Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Investor Day (October 2012)
38 slides from Shenandoah Telecommunications's investor day presentation, Oct 2, 2012
Slide 1: Shenandoah Telecommunications
Shenandoah Telecommunications October 2, 2012
Slide 2: Chris French, CEO and President
Chris French CEO and President 1
Slide 3: Agenda
Agenda Introduction and Shentel Overview Overview of Wireless Overview of Cable Overview of Wireline Questions and Answers Lunch 2
Slide 4: 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 5: Use of Non-GAAP Financial Measures
Use of 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 activities an
Slide 6: Shentel History
Shentel History Predecessor organization chartered on June 9, 1902: Farmers Mutual Telephone System of Shenandoah County Converted to a commercial stock corporation in 1960: Shenandoah Telephone Company Converted to holding company in 1981: Shenandoah Telecommunications Company Listed on NAS
Slide 7: Shentel Shareholder Base
Shentel Shareholder Base Approximately 2/3rd of shares held by retail holders 6
Slide 8: Shentel Shareholder Base
Shentel Shareholder Base Institutional holders predominantly Index Funds Ticker Name Ticker Name RAY Index Russell 3000 Index CCMP Index NASDAQ Composite Index RGUSU Index Russell 3000 Utilities Index BRNATLSV Index BI North American Telecom Carriers Valuation Peers RGUSU11 Index Russell 3000 Util
Slide 9: Growing Shareholder Value
SHENTEL Growing Shareholder Value Value of One Original Share of FMTS (logarithmic scale) 1,000,000.00 100,000.00 10,000.00 1,000.00
Slide 10: Adele Skolits, CFO and VP of Finance
Adele Skolits CFO and VP of Finance 9
Slide 11: Phase II: Mergers (effective July 31, 2012)
Phase II: Mergers (effective July 31, 2012) Shenandoah Telecommunications Company Shenandoah Personal Shenandoah Communications, Mobile, LLC Shentel Management LLC Company Parent Cable Entities Shentel Shenandoah Shenandoah Communications Allocation Subsidiary Telephone Company Cable Company Televis
Slide 12: Shentel Initiatives
Shentel Initiatives Diversify Cable – Improve Profitability from 2008 & 2010 Acquisitions Upgrade acquired networks to offer “Triple Play” with robust high speed data offering Increase penetration to market levels Capitalize on ILEC and satellite limitations Build clusters/streamline net
Slide 13: External Revenues by Segment (in millions)
External Revenues by Segment (in millions) Wireless Cable Wireline $300 $250 $200 $150 $100 $50 $0 2007 2008 2009 2010 2011 2Q2012 Annualized 12
Slide 14: 2012 Financial Highlights
2012 Financial Highlights Net Income ($ millions) Net Income – Grew $2.6 5.6 million, 86%, over 2Q 2011 3.0 Revenue – Up 16% from 2Q 2011 to $71.4 million Adjusted OBIDA Growth- Q2'11 Q2'12 Increase of $3.9 million, 17%, over 2Q 2011 Net Income from Continuing Operations ($ millions) 5.7 3.0 Q
Slide 15: 2Q'12 Highlights
2Q’12 Highlights Revenue Growth Revenue grew 16% over 2Q’11 to $71.4 million. Customer Growth 6/30/11 6/30/12 Change Wireless 332,194 372,095 39,901 Cable (RGUs) 131,010 137,025 6,015 ARPU Growth Increases in both Wireless & Cable Segments 14
Slide 16: Adjusted OIBDA by Segment ($ millions)
Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q2'11 Q2'12 Q2'11 Q2'12 Q2'11 Q2'12 Operating Income 10.4 12.5 (4.9) (4.0) 3.4 3.3 Depreciation and Amortization 6.1 6.7 6.1 6.2 2.2 2.3 OIBDA 16.5 19.2 1.2 2.2 5.6 5.6 Share based compensation 0.1 0.2 0.2 0.2 0.1 0.2 Adjusted OIBDA 16.6
Slide 17: Earle MacKenzie, COO and EVP
Earle MacKenzie COO and EVP 16
Slide 18: Wireless Segment
SHENTEL Wireless Segment 17
Slide 19: PCS Overview
PCS Overview One of 2 remaining Sprint Nextel affiliates 2.4 million licensed POPs 2.1 million covered POPs 372k total subscribers 18.0% penetration of covered POPs 510 CDMA base stations 434 EVDO enabled cell sites 94% EVDO covered POPs 18
Slide 20: PCS Subscriber Growth History
PCS Subscriber Growth History Postpaid Prepaid 400,000 350,000 114,384 117,070 300,000 107,100 66,956 250,000 200,000 255,025 150,000 250,684 248,620 235,697 211,462 222,818 100,000 187,303 153,503 122,975 50,000 85,139 102,613 67,915 47,318 21,814 0 8,483 19
Slide 21: Profile of the Sprint Nextel Relationship - Postpaid
Profile of the Sprint Nextel Relationship - Postpaid Contract Management Fee of 8% Initial term to 2024 (Fixed for life of contract) Spectrum Two 10 year renewals Deferred exit value based Brand on DCF National platform Access to Sprint vendors Net Service Fee of 12% (14% on simi
Slide 22: Key Operational Results – PCS
Key Operational Results – PCS Gross Billed Revenue per Postpaid User – Data & Voice 1 Voice Data $60.68 $57.06 $24.94 $28.90 $32.12 $31.78 Q2'11 Q2'12 1 – Before Service credits, bad debt, Sprint Nextel fees. 21
Slide 23: PCS Revenues
PCS Revenues Gross Billed Revenues - Postpaid ($ millions) 46.1 41.0 8.2 Management & Service Fees 7.2 1.6 3.9 Bad Debt 1.1 4.2 Discounts and Credits 32.4 28.5 Net Revenue Q2'11 Q2'12 22
Slide 24: Postpaid PCS Customers Top Picks Q2 2012
Postpaid PCS Customers Top Picks Q2 2012 Top Service Plans – 66% of Top Devices – New Activations - Gross Adds All Channels Everything Data Family iPhone 17% 1500 – 44% Everything 450 – 15% Kyocera DuraMax 17% Business Advantage Talk Samsung Epic 4G Touch 12% 200 – 7% Smartphones m
Slide 25: iPhone Statistics – Q2'12
iPhone Statistics – Q2’12 17% of Q2 Gross Adds 41% of iPhones were sold or upgraded in Shentel- controlled channels 9.8% of 6/30/2012 Postpaid customers had the iPhone, up from 6.8% at 3/31/12 59% iPhone 4S 41% iPhone 4 24
Slide 26: How Does Shentel's Wireless Compare?
