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3Q 2009 Earnings Conference Call
November 4, 2009
Exhibit 99.1
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Safe Harbor Statement
This presentation includes “forward-looking statements” within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended, regarding, among other things, our business strategy, our prospects and our
financial position. These statements can be identified by the use of forward-looking
terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,”
“should,” “could,” or “anticipates” or the negative or other variation of these similar
words, or by discussions of strategy or risks and uncertainties. These statements are
based on current expectations of future events. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual results could vary
materially from the Company’s expectations and projections. Important factors that
could cause actual results to differ materially from such forward-looking statements
include, without limitation, risks related to the following:
27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended, regarding, among other things, our business strategy, our prospects and our
financial position. These statements can be identified by the use of forward-looking
terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,”
“should,” “could,” or “anticipates” or the negative or other variation of these similar
words, or by discussions of strategy or risks and uncertainties. These statements are
based on current expectations of future events. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual results could vary
materially from the Company’s expectations and projections. Important factors that
could cause actual results to differ materially from such forward-looking statements
include, without limitation, risks related to the following:
qIncreasing competition in the communications industry; and
qA complex and uncertain regulatory environment.
A further list and description of these risks, uncertainties and other factors can be found
in the Company’s SEC filings which are available online at www.sec.gov,
www.shentel.com or on request from the Company. The Company does not undertake
to update any forward-looking statements as a result of new information or future
events or developments.
in the Company’s SEC filings which are available online at www.sec.gov,
www.shentel.com or on request from the Company. The Company does not undertake
to update any forward-looking statements as a result of new information or future
events or developments.
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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. 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 Shentel believes they provide relevant and useful
information to investors. Shentel utilizes these financial performance measures to
assess its ability to meet future capital expenditure and working capital requirements, to
incur indebtedness if necessary, return investment to shareholders and to fund
continued growth. Shentel also uses these financial performance measures to evaluate
the performance of its businesses and for budget planning purposes.
determined in accordance with US generally accepted accounting principles. 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 Shentel believes they provide relevant and useful
information to investors. Shentel utilizes these financial performance measures to
assess its ability to meet future capital expenditure and working capital requirements, to
incur indebtedness if necessary, return investment to shareholders and to fund
continued growth. Shentel also uses these financial performance measures to evaluate
the performance of its businesses and for budget planning purposes.
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Chris French
CEO and President
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3Q ‘09 Highlights
q Net Income - 3Q ‘09 net income of
$6.3 million
$6.3 million
q Operating results - Net income from
continuing operations of $6.3 million
continuing operations of $6.3 million
q Cable Loss - Net loss from the
acquired cable operations of $.8 million
acquired cable operations of $.8 million
Net Income (in millions)
Net Income from Continuing Operations
(in millions)
(in millions)
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3Q ’09 & More Recent Highlights
n Cable Triple Play - 40% of acquired
homes passed upgraded through Nov.1
homes passed upgraded through Nov.1
n Investment in wireless for
sustained growth - 16 additional cell
sites and 28 additional EVDO sites
sustained growth - 16 additional cell
sites and 28 additional EVDO sites
n Discontinued Operations -
Converged Services sale in progress
Converged Services sale in progress
n Acquisition of Rural Access Lines
- Closed November 1 on acquisition of
North River of 1,000 rural access lines
for $600k, upgrade to DSL for $1.0 m
is underway
- Closed November 1 on acquisition of
North River of 1,000 rural access lines
for $600k, upgrade to DSL for $1.0 m
is underway
Number of Cell Sites
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Adele Skolits
CFO and VP of Finance
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EPS
Earnings Per Share
Earnings per Share from Continuing
Operations
Operations
n Solid Earnings- EPS from
continuing operations and in total
of $.27 in 3Q ’09
continuing operations and in total
of $.27 in 3Q ’09
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Segment Results - Operating Income
