CinCinnati bELL (nYSE: Cbb)

By Matthew Kirk, Lonestar Capital Management

 August30,2012

Cincinnati Bell (CBB: $4.50)

SummaryInvestmentThesis CBBisamisunderstoodandcomplexeventdrivennamewithsubstantialupsideandalargemarginofsafety.Sumof thepartsanalysisindicates100%+upsidetosharesfromcurrentlevelswithCyrusOne(datacentersegment)atREIT multiples,managementishighlyincentivizedtounlockshareholdervalue,andcatalyststoareratinglooktobenear terminnature(datacenterpartialIPOtargetingQ412).Notefullseparationofentitieslikelystill1824+monthsaway. TodaysSharePriceandReviewofPotentialUpside
CBB Share Price - Scenarios
$14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 Current WSTarget Downside BaseCase Downside BaseCase BullCase $4.86 $6.85 $5.49 $4.25 $4.50 $10.93
Assumes Cyrus as a REIT

$12.81

Today (Actual) % Chg 8%

Today (MK Price Tgt) (6%) 52%

6/30/14 - (MK Price Tgt) 22% 143% 185%

WhattheMarketSees:NegativeOpticsCauseForDepressedInvestorSentiment 1. LegacyTelecomSpaceUnderPressureSellsideandinvestmentcommunityiswellawareofsecular operationalpressuresascustomerscutthecordandinvestorshavegottenburnedbadlybyseverallarge blowups(2yr.SharePerformancePeaktoTrough:FTRdown67%,FRPdown85%,ALSKdown85%). 2. HighlyLeveredLeveredat~5xEBITDA. 3. NodividendOneoftheonlylegacytelecomnamesgloballynottoofferadividend. 4. NoFCFAgain,ararityinthetelecomspaceandFCFisakeymetricinvestorsfollow. 5. OrphanStockNonaturalshareholderbaseorcompsforacompanythatisamixofbothlegacyconverged telecomoperationsandhighgrowthcarrierneutralpremiumcolocationdatacenterfacilities. a. NaturalshareholdersofILEC/wirelessandColoareverydifferent.Telecominvestorsacceptrevenue declinesbutplaceahugeamountofemphasison1)FCFand2)returnofcapitaltoshareholdersvia dividends.Meanwhile,datacenterinvestorslikelyarentpayingattentiontoCBBand/ordonthavean interestinowningthelegacytelecombusiness(majorityofrevenueandearningstoday). 6. HistoryofBadCapitalAllocation/StyleDriftFailedinvestmentintoBroadwing(nationwidefiberbackbone network)atheightoflate90sTMTbubbleburnedinvestorsandleftCBBsaddledwith$2.5Bofdebtafterselling itforfarlessseveralyearslater. 7. ExitofLargeShareholderPeninsulaCapitalAdvisorswentfromCBBslargestholderat6/30/11tozeroshares at12/31/11. 8. LittleEnthusiasmfromSellsideOf10wellfollowedsellsidebrokeragesthatcoverCBB,only3rateasabuy. 9. SayonPayAnotherrecentnegativeheadline.Companywasoneofonly45lastyearwhosecompensation packagetoexecutiveswasnotapprovedbyshareholders. WhattheMarketisMissing:KeyPoints/Mitigants 1. LegacyTelecomSpaceUnderPressurePeerblowupsreflectsteepstartingvaluationpointsdrivenbydividend yields(FTRandALSK)andM&Aexpectations(FRPrumoredtarget).Operationalpressuresanderosionreflect thesecompaniesspecificvulnerabilityandexposuretodeclinesincoppervoiceaccesslines,costrestructurings
Seeimportantinformationonthelastpageofthispresentation.

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 andsubsidyrevenues(atriskfrompendingreform).CBBhasdeminimusexposuretosubsidyrevenueandhas keptrevsalmostflatinlegacywirelinebusinessbypushingoutfiberproductandIPTVtooffsetvoicerevenue declines.Peersharedevaluationsreflectedoperationaldegradationandconsequentdividendcutsaswellas highstartingvaluations(~8xEV/EBITDAforFTRandALSK). HighlyLeveredLeverageismanageablegivensubstantialFCFgenerationoflegacybusinessesandassetvalue ofdatacentersegment.Largedebtloadwillsubstantiallybenefittheequityinthecaseofarerating. NodividendManagementhasindicatedtheywouldbewillingtopayadividendifattractiveandsuperior opportunitiestodeployFCFviadatacentergrowthcapexnolongermakesenseorareavailable. NoFCFNoFCFonlyaftermanagementelectstoreinvestallFCFsbackintodatacenterviagrowthcapex.CBB doesgeneratesubstantialfreecashflowsfromhighmarginrecurringrevsandcashtaxshelterprovidedby largeNOLsbeforeCyrusgrowthcapex. OrphanStockUnlikelytoremainthatway.ManagementhasguidedtoanIPOofdatacentersegmentand IncentivePlan(disclosedin8K)providessubstantialincentiveforexecutivestodoso.Separationoflegacy telecomassetsanddatacentersshouldallowforsubstantialreratingofsharesasthetwodistinctbusinesses findnaturalshareholderbases. HistoryofBadCapitalAllocation/StyleDriftPriorCEO.Thisteamhasdemonstratedimpressivedisciplineand focusuponshareholdervaluevialargesharebuybacks,theopportunisticacquisitionofCyrusOneand subsequentinvestmentinbothhiringmarqueeindustrypersonnelandfundingcapexforitsrapidgrowth. ExitofLargeShareholderPeninsulaportfoliomanagerTedWeschlerwashiredbyBuffettandlookstohave exitedallpositionsinhisfundashetransitionedtoBerkshire. LittleEnthusiasmfromSellsideSentimentisgenerallyapendulum,sobullsgetfreeoptiononitswingingthe otherwayfromhere.NegativesentimentisreflectedinpricetargetsandcommentaryandneglectsSOTPvalue andpotentialupsidefromREITconversion.Currentsellsideapproachcontributestoanattractiveentrypointfor deepdrillerswhoindependentlyassessthevalueofthecorebusinesses,reratingpotentialfrompotential corporateactions,andoverallrisk/returnfromaprospectiveinvestment. SayonPayHassincebeenresolvedandinconsequentialtoequitystory.

2. 3. 4.

5.

6.

7. 8.

9.

TheBullCase 1. Sumofthepartsvalueisintheprocessofbeingunlockedandofferssubstantialupsideandhugemarginof safetytoequityinvestorsattheselevels.Markingvarioussegmentstotradingpeermultiplesdemonstrates substantialdiscountintodaysmarketvaluationandpotentialforsharestodouble. a. TodayCBBtradesonconsolidatedEBITDAmultipleatonlyslightpremiumtopeers.Sharepriceof $4.50impliesanEV/FwdEBITDAmultipleof6.7x,aslightpremiumtopeers(6.2x).Thisvaluation disregardsmuchhighervalueofCyrusOnesegmentEBITDA. b. DataCenterPartialIPOplannedforendof12.Mgmtisproactivelylookingtounlockshareholdervalue viacorporateactionsandseparationofdatacentersegmentshouldachievethis. c. CyrusLikelytobeaREIT.MgmthasfiledanS11withREITdesignation.Comparabledatacenterpeers w/REITdesignationtrade16x18xEV/forwardEBITDA. d. LegacytelecombizcanpaybigdivOncedatacentersegmentisseparate,cashflowsfromlegacy currentlyfundingCyrusgrowthcapexcanbedeployedtowardsahealthydividend.Yieldshouldsupport anEBITDAmultipleinlinewith(ifnotinexcessof)otherlegacypeers. i. Mgmthasalludedtopotentialfordividendonrecentearningscalls 2. LegacybusinessesgeneratesubstantialandpredictableFCFsandarevaluableSubscriptionrevenuemodel withhighmargins,minimalcapitalintensityandcashtaxshieldviasubstantialNOLbalance(leftoverfrom Broadwing).ReinvestmentintofiberfootprintandIPTVhasminimizedrevenueerosiononwirelinesidewhile costdisciplinehasoptimizedmarginsandFCFs. 3. DataCentersegmentCyrusOneisacrownjewelasset;Likelyworth$2BstandaloneRapidlygrowing premiumdatacenterproviderthatcaterstoenterpriseclientelewithaspecificfocusupontheenergyvertical.
Seeimportantinformationonthelastpageofthispresentation.

