Attached files
| file | filename |
|---|---|
| 8-K - 8-K - NTELOS HOLDINGS CORP. | d627380d8k.htm |
 NASDAQ: NTLS
INVESTOR PRESENTATION
November 13, 2013
Exhibit 99.1 |
 Presentation of Financial and Other Important Information
2
NASDAQ: NTLS
USE OF NON-GAAP FINANCIAL MEASURES
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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, business separation charges, gain/loss on sale of assets and 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 November 8, 2012, February
28, 2013, May 7, 2013, July 30, 2013 and November 5, 2013.
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
with Sprint Corporation (“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; our ability to acquire or gain
access to additional spectrum; 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 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.
|
 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
$461
million¹
7.9 million licensed POPs; covered POPs of 6.0 million; 457,100 subscribers
¹
As of market close 11/11/13 |
 Investment Considerations
Leading “pure-play”
regional wireless company
4
Strategic asset set
Strong free cash flow
Broad geographic and network technology footprint
Experienced management team
NASDAQ: NTLS
Competitive and diversified business model |
 Key
Operating Strategies 5
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 revenues and margins
Drive Smartphone and data services penetration to increase ARPU
NASDAQ: NTLS
Manage cost structure to improve profitability |
 Regional Wireless Service Provider
NASDAQ: NTLS
6
Ntelos Covered Network
Sprint Wholesale Markets
STRATEGIC NETWORK ASSETS |
 7
NASDAQ: NTLS
Virginia East
Leap³
US Cellular
¹Sprint’s retail business runs on NTELOS’s Network in West Virginia
and portions of Virginia ²US Cellular has network assets and retail
business within a portion of NTELOS’s footprint ³Pending
acquisition by AT&T Carriers Without Network Assets in NTELOS’s
Footprint West Virginia / Virginia West
Leap³
Sprint¹
T-Mobile
US Cellular² |
 Attractive Spectrum Portfolio
8
NASDAQ: NTLS
Average Spectrum Depth in Key Markets
Band
Commentary
PCS
Average depth of 23 MHz
Scarce strategic asset
AWS
Significant spectrum
holdings in contiguous
markets in western Virginia
Currently undeployed
MHZ
3,673
2,710
1,767
1,016
Licensed POPs
(000’s)
302
200
209
216
205
278
66
0
10
20
30
Virginia East
Virginia West
West Virginia
Other
Roanoke, VA
Highland, VA
Bedford, VA
Giles, VA
Charlottesville, VA
Lynchburg, VA
Bath, VA
PCS
AWS
Source: Map Info: Custom Data, Total Population – Current Year and Five Year USA by Block
Group: United States, SO215245 |
 Closing the Device Gap on Competition
9
NASDAQ: NTLS
Best
Q4 2009
Q4 2010
Q4 2013
Better
Good
LG Optimus
Plus
Motorola
Defy XT
Alcatel One
Touch Ultra
ZTE
Director
Samsung Galaxy S II
Samsung
Galaxy III
LG Optimus
Select
iPhone 4S
iPhone 5c
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 5s |
 Smartphone Penetration
10
NASDAQ: NTLS
As of September 30, 2013:
69% of postpaid subscribers have a smartphone
57% of prepaid subscribers have a smartphone
Smartphone Penetration
ARPU
$49.00
$50.00
$51.00
$52.00
$53.00
$54.00
$55.00
0%
10%
20%
30%
40%
50%
60%
70%
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
Blended ARPU
50%
55%
60%
63%
65% |
 NTELOS Branding Resonating With Consumers
11
NASDAQ: NTLS
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013
Net Ports
3Q11
3Q12
3Q13
Unaided
Awareness
24%
32%
31%
Unaided
Recall
18%
28%
29%
Purchase
Consideration
12%
21%
13%
Positive net ports
vs. all other carriers
Source: Independent third-party research studies. |
 Churn Remains Stable
12
NASDAQ: NTLS
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
Prepaid Churn
Postpaid Churn |
 Subscribers –
Net Additions Trend (Continued)
13
NASDAQ: NTLS
Seventh consecutive quarter of positive net adds
(500)
6,800
3,500
5,500
9,300
11,400
3,800
2,300
(2,000)
0
2,000
4,000
6,000
8,000
10,000
12,000
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013 |
 Continuing Growth in Operating Revenues
14
NASDAQ: NTLS
3Q13 revenue increased 14% from 3Q12 to $130.9 million
millions
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
3Q 2012
3Q 2013
Retail
Wholesale & Other
+14% |
 Retail Revenue Gains Continue
15
NASDAQ: NTLS
Subscriber revenue growth driven by both:
ARPU growth
Subscriber growth
2Q13 retail revenue increased 2% sequentially and 13% from 2Q12 to $78.4
million Highest level in company history
+13%
millions
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013 |
 Wholesale/Other Revenue Remains Strong
16
NASDAQ: NTLS
3Q13 wholesale/other revenue increased 17% from 3Q12 to $50.6 million
Increase reflects incremental revenue recognized from SNA settlement
millions
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
SNA Settlement
+17% |
 Capital Investment
17
NASDAQ: NTLS
Status:
1,434 cell sites as of Sept. 30, 2013
Pending launch of first LTE markets
millions
Catalysts:
2011-2012 Cell site expansion
2013 Initial LTE deployment
$52
$58
$72
$53
$65
$0
$10
$20
$30
$40
$50
$60
$70
$80
FY 2010
FY 2011
FY 2012
YTD 2012
YTD 2013 |
 Network Evolution
18
•
6.0mm covered POPs; 7.9 mm licensed
POPs
•
100% of covered POPs are served with 3G
EV-DO
Rev.
