SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
-----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 16, 2001
NTELOS Inc.
(Exact Name of Registrant as Specified in Charter)
Virginia 0-16751 54-1443350
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
P. O. Box 1990
Waynesboro, Virginia 22980
(Address of principal executive offices)
(540) 946-3500
(Registrant's telephone number, including area code)
Item 9. Regulation FD Disclosure
Pursuant to Regulation FD, information is being furnished below with
respect to presentations to be made by Mr. James S. Quarforth, Chairman
and Chief Executive Officer, and Mr. Michael B. Moneymaker, Chief
Financial Officer, at investor meetings.
This presentation provides an overview of NTELOS' strategy,
transactions and performance through the fourth quarter of 2000 and
certain guidance for 2001. Included are statistical reviews of our core
services (digital PCS, Internet, and local telephone service).
The presentation is available on the company's website at
www.ntelos.com.
NTELOS
Photo of products and customers.
Company Overview
. Regionally-focused ICP concentrating on high-growth sectors
- PCS: 11.0MM pops
- Internet: 60 markets
- Wireline: CLEC (9 markets)
Long Haul
ILEC (3 markets)
. Long operating history, founded in 1897
- Public for over 30 years
- Wireless service since 1991
. Strong Local presence and brand
. Facilities-based
. Established "mid-stage" telco
- 350,000 customers
- Over $500mm CAPEX from 1996-2000
. Fully-Funded Business Plan
Map of Virginia, West Virginia, Maryland, Portions of Tennessee, Portions of
North Carolina, Portions of Ohio, and Portions of Pennsylvania
2
The Transactions
- - --------------------------------------------------------------------------------
- - -------------------------------- ----------------------------------- --------------------------------
| | | | | Divestiture of |
| Preferred Stock | | Debt Financing | | Non-Core Assets |
| o $225MM from Welsh Carson | | o $325MM Senior Credit Facility | | o Directory assistance |
| o $25MM from MSDW | | o $375MM Senior and | | o Communications towers |
| | | Subordinated Notes | | o Additional non-core assets |
- - -------------------------------- ----------------------------------- --------------------------------
| | $700MM |
| | |
| $250MM ---------------- $60MM + |
| | | |
-----------------------------| NTELOS |------------------------
| | | Up to |
| $408.6MM + ---------------- $250MM |
| Asset Swaps + | 3.7MM |
| Assumed Leases | shares |
- - ------------------------------------ ---------------------------------- ---------------------------------------
| Richmond-Norfolk | | | | |
| PCS Acquisition | | R&B Communications | | VA and WVA PCS |
| o $408.6MM cash | | Merger | | Alliance Recap |
| o Swap cellular assets of RSA 5 | | o Stock-for-stock | | o Inter-company loan |
| and RSA 6 | | o Long-time partner in all key | | o Refinance credit facilities |
| o Assume $20MM in capital leases| | businesses | | o Pro forma ownership |
| o Contiguous PCS footprint | | o Consolidate ownership of PCS | | o 91.1% of Virginia Alliance |
| | | Alliances | | o 78.9% of West Virginia Alliance |
- - ------------------------------------ ---------------------------------- ---------------------------------------
3
Established Regional ICP
- - ------------------------------------------------------------------------------
Invested Capital
- - ----------------
($MM)
[Graph]
PCS Other Total
--- ----- -----
1996 98.1 21.0 119.1
1997 68.1 22.2 90.3
1998 63.6 20.8 84.4
1999 61.5 43.6 105.1
2000 77.3 37.0 114.3
Customer Base
- - -------------
(000s)
[Graph]
PCS ILEC/CLEC Internet
