2Q16 Earnings Presentation August 4, 2016

SAFE HARBOR STATEMENT Safe Harbor Statement Windstream claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include, but are not limited to, 2016 guidance for service revenue, adjusted OIBDAR and adjusted capital expenditures, along with statements regarding adjusted free cash flow, cash interest and cash taxes in 2016; expectations regarding revenue trends and improving margins in the business segments; network cost optimization; stability and growth in adjusted OIBDAR; the anticipated benefits of Project Excel to improve network capabilities; the anticipated increase in availability of higher Internet speeds; the completion and benefits of network investments pursuant to the Connect America Fund; expectations regarding deployments of Windstream’s IPTV service, 1 Gig service and expanding the carrier network, products and customer verticals; and Windstream’s ability to improve its debt profile and reduce interest costs. These statements, along with other forward-looking statements regarding Windstream’s overall business outlook, are based on estimates, projections, beliefs, and assumptions that Windstream believes are reasonable but are not guarantees of future events and results. Actual future events and results of Windstream may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. For risk factors that could cause actual results and events to differ materially from those expressed, refer to Windstream’s filings with the Securities and Exchange Commission.

Regulation G Disclaimer This presentation includes certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available on our website at www.windstream.com/investors.

2

Participants

Tony Thomas Chief Executive Officer

Bob Gunderman Chief Financial Officer

Christie Grumbos Treasurer

3

2016 PRIORITIES 1

GROW Consumer revenue

2

COMPLETE Project Excel

3

EXPAND Enterprise contribution margins

4

Completed $75M share REPURCHASE plan (1Q16)

5

Opportunistically IMPROVE debt maturity profile and reduce interest cost

FOCUSED OPERATIONAL STRATEGY ALLOCATE CAPITAL + RETURN VALUE OPTIMIZE THE BALANCE SHEET

WIN STRATEGY 4

2Q16 ACHIEVEMENTS $ Executing Focused Operational Strategy  Continued expansion of Enterprise contribution margin  Generated $80M, or 15.7%  Up $32M, or 68%, vs. 2Q15  Adjusted OIBDAR increased ~1% y/y; consistent margins at 35%

(1)

Allocating Capital & Returning Value  Pursuing growth initiatives supportive of operational strategy

 Advancing our broadband network capabilities  Returned value through shareholder dividend

Optimizing the Balance Sheet  Reduced debt by $672M via a debt-for-equity exchange with the retained shares of CSAL  Lowered debt by $49M through open market debt repurchases in the second quarter (1)

Through the open market debt repurchases completed in 2Q16 through the date of earnings (August 4), Windstream reduced debt by $49 million by repurchasing $332M in unsecured bonds funded with $283M of revolver borrowings

5

CONSUMER & SMB ILEC STRATEGY NETWORK ENHANCEMENTS ESTABLISH A FOUNDATION FOR SUSTAINABLE GROWTH

ADVANCED BROADBAND CAPABILITIES TO INCREASE ARPU AND IMPROVE UNIT TRENDS

INTERNET SPEED AVAILABILITY Current

88%

YE 2016 Projection

 Deliver more speed to more people  Expand premium speed availability

54%

 Additional gig market deployment

 Next gen broadband technology evolution

79% 30% 42%

 Expand Internet availability  CAF program supports and expands broadband capabilities to 470k locations

15% 23% 11%

1 0 MB P S

2 5 MB P S

5 0 MB P S

7 5 + MB P S

Notes: • Current internet speed availability reflects the speeds available for Consumer and SMB ILEC locations • Expected YE 2016 projections will improve upon the completion of CAF projects.

6

CARRIER STRATEGY

DRIVE NEW SALES TO STABILIZE REVENUE

Leverage and monetize existing network assets • 100 gig capable long-haul & regional express network Strategic network expansion • Expanding network to highgrowth carrier hubs to drive new sales:  Carrier hotels  Int’l landing stations  Data centers Increase sales productivity • Expanded sales team to target high growth verticals • Focus on growth products (wave, carrier Ethernet)

7

ENTERPRISE STRATEGY GROW REVENUE AND EXPAND MARGINS

Grow Profitably  Focus on mid-market enterprises

Reduce Network Access Costs  Capacity management  Network modernization

 Emphasize high-value solutions to improve profitability

 Market expansion to bring more traffic on-net

Improve Customer Experience & Operating Efficiency  Further integration of processes in sales & support organizations  Simplify product set

Advancing Goal to Expand Margins to 20% 8

SMB CLEC STRATEGY MAXIMIZE CASH FLOW

IMPROVE CONTRIBUTION MARGIN TRENDS by growing profitable customer relationships and managing costs PROFITABLE CUSTOMER PROTECTION TARGETED SALES STRATEGY

IMPROVE COST EFFICIENCY

• Manage margin at the account level to ensure all customer relationships are profitable

• Expand relationships of existing customers • Target new sales with narrow, simplified SMB product set • Optimize the cost of revenue • Improve cost structure

9

DELIVERING STRONG AND CONSISTENT PERFORMANCE ADJUSTED SERVICE REVENUE ($ in millions)

$1,345

$1,341

HIGHLIGHTS

ADJUSTED OIBDAR (1) ($ in millions)



