Integra Telecom

Investor Presentation

May 2012

2

Safe Harbor

Confidential and Proprietary Company

Information

Special note regarding forward-looking statements

This presentation includes projections and forward looking statements within the meaning of Section 27A of

the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These projections

and forward looking statements involve known and unknown risks, uncertainties and other factors which

may cause actual results, performance and achievements, or industry results, to be materially different from

any future results, outcomes, performance or achievements expressed or implied by such forward looking

statements. Undue reliance should not be placed on any projections or forward looking statements.

Projections and forward looking statements should not be regarded as a representation by Integra Telecom

that the projections or forward looking statements will be achieved.

Integra’s annual financial results package posted on the Integra website as well as its Intralinks site contain

risk factors that management believes could cause actual results, outcomes or events to differ materially

from those contemplated by such projections or forward looking statements. You should consult Integra

Telecom should you have any questions about any items described in the risk factors or any of the

projections or forward looking statements described in this investor presentation.

All projections and forward looking statements included in this presentation are based on information

available on the date of this presentation and a number of estimates and assumptions that, while

considered reasonable by Integra Telecom, are inherently subject to significant business, economic and

competitive uncertainties and contingencies, many of which are beyond the control of Integra Telecom.

Integra Telecom undertakes no obligation to publicly update or revise any projections or forward looking

statement, whether as a result of new information, future events or otherwise.

Business Overview and Strategy Update

Kevin O’Hara, CEO

3

• Substantial long-haul and metropolitan fiber network

• Well positioned for growth due to excellent

product and service portfolio

• Diverse customer base across enterprise and

wholesale segments

57% of revenues from customers greater than

$1,000 in MRR

• Improving revenue mix and margins

FY 2011 revenues and Adjusted EBITDA of

$600mm and $173mm, respectively

• Positive cash flow expected in 2012

• Over $2 billion invested in the network, an asset

that would be difficult to replicate

4

Integra is a facilities-based provider of

advanced communication services operating

in 35 markets in the western US

Integra Overview

5

• 35 metropolitan markets

served

• Over 3,000 metropolitan

fiber route miles

• Over 1,800 on-net

buildings

• Regional concentration

makes Integra the leading

fiber based competitive

carrier in the Western US

Metropolitan network facilities drive higher margins and lower churn

Metro Area Networks

On-Net Buildings (1,847)

6

Integra is focused on delivering its services to on-net locations

• 1,847 buildings served directly with Integra

fiber at year-end; grew by approximately

16% in 2011

• Average revenue penetration of on-net

buildings is 12%

• Delivering service to on-net locations

reduces the reliance on LECs, increases

margin and decreases churn

• Approximately 16,000 additional buildings

located within 2,500 feet of existing

Integra fiber; represent addressable

monthly revenue of approximately $245

million

• Average incremental capital to add a new

location to an existing network is $35k with

an IRR of 60%

On-Net / Near Net

1458

167

6037

125

Commercial Buildings ILEC / LSO

Carrier Hotel / POP Data Center

Other

7

5,000 Miles of Long Haul Fiber

Interconnecting metro markets with Integra

fiber drives product differentiation, higher

margins and increased addressable market

IP Backbone

Longhaul Fiber and IP Backbone

8

• Collaboration & Messaging

• Next Generation Hosted Security

• Data Storage

• Colocation

Cloud & Managed Services

• Managed PBX

• PRI / SIP Solutions

• Hosted PBX (Cloud Voice)

• TDM Voice

Voice Services

• IPVPN

• Ethernet WAN Services

• Ethernet – Internet Access

• TDM – Internet Access

Data Services

• Carrier Ethernet Services

• Private Line

• Wavelengths

• Dark Fiber

Transport Services

• Full range of services to meet the

evolving needs of target customers

• Revenue expected to grow mid to

upper single digit % from 2013 to

2015

Growth products estimated to

increase at a 19% CAGR

Traditional products estimated

to decrease at a CAGR of 11%

Traditional Products

Strategic Growth Products

Core Service Portfolio

9

Integra has increased its investment in the enterprise segment,

resulting in more attractive customer mix.

Revenue by Customer Segment

45%

55%

As of December 31, 2010

43%

57%

As of December 31, 2011

45%

55%

As of December 31, 2010

MRR < $1,000 MRR > $1,000 Wholesale

Financial and Operating Results

10

11

• Focused on achieving positive free cash flow in 2012

• Expect quarterly sequential revenue and EBITDA growth in 2012

• Network density leads to strong margins

• Facilities-based network provides significant operating leverage

• Stabilization of churn leading to improving operating metrics

• Return of capital expenditures to historical levels, significantly

improving year over year free cash flow

• Modest leverage

• Significant value in underlying assets

Financial Overview

Note: All 2011 financial results throughout the presentation are unaudited.

