TYPE: 425
SEQUENCE: 1
DESCRIPTION: COMPANY PRESENTATION
Filed by: NTELOS Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: NTELOS Inc.
Commission File No. 000-16751
NTELOS
Photo of products and customers.
Company Overview
- -----------------
. Regionally-focused ICP concentrating on high-growth sectors
- PCS: 10.3mm 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
. Fully integrated operational support systems
. Established "mid-stage" telco
- 391,000 customers
- Over $510mm CAPEX from 1996-2000
- Positive EBITDA
. Fully-Funded Business Plan
Map of Virginia, West Virginia, Maryland, Portions of Tennessee, Portions of
North Carolina, Portions of Ohio, and Portions of Pennsylvania
PCS, CLEC and Internet
PCS & ISP
PCS
ILEC
2
Established Regional ICP
- ------------------------
Invested Capital
- ----------------
($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
----------- ------------ ----------- -----
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
2001 2Q 198.7 78.4 67.1 344.2
3
Operational Support Systems
- ---------------------------
. Integrated operations for all products and services
. ICMS customer records systems for integrated billing and service
. Lucent Technologies Automated Call Distribution System
. Harris Corporation Network Management System for network surveillance (NOC)
. Online intranet reference guide for customer-facing employees
. J.D. Edwards Accounting System
Operating Systems Enable Superior Customer Service & Strategic Growth
4
Corporate Structure
- -------------------
NTELOS Inc.
| . Holding Company
| . Investments
| . Senior and Subordinated Notes
| . Senior Credit Facility
| . Preferred Equity
- -----------------------------------------------------------------------------------------------------------
| | | | | |
| 100% |100% |100% |100% |91% |79%
| | | | | |
| | | | | |
NTELOS NTELOS R&B NTELOS Virginia PCS West Virginia
Telephone Network Communications Wireless Alliance, LC PCS Alliance, LC
Inc. Inc. Inc.
. ILEC . CLEC . ILEC . PrimeCo . PCS . PCS
. ISP . CLEC . Wireless PCS . Debt with . Debt with
. Fiber . ISP NTELOS Inc. NTELOS Inc.
Network . Fiber & FCC
| Network | | . Limited Liability . Limited Liability |
| | | Company - Company - |
| | | 10 members 3 members |
- ------------------------------------------- --------------------------------------------------------------
Wireline Wireless
5
Leading Regional ICP
- --------------------
Key Recent Milestone
[GRAPH]
.1995 - Introduced Internet Service Provider (ISP) Offering
.1996 - VA Alliance acquired digital PCS licenses
.1997 - Formed WV PCS Alliance
Launched digital PCS service in VA
Celebrated 100th anniversary
.1998 - Launched digital PCS Service in WV
Launched CLEC Services in VA
Opened integrated customer care center
.1999 - Acquired Net Access and Cornerstone, regional ISP's
Launched CLEC Services in WV
.2000 - Implemented consolidated billing
Divested directory assistance and towers
Acquired PrimeCo's assets in Norfolk - Richmond, VA
Raised $950 MM of capital ($250MM of preferred and $700MM of debt)
.2001 - Merged with R&B Communications
6
Wireless Digital PCS: Overview
- ------------------------------
. 10.3 MM PCS pops; 6.0 MM Operational
. 198,656 subscribers (2Q) -- 73% Post Pay
. ARPU: $48.06 Post Pay; $42.60 blended (2Q)
. Churn: 2.35% Post Pay; 3.89% blended (2Q)
. 4 Wireless Switches; 740 cell sites
. Average 20 MHz per license
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:
Wireless Overview
. Digital PCS Service Area
. PCS Licensed Area
7
Wireless Digital PCS: Operating Strategy
- ----------------------------------------
o Own and control licenses, network, distribution channels and brand
o Focus on in-region market niche with localized marketing
- "nTown" Plan - 21% of Post Pay
- "nNetwork" plan - 72% of Post Pay
- "nRegion" plan - 7% of Post Pay
o Expand robust digital CDMA PCS network
- 3G1XRTT upgrade in western markets 2001-2003
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 - Amendment 7/1/01 to 12/31/03
o Predictable Revenue Stream: 2001: $18.8M
2002: $27.4M
2003: $38.6M
8
Digital PCS
