Business Wire | Aug 5, 2020 04:06PM EDT

Alaska Communications Reports Second Quarter 2020 Results

Aug. 05, 2020

ANCHORAGE, Alaska--(BUSINESS WIRE)--Aug. 05, 2020--Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for the second quarter ended June 30, 2020.

"During the second quarter 2020, our superior network and established partnerships delivered strong performance despite the pandemic, led by Business and Wholesale broadband growth of 12.1%, nearly all of which is fiber based revenue. We continue to strategically augment our existing fiber-based network, which includes the North Slope, a complete ring around the state of Alaska, the Pacific Northwest and two under-sea cables to the Lower 48."

"In addition, we are strengthening our fiber infrastructure with several strategic initiatives to drive long-term growth. With interest from anchor customers, we will be the first Alaska provider of locally hosted Microsoft Azure Stack Hub cloud services, enriching users' computing experience with greater flexibility, increased reliability and lower latency. Leveraging our marine assets, we won our first subsea 100Gb IRU to a carrier customer in April. In addition, we are enhancing our consumer platform, and with our fixed-wireless CAF II program, we now offer high-speed broadband access to over 16,000 rural Alaskans," said Bill Bishop, president & CEO.

Three Months Ended June 30, 2020 Compared to 2019

* Total revenue was $59.5 million, compared to $57.4 million, an increase of 3.6%. Business and wholesale revenue was $40.0 million, compared to $37.0 million, up 8.1%. Consumer revenue was $9.2 million, compared to $9.3 million, a decrease of 1.8%. Regulatory revenue was $10.3 million, compared to $11.0 million, a decrease of 6.9%. * Operating expenses were $53.4 million, compared to $54.2 million. * Operating income was $6.1 million, compared to $3.2 million. * Net income attributable to Alaska Communications was $2.4 million, compared to $35 thousand. * Capital expenditures were $10.9 million, compared to $11.9 million, or excluding prefunded projects $7.8 million, compared to $11.9 million. * Adjusted EBITDA was $16.5 million, compared to $13.9 million. * Adjusted Free Cash Flow was $8.6 million, compared with Adjusted Free Cash Outflow of $3.1 million, or excluding prefunded projects $5.4 million, compared to an outflow of $3.1 million.

Balance Sheet Highlights

* Cash was $46.0 million at June 30, 2020, compared to $28.3 million at December 31, 2019. * Net debt was $131.7 million at June 30, 2020, compared to $153.8 million at December 31, 2019.

Six Months Ended June 30, 2020 Compared to 2019

* Total revenue was $117.7 million, compared to $114.3 million, an increase of 3.0%. Business and wholesale revenue was $78.8 million, compared to $73.5 million, up 7.2%. Consumer revenue was $18.3 million, compared to $18.5 million, a decrease of 1.2%. Regulatory revenue was $20.6 million, compared to $22.2 million, a decrease of 7.3%. * Operating expenses were $105.8 million, compared to $105.1 million. * Operating income was $11.9 million, compared to $9.2 million. * Net income attributable to Alaska Communications was $4.8 million, compared to $0.3 million. * Capital expenditures were $18.4 million, compared to $20.4 million, or excluding prefunded projects $14.7 million, compared to $20.4 million. * Adjusted EBITDA was $32.6 million, compared to $29.1 million. * Adjusted Free Cash Flow was $18.7 million, compared with Adjusted Free Cash Outflow of $0.1 million, or excluding prefunded projects $11.2 million, compared to an outflow of $0.1 million.

Reconciliations of non-GAAP financial measures to GAAP financial measures can be found in tables at the end of this release and on the Company's website at http://www.alsk.com in the investment data section.