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 Companyboastssubstantialindustryexpertiseandindustryleadingchurn.Customerlistincludesnearlyall supermajorsandmajoroilandgasfirmsintheworld. 4. ManagementincentivesarestronglyalignedwithshareholdersCEOJackCassidyholds6.8mshares(3.4%) andotherkeyexecutivesparticipateinanincentiveplanthattiesabigpaydaytoaCyrustransactionthat valuesdatacentersegmentat$2B(seebelowforfurtherdetailsandcalculation). KeyRisks 1. Delayinspin/marketobservationofSOTPdiscountVisibilityislimitedastowhenthemarketwillcorrect substantialdiscountintodaysshares.PartialIPOofdatacentersegmentasREITvehicleshouldhelpbut completeseparationofbusinessesisstill1year+awaysomarketcouldtakeitstimeinassigningmarket multiplestoCBBbizsegments. 2. CyrusfailstoqualifyasREITImpliessmalldownsidetotodaysshareprice(seetodaysdownsidecase). OpportunityOverview:Whatdrivestheupside? 1. Atfirstglance,CBBlookslikeotherlegacytelecosCBBaccesslineerosion,organicrevgrowth,profitability andvaluationappearinlinewithpeergrouponaconsolidatedbasis(WSconsensus#s) AccessLinesContinuetoErode(VoiceDisconnects)
FY12P Y-o-Y Access Line Loss
9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 7.7% 7.4% 7.1%

OrganicRevenuesareFlattoDecliningForMost
FY12P Organic Rev Growth
4.0% 2.9% 0.8% 0.3% 0.6% 1.0% 1.7% 6.5%

6.3% 4.9%

Rural
4.4%

2.0% 0.0% 2.0% 4.0%

1.1%

6.0% 8.0%

OrganicEBITDAtrendsgenerallyworsethanRevs
FY12P Organic EBITDA Growth
4.0% 2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 0.1% 2.7% 4.4% 6.9% 7.6% 3.4% 1.2%

EV/EBITDARatio6.2xFwdTodayatPeerAvg
TEV / FY12P EBITDA
8.0x 7.0x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x 7.2x 7.0x 6.7x 6.3x 6.1x 5.6x 5.3x

Avg: 6.2x

2. AndLegacyTelecomsHaveLookedTroubled.Severalbigblowupsinlegacytelecomspacehaveburnt investorswhilesecularpressuresfromresidentialcustomerscuttingthecordandcablecompetitionarewell known

Seeimportantinformationonthelastpageofthispresentation.

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FTR
$12.00 $10.00 $8.00 $6.00 $6.00 $4.00 $4.00 $2.00 $0.00
Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12

ALSK
Peakto Trough: Down67%
$14.00 $12.00 $10.00 $8.00

Peakto Trough: Down85%

FRP
$30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00
Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12

Peakto Trough: Down85%

$2.00 $0.00
Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12

3. However,thiscursoryglanceoverlooksakeydistinction.Whilemostlegacytelecoshavedeployedthe majorityoffreecashflowtowardsservicingadividend,CBBhascreatedsubstantialvaluebyinvesting massivelyintoitsgrowthvehicle,adatacenterplatformcalledCyrusOne. a. Whileonly15%ofconsolidatedrevsand22%ofconsolidatedEBITDA,CyrusOneisgrowingrapidlyand highlyprofitable.

FY12P Segment Breakdown
100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Rev EBITDA 84.8% 77.5% Legacy
$1,468m $521m

CyrusStats Ann.Churn
Cyrus

15.2%

22.5%

Sq.Ft.(ink)
YoYGrowth

3% UtilRate FY11A FY12P 763.0 874.7

19.4% 14.6%

85% FY13P 1,043.1

19.3%

Revenues
YoYGrowth

$184.7
NM

$228.7
23.8%

$291.9
27.6%

EBITDA
Margin YoYGrowth

$101.2
54.8% NM

$122.1
53.4% 20.7%

$154.7
53.0% 26.7%

4. CBBLegacyAlsoMuchStrongerAlsonoteCBBlegacybusinesshasminimalexposuretosecularpressuresupon telecopeersfromUSFandaccessrevenuereform.USFexposureoutlinedintablebelow. a. InvestorsareconcernedasUSFreformsaretostartrollingthroughinmid13andaccessrevreform startedinJuly12.Lossofsubsidyrevenueshasdisproportionateimpactuponpeersprofitabilityand FCFgivenhighmarginnature.Ruralplayersaregenerallymostvulnerable,whileCBBoperates primarilyinanurbanenvironment.

Note:HighCostSupportDataprovidedinFederalCommunicationsCommissionResponsetoUnitedStatesHouseofRepresentativesCommittee onEnergyandCommerceUniversalServiceFundDataRequestofJune22,2011

Seeimportantinformationonthelastpageofthispresentation.

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 5. MgmthasfiledanS11andintendstoconductapartialIPOtargetedforDec12withCyrusasaREITvehicleso whilevaluationtodayappearsinlinewithotherlegacytelecopeersonaconsolidatedEBITDAbasis a. CBBtradesatahalfturnpremiumtothepeergrouponFY12PEBITDA(6.7xvs.6.2x)

Debt / Legacy Telecom Windstream (1) CenturyLink (2) Frontier Consolidated Comm (3) Bell Aliant Alaska Comm Average Median TEV 14,727 47,505 12,627 1,762 9,451 656 Mkt Cap 5,792 26,201 4,733 649 6,014 99 Cap 60.7% 44.8% 62.4% 62.8% 32.2% 85.0% Net Debt / Fwd EBITDA 3.7x 2.8x 3.3x 4.4x 2.3x 4.8x 3.5x 3.5x FY11A 6.6x 6.1x 5.1x 6.7x 7.4x 5.2x 6.2x 6.4x TEV / EBITDA FY12P 6.1x 6.3x 5.3x 7.0x 7.2x 5.6x 6.2x 6.2x FY13P 6.0x Div Seen As Safe? Some Concern Div Yield 10.0% 6.8% 8.6% 9.5% 7.1% 9.3% 8.6% 9.0% Notes Div Yield has risen as payout ratio has tightened and organic rev growth turned neg. Div perceived to be safe due to low leverage and exposure to enterprise segment High div yield reflects sustainabilty fears after FTR has cut div twice in two years Some concerns rec ently, yield has gone from 8.0% to 9.5% - pro forma for SURW acq Bell Canada owns large stake and aerial fiber deployment expec ted to support div VZ wireless entry and div cut last year have created a skepticism in investor base

6.3x Seen As Safe 5.5x 6.5x Some Concern Some Concern

7.2x Seen As Safe 6.4x 6.3x 6.4x Some Concern

Cincinnati Bell Inc.

3,606

934

70.7%

4.8x

6.8x

6.7x

6.6x

No Div

NA

6. pendingpartialIPOofCyrusOnerequiresaSumofthePartsframework.Sellsideanalysistoday substantiallyundervaluesthedatacentersegment. a. BackingoutpropervalueofCyrusOneimpliesthelegacytelecombusinessisvaluedat3.8xEBITDA.