====================================================================================================================================
PCS Spectrum
- ------------
Virginia West Virginia Pennsylvania
BTA POPS MHz BTA POPS MHz BTA POPS MHz
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
Brunswick 45.2 30 * Beckley 168.2 40 Harrisburg 687.4 10
Tri-Cities(sale pending) 10 * Bluefield 177.3 30 York-Hanover 463.3 10
* Charlottesville 215.3 30 * Charleston 487.0 30 Lancaster 457.0 10
* Danville 169.7 30 * Clarksburg 193.9 10 Reading 356.0 10
Fredericksburg 136.3 10 Cumberland, MD 160.1 40 Williamsport 160.6 10
Harrisonburg 143.1 20 * Fairmont 56.4 40 State College 133.9 10
* Lynchburg 158.4 30 * Huntington 369.1 30 Johnstown 235.9 10
* Martinsville 89.0 30 Logan 41.0 30 Altoona 223.9 25
Norfolk 1,763.4 20 Martinsburg 354.6 20
Richmond 1,210.4 20 * Morgantown 107.0 25
* Roanoke 639.6 30 Parkersburg 181.8 30
* Staunton-W'boro 109.4 30 Portsmouth, OH 95.7 30
Winchester 158.1 30 Wheeling 212.4 40
Williamson 186.2 30
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
4,839.7 2,790.7 2,718.0
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
Total POPs: 10,348,400 Operational POPS: 6,038,000
*Wholesale BTA POPs: 2,763,000
9
Wireless Digital PCS: Key Statistics
- ------------------------------------
Subscribers
- ------------
(000s)
[Graph]
Alliances Virginia East Total
--------- ------------- -----
1Q 00 55.2 86.4 141.6
2Q 00 63.5 88.0 151.5
3Q 00 69.4 88.3 157.7
4Q 00 80.7 87.7 168.4
1Q 01 89.4 96.6 186.0
2Q 01 96.9 101.8 198.7
2001E 230.4 - 239.4
Revenues and EBITDA
- --------------------
($ MMs)
[Graph]
EBITDA EBITDA before COA Revenues
------ ----------------- --------
1Q 00 (8.9) 2.1 21.2
2Q 00 (4.5) 5.2 23.8
3Q 00 (5.6) 5.2 24.0
4Q 00 (10.1) 2.7 22.8*
1Q 01 (7.0) 6.0 27.7
2Q 01 (5.0) 8.0 30.3
* SAB 101 adopted 4Q 00
10
Wireless Digital PCS: Monthly Subscriber Churn
- ----------------------------------------------
Virginia East
Pre-pay Blended Post-pay
------- ------- --------
4Q00 9.38% 6.68% 3.91%
1Q01 7.18% 5.05% 3.16%
2Q01 8.32% 4.63% 2.36%
Virginia West & West Virginia
Pre-pay Blended Post-pay
------- ------- --------
4Q00 6.75% 4.33% 3.59%
1Q01 5.95% 3.80% 3.15%
2Q01 5.77% 3.10% 2.34%
11
Wireless Digital PCS: Post Pay Customers
- ----------------------------------------
Virginia East
Gross Additions Ending Mix
--------------- ----------
4Q00 39.6% 51.2%
1Q01 46.9% 55.9%
2Q01 73.9% 67.1%
Virginia West & West Virginia
Gross Additions Ending Mix
--------------- ----------
4Q00 70.5% 76.8%
1Q01 69.5% 76.8%
2Q01 79.2% 78.8%
12
Wireline Overview
- ------------------
ILEC CLEC
---- ----
o 51,938 residential/business o 26,509 business access lines
access lines o 9 markets; 14 COs
o Leading ILEC service provider in Virginia o Interconnection agreements in
as ranked by SCC VA, WV and TN with Sprint and
Verizon
Internet Network Fiber
-------- -------------
o 64,801 customers o 1,500 route miles deployed
o 2,297 DSL Customers o 32,000 Fiber miles
o 60 markets o connectivity to major retail cities
o Dial-up access in
all Markets
o DSL in 16 markets
100% digital platform with best-in-class equipment
13
Wireline: Operating Strategy
- ----------------------------------
o ILEC
o No competition in ILEC market to date, despite deregulation
o ILEC operates under small company status, which is lightly regulated
o CLEC
o Hybrid facilities-based/ "smart-build" strategy
o Leverage our fiber optic network, ILEC switching platform & brand
o Target businesses with bundled service offerings - PCS emphasized
o Internet/DSL
o Broad product-offering of fast and reliable services
o DSL offered in a growing number of markets in three states
o Network Fiber
o Wholesale Revenue Stream
o Significant operating cost reduction
o Significant increase in reliability
14
Network
- --------------------------------------------------------------------------------
. 1,500 route miles; 32,000 fiber miles
. Connectivity to major retail cities
. Differentiating characteristics
- Wholesale Revenue Stream: $9.1 MM annually/1/
- EBITDA: $7.3 MM annually, 80% margin/1/
- Significant operating cost reduction
