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 13, 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, the information being furnished below is an overview
of NTELOS' strategy, operations and performance through fiscal year 2001 and
includes certain projections and guidance for 2002.
A powerpoint version of the information is available on NTELOS' website at
www.ntelos.com.
NTELOS
Company Guidance
- ----------------
2002
March 2002
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
Wireless Digital PCS
3
Wireless Digital PCS - Coverage Area
- ------------------------------------
o Geographic expansion minimal for 2002
-- Fredericksburg, VA (I-95); Hagerstown, MD (I-81);
Bluefield, WV (I-77)
-- Fill-in for some primary corridors
o Projected 835 cell sites by end of 2002
-- Expected 65 new sites to become operational in 2002
-- 61 of these sites substantially funded in 2001
Map of Virginia, West Virginia and portions of North Carolina showing:
o Current NTELOS Coverage
o Future NTELOS Coverage
* Coverage may vary depending upon terrain, weather conditions and customer
equipment.
4
Wireless Digital PCS: Subscribers & Key Metrics
- ------------------------------------------------
Total Ending PCS Subscribers
- ----------------------------
(000s)
[Graph]
Post Pay nAdvance Pre Pay Total Guidance Range
2000 107.0 ---- 61.4 168.4 ----
2001 172.4 12.1 39.3 223.8 ----
2002E ---- ---- ---- ---- 275.0 - 294.0
o Projected 2002 year-end subscriber mix reflects 91% Post Pay-like
plans with growth of nAdvance and reduction of Pre Pay
-- Post Pay: 70% (77% year-end 2001)
-- nAdvance: 21% (5% year-end 2001)
-- Pre Pay: 9% (18% year-end 2001)
o Projected 4Q 2002 monthly subscriber churn improves as traditional
Pre Pay base reduces
-- Post Pay: 2.9% (3.3% for 4Q 2001)
-- Blended: 3.8% (4.4% for 4Q 2001)
o Projected monthly subscriber ARPU improves in every category
-- Post Pay: Increases from $52 to $54 by year-end with
continued focus on higher-end rate plans
-- nAdvance: Increases from introductory levels to $42 by
year-end
-- Pre Pay: Increases to $18 by year-end on usage of new
roaming capability
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
5
Wireless Digital PCS: Key Financial Projections
- ------------------------------------------------
Revenues
- --------
($ MMs)
[Graph]
PCS Revenues Guidance Range
2000 91.8 ----
2001 121.3 ----
2002E ---- 170.0 - 180.0
o Projected 2002 PCS revenues of $170 MM to $180 MM supported by:
-- Customer Growth
-- Improved ARPUs on strength of higher-end post pay plans &
nAdvance
-- Sprint/Horizon wholesale network services agreement with
contractual minimum revenues of $27.4 MM ($19.1 MM in 2001)
EBITDA
- ------
($ MMs)
[Graph]
PCS EBITDA Guidance Range
2000 (29.1) ----
2001 (21.9) ----
2002E ---- 11.0 - 14.0
o Projected 2002 PCS EBITDA turns positive to $11 MM to $14 MM:
-- Positive turn by mid-year
-- Stable CPGA of approximately $350
-- Transition & integration of Virginia East markets completed
in 2001
-- Operating expenses (excluding cost of sales) continue
efficiency improvements shown in 2001
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
6
Wireline
- --------
7
Wireline: ILEC Operations
- --------------------------
Access Lines
- ------------
(000)
[Graph]
ILEC Access Lines Guidance Range
2000 52.0 ----
2001 52.0 ----
2002E ---- 52.0 - 53.0
o Projected 2002 ILEC access lines flat to 2% growth dependant upon:
-- Residential household growth
-- New business openings
Revenues
($ MMs)
[Graph]
ILEC Revenues Guidance Range
2000 41.2 ----
2001 44.0 ----
2002E ---- 45.0 - 46.0
o Projected 2002 ILEC revenues increase to $45 MM - $46 MM on the
strength of switched access minute growth
-- Switched access revenues increasing on continued MOU growth