Cincinnati Bell - Value of Legacy Teleco D ivision
($ in m, except per share data; FYE 12/31)

(1) Pro forma for acquisition of Paetec (2) Pro forma for acquisition of Savvis (3) Pro forma for acquisition of Surewest

CBB TEV CB Share Price B (x) FD Shares CB Market Cap B (-) Cash (-) N OL's (10% disc., $1.1B nom $'s) (+ D ) ebt & Pfd (+ $'s to fully fund pension ) CBB Enterprise Value D ata Center Segments TEV G (6.20.12 report) S PiperJaffray (8.8.12 report) MS (2.10.12 m odel) UB (8.13.12 report) S B AML (8.7.12 report) G abelli (2.9.12 report) Avg. Value % of CB TEV Today B
M ethod M etric

$4.50 207.6 $934.1 (4.1) << As of 6/30/12 (250.0) << As of 6/30/12 2,681.6 244.1 $3,605.7
M ult. Ent. Value
<< As of 6/30/12 << As of 6/30/12

EV / EV / EV / EV / EV /

FY13P EB ITD A FY13P EB ITD A FY12P EB ITD A FY13P EB ITD A FY13P EB ITD A

$159.0 145.0 120.0 152.0 152.0 146.0

9.0x 8.0x 10.0x 12.0x 10.0x 11.0x

$1,431.0 1,160.0 1,200.0 1,824.0 1,520.0 1,606.0 $1,456.8 40.4%

CBB Px T gt $4.00 $4.40 N A $6.00 N A

Notes

Assum not a R es EIT Pre-R EIT announcem ent Pre-R EIT announcem ent Assum R es EIT status R EIT assum ption not clear Assum R es EIT status

EV / FY13P EB ITD A

@ REIT Peers

Cyrus FY12P EB ITD A D Peer Mult. C Cyrus T rue TEV

WS M in WS Avg

$122.1 17.0x $2,075.7

@ REIT Peers

R EIT Peers D , D LR FT, COR

CB TEV B (-) Cyrus One TEV Implied Legacy T eleCo TEV CB FY12P Legacy Teleco EB B ITD A TEV / FY12P EBITD M A ultiple

$3,606 (1,160) $2,446 $399 6.1x

$3,606 (1,457) $2,149 $399 5.4x

$3,606 (2,076) Im plies 58% of CB TEV B $1,530 $399 3.8x

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Seeimportantinformationonthelastpageofthispresentation.

 b. Assuming3xproformaleverage@8%onlegacy(mgmt.hasindicated23xlevwldbeappropriatefor standalonelegacy)andbackingout$2BforCyrusimplieslegacybusinesstradingatnegequityvalue despite~$128mofFCFprojectedinFY12.

Implied Upside - Quick Math Legacy Free Cash Flow FY12P Leverage EBITDA (1) Debt Interest Rate Interest Expense EBITDA (1) (-) Capex EBITDA - Capex (-) Cash Interest (-) Cash Taxes (-) Pfd Dividend (-) Cash to Pension FCF 3.0x $399 $1,196 8% $96 $399 (120) $279 (96) (4) (10) (40) $128 FY13P 3.0x $375 $1,125 8% $90 $375 (120) $255 (90) (4) (10) (50) $101
Implied Equity Val - "@ REIT Peers" Case WS Min WS Avg @ REIT Peers

Leg Biz Ent. Value (-) Debt (3x FY12P) (-) Pension (-) Pfd Implied Legacy Equity FY12P FCF to Equity Implied FCF Yield FY13P FCF to Equity Implied FCF Yield

$2,446 (1,196) (244) (129) $877 $128 14.7% $101 11.5%

$2,149 (1,196) (244) (129) $580 $128 22.2% $101 17.4%

$1,530 (1,196) (244) (129) ($39) $128 NM $101 NM

FCF Yield Implied Equity Value Delta from Curr. - ($39m) Delta Per Share % upside to today's Px

25.0% $514 $553 $2.66 59.2%

20.0% $642 $682 $3.28 73.0%

15.0% $857 $896 $4.32 95.9%

SumoftheParts:Whatiseachsegmentworthonstandalonebasis? 1. DataCenterSegment:WhileitappearshighlylikelyCyruswillqualifyasaREIT,CBBhasyettoreceiveaprivate letterruling. a. IfaCCorp,Cyrusisconservativelyworth~$1.5Bor12xFwdEBITDA.

Debt / C-Corp Data Centers Equinix TEV $10,645 Mkt Cap $8,728 Cap 17.3% Net Debt / Fwd EBITDA 2.1x FY12P Growth Rev 19.8% EBITDA 22.7% '12P - '14P Growth Rev 14.7% EBITDA 17.4% Annualized Churn (1) 7.5% FY11A 14.4x TEV / EBITDA FY12P 12.0x FY13P 10.2x Notes Mult above hist. levels given REIT chatter. Connectivity business model distinct from Cyrus (shorter-term leases focused upon peering and low-latency applications). Closer comp to Equinix than Cyrus but retail coloc ation player structured as C-Corp offers some comparison. Closer comp to Equinix than Cyrus but retail coloc ation player structured as C-Corp offers some comparison. Not a great comp. Primarily a managed hosting provider in SMB space. Faces stiff competition from AMZN, GOOG, other new entrants.

(1) Not Co.'s EBITDA definition. Includes pension expense and allocates corp cost.

Interxion

1,501

1,281

11.5%

1.5x

16.7%

21.0%

15.9%

20.8%

6.0%

15.1x

13.0x

10.8x

Telec ityGroup

1,977

1,771

10.4%

1.6x

16.6%

20.6%

16.5%

20.7%

8.0%

18.1x

15.1x

12.5x

Rackspace

$7,290

$7,356

-0.9%

-0.1x

28.7%

29.8%

23.6%

27.5%

9.6%

22.6x

16.2x

12.6x

Average Median

1.3x 1.5x

20.5% 18.3%

23.5% 21.8%

17.7% 16.2%

21.6% 20.8%

7.8% 7.7%

17.6x 16.6x

14.1x 14.1x

11.5x 11.6x

Cyrus One

23.8%

20.7%

25.2%

25.9%

3.0%

(1) May look unfamiliar as most peers report c hurn on monthly basis.

b. However,recentkeyhiresandinsidersappeartothinkmorelikelyCyrusisworth$2Bandqualifiesas aREIT. i. ManagementIncentivePlanhasattractedandretainedkeydatacenterindustryexecs 1. NoteKevinTimmonshire;industrygiantandformerheadofMSFTandYHOOdata centerswasrumoredtobeinrunningforheadingupAAPLsiCloudbutnowrunning

Seeimportantinformationonthelastpageofthispresentation.

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 Cyruseffort.Ibelievemgmt.incentiveplanisprimaryreasontogofromFortune50sto asubsidiaryof$900mmktcapcompany. 2. SeveralhiresfromTerremarkalsoparticipatinginplantheyhaveseenthismovie before.In2010,TerremarkwasacqdbyVerizonfor15.4xFwdEBITDA.

CyrusOne Recent Executive Hires
Name Role Prior Firm(s) Notes

Kevin Timmons Michael Duckett Bill Williams Josh Snowhorn Gary Wojtaszek Kimberly Sheehy Christopher Opat John Hatem

CTO COO VP of Network Svcs VP and GM of Interconection President CAO for Finance & HR VP of Corp. IT Systems VP of Construction

Microsoft, Yahoo CoreLink, Terremark Terremark Terremark Cincy Bell Parent Cincy Bell Parent JPMorgan / Bear Stearns JPMorgan / Bear Stearns

Ran data centers at those two firms, highly regarded / premier industry exec Former Pres and COO of CoreLink, SVP at Terremark before that Interconnection expertise as former VP of IP Architecture at Terremark Expertise in interconnection / internet exchange construction (NAP of Americas) Former CFO Former IR 20 years of executive IT experience in financial services Expertise in design and construction of data center facilities

ii. andplanspayoutschemeindicateslargepaydayforinsidersinthecaseCyrusgarnersa$2B valuation.Detailsfrom8KfiledDec10outlinelargeonetimecompensationawardtoexecsif CyrusOneispartiallyspunout(atleast20%)orsoldforatleast$1BaboveCBBcostbasis. 1. Costbasiscalculationestimatebelow.Impliesfullpayoutforinsiderswouldtriggerif CyrusOneispartiallyIPOdat~$2.1Bvaluation,or13.5xFY13PEBITDA(seebolded#s atbottom).