Service revenue down 1%



Consistent and stable adjusted OIBDAR

$1,331

 $479

$485

$482



2Q15

(.3%)

34.5%

35.3%

35.5%

1Q16

2Q16

2Q15

1Q16

2Q16

(0.2%)

(1%)

(9.7%)

0.8%

0.6%

Up approximately 1% y/y

Adjusted OIBDAR margins improved 100 bps y/y to 35.5%

CHANGE YOY

1) Adjusted OIBDA prior to lease payment to CS&L Note: Adjusted revenue and OIBDAR adjust operating results under GAAP to exclude the impacts of the disposed data center and consumer CLEC businesses and directory publishing operations and all merger and integration, restructuring, stock based compensation and non-cash pension costs

10

CONSUMER AND SMB ILEC DELIVERED SOLID RESULTS

CONSUMER & SMB SERVICE REVENUE $403

$401

$397

$397

$395

$89

$87

$86

$85

$84

KEY DRIVERS  ARPU grew 1.2% sequentially and 5% y/y

$314

2Q15

$314

3Q15

$311

4Q15

Consumer

$312

1Q16

$311

2Q16

$224

$230

$228

 Premium speed attachment rates of 38%  Contribution margin of $225M, or 57%

SMB ILEC

CONTRIBUTION MARGIN $241

 Speed penetration gains, modem rental and sale of bundle adders

$225

FUTURE DRIVERS

 Faster Internet speeds to more people  New IPTV market deployments

60%

56%

58%

57%

57%

 1 Gig market launches  Broadband expansion through CAF program

2Q15

3Q15

4Q15

1Q16

2Q16

($ in millions)

11

CARRIER

PERFORMING IN-LINE WITH EXPECTATIONS CARRIER SERVICE REVENUE $172 $16

$169

$171

$163

$160

$15

$14

$13

$11

$156

$153

$157

$150

$149

2Q15

3Q15

4Q15

1Q16

2Q16

Core Carrier / Wholesale

Wireless TDM

CONTRIBUTION MARGIN $124

$124

$124

$118

$115

72%

73%

73%

72%

72%

KEY DRIVERS  Core Carrier & Wholesale down $1M sequentially  Legacy declines partially offset by growth products such as Ethernet, WAVE sales and sales to new customer verticals FUTURE DRIVERS  Expanding network, products and customer verticals to drive sales  Strategic network expansion to high growth carrier hubs

 Expanded sales team; targeting high growth customer verticals 2Q15

3Q15

4Q15

1Q16

2Q16

($ in millions)

12

ENTERPRISE

GREW REVENUE AND IMPROVED MARGINS ENTERPRISE SERVICE REVENUE $478

$496

$498

$491

$491

KEY DRIVERS  Enterprise service revenue up 2.7% y/y  Data & Integrated Services up 5.6%  2Q enterprise contribution margin of $80M increased $32M, or 68% y/y

2Q15

3Q15

4Q15

1Q16

2Q16

CONTRIBUTION MARGIN $78 $63

$80 $71

 Expect further improvements in the second half of 2016 FUTURE DRIVERS  Target middle market enterprise customers  Expand enterprise margins

$48 9%

12%

15%

14%

16%

2Q15

3Q15

4Q15

1Q16

2Q16

 Network cost optimization  Improve operating efficiency

($ in millions)

13

SMB CLEC

DELIVERED SOLID RESULTS SMB CLEC SERVICE REVENUE $142

$139

$132

$129

$125

KEY DRIVERS  Revenue declining in-line with expectations  Simplified product line-up  Managing margins at the account level

2Q15

3Q15

4Q15

1Q16

2Q16

CONTRIBUTION MARGIN

 Cost efficiencies driving stable contribution margin FUTURE DRIVERS  Operating strategy to improve profitability

$45

$46

31%

33%

2Q15

3Q15

$41 31%

4Q15

$41

$41

32%

33%

1Q16

2Q16

 Focused on retention; selling incremental services to existing customers  Improve efficiency and cost of revenue

($ in millions)

14

OPTIMIZING THE BALANCE SHEET

PURSUING MULTIPLE PATHS TO IMPROVE THE BALANCE SHEET DEBT MATURITY PROFILE

(1)

 Together, through the CSAL monetization and open market debt repurchases completed since 3Q15, WIN has reduced debt by over $740M (2)

$599 $209

 Debt maturity profile attractive, with minimal near term maturities

$996 $575

$700

$812 $447

$369

$100

Sr. Notes

Revolver

Sr. Loans

 Ability to further improve the balance sheet and lower interest expense via secured debt capacity

(1) Debt maturity profile as of June 30, 2016 is adjusted to reflect open market debt repurchases completed between June 30, 2016 and August 4, 2016 totaling $92M in face value. The June 30, 2016 revolver balance of $125M has also been adjusted to reflect the cash funding of the repurchases, which totaled $84M (2) WIN reduced debt by $672M via the CSAL monetization in June 2016. In addition, since 3Q15 through August 4, 2016, WIN has reduced debt by $69M via open market repurchases resulting in the retirement of $786M in face value of debt funded by revolver borrowings of $717M

15

A CLOSER LOOK AT 2016 CAPEX EXECUTING A NETWORK FIRST STRATEGY

2016 Capex Plans

Capex

(in millions)

