Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - NTELOS HOLDINGS CORP. | d446193d8k.htm |
 Exhibit 99.1
NASDAQ: NTLS
Investor Presentation
November 2012 |
 2
NASDAQ: NTLS
USE OF NON-GAAP FINANCIAL MEASURES
Included in this presentation are certain non-GAAP financial measures that are not determined in
accordance with US generally accepted accounting principles (“GAAP”). These financial
performance measures are not indicative of cash provided or used by operating activities and exclude the effects of certain operating,
capital and financing costs and may differ from comparable information provided by other companies,
and they should not be considered in isolation, as an alternative to, or more meaningful than
measures of financial performance determined in accordance with US generally accepted accounting principles. These
financial performance measures are commonly used in the industry and are presented because NTELOS
believes they provide relevant and useful information to investors. NTELOS utilizes these
financial performance measures to assess its ability to meet future capital expenditure and working capital requirements, to
incur indebtedness if necessary, and to fund continued growth. NTELOS also uses these financial
performance measures to evaluate the performance of its business, for budget planning purposes
and as factors in its employee compensation programs. Adjusted EBITDA is defined as net income attributable to
NTELOS Holdings Corp. before interest, income taxes, depreciation and amortization, accretion of asset
retirement obligations, gain/loss on derivatives, net income attributable to
non-controlling interests, other expenses/income, equity based compensation charges, acquisition related charges, net loss from
discontinued operations and costs related to the separation of the wireless and wireline companies.
Please review the reconciliations and other definitions of non- GAAP financial measures
contained in the press releases filed by the Company with the SEC, including those filed on Form 8-K on February 29, 2012, April 30,
2012, August 1, 2012 and November 1, 2012.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Any statements contained in this presentation that are not statements of historical fact, including
statements about our beliefs and expectations, are forward- looking statements and should be
evaluated as such. The words “anticipates,” “believes,” “expects,” “intends,” “plans,” “estimates,” “targets,” “projects,” “should,”
“may,” “will” and similar words and expressions are intended to identify
forward-looking statements. Such forward-looking statements reflect, among other things,
our current expectations, plans and strategies, and anticipated financial results, all of which are
subject to known and unknown risks, uncertainties and factors that may cause our actual results
to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our
ability to control or predict. Because of these risks, uncertainties and assumptions, you should not
place undue reliance on these forward-looking statements. Furthermore, forward-looking
statements speak only as of the date they are made. We do not undertake any obligation to update or review any forward-looking
information, whether as a result of new information, future events or otherwise. Important
factors with respect to any such forward-looking statements, including certain risks and
uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include, but are not limited to: our
ability to attract and retain retail subscribers to our services; our dependence on our strategic
relationship and the potential outcome of any disputes with Sprint Nextel (“Sprint”);
a potential increase in roaming rates and wireless handset subsidy costs; rapid development and intense competition in the telecommunications
industry; our ability to finance, design, construct and realize the benefits of any planned network