A
•
Primarily Alcatel Lucent equipment
•
1,432 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 BRS
•
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 of first LTE is imminent
•
Complete initial build-out by year-end
2014; 70% of covered POPs
•
Devices supporting Band Classes 2,
4 and 25
•
Estimated network CapEx of
approximately $65mm to $70mm
Current network
4G LTE upgrade plans
NASDAQ: NTLS |
 Sprint Strategic Network Alliance Evolution
19
NASDAQ: NTLS
8/1999:
Agreement
with Horizon PCS
(Sprint affiliate)
10/2010:
Sprint
announces
Network Vision
8/2004:
Horizon
bankruptcy; Sprint
agreement signed
8/2007:
Amends
agreement with Sprint
10/2006:
Sprint
launches EV-DO
Rev A in San Diego
9/2012:
Sprint has 19
metropolitan areas
with 4G LTE
3/2008:
Launch
of EV-DO
11/2008:
Completes
EV-DO build
9/2013:
Settles
disputes with Sprint
and amends
agreement
1999
1999
2010
2010
2006
2006
2012
2012
2008
2008
2013
2013
2008
2008
2004
2004 |
 Sprint Strategic Network Alliance Service
20
Exclusively provides 3G services to large number of Sprint home and travel
subscribers
Encompasses approximately
•
2.0mm covered POPs in WV and Western VA
•
846 cell sites
•
36,800 square miles
Provides ~$40mm in quarterly revenues
NASDAQ: NTLS |
 Sprint Strategic Network Alliance Leverages NTELOS’s Network
NASDAQ: NTLS
Strategic
Network
Alliance
revenues
(1)
(1) Excludes roaming
Sprint Nextel Strategic Network Alliance
through at least July 2015
Attractive contribution to margin
Growing Usage
Significant growth in data usage
since EV-DO launched
Voice continues to grow
millions
21
$38
$40
$40
$42
$41
$40
$40
$49
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
SNA Settlement |
 Financial Summary |
 Operating Revenues
23
NASDAQ: NTLS
+14%
millions
$131
$71
$75
$77
$78
$80
$43
$42
$42
$41
$41
$114
$117
$119
$120
$0
$20
$40
$60
$80
$100
$120
$140
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
SNA Settlement
Sprint, Wholesale & Other
Retail
$10 |
 Adjusted EBITDA
24
NASDAQ: NTLS
(millions)
Continued investments in the business resulted in higher Adjusted EBITDA
$32
$33
$37
$41
$46
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
SNA Settlement |
 Historical Financial Performance
25
NASDAQ: NTLS
Revenue
Adjusted EBITDA
millions
millions
(1) Updated as of November 5, 2013 (includes $9.6 million in Adjusted EBITDA in
connection with the SNA dispute settlement) $407
$423
$454
$100
$140
$180
$220
$260
$300
$340
$380
$420
$460
2010
2011
2012
$142
$143
$135
$150 -
$155
$50
$70
$90
$110
$130
$150
$170
2010
2011
2012
2013 G (1) |
 Managing Free Cash Flow with Disciplined Capital Investment
26
NASDAQ: NTLS
CapEx
millions
millions
CapEx
Free Cash Flow
(Adjusted EBITDA Less CapEx)
(1)
As of November 5, 2013
Note: Excludes wireline and related capex incurred prior to business separation
Revenue
Revenue
millions
~$80
$85
$97
$71
$52
$58
$72
$350
$375
$400
$425
$450
$475
$0
$25
$50
$75
$100
2007
2008
2009
2010
2011
2012
2013 G (1)
$70-$75
$59
$60
$85
$90
$85
$63
$0
$25
$50
$75
$100
2007
2008
2009
2010
2011
2012
2013 G (1)
Maintenance, IT & Other
Capacity
Growth
EV-DO |
 Capitalization Overview
NASDAQ: NTLS
27
($ in millions)
September 30, 2013
Cash, unrestricted
$110.9
Total Debt
$491.5
Net Debt
