Attached files
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| 8-K - FORM 8-K - Consolidated Communications Holdings, Inc. | f8k_030810.htm |
Bob Currey - Chief Executive Officer
March 2010
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Safe Harbor
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Company Overview
§ One of the largest Independent Local Exchange Carrier in the U.S., with
operations in Illinois, Texas and Pennsylvania
operations in Illinois, Texas and Pennsylvania
§ Company history dates back to 1894 with our current Chairman’s great-
grandfather as the founder.
grandfather as the founder.
§ Total connections are 451,830 consisting of 247,235 ILEC access lines, 72,681
CLEC access line equivalents, 100,122 DSL subscribers, 23,127 IPTV
subscribers, and 8,665 VOIP subscribers
CLEC access line equivalents, 100,122 DSL subscribers, 23,127 IPTV
subscribers, and 8,665 VOIP subscribers
§ Providing voice, video and data services for the full triple play in all markets
§ Full year 2009 financial overview:
§ Revenues of $406.2
million
§ Adjusted EBITDA
of $188.8
§ Dividend payout
ratio of 58.4%
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Well-Established Operating History
1894
1984
2005
1997
2002
2004
CCI was formed and
non-regulated
businesses incorporated
from 1984-1989
non-regulated
businesses incorporated
from 1984-1989
CCI acquired by
McLeodUSA
McLeodUSA
Lumpkin,
Providence and
Spectrum
acquire CCI
Providence and
Spectrum
acquire CCI
Mattoon
Telephone Co.
founded by Dr.
I.A. Lumpkin
Telephone Co.
founded by Dr.
I.A. Lumpkin
CCI acquires
TXUCV and
VOIP deployed in
TX
TXUCV and
VOIP deployed in
TX
Consolidated
completes IPO; IPTV
Launch in Illinois
completes IPO; IPTV
Launch in Illinois
CNSL
acquires
NPSI
acquires
NPSI
2006
IPTV Launch
in TX
in TX
2007
2008
IPTV launch
in PA
in PA
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CNSL Acquisition Criteria
§ Attractiveness of the markets
§ Quality of the network
§ Ability to integrate efficiently
§ Potential for synergies
§ Cash flow accretive
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Consistent Organic and Acquisition Growth
§ 2002 - New Consolidated created after acquisition from McLeod.
§ 2004 - Tripled the size of the company with TXU acquisition.
§ 2005 - Initial Public Offering.
§ 2007 - Completed acquisition of North Pittsburgh Systems, Inc.
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Operations in Illinois, Texas and
Pennsylvania
Pennsylvania
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Competitive Landscape
§ With full product suite, we are best positioned RLEC to compete.
§ Competitive pricing has been stable with promotional differentiation as
the driver.
the driver.
§ Illinois markets compete with Mediacom and NewWave
Communications.
Communications.
§ Texas markets compete with Comcast and SuddenLink.
§ Pennsylvania markets compete with Armstrong and Comcast.
§ Competitors are fully launched in our territories.
Executing on our Strategy
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Sustain
and grow
cash flow
Increase
revenue
per customer
Improve
operating
efficiency
Pursue selective
acquisitions
Maintain
effective capital
deployment
Increase Revenue per Customer
DSL Subscriber Growth
§ Attractive, feature rich
broadband offerings
broadband offerings
– Multiple DSL speeds
and price points
and price points
§ IPTV enables the Triple
Play offering
Play offering
– Enhances the value of
the bundle and
deepens customer
relationships
the bundle and
deepens customer
relationships
– Approx. 21,000 triple
play customers
play customers
IPTV Service in all markets
A robust offering with over 200 all-digital channels,
premium movie packages and over a 1000 hours of
movies on demand
premium movie packages and over a 1000 hours of
movies on demand
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Video Drives Incremental Revenue Per Customer
§ Incremental Product Rollout
§ Leverages existing resources
and IP Backbone/ADSL 2+
§ Future CapEx is success
based
§ Enhances the value of
the bundle and deepens customer
relationships
relationships
§ Service available in all markets
§ 23,127 total video subscribers
§ Passed an additional 45,000
homes in 2009
§ 12% penetration on 187,630
total homes passed
§ Doubled HD channels in 2008 and 2009, adding 20 more in 2010
§ ‘Relaunch’ in July 2009 is set-top box model
– Build to consumer demand.
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PA ILEC Access Line Trends
Total Company ILEC Access Line Trends
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CLEC Overview
§ True “edge-out” strategy, which leverages ILEC network, human capital skills
and reputation in the surrounding markets
and reputation in the surrounding markets
§ Cash flow positive due to focus on success-based capital expenditures
§ Focus on small to mid-sized business customers (5 to 500 lines), educational
institutions and healthcare facilities
institutions and healthcare facilities
§ Operates an extensive SONET optical network with over 300 route miles of fiber
optic facilities in the Pittsburgh metropolitan market
optic facilities in the Pittsburgh metropolitan market
§ Focus is on migrating to an on-net, ethernet and VoIP delivery system
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Disciplined Capital Deployment
§ IP platform supports triple play, increased data speeds and new
products, delivering an all digital video signal over existing
fiber/copper network
products, delivering an all digital video signal over existing
fiber/copper network
§ DSL-capable:
– 3Meg
offering to 100% of DSL capable customers
– 10Meg
offering to 85% of customers
– 20Meg
offering to 65% of customers
§ Technology investments, which enable operating expense reductions
§ Historically capital spending has run 10% -12% of revenue
§ 2010 Cap ex Guidance is $40 million to $42 million, 2009 was $42.4
million
million
Cap ex focused on enhancing revenue, service quality and
efficiency gains
efficiency gains
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Disciplined Capital Deployment
Total Spend $31.1M $33.4M $33.5M $48.0M $42.4M
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Wireless Partnerships
§ In addition to its core business, CNSL derives a portion of its cash
flow from five wireless partnerships.
flow from five wireless partnerships.
§ All are managed by Verizon Wireless and overlap with our ILEC and
CLEC markets.
CLEC markets.
§ All have experienced solid revenue, operating income, cash
distribution and subscriber growth over the past few years.
distribution and subscriber growth over the past few years.
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CNSL Delivering Strong Financial Results…
($ in millions)
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Investment Highlights
§ Attractive dividend yield
– Double digit yield based
on recent share price
– Comfortable payout ratio
of cash available for dividends
§ Sustainable cash available for dividends
– Unique market mix of
rural and high growth areas
– Advance IP quality network
with ‘have to’ Cap ex upgrades behind us
– No debt maturities until
December 2014
– IPTV margins improving
– Wireless partnership
cash distributions have increased every year
§ Growth opportunities
– Commercial developments
planned or underway
– Pair bonding
– IPTV, DSL
and VOIP
– CLEC
– Acquisitions
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Appendix
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GAAP Reconciliation
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GAAP Reconciliation (con’t)
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Adjusted EBITDA Reconciliation
($ in thousands)
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Cash Available to Pay Dividends
($ in thousands)