Governance

1. INTRODUCTION

   Manitoba Telecom Services Inc. (“MTS”), as a publicly traded company and a reporting issuer under securities legislation, is required by law to disclose Material Information to the public on a timely basis. MTS also has an obligation to ensure that its directors, officers and employees comply with the insider trading requirements set out in securities legislation, which prohibit insiders and other persons who have access to undisclosed Material Information of a reporting issuer from trading in securities of the issuer. These rules are designed to protect the integrity of the securities markets by ensuring that all investors have equal access to information that may affect their investment decisions.

   The Toronto Stock Exchange recommends that every listed company should have a firm rule prohibiting those who have access to Material Information from trading in the company’s securities before the information has been generally disclosed to the public and a reasonable period of time for dissemination of the information has passed.

   This policy is intended to outline the restrictions on trading in securities of MTS by insiders and other employees of MTS or its subsidiaries, and the insider reporting requirements applicable to insiders of MTS.

   It is the personal responsibility of each director, officer and employee to ensure that, when they trade or propose to trade in securities of MTS or of companies with which MTS has business dealings, they comply with all applicable insider trading restrictions including those referred to in this policy. The provisions of this policy are qualified by the specific provisions of applicable law.

2. INSIDER TRADING RESTRICTIONS
   1. Insider Trading Restrictions

      Insider trading is strictly regulated by Canadian securities law, which provides for both fines and imprisonment in the event of violations of the prescribed restrictions on trading in the securities of a reporting issuer. For this purpose, securities include shares, phantom shares, debt instruments, puts, calls, options or other rights to purchase or sell securities and a security the market price of which varies materially with the market price of the securities of the reporting issuer.

      Securities legislation sets out two main prohibitions in relation to Material Information of a reporting issuer:

      1. A person in a special relationship with a reporting issuer may not purchase or sell securities of the issuer when in possession of Material Information related to the issuer that has not been generally disclosed to the public. Failure to comply with the foregoing is known as “insider trading”.
      2. A person in a special relationship with a reporting issuer may not inform another person or corporate entity, other than in the necessary course of business, of Material Information related to the issuer before that information has been generally disclosed to the public. Failure to comply with the foregoing is known as tipping.
   2. Material Information

      For this purpose, “Material Information” means any information that, if disclosed, would significantly affect, or would reasonably be expected to have a significant effect on, the market price or value of any of an issuer’s securities. That includes any such information related to the business, operations or capital of MTS. Information may also be material if it would reasonably be expected to have a significant influence on an informed investor’s investment decisions. The most common Material Information consists of quarterly and annual financial results.

      The Canadian Securities Administrators, in a national policy instrument adopted in July 2002, have identified an expanded, non-exhaustive list of examples of the types of events or information that may be material. These examples are specified in Attachment A.

   3. Persons in Special Relationship

      A “person in a special relationship” with a reporting issuer includes all directors, officers, employees and insiders of the issuer and its subsidiaries (including their spouses, family members and others that live in their households), and anyone who is informed of Material Information of the issuer that has not been generally disclosed.

      Securities legislation defines “insider” as meaning all directors and senior officers of a reporting issuer or of any of its subsidiaries, and any holder of more than 10% of the voting rights of the issuer and the directors and senior officers of any such holder. A “senior officer” is defined as the chair and any vice-chair, the president, any vice-president, the secretary, the treasurer, the general manager, and any other individual who performs functions for the issuer similar to those normally performed by an individual occupying any of the above offices, together with each of the five highest paid employees of the issuer, including any of the individuals specified above. These individuals, therefore, are all insiders, and are subject to the insider trading restrictions described in this section 2 and to the insider reporting requirements described in section 3 below.

   4. MTS Trading Restrictions

      In order to avoid even the appearance of possible insider trading, MTS has established the following additional trading restrictions:

      1. Insiders of MTS and its subsidiaries, and any other employees of MTS who are given notice that they are subject to black out are prohibited from trading in securities of MTS during a period of ten (10) business days prior to, and two (2) business days following, the date of public disclosure by MTS of this Material Information. Advance notice will be given by the Company to all persons who are subject to this trading restriction of the commencement of a restricted trading period.
      2. Insiders of MTS and its subsidiaries, as well as employees of MTS and its subsidiaries, must refrain from purchasing or selling shares of MTS frequently so as to appear to be speculating in securities of MTS.
      3. Insiders of MTS and its subsidiaries, as well as employees of MTS and its subsidiaries, must not engage in short selling of, or trading in, puts or calls in respect of securities of MTS.