Laurie Butcher, Alaska Communications' chief financial officer, said, "We are pleased with our revenue performance, reflecting the success of our sales and delivery teams in key strategic verticals. Regarding capital spending, we have taken a conservative approach in the first half of the year. As our fiber growth projects began to ramp up during the second quarter, we expect capital spending on growth projects to increase in the latter half of the year resulting in total year expenditures consistent with our 2020 guidance. To date, we are encouraged we have not seen material negative impacts from COVID-19. On the contrary, we benefited from the CARES Act determination to accelerate AMT tax refunds, which will positively impact adjusted free cash flow in 2020. While the long-term impact of COVID remains unclear, we are confident in our strategic plan for growth and affirm our 2020 guidance."

Special Dividend Paid

On June 18, 2020, Alaska Communications paid a one-time cash dividend of $0.09 per share, or $4.8 million, to shareholders of record as of April 20, 2020. This reflects the board's confidence in the company's strong performance over the past several years and management's ability to drive business and wholesale revenue growth.

Russell 2000 and 3000 Index

Effective June 29, 2020, Alaska Communications was added as a member of the small-cap Russell 2000(r) Index, the broad-market Russell 3000(r) Index and the appropriate growth and value indexes.

2020 Guidance

Management maintains its 2020 financial guidance as follows:

* Total Revenue to be between $232 million and $237 million * Adjusted EBITDA to be between $63 million and $65 million * Capital Expenditures excluding prefunded projects to be between $39 million and $43 million * Adjusted Free Cash Flow excluding prefunded projects to be between $8 million and $10 million

Conference Call

The Company will host a conference call and live webcast on Thursday, August 6, 2020 at 2:00 p.m. Eastern Time to discuss the results. Parties in the United States and Canada can access the call at 1-800-437-2398 and enter pass code 9971095. All other parties can access the call at 1-323-289-6576 and use the same code.

The live webcast of the conference call will be accessible from the "Events Calendar" section of the Company's website (www.alsk.com). The webcast will be archived for a period of 30 days. A telephonic replay of the conference call will also be available two hours after the call and will run until September 5, 2020 at 5:00 p.m. Eastern Time. To hear the replay, parties in the U.S. and Canada can call 1-888-203-1112 and enter pass code 9971095. All other parties can call 1-719-457-0820 and enter pass code 9971095.

About Alaska Communications

Alaska Communications (NASDAQ: ALSK) is the leading provider of advanced broadband and managed IT services for businesses and consumers in Alaska. The Company operates a highly reliable, advanced statewide data network with the latest technology and the most diverse undersea fiber optic system connecting Alaska to the contiguous U.S. For more information, visit www.alaskacommunications.com or www.alsk.com.

Revenue Category Definitions

Growth Revenues are defined as business broadband, managed IT services, equipment sales and installations, wholesale broadband and consumer broadband. Legacy Revenues are defined as business voice and other, Wholesale voice and other, consumer voice and other, and Access. CAF II Revenues are defined as high cost support.

Non-GAAP Measures

In an effort to provide investors with additional information regarding our financial results, we have provided certain non-GAAP financial information, including Adjusted EBITDA, Adjusted Free Cash Flow and Net Debt. Adjusted EBITDA eliminates the effects of period to period changes in costs that are not directly attributable to the underlying performance of the Company's business operations and is used by Management and the Company's Board of Directors to evaluate current operating financial performance, analyze and evaluate strategic and operational decisions and better evaluate comparability between periods. Adjusted Free Cash Flow is a non-GAAP liquidity measured used by Management and the Company's Board of Directors to assess the Company's ability to generate cash and plan for future operating and capital actions. Adjusted EBITDA and Adjusted Free Cash Flow are common measures utilized by our peers (other telecommunications companies) and we believe they provide useful information to investors and analysts about the Company's operating results, financial condition and cash flows. Net Debt provides Management and the Company's Board of Directors with a measure of the Company's current leverage position. The definition and computation of these non-GAAP measures are provided on Schedules 4, 6 and 9 to this press release. Adjusted EBITDA and Adjusted Free Cash Flow should not be considered a substitute for Net Income, Net Cash Provided by Operating Activities and other measures of financial performance recorded in accordance with GAAP. Reconciliations of our non-GAAP measures to our nearest GAAP measures can be found in the tables in this release. Other companies may not calculate non-GAAP measures in the same manner as Alaska Communications. The Company does not provide reconciliations of guidance for Adjusted EBITDA to Net Income, and Adjusted Free Cash Flow to Net Cash from Operating Activities, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company does not forecast certain items required to develop the comparable GAAP financial measures. These items are charges and benefits for uncollectible accounts, certain other non-cash expenses, unusual items typically excluded from Adjusted EBITDA and Adjusted Free Cash Flow, and changes in operating assets and liabilities (generally the most significant of these items, representing cash inflows of $21.2 million in the six-month period of 2020).