Project Excel

$200

Success-based

$140

Broadband capacity and expansion (incl. CAF-2)

$100

Enterprise on-net expansion & interconnect savings

$50

IT Projects to drive efficiencies

$60

Carrier network expansion / upgrade

$50

IPTV & Fiber to the home

$25

Other

$25

Strategic Capex

$650

Maintenance capex

$375

Total Capital Expenditures

$1,025

2016 INITIATIVES  Expand high-speed internet capabilities

 Expand the carrier network  Roll out new IPTV markets  Enhance network performance  Make targeted investments to reduce network operating expenses

Less: Project Excel Capex Total Adjusted Capex

($200) $825

Project Excel will be completed in 2016 and is funded via proceeds from the data center sale

16

2016 GUIDANCE AFFIRMED

IMPROVED CASH INTEREST AND CASH TAX GUIDANCE

2016 GUIDANCE AFFIRMED

2016 Adjusted FCF Overview Adj. OIBDAR Guidance (Midpoint)

Adj. Service Revenue Adj. OIBDAR Adjusted Capex (1)

$5,275 - $5,425M $1,900 – 1,950M

$800 - $850M

$1,925

Lease Payment to CS&L

(654)

Adjusted Capex Guidance (Midpoint) (1)

(825)

Cash Interest

(365)

Cash Taxes

(10)

CS&L Dividends Received (2)

35

Adjusted Free Cash Flow

$106

($ in millions) (1) 2016 Adjusted Capex excludes expenditures related to Project Excel, a $250M capital program funded by using a portion of the $575M proceeds from the sale of the data center business completed on December 18, 2015 (2) Windstream monetized its stake in CSAL in June 2016. The proceeds were used to pay down debt and reduce cash interest

17

Clear roadmap to GROWING Adjusted OIBDAR

Generate strong financial RETURNS for our investors by leveraging existing fiber and RETURNING VALUE

STRONG and IMPROVING balance sheet

WINDSTREAM INVESTMENT THESIS 18

APPENDIX

Contents: • Additional slides • Quarterly supplemental schedules

19

SUPPLEMENTAL FINANCIAL INFORMATION ADJUSTED RESULTS OF OPERATIONS: Revenues and sales: Total service revenues Product sales Total revenues and sales

2016 2nd Qtr.

Total $

2,671.9 61.1 2,733.0

$

1,331.3 28.3 1,359.6

1st Qtr. $

1,340.6 32.8 1,373.4

Total $

5,467.4 166.7 5,634.1

2015 3rd Qtr.

4th Qtr. $

1,360.0 38.6 1,398.6

$

1,419.8 47.4 1,467.2

2nd Qtr. $

1,344.5 43.9 1,388.4

1st Qtr. $

1,343.1 36.8 1,379.9

Costs and expenses: Cost of services Cost of products sold Selling, general and administrative Costs and expenses excluding pension and share-based compensation expense

1,329.5 53.1 382.9 1,765.5

663.1 24.2 190.1 877.4

666.4 28.9 192.8 888.1

2,675.1 145.2 809.5 3,629.8

666.2 33.4 195.8 895.4

683.8 41.4 201.5 926.7

668.3 38.5 202.3 909.1

656.8 31.9 209.9 898.6

Adjusted OIBDAR (B) Master lease rent payment

967.5 326.9

482.2 163.4

485.3 163.5

2,004.3 650.0

503.2 162.5

540.5 162.5

479.3 162.5

481.3 162.5

Adjusted OIBDA (C) Pension expense (income) Restructuring charges Share-based compensation expense OIBDA (D)

640.6 1.7 10.3 22.6 606.0

318.8 2.0 5.9 8.9 302.0

321.8 (0.3) 4.4 13.7 304.0

1,354.3 1.2 20.7 54.4 1,278.0

340.7 9.6 5.0 12.2 313.9

378.0 (1.9) 5.3 14.4 360.2

316.8 (4.7) 3.4 13.3 304.8

318.8 (1.8) 7.0 14.5 299.1

$

Margins (E): Adjusted OIBDAR margin Adjusted OIBDA margin CAPITAL EXPENDITURES: Capital expenditures under GAAP Project Excel capital expenditures Capital expenditures funded by CS&L Adjusted capital expenditures (F)

(A) (B) (C) (D) (E) (F)

$

35.4% 23.4%

$

$

510.3 (70.6) 439.7

$

35.5% 23.4%

$

$

246.5 (36.9) 209.6

$

35.3% 23.4%

$

$

263.8 (33.7) 230.1

$

35.6% 24.0%

$

$

1,055.3 (47.2) (43.1) 965.0

$

36.0% 24.4%

$

$

310.9 (41.2) (43.1) 226.6

$

36.8% 25.8%

$

$

300.1 (6.0) 294.1

$

34.5% 22.8%

$

$

255.0 255.0

34.9% 23.1%

$

$

189.3 189.3

Adjusted results of operations exclude the impacts of the disposed data center and consumer CLEC businesses and directory publishing operations and all merger and integration costs related to strategic transactions. Adjusted OIBDAR is adjusted OIBDA before the annual cash rent payment due under the master lease agreement with CS&L assuming the lease payments began on January 1, 2015. Adjusted OIBDA is OIBDA before restructuring charges, pension expense (income) and share-based compensation expense. OIBDA is operating income before depreciation and amortization. Margins are calculated by dividing the respective profitability measures by total revenues and sales. Adjusted capital expenditures exclude the impacts of capital expenditures funded by CS&L and expenditures related to Project Excel, a $250 million capital program funded entirely using a portion of the $575 million proceeds from the sale of the data center business completed on December 18, 2015.