technology upgrade; the potential to experience a high rate of customer turnover; the potential
for Sprint and others to build networks in our markets; cash and capital requirements; operating and financial restrictions
imposed by our senior credit facility; adverse economic conditions; federal and state regulatory fees,
requirements and developments; loss of ability to use our current cell sites; our ability to
realize the benefits anticipated following the spinoff of our wireline business; our continued reliance on indirect channels of retail
distribution; our reliance on certain suppliers and vendors; and other unforeseen difficulties that
may occur. These risks and uncertainties are not intended to represent a complete list of all
risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements
and risk factors included in our SEC filings, including our most recent Annual Report filed on Form
10-K. Presentation of Financial and Other Important Information
|
 Company Overview
3
Leading pure-play wireless carrier in mid-Atlantic region
Headquartered in Waynesboro, VA
Exclusive CDMA Network provider for Sprint in WV and Western VA
NTELOS-branded retail postpay and prepay subscribers; robust wholesale
business NASDAQ: NTLS
NASDAQ: NTLS –
Market Capitalization approximately $331 million¹
8.1 million licensed POPs; covered POPs of 6.0 million; approx. 430,000
subscribers ¹
As of market close 11/26/12 |
 Key
Operating Strategies 4
Elevate brand & best value in wireless position to improve quality of
subscriber base and grow market share
Enhance customer experience at all touch points by focusing on core differentiators
of savings, simplicity and service to improve customer satisfaction and
reduce subscriber churn
Leverage disciplined network investments to expand wholesale revenues and
margin Drive Smartphone and data services penetration to increase ARPU
NASDAQ: NTLS
Manage cost structure to improve profitability |
 Investment Considerations
Leading “pure-play”
Mid-Atlantic regional wireless company
5
Strategic asset set
Strong free cash flow
Broad geographic and network technology footprint
Experienced management team
NASDAQ: NTLS
Competitive and diversified business model |
 Regional Wireless Service Provider
NASDAQ: NTLS
6
Ntelos Covered Network
Sprint Wholesale Markets
STRATEGIC NETWORK ASSETS |
 Carriers Without Network Assets in NTELOS’s Footprint
7
NASDAQ: NTLS
Virginia East
Leap
Metro PCS
US Cellular
¹Sprint’s retail business runs on NTELOS’s Network
²US Cellular has network assets and retail business within a portion of
NTELOS’s footprint West Virginia / Virginia West
Leap
Metro PCS
Sprint¹
T-Mobile
US Cellular² |
 Attractive Spectrum Portfolio
8
NASDAQ: NTLS
Average Spectrum Depth in Key Markets
Source:
Map
Info:
Custom
Data,
Total
Population
–
Current
Year
and
Five
Year
USA
by
Block
Group:
United
States,
SO215245
Band
Commentary
PCS
Average depth of 23 MHz
Scarce strategic asset
AWS
Significant spectrum
holdings in top operating
markets of western Virginia
Currently undeployed
MHZ
3,643
2,661
1,775
1,025
Licensed POPs
(000’s)
302
194
211
213
200
273
0
10
20
30
Virginia East
Virginia West
West Virginia
Other
Roanoke, VA
Highland, VA
Bedford, VA
Giles, VA
Charlottesville, VA
Lynchburg, VA
PCS
AWS |
 Operating Revenues
9
NASDAQ: NTLS
millions
$72
$72
$70
$70
$66
$69
$70
$71
$31
$33
$35
$38
$40
$41
$42
$43
$103
$105
$105
$108
$106
$110
$112
$114
$0
$20
$40
$60
$80
$100
$120
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Sprint, Wholesale & Other
Retail |
 Competitively Differentiated Retail Model
SAVINGS
SIMPLICITY
SERVICES
Unlimited nationwide
plans always less
expensive than AT&T
and Verizon Wireless
Cutting through the
complexity with simple,
customer friendly
products and plans
Creating “raving fans,”
leveraging local retail and
customer service
presence
10
NASDAQ: NTLS
Note: Historical examples of campaigns; not to be considered current offers.
