Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Investor Presentation (November 2013)
43 slides from Shenandoah Telecommunications's investor presentation, Nov 7, 2013
Slide 1: Shenandoah Telecommunications Company Investor Presentation November 2013
Shenandoah Telecommunications Company INVESTOR PRESENTATION November 2013 NASDAQ: SHEN Exhibit 99.1
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.
Slide 3: 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
Slide 4: Company Overview
* Company Overview Diverse Revenue Streams 3 complementary revenue streams: Wireless, Cable and Wireline All divisions are OIBDA positive Substantial Network Upgrade Both 4G and Cable upgrades complete in 2013 CapEx expected to reduce significantly in 2014 Significant Opportunity for Improved Cable
Slide 5: Building Value Since 1902
* Building Value Since 1902 *Adjusted for stock splits Founded in 1902 as a farmer’s mutual 4G Book Value per share Dividend payment per share Dividend payment per share Book Value per share*
Slide 6: Tail End of Significant Capital Expenditures
* Tail End of Significant Capital Expenditures Acquisitions Upgrades Reduced CapEx 2008-2010 2010-2013 2014 Cable Upgraded acquired networks to offer “Triple Play” with robust high speed data offering Streamline network to gain operating efficiency Wireless Investing heavily in upgrading wireless ne
Slide 7: External Revenues by Segment
* External Revenues by Segment ($ in thousands)
Slide 8: Historical Net Income
* Historical Net Income 25.5% Growth ($ in millions) 102% Growth
Slide 9: Adjusted OIBDA by Segment
* Adjusted OIBDA by Segment ($ in millions) 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
Slide 10: Wireless Segment
AXSHENTEL WIRELESS SEGMENT
Slide 11: Network Overview
* One of only 2 Sprint affiliates 2.1 million covered POPs 400k total subscribers 19% penetration of covered POPs 525 base stations 95% of POPs covered by 4G LTE Network Overview
Slide 12: Attractive Relationship With Sprint Nextel
* Attractive Relationship With Sprint Nextel LONG TERM CONTRACT: Initial contract term to 2024 Two 10-year renewals Payment at termination 22% Fee (Management: 8%; Service: 14%); capped for the duration of the contract Spectrum Brand National Platform Access to Sprint vendors on similar terms Billin
Slide 13: Why We Invested in Sprint's Network Vision
* 4G has data speeds of 8x to 10x 3G speeds Provide 4G LTE service in entire coverage area Keeps Shentel’s network aligned with Sprint’s Allows Shentel to remain competitive with Verizon and AT&T Improve customers’ experience Provide better in-building and overall coverage Converted thousands of iDE
Slide 14: PCS Subscriber Growth
AXSHENTEL PCS Subscriber Growth = Postpaid = Prepaid SPY MHF HX FLAS EF EF nS rr Pr Pe FKP KK SF F 14
Slide 15: Diverse PCS Sales Channels
* Diverse PCS Sales Channels Postpaid Retail Channels Postpaid Retail Channels Corporate 15 Branded 23 Local Agents 8 Nationals (Big Box Retailers) 75 Total 121
Slide 16: Growth Rate and Penetration Compare Well to Peers
* Growth Rate and Penetration Compare Well to Peers Source: Company filings, SNL Kagan, and Shentel estimates; covered pops and penetration as of June 30, 2013; % growth for trailing twelve months as of June 30, 2013. As of 6/30/2013 As of 6/30/2013 As of 6/30/2013 As of 6/30/2013 As of 6/30/2013 As
Slide 17: Gross Billed Revenues - Postpaid
* Gross Billed Revenues - Postpaid ($ millions) PCS Revenues - Postpaid * Net service fee increased from 12% to 14% effective 8/1/2013 *
Slide 18: Gross Billed Revenue per Postpaid User
* Gross Billed Revenue per Postpaid User – Data & Voice 1 1 – Before Service credits, bad debt, Sprint fees. Key PCS Results – Average Postpaid
Slide 19: Gross Billed Revenues - Prepaid
* Gross Billed Revenues - Prepaid ($ millions) PCS Revenues - Prepaid
Slide 20: Gross Billed Revenue per Prepaid User
* Gross Billed Revenue per Prepaid User Key PCS Results – Average Prepaid
Slide 21: Steady Recurring Cash Flow: Mobile Tower Leasing
Steady Recurring Cash Flow Mobile Tower Leasing Tower lease revenue of $10.1 million over the TTM with $5.7 million of EBITDA Long-term opportunity to increase leasing revenues given growing demand for data Company owns 153 cell towers Most carriers do not own their own towers 21
Slide 22: Cable Segment
AXSHENTEL CABLE SEGMENT
Slide 23: Cable: Important Growth Initiative Since 2008
* Focus on broadband Diversifies revenue streams Opportunity to consolidate cable providers in region Strong regional presence Long-term opportunity to acquire/upgrade neglected markets Strong demand in the region for high-speed “triple play” offering Net Promoter Score has improved from -5 in 2010
Slide 24: Cable Network
* Cable Network Shentel Fiber Routes Leased Routes Planned Routes Shentel POP Internet POP Master Headend WV VA MD DC
Slide 25: Cable Competitive Advantage
* Cable Competitive Advantage Verizon/CenturyLink/Frontier DSL– slower service Requires significant capital expenditure to offer comparable service to Cable Loss of cash flow from shrinking voice service Bundling of satellite video with their voice and DSL Dish/DirecTV Bundling of telco, DSL and voi
Slide 26: Customers and RGUs per Customer
* Customers 76,130 74,726 75,386 74,798 75,573 74,557 75,324 RGU’s/Customer 1.50 1.51 1.52 1.54 1.54 1.56 1.58 Sequential RGU Growth RGU = Revenue Generating Unit
Slide 27: Average Monthly Revenue is Growing
* Average Monthly Revenue per RGU Average Monthly Revenue per Customer* *Average monthly revenue per video subscriber was $94.96 and $107.05 for Q3 2012 and Q3 2013, respectively. Average Monthly Revenue is Growing
Slide 28: How Does Shentel Compare?