Value Creation from Mgm Contract t Cost B asis '10 EB ITD A CyrusOne $44.6 Legacy 32.0 Est'd Cost Basis as of 12/31/09 Mult 11.8x 6.0x EV $526.0 192.0 $718.0

1 2 3 4 5 6 7 8 9 10 11 12

Cum Capex 2.4 5.6 21.9 31.8 54.2 70.1 112.8 156.8 213.4 270.5 316.7 $365.8 Cost Basis $718.0 720.4 723.6 739.9 749.8 772.2 788.1 830.8 874.8 931.4 988.5 1,034.7 $1,083.8 +$500m 1,220.4 1,223.6 1,239.9 1,249.8 1,272.2 1,288.1 1,330.8 1,374.8 1,431.4 1,488.5 1,534.7 $1,583.8 +$1B 1,720.4 1,723.6 1,739.9 1,749.8 1,772.2 1,788.1 1,830.8 1,874.8 1,931.4 1,988.5 2,034.7 $2,083.8

Cost of Accum Capital Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Capex Starting Q1'10 2.4 10.0% 2.4 Q2'10 3.1 2.5 3.1 Q3'10 16.2 2.5 3.2 16.2 Q4'10 9.4 2.6 3.3 16.6 9.4 Q1'11 21.6 2.6 3.3 17.0 9.6 21.6 Q2'11 14.6 2.7 3.4 17.4 9.9 22.1 14.6 Q3'11 41.0 2.8 3.5 17.8 10.1 22.7 15.0 41.0 Q4'11 41.3 2.8 3.6 18.2 10.3 23.2 15.3 42.0 41.3 Q1'12 52.8 2.9 3.7 18.7 10.6 23.8 15.7 43.0 42.3 52.8 Q2'12 52.0 3.0 3.8 19.1 10.8 24.3 16.1 44.0 43.3 54.1 52.0 Q3'12P 39.6 3.0 3.8 19.6 11.1 24.9 16.4 45.1 44.4 55.4 53.3 39.6 Q4'12P $41.4 $3.1 $3.9 $20.1 $11.4 $25.5 $16.8 $46.2 $45.4 $56.7 $54.5 $40.6 $41.4

FY13P EBITDA $154.7

Multiple +$500m +$1B 10.2x 13.5x

iii. A$2BCyrusvaluationisalsoinlinewithREITdatacenterpeersNoteEBITDAandFFO multiplesinlinewithpeers(@$2BCyrusvaluation)at12.9xFY13PEBITDA(vs.14.4xpeermult) and13.1xFY13PFFO(vs.15.0xpeermult;CyrusFFOMKestd,PFforREITstructure).

Ann. EBITDA Last FYE Digital Realty Trust Inc. DuPont Fabros Technology, Inc. CoreSite Realty Corporation Average Median CyrusOne (at $2B)
% Delta to Average % Delta to Median

TEV / Revenue TEV 13,369 3,252 1,383 FY11A 12.52x 11.40x 8.00x 10.64x 11.40x 8.75x
(17.8%) (23.3%)

TEV / EBITDA FY11A 21.6x 18.4x 21.9x 20.6x 21.6x 19.8x

(4.1%) (8.3%)

Growth FY13P 15.2x 13.5x 14.6x 14.4x 14.6x 12.9x

(10.3%) (11.3%)

Price / FFO FY12P 17.6x 17.9x 18.0x 17.8x 17.9x 18.2x

1.7% 1.4%

FY12P 10.86x 9.82x 7.21x 9.30x 9.82x 6.85x

(26.3%) (30.2%)

FY12P 18.1x 15.8x 17.3x 17.1x 17.3x 16.4x

(4.1%) (5.3%)

Next 2 Yrs 19.1% 17.0% 22.6% 19.5% 19.1% 23.6%

FY13P 15.0x 14.1x 15.8x 15.0x 15.0x 13.1x

(12.1%) (12.3%)

Dec-11 Dec-11 Dec-11

$2,000

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 2. LegacyTelecomBusiness:Thisisgenerallytheharderpartoftheexerciseandsourceofwiderdissentamongst valueinvestors.BelowoutlinesanapproachtodiscerningthevalueofCincylegacytelecombusiness. a. AttractiveproformaFCFGenerationonGoForwardBasisAnalysisbelowassumesproforma leveragetakentoguidedmultiples. i. MinimalcashtaxesgivenNOLs ii. Pensioncashcontributionslikelyconservativegivenrecentlegislationthatallowscompaniesto boostdiscountrate(usingdiscountratebaseduponaverageofpast25yearsinsteadofpast two)usedtodiscountliabilitiesforthepurposeofsettingcompanycontributions iii. Mgmthasindicated23xleveragewouldbeappropriateforstandalonetelecomasset(with higherleveragebetterfortheequitybullcase)
(Re:appropriateleverageforlegacybizstandalone)Wewouldexpectthattheleverageinthelocaltelcowouldhavetobe somewherebetweenatwoandathree(andalotclosertoatwo).CEOJackCassidy,5.03.12
Optimize Value in Legacy (Wireline & Wireless) FY12P Case #1 Leverage EBITDA (1) Debt Interest Rate Interest Expense EBITDA (1) (-) Capex EBITDA - Capex (-) Cash Interest (-) Cash Taxes (-) Pfd Dividend (-) Cash to Pension FCF 2.0x $399 $797 6% $48 $399 (120) $279 (48) (4) (10) (40) $176 Case #2 3.0x $399 $1,196 8% $96 $399 (120) $279 (96) (4) (10) (40) $128

(1) Not Co.'s EBITDA definition. Includes pension expense

b. UseofCashMgmthashistoryofshareholderfriendlyallocationofcapital.Over100%ofLevFCFwas allocatedtosharebuybacks/debtreductionin08and09. i. SubsequentshiftofcapitalallocationtodatacentersstartinginFY10(CyrusOnepurchaseand growth)hasalsodemonstratedhighROItoshareholders. FCFwasusedforbuybacksanddebtpaydownbeforeCyrusacq DCsinvestmentgoodforinvestors

2008 Levered Free Cash Flow FCF before DC Growth Capex Memo: FCF Uses Buybacks Debt Paydown / (Increase) Cyrus Acq Data Center Growth (Share Buy's & Debt Paydown) / Lev FCF 76.8 82.7 0.0 0.0 105.4% 73.2 13.7 0.0 0.0 117.0% 10.0 (579.8) 524.6 28.7 10.4 11.5 0.0 118.5 $151.3 151.3 2009 $74.3 77.2 2010 $154.9 186.0 2011 $24.8 143.3

and allocates corp cost.

R eturns from D C's - U nlevered CyrusOne Acq Legacy D Operation C Capex (thru D '12) ec $'s Invested Proj. Cyrus Value - R EIT IR (unlevered) R MOI (3 yrs, unlev) $'s Made $'s Invested $526.0 192.0 335.5 $1,053.5 $2,000.0 15.4% 1.90x $946.5

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 c. ValuationFloorWouldBeProvidedbyFCFYield20%FCFyieldimplies$2.2BTEV
Implied Equity Val - "3x Lev @ 8%"

Legacy Biz FY12P FCF (/) FCF Yield Implied Equity Value (+) Debt (+) Pension (+) Pfd Implied Legacy Ent Value Multiple of EBITDA

$128 25.0% $514 1,196 244 129 $2,083 5.2x

$128 20.0% $642 1,196 244 129 $2,212 5.5x

$128 15.0% $857 1,196 244 129 $2,426 6.1x

d. ButitisRareforLegacyTeleCotoNotPayaDivCBBdoesntcurrentlypayadividendbutthatisrare intelecom.
North American Telecom Companies on Nasdaq and NYSE over $200m Dividend Payers
Firm Div Y ield

Don't Pay Dividend

Firm

Windstream Consolidated Communications Alaska Communications Frontier Bell Aliant CenturyLink BCE Manitoba Telecom AT&T Verizon TELUS

