Alamosa — Airgate PCS — Merger or Acquisition (January 2005)
34 slides from Alamosa's merger presentation, Jan 11, 2005
Slide 1: Alamosa
& ALAMOSA mmm PERSONAL COMMUNICATIONS SERVICE APCS LISTED
Slide 2: Safe Harbor Provisions
Safe Harbor Provisions This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, (1) statements about the benefits of the proposed merger between Alamosa Holdings, Inc. ("Alamosa") an
Slide 3: Safe Harbor Provisions (continued)
Safe Harbor Provisions (continued) On December 22, 2004, Alamosa filed a registration statement with the Commission containing Alamosa's and AirGate's preliminary joint proxy statement/prospectus regarding the proposed merger with AirGate. Stockholders are urged to read the Preliminary joint proxy s
Slide 4: Investment Highlights- Why Wireless/Why Alamosa?
Investment Highlights- Why Wireless/Why Alamosa? Wireless Industry Current industry trends strong; Future industry trends also appear strong Execution key to performance and cash flow Attractive assets Critical footprint to Sprint & attractive markets Favorable Affiliation Agreements Experienced man
Slide 5: Alamosa's Footprint
Alamosa’s Footprint 15.8 million POPs 12.3 million covered POPs 15 states 74 cities 915,000 subscribers * Less penetrated Less competition Favorable roaming position Attractive demographics Attractive Markets Note: * As of December 31, 2004 Critical Footprint to Sprint
Slide 6: Slide 6
Slide 7: Strong Financial Position
Strong Financial Position Cash & Investments of $160 million Cash flow positive No debt principal payments until Cash flow increasing with subscriber growth and roaming revenue Net debt declining
Slide 8: Strong Third Quarter 2004 Results- "Executing with Excellence"
Strong Third Quarter 2004 Results- “Executing with Excellence” Stable ARPU** (w/o Roaming) $57 Roaming Revenue increased 14% (average $24 per subscriber) Stable Cash Cost Per User (CCPU)** (w/ Roaming) $45 Lower Cost Per Gross Addition (CPGA)** $351 Stable average monthly customer churn-2.4% Better
Slide 9: Rapid Growth in Adjusted EBITDA
Rapid Growth in Adjusted EBITDA* NOTES: 1 Excludes one-time access revenue adjustment of $5.4 million. * See appendix for reconciliation of adjusted EBITDA
Slide 10: Improving Profit Profile Incremental Change
Improving Profit Profile Incremental Change (Svc. Revenue & Adj. EBITDA** (’03-’04)) 20% Margin 23% Margin 43% Margin NOTES: ** See appendix for reconciliation of Adjusted EBITDA, ARPU/CCPU
Slide 11: Profitable Growth Strategy
Profitable Growth Strategy Execute the Plan Growth with right economics Drive scale through business Enhance Value of Customers Increased distribution Increased 2 year contracts Expand Network Prudently Roaming opportunities In-market expansion
Slide 12: Execute The Plan- Growth with Right Economics
Execute The Plan- Growth with Right Economics Service Revenues ($ mm) Prime Subscriber % Monthly Churn % Subscribers (000s) (at period end) Avg Avg Avg
Slide 13: Execute the Plan- Drive Scale through the Business
Execute the Plan- Drive Scale through the Business Per Subscriber Economics NOTES: Excludes one-time access revenue adjustment of $5.4 million. Customer retention costs, reclassified to CCPU starting in 2002. Impact on periods prior to 2002 was immaterial. See appendix for reconciliation/calculation
Slide 14: Expand Network Coverage Prudently- Profitable Roaming Position
$8 $11 $9 $9 $10 $12 $10 Expand Network Coverage Prudently- Profitable Roaming Position $9.5 Historical Roaming Trends Numerous NPV-positive roaming sites identified Fixed voice roaming rate with Sprint PCS – $0.058 per minute through 2006 Favorable Sprint PCS travel ratio (1.15 to 1.0 in Q3 ‘04) Ad
Slide 15: Expand the Network Prudently Expected Alamosa PCS Coverage
Expand the Network Prudently Expected Alamosa PCS Coverage 2004-2005
Slide 16: Wireless Consolidation- It is Now a Reality!
