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): April 29, 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
performance through fiscal year 2001 and certain 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
- Wireless: PCS (10.2MM pops)
- Wireline: ILEC (3 markets)
CLEC (14 markets)
Internet (60 markets)
Long Haul
... 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 $600MM CAPEX from 1996-2001
- Positive EBITDA
... Fully-Funded Business Plan
Map of Virginia, West Virginia, Maryland, Portions of Tennessee, Portions of
North Carolina, Portions of Ohio, Portions of Kentucky and Portions of
Pennsylvania
PCS, CLEC and Internet
PCS & Internet
PCS
ILEC
Internet
3
Established Regional ICP
- ------------------------
Invested Capital
- ----------------
($MMs)
[Graph]
Wireline/
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
2001 64.4 50.3 114.7
2002E* 80.0-95.0
* Wireline/PCS/Other 50.0 to 60.0
3-GIXRTT Capex 30.0 to 35.0
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
2002E 455.0 to 480.0
1996 - 2001 CAGR = 54.4%
All historical amounts are pro forma to include results of CFW Communications,
R&B Communications, the Virginia and West Virginia PCS Alliances and PrimeCo
Virginia PCS.
4
Digital PCS
Wireless Digital PCS: Attractive Operating Regions
- --------------------------------------------------
. Contiguous geographic markets with 10.2 MM PCS pops; 6.7 MM Operational
. Over 1500 interstate miles & three state capitals
. Abundant tourist destinations
- Beaches
- Historic areas
- State and National Parks
. Hub of major universities/colleges
- University of Virginia
- Virginia Tech
- William & Mary
- Old Dominion University
. Expansion Opportunities
- High growth markets in Harrisburg and communities west of Philadelphia
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
6
Wireless Digital PCS - Spectrum
- -------------------------------
Virginia West Virginia/Other Pennsylvania
BTA POPS MHz BTA POPS MHz BTA POPS MHz
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
* Beckley/1/ 168.2 20 Harrisburg 687.4 10
Charlottesville 215.3 20 * Bluefield/1/ 177.3 20 York-Hanover 463.3 10
* Danville 169.7 30 * Charleston/1/ 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 Altoona 223.9 15
Lynchburg 158.4 30 * Fairmont 56.4 40 Williamsport/1/
* Martinsville 89.0 30 * Huntington 369.1 30 State College/1/
* Norfolk 1,763.4 20 Logan 41.0 30
Richmond 1,255.6 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 Wheeling/1/ 212.4 30
Williamson 186.2 30
Athens, OH 132.1 15
Chillicotne, OH 104.7 15
Portsmouth, OH 95.7 30
Zanesville, OH 187.2 15
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
4,837.9 3,214.7 2,187.6
- ---------------------------------------- ---------------------------------------- ------------------------------------------------
Total POPs: 10.2 million Operational POPS: 6.8 million
*Wholesale BTA POPs: 2.9 million
/1/ Pro forma for announced pending spectrum sales valued at $7.1 million
7
Wireless Digital PCS: Network
- -----------------------------
o Region's largest CDMA Network
o Mature-stage development
o 770 cell sites on-air (4Q01)
o 3G1XRTT Upgrade: 2001-2003
- Western markets
- $40 MM - $45MM Capex
o Wholesale Provider of wireless network services
- Sprint/Horizon agreement - amendment 7/1/01 to 12/31/03
o Predictable minimum revenue stream: 2001: $19.1MM
2002: $27.4MM
2003: $38.6MM
-------
$85.1MM
Cell Site Deployment
Sites On-Air Total Sites
------------ -----------
1996 118 118
1997 125 243
1998 164 407
1999 118 525
2000 177 702
2001 68 770
2002E 65* 835
*38 sites substantially complete in 2001; 27 estimated new sites for 2002
All historical amounts are pro forma to include the results of CFW
Communications, R&B Communications, the Virginia & West Virginia PCS Alliances
and PrimeCo Virginia PCS.