10.6% 9.5% 9.3% 8.6% 7.2% 7.0% 5.0% 4.9% 4.8% 4.6% 3.8%

Cincinnati Bell Level Three

e. Managementwillcontinuetoworktowardsmaximizingvaluefortheshareholders,bothwithrespect tofurthercorporateactionsandallocationofcapital.Asaleofwirelesssegmentwouldbebullish.
(Re:wirelesssegment)It'shardnottonoticethatsomebodycouldcomeinandbuythatbusinessandjustthesynergyvalue alonewouldbehugelyaccretivetothem.WhenyoulookatourSG&Aversusit'sjustduplicatedinothersIsitforsale?I haveneverfalleninlovewithmyinvestments.Thewirelinebusiness,thewirelessbusiness,theDataCenterbusiness,it'sall basedonshareholdervalue.CEOJackCassidy,2.28.12 f. AFutureDividendisLikely;Implies$2.12.7BTEVforLegacyLegacyFCFsnolongertobeusedto fundCyrusOnegrowthcapexonceseparated.Adividendwouldmaximizelegacyequityvalue. i. RecallCEOislargeshareholder(3.6%ofshares,~$30mstake)andlikelywilllooktomaximize sharevalue ii. Managementcommentarysuggestspotentialforfuturedividend Sodebtreductionwasthereasonwhywedidthis(Cyrusacqandgrowth)anddebtreductionwillbethepurposeforit.And you'llseeitinouractionsthatwe'reveryseriousaboutgettingthetelcotoaleverageratewhereitwillthenbeabletodo thingsthatitwantstodo,whetherthat'spayadividend,orinvestinotherbusinesses,orrolloutitsFiopticsbusiness,orlook atLTE,orlivewiththeassetsthatithas.CEOJackCassidy,5.3.12 Butthecashflowfromthatbusiness(legacyteleco)wouldthenhavetobeusedtoprovidewhateverisinthebestinterest oftheshareholder,whetherthat'sinvestinginfurtherintheFiopticsbusiness,whetherit'sinvestinginanLTEwireless network,whetherit'sinvestinginadividendfortheshareholderIt'sgoingtobewhatever'sinthebestinterestofthe shareholder.CEOJackCassidy,2.9.12

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 iii. 60%payoutratioand3xleverageindicatesdividendcapacityof$77mandequityvalueof$1.1B forlegacyat7%divyield 1. Implies$2.7BTEVand6.7xEBITDAmultiple

Dividend Capacity & Implied Legacy Ent. Value FY12P Case #1 FCF (x) FCF Payout Ratio Dividend Div Yield Implied Valuation of Equity (+) Debt (+) Pension (+) Pfd Implied Ent Value of Legac y Multiple of EBITDA $176 50% $88 9% $980 797 244 129 $2,150 5.4x Case #2 $128 60% $77 7% $1,101 1,196 244 129 $2,670 6.7x

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 PuttingItAllTogether:ReturnsProfile 1. Current:Sharesareup~50%YTDonrecentCyrusspinnewsbutTEV/EBITDAmultipleremainsonlyinlinewith otherlegacytelecosonaconsolidatedbasis,reflectingthedeepdiscountCBBtradedatlastyearrelativeto peers.ValuationtodayreflectsaCCorpmultipleonCyrusOneandthelowendofpeermultiplesonCBBlegacy business(FTR@5.3xEBITDA;25%PFFCFyieldforCBBlegacybiz)despitemateriallybettertrendsandFCF generation. 2. TodaysBaseCase:SOTPFrameworkw/legacyandCyruseachatdiscounttopeers:AssignsCyrus1xdiscount todatacenterpeersFY12PEBITDAmultipleof17.0x.Assignslegacytelecombusinessdiscount(5.5x)topeer telecommultipleof6.2xFY12PEBITDA. 3. TodaysDownside:Mostlypricedin:StocktodayalreadyappearstoreflectaCCorpmultipleforCyrusOneand 25%FCFyieldforlegacytelecombusiness.Veryconservativeassumptions. a. AdditionaldownsidelikelyifnopartialIPOoccursbutmanagementincentiveplanandS11filing indicatethattobeunlikely. 4. 6/30/14ALotCanGoRight(100%+upside):AssumesCyrusasREITandsegmentsbecomefullyseparatedas CBBmonetizesCyrusstaketodeleverlegacybusiness.CyrusOnegrowth(~20%)andREITmultiplesareexpected tocontinue(inbaseandbullcases).LegacybusinesslikelytopayadividendonceFCFsnolongerneededto funddatacentergrowth;thiswillmaximizevalue.Recallmanagementishighlyincentivizedtomaximize shareholdervaluegiveninsiderincentiveplanatCyrusandCEOassubstantialCBBshareholder. Note:Forsimplicityssake,IdonotmodelgradualselldownofCyrusequitybyCBBparent(initialpartialIPO,subsequent offerings,etc.)butrathershow6/30/14valuationstoreflectentireCyrusseparationatthatpoint.Inreality, monetizationprocessislikelytobegradualinnaturewithseveralincrementalselldowns(vs.allatonetime).
($ in m, except per share data) Assumes no REIT designation for CyrusOne and multiple inline w/ low-end of peer group for legacy biz (FTR) despite significantly better operating trends. Highly unlikely that Cyrus isn't a REIT. Value Today - Sum of the Parts Value on 6/30/14 - Legacy and Cyrus Fully Separated Legacy Teleco does not initiate a dividend; Assumes Cyrus has qualified as a REIT but growth stalls (EBITDA well below base projections) and multiple compresses meaningfully FY14P Bear EV $2,191.9 EBITDA (1) $354.3 298.2 56.2 122.1 $3,605.7 4.1 250.0 (2,552.2) (129.4) (244.1) $3,687.7 4.1 250.0 (2,552.2) (129.4) (244.1) 12.0x 1,465.2 $3,548.3 4.1 250.0 (2,552.2) (129.4) (244.1) Discount to DC REITs FY12P Mult 16.0x 1,953.6 $4,145.6 4.1 250.0 (2,552.2) (129.4) (244.1) 165.0 13.0x 2,145.0 $3,921.1 4.1 250.0 (2,552.2) (129.4) (244.1) (79.0) $934.1 207.6 $4.50 $1,016.1 209.1 $4.86 8.0% $876.7 206.4 $4.25 (5.6%) $1,474.0 215.3 $6.85 52.1% $1,170.6 213.3 $5.49 21.9% 11.4% Corresponds to 60% payout ratio, 3x leverage and 8% div yield Downside Mult 5.0x EV $1,776.1 FY14P Base EBITDA (1) $354.3 298.2 56.2 193.6 16.0x 3,097.3 $5,170.6 4.1 250.0 (2,552.2) (129.4) (244.1) (79.0) $2,420.1 221.4 $10.93 142.9% 62.3% Mult 5.9x Legacy telecom (wireline and wireless stay combined) initiates dividend, Cyrus is a REIT, hits MK projections and trades at 1x discount to current [FY + 1] peer multiples Base EV $2,073.3 6.3x 8.0x 17.0x $1,874.5 449.4 3,290.9 $5,614.8 4.1 250.0 (2,552.2) Mult Legacy wireline initiates dividend, wireless segment is sold to strategic for subs and spectrum, Cyrus is a REIT, hits MK projections and trades at parity to current [FY + 1] peer multiples Bull EV Legacy still trades at meaningful discount to peers (no div) and Cyrus qualifies as a REIT but trades below peer multiples [FY +1] given limited float

Description:

FY12P Current Legacy Telecom Wireline & Other Wireless CyrusOne (Data Centers) Total Enterprise Value Add: Cash on B/S Today Add: NOL's (3) Less: Debt Less: Pfd Equity Less: $'s to fully fund pension (4) Add: FCF (6/3012 - 6/30/14) Equity Value FD Shares Outstanding (5) Price Per Share % Prem to Current 2 Yr. IRR WS Target EBITDA (1) $398.5

Downside - No REIT Mult 5.2x EV $2,083.1 Mult

Base 5.5x

Reflects 25% FCF yield (2)

Multiple in-line w/ low-end of peer group (FTR) despite significantly better operating trends; Reflects 25% FCF yield (2)

Wireline: 60% payout ratio, 3x leverage and 7% div yield

(129.4) Wireless: Spectrum (244.1) and (79.0) subscriber value to nat'l $2,864.3 network 223.5 $12.81 184.7% 77.0%

(1) Not Co.'s EBITDA definition. Includes pension expense. (2) FCF calculated as EBITDA - Capex - Cash Taxes - Cash Interest - Cash to Pension - Pfd Dividend. Assumes 3x pro forma leverage @ 8%. (3) $1.1B nom $'s in NOL's valued at 10% discount rate (4) Per 10-K, less contributions YTD. In 2009, pension benefits were frozen for certain management employees below 50 years of age and provided a 10 year transition period for employees over age 50. (5) Adjusted for legacy warrants from Broadwing mezz financing w/ $3.00 strike. Expiration date of Mar '13 but share count in various scenarios as of 6/30/14 assumes full price appreciation and dilution from warrants. Add'l upside if some of price appreciation happens after Mar '13.