20

SUPPLEMENTAL FINANCIAL INFORMATION REVENUE SUPPLEMENT Service revenues: High-speed Internet bundles Voice only Video and miscellaneous Total consumer Small business - ILEC Consumer and small business - ILEC

$

522.6 76.9 23.0 622.5 169.3 791.8

$

261.5 37.9 11.4 310.8 84.2 395.0

1st Qtr. $

261.1 39.0 11.6 311.7 85.1 396.8

Total $

2015 3rd Qtr.

4th Qtr.

1,032.8 169.3 49.0 1,251.1 351.5 1,602.6

$

258.4 40.4 12.3 311.1 86.1 397.2

$

259.9 41.8 12.3 314.0 87.2 401.2

2nd Qtr. $

258.7 42.9 12.2 313.8 88.7 402.5

1st Qtr. $

255.8 44.2 12.2 312.2 89.5 401.7

Core carrier (B) Wholesale (C) Total core carrier and wholesale Wireless TDM Carrier

260.4 38.6 299.0 24.1 323.1

129.6 18.9 148.5 11.4 159.9

130.8 19.7 150.5 12.7 163.2

543.4 80.5 623.9 64.0 687.9

136.7 19.9 156.6 14.1 170.7

132.9 20.5 153.4 15.3 168.7

135.4 20.4 155.8 16.4 172.2

138.4 19.7 158.1 18.2 176.3

Voice and long distance Data and integrated services (D) Miscellaneous Enterprise

293.2 637.3 52.2 982.7

145.1 320.0 26.2 491.3

148.1 317.3 26.0 491.4

604.7 1,238.8 103.6 1,947.1

151.2 319.5 26.8 497.5

151.6 317.5 26.6 495.7

149.9 303.1 25.2 478.2

152.0 298.7 25.0 475.7

Small business - CLEC

254.0

125.3

128.7

559.0

131.5

139.0

141.9

146.6

57.3 97.0 62.4 90.1 13.5 320.3 2,671.9

28.4 48.5 31.2 44.9 6.8 159.8 1,331.3

28.9 48.5 31.2 45.2 6.7 160.5 1,340.6

133.5 197.5 144.2 171.1 24.5 670.8 5,467.4

30.1 49.6 33.7 42.5 7.2 163.1 1,360.0

30.7 97.8 35.4 44.0 7.3 215.2 1,419.8

37.0 25.0 37.5 43.2 7.0 149.7 1,344.5

35.7 25.1 37.6 41.4 3.0 142.8 1,343.1

39.7 0.6 20.8 61.1 2,733.0

18.0 0.2 10.1 28.3 1,359.6

21.7 0.4 10.7 32.8 1,373.4

120.1 2.9 43.7 166.7 5,634.1

29.4 0.6 8.6 38.6 1,398.6

31.4 0.6 15.4 47.4 1,467.2

31.7 0.6 11.6 43.9 1,388.4

27.6 1.1 8.1 36.8 1,379.9

Switched access CAF Phase II funding and frozen federal USF State USF and ARM support Pass through taxes and surcharges Miscellaneous Regulatory and other Total service revenues Product sales: Enterprise Consumer Other Total product sales Total revenues and sales

(A) (B) (C) (D)

2016 2nd Qtr.

Total

$

$

$

$

$

$

$

$

Adjusted results of operations exclude the impacts of the disposed data center and consumer CLEC businesses and directory publishing operations and all merger and integration costs related to strategic transactions. Core carrier revenues primarily include revenues from other carriers for special access circuits and fiber connections. Wholesale revenues represent voice and data services sold to other carriers on a wholesale basis. Data and integrated service revenues primarily include voice and broadband services delivered over a single Internet connection as well as multi-site networking services.

21

SUPPLEMENTAL FINANCIAL INFORMATION 2016 2nd Qtr.

Total Consumer and Small Business - ILEC Revenues and sales: Service revenues Product sales Total consumer Small business - ILEC Total revenues and sales Costs and expenses Consumer and Small Business - ILEC contribution margin Consumer and Small Business - ILEC contribution margin % Carrier Service revenues Costs and expenses Carrier contribution margin Carrier contribution margin % Enterprise Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses Enterprise contribution margin Enterprise contribution margin % Small business - CLEC Service revenues Costs and expenses Small Business - CLEC contribution margin Small Business - CLEC contribution margin % Total segment revenues and expenses Revenues and sales: Service revenues Product sales Total segment revenues and sales Total segment costs and expenses Segment contribution margin Segment contribution margin %

$

$

$ $

$

$

$ $

$

$

622.5 0.6 623.1 169.3 792.4 338.9 453.5 57.2%

$

323.1 90.7 232.4 71.9%

$

982.7 39.7 1,022.4 872.1 150.3 14.7%

$

254.0 171.5 82.5 32.5%

$

2,351.6 40.3 2,391.9 1,473.2 918.7 38.4%

$

$

$

$

$

$

1st Qtr.