|
 Closing the Device Gap on Competition
11
NASDAQ: NTLS
Best
Q4 2009
Q4 2010
Q4 2012
Better
Good
LG Optimus
Plus
Motorola
Defy XT
Alcatel One
Touch Ultra
Motorola
Milestone 3
HTC One V
Samsung Galaxy S II
Motorola
RAZR MAXX
Motorola
Milestone PLUS
iPhone 4
iPhone 4S
iPhone 5
BlackBerry
Curve 8330
BlackBerry
Pearl Flip
8230
HTC Hero
Android
BlackBerry
Pearl
8130
HTC 6800
HTC Touch
Diamond
BlackBerry
Curve 8330
BlackBerry
Pearl Flip
8230
HTC Snap
HTC Hero
Android
BlackBerry
Tour 9630 |
 iPhone Data –
Q3 2012 Snapshot
NASDAQ: NTLS
12
39,000 iPhones sold since launch on April 20, 2012
36% of gross adds
68% of postpaid adds
72% of iPhones sold to new subscribers
13% penetration in postpaid subscriber base as of September 30, 2012
24% of iPhone upgrades paid early upgrade fee |
 Growth Initiatives
NASDAQ: NTLS
13
NTELOS brand positioned as the best value in wireless: Savings, Simplicity,
Service •
Gaining subscriber share from competitors
•
“Brand Awareness”
and “Consideration”
scores have dramatically improved
Churn improvement resulting in positive net add trends
•
Postpay churn decreased 57 bps from 2.6% in Q3 11 to 2.0% in Q3 12
•
Prepay churn down 178 bps from 6.5% in Q3 11 to 4.7% in Q3 12
•
Total churn down 81 bps from 3.7% in Q3 11 to 2.9% in Q3 12
Simplification of rate plans and handset pricing to better compete in local
marketplace Smartphone penetration driving growth and profitability
•
Postpay Smartphone penetration increased from 28.3% in Q3 11 to 52.7% in Q3
12 •
Positive impact from iPhone launch in April 2012, followed by iPhone 5 launch in
September
•
Retail data ARPU growth of $4.08 from $16.17 in Q3 11 to $20.25 in Q3 12
Leverage network investments to expand wholesale revenues and margin beyond Sprint
Network Alliance |
 NTELOS Branding Resonating With Consumers
14
NASDAQ: NTLS
Positive net ports
vs. all other carriers
Source: Independent third-party research studies.
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Postpay Number Porting, Net Ports
3Q11
3Q12
Net
Promoter
Score
33%
46%
Unaided
Awareness
24%
32%
Unaided Recall
16%
28%
Purchase
Consideration
12%
21% |
 Managing Postpaid Churn to Enhance Profitability
15
NASDAQ: NTLS
Postpaid Churn
Predictive churn analytics driving
improved results
Brand positioning yielding higher
credit quality customers
“CRM”
driving retention costs
down through more targeted
loyalty programs
“Best Value in Wireless”
rate
plans resonating with customers
1.0%
1.5%
2.0%
2.5%
3.0%
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012 |
 Consistently Improving Prepaid Churn Metrics
16
NASDAQ: NTLS
Prepaid Churn
Simplified, tax-inclusive rate
plans at competitive prices
Expanded device line-up driving
higher credit quality subscribers
Increased smartphone
penetration results in customer
“stickiness”
Lower churn in prepay base
improves ARPU and customer
profitability
2%
4%
6%
8%
10%
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012 |
 Subscribers and ARPU –
Return to Growth
17
NASDAQ: NTLS
Q2
Q3
Q4
Q1
Q2
Q3
2011
2011
2011
2012
2012
2012
Postpay net additions comparison
Prepay net additions comparison
(8,000)
(4,000)
0
4,000
8,000
Q1
Q2
Q3
Q4
2012
2011
(8,000)
(4,000)
0
4,000
8,000
12,000
16,000
Q1
Q2
Q3
Q4
2012
2011
$0
$10
$20
$30
$40
$50
$60
Prepay Data ARPU
Prepay Voice ARPU
Postpay Data ARPU
Postpay Voice ARPU |
 Network Evolution
NASDAQ: NTLS
18
•
6.0mm covered POPs; 8.1mm licensed POPs
•
90% of covered POPs are served with 3G
EV-DO Rev. A
•
Primarily Alcatel Lucent equipment
