2005 ANNUAL
SHAREHOLDERS
MEETING
SHENANDOAH
TELECOMMUNICATIONS
COMPANY
Revenue Comparison 1984-2004
2
Revenue Comparison 1984-2004
3
Revenue Comparison 1984-2004
4
Income Comparison 1984-2004
5
PCS Customers
0
20
40
60
80
100
120
140
160
Retail
Wholesale
6
Management Team
7
Circle of Excellence
8
9
25.8
12.2
13.6
Revenues
($ billions)
38.5
69.5
Proforma
15.3
23.2
Subscribers
(millions)
33.3
36.9
Market Cap
($ billions)
NXTL
(NASDAQ)
FON
(NYSE)
Ticker
Symbol
Industry Consolidation
Source: The Wireless Advisor, Dec. 2004
10
Total Return - 5 Years
11
2005 ANNUAL
SHAREHOLDERS
MEETING
SHENANDOAH
TELECOMMUNICATIONS
COMPANY
Comparative Results
(in millions, except EPS)
$1.34
$10.2
2004
$(2.88)
$4.22
Earnings Per Share (EPS)
$(21.9)
$32.1
Consolidated Net Income
Change
2003
13
Impact of Discontinued
Operations
(in millions, except EPS)
$ 0.5 )
$ 9.7
$10.2
Net Income – Continuing
Operations
$0.06 )
$1.28
$1.34
Earnings Per Share
22.4 )
22.4
-
Less Discontinued Cellular
Operations
$(21.9)
$32.1
$10.2
Consolidated Net Income
Change
2003
2004
14
Operating Income Results
(in millions)
$ 19.6
101.4
$121.0
2004
$ 1.0
$ 18.6
Operating Income
14.4
87.0
Operating Expense
$15.4
$105.6
Revenue
Change
2003
15
Revenue
(in millions)
$ 83.2
30.7
7.1
$121.0
2004
$ 13.6
1.7
0.1
$ 15.4
$ 69.6
29.0
7.0
$105.6
Wireless
Wireline
Other
Total
Change
2003
16
Year End Customers
Telephone
Cable
Long Distance
PCS
Retail
Wholesale
Internet
Dial Up
DSL
Change
(186)
(65)
392)
17,474)
14,479)
(2,369)
1,348)
2003
24,877
8,696
9,526
85,139
12,858
17,420
1,298
2004
24,691
8,631
9,918
102,613
27,337
15,051
2,646
17
Operating Expenses
(in millions)
$ 15.8
36.3
19.0
30.3
$101.4
2004
$ 2.4
4.6
2.4
5.0
$14.4
$13.4
31.7
16.6
25.3
$87.0
Cost of Goods
Network Operating
Depreciation
Selling, General &
Administration
Total
Change
2003
18
Business Segments
Net Income
(in millions)
(1.2)
$10.2)
7.3)
$4.1)
2004
(2.0)
$0.5)
0.8
$9.7
Other
Total
(0.6)
7.9
Wireline
$3.1)
$1.0
Wireless
Change
2003
19
Net Income
Excluding the Sale Proceeds of VA-10
20
Net Income
Excluding the Sale Proceeds of VA-10
Sale
VA-6
Gain
Verisign
Stock
Major
Issues:
Loss
Verisign
Stock
Sprint Settlement
& Other
Adjustments
Sarbanes/
Oxley
21
Net Income
Excluding the Sale Proceeds of VA-10
Normalized for the Major Issues
22
Q1 Results
(in millions)
$3.7
2.1
0.9
$6.7
$1.8
1.5
0.8
2.3
$6.4
$0.3
$18.9
7.1
1.7
$27.7
$ 3.7
8.3
4.3
7.1
$23.4
$ 4.3
$22.6
9.2
2.6
$34.4
$ 5.5
9.8
5.1
9.4
$29.8
$ 4.6
Revenue – Wireless
– Wireline
– Other
Total
Expenses – Cost of Goods
– Network Operating
– Depreciation
– SG & A
Total
Operating Income
2005
Change
2004
23
Q1 Results
(in millions)
$0.1
0.2
0.1
--
$0.3
0.3
Change
$2.3
0.2
0.8
1.4
$4.3
--
2004
$2.4
0.4
0.9
1.4
$4.6
(0.3)
2005
Net Income
Other Income
Interest Expense
Income Taxes
Operating Income
Loss on Investments
24
2005
CUSTOMER SURVEY
Conducted in February 2005
By
Polk-Lepson Research Group
25
Evaluation of Shentel’s Telephone Service
1.2%
6.1%
92.7%
4.61
Courtesy and professionalism of technicians
2.0%
12.5%
85.5%
4.29
Overall rating
27.5%
23.1%
49.5%
3.32
Reasonableness of long distance rates
3.8%
26.5%
69.8%
3.95
Value of service versus price
5.5%
26.6%
71.7%
3.99
Reasonableness of local rates
2.9%
11.9%
85.2%
4.33
Clarity of sound
1.9%
10.4%
87.7%
4.39
Speed of restoring service
2.3%
7.5%
90.2%
4.43
Ability to restore service
3.0%
7.7%
89.2%
4.44
Rarely experience problems
Score of
1 & 2
Score
3
Score
5 & 4
Mean
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
26
Evaluation of Shentel’s Cable Television Service
9.7%
28.2%
62.2%
3.77
Overall rating
26.4%
28.0%
45.6%
3.31
Reasonableness of price
15.6%
26.3%
58.1%
3.66
Choice of packages
13.7%
25.8%
60.6%
