PowerPitch Presentation

1
mruszczy NEED LOGOS!!
Embarq (EQ-NYSE)
Sell Presentation
November 29,2006
Western Investment Club Created by Tech Group,
November 29 2006
2
Company Overview

• Embarq was formed after Sprint-Nextel decided to
  spinoff the business to focus on mobile
  communication services (May 2006)
• 14,500 Employees
• Focused on local voice and data services (DSL),
  but also operates within wireless, video and
  nationwide long distance services
• Servicing 7.26 million consumer and business
  access lines throughout the US (18 states)
• 2005 Revenue 6.7bn, EBITDA 2.9bn.

3
Relative Price Performance
4
Segment Growth
DSL 17 of Revenues
5
Operating Performance
Voice 70 of Revenues
6
Potential Upside

• Improved strategic flexibility due to feedback
  from IRS regarding tax free nature of the
  spin-off
• May pursue MA activity and share repurchases
  going forward
• Successful post spin-off strategy could lead to
  stronger valuations in the future due to
  increased focus for operations

7
Major Risks/Concerns

• Increased pressure on EBITDA, FCF and dividend
  yield will limit upside
• - Higher long distance costs, recurring
  merger expenses, seasonal maintenance
  costs
• Accelerating competition from cable providers
• DSL ARPU has been decreasing over the past 7
  quarters (46-39.66).

8
Recommendation

• Sell entire stake in Embarq.