•
1,396 cell sites deployed
•
Market level spectrum holdings ranging from
10 MHz to 50 MHz
•
PCS average depth of 23 MHz
•
AWS average depth of 20 MHz
•
Additional spectrum includes
•
Small amount of WCS, BRS and LMDS
•
Opportunities for additional spectrum
and spectrum sharing being evaluated
•
Upgrade history
•
1xRTT launched in 2002
•
EV-DO Rev A launched in 2008
•
LTE Drivers
•
Serve the needs of our retail
subscribers
•
Maintain competitive position in
marketplace
•
Optimize long-term network
operating cost with new technology
•
Serve the needs of our largest
wholesale customer, Sprint
•
Deployment Plan
•
Launch first LTE markets in 2H 2013
•
Complete initial build-out by year-end
2014; 70% of covered POPs
•
Devices supporting Band Classes 2,
4 and 25
•
Estimated CapEx of approximately
$60mm to $65mm
Current network
4G LTE upgrade plans |
 Sprint Strategic Network Alliance Evolution
19
NASDAQ: NTLS
8/1999:
Agreement
with Horizon PCS
(Sprint affiliate)
8/2004:
Horizon
bankruptcy; Sprint
agreement signed
10/2006:
Sprint
launches EV-DO
Rev A in San Diego
10/2010:
Sprint
announces Network
Vision
9/2012:
Sprint
has
19
metropolitan areas with
4G LTE
8/2007:
Amends
agreement with Sprint
3/2008:
Launch
of EV-DO
11/2008:
Completes
EV-DO build |
 Sprint Strategic Network Alliance Service
20
NASDAQ: NTLS
Exclusively provides 3G services to large number of Sprint home and travel
subscribers
Encompasses approximately
•
2.0mm covered POPs in WV and Western VA
•
823 cell sites
•
36,800 square miles
Provides ~$40mm in quarterly revenues
Sprint relationship update
•
Continuing dialogue
•
Rate dispute previously outlined remains outstanding; estimated range ($8.0mm) to
$8.0mm
•
Q3 $4.2mm dispute, isolated to historical billing issues only
|
 Sprint Strategic Network Alliance Leverages NTELOS’s Network
21
NASDAQ: NTLS
Strategic
Network
Alliance
revenues
(1)
(1)
Excludes roaming
Sprint Nextel Strategic Network Alliance
through at least July 2015
$9 million monthly minimum revenue
guarantee
Attractive contribution to margin
Growing Usage
Significant growth in data usage
since EV-DO launched
Voice continues to grow
Calculated revenues exceeded
the $9 million monthly minimum in
all quarters of 2011 and 2012 YTD
millions
$21
$22
$23
$23
$24
$24
$25
$10
$11
$13
$15
$16
$17
$17
$0
$5
$10
$15
$20
$25
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Total Voice
Total Data |
 Financial Summary |
 Strong Historical Financial Performance
23
NASDAQ: NTLS
Revenue
Adjusted EBITDA
Driving Positive Results
millions
millions
$407
$423
$443
$317
$337
$100
$140
$180
$220
$260
$300
$340
$380
$420
$460
2010
2011
LTM 9/30/12
YTD 11
YTD 12
$142
$143
$136
$109
$102
$50
$70
$90
$110
$130
$150
2010
2011
LTM 9/30/12
YTD 11
YTD 12 |
 Managing Free Cash Flow with Disciplined Capital Investment
24
NASDAQ: NTLS
CapEx
millions
millions
CapEx
Adjusted EBITDA less CapEx
Note: Excludes wireline capex incurred prior to business separation
(1)
Includes $5mm of capex related to business separation
(1)
Revenue
Network Upgrade to EV-DO Still Driving Revenue Growth
Revenue
millions
$85
$97
$71
$50
$58
$70
$350
$375
$400
$425
$450
$0
$25
$50
$75
$100
2007
2008
2009
2010
2011
LTM
9/30/12
Maintenance, IT & Other
Capacity
Growth
EV-DO
$59
$60
$85
$92
$85
$66
$0
$25
$50
$75
$100
2007
2008
2009
2010
2011
LTM
9/30/12 |
 Financial Overview
(in millions)
2011
3Q12
Capitalization
Cash
$60.0
$64.6
Total Debt
$458.4
$456.3
Net Debt
$398.4
$391.7
Net Debt Leverage
3.0X
3.0X
Guidance*