Forward-Looking Statements

This press release includes certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events made using information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside the Company's control. Such factors include, without limitation changes in technology and related standards, the impacts of the COVID-19 pandemic on the economy of Alaska and on the Company, the impact of natural or man-made disasters and accidents, Federal and Alaska Universal Service Fund changes and our current and historical compliance with the obligations of those programs, structural declines for voice and other legacy services, maintenance or IT issues, third-party intellectual property claims, potential pension shortfalls, the success or failure of future strategic transactions, funding through the rural health care universal service support mechanism and our ability to comply and our history of compliance with the regulatory requirements to receive those support payments, our ability to service our debt and refinance as required, adverse economic conditions, our success in providing broadband services on the North Slope and Western Alaska, the effects of competition in our markets, our relatively small size compared with our competitors, the Company's ability to compete, manage, integrate, market, maintain, and attract sufficient customers for its products and services, adverse changes in labor matters, including workforce levels, labor negotiations, employee benefit costs, our ability to control other operating costs, disruption of our supplier's provisioning of critical products or services, the actions of activist shareholders, changes in Company's relationships with large customers, unforeseen changes in public policies, regulatory changes, our internal control over financial reporting, and changes in accounting standards or policies, which could affect reported financial results. For further information regarding risks and uncertainties associated with the Company's business, please refer to the Company's SEC filings, including, but not limited to, the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of the Company's SEC filings may be obtained by contacting its investor relations department at (907) 564-7556 or by visiting its investor relations website at www.alsk.com.

Schedule 1 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.CONSOLIDATED SCHEDULE OF OPERATIONS(Unaudited, In Thousands Except Per Share Amounts) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Operating revenues $ 59,456 $ 57,395 $ 117,722 $ 114,304

Operating expenses:Cost of services and sales 27,134 26,356 54,248 51,983 (excluding depreciation andamortization)Selling, general & 16,225 18,718 31,619 35,374 administrativeDepreciation and amortization 10,033 9,200 19,873 17,879

Loss (gain) on disposal of 14 (95 ) 100 (97 )assets, net Total operating expenses 53,406 54,179 105,840 105,139

Operating income 6,050 3,216 11,882 9,165

Other income and (expense):Interest expense (2,739 ) (3,096 ) (5,698 ) (6,152 )

Loss on extinguishment of - (31 ) - (2,830 )debtInterest income 68 95 143 170

Other income (expense), net 33 (122 ) 414 -

Total other income and (2,638 ) (3,154 ) (5,141 ) (8,812 )(expense) Income before income tax 3,412 62 6,741 353 expense Income tax expense (996 ) (46 ) (1,956 ) (144 )

Net income 2,416 16 4,785 209

Less net loss attributable to (24 ) (19 ) (42 ) (53 )noncontrolling interest Net income attributable to $ 2,440 $ 35 $ 4,827 $ 262 Alaska Communications Net income per shareattributable to AlaskaCommunications:Net income applicable to $ 2,440 $ 35 $ 4,827 $ 262 common shares Basic $ 0.05 $ 0.00 $ 0.09 $ 0.00

