Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Shareholder Meeting (2008)
49 slides from Shenandoah Telecommunications's shareholder meeting presentation, 2008
Slide 1: Shenandoah Telecommunications Company 2008 Annual Shareholders Meeting
SHENANDOAH TELECOMMUNICATIONS COMPANY 2008 ANNUAL SHAREHOLDERS MEETING
Slide 2: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements 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
Slide 3: Total Return - 5 Years
Total Return - 5 Years 350 300 250 200 150 100 50 2002 2003 2004 2005 2006 2007 SHENANDOAH TELECOMMUNICATIONS COMPANY NASDAQ U.S. INDEX NASDAQ TELECOMMUNICATIONS INDEX 3
Slide 4: Comparative Results
Comparative Results (in millions, except per share amounts) Percent 2006 2007 Change Revenues 169.2 141.2 (16.6) Operating Income 21.2 31.2 47.3) Total Net Income 17.9 18.8 4.9) Total Net Income w/o RTB gain 11.5 18.8 63.7) Cash Dividend (per share) 0.25 0.27 8.0) 4
Slide 5: Stock Performance-Wireless
0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 J a n -0 7 F e b -0 7 M a r-0 7 A p r-0 7 SHEN M a y -0 7 J u n -0 7 IPCS J u l-0 7 S A u g -0 7 S e p -0 7 NTLS O c t-0 7 N o v -0 7 January 2007 – April 2008 D e c -0 7 J a n -0 8 F e b -0 8 Stock Performance-Wireless M a r-0 8 A p r-0 8 5
Slide 6: Stock Performance-Wireline
0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 J a n -0 7 F e b -0 7 M a r-0 7 A p r-0 7 SHEN M a y -0 7 DECC J u n -0 7 J u l-0 7 SURW A u g -0 7 S e p -0 7 CNSL O c t-0 7 N o v -0 7 January 2007 – April 2008 D e c -0 7 J a n -0 8 F e b -0 8 Stock Performance-Wireline M a r-0 8 A p r-0 8 6
Slide 7: Long-Term Stock Performance
0.00 5.00 10.00 15.00 20.00 25.00 30.00 D e c -0 1 M a r-0 2 J u n -0 2 S e p -0 2 D e c -0 2 M a r-0 3 J u n -0 3 S e p -0 3 D e c -0 3 M a r-0 4 J u n -0 4 S e p -0 4 SHEN Closing Price D e c -0 4 M a r-0 5 J u n -0 5 S e p -0 5 Nasdaq D e c -0 5 M a r-0 6 J u n -0 6 December 2001 – April 2008 S e
Slide 8: PCS Net Income Growth
PCS Net Income Growth (thousands) 16,957 8,753 5,362 2,764 180 1999 2000 2001 2002 2003 2004 2005 2006 2007 (2,573) (4,359) (5,599) (5,569) 8
Slide 9: Shenandoah Telecommunications Company 2008 Annual Shareholders Meeting
SHENANDOAH TELECOMMUNICATIONS COMPANY 2008 ANNUAL SHAREHOLDERS MEETING
Slide 10: Comparative Financial Results 2007 and 2006
Comparative Financial Results 2007 and 2006
Slide 11: Summary Results
Summary Results (in millions) $20 $18.8 $18.8 $17.9 $18 $16 $14 $11.5 $12 $10 $8 $6 $4 $2 $- Net Income Adjusted Net Income* 2006 2007 *Excluding $6.4 gain on liquidation of Rural Telephone Bank 11
Slide 12: Operating Income Results
Operating Income Results (in millions) $35.0 $31.2 $30.0 $25.0 up $21.2 47.3% $20.0 $15.0 $10.0 $5.0 $- 2006 2007 12
Slide 13: Operating Income Growth Rate
Operating Income Growth Rate 50.0% 47.3% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 9.3% 10.0% 7.6% 5.0% 0.5% 0.0% 2004 2005 2006 2007 13
Slide 14: 2007 Reporting Segment Revenues
