Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Jefferies Global Internet, Media, & Telecom Conference 2010
42 slides from Shenandoah Telecommunications's conference presentation, May 12, 2010
Slide 1: Jefferies Global Internet, Media, & Telecom Conference
Jefferies Global Internet, Media, & Telecom Conference May 12, 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our business strategy, our prospects and our financial position. Th
Slide 3: Use of Non-GAAP Financial Measures
Use of Non- Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures that are not determined in accordance with US generally accepted accounting principles. These financial performance measures are not indicative of cash provided or used by operating activiti
Slide 4: Agenda
Agenda Introduction and Shentel Overview – Earle MacKenzie – EVP/COO Overview of Wireless Overview of Cable Overview of Wireline Financials – Adele Skolits - CFO 3
Slide 5: Shenandoah Telecommunications Company
Shenandoah Telecommunications Company Wireless Entities Cable Entities Shenandoah Telecommunications Wireline Entities Company Allocation Subsidiary Shenandoah Personal Shenandoah Mobile Shentel Management Shenandoah Cable Shentel Cable Communications Company Company Television Company Company Compa
Slide 6: Growth Strategy – Capitalize on Core Competencies
Growth Strategy – Capitalize on Core Competencies Cable Focus on smaller less competitive markets Build clusters to gain operating efficiencies Upgrade networks to offer “Triple Play” Wireless Increase penetration in existing PCS footprint Look for new wireless opportunities in surrounding geographi
Slide 7: Segment Overview
Segment Overview Twelve Months Ending March 31, 2010 Operating Income Before Depreciation & Revenue by Segment Amortization (OIBDA) by Segment Cable % Margin % of Total 10% Segment OIBDA Wireless $61.1 53% 81% Wireline 20.8 65% 28% Wireline Cable (3.1) -20% -4% 20% Other (3.4) N/A -4% Total $75.4 47
Slide 8: Agenda
Agenda Introduction and Shentel Overview Overview of Wireless Overview of Cable Overview of Wireline Financials 7
Slide 9: PCS Overview
PCS Overview Only remaining public Sprint Nextel affiliate 2.4 million licensed POPs 2.1 million covered POPs 225k total subscribers 11% penetration of covered POPs 481 CDMA base stations 340 EVDO enabled cell sites 96% EVDO covered POPs $41,000 Estimated Average household income 8
Slide 10: Profile of the Sprint Nextel Relationship
Profile of the Sprint Nextel Relationship • Current contract through 2019 with two 10 year extensions • Upon expiration of contract – Shentel compensated based on enterprise value • Settlement simplification in place through contract unless amended by both parties 8% of Revenue – Spectrum, Brand, Na
Slide 11: Key Operational Metrics – PCS
Key Operational Metrics – PCS Periods Ending Retail Subscribers (000s) Number of Cell Sites EVDO Sites Non-EVDO Sites 481 411 476 211 223 225 346 187 211 334 340 2007 2008 2009 Q1 '10 2007 2008 2009 Q1 '10 Churn (%) Penetration (%) 2.30% 2.09% 1.91% 1.90% 11% 11% 11% 10% 2007 2008 2009 Q1 '10 2007 2
Slide 12: Attractive Service Revenue Growth – PCS
Attractive Service Revenue Growth – PCS 12 Months Ending Gross Billed PCS Revenue ($ millions)1 11 % CAGR $145.9 $138.8 $118.8 3/31/08 3/31/09 3/31/10 1 Before credits and fees 11
Slide 13: PCS Revenues
PCS Revenues 12 Months Ending Billed Revenue ($ millions) Up 5% $145.9 $138.9 $6.5 $7.3 $10.1 Bad Debt $9.4 $11.2 Management Fee $10.4 $14.7 Service Fee $15.3 Service Credits Net Revenue $96.5 $103.4 3/31/09 3/31/10 12
Slide 14: PCS Revenue per Subscriber