EBITDA
($ MMs)
[Graph]
ILEC EBITDA Guidance Range
2000 25.5 ----
2001 28.1 ----
2002E ---- 28.5 - 29.5
o Projected 2002 ILEC EBITDA $28.5 MM to $29.5 MM
-- Continued strong operating margin of 63% to 64% for 2002
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
8
Wireline: CLEC Operations
- --------------------------
Access Lines
- ------------
(000)
[Graph]
CLEC Access Lines Guidance Range
2000 20.5 ----
2001 33.6 ----
2002E ---- 45.0 - 47.0
o Projected 2002 CLEC access lines reflect continuation of historical
growth trends
-- 6 new markets added in 2001
-- 2 co-locations added in existing markets in 2001
-- No new markets for 2002; 2 co-locations planned
-- Business access lines (no resale strategy)
Revenues
- --------
($ MMs)
[Graph]
CLEC Revenues Guidance Range
2000 11.8 ----
2001 17.9 ----
2002E ---- 19.0 - 20.0
o Projected 2002 CLEC revenues reflect continued access line growth,
offset by declining reciprocal compensation and switched access rates
-- Recip comp revenues down approximately $1.0 MM in 2002 from
$3.7 MM in 2001
-- Switched access revenues down approximately $1.5 MM in 2002
from $3.8 MM in 2001
EBITDA
- ------
($ MMs)
[Graph]
CLEC EBITDA Guidance Range
2000 (0.4) ----
2001 1.9 ----
2002E ---- 0.0 - 0.5
o Projected 2002 CLEC EBITDA remains positive reflecting recip comp and
switched access revenue reductions
-- Virginia CLEC operations, which were the earliest deployed,
had EBITDA of $4.6 MM for 2001
-- Earlier stage markets remain in loss position, showing
improvement
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
9
Wireline: Internet Operations
- ------------------------------
Subscribers
- -----------
(000)
[Graph]
ISP Subscribers Guidance Range
2000 62.9 ----
2001 74.2 ----
2002E ---- 83.0 - 86.0
o Projected 2002 Internet subscribers reflect continued dial-up growth
and strong DSL growth
-- Dial-up increase of 7,000 to 9,000 subscribers
-- DSL subscriber growth of 55% to 65%
* Line-sharing - residential DSL product introduced in
fourth quarter 2001
Revenues
- --------
($ MMs)
[Graph]
ISP Revenues Guidance Range
2000 14.2 ----
2001 17.8 ----
2002E ---- 19.5 - 21.0
o Projected 2002 Internet revenues grow at rates beyond customer growth
-- Residential DSL ARPUs more than double dial-up
-- Business DSL ARPUs more than 5x dial-up
-- DSL about 5% of customer base in 2001; grows to about 8% in
2002
EBITDA
- ------
($ MMs)
[Graph]
ISP EBITDA Guidance Range
2000 (0.8) ----
2001 1.3 ----
2002E ---- 2.5 - 3.0
o Projected 2002 Internet EBITDA reflects maturing operations
-- Operating cost efficiencies
-- Operating margins grow from 7% in 2001 to a range of 12% to
14% in 2002
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
10
Wireline: Network Operations (Long-Haul)
- -----------------------------------------
Revenues
- --------
($ MMs)
[Graph]
Network Guidance Range
2000 8.1 ----
2001 9.3 ----
2002E ---- 10.0 - 11.0
EBITDA
- ------
($MMs)
[Graph]
Network EBITDA Guidance Range
2000 5.9 ----
2001 7.8 ----
2002E ---- 8.5 - 9.0
o New connections with Valley Net and DDR in 6 states increase wholesale
opportunities
o Additional 500 miles to be operational in 2002
o Offers significant operating cost reductions for consolidated Company
Map of Virginia, Portions of West Virginia, Ohio, Pennsylvania, North Carolina
and Tennessee showing:
o In Service
o Owned
o Valley Net
o DDR
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
11
Consolidated Operations
- -----------------------
12
Consolidated Operations
- -----------------------
Revenues
- --------
($ MMs)
[Graph]
Revenues Guidance Range
2000 179.5 ----
2001 220.2 ----
2002E ---- 270.0 - 286.0
EBITDA
- ------
($ MMs)
[Graph]
EBITDA Guidance Range
2000 5.2 ----