* * Note: Peer Average information derived from SNL Kagan data as of 6/30/2013 for 10 comparably sized companies: Blue Ridge Cable; Baja Broadband; WEHCO Video; Zito Media; Fidelity Communications; Allegiance Communications; James Cable; Schurz Communications; Comporium Communications; CMA Communica
Slide 29: Wireline Segment
AXSHENTEL WIRELINE SEGMENT
Slide 30: Key Wireline Operational Results
* Access line loss of 1.3% in past 12 months vs. 9.0% for the industry* Broadband penetration in LEC area at 56.3% Total connections at 9/30/13 of 34.7 thousand *Source: SNL Kagan 6/30/13 Access lines (000s) DSL Customers (000s) Key Wireline Operational Results
Slide 31: Wireline Segment – Fiber Sales Activities
* Wireline Segment – Fiber Sales Activities 2010, 2011 and 2012 amounts are annual totals; 2013 amount is for the nine months ended September 30. Typical contract length is 60 months
Slide 32: Fiber Network
* Fiber Network 3,600+ fiber route-miles 40% in Wireline markets 60% in Cable markets WV VA MD DC 32 Shentel Fiber Routes Leased Routes Planned Routes
Slide 33: Capital Investment
AXSHENTEL CAPITAL INVESTMENT
Slide 34: Investing in the Future
* Cable upgrades are complete. Fiber will continue to be installed through end of 2013. Network Vision spend of $55M in 2012, $50M in 2013. Approx. $17M of planned FY’13 spend is being shifted into 2014. CapEx should decrease significantly in 2014. Capex Spending ($ millions) * Capex spending for 20
Slide 35: Q&A
AXSHENTEL Q&A
Slide 36: Appendix
AXSHENTEL APPENDIX
Slide 37: Postpaid PCS Customers Top Service Plans
* Postpaid PCS Customers Top Service Plans – 81% of Gross Adds Everything Data 1500 – 46% Unlimited, My Way – 27% Everything Data 450 – 9% Top Devices – New Activations – All Channels Samsung Galaxy S III 32% iPhone 23% Samsung Galaxy S4 12% Top Picks 3Q13 Smartphones made up 72% of the Postpaid bas
Slide 38: PCS Postpaid Statistics
* Gross Additions (000s) Cumulative Customers (000s) PCS Postpaid Statistics
Slide 39: PCS Prepaid Statistics
* Gross Additions (000s) Cumulative Customers (000s) PCS Prepaid Statistics *The loss of customers in Q2’13 related to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program.
Slide 40: PCS Postpaid Statistics: Churn and Gross Billed Revenue
* Churn % Average Gross Billed Revenue PCS Postpaid Statistics
Slide 41: PCS Prepaid Statistics: Churn and Gross Billed Revenue
* Churn % Average Gross Billed Revenue PCS Prepaid Statistics
Slide 42: Top Ten Shareholders at 6/30/13
* Top Ten Shareholders at 6/30/13 Holder Name / Fund Name Mkt Val Holdings Style BlackRock Fund Advisors 49,759,280 Index The Vanguard Group, Inc. 29,339,079 Index Christopher E. French 25,786,572 Individual Crow Point Partners LLC 15,782,500 Yield Columbia Management Investment Advisers LLC 12,330,
Slide 43: Covering Analysts
AXSHENTEL Covering Analysts Analyst Firm Drexel Hamilton, LLC Friedman, Billings, Ramsey & Co. Inc. Raymond James & Associates, Inc. Contact Name Barry Sine David Dixon Ric Prentiss 43
Shenandoah Telecommunications — Investor Presentation (November 2013) on 6ix