- Significant increase in reliability
/1/ Based on actual 1H01 run rate
Map of Virginia, West Virginia, Maryland, Portions of Tennessee, Portions of
North Carolina, Portions of Ohio, and Portions of Pennsylvania showing
network that is:
In Service
Planned for 2001
Future
15
Wireline: Key Statistics
- ------------------------
Customer/Lines
- --------------
($000s)
[Graph]
CLEC ISP/DSL ILEC Total
---- ------- ---- -----
1Q 00 13.3 56.6 50.6 120.5
2Q 00 17.4 59.3 51.4 128.1
3Q 00 18.1 59.6 51.7 129.4
4Q 00 20.5 62.9 51.9 135.3
1Q 01 23.7 65.8 51.8 141.3
2Q 01 26.5 67.1 51.9 145.5
2001E 154.3 - 157.8
Revenues and EBITDA
- -------------------
($MM)
[Graph]
EBITDA Revenues
------ --------
1Q 00 7.2 17.6
2Q 00 7.1 18.5
3Q 00 7.6 19.0
4Q 00 8.3 20.4
1Q 01 9.8 22.4
2Q 01 9.4 21.9
16
Branding
- --------
[Photo of NTELOS brand]
More ways to bring more people together.
17
Marketing and Promotion
- ----------------------
o Advertising, Marketing and External Affairs
- $14 million total company
- 88% wireless
o Positioning and Target Segments
Pie Graph - Wireless Marketing
69% Media
16% Production
9% PR
6% Other
o Wireless
- Region's largest digital provider
- Simple, Feature Rich, Post pay
- Consumer 25-54
- Blended Media Strategy
- Mix, Brand and Promotion
- Business to Business
o Wireline
- ILEC/CLEC
- Heritage and Experience
- Medium and Small Business
- DSL
o ARPU Initiatives
- Plan restructures with increased rates and/or reduced minutes
- Target upgrades for low-end plans
18
Extensive Distribution Channels
- -------------------------------
o Company-Owned Retail Stores
- 47 current
- 55 by end-of-year 2001
o Direct Sales Force
- 223 retail representatives
- 60 account executives
o Indirect Sales
- 350 agent locations
o Inside Sales
- Now selling for all markets
- 2,434 gross adds in 2Q 01
Photo of retail center.
19
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
- PRI CLEC Service
- Private Fiber Network
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
o Hollin Univerity
- PRI Service
20
Conestoga Opportunity
- --------------------------------------------------------------------------------
NTELOS/Conestoga Combination Creates the Premier Regional ICP
Scale Greater market recognition, liquidity, access to capital,
critical mass and economies of scale
Asset Portfolios Similar strategic business focus on wireline and
wireless operations
Geographic Fit Complementary geographic markets (both in wireless and
wireline businesses); platform for growth in PA
Management & Established and strategic workforce - a catalyst for
Employees continued growth
Culture & Values Common culture and values facilitating integration;
commitment to communities
21
Conestoga Opportunity
- --------------------------------------------------------------------------------
Transaction Summary
. Purchase Price and Consideration
- $40 per Conestoga share
- $335MM plus assumption of $73MM of debt
. $60 MM anticipated proceeds from sale of Conestoga Wireless
. $21 MM anticipated proceeds from sale of Conestoga Towers
- Up to 58% cash consideration funded by equity infusion of up to
$200MM from Welsh, Carson, Anderson & Stowe ("WCAS")
- At least 42% of NTELOS common stock with an approximate value of
$140 MM
- Pricing collar on NTLO stock: $18 to $30
. Accounting/Tax treatment
- Purchase accounting/Tax-free reorganization
. Closing targeted around year-end of 2001
- No significant shareholder- or regulatory-related obstacles
anticipated
- WCAS financing fully committed
22
Conestoga Opportunity
- --------------------------------------------------------------------------------
Leading Pennsylvania ICP
. ILEC - 84,000 access lines
. CLEC - 14,000 access lines
. PCS - 18,000 subscribers
. Historical Financial Performance:
($MM) 1998 1999 2000 1H'01
-------- -------- -------- ---------
Revenues 77.3 87.4 87.6 45.4
EBITDA
ILEC 28.9 31.0 31.3 17.1
CLEC & Other 2.4 0.5 (0.4) (0.5)
Wireless (3.9) (5.0) (5.1) (1.8)
Total 27.4 26.5 25.8 14.8
23
Conestoga Opportunity
- --------------------------------------------------------------------------------
Leading Pennsylvania ICP (cont.)