310.8 0.2 311.0 84.2 395.2 169.8 225.4 57.0%

$

159.9 45.2 114.7 71.7%

$

491.3 18.0 509.3 429.5 79.8 15.7%

$

125.3 84.1 41.2 32.9%

$

1,171.5 18.2 1,189.7 728.6 461.1 38.8%

$

$

$

$

$

$

Total

311.7 0.4 312.1 85.1 397.2 169.1 228.1 57.4%

$

163.2 45.5 117.7 72.1%

$

491.4 21.7 513.1 442.6 70.5 13.7%

$

128.7 87.4 41.3 32.1%

$

1,180.1 22.1 1,202.2 744.6 457.6 38.1%

$

$

$

$

$

$

2015 3rd Qtr.

4th Qtr.

1,251.1 2.9 1,254.0 351.5 1,605.5 671.0 934.5 58.2%

$

687.9 185.6 502.3 73.0%

$

1,947.1 120.1 2,067.2 1,826.6 240.6 11.6%

$

559.0 378.2 180.8 32.3%

$

4,796.6 123.0 4,919.6 3,061.4 1,858.2 37.8%

$

$

$

$

$

$

311.1 0.6 311.7 86.1 397.8 168.0 229.8 57.8%

$

170.7 46.4 124.3 72.8%

$

497.5 29.4 526.9 449.1 77.8 14.8%

$

131.5 90.2 41.3 31.4%

$

1,196.9 30.0 1,226.9 753.7 473.2 38.6%

$

$

$

$

$

$

2nd Qtr.

314.0 0.6 314.6 87.2 401.8 178.0 223.8 55.7%

$

168.7 44.8 123.9 73.4%

$

495.7 31.4 527.1 463.8 63.3 12.0%

$

139.0 92.7 46.3 33.3%

$

1,204.6 32.0 1,236.6 779.3 457.3 37.0%

$

$

$

$

$

$

1st Qtr.

313.8 0.6 314.4 88.7 403.1 161.8 241.3 59.9%

$

172.2 48.3 123.9 72.0%

$

478.2 31.7 509.9 462.3 47.6 9.3%

$

141.9 97.3 44.6 31.4%

$

1,194.8 32.3 1,227.1 769.7 457.4 37.3%

$

$

$

$

$

$

312.2 1.1 313.3 89.5 402.8 163.2 239.6 59.5%

176.3 46.1 130.2 73.9%

475.7 27.6 503.3 451.4 51.9 10.3%

146.6 98.0 48.6 33.2%

1,200.3 28.7 1,229.0 758.7 470.3 38.3%

22

SUPPLEMENTAL FINANCIAL INFORMATION Consolidated revenues and expenses Revenues and sales: Segment revenues and sales Service revenues Product sales Segment revenues and sales Regulatory and other revenues and sales (B) Service revenues Product sales Regulatory and other revenues and sales Consolidated revenues and sales Service revenues Product sales Consolidated revenues and sales Consolidated costs and expenses Segment costs and expenses Regulatory and other expenses (C) Consolidated costs and expenses excluding pension and share-based compensation expense Consolidated Adjusted OIBDAR Adjusted OIBDAR margin

$

$

2,351.6 40.3 2,391.9

$

1,171.5 18.2 1,189.7

$

1,180.1 22.1 1,202.2

$

4,796.6 123.0 4,919.6

$

1,196.9 30.0 1,226.9

$

1,204.6 32.0 1,236.6

$

1,194.8 32.3 1,227.1

$

1,200.3 28.7 1,229.0

320.3 20.8 341.1

159.8 10.1 169.9

160.5 10.7 171.2

670.8 43.7 714.5

163.1 8.6 171.7

215.2 15.4 230.6

149.7 11.6 161.3

142.8 8.1 150.9

2,671.9 61.1 2,733.0

1,331.3 28.3 1,359.6

1,340.6 32.8 1,373.4

5,467.4 166.7 5,634.1

1,360.0 38.6 1,398.6

1,419.8 47.4 1,467.2

1,344.5 43.9 1,388.4

1,343.1 36.8 1,379.9

$

$

$

$

$

$

$

$

1,473.2 292.3

$

728.6 148.8

$

744.6 143.5

$

3,061.4 568.4

$

753.7 141.7

$

779.3 147.4

$

769.7 139.4

$

758.7 139.9

$

1,765.5

$

877.4

$

888.1

$

3,629.8

$

895.4

$

926.7

$

909.1

$

898.6

$

967.5 35.4%

$

482.2 35.5%

$

485.3 35.3%

$

2,004.3 35.6%

$

503.2 36.0%

$

540.5 36.8%

$

479.3 34.5%

$

481.3 34.9%

(A) Adjusted results of operations exclude the impacts of the disposed data center and consumer CLEC businesses and directory publishing operations and all merger and integration costs related to strategic transactions. (B) These revenues are not allocated to the business segments. These revenues include revenue from federal and state universal service funds, CAF Phase II support, and funds received from federal access recovery mechanisms, revenues from providing switched access services, and certain surcharges assessed to our customers, including billings for our required contributions to federal and state USF programs. (C) These expenses are not allocated to the business segments. Unallocated expenses primarily consist of certain regulatory fees and shared services, such as accounting and finance, information technology, engineering, network management, legal, human resources, and investor relations, that are centrally managed and are not monitored by management at a segment level.