3.72
Options within your budget
10.1%
26.1%
62.7%
3.81
Variety of programming
8.7%
22.0%
69.3%
3.90
Shows you want to watch
6.6%
17.18%
75.6%
4.09
Quality of picture
Score of
1 & 2
Score of 3
Score of
5 & 4
Mean
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
27
Evaluation of Shentel’s Internet Service
7.5%
25.8%
66.8%
3.83
Overall rating
21.2%
28.3%
50.4%
3.45
Notification of viruses
15.4%
26.2%
58.4%
3.63
Speed of accessing Internet
13.3%
26.2%
58.3%
3.65
Reasonableness of rates
9.5%
25.4%
65.2%
3.85
Infrequency of down time
7.2%
19.3%
73.5%
4.05
Quality of support service
6.3%
19.6%
74.1%
4.06
Access support service
Score of
1 & 2
Score of
3
Score
of
5 & 4
Mean
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
28
Evaluation of Shentel’s Service and Installation
1.2%
8.4%
91.7%
4.52
Overall rating
2.0%
10.7%
89.3%
4.44
Ease of arranging service and
installation
1.2%
8.9%
91.1%
4.51
Work done at scheduled time
1.2%
9.5%
90.5%
4.53
Technicians following your directions
0.9%
7.0%
92.9%
4.57
Knowledgeable service technicians
1.2%
7.3%
92.7%
4.60
Professionalism of technicians
0.9%
5.5%
94.5%
4.64
Courtesy and politeness of technicians
Score
of
1 & 2
Score of
3
Score of
5 & 4
Mean
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
29
Evaluation of Shentel’s Customer Service
2.3%
7.6%
90.1%
4.46
Overall rating
4.3%
9.3%
86.4%
4.33
Ability of staff to correct problems
2.6%
10.9%
86.6%
4.36
Returns your calls promptly
2.1%
8.6%
89.3%
4.44
Ease of reaching customer service
1.7%
8.0%
90.3%
4.50
Transfers you to correct person
1.9%
7.8%
90.4%
4.52
Treats you with respect
1.7%
6.9%
91.4%
4.55
Politeness and courteousness
Score of
1 & 2
Score
of 3
Score
of
5 & 4
Mean
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
30
Overall Rating of Shentel
2.0%
11.6%
86.4%
4.33
Overall rating of Shentel
Score of
1 & 2
Score of 3
Score of
5 & 4
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
31
Would Recommend Shentel
11.1%
88.9%
As an Internet service provider
14.7%
85.3%
As a cable service provider
3.1%
96.9%
As a telephone service provider
Would Not
Recommend
Shentel
Would
Recommend
Shentel
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
32
Evaluation of NTC’S Service and Installation
6.2%
20.5%
73.3%
3.99
Overall rating
8.1%
16.5%
75.4%
4.02
Technicians following your directions
6.1%
15.9%
78.0%
4.03
Ease of arranging service
9.2%
13.3%
77.4%
4.05
Service done at scheduled time
7.6%
13.9%
78.5%
4.08
Knowledgeable technicians
6.6%
14.1%
79.3%
4.08
Professionalism of technicians
5.7%
12.7%
81.5%
4.15
Courtesy and politeness of technicians
Score of
1 & 2
Score
of 3
Score 5
& 4 of
Mean
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
33
Evaluation of NTC’s Customer Service
16.1%
26.7%
57.1%
3.54
Overall rating of NTC’s
Customer Service
27.2%
29.7%
43.0%
3.23
Returns your calls promptly
20.8%
28.2%
51.0%
3.39
Ease of reaching customer service
21.4%
25.4%
53.1%
3.42
Ability to correct problems
16.0%
19.8%
64.2%
3.67
Treats you with respect
14.7%
20.8%
64.5%
3.72
Transfers you to correct person
13.2%
20.5%
66.3%
3.77
Politeness and courteousness
Score of
1 & 2
Score
of 3
Score of
5 & 4
Mean
Average
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
34
Overall Rating of NTC
12.9%
30.8%
56.3%
3.60
Overall rating of NTC
Score of
1 & 2
Score of
3
Score of 5 & 4
Mean Average
JMU
Score of
1 & 2
Score of 3
Score of 5 &
4
7.4%
29.3%
63.2%
3.80
Overall rating of NTC
Mean Average
17.1%
32.1%
50.8%
3.45
Overall rating of NTC
Score of
1 & 2
Score of 3
Score of 5 &
4
Mean Average
VA Tech
Source: Polk-Lepson Research Group
Rating: 5 -Excellent 4 -Very Good 3-Average 2- Needs Improvement 1 - Poor
35
Disclosure Regarding
