3Q 2010 Earnings Conference Call
November 4, 2010
Exhibit 99.1
2
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.
3
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.
4
Chris French
CEO and President
5
3Q ‘10 Highlights
q Strategic Growth Initiatives
u Cable Acquisitions
• Acquisition of Jet Broadband closed on July 30th
• Planned purchase of Suddenlink properties in
Salem, WV and Oakland, MD
Salem, WV and Oakland, MD
u Wireless Prepaid
• Purchased approximately 50,000 current Virgin
Mobile customers
Mobile customers
• Began offering Boost and Virgin Mobile service in
July
July
6
3Q ’10 Cable Highlights
q Synergies - Newly acquired JetBroadBand cable subs
now on our billing platform
now on our billing platform
q Sales Momentum - 3Q 2010 net RGU additions of
4,112 - includes 8% growth in existing markets
4,112 - includes 8% growth in existing markets
q Triple Play - High Speed data available to 88% and
voice to 76% of acquired video homes passed
voice to 76% of acquired video homes passed
7
3Q ’10 Wireless Highlights
q 3G/4G - now selling 3G/4G data cards and 4G handsets
PCS Postpaid Customers (000s)
q Prepaid - 6,296 net
additions and 56,203
prepaid subs at 9/30
additions and 56,203
prepaid subs at 9/30
q Steady Wireless growth
- Postpaid customers up
5% in the last year
- Postpaid customers up
5% in the last year
q Quarterly churn
improves - Q3 ‘10 churn
of 1.9% compared to 2.2%
for Q3 ’09
improves - Q3 ‘10 churn
of 1.9% compared to 2.2%
for Q3 ’09
8
3Q ‘10 Financial Highlights
q JetBroadBand acquisition-
related transaction costs -
$3.0 million before tax and $1.8
million after tax
related transaction costs -
$3.0 million before tax and $1.8
million after tax
q Prepaid - Net loss $1.5 million
pre-tax, $0.9 million after-tax
pre-tax, $0.9 million after-tax
q Directory sale - sold
publishing rights for $4 million
gain pre-tax, $2.6 million after
tax
publishing rights for $4 million
gain pre-tax, $2.6 million after
tax
q Net Income - Net income of
$4.0 million
$4.0 million
q Operating results - Net
income from continuing
operations of $4.2 million
income from continuing
operations of $4.2 million
Net Income
(in millions)
Net Income from Continuing Operations
(in millions)
(in millions)
9
Adele Skolits
CFO and VP of Finance
10
Profitability
Adjusted OIBDA for the Quarter ($ millions)
11
Adjusted OIBDA by Segment
12
Wireless Segment - Change in Adjusted OIBDA
13
Cable Segment - Change in Adjusted OIBDA
14
Earle MacKenzie
EVP and COO
15
Key Operational Results - Wireless
PCS Postpaid Customers (000s)
16
Key Operational Results - Wireless
Gross Additions - Postpaid
Net Additions - Postpaid
n Decrease in churn from
2.2% in Q3 ’09 to 1.9% in
Q3 ’10
2.2% in Q3 ’09 to 1.9% in
Q3 ’10
n Continued postpaid net
growth
growth
17
Key Operational Results - PCS
Gross Billed Revenue per Postpaid User - Data & Voice 1
1 - Before Service credits, bad debt, Sprint Nextel fees. See reconciliation of Non-GAAP financial measures
on slide 25
on slide 25
18
PCS Revenues
Gross Billed Revenues - Postpaid ($ millions)
$36.4
$38.1
*-The Net Service Fee percentage increased from 8.8% to 12%
effective 6/1/10, an increase of $1.0 million for Q3 2010.
effective 6/1/10, an increase of $1.0 million for Q3 2010.
19
PCS Prepaid Statistics
ØAcquired 50K prepaid subscribers effective 7/1/10
§Paid $138 per sub
ØGross adds of 14,147
ØNet adds of 6,296
ØEnding subscribers of 56,203
ØChurn rate of 5.02%
20
PCS Customers Top Picks Q3 2010
n Top Service Plans - 63% of
Gross Adds
Gross Adds
u Everything Data Family
1500 - 43%
1500 - 43%
u Everything Messaging
Family 1500 - 11%
Family 1500 - 11%
u Everything 450 - 9%
n Top Devices - New Activations
- All Channels
- All Channels
u Samsung Seek - 18%
u LG Rumor Touch - 11%
u Blackberry 8530 - 10%
u HTC EVO 4G - 10%
u Sanyo 3810 - 7%
u Mobile Data Cards - 7%
21
Key Operational Results - Wireline
n Modest access line loss
n Improved broadband
penetration to 49%
penetration to 49%
n 11% growth in DSL
customers since 9/30/09
customers since 9/30/09
Access lines (000s)
Internet Customers (000s)
22
RGU Growth by Quarter - Cable
Net RGU growth excludes 1,754 RGU’s sold Q4’09 and 65,338 acquired Q3’10
Total RGU's | 25,992 | 25,954 | 25,675 | 24,856 | 26,028 | 27,901 | 97,351 |
23
Key Operational Results - Cable
12/31/08 | 9/30/09 | 12/31/09 | 9/30/10 | ||
Video | |||||
Homes Passed | 64,365 | 64,365 | 56,268 | 171,662 | |
Penetration | 38.9% | 37.5% | 40.5% | 37.6% | |
High-speed Internet | |||||
Available Homes | 19,405 | 21,962 | 25,748 | 136,998 | |
Penetration | 5.8% | 7.1% | 8.1% | 20.2% | |
Voice | |||||
Available Homes | 0 | 0 | 0 | 118,627 | |
Penetration | n/a | n/a | n/a | 4.4% |
Note: Video homes passed includes 16K homes located in Shenandoah County, VA, where internet and
voice services are not available from the cable company.
voice services are not available from the cable company.
24
Q&A
25
Appendix
26
Non-GAAP Financial Measure - Billed Revenue per Postpaid Subscriber
Dollars in thousands (except subscribers and revenue per subscriber) | |||
3Q '09 | 3Q '10 | ||
Gross billed revenue | |||
Wireless segment total operating revenues | $28,690 | $33,728 | |
Equipment revenue | (1,046) | (1,712) | |
Other revenue | (2,358) | (5,843) | |
Wireless service revenue - postpaid | 25,287 | 26,174 | |
Service credits | 3,987 | 3,913 | |
Write-offs | 1,916 | 1,415 | |
Management fee | 2,484 | 2,651 | |
Service fee | 2,732 | 3,977 | |
Gross billed revenue - postpaid | 36,406 | 38,129 | |
Average postpaid subscribers | 217,659 | 229,045 | |
Billed revenue per postpaid subscriber | $55.75 | $55.49 |