Subscribers Access Lines Subscribers Total
---------- ------------ ----------- -----
1995 41.7 41.7
1996 43.4 0.3 43.7
1997 23.8 45.5 4.8 74.1
1998 69.8 48.9 8.7 127.4
1999 122.1 59.3 47.3 228.7
2000 168.4 72.5 62.9 303.8
4
Pro Forma Service Footprint (12/31/00)
- - ------------------------------------------------------------------------------
PCS
- - -----------------------------
o 11,032,828 PCS pops
o 168,436 PCS subscribers
o 702 cell sites
Wireline
- - -----------------------------
o 51,959 ILEC access lines
o 20,545 CLEC access lines
o 1,500 route miles
o 62,916 Internet subscribers
Map of Virginia, West Virginia, Maryland, Portions of Pennsylvania, Portions of
North Carolina, Portions of Ohio, Portions of Tennessee, and Portions of
Kentucky showing regions with:
PCS, CLEC and Internet
PCS & ISP
PCS
Richmond-Norfolk PCS
CLEC and ISP
ILEC
AT&T Swap
5
Transition and Integration - Virginia East (Formerly PrimeCo)
- - ------------------------------------------------------------------------------
o Organizational Integration Completed
o Functional Transition Completed For:
- Human Resources
- Inside Sales
- Purchasing
- Branding Campaign
- New Service Plans
- Fraud Management
- Customer Care
o Transition Scheduled for Mid-2001
- Pre-Pay Platform
- Billing Conversion
Picture of new customer care center - Portsmouth, VA
6
Fiber Network Expansion
- - ------------------------------------------------------------------------------
o 1,500 route miles; 32,000 fiber miles
o Connectivity to major retail cities
o Differentiating characteristics
- Wholesale Revenue Stream
- Significant operating cost reduction
- Significant increase in reliability
Map of Virginia, West Virginia, Maryland, Portions of Pennsylvania, Portions of
North Carolina, Portions of Ohio, and Portions of Kentucky showing Fiber Network
expansion plans at:
End of year 2000
Early 2001
Planned
7
Pro Forma PCS Statistics
Subscribers
- - -----------
(000s)
[Graph]
Richmond-
Alliances Norfolk PCS Total
--------- ----------- -----
1Q 99 19.1 68.6 87.7
2Q 99 24.2 73.7 97.9
3Q 99 30.5 74.9 105.4
4Q 99 43.3 78.9 122.2
1Q 00 55.2 86.4 141.6
2Q 00 63.5 88.0 151.5
3Q 00 69.4 88.3 157.7
4Q 00 80.7 87.7 168.4
2001E* 230.4 - 239.4
* 2001 Guidance Range
Revenues and EBITDA
- - -------------------
($ MMs)
[Graph]
EBITDA Revenues
------ --------
1Q 99 (9.6) 15.1
2Q 99 (8.0) 16.6
3Q 99 (5.7) 17.2
4Q 99 (8.9) 19.6
1Q 00 (8.9) 21.2
2Q 00 (4.7) 23.8
3Q 00 (5.7) 23.9
4Q 00 (10.3) 23.1
* SAB 101 adopted 4Q 00
8
PCS Operating Strategy
- - ------------------------------------------------------------------------------
o Own and control licenses, network, distribution channels and brand
o Focus on in-region market niche with localized marketing
- Intra-regional "one-rate" plans (88-94% of subscribers)
- National "one-rate" (6-12% of subscribers)
o Expand robust digital CDMA PCS network
o Emphasize customer service via consolidated selling effort and single bill
o Target attractive markets
- Individual - convenience users in the 25-45 age group
- Business - regional small to medium sized businesses
o Wholesale Provider of Wireless Network
- Sprint/Horizon Agreement
9
Wireline Overview
- - ------------------
100% digital platform with best-in-class equipment
CLEC
----
o 20,545 business access lines
o 9 markets; 11 COs
o Interconnection agreements in
VA, WV and TN with Sprint and
Verizon
Internet ILEC
-------- ----
o 61,261 customers o 51,959 residential/business
o 1,655 DSL Customers access lines
o 60 markets o Leading ILEC service provider in VA
o Dial-up access
o DSL in 16 markets
10
Integrated CLEC Operating Strategy
