Comparative Results
(in millions, except per share amounts)
0.46
1.39
10.7
19.4
146.4
2005
7.0
0.43
Cash Dividend (per share)
6.1
1.31
EPS – diluted
7.0
10.0
Total Net Income
7.6
18.0
Operating Income
21.0
121.0
Revenues
% Change
2004. .
(restated)
2
Debt Component
3
2004 and 2003 Financials Restated
Corrected previous accounting for operating leases
No change to cash expense or revenues from leases
Accounting Weaknesses
Income Tax Review and Calculations
Lacked internal controls and expertise
Supplementing in-house staff with external expertise
4
PCS Customers
5
Tackley Mill
6
Critical Milestone - 100% DSL Availability
“Internet Access Essential for Rural Virginia”
Rural Virginia Prosperity Commission Report, April 25, 2006
“Rural Areas Neglected by Broadband Providers”
Washington Post, March 14, 2006
“U.S. Lags Behind in High-Speed Internet Access”
Wall Street Journal, April 12, 2006
“Survey Finds Gaps in Americans’ Internet Access”
Newsday, October 6, 2005
7
Competition for regulated telephone services
Customer owned equipment
Long distance service
Breakup of Bell System
Introduction of mobile communications
Cellular
Personal Communications Service (PCS)
The Internet
Industry Change
8
Business Segments
Assets
Revenues
9
- Negotiate a new, long-term
agreement
Sell PCS business to Sprint-Nextel
Pursue legal claims for breach of
existing Agreement
Options with Sprint-Nextel
10
-Will there be a sale?
If so, what will be the sale price?
What will be the tax effect?
What would the Company do with
the proceeds?
Major Questions
11
Invest in new ventures or
acquisitions
Special dividend
Stock buyback
Future Options
12
Present Mix of Businesses
Traditional Services
Telephone
CATV
Mobile (Towers)
Shentel Services (Internet)
Network
Long Distance
Personal Communications Services
New Ventures
NTC Communications
Shentel Wireless
Converged Services of WV
13
Rate of Growth
Present Mix of Businesses
New Ventures
PCS
Traditional
Services
14
Rate of Growth
Mix of Businesses Post Sale
New Ventures
Traditional
Services
15
Assets
16
Revenues
17
Operating Income
18
Net Income
19
Total Return - 5 Years
20
2006 ANNUAL
SHAREHOLDERS
MEETING
SHENANDOAH
TELECOMMUNICATIONS
COMPANY
Comparative Results
(in millions, except EPS)
$1.39
$10.7
2005
6.1%
$1.31
Earnings Per Share (EPS)
7.0%
$10.0
Consolidated Net Income
%
Change
2004
(Restated)
22
Operating Income Results
(in millions)
$ 19.4
127.0
$146.4
2005
7.6%
$ 18.0
Operating Income
26.3%
103.0
Operating Expense
21.0%
$121.0
Revenue
%
Change
2004
(Restated)
23
Reporting Segments
Revenue
(in millions)
6.0%
13.3
14.1
Other
6.5%
3.1
3.3
Mobile
140.0%
0.7
9.8
Converged
Services (NTC)
4.2%
23.7
24.7
Telephone
$146.4
$ 94.4
2005
21.0%
$121.0
17.7%
$ 80.2
PCS
%
Change
2004
(Restated)
24
Year End Customers
5.6%
143
151
Mobile/Tower Leases-Non Aff.
(16.9%)
79.4%
15,051
2,646
12,514
4,748
Internet
Dial Up
DSL
5.0%
9,918
10,214
Long Distance
0.6%
8,631
8,684
Cable
0.2%
24,691
24,740
Telephone
22,326
8,461
9,914
Converged Services (NTC)
Network
Video
Phone
PCS
Retail
Wholesale
Change
19.8%
41.7%
2004
102,613
27,337
2005
122,975
38,726
25
Operating Expenses
(in millions)
Total
Selling, General & Admin.
Depreciation & Amort.
Cost of Goods & Services
10.6%
22.9%
$103.3
$127.0
5.6%
16.3%
38.1
44.3
5.5%
17.9%
19.0
22.4
17.8%
24.3%
$45.8
$60.3
(Restated)
W/O
NTC
%
Change
2004
2005
26
Reporting Segments
Net Income
(in millions)
7.0%
$10.0
$10.7
Total
20.0 %
(0.5)
(0.4)
Other
--
1.1
1.1
Mobile
(330.0%)
(0.1)
(3.3)
Converged Services (NTC)
17.9%
6.7
7.9
Telephone
92.9%
$ 2.8
$ 5.4
PCS
%
Change
2004
2005
27
Q1 Results
Revenue
(in millions)
%
Change
Q1
2005
Q1
2006
5.9%
15.7%
3.4
$34.4
3.6
$39.8
Other
Total
12.5%
0.8
0.9
Mobile
16.7%
2.4
2.8
Converged Services (NTC)
5.0%
6.0
6.3
Telephone
20.2%
$21.8
$26.2
PCS
28
Q1 Results
Operating Income
(in millions)
0.0%
(6.7%)
0.0
$4.5
(0.8)
$4.2
Other
Total
0.0%
0.5
0.5
Mobile
(100.0%)
(0.8)
(1.6)
Converged Services (NTC)
16.7%
3.0
3.5
Telephone
44.4%
$1.8
$2.6
PCS
Q1
2006
%
Change
Q1
2005
29
Q1 Results
Net Income
(in millions)
370.0%
$2.3
$8.5
Total
0.0%
0.3
0.3
Mobile
150.0%
(0.2)
(0.5)
Other
100.0%
(0.6)
(1.2)
Converged Services (NTC)
452.6%
1.9
8.6*
Telephone
* Includes $6.4 million net of tax gain from liquidation of the Rural
Telephone Bank
44.4%
$0.9
$1.3
PCS
Q1
2006
%
Change
Q1
2005
30
Affiliate Transactions
Sprint-Nextel has acquired six of the
former Sprint affiliates:
US Unwired
Gulf Coast
Independent Wireless One (IWO)
Alamosa
Enterprise
Ubiquitel
31
Affiliates by Covered POPs
32
Affiliates by Dollars of Revenue
33
Affiliates by Retail Subscribers
34
Deal Values as Multiple of POPs
35
Deal Values as Multiple of Revenue
36
Deal Values as Multiple of Subscribers
37
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.
38
2006 ANNUAL
SHAREHOLDERS
MEETING
SHENANDOAH
TELECOMMUNICATIONS
COMPANY