2001 20.4 ----
2002E ---- 52.0 - 58.0
[Chart]
2002 Revenue Guidance 2002 EBITDA Guidance
Summary ($MM) Summary ($MM)
- --------------------------------------------------------------------------------------------------------
$170.0 to $180.0 PCS $11.0 to $14.0
45.0 to 46.0 ILEC 28.5 to 29.5
19.0 to 20.0 CLEC 0.0 to 0.5
19.5 to 21.0 ISP 2.5 to 3.0
10.0 to 11.0 Network 8.5 to 9.0
6.5 to 8.0 Other 1.5 to 2.0
- --------------------------------------------------------------------------------------------------------
$270.0 to $286.0 Total $52.0 to $58.0
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
13
Capital Expenditures
- --------------------
[Graph]
($MM)
Wireless/Wireline/Other 3G1XRTT Total
2000 114.3 ---- ----
2001 114.7 ---- ----
2002E 50.0 to 60.0 30.0 to 35.0 80.0 to 95.0
2003E 45.0 to 55.0 5.0 to 10.0 50.0 to 65.0
o Special projects inflated CAPEX in 2001
-- Portsmouth customer care center
-- IT expansion for VA East integration
-- Building (R&B)
-- Fiber build
o Infrastructure build-out in existing markets reaching mature stage
reducing build-out need in future
o Primary CAPEX for 2002-2003 is for capacity expansion to support
growing customer base
-- Capital savings if customer growth lags
o 3G1XRTT CAPEX in connection with Sprint/Horizon wholesale network
services agreement
-- $85.0 MM in minimum revenue guarantees 2001 through 2003
-- Updates network platform reducing maintenance CAPEX &
enhances capacity
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia & West Virginia PCS Alliances and PrimeCo PCS.
14
2002 Liquidity Projection (using low-end of guidance ranges)
- ------------------------------------------------------------
($MM) 2002
- --------------------------------------------------------------------- ---------
EBITDA $ 52.0
Capital expenditures (80.0)
Proceeds from sale of non-strategic assets /1/ 40.0
Miscellaneous scheduled debt paydown (9.6)
Working capital requirement (9.5)
Cash interest /2/ (36.0)
------
Projected net borrowings $ (43.1)
========
Senior credit facility revolver at beginning of year $ 100.0
Net borrowings (43.1)
-------
Senior credit facility revolver at end of year $ 56.9
========
/1/ Includes $8.0 MM received in January 2002 from tower sales, $21.6 MM
expected to be received from announced definitive agreements for the sale of
excess PCS spectrum, and anticipated proceeds from selected sales of additional
excess PCS spectrum or other non-strategic assets
/2/ Excludes pre-funded interest on senior notes in 2002
15
Non-Strategic Assets
- --------------------
o Excess PCS spectrum
-- Over 110 million MHz POPs
o Other excess spectrum
-- MMDS spectrum (850,000 households)
-- LMDS spectrum (1.3 MM POPs)
o Other non-strategic assets
-- Wireline cable operations
-- Paging operations
-- Alarm system operations
-- Directory Assistance Buildings
16
2002 Guidance Summary
- ---------------------
o Projected 2002 revenues growth of 23% to 30% supported by:
-- Customer growth
-- Improving PCS ARPUs
-- Continued stability of wireline revenues
-- Wholesale revenue streams: Sprint/Horizon & Network
o Projected EBITDA growth of 155% to 184% supported by:
-- PCS turn to positive EBITDA by mid-year
-- Continued high margins on ILEC and wholesale revenues
o Capital expenditures declining
-- Mature stage infrastructure build-out
-- Capacity expansion scales to customer growth
-- Portions discretionary and could be further reduced
o Plan is fully-funded with reserves
-- Amendment to $325 MM senior credit facility executed
-- Value of non-strategic assets significantly exceeds planned
asset sales
17
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
Senior Vice President and Chief Financial
Officer, Treasurer and Secretary
Date: March 13, 2002