- - ------------------------------------------------------------------------------
o Hybrid facilities-based/ "smart-build" strategy
- Leverage our fiber optic network and ILEC switching platform
- Remote switching in COs
o Target businesses through a direct sales strategy
o Bundle local service with long distance, DSL and digital PCS
- PCS service emphasized
o Leverage local brand name recognition and strong customer service
o Focus on long-term, sustainable revenues
11
Pro Forma CLEC Statistics
- - ------------------------------------------------------------------------------
Business Access Lines
- - ---------------------
($000s)
[Graph]
NTELOS R&B
Lines Lines Total
----- ----- -----
1Q 99 0.9 1.6 2.5
2Q 99 2.3 2.6 4.9
3Q 99 4.0 3.1 7.1
4Q 99 5.8 4.0 9.8
1Q 00 8.9 4.4 13.3
2Q 00 12.4 5.0 17.4
3Q 00 13.2 5.0 18.2
4Q 00 14.6 5.9 20.5
2001E* 30.5 - 32.5
* 2001 Guidance Range
Revenues and EBITDA
- - -------------------
($000s)
[Graph]
EBITDA Revenues
------ --------
1Q 99 (295) 647
2Q 99 (404) 884
3Q 99 (334) 1,132
4Q 99 (501) 1,453
1Q 00 (486) 2,013
2Q 00 (820) 2,180
3Q 00 (764) 2,245
4Q 00 (588) 2,883
12
Favorable ILEC Regulatory Environment
- - ------------------------------------------------------------------------------
o No competition in ILEC markets to date, despite deregulation
o ILEC operates under small company status, which is lightly regulated
o Virginia State Corporation Commission has taken a progressive stance
on supporting the value of rural telephone companies and the role
they play in economic development in these regions
o Process for rate increases is less cumbersome than for large telcos
13
Pro Forma ILEC Statistics
- - ------------------------------------------------------------------------------
Access Lines
- - ------------
(000s)
[Graph]
NTELOS R&B
Lines Lines Total
----- ----- -----
1Q 99 37.1 10.8 47.9
2Q 99 37.3 10.9 48.2
3Q 99 37.5 11.3 48.8
4Q 99 37.9 12.2 50.1
1Q 00 38.3 12.3 50.6
2Q 00 39.1 12.3 51.4
3Q 00 39.4 12.3 51.7
4Q 00 39.7 12.3 52.0
2001E* 54.0
* Guidance 2001
Revenues and EBITDA
- - -------------------
(000s)
[Graph]
EBITDA Revenues
------ --------
1Q 99 6,642 9,880
2Q 99 7,024 10,251
3Q 99 6,503 10,054
4Q 99 6,293 10,018
1Q 00 6,407 10,171
2Q 00 6,037 10,072
3Q 00 6,265 10,178
4Q 00 7,102 10,743
14
Internet Operating Strategy
- - ------------------------------------------------------------------------------
o Broad product offering of fast and reliable services
- Offers local dial-up, dedicated and discounted bundled services
- All digital network
- Web hosting available
- Low modem-to-customer ratio (9:1)
o 24/7 customer care
o High speed data services
- Aggressive rollout strategy
- DSL: offered in a growing number of markets in four states
- Wireless spectrum: LMDS (1.3MM POPs), MMDS (850,000) households
15
Pro Forma Internet Statistics
- - -----------------------------
Subscribers
- - -----------
(000s)
[Graph]
NTELOS R&B Total
------ --- -----
1Q 99 9.1 1.4 10.5
2Q 99 16.7 1.4 18.1
3Q 99 31.6 1.8 33.4
4Q 99 45.7 2.1 47.8
1Q 00 54.4 2.2 56.6
2Q 00 57.0 2.3 59.3
3Q 00 57.6 2.1 59.7
4Q 00 60.8 2.1 62.9
2001E* 69.9 - 71.4
* 2001 Guidance Range
Revenues and EBITDA
- - -------------------
(000s)
[Graph]
EBITDA Revenues
------ --------
1Q 99 (249) 630
2Q 99 (325) 921
3Q 99 (249) 1,704
4Q 99 86 2,949
1Q 00 84 3,652
2Q 00 197 4,142
3Q 00 431 4,347
4Q 00 407 4,586
16
Extensive Retail Distribution Focused on Customer Care
- - ------------------------------------------------------------------------------
o Sales force representatives
- 108 retail
- 30 business
- 14 CLEC
o Indirect Sales
o Company-owned retail stores
- 46 current
- 61 by end-of-year 2001
o Inside Sales
Photo of retail center.
