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): February 11, 2002
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, Chief Executive Officer, and
Mr. Michael B. Moneymaker, Chief Financial Officer, at investor meetings. This
presentation provides an overview of NTELOS' strategy, transactions and certain
performance through fiscal year 2001 and guidance for 2002.
NTELOS
Photo of products and customers.
Forward-Looking Statements
- ---------------------------
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 documents 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.
2
Company Overview
- -----------------
. Regionally-focused ICP concentrating on high-growth sectors
- PCS: 10.2MM pops
- Internet: 60 markets
- Wireline: CLEC (14 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
- 431,000 customers
- Over $600MM CAPEX from 1996-2001
- Positive EBITDA
. Fully-Funded Business Plan
Map of Virginia, West Virginia, Maryland, Portions of Tennessee, Portions of
North Carolina, Portions of Ohio, and Portions of Pennsylvania
PCS, CLEC and Internet
PCS & ISP
PCS
ILEC
3
Established Regional ICP
- ------------------------
Invested Capital
- ----------------
($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
----------- ------------ ----------- -----
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 223.8 85.6 74.2 383.6
4
Digital PCS
Wireless Digital PCS: Overview
- ------------------------------
. 10.2 MM PCS pops; 6.7 MM Operational
. 223,805 subscribers (4Q) -- 77% post pay
. Launched new nAdvance product -- 12,123 subscribers (4Q)
- Higher ARPU
- Paid-in-advance revenue
- One-year contract
. ARPU: $53.65 post pay; $46.01 blended (3Q)
. 4 wireless switches
. 770 cell sites (4Q)
. Average 20 MHz per license
. Virginia East transition complete
Map of Virginia, West Virginia, Maryland, Portions of Pennsylvania, Portions of
North Carolina, Portions of Ohio, and Portions of Kentucky showing:
Wireless Overview
. PCS operational BTAs
. PCS Licensed BTAs, non-operational
. Spectrum sale pending
6
Wireless Digital PCS - Spectrum
- -------------------------------
Virginia West Virginia Pennsylvania
BTA POPS MHz BTA POPS MHz BTA POPS MHz
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
Brunswick 45.2 30 * Beckley 168.2 20 Harrisburg 687.4 10
* Charlottesville 215.3 20 * Bluefield 177.3 20 York-Hanover 463.3 10
* Danville 169.7 30 * Charleston 487.0 30 Lancaster 457.0 10
Fredericksburg 136.3 10 * Clarksburg 193.9 10 Reading 356.0 10
Harrisonburg 143.1 20 Cumberland, MD 160.1 40 Williamsport/1/ 10
* Lynchburg 158.4 30 * Fairmont 56.4 40 State College/1/ 10
* Martinsville 89.0 30 * Huntington 369.1 30 Johnstown/1/ 10
Norfolk 1,763.4 20 Logan 41.0 30 Altoona 223.9 15
Richmond 1,210.4 20 Martinsburg 354.6 20
* Roanoke 639.6 30 * Morgantown 107.0 25
* Staunton-W'boro 109.4 30 Parkersburg 181.8 30
Winchester 158.1 20 Portsmouth, OH 95.7 30
Wheeling 212.4 30
Williamson 186.2 30
Athens, OH 132.1 15
Portsmouth, OH 95.7 15
Zanesville, OH 187.2 15
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
4,837.9 3,205.7 2,187.6
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
Total POPs: 10.2 million Operational POPS: 6.7 million
*Wholesale BTA POPs: 2.9 million
/1/ Sale Pending
7
Digital PCS Coverage Area
- -------------------------
. 1st/ to launch PCS services in Virginia and West Virginia
. The region's largest 100% digital PCS network utilizing CDMA technology
(770 cell sites)
. Sprint and Horizon wholesale agreements
Map of Virginia, West Virginia and portions of North Carolina showing:
. Current NTELOS coverage
. Future NTELOS coverage
* Coverage may vary depending upon terrain, weather conditions and customer
equipment
8
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 - 29% of post pay
- "nNetwork" plan - 62% of post pay
- "nRegion" plan - 9% of post pay
- "nNation" plan - less than 1% 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 minimum revenue stream: 2001: $18.8MM
2002: $27.4MM
2003: $38.6MM
-------
$84.8MM
9
Wireless Digital PCS: Key Statistics
- ------------------------------------
Total PCS Subscribers
- ---------------------
(000s)
[Graph]
Alliances Virginia East Total
--------- ------------- -----
1Q 00 55.2 86.4 141.6
2Q 00 63.5 88.0 151.5
3Q 00 69.4 88.3 157.7
4Q 00 80.7 87.7 168.4
1Q 01 89.4 96.6 186.0
2Q 01 96.9 101.8 198.7
3Q 01 99.6 104.2 203.8
4Q 01 108.8 115.0 223.8
Post Pay Net Additions
- ----------------------
2000 - 28,334 Net post pay additions
2001 - 57,830 Net post pay additions
104% increase year-over-year
2000 2001
---- ----
1Q 8.1 12.8
2Q 5.6 17.3
3Q 4.3 12.0
4Q 10.3 15.7
10
Wireless Digital PCS: Post Pay Customers
- ----------------------------------------
Virginia East
- -------------
Gross Additions Ending Mix
--------------- ----------
4Q 00 39.6% 51.2%
1Q 01 46.9% 55.9%
2Q 01 73.9% 67.1%
3Q 01 86.5% 73.6%
4Q 01 96.4% 75.9%
Virginia West and West Virginia
- -------------------------------
Gross Additions Ending Mix
--------------- ----------
4Q 00 70.5% 76.8%
1Q 01 69.5% 76.8%
2Q 01 79.2% 78.8%
3Q 01 70.2% 80.3%
4Q 01 81.7% 78.1%
4Q 01 gross additions exclude the effect of new nAdvance Subscribers
11
Wireless Digital PCS: Key Statistics
- -------------------------------------
Revenue and EBITDA
- ------------------
($ 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
3Q 01 (3.0) 9.0 32.0
* SAB 101 adopted 4Q 00
Operating Expenses (excluding cost of sales)
- --------------------------------------------
Graph depicting Revenues and Operating Expenses (excluding cost of sales) per
quarter from 1Q00 to 3Q01.