23

SUPPLEMENTAL FINANCIAL INFORMATION 2016 2nd Qtr.

Total KEY OPERATING METRICS: Consumer Households served YOY change in households served Consumer revenue Average revenue per household served per month

1,403.8 -6.1% $ $

High-speed Internet customers Digital television customers YOY change in high-speed Internet YOY change in digital television customers Small business - ILEC Small business - ILEC customers (A) YOY change in small business - ILEC customers Small business - ILEC revenue Average revenue per small business - ILEC customer per month

$ $

Enterprise Enterprise customers (B) YOY change in enterprise customers Enterprise revenue Average revenue per enterprise customer per month

1,403.8 -6.1% $ $

$ $

1,430.7 -5.7% $ $

311.7 72.24

1,445.8 -5.4% $ $

2015 3rd Qtr.

4th Qtr.

1,251.1 70.36

1,445.8 -5.4% $ $

311.1 71.11

2nd Qtr.

1,471.0 -5.2% $ $

314.0 70.60

1st Qtr.

1,494.2 -5.2% $ $

313.8 69.49

1,516.5 -5.6% $ $

312.2 68.35

1,075.8 342.0 -4.0% -8.2%

1,092.0 350.1 -3.6% -7.6%

1,095.1 359.3 -3.2% -6.7%

1,095.1 359.3 -3.2% -6.7%

1,109.6 366.0 -2.8% -6.1%

1,120.8 372.5 -2.9% -5.5%

1,132.4 378.8 -3.2% -5.0%

141.0 -7.0%

141.0 -7.0%

144.3 -7.4%

146.8 -8.4%

146.8 -8.4%

148.6 -9.6%

151.6 -10.0%

155.9 -9.6%

169.3 197.80

$ $

982.7 6,157.27

254.0 505.17

84.2 196.75

$ $

26.8 3.1% $ $

81.2 -18.2% $ $

310.8 73.10

Total

1,075.8 342.0 -4.0% -8.2%

26.8 3.1%

Small business - CLEC Small business - CLEC customers (C) YOY change in small business - CLEC customers Small business - CLEC revenue Average revenue per small business - CLEC customer per month

622.5 73.21

1st Qtr.

491.3 6,156.64

125.3 498.41

$ $

26.4 0.8% $ $

81.2 -18.2% $ $

85.1 194.89

491.4 6,216.32

128.7 483.11

$ $

26.3 $ $

86.4 -19.5% $ $

351.5 194.34

1,947.1 6,198.98

559.0 474.13

$ $

26.3 $ $

91.2 -15.2% $ $

86.1 194.31

497.5 6,317.46

131.5 470.31

$ $

26.2 -0.4% $ $

91.2 -15.2% $ $

87.2 193.65

495.7 6,330.78

139.0 476.44

$ $

26.0 -0.8% $ $

95.2 -14.5% $ $

88.7 192.30

478.2 6,107.28

26.2 0.4% $ $

99.3 -14.0% $ $

141.9 457.89

89.5 188.76

475.7 6,040.63

107.3 -10.4% $ $

146.6 455.00

(A) Small business customer relationships that generate less than $1,500 in revenue per month and are located in service areas in which we are the incumbent local exchange carrier ("ILEC") and provide services over network facilities operated by us. (B) Enterprise customers represent customers that generate $1,500 or more in revenue per month. (C) Small business customer relationships that generate less than $1,500 in revenue per month and are located in service areas in which we are the competitive local exchange carrier ("CLEC") and provide services over network facilities primarily leased from other carriers.

24

SUPPLEMENTAL FINANCIAL INFORMATION 2016 2nd Qtr.

Total

1st Qtr.

Total

2015 3rd Qtr.

4th Qtr.

2nd Qtr.

1st Qtr.

ADJUSTED FREE CASH FLOW: Operating income under GAAP Depreciation and amortization OIBDA Adjustments: Merger and integration costs Pension expense (income) Restructuring charges Share-based compensation expense Master lease rent payment Adjusted capital expenditures (A) Cash paid for interest on long-term debt obligations Cash (paid) refunded for income taxes Cash dividends received on CS&L common stock Adjusted free cash flow Dividends paid Weighted average common shares Common stock outstanding

DEBT LEVERAGE RATIO: Long-term debt, including current maturities Capital lease obligations Total long-term debt and capital lease obligations Cash and cash equivalents Net debt

Adjusted OIBDA (per page slide2)20) Net leverage ratio (B)

$

312.3 613.0 925.3

$

7.6 1.7 10.3 22.6 (326.9) (439.7) (194.3) (7.9) 35.2 33.9

$

29.5

$

154.6 308.2 462.8

$

2.6 2.0 5.9 8.9 (163.4) (209.6) (138.8) (1.4) 17.6 (13.4)