Full Year 2012 Adjusted EBITDA
$132mm - $136mm
Full Year 2012 CapEx
~$75mm
* As of November 8, 2012
NASDAQ: NTLS
Senior Secured Credit Facility*
$150 million Term Loan A
Priced at LIBOR + 350bps, subject to 1.0% LIBOR floor
Expires August 2015
$350 million Term Loan B
Priced at LIBOR + 475bps, subject to 1.0% LIBOR floor
Expires November 2019
25
*Completed transaction on November 9, 2012 |
 Senior Executives—Wireless Veterans
JIM HYDE
CEO, President and Director
STEB CHANDOR
EVP, CFO and Treasurer
CONRAD HUNTER
EVP, COO
Former CEO, T-Mobile UK
Former T-Mobile USA /
Western Wireless /
VoiceStream Sr. Exec
17 years industry experience
Former CFO, iPCS Wireless
Former CFO, Metro One
Telecommunications
16 years industry experience
Former COO, iPCS Wireless
Former VP of Midwest
Operations, U.S. Cellular
Corporation
32 years industry experience
26
NASDAQ: NTLS |
 Summary
Leading “pure-play”
Mid-Atlantic regional wireless company
27
Strategic asset set
Strong free cash flow
Broad geographic and network technology footprint
Experienced management team
NASDAQ: NTLS
Competitive and diversified business model |
 Appendix |
 29
NASDAQ: NTLS
(In thousands)
LTM 9/30/2012
2011
2010
2009
2008
2007
Net Income Attributable to NTELOS Holdings Corp.
(42,472)
$
(23,715)
$
44,808
$
63,285
$
44,829
$
32,453
$
Net income attributable to noncontrolling interests
(1,945)
(1,769)
(1,417)
(851)
Net Income
(40,527)
(21,946)
46,225
64,136
44,829
32,453
Discontinued operations, net
(64,812)
(45,386)
16,882
18,054
16,002
12,638
Income from continuing operations
24,285
23,440
29,343
46,082
28,827
19,815
Interest expense
21,756
23,380
24,728
15,922
17,024
24,520
Loss (gain) on derivatives
31
264
147
(2,100)
9,531
3,527
Income taxes
15,202
16,363
20,251
26,526
20,787
17,161
Corporate financing fees
1,366
1,567
Other expense (income), net
(67)
1,240
413
971
1,402
2,953
Operating income
62,573
66,254
74,882
87,401
77,571
67,976
Depreciation and amortization
63,407
63,083
58,016
63,015
75,982
70,102
Accretion of asset retirement obligations
618
658
770
695
914
746
Equity-based compensation
5,908
6,072
5,270
3,227
2,729
4,328
Acquisition related charges
(41)
2,815
1,477
570
Business separation charges
1
3,244
6,988
352
Adjusted EBITDA
135,709
143,055
$
142,105
$
155,815
$
157,196
$
143,721
$
1
Charges for legal and consulting services costs in connection with the separation of
the wireless and wireline operations. |
 30
NASDAQ: NTLS
NTELOS Holdings Corp.
Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
(In thousands)
2012
2011
2012
2011
Net Income Attributable to NTELOS Holdings Corp.
4,608
$
13,265
$
18,066
$
36,822
$
Net income attributable to noncontrolling interests
488
481
1,498
1,322
Net Income
5,096
13,746
19,564
38,144
Discontinued operations, net
-
6,813
-
19,426
Income from continuing operations
5,096
6,933
19,564
18,718
Interest expense
5,432
5,509
16,293
17,918
Income taxes
3,141
4,969
13,130
14,291
Other expense (income), net
50
23
156
1,897
Operating income
13,719
17,434
49,143
52,824
Depreciation and amortization
15,810
16,098
45,818
45,494
Accretion of asset retirement obligations
163
176
463
503
Equity-based compensation
1,478
1,611
4,683
4,847
Business separation charges
684
3,375
1,604
5,388
Adjusted EBITDA
31,854
$
38,694
$
101,711
$
109,056
$
Three Months Ended September 30,
Nine Months Ended September 30,
1
Charges in connection with the separation of the Company's wireless and wireline
operations. 1 |
 31
NASDAQ: NTLS
NTELOS Holdings Corp.