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 OverviewofKeyInvestorObjections/ConcernstoaReRatingandCommentary/Mitigants 1. Whatifatransactiondoesnthappen?Noguaranteeanytransactiontakesplaceasfilinganddiscussionsare preliminaryatthispointandCBBhasyettoattainaprivateletterruling. Mitigant:MgmtincentiveplanmakesaninitialtransactionandREITqualificationhighlylikely.Cyrusbusiness modelmuchmorelikeDLR/DFTthanEQIX,soprecedenceofpriorqualificationsofsimilarbusinessmodelsisalso supportive. 2. WhatifCBBneverspinsouttheremainingstakeinCyrus?CBBhasonlyannouncedplansforapartialIPOof CyrusOneandoffersnoguaranteeortimingregardingafullseparationofthetwobusinesses. Mitigant:DeleveragingoflegacytelecombusinesswillrequirecashproceedsandmonetizationofCyrusasset. 3. IsitevenpossiblefordatacenterstobepartiallyIPOdgivencovenants?Isitpossibletopayadividendat legacy?CyrusNetworksisaguarantorofCBBdebtandexistingcapitalstructurehascovenantsthatrestrict assetsalesand/orrestrictedpayments,whichshouldpresentobstaclestoaseparationofCyrusOne.Anda separationofCyrusrequiresCBBlegacytodelever. Mitigant:CyrusNetworksequitycanbesoldinapartialIPOunderassetsalesguidelinesaslongascashproceeds arereceivedandusedtopaydowndebtwithinoneyear.Adividendtoshareholdersfromlegacyispermissibleso longasthereiscapacityintherestrictedpaymentsbasket(estd$1.5Bcapacityat12/31/12). 4. HowcanCBBdeleverthelegacybusinessgivenlongdatedmaturitiesandbondheavycapitalstructure? Legacybusinessrequiresleverageof2x3x(permgmt.team)butbondsdontmatureforseveralyears. Mitigant:SpinningoutCyruswillrequiresomelevelofdebtpaydown.Additionalmonetizationanddeleveringis possiblebyexaminingcallscheduleofCBBbonds(ifholdersdontwanttotenderatreasonablepriceearlier).Sub 3xproformaleverage(forlegacyonly)looksachievablebyearly14. 5. WhowantstoownlegacytelecombizonceCyrusisseparated?Hedgefundsarenotenticedbyowning legacytelecom. Mitigant:FCFyieldshouldprovidefloor.Dividendwouldsolicitstrongerbidfromincomeorientedfundsandyield investors.Legacybusinesscomparesfavorablytopeers. 6. WhywouldIwanttoownadatacenterbusinessatsuchhugemultiples?DatacenterREITstradeathigh multiples,REITvaluationsaretiedtospreadsoverrecordlowTreasuryyields,andsomehavecalledthespacea bubble. Mitigant:CyrusOneishighqualityassetwithattractiveenergyendmarketexposureandhighquality counterparties(mostlyFortune1000s)thatcomparesfavorablytopeers. Note:Mitigantto5)and6) ValueinvestorslookingtocapturealphafromCBBSOTPbutaversetolongexposuretolegacytelecomand/orREITS haveseverallarge,liquidpeersineachspacethatcanbepairedtotransformthetradefromlongbiasedtorelative value.PairingexposurewouldeffectivelybecomeabetonmultipleconvergencetopeersforCyrus(currently16x+for REITs)andlegacytelecom(currently5.5x+)inlieuofoutrightappreciationofCBBshares.

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 Appendix CompanyDescription/SituationOverview 1. Convergedregionaltelecommunicationsprovider(bothwirelineandwireless)inCincyareathatalsooffersa bestinclassdatacenterproduct(colocation)focuseduponFortune1000customers. 2. Companyisacombinationoffourdistinctoperatingsegments. a. Wireline(48%ofCY12Prev,59%ofCY12PEBITDA) i. CorebusinessdrivenbyroleasILECinCincinnatiarea.Productofferingdrivenbyvoice,video anddataservicestobothresidentialandenterprisecustomers.Revenueindeclinebuthighly FCFgenerative. b. Wireless(16%ofCY12Prev,15%ofCY12PEBITDA) i. #2mktshareplayerinCincyareabehindVerizonwithAT&Tadistant3rd(lessthan15%)but losingsubstonatlnetworks.Spectrumholdingsinclude50MHzinCincinnati(2.18Mpops)and another40MHzinDayton(1.2Mpops). c. DataCenters(15%ofCY12Prev,22%ofCY12PEBITDA) i. Industryleadingmarginsdrivenbyhighutilizationratesandlowchurn.Companytargets Fortune1000customerswith~36%comingfromenergyspace. ii. Energycompaniesareattractivecustomersgivenhighdegreeofprofitability(notasprice sensitiveassmallerorlessprofitablecompanies),sensitivitytosecurityofdataandsubstantial scaleofdatacenterneeds(seismicworkislargeandpowerintensive).Customersarewillingto payforqualityandwillonlyworkwithvendorsthathaveindustryleadingofferingandtrack record(barriertocompetitionforincumbentColoproviderlikeCyrusOne).Inaddition,these companiesoftenrunhighendhardware(supercomputers,proprietarybuilds)whichmakes themlesslikelycandidatestotransitionupthestackandawayfromcolocation/towardsa managedhostingorpubliccloudoffering. d. EquipmentSalesandServices(20%ofCY12Prev,4%ofCY12PEBITDA) i. Lowvalueaddequipmentresellingtoexistingtelecomanddatacentercustomers.Division existsprimarilyasaservicetoexistingcustomersandisnotoperatedtobeaprofitcenter. FinancialSummary 1. Giveninvestorconcernsarounddegradationoflegacywirelinebusiness,belowoutlinesdetailedwirelinerev modelingthatassumescontinuedtrenderosionofresidentialvoiceandsuccesswithbundlingFioptics entertainmentproducttocustomerswithhighspeedconnections(FTTPorFTTNw/shortlooplength) a. KeydistinctionbetweenwirelineCBBandpressuredpeers(WIN,FTR,CNSL)islackofsubsidyrevenue andartificiallyhighterminationrevsthatare100%marginandbeingreformed
( $ in m, except per share data; FYE 12/31) MK Scenario Base 2008 Wireline Revenue Voice - local service Data Long Distance / VOIP Entertainment Other Total Wireline Revenues Y-o-Y Wireline Growth Voice - local service Data Long Distance / VOIP Entertainment Other Total Growth (38.4%) (5.0%) (10.6%) 3.9% (1.2%) (10.3%) (0.4%) 7.5% 116.9% (0.4%) (2.7%) (10.1%) 2.9% 6.6% 59.3% (14.5%) (1.4%) (9.9%) 4.4% 3.9% 20.3% (22.2%) (1.4%) (10.0%) 3.0% 3.0% 12.0% (15.0%) (1.6%) (10.0%) 3.0% 3.0% 12.0% (15.0%) (1.1%) (10.0%) 3.0% 3.0% 12.0% (15.0%) (0.6%) $389.1 273.5 98.3 0.0 42.7 $803.6 $347.7 284.3 97.1 7.7 26.3 $763.1 $311.9 283.3 104.4 16.7 26.2 $742.5 $280.3 291.5 111.3 26.6 22.4 $732.1 $252.5 304.3 115.7 32.0 17.4 $721.9 $227.2 313.5 119.2 35.8 14.8 $710.5 $204.5 322.9 122.7 40.1 12.6 $702.8 $184.1 332.6 126.4 45.0 10.7 $698.7 2009 2010 2011 2012P 2013P 2014P 2015P