Forward-Looking Statements
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. Forward-looking statements in this presentation may include, among others,
statements concerning:
- projections of our future results of operations, cash flows or financial condition; and
- our business strategy and our ability to capitalize on any of our competitive strengths.
The expectations reflected in these forward-looking statements are inherently subject to risks,
uncertainties and assumptions about us and our subsidiaries and we cannot assure you that such
expectations will prove to be correct. Important factors that could cause actual results to differ
materially from the forward-looking statements made herein are set forth in our filings with the
Securities and Exchange Commission and include, without limitation, risks related to the
following:
- increasing competition in the communications industry; and
- a complex and uncertain regulatory environment.
All subsequent written and oral forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the cautionary statements included in this
presentation. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in this presentation
might not occur.
36
Regulation G Disclosure
This presentation references historical information
excluding significant one time events, which had a
material impact on the financial statements of the
Company. This information is provided to assist the
reader in understanding the core operations of the
Company. This information is not consistent with
GAAP (Generally Accepted Accounting Principles)
and should not be used to evaluate the financial
position of the Company.
37
Shentel Converged
Services / NTC
Business Overview
NTC Acquisition
Original Shentel investment in 2001
Off-Campus Student Housing Focus
Student Demographic = High Demand
CATV, Telephone, Internet Bundle
39
NTC – Key Statistics
Serving 13 Colleges, 112 Properties, 7 Southeast States
70% of Properties in Harrisonburg, VA & Blacksburg, VA
2005 Q1 Revenues $2.3 Million
Customer Segments
40
NTC Business Plan
Exclusive, Long-Term Contracts
Equipment & Wiring Investment
“Bulk” or “Retail” Billing
“Bundled” Services & Pricing
Easy to buy – “Plug In and Go!”
Local Market Service Technicians
Close Property Manager Relationships
Advanced Technologies
41
Strategic Fit for Shentel
Consistent with Shentel Diversification Strategy
Shentel strength building & operating Internet, TV, & Phone Services
Natural Southeast Expansion of Shentel Serving Area
New “High-Tech” Customer Base & New Revenue Stream
Cost Reduction & Centralization into Shentel Operating Functions
Credibility in the Fast-Growing Multi-Tenant Housing Industry
Easy expansion to Non-Student Housing in existing Markets
Converged
Bundle
42
Work to Do
Managing Decentralized Personnel & Remote Locations
College Student Demands…bandwidth, customer service hours, price
Revenue & Installation Seasonality of School Year
Acclimation of NTC people & processes into Shentel
Driving Improvements in Service Quality & Customer Satisfaction
Offsetting decline of traditional Telephone demand with the “Bundle”
Managing Long Sales Cycle and Construction Schedules
43
The Growth Opportunity
Better Penetration in Existing Markets including Non-Student Apts
“Purposeful” Property Selection to improve Economics of each market
Expand Model to New High-Density Housing on Shentel’s Fiber Route
Trial New Technology Services to “early adopter” Customer base
Local Sales Presence and Revenue Accountability
Student-Oriented Multi-Tenant Housing
Residential Multi-Tenant & High Density
“Fiber to the Home” Communities
44
2005 ANNUAL
SHAREHOLDERS
MEETING
SHENANDOAH
TELECOMMUNICATIONS
COMPANY