Wireless
n Average customers up 7% and service revenues up 4%
n Operating costs associated with PCS network upgrades up $1.2 million in cost
of goods sold and $.9 million in depreciation
of goods sold and $.9 million in depreciation
Wireline
n Non-recurring income - 3Q ‘08 included adjustment of $.6 in retroactive
access fees
access fees
Cable
n The acquired cable operations will continue to impact earnings; it added $1.3
million to the net operating loss in 3Q ’09
million to the net operating loss in 3Q ’09
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Profitability
OIBDA for the Quarter Ended ($ millions)
n Maintaining profitability while
investing in growth - OIBDA
margin of 47% for 3Q’09
investing in growth - OIBDA
margin of 47% for 3Q’09
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Cash Flows
Cash Flows ($ millions)
n Increased operating cash flow
- Cash generated by operations 3
times Q3’08
- Cash generated by operations 3
times Q3’08
n Capex Well Supported-
Increased capital expenditures
supported more than adequately by
operating cash flow and debt
facility
Increased capital expenditures
supported more than adequately by
operating cash flow and debt
facility
n Positioned to deliver for
shareholders - Ability to be
opportunistic or return value to
shareholders
shareholders - Ability to be
opportunistic or return value to
shareholders
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Earle MacKenzie
EVP and COO
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Key Operational Results - PCS
Retail Subscribers (000s)
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Key Operational Results - PCS
Gross Additions
Net Additions
n Modest increase in churn
from 2.07% in Q2 ‘09 to
2.17% in Q3 ‘09, an
increase from 1.85% in
Q3 ‘08
from 2.07% in Q2 ‘09 to
2.17% in Q3 ‘09, an
increase from 1.85% in
Q3 ‘08
n Bad Debt write-offs in
Q3‘09 of 5.3% of gross
revenues versus 5.5% in
Q3’08
Q3‘09 of 5.3% of gross
revenues versus 5.5% in
Q3’08
n Credits and adjustments
down from 11.6% of gross
revenues in 3Q’08 to
11.0% in 3Q’09
down from 11.6% of gross
revenues in 3Q’08 to
11.0% in 3Q’09
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Key Operational Results - PCS
Gross Billed Revenue per User - Data & Voice 1
n Data revenues growth continues to grow
1 - Before Service credits, bad debt, Sprint Nextel fees. See reconciliation of Non-GAAP financial measures
on slide 24
on slide 24
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PCS Revenues
Gross Billed Revenues ($ millions)
$35.0
$36.4
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PCS Customers Top Picks Q3 2009
n Top Service Plans - 49% of
Gross Adds
Gross Adds
u Everything Messaging
Family 1500
Family 1500
u Everything Data Family
1500
1500
u Simply Everything
n Top Devices - Shentel
Controlled Channels
Controlled Channels
u LG Rumor 2 19%
u Sanyo 2700 12%
u Samsung Exclaim 8%
u Blackberry Curve 6%
u Sanyo Katana LX 6%
u Mobile Data Cards 6%
u Samsung Rant 5%
u Palm Pre 5%
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Meeting PCS Customer Needs
n On track to complete 2009
construction plans
construction plans
n Expanded data offering
u Over 94% POP’s with
EVDO coverage
EVDO coverage
n PA coverage improved
n Capacity increased
Number of Cell Sites
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Key Operational Results - Wireline
n Modest access line loss
n 45% broadband
penetration
penetration
n 2009 & 2010 Capex to
increase broadband
speeds to 10Mbps+
increase broadband
speeds to 10Mbps+
Access lines (000s)
Internet Customers (000s)
1 DSL only available within LEC area
2 Dial-up offered inside and outside the LEC area
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Key Operational Results - Cable
n Integrating acquisition of
17,000 new customers
17,000 new customers
n Converted acquired cable
systems to our billing platform
systems to our billing platform
n Re-launch of 40% of the cable
systems with 2 way video and
internet
systems with 2 way video and
internet
n Upgrade underway to enable
us to offer triple play to 53%
of acquired homes passed by
year end 2009
us to offer triple play to 53%
of acquired homes passed by
year end 2009
Revenue Generating Units(000’s)
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Investing in the Future
n Expanding wireless coverage
& capacity with 64 new cell
sites and data with 125 EVDO
sites in 2009
& capacity with 64 new cell
sites and data with 125 EVDO
sites in 2009
n Increasing broadband speeds
to 10 MB in LEC area
to 10 MB in LEC area
n Increased miles and capacity
of fiber
of fiber
n Upgrade of cable systems to 2
-way to provide triple play of
services
-way to provide triple play of
services
Capex Spending
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Q&A
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Appendix
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Non-GAAP Financial Measure - Billed Revenue per Subscriber
Dollars in thousands (except subscribers and revenue per subscriber) | |||
3Q ‘08 | 3Q ‘09 | ||
Gross billed revenue | |||
Wireless segment total operating revenues | $27,526 | $28,690 | |
Equipment revenue | (1,409) | (1,046) | |
Other revenue | (1,877) | (2,357) | |
Wireless service revenue | 24,240 | 25,287 | |
Service credits | 4,000 | 3,987 | |
Write-offs | 1,903 | 1,916 | |
Management fee | 2,336 | 2,484 | |
Service fee | 2,570 | 2,732 | |
Gross billed revenue | 35,049 | 36,406 | |
Average subscribers | 203,454 | 217,659 | |
Billed revenue per subscriber | $57.42 | $55.75 |