17
When Quality Matters
- - --------------------
Hospitals
- - ---------
o Augusta Health Care
- PRI CLEC Service
o Rockingham Memorial Hospital
- PRI CLEC Service
- Private Fiber Network
- 100 meg Circuit
- PCS
o Genesis (1)
- PRI CLEC Service
- Private Fiber Network
(1) Services contracted to begin in early 2001
Colleges and Universities
- - -------------------------
o James Madison University
- PRI Service
- 100 meg Circuits
- PCS
o Eastern Mennonite University
- PRI Service
- PCS
o Mary Baldwin College
- PRI Service
o Bridgewater College
- T-1 Internet Service
- PRI Service
o Liberty University
- PRI Service
- PCS
18
Pro Forma Historical Financial Statistics/2001 Guidance
- - -----------------------------------------------------
Revenues
- - --------
($MM)
[Graph]
Wireline/
PCS Other
--- -----
1995 - 49.9
1996 0.7 55.7
1997 11.3 61.8
1998 37.3 70.8
1999 72.1 81.4
2000 92.0 93.3
2001E* 144.0 96.0
* 2001 Guidance: Annualized 4Q01 run-rate for PCS Revenues of $35 to $37MM and
Wireline Revenues of $24MM.
EBITDA
- - ------
($MM)
[Graph]
Wireline/
PCS Other
--- -----
1995 - 26.0
1996 (14.9) 28.1
1997 (28.0) 32.7
1998 (31.2) 36.8
1999 (32.2) 38.1
2000 (29.6) 37.1
2001 Guidance: PCS EBITDA approaching breakdown 3Q01 down again slightly 4Q01.
Wireline EBITDA just over $9MM 4Q01 Run-Rate
Capital Expenditures
- - --------------------
($MM)
[Graph]
Wireline/
PCS Other
--- -----
1995 7.3 15.2
1996 98.1 21.0
1997 68.1 22.2
1998 63.6 20.8
1999 61.5 43.6
2000 77.3 37.0
2001E* 70.0 30.0
* 2001 Guidance: Total CAPEX $90 to $100MM; PCS CAPEX of $60-$70MM
19
Investment Highlights
o Transactions solidify position as regional PCS / ICP powerhouse
o Region's first and largest PCS provider utilizing CDMA technology
o Established, local CLEC and ILEC presence provides stable revenues
o Internet growth increases bundled service offerings
o Significant liquidity and financial flexibility
- Positive EBITDA
- $250MM of new preferred stock
- $150MM available at closing under senior credit facility
- $100MM+ in non-core assets available for sale
o Strong Financial Sponsor
- Welsh Carson Anderson & Stowe
o Experienced management team
20
Forward-Looking Statements
The Company wishes to caution readers that forward-looking statements made by
the Company are based on a number of assumptions, estimates and projections.
These statements are not guarantees of future performance and involve risks and
uncertainties, including those set forth in reports filed by the Company with
the Securities and Exchange Commission, and any significant deviations from
these assumptions could cause actual results to differ materially from those in
forward-looking statements. The Company undertakes no obligation to revise or
update such statements to reflect current events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NTELOS Inc.
(Registrant)
By: /s/ Michael B. Moneymaker
------------------------------
Michael B. Moneymaker
Chief Financial Officer and Senior
Vice President, Treasurer and
Secretary
Date: March 16, 2001