Diluted $ 0.04 $ 0.00 $ 0.09 $ 0.00

Weighted average sharesoutstanding:Basic 53,976 53,799 53,799 53,591

Diluted 54,342 54,569 54,295 54,599

Schedule 2 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.CONSOLIDATED BALANCE SHEETS(Unaudited, In Thousands Except Per Share Amounts) June 30, December 31,Assets 2020 2019

Current assets:Cash and cash equivalents $ 44,379 $ 26,662

Restricted cash 1,628 1,631

Short-term investments 134 134

Accounts receivable, net of allowance of $4,117 27,989 34,354 and $4,627Materials and supplies 8,056 8,900

Prepayments and other current assets 13,591 9,617

Total current assets 95,777 81,298

Property, plant and equipment 1,436,987 1,424,904

Less: accumulated depreciation and amortization (1,055,336 ) (1,042,546 )

Property, plant and equipment, net 381,651 382,358

Operating lease right of use assets 88,232 80,991

Other assets 10,191 12,598

Total assets $ 575,851 $ 557,245

Liabilities and Stockholders' EquityCurrent liabilities:Current portion of long-term obligations $ 9,059 $ 8,906

Accounts payable, accrued and other current 43,929 39,108 liabilitiesAdvance billings and customer deposits 3,639 3,761

Operating lease liabilities - current 10,065 2,795

Total current liabilities 66,692 54,570

Long-term obligations, net of current portion 163,589 167,476

Deferred income taxes 5,497 4,403

Operating lease liabilities - noncurrent 79,117 78,767

Other long-term liabilities, net of current 89,268 78,520 portionTotal liabilities 404,163 383,736

Commitments and contingenciesAlaska Communications stockholders' equity:Common stock, $.01 par value; 145,000 authorized 548 541

Treasury stock, 1,000 shares at cost (1,812 ) (1,812 )

Additional paid in capital 162,240 161,844

Retained earnings 15,342 15,367

Accumulated other comprehensive loss (5,434 ) (3,277 )

Total Alaska Communications stockholders' equity 170,884 172,663

Noncontrolling interest 804 846

Total stockholders' equity 171,688 173,509

Total liabilities and stockholders' equity $ 575,851 $ 557,245

Schedule 3 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.CONSOLIDATED STATEMENT OF CASH FLOWS(Unaudited, In Thousands) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Cash Flows fromOperating Activities:Net income $ 2,416 $ 16 $ 4,785 $ 209

Adjustments to reconcilenet income to net cashprovidedby operating activities:Depreciation and 10,033 9,200 19,873 17,879 amortizationLoss (gain) on disposal 14 (95 ) 100 (97 )of assets, netAmortization of debt 294 303 644 606 issuance costs and debtdiscountLoss on extinguishment - 31 - 2,830 of debtAmortization of deferred (1,711 ) (1,133 ) (3,071 ) (2,259 )capacity revenueStock-based compensation 409 (9 ) 718 489

Deferred income tax 996 46 1,950 138 expenseCharge for uncollectible (165 ) 665 (394 ) (32 )accountsAmortization of ROU 679 583 1,257 1,148 assetOther non-cash (income) (33 ) 123 (66 ) 244 expense, netChanges in operating 11,678 3,128 21,176 7,178 assets and liabilitiesNet cash provided by 24,610 12,858 46,972 28,333 operating activities Cash Flows fromInvesting Activities:Capital expenditures (10,949 ) (11,869 ) (18,412 ) (20,432 )

Capitalized interest (315 ) (254 ) (631 ) (609 )