PCS Revenue per Subscriber Period Ending Gross Billed Revenue per Subscriber1 Data Voice $54.90 $56.62 $55.38 $12.60 $17.99 $20.54 $42.30 $38.63 $34.84 1Q08 1Q09 1Q10 1 Before credits and fees 13
Slide 15: Wireless Segment
Wireless Segment 12 Months Ending Reported Revenue ($ millions) OIBDA ($ millions) 10% CAGR 15% CAGR $111.3 $117.1 $61.1 $58.1 $96.8 $46.4 3/31/08 3/31/09 3/31/10 3/31/08 3/31/09 3/31/10 14
Slide 16: Capital Expenditures – Wireless
Capital Expenditures – Wireless 12 Months Ending Capital Expenditures by Category ($ millions) Coverage Other Capacity EVDO Towers $50 $45.1 $40 $30 $27.5 $20 $14.1 $12.5 $10 $0 2007 2008 2009 2010E # Cell Sites 346 411 476 503 % Covered POPs 79% 85% 87% 88% # EVDO Sites 52 211 334 365 % POPs Covere
Slide 17: Agenda
Agenda Introduction and Shentel Overview Overview of Wireless Overview of Cable Overview of Wireline Financials 16
Slide 18: Cable TV Overview
Cable TV Overview Complimentary (with LEC business) 16k Homes Passed 8k Video Subscribers Offensive positioning (Outside ILEC) 40k Homes Passed 15k Video and 3k Internet Subscribers Voice service initiated 3/31/10 All upgraded by 9/30/10 17
Slide 19: Cable TV
Cable TV RGUs (000s) Internet 26.0 24.9 Basic 23.9 2.8 1.5 2.1 Digital 16.3 15.7 17.3 6.5 7.5 5.1 9/30/09 12/31/09 3/31/10 Excludes markets sold in November 2009 for all periods shown and only includes internet for areas outside ILEC service area 18
Slide 20: Cable TV
Cable TV 12 Months Ending Revenue ($ millions) OIBDA ($ millions) $3.1 $15.6 $0.1 $8.6 ($0.3) $5.1 3/31/08 3/31/09 3/31/10 3/31/08 3/31/09 3/31/10 Includes Rapid Communications acquisition December 1, 2008 19
Slide 21: Deal Highlights – JetBroadband Acquisition
Deal Highlights – JetBroadband Acquisition Structured as an asset Network purchase 3,200 miles Purchase Price = $148 900 miles of fiber 115 thousand homes 84% two way passed and serves 67 thousand RGUs Competition 43 thousand video No fiber to the home customers CenturyLink, Verizon 22 thousand data
Slide 22: JBB Acquisition - Rationale
JBB Acquisition - Rationale Diversification Scale Below Market Penetration Geographic Fit Synergies Leveraging Core Competencies Coaxial Network 21
Slide 23: Percent of Homes Passed with Services
Percent of Homes Passed with Services 60.00% Jet Broadband Industry 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Video Internet Voice 22
Slide 24: JBB Network
SHENTEL JBB Networ | a. — sane @ Headend (©) Shentel Cable Areas @ IP Hub Site > 5JBB Cable Areas --- LeasedWavelength § @ RFHubSite —— IRUFiber © _Direct-fed Nodes "New Fiber s
Slide 25: Key Operational Metrics – With Acquisition
Key Operational Metrics – With Acquisition Pro Forma for Periods Ending March 31, 2010 Cable Homes Passed (in 000’s) RGUs (in 000’s) 93 171 56 26 Existing Combined Existing Combined Revenues (in millions) OIBDA (in millions) 2010 Pro Forma 2010 Pro Forma 90 207 162 75 Existing Combined Existing Comb
Slide 26: Total Capital Expenditures
Total Capital Expenditures Capital Expenditures by Segment ($ millions) Wireless Wireline Cable Other JetBB Acquisition $65.6 $9.5 $0.5 $20.0 $53.2 $52.2 $3.5 $11.1 $13.5 $3.1 $29.1 $8.7 $12.1 $7.0 $0.2 $45.1 $8.1 $13.5 $27.5 $13.8 $12.4 2007 2008 2009 2010 Actual Actual Actual Estimated 25
Slide 27: JBB Execution
JBB Execution Success with Rapid Acquisition Network Interconnection Proven Technologies Similar Demographics Proximity Low Regulatory Risk Strategic Owner Appeal 26
Slide 28: Agenda
Agenda Introduction and Shentel Overview Overview of PCS Overview of Cable Overview of Wireline Financials 27
Slide 29: Wireline Customers