$380.6
LTM Adjusted EBITDA
$157.2
Secured Term Loan
$490.4
Net Debt Leverage
2.4x |
 Guidance (as of November 5)
NASDAQ: NTLS
28
FY
2013
Adjusted
EBITDA
of
$150
million
-
$155
million
FY 2013 CapEx of ~$80 million
2013 net adds expected to be at or about 2012 net adds
|
 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
18 years industry experience
Former CFO, iPCS Wireless
Former CFO, Metro One
Telecommunications
17 years industry experience
Former COO, iPCS Wireless
Former VP of Midwest
Operations, U.S. Cellular
Corporation
33 years industry experience
29
NASDAQ: NTLS
ROBERT McAVOY
EVP, CTO
Former Market General
Manager, PrimeCo
Began career at Bell Atlantic
25 years industry experience |
 Summary
Leading “pure-play”
regional wireless company
30
Strategic asset set
Strong free cash flow
Broad geographic and network technology footprint
Experienced management team
NASDAQ: NTLS
Competitive and diversified business model |
 Appendix |
 32
NASDAQ: NTLS
NTELOS Holdings Corp.
Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
Year Ended:
(In thousands)
2012
2011
2010
2009
2008
2007
Net Income Attributable to NTELOS Holdings Corp.
18,387
$
(23,715)
$
44,808
$
63,285
$
44,829
$
32,453
$
Net income attributable to noncontrolling interests
1,941
(1,769)
(1,417)
(851)
Net Income
20,328
(21,946)
46,225
64,136
44,829
32,453
Discontinued operations, net
-
(45,386)
16,882
18,054
16,002
12,638
Income from continuing operations
20,328
23,440
29,343
46,082
28,827
19,815
Interest expense
22,944
23,380
24,728
15,922
17,024
24,520
Loss (gain) on derivatives
-
264
147
(2,100)
9,531
3,527
Income taxes
12,676
16,363
20,251
26,526
20,787
17,161
Corporate financing fees
-
1,567
Other expense (income), net
7,194
1,240
413
971
1,402
2,953
Operating income
63,142
66,254
74,882
87,401
77,571
67,976
Depreciation and amortization
63,258
63,083
58,016
63,015
75,982
70,102
Accretion of asset retirement obligations
637
658
770
695
914
746
Equity-based compensation
6,029
6,072
5,270
3,227
2,729
4,328
Acquisition related charges
-
-
2,815
1,477
570
Business separation charges
1
1,660
6,997
352
Adjusted EBITDA
134,726
$
143,064
$
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. |
 33
NASDAQ: NTLS
NTELOS Holdings Corp.
Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
(In thousands)
3Q13
2Q13
1Q13
4Q12
3Q12
Net Income Attributable to NTELOS Holdings Corp.
10,583
$
9,386
$
5,493
$
321
$
4,608
$
Net income attributable to noncontrolling interests
588
541
529
443
488
Net Income
11,171
9,927
6,022
764
5,096
Interest expense
7,480
7,398
7,361
6,651
5,432
Income taxes
8,340
6,380
3,744
(454)
3,141
Other expense (income), net
431
(151)
369
7,038
50
Operating income
27,422
23,554
17,496
13,999
13,719
Depreciation and amortization
16,559
20,443
18,456
17,440
15,810
Gain on sale of intangible assets
-
(4,442)
-
-
-
Accretion of asset retirement obligations
135
173
143
174
163
Equity-based compensation
1,442
1,460
1,321
1,346
1,478
Business
separation
charges
1
-
-
-
56
684
Adjusted EBITDA
45,558
$
41,188
$
37,416
$
33,015
$
31,854
$
1
Charges for legal and consulting services costs in connection with the separation of
the wireless and wireline operations. |
 34
NASDAQ: NTLS
NTELOS Holdings Corp.