Change in unsettled 3,057 570 (702 ) (551 )capital expendituresProceeds on sale of - 19 - 19 assetsNet cash used by (8,207 ) (11,534 ) (19,745 ) (21,573 )investing activities Cash Flows fromFinancing Activities:Repayments of long-term (1,138 ) (10 ) (4,378 ) (171,768 )debtProceeds from the - - - 180,000 issuance of long-termdebtDebt issuance costs and - (24 ) - (2,683 )discountsCash paid for debt - (30 ) - (1,252 )extinguishmentPayment of cash dividend (4,820 ) - (4,820 ) - on common stockPayment of withholding - (143 ) (439 ) (448 )taxes on stock-basedcompensationPurchases of treasury - (149 ) - (149 )stockProceeds from issuance 124 106 124 106 of common stockNet cash (used) provided (5,834 ) (250 ) (9,513 ) 3,806 by financing activities Change in cash, cash 10,569 1,074 17,714 10,566 equivalents andrestricted cash Cash, cash equivalents 35,438 24,477 28,293 14,985 and restricted cash,beginning of period Cash, cash equivalents $ 46,007 $ 25,551 $ 46,007 $ 25,551 and restricted cash,end of period Supplemental Cash FlowData:Interest paid $ 2,789 $ 3,039 $ 5,708 $ 6,114

Dividends payable at $ 32 $ - $ 32 $ - June 30, 2020

Income taxes paid, net $ - $ - $ - $ 10

Schedule 4ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.ADJUSTED EBITDA(Unaudited, In Thousands) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Net income $ 2,416 $ 16 $ 4,785 $ 209

Add (subtract): Interest expense 2,739 3,096 5,698 6,152

Loss on extinguishment of - 31 - 2,830 debt Interest income (68 ) (95 ) (143 ) (170 )

Depreciation and 10,033 9,200 19,873 17,879 amortization Other (income) expense, net (33 ) 122 (414 ) -

Loss (gain) on disposal of 14 (95 ) 100 (97 ) assets, net Income tax expense 996 46 1,956 144

Stock-based compensation 409 (9 ) 718 489

Cash severance expense - 1,595 - 1,595

Net loss attributable to 24 19 42 53 noncontrolling interest Adjusted EBITDA $ 16,530 $ 13,926 $ 32,615 $ 29,084

NonGAAP Measures:The Company provides certain non-GAAP financial information, including AdjustedEBITDA, Adjusted Free Cash Flow and Net Debt. Adjusted EBITDA eliminates theeffects of period to period changes in costs that are not directly attributableto the underlying performance of the Company's business operations and is usedby Management and the Company's Board of Directors to evaluate currentoperating financial performance, analyze and evaluate strategic and operationaldecisions and better evaluate comparability between periods. Adjusted Free CashFlow is a non-GAAP liquidity measure used by Management to assess the Company'sability to generate cash and plan for future operating and capital actions.Adjusted EBITDA and Adjusted Free Cash Flow are common measures utilized by ourpeers (other telecommunications companies) and we believe they provide usefulinformation to investors and analysts about the Company's operating results,financial condition and cash flows. Net Debt provides Management and the Boardof Directors with a measure of the Company's current leverage position.



The Company does not provide reconciliations of guidance for Adjusted EBITDA toNet Income, and Adjusted Free Cash Flow to Net Cash Provided by OperatingActivities, in reliance on the unreasonable efforts exception provided underItem 10(e)(1)(i)(B) of Regulation S-K. The Company does not forecast certainitems required to develop the comparable GAAP financial measures. These itemsare charges and benefits for uncollectible accounts, certain other non-cashexpenses, unusual items typically excluded from Adjusted EBITDA and AdjustedFree Cash Flow, and changes in operating assets and liabilities (generally themost significant of these items, representing cash inflows of $21.2 million inthe six-month period ended June 30, 2020).

Adjusted EBITDA and Adjusted Free Cash Flow are not GAAP measures and shouldnot be considered a substitute for net income, net cash provided by operatingactivities, or net cash provided or used. Adjusted EBITDA as computed above isnot consistent with the definition of Consolidated EBITDA referenced in our2019 Senior Credit Facility, and other companies may not calculate Non-GAAPmeasures in the same manner we do.

Adjusted EBITDA is defined as net income before interest expense and income,loss on extinguishment of debt, depreciation and amortization, other income andexpense, gain or loss on asset purchases or disposals, provision for incometaxes, stock-based compensation, and net loss attributable to noncontrollinginterest.