How Does Shentel’s Wireless Compare? Wireless Scorecard 2Q12 Results (in thousands) Verizon AT&T Sprint Shentel US Metro T-Mobile NTELOS Leap Wireless Mobile Nextel PCS Cellular PCS Covered POPS (^) 296,000 313,000 282,000 2,064 46,966 280,000 6,000 102,000 95,400 Penetration (Postpaid / Prepaid onl
Slide 27: Investing in the Future – CapEx Spending (in millions)
Investing in the Future – CapEx Spending (in millions) Wireless Wireline Cable Other Upgrade of Jet Network is $138.4 approximately 51% complete $34.2 All remaining systems in $100.8 Virginia, West Virginia and Maryland to have upgrades $15.3 $74.6 $21.5 completed in 2012 $12.5 Network Vision
Slide 28: Network Vision
Network Vision Plan to upgrade 274 cell sites in 2012 and the remaining 236 in 2013 including: Multi-modal base station at each site Expanded backhaul capacity LTE in the PCS G-block* Voice service in the 800Mhz block* Expect to launch LTE as early as Q3 2012 New 4G cell sites will req
Slide 29: Network Vision: Investing in the Future
Network Vision: Investing in the Future Keeps Shentel’s network aligned with Sprint’s Allows Shentel to remain competitive with Verizon and AT&T Improve customers’ experience Provide 4G LTE service in entire coverage area Provide better in building and overall coverage Gives Shentel pote
Slide 30: Cable Segment
SHENTEL Cable Segment 29
Slide 31: Cable Service Areas
* SHENTEL Cable Service Areas 7 Map Key: * SHENTEL Shenandoah County @ Advanced Media and Communications Solutions Former Rapid @ Former Jet Broadband Cable & Fiber Optic Network @ Former Suddenlink @ rn 0 cen 2 | dinburg (NOC) (ons f Franklin New Market ‘charleston, ‘rarrisonourg ‘Suummersvle Charl
Slide 32: Cable Revenue Generating Units (in thousands)
Cable Revenue Generating Units (in thousands) 137.2 137.0 128.3 9.9 11.1 6.3 31.8 37.0 38.6 32.1 90.1 90.3 87.3 2.5 29.5 2009 2010 2011 2Q'12 Video Data Voice 31
Slide 33: How Does Shentel Cable Compare?
How Does Shentel Cable Compare? Industry 12/31/2010 12/31/2011 6/30/2012 Average * Video Homes Passed 178,763 182,156 183,190 Penetration 38% 36% 34% 42% High-speed Internet Available Homes 144,099 156,119 156,791 Penetration 21% 24% 25% 36% Voice Available Homes 118,652 143,235 143,907 Penetration
Slide 34: Why Cable has a Competitive Advantage
Why Cable has a Competitive Advantage Issues with the Local Telephone Company Limits of DSL – Is it the new dial up? Requires significant capital investment to offer comparable Loss of cash flow from shrinking voice service Long-term pricing advantages as access revenues decrease Bundlin
Slide 35: Shentel's Cable Advantage
Shentel’s Cable Advantage We know Telephone – Our primary competitor Needs to spend lots of capital to match our service Unfavorable changes in economics Own/control our backbone fiber network Own our telephone switch Regional focus on small markets 34
Slide 36: Wireline Segment
SHENTEL Wireline Segment 35
Slide 37: Wireline Customers
Wireline Customers Access lines (000s) Internet Customers (000s) DSL Dial-up 24.0 24.4 12.4 12.5 1 11.9 23.7 23.1 2 22.7 11.0 9.9 4.9 3.4 2.2 1.3 1.2 1 DSL only available within LEC area 2 Dial-up offered inside and outside the LEC area 36
Slide 38: Q&A
SHENTEL Q&A 37
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