8
Wireless Digital PCS: Operating Strategy
- ----------------------------------------
... Own and control licenses, network, distribution channels and brand
... 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 - *1% of post pay
... Target new customer segments
_ New nAdvance product
. 12,123 subscribers (4Q01)
. Higher ARPU
. Paid-in-advance revenue
. One year contract
* Less Than
9
Wireless Digital PCS: Key Statistics
- ------------------------------------
Total PCS Subscribers
- ---------------------
82% post pay-like plans
(000s)
[Graph]
Post-Pay Pre Pay Advance Total
--------- ------- ------- -----
1Q 00 87 55 142
2Q 00 92 59 152
3Q 00 97 61 158
4Q 00 107 62 168
1Q 01 123 64 186
2Q 01 145 54 199
3Q 01 157 47 204
4Q 01 172 39 12 224
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
All historical amounts are pro forma to include the results of CFW
Communications, R&B Communications, the Virginia and West Virgina PCS Alliances
and PrimeCo Virgina PCS.
10
Wireless Digital PCS: Key Statistics
- ------------------------------------
ARPU
- ----
Post-Pay Blended
-------- -------
4Q 00 46.2 43.2
1Q 01 47.9 40.5
2Q 01 50.8 42.6
3Q 01 53.7 46.0
4Q 01 52.0 43.7
Churn
- -----
Post-Pay Blended
-------- -------
4Q 00 3.7 5.6
1Q 01 3.2 4.4
2Q 01 2.4 3.9
3Q 01 3.0 4.5
4Q 01 3.3 4.4
CPGA
- ----
Blended
-------
4Q 00 339
1Q 01 322
2Q 01 363
3Q 01 376
4Q 01 329
11
Richmond/Norfolk Turnaround
- ---------------------------
Key Initiatives Successful Results
--------------- ------------------
2000 2001
---- ----
... New post-pay rate plans % Post-Pay Subs 51% 76%
... Focus on direct distribution % Post-Pay Gross Adds 29% 75%/1/
... New distribution channels
- Business to business
- Inside Sales Post-Pay Churn 3.6% 3.2%
... Localizing branding and
marketing campaigns Post-Pay ARPU $ 44 $ 55
... Operations, customer care and %Post-Pay Customers
billing transitioned in-house with $50 + plans 35%/2/ 52%
/1/ Excluding the effect of 6,920 nAdvance gross additions.
/2/ 1Q 01
Wireless Digital PCS: Key Statistics
- -------------------------------------
Revenue and EBITDA
- ------------------
($ MMs)
109% year over year increase in EBITDA before COA
[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
4Q 01 (7.0) 8.7 31.2
* SAB 101 adopted 4Q 00
Operating Expenses
- ------------------
Gaining OPEX Efficiencies
Graph depicting Revenues and Operating Expenses (excluding cost of sales) per
quarter from 1Q00 to 4Q01.
Operating Expenses (excluding cost of sales) were 88% of Revenues in 2000 and
78% of Revenues in 2001.
All historical amounts are pro forma to include the results of CFW
Communications, R&B Communications, the Virginia and West Virginia PCS Alliances
and PrimeCo Virginia PCS.
13
Wireline
14
Wireline: Overview
- ------------------
ILEC CLEC
---- ----
o 52,036 residential/business o 33,598 business access lines
access lines o 15 markets
o Leading ILEC service provider in Virginia o Interconnection agreements in
as ranked by SCC VA, WV and TN with Sprint and
o Strong EBITDA margins: 64% in 2001 Verizon
o Positive EBITDA in 2001
Internet Network Fiber
-------- -------------
o 70,189 dial-up customers o 1,600 route miles deployed
o 4,004 DSL customers o Connectivity to major retail cities
o 60 markets o Connections with Valley Net and DDR
o Dial-up access in
all markets
o DSL in 24 markets
o Positive EBITDA in 2001
100% digital platform with best-in-class equipment
15
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
16
Network
- --------------------------------------------------------------------------------
... 1,600 route miles
... Connectivity to major retail cities
... Differentiating characteristics
- Wholesale Revenue Stream: $9.3 MM annually/1/
- EBITDA: $7.8 MM annually, 84% margin/1/
- Significant operating cost reduction
- Significant increase in reliability
/1/ 2001 pro forma results
Map of Virginia, West Virginia, Maryland, Portions of Tennessee, Portions of
North Carolina, Portions of Ohio, Portions of Kentucky and Portions of
Pennsylvania showing network that is:
In Service/operational 2002
Owned
Valley Net
DDR
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia and West Virginia PCS Alliances and PrimeCo
Virginia PCS.