ARPU Reconciliation
Average Monthly Revenue per User (ARPU) ¹
3Q13
2Q13
1Q13
4Q12
3Q12
FY 2012
FY 2011
(In thousands, except for subscribers and ARPU)
Operating Revenues
130,912
$
119,859
$
119,345
$
117,398
$
114,466
$
453,989
$
422,629
$
Less: Equipment revenue from sales to new customers
(3,595)
(3,104)
(3,521)
(3,808)
(3,333)
(15,041)
(9,091)
Less: Equipment revenue from sales to existing customers
(2,946)
(2,395)
(3,117)
(3,315)
(3,416)
(15,037)
(17,793)
Less: Wholesale, other and adjustments
(50,142)
(41,179)
(40,918)
(41,488)
(42,380)
(165,765)
(143,477)
Gross subscriber revenue
74,229
73,181
71,789
68,787
65,337
258,146
252,268
Less: prepay subscriber revenue
(16,248)
(15,879)
(15,205)
(14,823)
(14,103)
(56,330)
(48,758)
Less: adjustments to prepay subscriber revenue
(230)
(303)
(479)
(237)
(434)
(1,706)
(1,175)
Gross postpay subscriber revenue
57,751
$
56,999
$
56,105
$
53,727
$
50,800
$
200,110
$
202,335
$
Prepay subscriber revenue
16,248
15,879
15,205
14,823
14,103
56,330
48,758
Plus: adjustments to prepay subscriber revenue
230
303
479
237
434
1,706
1,175
Gross prepay subscriber revenue
16,478
$
16,182
$
15,684
$
15,060
$
14,537
$
58,036
$
49,933
$
Average number of subscribers
455,724
453,262
444,244
434,457
427,610
425,377
422,256
Total ARPU
54.29
$
53.82
$
53.87
$
52.78
$
50.93
$
50.57
$
49.79
$
Average number of postpay subscribers
297,900
299,304
298,414
292,668
287,165
288,428
298,992
Postpay ARPU
64.62
$
63.48
$
62.67
$
61.19
$
58.97
$
57.82
$
56.39
$
Average number of prepay subscribers
157,824
153,958
145,831
141,789
140,446
136,949
123,264
Prepay ARPU
34.80
$
35.04
$
35.85
$
35.41
$
34.50
$
35.31
$
33.76
$
Gross subscriber revenue
74,229
73,181
71,789
68,787
65,337
258,146
252,268
Less: voice and other feature revenue
(43,672)
(43,078)
(42,658)
(41,379)
(39,366)
(156,032)
(171,882)
Data revenue
30,557
$
30,103
$
29,131
$
27,408
$
25,971
$
102,114
$
80,386
$
Average number of subscribers
455,724
453,262
444,244
434,457
427,610
425,377
422,256
Total Data ARPU
22.35
$
22.14
$
21.86
$
21.03
$
20.25
$
20.00
$
15.86
$
Gross postpay subscriber revenue
57,751
56,999
56,105
53,727
50,800
200,110
202,335
Less: postpay voice and other feature revenue
(36,652)
(36,170)
(35,952)
(34,651)
(33,028)
(130,601)
(144,114)
Postpay data revenue
21,099
$
20,829
$
20,153
$
19,076
$
17,772
$
69,509
$
58,221
$
Gross prepay subscriber revenue
16,478
16,182
15,684
15,060
14,537
58,036
49,933
Less: prepay voice and other feature revenue
(7,020)
(6,908)
(6,706)
(6,728)
(6,338)
(25,431)
(27,768)
Prepay data revenue
9,458
$
9,274
$
8,978
$
8,332
$
8,199
$
32,605
$
22,165
$
Average number of postpay subscribers
297,900
299,304
298,414
292,668
287,165
288,428
298,992
Postpay data ARPU
23.61
$
23.20
$
22.51
$
21.73
$
20.63
$
20.08
$
16.23
$
Average number of prepay subscribers
157,824
153,958
145,831
141,789
140,445
136,949
123,264
Prepay data ARPU
19.98
$
20.08
$
20.52
$
19.59
$
19.46
$
19.84
$
14.99
$
1
Average monthly revenue per user (ARPU) is computed by dividing service
revenues per period 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 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.
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