Schedule 5ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITES TO ADJUSTED FREECASH FLOW(Unaudited, In Thousands) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Net cash provided by $ 24,610 $ 12,858 $ 46,972 $ 28,333 operating activitiesAdjustments to reconcilenet cash provided byoperating activities toadjusted free cash flow:Capital expenditures (7,827 ) (11,869 ) (14,663 ) (20,432 )excluding prefundedprojectsCapital expenditures for (3,122 ) - (3,749 ) - prefunded projectsMilestone payments 6,640 - 11,780 - received for prefundedprojectsDeferred cost of sales 175 - 175 - for prefunded projectsAmortization of revenue (482 ) - (709 ) - for prefunded projectsAmortization of deferred 1,711 1,133 3,071 2,259 capacity revenueAmortization of GCI (516 ) (516 ) (1,032 ) (1,027 )capacity revenueAmortization of debt (294 ) (303 ) (644 ) (606 )issuance costs and debtdiscountInterest expense 2,739 3,096 5,698 6,152

Interest paid (2,789 ) (3,039 ) (5,708 ) (6,114 )

Interest income (68 ) (95 ) (143 ) (170 )

Deferred income tax (996 ) (46 ) (1,950 ) (138 )expense

Income tax expense 996 46 1,956 144

Income taxes paid, net - - - (10 )

Charge for uncollectible 165 (665 ) 394 32 accounts

Amortization of ROU asset (679 ) (583 ) (1,257 ) (1,148 )

Other (income) expense, (33 ) 122 (414 ) - net

Net loss attributable to 24 19 42 53 noncontrolling interest

Other non-cash income 33 (123 ) 66 (244 )(expense), net

Changes in operating (11,678 ) (3,128 ) (21,176 ) (7,178 )assets and liabilities

Adjusted free cash flow $ 8,609 $ (3,093 ) $ 18,709 $ (94 )

Schedule 6ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.ADJUSTED FREE CASH FLOW(Unaudited, In Thousands) Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

Adjusted EBITDA $ 16,530 $ 13,926 $ 32,615 $ 29,084

Less:Capital expenditures (7,827 ) (11,869 ) (14,663 ) (20,432 )excluding prefundedprojectsAmortization of GCI (516 ) (516 ) (1,032 ) (1,027 )capacity revenueCash severance expense - (1,595 ) - (1,595 )

Income taxes paid, net - - - (10 )

Interest paid (2,789 ) (3,039 ) (5,708 ) (6,114 )

5,398 (3,093 ) 11,212 (94 )

Impact of prefundedprojects:Capital expenditures (3,122 ) - (3,749 ) - for prefunded projectsMilestone payments 6,640 - 11,780 - received for prefundedprojectsDeferred cost of sales 175 - 175 - for prefunded projectsAmortization of (482 ) - (709 ) - revenue for prefundedprojects 3,211 - 7,497 -

Adjusted free cash $ 8,609 $ (3,093 ) $ 18,709 $ (94 )flow*

* Quarterly Adjusted Free Cash Flow fluctuates and should not be viewed as anindicator of annual performance. Onetime events, seasonality of capital spendand the timing of interest payments may result in negative Adjusted Free CashFlow in one or more quarters. NonGAAP Measures:Adjusted Free Cash Flow is a non-GAAP liquidity measure and is defined asAdjusted EBITDA, less recurring operating cash requirements which includecapital expenditures, cash income taxes refunded or paid, cash interest paid,amortization of GCI capacity revenue, cash severance expense for the Company'sformer Chief Executive Officer, and cash receipts and payments, deferred costsand amortized revenue and expense associated with certain prefunded specialprojects as defined in the 2019 Senior Credit Facility. Amortization ofdeferred revenue associated with our interconnection agreement with GCI isexcluded from Adjusted Free Cash Flow because no cash was received by theCompany in connection with this agreement. Amortization of all other deferredrevenue, including that associated with other IRU capacity arrangements, isincluded in Adjusted Free Cash Flow because cash was received by the Company,typically at contract inception, and is being recognized as revenue over theterm of the relevant agreement.See Schedule 3 for Net cash provided by operating activities, Net cash used byinvesting activities, and Net cash (used) provided by financing activities.