Operating Expenses were 92% of Revenues at 1Q00 and 72% of Revenues at 3Q01.
12
Wireline
Wireline Overview
- ------------------
ILEC CLEC
---- ----
o 52,036 residential/business o 33,598 business access lines
access lines o 14 markets
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 70,189 dial-up customers o 1,500 route miles deployed
o 4,004 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 24 markets
100% digital platform with best-in-class equipment
14
Wireline: Operating Strategy
- ----------------------------------
o ILEC
- No competition in ILEC markets to date, despite deregulation
- ILEC operates under small company status, which is lightly regulated
o CLEC
- Hybrid facilities-based/ "smart-build" strategy
- Leverage our fiber optic network, ILEC switching platform & brand
- Target businesses with bundled service offerings - PCS emphasized
o Internet/DSL
- Broad product-offering of fast and reliable services
- DSL offered in a growing number of markets in three states
o Network Fiber
- Wholesale Revenue Stream
- Significant operating cost reduction
- Significant increase in reliability
15
Network
- --------------------------------------------------------------------------------
. 1,500 route miles; 32,000 fiber miles
. Connectivity to major retail cities
. Differentiating characteristics
- Wholesale Revenue Stream: $8.4 MM annually/1/
- EBITDA: $6.8 MM annually, 80% margin/1/
- Significant operating cost reduction
- Significant increase in reliability
/1/ Based on actual 9 months 2001, annualized
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
Owned-operational early 2002
16
Wireline: Key Statistics
- ------------------------
Customer/Lines
- --------------
($000s)
[Graph]
CLEC ISP/DSL ILEC Total
---- ------- ---- -----
1Q 00 13.3 56.6 50.6 120.5
2Q 00 17.4 59.3 51.4 128.1
3Q 00 18.1 59.6 51.7 129.4
4Q 00 20.5 62.9 51.9 135.3
1Q 01 23.7 65.8 51.8 141.3
2Q 01 26.5 67.1 51.9 145.5
3Q 01 30.7 72.1 51.9 154.7
4Q 01 33.6 74.2 52.0 159.8
Revenues and EBITDA
- -------------------
($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
3Q 01 9.0 21.5
17
Distribution Channels & Customer Care
- -------------------------------------
o Company-Owned Retail Outlets
- 54 current
o Direct Sales Force
- 321 retail representatives
- 34 account executives
- 16 telesales representatives
o Indirect Sales
- 363 agent locations
o Customer Care Centers
- Waynesboro - Wireline & Wireless
- Portsmouth - Wireless
- Roanoke - Wireline
- Net Access/Cornerstone - Internet II
o Centers virtually linked for staffing efficiencies
o Retention Specialists
Photo of retail center.
18
When Quality Matters
- --------------------
Healthcare Colleges and Universities
---------- -------------------------
. Genesis Hospital System . Bridgewater College
. Augusta Medical Center . Hollins University
. Rockingham Memorial Hospital . Mary Baldwin College
. Allegheny Regional Hospital . Eastern Mennonite University
. Winchester Medical Center . James Madison University
. Centra Health System . Blue Ridge Community College
. River Park Hospital . Dabney Lancaster Community College
. University of Virginia Medical Center . Liberty University
. Montgomery County Hospital . Shenandoah University
. Stonewall Jackson Hospital . University of Virginia
. Washington and Lee University
19
Liquidity - December 31, 2001
- -------------------------------------------------------
($ Millions) As of 12/31/01
- ------------ --------------
Cash and Cash Equivalents $ 6.9
======
Restricted Cash $ 36.2
======
Long-Term Debt: (book value)
Senior Credit Facility $225.0
Revolver --
Senior Notes 270.5
Sub Notes 84.5
JLL Obligations 13.0
FCC and Other 19.1
------
Total Long-Term Debt $612.1
======
Total Credit Facility Available = $100MM
2002 Asset Sales completed/definitive
agreements signed = $30MM
20
Investment Highlights
- ----------------------
o PCS poised to turn EBITDA positive by mid-year 2002
o Spectrum "rich" - proven value and liquidity
o ILEC's established, local presence provides stable revenue base and operating
cash flows
o CLEC and ISP: EBITDA positive and growth leverages infrastructure
o Strategic Fiber Network - generates revenue stream and cost reductions
o Experienced management team
o Proven ability to manage liquidity
- Planned non-core asset sales executed in 2001: $57.8MM
- Definitive agreements on 2002 assets sales: $29.6MM
- Additional asset sales implemented in response to 3G commitment
- Potential of additional asset sales
- $100MM currently available under facility
21
NTELOS
Photo of products and customers
22
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/ Carl A. Rosberg
-----------------------------------------
Carl A. Rosberg
Executive Vice President
and Chief Operating
Officer
Date: February 11, 2002