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May 2004

A “FORTUNE 1000” GROWTH COMPANY. May 2004. Safe Harbor.

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May 2004

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  1. A “FORTUNE 1000” GROWTH COMPANY May 2004

  2. Safe Harbor The statements in this presentation are “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on current expectations, are not strictly historical statements, and may differ materially from actual results. Forward looking statements include without limitation, those regarding management's plans, goals, expectations, guidance, objectives, strategy, and timing for future operations and products such as product plans and performance, predictions or expectations of future growth, management's assessment of market factors, currency exchange rates, the availability of financing and future financial performance. Among factors that could cause actual results to differ materially are changes in business conditions; changes in the telecommunications or Internet industry or the general economy or capital markets; DSL, Internet and fixed line and wireless telecom competition; changes in service offerings or business strategies; fluctuations in currency exchange rates; difficulty in provisioning Voice over IP services; changes in the regulatory schemes and regulatory enforcement in the markets in which we operate; restrictions on our ability to follow certain strategies or complete certain transactions as a result of our capital structure or debt covenants; the possible inability to raise capital when needed, or at all; the inability to reduce debt significantly; risks associated with PRIMUS's limited DSL, Internet, wireless and web-hosting experience and expertise, entry into developing markets, the possible inability to hire and/or retain qualified sales, technical and other personnel, and managing rapid growth; and risks associated with international operations (including foreign currency translation risks); dependence on effective information systems; dependence on third parties to enable us to expand and manage our global network and operations; and dependence on the performance of PRIMUS's global ATM+IP communications network. These factors are discussed more fully in PRIMUS's public filings, including its most recent 10Q and 10K filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date these statements were made. PRIMUS disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

  3. Company Overview May 2004

  4. Our Business Global, facilities-based telecommunications service provider offering international and domestic voice, wireless, Internet and data services to business and residential retail customers in select countries in North America, Asia-Pacific and western Europe utilizing our world-class broadband global network

  5. Investment Highlights • Track record of financial and operating success • Strong Free Cash Flow to fund growth initiatives and further deleverage the balance sheet • Poised to attack $100 billion+ new market opportunity in broadband, VoIP, wireless and local services • A “Fortune 1000” company with a well-diversified Revenue and EBITDA mix • Proven management team with a successful track record

  6. 4.5% Quarterly Growth Rate 2% Quarterly Growth Rate Track Record of Financial Success Revenue Gross Margin (%) Income from Operations (1) Quarterly Interest Expense (2) 46% Quarterly Growth Rate • Income from Operations Excludes Asset Impairments and Includes impact of Investments in New Initiatives. • Quarterly Interest Expense excludes non-recurring interest charges

  7. Building Scale in Key Markets _______________ (1) Annualized based on the results for the three months ended March 31, 2004.

  8. Fully Built Global Network Copenhagen London Frankfurt Amsterdam Vancouver Toronto Paris Milan Tokyo New York Madrid Jersey City Los Angeles New Delhi Puerto Rico Brisbane Perth Sao Paulo Adelaide Sydney Melbourne IRU – Fiber Capacity International Gateway Switch Domestic Switch Satellite Link

  9. Global Diversification Reduces Business Risk Revenue and EBITDA* by Geographic Region for 3 Months Ended 1Q04 Revenue EBITDA _______________ * EBITDA defined as Income from Operations plus Depreciation and Amortization.

  10. PRIMUS’ Customer Base isDiversified and Retail Focused Revenue by Customer Segment for 3 Months Ended 1Q04

  11. Expanding the Current Business Model Current Services New Growth Initiatives

  12. Objectives of 2004 Initiatives • Position PRIMUS to participate in key growth segments • Broadband VoIP • Wireless • Local • Build out the product bundle to increase ARPU and keep churn low • Leverage existing global network and distribution channels to introduce global products with minimal capital investment