$

14.6

$

157.7 304.8 462.5

$

5.0 (0.3) 4.4 13.7 (163.5) (230.1) (55.5) (6.5) 17.6 47.3

$

14.9

$

509.4 1,366.5 1,875.9

$

95.0 1.2 20.7 55.3 (446.0) (965.0) (487.8) (1.1) 30.6 178.8

$

369.2

$

131.7 333.5 465.2

$

20.5 9.6 5.0 12.4 (162.5) (226.6) (160.3) (0.3) 17.6 (19.4)

$

15.1

$

178.5 350.5 529.0

$

3.1 (1.9) 5.3 14.6 (162.5) (294.1) (46.5) (2.3) 13.0 57.7

$

11.5

$

79.3 341.8 421.1

$

119.9 340.7 460.6

$

57.3 (4.7) 3.4 13.5 (121.0) (255.0) (206.3) 0.3 (91.4)

$

14.1 (1.8) 7.0 14.8 (189.3) (74.7) 1.2 231.9

$

191.1

$

151.5

93.2 96.4 As of 6/30/2016 $ 4,743.5 22.2 4,765.7 41.6 $ 4,724.1 Twelve Months Ended 6/30/2016 $ 1,359.3 3.48

(A) Adjusted capital expenditures exclude the impacts of capital expenditures funded by CS&L and expenditures related to Project Excel, a $250 million capital program funded entirely using a portion of the $575 million proceeds from the sale of the data center business completed on December 18, 2015. (B) The net leverage ratio is computed by dividing net debt by adjusted OIBDA.

25

SUPPLEMENTAL FINANCIAL INFORMATION 2016 2nd Qtr.

Total Reconciliation of Revenues and Sales under GAAP to Adjusted Revenues and Sales: Service revenues under GAAP Adjustments: Data center revenues Consumer CLEC revenues Directory publishing revenues Adjusted service revenues Product sales under GAAP Adjusted revenues and sales:

Reconciliation of Net Income (Loss) under GAAP to Adjusted OIBDA: Net income (loss) Adjustments: Dividend income on CS&L common stock Other expense (income), net Gain on sale of data center business Net gain on disposal of investment in CS&L common stock Net (gain) loss on early extinguishment of debt Other-than-temporary impairment loss on investment in CS&L common stock Interest expense Income tax (benefit) expense Operating income under GAAP Depreciation and amortization Adjustments: Data center business operating (income) loss Consumer CLEC business operating income Directory publishing operating income Depreciation and amortization - disposed businesses Merger and integration costs Pension expense (income) Restructuring charges Share-based compensation expense Adjusted OIBDAR (B) Master lease rent payment Adjusted OIBDA (C)

$

2,671.9

$

2,671.9 61.1 2,733.0

$

$

(230.4)

$

1,331.3

1st Qtr.

$

1,340.6

$

1,331.3 28.3 1,359.6

$

1,340.6 32.8 1,373.4

$

1.5

$

(231.9)

Total

$

5,598.6

$

(119.4) (10.2) (1.6) 5,467.4 166.7 5,634.1

$

2015 3rd Qtr.

4th Qtr.

27.4

$

1,388.4

$

1,451.2

$

(28.4) 1,360.0 38.6 1,398.6

$

140.5

2nd Qtr.

$

1,377.2

$

(31.4) 1,419.8 47.4 1,467.2

$

(7.2)

1st Qtr.

$

1,381.8

$

(30.4) (2.3) 1,344.5 43.9 1,388.4

$

(29.2) (7.9) (1.6) 1,343.1 36.8 1,379.9

$

(111.2)

$

5.3

(17.6) 3.1 (17.3) (2.1) 181.9 437.1 (42.4) 312.3 613.0

1.9 (17.3) (37.5) 217.4 (11.4) 154.6 308.2

(17.6) 1.2 35.4 181.9 219.7 (31.0) 157.7 304.8

(48.4) (9.1) (326.1) 36.4 813.2 16.0 509.4 1,366.5

(17.8) (1.2) (326.1) 0.6 224.4 111.3 131.7 333.5

(17.6) 0.2 (7.6) 230.2 (19.5) 178.5 350.5

(13.0) (9.3) 43.4 217.5 (48.1) 79.3 341.8

1.2 141.1 (27.7) 119.9 340.7

7.6 1.7 10.3 22.6 967.5

2.6 2.0 5.9 8.9 482.2

5.0 (0.3) 4.4 13.7 485.3

(2.6) (3.3) (0.8) (36.2) 95.0 1.2 20.7 54.4 2,004.3

(7.3) (2.0) 20.5 9.6 5.0 12.2 503.2

1.1 (10.5) 3.1 (1.9) 5.3 14.4 540.5

2.1 (0.8) (12.4) 57.3 (4.7) 3.4 13.3 479.3

1.5 (2.5) (0.8) (11.3) 14.1 (1.8) 7.0 14.5 481.3

(326.9) 640.6

$

(163.4) 318.8

$

(163.5) 321.8

$

(650.0) 1,354.3

$

(162.5) 340.7

$

(162.5) 378.0

$

(162.5) 316.8

$

(162.5) 318.8

(A) Adjusted results of operations exclude the impacts of the disposed data center and consumer CLEC businesses and directory publishing operations and all merger and integration costs related to strategic transactions. (B) Adjusted OIBDAR is adjusted OIBDA before the annual cash rent payment due under the master lease agreement with CS&L assuming the lease payments began on January 1, 2015. (C) Adjusted OIBDA is OIBDA before restructuring charges, pension expense (income) and share-based compensation expense.