Wireless Consolidation- It is Now a Reality! National Affiliates 46 Million Customers 97 of Top 100 Markets 35 Million Customers $34 Billion in LTM Revenues 23 Million Lic. Pops/19 Million Covered Pops 1.2MM Customers Sprint-Nextel
Slide 17: Overlap of Nextel/Nextel Partners with Alamosa (including AirGate)
Overlap of Nextel/Nextel Partners with Alamosa (including AirGate)
Slide 18: Creation of the Premier Sprint Affiliate
Creation of the Premier Sprint Affiliate Sector leading combination Creation of the premier Sprint Affiliate Over 23 million total POPs, 18 million covered POPs and 1.25 million subscribers Pro forma size should appeal to a broader investor base Alamosa is the strongest Sprint Affiliate Consistently
Slide 19: Merger Beneficial to All Shareholders
Merger Beneficial to All Shareholders AirGate Shareholders Attractive valuation Immediate increase in liquidity Opportunity to receive a portion of proceeds in cash Strong Alamosa currency offered Most liquid stock in Sprint Affiliate sector Largest market capitalization of the Sprint Affiliates Bes
Slide 20: Strong Pro Forma Footprint
Strong Pro Forma Footprint The pro forma Company will be the premier and largest Sprint Affiliate
Slide 21: Positioned for Sector Leadership
Positioned for Sector Leadership Industry leading combination with significantly increased scale Net Adds (000s) – Q3 04 Covered POPs (mm) Total POPs (mm) EOP Subscribers (000s) – Q3 04 Source: Alamosa’s 2004 reported data and Company Guidance, Wall Street research and publicly reported data from Ai
Slide 22: Positioned for Sector Leadership
Positioned for Sector Leadership Strong pro forma cash flow generation Does not reflect pro forma impact of estimated annual synergies LTM EBITDA (mm) CY 2004 EBITDA (mm) LTM EBITDA – Capex (mm) CY 2004 EBITDA – Capex (mm) Source: Alamosa’s 2004 reported data and Company Guidance, Wall Street resear
Slide 23: Transaction Terms
Transaction Terms Q1 Expected Closing: Alamosa and AirGate shareholders Sprint Hart-Scott-Rodino antitrust approval Required Approvals: $630 million, based on closing prices of Alamosa & AirGate on December 7, Includes assumption of approximately $238 million of net debt AirGate shareholders can ele
Slide 24: Implied Valuation
Implied Valuation Assuming 100% stock consideration, AirGate shareholders will own approximately 18.1% 1 of the pro forma company Alamosa would issue approximately 33.8 million shares 2 to AirGate shareholders Implied valuation based on 12/7/04 Alamosa share price Price per AirGate share of $33.01 E
Slide 25: Historical Operating & Financial Highlights
Historical Operating & Financial Highlights $94.0 $14.1 $79.9 LTM Capex (mm) $227.1 $61.5 $165.5 LTM EBITDA (mm) $302.9 $91.5 $211.4 CY Q3 Total Revenue (mm) Combined AirGate Alamosa $63.0 $17.1 $45.9 CY Q3 EBITDA (mm) $1,085.6 $336.1 $749.5 LTM Total Revenue (mm) Financial: 62.3 9.3 53.0 CY Q3 Net
Slide 26: Pro Forma Capitalization
Pro Forma Capitalization $0.0 ($ in millions) Max 9/30/2004 9/30/2004 Cash Scenario Coupon Maturity Alamosa AirGate Adj. Pro Forma Cash & Equivalents $159.6 $105.8 ($123.1) $142.4 Capital Lease $0.9 - $0.9 Senior Secured Floating Rate Notes L+3.75 10/15/2011 - $175.0 175.0 Senior Subordinated Secure
Slide 27: Accretive Transaction 2004 EBITDA Accretion per Share
Accretive Transaction 2004 EBITDA Accretion per Share - 17% 22% The transaction is EBITDA per share accretive to Alamosa’s shareholders 17% accretive to 2004 EBITDA per share on a pro forma basis (all stock consideration) Pro forma for the impact of estimated annual synergies Source: Alamosa’s 2004
Slide 28: 2004 Guidance
2004 GUIDANCE Full year 2004 Adjusted EBITDA* of approximately $180 million Fixed asset additions of $90 million Penetration of Alamosa markets to be in the range of 7.1 to 7.4 percent by year-end 2004. Covered pops expected to be approximately 12.8 million Full year churn of 2.4% percent or lower
Slide 29: Summary
Summary Wireless Industry Current industry trends strong; Future industry trends also appear strong Execution key to performance and cash flow Attractive assets Critical footprint to Sprint & attractive markets Favorable Affiliation Agreements Experienced management team Strong financial position St
Slide 30: Alamosa
& ALAMOSA mmm, PERSONAL COMMUNICATIONS SERVICE
Slide 31: Calculation of Adjusted EBITDA
Calculation of Adjusted EBITDA* Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) are defined as net loss plus taxes, net interest expense, depreciation expense, amortization expense and other non-cash expense items. Adjusted EBITDA is a measure used by the
Slide 32: Calculation of ARPU/CCPU
Calculation of ARPU/CCPU Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net Income/Loss $2,168 ($10,706) ($12,548) (8,142) $ (17,510) $ (18,663) $ (30,531) $ (403,349) $ (147,423) $ Income tax benefit - (2,235) (5,446) (4,480) (5,768) (67,086) (80,441) Net interest expense 18,844 18,731 18,067 20,780 26,332 25,702 26,152 99,
Slide 33: Calculation of CPGA
Calculation of CPGA Q3 Q2 Q1 Q4 Q3 Q2 Q1 Selling & Marketing Expenses 40,090 31,839 30,993 28,095 29,801 26,584 28,146 119,059 110,052 Less Upgrade costs in selling & marketing (8,876) (4,901) (4,680) (4,152) (3,058) (3,671) (3,939) (10,213) - Cost of Products Sold 20,265 16,379 19,783 19,495 14,913
Slide 34: Alamosa
& ALAMOSA mmm PERSONAL COMMUNICATIONS SERVICE APCS LISTED