  13. VoIP Products Services – targeted to customers with broadband connections anywhere in the world • Wholesale • Global Resale through third parties • Enterprise • Residential Roll-out: • Canada – launched 1Q04, expanded to 15 cities in 2Q04 • US – nationwide availability by mid-year 2004 • Australia – launched to business customers 1Q04 • Europe – late 2004 launch in UK with rolling expansion in Europe during 2005 • Global – late 2004; Internet-based and third party distribution channels

  14. Wireless Services Services – to wireless users for international calling • International “dial around” service • Wireless resale packaged with PRIMUS long distance and local services • PRIMUS-branded “intelligent” GSM handsets Roll-out: • International “dial around” currently available • Service resale • Europe – UK today and Europe roll-out by year-end • Canada – 4Q04 • US – 4Q04 • Australia – currently available • PRIMUS handsets – launched in Europe in 1Q04, India in 2Q04

  15. Local Services Services: • Resale • UNE-P Rollout: • Australia – local service currently sold with PRIMUS bundle • Canada – resale in 3Q04 • US –UNE-P and resale being evaluated

  16. Financial Overview May 2004

  17. Financial Summary Annual Financial Results ____________________ (1) Excludes asset impairment write-down and loss on sale of assets. (2) Free cash flow defined as net cash provided by (used in) operating activities less net cash used in investing activities.

  18. Growing Revenue • Residential and business revenue growth • Core long distance voice and data; additional local bundling • Prepaid services increasing • VoIP provides an additional revenue source and improves Carrier gross margins • Data/Internet growing steadily Revenue by Product Revenue by Customer Type ($ in millions) ($ in millions)

  19. Income from Operations Improvement • Positive Income from Operations since Q102 Income from Operations (1) ($ in millions) • ____________________ • Excludes asset impairments. • * 1Q04 reflects $3.6MM investment in new initiatives.

  20. Future Capital Requirements Are Primarily Success-Based • Over $500M invested in the core switching platforms and fiber capacity from 1997 – 2003 • Traditionally have utilized IRUs and leases rather than laying fiber • Minimal fiber capacity purchases in 2002 and 2003 due to: • Adequate existing capacity • Plummeting capacity lease rates • Increased routing of voice traffic over public Internet • Expect 2004 Capital Expenditures in the range of 3% of Net Revenue (approximately $45MM) Capital Expenditures

  21. Growing Free Cash Flow • Completed global network infrastructure deployment • Additional capex beyond current levels will be success-based • 2004 Guidance includes $40-50MM of cash used for working capital improvement Free Cash Flow (1) CapEx ($ in millions) FCF (1) ($ in millions) (1) Defined as Cash from (used by) Operating Activities less Investing Activities.

  22. Leverage Improvement • Total debt and interest expense reduced nearly 60% Total Debt Interest Expense ($ millions) ($ millions) * 3Q03 & 1Q04 Total Debt reflects refinancing of high-yield notes at lower interest rates. Old notes retired at premium to par. ** 3Q03 & 1Q04 Interest Expense includes non-recurring charges ($2MM and $4MM, respectively) related to early retirement of debt

  23. Sustainable Capital Structure * Interest Expense in 1Q04 excludes non-recurring expenses for early debt retirement.

  24. 2004 Financial Guidance • Annual Net Revenue Growth in the Range of 12% to 15%, or $1.4 to $1.5 billion (1) • Incremental SG&A spending of $20-25 million for new initiatives (VoIP, Wireless and Local) • Net Income in the Range of $35 Million to $40 million (2) • Capital Expenditures in the range of 3% of Net Revenue • 2004 Guidance assumes constant year-end 2003 currency rates • Excluding one-time debt reduction charges of $18MM.

  25. Investment Highlights • Track record of financial and operating success • Strong Free Cash Flow to fund growth initiatives and further deleverage the balance sheet • Poised to attack $100 billion+ new market opportunity in broadband, VoIP, wireless and local services • A “Fortune 1000” company with a well-diversified Revenue and EBITDA mix • Proven management team with a successful track record

  26. A “FORTUNE 1000” GROWTH COMPANY May 2004

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