ARPU Reconciliation
Average Monthly Revenue per User (ARPU) ¹
2012
2011
2012
2011
(In thousands, except for subscribers and ARPU)
Operating Revenues
114,466
$
107,404
$
336,592
$
316,633
$
Less: Equipment revenue from sales to new customers
(3,333)
(2,284)
(11,233)
(6,214)
Less: Equipment revenue from sales to existing customers
(3,416)
(4,859)
(11,722)
(14,151)
Less: Wholesale, other and adjustments
(42,380)
(37,715)
(124,278)
(104,151)
Gross subscriber revenue
65,337
62,546
189,359
192,117
Less: prepay subscriber revenue
(14,103)
(11,946)
(41,507)
(37,170)
Less: adjustments to prepay subscriber revenue
(434)
(235)
(1,469)
(871)
Gross postpay subscriber revenue
50,800
$
50,365
$
146,383
$
154,076
$
Prepay subscriber revenue
14,103
$
11,946
$
41,507
$
37,170
$
Plus: adjustments to prepay subscriber revenue
434
235
1,469
871
Gross prepay subscriber revenue
14,537
$
12,181
$
42,976
$
38,041
$
Average number of subscribers
427,610
418,923
422,351
425,391
Total ARPU
50.93
$
49.77
$
49.82
$
50.18
$
Average number of postpay subscribers
287,165
298,387
287,015
301,064
Postpay ARPU
58.97
$
56.26
$
56.67
$
56.86
$
Average number of prepay subscribers
140,446
120,536
135,336
124,327
Prepay ARPU
34.50
$
33.68
$
35.28
$
34.00
$
Gross subscriber revenue
65,337
$
62,546
$
189,359
$
192,117
$
Less: voice and other feature revenue
(39,366)
(42,218)
(114,653)
(133,233)
Data revenue
25,971
$
20,328
$
74,706
$
58,884
$
Average number of subscribers
427,610
418,923
422,351
425,391
Total Data ARPU
20.25
$
16.17
$
19.65
$
15.38
$
Gross postpay subscriber revenue
50,800
$
50,365
$
146,383
$
154,076
$
Less: postpay voice and other feature revenue
(33,028)
(36,028)
(95,950)
(110,890)
Postpay data revenue
17,772
$
14,337
$
50,433
$
43,186
$
Gross prepay subscriber revenue
14,537
$
12,181
$
42,976
$
38,041
$
Less: prepay voice and other feature revenue
(6,338)
(6,190)
(18,703)
(22,340)
Prepay data revenue
8,199
$
5,991
$
24,273
$
15,701
$
Average number of postpay subscribers
287,165
298,387
287,015
301,064
Postpay data ARPU
20.63
$
16.02
$
19.52
$
15.94
$
Average number of prepay subscribers
140,445
120,536
135,336
124,327
Prepay data ARPU
19.46
$
16.57
$
19.93
$
14.03
$
Three Months Ended September 30,
Nine Months Ended September 30,
Average monthly revenue per user (ARPU) is computed by dividing service revenues per period divided by
the average number of subscribers during that period. ARPU as defined may not be similar to
ARPU measures of other companies, is not a measurement under GAAP and should be considered in addition to, but not as a substitute for, the information contained in the
Company’s unaudited condensed consolidated statements of operations. The Company closely monitors
the effects of new rate plans and service offerings on ARPU in order to determine their
effectiveness. ARPU provides management useful information concerning the appeal of NTELOS rate plans and service offerings and the Company’s performance in attracting and
retaining high-value customers.
1 |