      The insider trading restrictions described in this policy, also apply to restrict trading by directors, officers and employees of MTS in securities of an issuer with which MTS has a business relationship or with which it is proposing to enter into a transaction or business combination.

      MTS may from time to time impose additional black-out periods on some or all of the directors, officers or employees of MTS and its subsidiaries. Despite the above, a director, officer or employee of the Company may purchase or sell securities during a black-out period with the prior written consent of the Chief Legal Officer. The Chief Legal Officer will grant permission to purchase or sell during a black-out period only in exceptional circumstances. Exceptional circumstances may include the sale of securities in the case of financial hardship or where the timing of the sale is important for tax planning purposes or where options may be expiring. In no event will any person be permitted to trade with a third party when such person has knowledge of any material undisclosed information.

3. INSIDER REPORTING REQUIREMENTS
   1. General Reporting Requirements

      Pursuant to Canadian securities legislation, insiders, as defined in section 2 above, are required to file insider trading reports, in a prescribed manner, with the securities regulatory authorities in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia and Newfoundland.

   2. Initial Insider Report

      An insider must file an initial insider report within ten (10) days from the day on which the person became an insider of a reporting issuer. This report must indicate the position held by the insider with the issuer, and must disclose any direct or indirect beneficial ownership of, or control or direction over, securities of the issuer. If the insider does not own or exercise control or direction over securities of the issuer, the insider is not required to file an initial insider report until such time as the insider first acquires securities or control or direction over securities.

   3. Subsequent Insider Reports

      All changes in the beneficial ownership of or control or direction over securities by an insider, including the purchase or sale of securities, must be reported by filing an insider report within ten (10) days from the day on which the change took place. This insider report must state both the change in holdings and the resulting ownership or control position.

   4. Filing by MTS

      The insiders of MTS are responsible for ensuring that they are in compliance with the insider reporting requirements set out in securities law as described above. Insiders, therefore, are responsible for preparing and filing the required insider reports in the prescribed manner within the statutory filing period. To assist MTS’s insiders in complying with these requirements, the office of the Corporate Secretary, through the Law Department, will when requested to do so, arrange to file the required insider reports with the securities regulatory authorities on behalf of the insider.

Changes in corporate structure

• changes in share ownership that may affect control of the company
• major reorganizations, amalgamations, or mergers
• take-over bids, issuer bids, or insider bids

Changes in capital structure

• the public or private sale of additional securities
• planned repurchases or redemptions of securities
• planned splits of common shares or offerings of warrants or rights to buy shares
• any share consolidation, share exchange, or stock dividend
• changes in a company’s dividend payments or policies
• the possible initiation of a proxy fight
• material modifications to the rights of security holders

Changes in financial results

• a significant increase or decrease in near-term earnings prospects
• unexpected changes in the financial results for any period
• shifts in financial circumstances, such as cash flow reductions, major asset write-offs or write-downs
• changes in the value or composition of the company’s assets
• any material change in the company’s accounting policies

Changes in business and operations

• any development that affects the company’s resources, technology, products or markets
• a significant change in capital investment plans or corporate objectives
• major labour disputes or disputes with major contractors or suppliers
• significant new contracts, products, patents, or services or significant losses of contracts or business
• significant discoveries by resource companies
• changes to the Board of Directors or executive management, including the departure of the company’s CEO, CFO, COO or president (or persons in equivalent positions)
• the commencement of, or developments in, material legal proceedings or regulatory matters
• waivers of corporate ethics and conduct rules for officers, directors, and other key employees
• any notice that reliance on a prior audit is no longer permissible
• de-listing of the company’s securities or their movement from one quotation system or exchange to another

Acquisitions and dispositions

• significant acquisitions or dispositions of assets, property or joint venture interests
• acquisitions of other companies, including a take-over bid for, or merger with, another company

Changes in credit arrangements

• the borrowing or lending of a significant amount of money
• any mortgaging or encumbering of the company’s assets
• defaults under debt obligations, agreements to restructure debt, or planned enforcement procedures by a bank or any other creditors
• changes in rating agency decisions
• significant new credit arrangements

The necessary course of business exception to the tipping prohibition would generally cover communications that are reasonably necessary in the course of business with:

• vendors, suppliers, or strategic partners on issues such as research and development, sales and marketing, and supply contracts
• employees, officers and board members
• lenders, legal counsel, auditors, underwriters, and financial and other professional advisors to the Company
• parties to negotiations
• labour unions and industry associations
• government agencies and non-governmental regulators
• credit rating agencies (provided that the information is disclosed for the purpose of assisting the agency to formulate a credit rating and the agency’s ratings generally are or will be publicly available)
• in connection with a private placement
• communications with controlling shareholders, in certain circumstances