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 2. NoteFCFgenerationpriortoDCgrowthcapex.Also,minimalcashtaxburdenatCBBdrivenbyNOLsandnot bonusdepreciation(thatisgoingawayandinflatingFCFgenerationatpeertelecos).
( $ in m, except per share data; FYE 12/31)
Only incl. half year for CyrusOne

MK Scenario Base 2011 $732.1 277.6 184.7 300.5 (32.5) $1,462.4 2012P $721.9 247.2 228.7 305.0 (34.7) $1,468.1 2013P $710.5 229.2 291.9 305.0 (34.0) $1,502.5 2014P $702.8 213.2 358.5 305.0 (34.0) $1,545.5 2015P $698.7 198.4 428.2 305.0 (34.0) $1,596.3

2008 Revenue Wireline Wireless Data Centers Equipment Sales & Svcs Intersegment Total Revenues Y-o-Y Growth Wireline Wireless Data Centers Equipment Sales & Svcs Total Growth Gross Profit Wireline Wireless Data Centers Equipment Sales & Svcs Intersegment Total Gross Profit Gross Margin Wireline Wireless Data Centers Equipment Sales & Svcs Total Gross Margin EBITDA Wireline Wireless Data Centers Equipment Sales & Svcs Corp (and SBC addback) Total EBITDA EBITDA Margin Wireline Wireless Data Centers Equipment Sales & Svcs Total EBITDA Margin EBITDA - Capex Wireline Wireless Data Centers Equipment Sales & Svcs Corp (and SBC addback) Total EBITDA - Capex EBITDA - Capex (% of sales) Wireline Wireless Data Centers Equipment Sales & Svcs Total Less: Cash Interest (Expense) / Income Less: Cash Taxes Less: Cash to Pension / Post Ret Less: Div to Pfd Levered Free Cash Flow FCF before DC Growth Capex -11.1% 17.6% (145.0) (2.0) 61.4 (10.4) $151.3 151.3 29.9% 20.2% (35.1) (21.4) $247.3 $240.0 63.8 11.1% 34.1% 47.5% 26.2% 35.1 (21.4) $478.2 $381.7 82.8 23.7% 54.4% 66.9% 48.6% 74.8 (2.8) $763.2 $537.7 153.5 315.2 (31.9) $1,403.0 $803.6 316.1

2009 $763.1 307.0 71.8 231.3 (37.2) $1,336.0

2010 $742.5 289.2 125.3 254.7 (34.7) $1,377.0

(5.0%) (2.9%) (26.6%) (4.8%)

(2.7%) (5.8%) 10.1% 3.1%

(1.4%) (4.0%) 47.4% 18.0% 6.2%

(1.4%) (11.0%) 23.8% 1.5% 0.4%

(1.6%) (7.3%) 27.6% 0.0% 2.3%

(1.1%) (7.0%) 22.8% 0.0% 2.9%

(0.6%) (6.9%) 19.5% 0.0% 3.3%

$511.5 145.4 41.7 49.2 (2.8) $745.0

$485.7 151.8 86.1 52.1 (3.2) $772.5

$462.1 143.4 125.0 57.5 (2.9) $785.1

$442.6 125.9 153.3 59.4 (2.9) $778.4

$426.0 113.3 195.5 61.0 (3.4) $792.4

$412.9 102.2 240.2 61.0 (3.4) $812.9

$402.1 92.1 286.9 61.0 (3.4) $838.8

67.0% 47.4% 58.1% 21.3% 55.8%

65.4% 52.5% 68.7% 20.5% 56.1%

63.1% 51.7% 67.7% 19.1% 53.7%

61.3% 51.0% 67.0% 19.5% 53.0%

60.0% 49.4% 67.0% 20.0% 52.7%

58.8% 47.9% 67.0% 20.0% 52.6%

57.6% 46.4% 67.0% 20.0% 52.5%

$364.5 77.2 32.0 16.9 (20.4) $470.2

$345.6 90.7 70.2 14.4 (19.3) $501.6

$335.4 88.2 101.2 20.1 (22.9) $522.0

$322.0 79.4 122.1 19.7 (22.5) $520.6

$305.2 69.0 154.7 24.4 (23.4) $529.8

$293.5 59.9 193.6 24.4 (23.4) $547.9

$283.3 51.8 231.2 24.4 (23.4) $567.4

47.8% 25.1% 44.6% 7.3% 35.2%

46.5% 31.4% 56.0% 5.7% 36.4%

45.8% 31.8% 54.8% 6.7% 35.7%

44.6% 32.1% 53.4% 6.4% 35.5%

43.0% 30.1% 53.0% 8.0% 35.3%

41.8% 28.1% 54.0% 8.0% 35.5%

40.6% 26.1% 54.0% 8.0% 35.5%

$231.5 42.3 29.1 (7.0) (20.8) $275.1

$247.0 79.0 39.1 6.1 (19.3) $351.9

$222.8 70.6 (17.3) 13.3 (22.9) $266.5

$222.3 63.7 (63.8) 13.0 (22.5) $212.7

$205.2 54.0 (30.6) 20.4 (23.4) $225.6

$193.5 44.9 49.6 20.4 (23.4) $284.9

$183.3 36.8 69.2 20.4 (23.4) $286.3

30.3% 13.8% 40.5% -3.0% 20.6% (118.8) (6.0) (65.6) (10.4) $74.3 77.2

33.3% 27.3% 31.2% 2.4% 25.6% (172.4) (3.5) (10.7) (10.4) $154.9 186.0

30.4% 25.4% -9.4% 4.4% 18.2% (211.8) 0.0 (19.5) (10.4) $24.8 143.3

30.8% 25.8% -27.9% 4.2% 14.5% (213.2) (4.0) (40.0) (10.4) ($55.0) 130.9

28.9% 23.6% -10.5% 6.7% 15.0% (218.0) (4.0) (50.0) (10.4) ($56.8) 128.4

27.5% 21.1% 13.8% 6.7% 18.4% (223.5) (4.0) (50.0) (10.4) ($3.0) 141.0

26.2% 18.5% 16.2% 6.7% 17.9% (223.5) (4.0) (50.0) (10.4) ($1.6) 160.5

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Seeimportantinformationonthelastpageofthispresentation.

 KeyLanguageFromMgmtIncentivePlan8Kon12/31/10 KeyhiresandmanagementwiththeexceptionofCEOJackCassidyparticipateintheprogram.TheAgreementprovides fora(presumablylarge)cashpaymenttotheparticipatingemployeeintheeventthat: (i) theemployeeiscontinuouslyemployedforathreeyearperiodafterthedateofgrant (ii) specifiedEBITDAtargets(undisclosed)fortheTSSBusiness(Cyrus)aremetoversuchthreeyearperiod (iii) a"qualifyingtransaction"isconsummatedwithintenyearsofthedateofgrantand (iv) atleast$1,000,000,000ofequityvalueiscreatedintheTSSBusinesspriortothe"qualifyingtransaction". TheAgreementalsogivestheCommitteediscretiontomakefractionalpaymentsinanamountupto,butnotmore than,thebasepayoutamountintheeventthereiseither:(a)aqualifyingtransactionbeforethefifthanniversaryofthe initialawardgrantdate;or(b)thereisaqualifyingtransactionafterthefifthanniversaryoftheinitialawardgrantdate andtheequityvaluecreatedisatleast$500,000,000.