($200)

($100)

$0

$100

$200

$300

2009 2010 2011 2012

($0

00

's)

Leveraged Free Cash Flow

EBITDA Capex Cash Interest Levered FCF

12

With stabilization of

Revenue and EBITDA,

and a return of capital

expenditures to historic

levels, 2012 is expected

to return to positive free

cash flow

1 LFCF = EBITDA – Capex – Cash Interest + Customer Aid to Construction 2 Capex = Total Capital Spend - Customer Aid to Construction

Trend of Cash Flow

1

2

Trend of Revenue and Adjusted EBITDA

13

2012 Revenue Guidance

• Modest year over year growth

• Q4 2011 and Q1 2012 represent

revenue low point with sequential

quarterly revenue growth expected

in 2012

2012 EBITDA Guidance

• Modest year over year revenue

growth coupled with a focus on

managing operating expenses

produces improved year over year

EBITDA

• Q4 2011 and Q1 2012 represent

Adjusted EBITDA low point with

sequential quarterly growth

expected in 2012

$0$100$200$300$400$500$600$700

2009 2010 2011 2012

($0

00

's)

Annual Revenue

$0

$50

$100

$150

$200

$250

2009 2010 2011 2012

($0

00

's)

Annual EBITDA

Source: Company filings

Note: Reflects actual results as of December 31, 2011, except

for Paetec and Broadview which are as of September 30, 2011,

and XO Communications which is as of June 30, 2011. 14

• Integra’s dense fiber assets

drive high EBITDA margins

• Expected EBITDA margins in

excess of 35% and unlevered

free cash flow margins in

excess of 20% over time

• Operating leverage has

historically produced 50%

incremental EBITDA margins

and 30% incremental

unlevered free cash flow

• Management estimates this

will improve to 60% and 35%

respectively based on current

product and customer focus

Network Density Driving Financial Metrics

34.2%31.5%

28.8%

24.2%

19.1% 17.8%14.3%

10.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Strong EBITDA Margin

$1,968

$1,541 $1,370 $1,310

$600 $485

$386 $306

$0

$500

$1,000

$1,500

$2,000

$2,500

LTM Revenue ($mm)

Average quarterly churn (%)

15 Excludes approximately $175k of churn in Q4 2011 related to one-time, carrier customer network transitions.

• Stable churn and renewals

create expectations for

sequential revenue growth in

FY 2012 as sales and

installation rates return to

historical levels

Recent Operating Metrics

1

FY Monthly Averages

Recent Monthly Averages

2009 2010 2011 Dec '11 – March 12

Installs $654 $713 $545 $647

Churn (661) (604) (548) (511)

Renewals (135) (140) (105) (91)

Net MRR Change ($142) ($31) ($108) $45

0.62% 0.55% 0.56% 0.50% 0.55% 0.53% 0.53% 0.49% 0.53%

0.79% 0.93% 0.86%

0.85% 0.76% 0.74% 0.74% 0.78% 0.70%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

Economic Competitive

16

• 2011 capital expenditures

included significant

investment in new

capabilities and additional

network capacity

• Return to normal investment

levels in 2012 with focus on

selling in to existing capacity

Trend of Capital Spend

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$0

$20

$40

$60

$80

$100

$120

$140

$160

2009 2010 2011 2012

Cap

ex as a % o

f Reven

ue

($0

00

's)

Capital Expenditures

Capex Capex as a % of Revenue

• 2011 included

approximately $30

million of incremental

capital spend on switch

consolidation, deferred

maintenance, product

development and

network expansion

• Approximately 74% of

2012 capex is success

based with 37% directly

related to new orders

17

($ in millions)

1 Includes $7.3 million and $3.8 million of product developments costs in 2011 and 2012, respectively.

1

Capex Summary- 2011 Actual vs. 2012 Budget

$36

$11

$3

$38

$16

$34

$25

$5

$49

$23

$0

$10

$20

$30

$40

$50

$60

CapitalizedLabor

Corporate /Maintenance

ILEC Pure SuccessBased Capital

RevenueEnablement

2012 Budgeted Capex 2011 Actual Capex

Total Capex 2012F 2011A

Gross $104.7 $136.7

Net $99.5 $135.4

1

Facility Maturity Interest Amount

LTM

EBITDA

Multiple2

Cash $9.0

Revolving Credit ($60mm) 12/31/2014 L + 425 -- --

Term Loan 4/15/2015 L + 7251

243.8 1.4 x

Notes 4/15/2016 10.75% 475.0 2.7 x

Capital Leases 4.3 0.0 x

Total Debt $723.0 4.2 x

Net Debt $714.0 4.1 x

$0

$100

$200

$300

$400

$500

2011 2012 2013 2014 2015 2016

Debt Maturities

• Integra has adequate

liquidity to meet the needs

of its business

• Integra expects to be in

compliance with both its

interest coverage (2.0x)

and total leverage (4.75x)

covenants with

approximately 10%

cushion during 2012

• No step downs in

covenant levels until

March 31, 2014

1 Libor floor of 2.0%. 2 Integra Adjusted EBITDA of $173 million represents the last four quarters ended December 31, 2011 and

adjusted to remove one time items. 3 Revolver matures, but no balance is projected.

18

($ in millions, as of 12/31/2011)

3

Capital Structure

• Integra generates significant cash flow

2012 expected to generate approximately $75M of unlevered cash flow

Approximately $75M of capital expenditures are invested for growth purposes with half

being driven by specific new customer contracts

Approximately 33% or $75M of SG&A expense invested for growth purposes either

through customer acquisition or new product development

• Over $2 billion has been invested in the network creating an asset that

would be difficult to replicate

• Integra owns a stable ILEC

Revenue of $14M has been flat despite national trend

Generates $9M in EBITDA and $6M in unlevered free cash flow

19

Significant Value in Underlying Assets

• Expected to return to cash positive levered

free cash flow in 2012

• Substantial network assets are key

differentiator driving high margins

• Improving revenue mix and diverse customer

base positions the company well for growth

• Over $2 billion invested in the network

20

Integra Summary

Thank you.