. ILEC: Buffalo Valley Tel. & Conestoga Tel.
-- 62% of total operating revenues
-- Access line CAGR of 5.4% (1996 to 2000)
-- Approximately $34MM of annual EBITDA
-- 100% digital local exchanges / 97% DSL capable
. CLEC: CEI Networks
-- Operates in 5 Verizon markets in central PA
-- Leverages Conestoga network and brand
-- 130 miles of fiber and 75 miles of coaxial cable
. PCS: Conestoga Wireless Company
-- Announced sale to VoiceStream for $60MM
24
Conestoga Opportunity
- --------------------------------------------------------------------------------
Transaction Rationale Significant, Identifiable Benefits to Accrue from
Conestoga Acquisition
. Enhanced scale and depth to accelerate business plan
. Complementary geographic markets
. Strengthened financial positioning
-- Increased liquidity through greater trading volume
-- Broader analyst coverage/deepened institutional following
. Potential revenue and cost synergies
. Optimal positioning as regional consolidator
. Management depth
. Enhanced growth and profitability prospects
. Significant improvement in credit profile through enhanced cash flows,
new equity infusion and substantially larger asset base
. Conestoga management and organization provide an established base of
operations for expansion in Pennsylvania
25
Historical Financial Statistics/2001 Guidance
- ---------------------------------------------
Pro-Forma including Virginia East and R&B
Revenues
- ---------
($MM)
[Graph]
Wireline/
PCS Other
--- ---------
1995 - 44.3
1996 - 48.6
1997 11.3 53.1
1998 36.0 60.9
1999 66.8 75.3
2000 91.8 87.7
* 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 - 26.2
1996 (14.9) 29.8
1997 (28.0) 34.9
1998 (30.5) 39.8
1999 (28.6) 37.6
2000 (29.1) 34.3
2001 Guidance: PCS EBITDA approaching breakeven 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 to $70MM (excluding
3G alliance upgrade of $40-$45MM from 2001 to 2003)
26
Investment Highlights
- ----------------------
o Transactions in 2000 solidify position as regional PCS / ICP provider
o Well positioned as regional consolidator in the RLEC sector
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 with $227 MM of available funds at 6/30/01
- Cash and equivalents\1\ $ 56 MM
- Available under credit facility $ 95 MM
- Expected proceeds from non-core assets sales $ 50 MM
- Positive EBITDA
o Strong Financial Sponsor
- Welsh Carson Anderson & Stowe
o Experienced management team
\1\ Includes $26 MM investment in Illuminet Holdings, Inc.
27
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.
28
WE URGE INVESTORS AND SECURITY HOLDERS TO READ NTELOS' REGISTRATION STATEMENT ON
FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS RELATING TO THE MERGER TRANSACTION DESCRIBED ABOVE, WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. When these other
documents relating to the transaction are filed with the Commission, investors
and security holders may obtain a free copy at the Commission's web site at
www.sec.gov. The documents filed with the Commission by NTELOS may also be
obtained for free from NTELOS by directing a request to NTELOS Inc., P.O.Box
1990, Waynesboro, Virginia 22980, Attn: Investor Relations, telephone: (540)
946-3500. Certain of these documents may also be available on NTELOS' website at
www.ntelos.com. WHEN THEY BECOME AVAILABLE, READ THE DEFINITIVE REGISTRATION
STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A
DECISION CONCERNING THE MERGER.