KeyDefinitions "Transaction"meansanyofthefollowing:(A)theconsummationofasaleofallorsubstantiallyalltheassetsrepresentingtheTSS Segment(otherthantotheCompanyoranyofitsaffiliates),(B)theconsummationofanytransaction(includingastocksale, merger,initialpublicoffering,spinoff,splitofforsimilarstockdistribution)thatresultsinatleast20%oftheEquityValueofthe TSSSegment(determinedatthetimeoftheTransaction)ceasingtobeownedbytheCompanyoranyofitsaffiliates,(C)the consummationofanytransaction(includingastocksale,merger,initialpublicoffering,spinoff,splitofforsimilarstock distribution)thatresultsintheCompanyoranyofitsaffiliatescontinuingtoowntheTSSSegment,butceasingtoownallor substantiallyalltheassetsofthebusinessesconductedbytheCompanyoranyofitsaffiliates(otherthantheTSSSegment)asof June11,2010or(D)a"ChangeinControl"oftheCompany(assuchtermisdefinedontheEffectiveDateinthePlan). "EquityValueoftheTSSSegment"means,asofanyspecifieddate,(x)theaggregateEnterpriseValueofeachentityconductingthe TSSSegmentasdeterminedbytheValuationFirmminus(y)theaggregateprincipalamountandaccruedinterestoftheinterest bearingdebtandintercompanyliabilities,netofintercompanyreceivables,oftheTSSSegment(excludingintercompanyaccounts betweentheentitiesconductingtheTSSSegment)determinedinaccordancewithGAAPand,ineachcase,determinedasofsuch dateandtakingintoconsiderationanybusinessorportionthereofnotbeingvalued. "EquityValueCreated"means,withrespecttoaTransaction,theexcess,ifany,of(i)theEquityValueoftheTSSSegmentcalculated asoftheconsummationoftheTransactionover(ii)(w)theEquityValueoftheTSSSegmentcalculatedasofDecember31,2009 [(includingtheequityvalueofCyrusasoftheCyrusPurchaseDate)],plus(x)theTSSContributionAmountplus(y)theTSSCostof CapitalAmountCumulativeTotalminus(z)theTSSDistributionAmount.Foravoidanceofdoubt,thecashusedtoacquirethe membershipinterestsofCyrusshallbedeemedtohavebeencontributedbytheCompanyoroneofitsaffiliatesasanequity contributiontoCBTS,providedhowever,suchcontributionshallnotbeaTSSContributionAmount. "TSSContributionAmount"meanstheaggregatevalueofanycashorproperty(includingstockorotherequityinterestsinanyother entity)contributed(ordeemedcontributed)asacapitalorotherequitycontributiontotheTSSSegment(ortheentitiesconducting theTSSSegment)bytheCompanyoranyofitsotheraffiliatesduringtheperiodfromDecember31,2009throughthe consummationoftheapplicableTransaction.EachsuchcontributionshallbevaluedbasedontheFairValueofthecontributed propertyontheapplicablecontributiondate.Fortheavoidanceofdoubt,adeemedcontributionwilloccurifachangeinthe Company'sreportingoftheTSSSegmentresultsinabusinessorentitythatwasformerlyexcludedfromtheTSSSegmentasof December31,2009becomingincludedinthereportingoftheTSSSegment(otherthananychangeduetotheacquisitionofCyrus bytheCompanyontheCyrusPurchaseDate). "TSSCostofCapitalAmount"means,withrespecttoanycontributionincludedintheTSSContributionAmountoranydistribution includedintheTSSDistributionAmount,theproductof(a)theFairValueofsuchcontributionordistributionmultipliedby(b)arate of10%perannumappliedovertheperiodbeginningonthedateofsuchcontributionordistributionandendingonthedateofthe applicableTransaction.

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 Seebelowforestimateofcostbasis.Calculationimpliesfullpayoutofincentiveplantomanagementat$2Bvaluation.
Value Creation from Mgm Contract t Cost B asis '10 EB ITD A CyrusOne $44.6 Legacy 32.0 Est'd Cost Basis as of 12/31/09 Mult 11.8x 6.0x EV $526.0 192.0 $718.0

1 2 3 4 5 6 7 8 9 10 11 12

Cum Capex 2.4 5.6 21.9 31.8 54.2 70.1 112.8 156.8 213.4 270.5 316.7 $365.8 Cost Basis $718.0 720.4 723.6 739.9 749.8 772.2 788.1 830.8 874.8 931.4 988.5 1,034.7 $1,083.8 +$500m 1,220.4 1,223.6 1,239.9 1,249.8 1,272.2 1,288.1 1,330.8 1,374.8 1,431.4 1,488.5 1,534.7 $1,583.8 +$1B 1,720.4 1,723.6 1,739.9 1,749.8 1,772.2 1,788.1 1,830.8 1,874.8 1,931.4 1,988.5 2,034.7 $2,083.8

Cost of Accum Capex Capital Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Starting Q1'10 2.4 10.0% 2.4 Q2'10 3.1 2.5 3.1 Q3'10 16.2 2.5 3.2 16.2 Q4'10 9.4 2.6 3.3 16.6 9.4 Q1'11 21.6 2.6 3.3 17.0 9.6 21.6 Q2'11 14.6 2.7 3.4 17.4 9.9 22.1 14.6 Q3'11 41.0 2.8 3.5 17.8 10.1 22.7 15.0 41.0 Q4'11 41.3 2.8 3.6 18.2 10.3 23.2 15.3 42.0 41.3 Q1'12 52.8 2.9 3.7 18.7 10.6 23.8 15.7 43.0 42.3 52.8 Q2'12 52.0 3.0 3.8 19.1 10.8 24.3 16.1 44.0 43.3 54.1 52.0 Q3'12P 39.6 3.0 3.8 19.6 11.1 24.9 16.4 45.1 44.4 55.4 53.3 39.6 Q4'12P $41.4 $3.1 $3.9 $20.1 $11.4 $25.5 $16.8 $46.2 $45.4 $56.7 $54.5 $40.6 $41.4

FY13P EBITDA $154.7

Multiple +$500m +$1B 10.2x 13.5x

CBBCapitalization 1. Debtcomprisedprimarilyofbondswithlongerdatedmaturities.Earlierdeleveragingpathcouldbepursuedby managementviadebttendersorasbondsbecomecallable.

($ in m, except per share data; FYE 12/31)

Cumulative

Cincy Bell TEV Build A/R Securitization ($105m capacity) Credit facility ($210m capacity) Senior Notes due 2015 Senior Notes due 2017 Senior Notes due 2020 Senior Notes due 2023 Debentures due 2028 Var. Cincinnati Bell Tel Notes Capital lease / Other Total Snr Debt

Coupon

Maturity

Callable

Call Price (1)

6/30/12 $19 0

EBITDA Mult

7.000% 8.250% 8.375% 7.250%

2/15/15 10/15/17 10/15/20 6/15/23 12/1/28

Today 10/15/13 10/15/15 NA NA

101.167 104.125 104.188 NA NA

250 500 775 40 134 73 135 $1,927 3.7x

Snr Sub Notes due 2018 Total Debt

8.250%

3/15/18

3/15/2014

104.370

625 $2,552 4.9x

$'s to fully fund pension Cum Preferred NOLs (10% disc, $1.1B nom $'s) Cash
Price Shares

244 129 (250) (4) $4.50 208 934 $3,606 6.9x $521

Common Equity (Mkt) Cincy Bell Enterprise Value Memo: MK FY12P EBITDA (1) Call Price at sooner of today or First Day Callable

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 IMPORTANTINFORMATION This presentation was prepared by an employee of Lonestar Capital Management LLC (LCM), to be used solely in connectionwiththeValueInvestingChallenge.Itisnotanoffertoprovideinvestmentadviceorasolicitationofsuchan offer. No one should rely on the information contained in this presentation to make any investment decision. The presentationcontainsandisbaseduponinformationthattheauthorandLCMbelievetobecorrectbuttheyhavenot verifiedthatinformationandassumenoliabilityifsuchinformationisincorrect.NeitherLCMnortheauthorhasany duty to correct or update the information contained herein. LCMs clients currently have a significant position in the securitymentionedtherein.LCMmaybuy,sellorsellshortthesecurityatanytimewithoutnoticetoanyone. This document contains forwardlooking statements based on the authors expectations and projections. Those statementsaresometimesindicatedbywordssuchasexpects,believes,willandsimilarexpressions.Inaddition, anystatementsthatrefertoexpectations,projectionsorcharacterizationsoffutureeventsorcircumstances,including any underlying assumptions, are forwardlooking statements. Such statements are not guaranties of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actualreturnscoulddiffermateriallyandadverselyfromthoseexpressedorimpliedinanyforwardlookingstatements asaresultofvariousfactors.

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