Wireline Customers March 31, 2010 24.2k LEC access lines One FTTH community in service outside of LEC area Acquisition of North River Telephone closed November Fiber Network 2nd Route miles: 1,570 0.9k access lines 11.5k DSL subscribers 46% Penetration of Access Lines 3.0k dial-up Internet subscribe
Slide 30: Agenda
Agenda Introduction and Shentel Overview Overview of PCS Overview of Cable Overview of Wireline Financials – Adele Skolits - CFO 29
Slide 31: Key Financial Results – Continuing Operations
Key Financial Results – Continuing Operations1 12 Months Ending Net Income from Continuing Operations Revenue ($ millions) ($ millions) Wireless Cable Wireline $175 $162.0 $26.8 $150.9 $25.5 $150 $133.5 $22.5 $125 $100 $75 $50 $25 $0 3/31/08 3/31/09 3/31/10 3/31/08 3/31/09 3/31/10 1 Shentel Converge
Slide 32: Key Financial Results – Continuing Operations
Key Financial Results – Continuing Operations1 12 Months Ending Operating Income Before Depreciation & Operating Income ($ millions) Amortization ($ millions) $75.9 $75.4 $47.7 $61.9 $42.3 $37.5 3/31/08 3/31/09 3/31/10 3/31/08 3/31/09 3/31/10 1 Shentel Converged Services has been reclassed as discon
Slide 33: Key Financial Results – Consolidated
Key Financial Results – Consolidated 12 Months Ending Earnings Per Share Earnings Per Share - Continuing Operations1 - Net Income $1.14 $1.10 $1.08 $0.96 $0.82 $0.64 3/31/08 3/31/09 3/31/10 3/31/08 3/31/09 2 3/31/10 1 Shentel Converged Services has been reclassed as discontinued operations. All resu
Slide 34: Jet BB Deal - Financial Highlights
Jet BB Deal - Financial Highlights Operating Income before Financing Interest and Depreciation Syndicated debt deal $16.2 before Corporate $198m Term Loan office costs $50m Undrawn $14.6 after Corporate office costs Revolver Oversubscribed at more than 150% of needs 33
Slide 35: Level of Debt – Acquisition Impact
Level of Debt – Acquisition Impact Pro Forma for Periods Ending March 31, 2010 Debt (in millions) Debt to EBITDA Ratio 198 2.2 0.4 32 Existing Combined Existing Combined 34
Slide 36: Q&A
SHENTEL Q&A 35
Slide 37: Appendix
<a? SHENTEL Appendix
Slide 38: Non-GAAP Financial Measure – Billed Revenue per Subscriber
Non- Non-GAAP Financial Measure – Billed Revenue per Subscriber Period Ending Dollars in thousands (except subscribers and revenue per subscriber) Gross billed revenue 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 Wireless segment total operating revenues $27,341 $27,526 $27,611 $28,804 $29,060 $28,690 $2
Slide 39: Non-GAAP Financial Measure – OIBDA 12 Months Ended 3/31/2010
Non- Non-GAAP Financial Measure – OIBDA 12 Months Ended 3/31/2010 Dollars in thousands Wireless Wireline Cable Other Consolidated Operating Income $40,459 $12,711 ($7,172) ($3,683) $42,315 Depreciation and amortization 20,660 8,090 4,045 308 33,103 OIBDA $61,119 $20,801 ($3,127) ($3,375) $75,418 38
Slide 40: Non-GAAP Financial Measure – OIBDA 12 Months Ended 3/31/2009
Non- Non-GAAP Financial Measure – OIBDA 12 Months Ended 3/31/2009 Dollars in thousands Wireless Wireline Cable Other Consolidated Operating Income $40,082 $13,926 ($1,684) ($4,589) $47,735 Depreciation and amortization 18,039 8,071 1,738 315 28,163 OIBDA $58,121 $21,997 $54 ($4,274) $75,898 39
Slide 41: Non-GAAP Financial Measure – OIBDA 12 Months Ended 3/31/2008
Non- Non-GAAP Financial Measure – OIBDA 12 Months Ended 3/31/2008 Dollars in thousands Wireless Wireline Cable Other Consolidated Operating Income $29,739 $14,199 ($1,336) ($5,082) $37,520 Depreciation and amortization 16,629 6,468 1,035 263 24,395 OIBDA $46,368 $20,667 ($301) ($4,819) $61,915 40
Slide 42: Jefferies Global Internet, Media, & Telecom Conference
Jefferies Global Internet, Media, & Telecom Conference May 12, 2010