17
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)
29% EBITDA increase year-over-year
[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
4Q 01 10.9 23.2
All historical amounts are pro forma to include the results of CFW
Communications, R&B Communications, the Virginia and West Virginia PCS Alliances
and PrimeCo Virginia PCS.
18
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
o Centers virtually linked for staffing efficiencies
o Retention Specialists
Photo of retail center.
19
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
20
2002 Company Guidance
21
2002 Customer Projections
- -------------------------
Ending PCS Subscribers
- ----------------------
(000)
Post Pay nAdvance Pre Pay Total
-------- -------- ------- -----
2000 107.0 61.4 168.4
2001 172.4 12.1 39.3 223.8
2002E 275.0-294.0
CLEC Access Lines
- -----------------
(000)
CLEC Access Lines
-----------------
2000 20.5
2001 33.6
2002E 45.0-47.0
ILEC Access Lines
- -----------------
(000)
ILEC Access Lines
-----------------
2000 52.0
2001 52.0
2002E 52.0-53.0
Internet/DSL Subscribers
- ------------------------
(000)
ISP/DSL Subscribers
-------------------
2000 62.9
2001 74.2
2002E 83.0-86.0
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia and West Virginia PCS Alliances and PrimeCo PCS.
22
Consolidated Operations
- -----------------------
Revenues
- --------
($MMs)
Revenues
--------
2000 179.5
2001 220.2
2002E 270.0-286.0
EBITDA
- ------
($MMs)
EBITDA
------
2000 5.2
2001 20.4
2002E 52.0-58.0
2002 Revenue 2002 EBITDA
Guidance Summary ($MM) Guidance Summary ($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 $58.0
All historical amounts are pro forma to include the results of NTELOS, R&B
Communications, the Virginia and West Virginia PCS Alliances and PrimeCo PCS.
23
2002 Liquidity Projection (using low-end of guidance ranges)
- ------------------------------------------------------------
($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
Projected net borrowings (43.1)
------------
Senior credit facility revolver at end of year $ 56.9
============
/1/ Includes $8.0 MM received January 2002 from tower sales, $14.5 MM received
in March & April 2002 from sale of excess PCS spectrum and $7.1 MM expected to
be received from announced definitive agreements for the sale of excess PCS
spectrum, and anticipated proceeds from sales of additional excess PCS spectrum
or other non-strategic assets
/2/ Excludes pre-funded interest on senior notes in 2002
24
Investment Highlights
- ----------------------
o PCS poised to turn EBITDA positive in early 2002
o Spectrum "rich" - proven value and liquidity
o ILEC's established, local presence provides stable revenue base and high
margin operating cash flows
o CLEC and ISP: EBITDA positive and growth leverages infrastructure
o Strategic Fiber Network - generates positive EBITDA & cost reductions
o Proven ability to manage liquidity
- Non-strategic asset sales executed in 2001: $57.8MM
- Non-strategic asset sales executed in 2002: $22.5MM
- Definitive agreements on 2002 assets sales: $7.1MM
- Additional non-strategic asset sales in business plan
- $100MM currently available under facility at 12/31/01; $90 MM available at
3/31/02
o Plan is fully-funded with reserves
- Amendment to $325MM senior credit facility executed
- Value of non-strategic assets significantly exceeds planned asset sales
25
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: April 29, 2002