26

SUPPLEMENTAL FINANCIAL INFORMATION 2016 2nd Qtr.

Total Reconciliation of Adjusted OIBDA to Net Cash Provided from Operating Activities: Adjusted OIBDA Adjustments: Master lease rent payment Cash dividends received on CS&L common stock Pretax operating results of disposed businesses Merger and integration costs Restructuring charges Other (expense) income, net Net gain (loss) on early extinguishment of debt Interest expense Income tax benefit, net of deferred income taxes Provision for doubtful accounts Noncash portion of net gain (loss) on early extinguishment of debt Amortization of unrealized losses on de-designated interest rate swaps Plan curtailment Other noncash adjustments, net Changes in operating assets and liabilities, net Net Cash Provided from Operating Activities Reconciliation of Adjusted Free Cash Flow to Net Cash Provided from Operating Activities: Adjusted Free Cash Flow Adjustments: Cash paid (refunded) for income taxes Cash paid for interest on long-term debt obligations Capital expenditures Project Excel capital expenditures Capital expenditures funded by CS&L Master lease rent payment Merger and integration costs Restructuring charges Other (expense) income, net Net gain (loss) on early extinguishment of debt Interest expense Income tax benefit, net of deferred income taxes Provision for doubtful accounts Noncash portion of net gain (loss) on early extinguishment of debt Amortization of unrealized losses on de-designated interest rate swaps Plan curtailment Other noncash adjustments, net Changes in operating assets and liabilities, net Net Cash Provided from Operating Activities

$

640.6

$

318.8

$

326.9 35.2 (7.6) (10.3) (3.1) 2.1 (437.1) 2.1 20.5 (45.1) 2.2 (5.5) (24.6) (71.8) 424.5

$

33.9

$

7.9 194.3 510.3 (70.6) 326.9 (7.6) (10.3) (3.1) 2.1 (437.1) 2.1 20.5 (45.1) 2.2 (5.5) (24.6) (71.8) 424.5

1st Qtr.

$

321.8

$

163.4 17.6 (2.6) (5.9) (1.9) 37.5 (217.4) (1.4) 10.8 (37.7) 1.0 (9.6) 24.7 297.3

$

(13.4)

$

1.4 138.8 246.5 (36.9) 163.4 (2.6) (5.9) (1.9) 37.5 (217.4) (1.4) 10.8 (37.7) 1.0 (9.6) 24.7 297.3

Total

$

1,354.3

$

163.5 17.6 (5.0) (4.4) (1.2) (35.4) (219.7) 3.5 9.7 (7.4) 1.2 (5.5) (15.0) (96.5) 127.2

$

47.3

$

6.5 55.5 263.8 (33.7) 163.5 (5.0) (4.4) (1.2) (35.4) (219.7) 3.5 9.7 (7.4) 1.2 (5.5) (15.0) (96.5) 127.2

2015 3rd Qtr.

4th Qtr.

$

340.7

$

378.0

$

650.0 30.6 43.8 (95.0) (20.7) 9.1 (36.4) (813.2) (32.3) 47.1 1.0 11.6 (18.0) 5.7 (111.0) 1,026.6

$

162.5 17.6 9.5 (20.5) (5.0) 1.2 (0.6) (224.4) (24.3) 10.0 1.1 1.6 (1.5) 7.6 (5.2) 270.3

$

178.8

$

(19.4)

$

1.1 487.8 1,055.3 (47.2) (43.1) 446.0 (95.0) (20.7) 9.1 (36.4) (813.2) (32.3) 47.1 1.0 11.6 (18.0) 5.7 (111.0) 1,026.6

$

0.3 160.3 310.9 (41.2) (43.1) 162.5 (20.5) (5.0) 1.2 (0.6) (224.4) (24.3) 10.0 1.1 1.6 (1.5) 7.6 (5.2) 270.3

2nd Qtr.

$

316.8

$

162.5 13.0 9.6 (3.1) (5.3) (0.2) 7.6 (230.2) (0.4) 13.6 2.8 2.9 (3.0) (14.1) 42.6 376.3

$

57.7

$

2.3 46.5 300.1 (6.0) 162.5 (3.1) (5.3) (0.2) 7.6 (230.2) (0.4) 13.6 2.8 2.9 (3.0) (14.1) 42.6 376.3

1st Qtr.

$

318.8

$

162.5 11.3 (57.3) (3.4) 9.3 (43.4) (217.5) (1.5) 13.2 (2.9) 3.7 (13.5) 3.5 (44.6) 136.2

$

162.5 13.4 (14.1) (7.0) (1.2) (141.1) (6.1) 10.3 3.4 8.7 (103.8) 243.8

$

(91.4)

$

231.9

$

(0.3) 206.3 255.0 121.0 (57.3) (3.4) 9.3 (43.4) (217.5) (1.5) 13.2 (2.9) 3.7 (13.5) 3.5 (44.6) 136.2

$

(1.2) 74.7 189.3 (14.1) (7.0) (1.2) (141.1) (6.1) 10.3 3.4 8.7 (103.8) 243.8

27