Schedule 7 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.REVENUE BY CUSTOMER GROUP(Unaudited, In Thousands) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Business and wholesale revenueBusiness broadband $ 16,258 $ 15,437 $ 31,897 $ 30,704

Business voice and other 7,180 7,241 14,416 14,242

Managed IT services 1,300 1,517 2,527 3,176

Equipment sales and installations 1,192 1,008 2,606 1,888

Wholesale broadband 12,750 10,443 24,729 20,705

Wholesale voice and other 1,344 1,392 2,632 2,818

Total business and wholesale revenue 40,024 37,038 78,807 73,533

Growth in business and wholesale 8.1 % 7.2 %

Consumer revenueBroadband 6,796 6,694 13,488 13,162

Voice and other 2,380 2,647 4,829 5,380

Total consumer revenue 9,176 9,341 18,317 18,542

Total business, wholesale, and 49,200 46,379 97,124 92,075consumer revenueGrowth in business, wholesale and 6.1 % 5.5 %consumer revenueGrowth in broadband revenue 9.9 % 8.6 %

Regulatory revenueAccess 5,333 6,093 10,751 12,382

High cost support 4,923 4,923 9,847 9,847

Total regulatory revenue 10,256 11,016 20,598 22,229

Total revenue $ 59,456 $ 57,395 $ 117,722 $ 114,304

Growth in total revenue 3.6 % 3.0 %

Growth Revenues: Business broadband, Managed IT services, Equipment sales andinstallations, Wholesale broadband, and Consumer broadband Legacy Revenues: Business voice and other, Wholesale voice and other, Consumervoice and other, and Access CAF II Revenues: High Cost Support

Schedule 8 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.KEY OPERATING STATISTICS(Unaudited) Three Months Ended June 30, March 31 June 30, 2020 2020 2019

Voice:Business access lines 66,939 67,406 68,978

Consumer access lines 21,769 22,227 24,302

Voice ARPU business $ 27.68 $ 27.14 $ 26.84

Voice ARPU consumer $ 34.35 $ 34.11 $ 33.96

Broadband:Business connections 14,661 14,689 15,141

Consumer connections 32,115 31,796 32,411

Broadband ARPU business $ 369.14 $ 352.28 $ 339.75

Broadband ARPU consumer $ 70.69 $ 70.25 $ 68.15

Monthly Average Churn:Business voice 0.8 % 0.9 % 1.0 %

Consumer broadband 2.6 % 2.3 % 2.8 %

Consumer voice 1.0 % 1.1 % 1.5 %

Schedule 9 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.LONG TERM DEBT AND NET DEBT(Unaudited, In Thousands) June 30, December 31, 2020 2019

$ $ 177,7502019 senior secured credit facility due 2024 173,396

Debt discount - 2019 senior secured credit facilities due (1,863) (2,234)2024Debt issuance costs - 2019 senior secured credit (1,590) (1,863)facilities due 2024Capital leases and other long-term obligations 2,705 2,729

Total debt 172,648 176,382

Less current portion (9,059) (8,906)

$ $ 167,476Long-term obligations, net of current portion 163,589

$ $ 176,382Total debt 172,648

Plus debt discounts and debt issuance costs 3,453 4,097

Gross debt 176,101 180,479

Cash and cash equivalents (44,379) (26,662)

$ $ 153,817Net debt 131,722

View source version on businesswire.com: https://www.businesswire.com/news/home/20200805005973/en/

CONTACT: Media Contact Heather Cavanaugh, 907-564-7722 Director, External Affairs and Corporate Communications

CONTACT: Investor Contact Tiffany Smith, 907-564-7556 Manager, Board and Investor Relations investors@acsalaska.com