2007 Reporting Segment Revenues Other Cable TV 7.0% Mobile 3.6% 2.8% Converged Services 7.9% Telephone 16.8% PCS 61.8% 14
Slide 15: Revenues by Segment
Revenues by Segment (in millions) $25.0 $24.7 $23.8 2006 2007 $20.0 $15.0 $10.7 $11.2 $9.8 $9.9 $10.0 $5.0 $5.0 $5.0 $3.9 $3.6 $- Telephone Converged Mobile Cable TV Other Services 15
Slide 16: Reporting Segments Operating Income
Reporting Segments Operating Income $28.8 (in millions) $28.0 2006 2007 $23.0 $18.0 $15.7 $14.4 $13.0 $11.3 $8.0 $2.1 $2.6 $3.0 $(2.0) $(0.5) $(1.8) $(1.5) $(2.9) $(7.0) $(7.4) $(8.2) $(12.0) PCS Telephone Converged Mobile Cable TV Other Services 16
Slide 17: Earnings Per Share
Earnings Per Share 2007 $0.80 2006 $0.50 $0.27 $0.77 2005 $0.46 2004 $0.44 $- $0.20 $0.40 $0.60 $0.80 $1.00 Earnings RTB Portion 17
Slide 18: Dividends Per Share
Dividends Per Share 2007 $0.27 2006 $0.16 $0.09 $0.25 2005 $0.15 2004 $0.14 $- $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 Regular Special 18
Slide 19: Cash Flows – 2006 to 2007
Cash Flows – 2006 to 2007 (in millions) 2006 2007 Beginning Cash $ 2.6) $ 13.4) Cash generated by Operations 34.4) 43.7) Net proceeds of RTB sale 11.3) 0.0) Cash used for: Plant and Equipment (21.2) (29.1) Payments on Long-term Debt (9.9) (4.1) Dividends (5.3) (5.8) Other sources (uses) of cash 1.6)
Slide 20: Debt as a Percent of Assets
Debt as a Percent of Assets As of 12/31/07 100% 95% 90% 80% 67% 68% 70% 60% 50% 39% 40% 35% 30% 25% 20% 10% 10% 0% Shentel Ntelos iPCS Sprint D&E Consol. SureWest 20
Slide 21: Comparative Financial Results Quarter 1 2008 and 2007
Comparative Financial Results Quarter 1 2008 and 2007
Slide 22: Q1 Results - Net Income
Q1 Results - Net Income (in millions) $6.0 13.6% Net Income 13.4% $5.0 Profit Margin $4.8 $4.1 13.2% $4.0 13.1% 13.0% $3.0 12.8% 12.6% $2.0 12.4% $1.0 12.3% 12.2% $- 12.0% Q1 2007 Q1 2008 22
Slide 23: Q1 Results - Operating Income
Q1 Results - Operating Income (in millions) $10.0 25.0% Operating Income $9.0 $8.5 Operating Margin 24.0% $8.0 $7.1 $7.0 23.0% $6.0 23.3% $5.0 22.0% $4.0 21.4% 21.0% $3.0 $2.0 20.0% $1.0 $- 19.0% Q1 2007 Q1 2008 23
Slide 24: Q1 Results – Revenues by Segment
Q1 Results – Revenues by Segment Other Other Cable TV 7% 7% Cable TV 2007 4% 2008 4% Mobile Mobile 3% 3% Converged Converged Services Services 8% 8% Telephone PCS PCS 16% 62% Telephone 60% 18% 24
Slide 25: Q1 Results - Revenues
Q1 Results - Revenues (in millions) $25.0 $22.8 Q1 2007 Q1 2008 $19.7 $20.0 $15.0 $10.0 $6.0 $5.7 $5.0 $2.7 $3.0 $2.4 $2.6 $1.0 $1.0 $1.2 $1.3 $0.0 PCS Telephone Converged Mobile Cable TV Other Services 25
Slide 26: Q1 Results – Operating Income
Q1 Results – Operating Income (in millions) $8.0 $7.3 $7.0 $5.9 Q1 2007 Q1 2008 $6.0 $5.0 $4.0 $3.6 $3.0 $2.2 $2.0 $1.0 $0.8 $0.5 $0.1 $- $(0.2) $(1.0) $(0.6) $(0.6) $(2.0) $(1.7) $(1.6) $(3.0) PCS Telephone Converged Mobile Cable TV Other Services 26
Slide 27: Cash Flows – Q1 2007 to Q1 2008
Cash Flows – Q1 2007 to Q1 2008 (in millions) Q1 2007 Q1 2008 Beginning Cash $ 13.4) $ 17.2) Cash generated by Operations 11.3) 14.3) Cash used for: Plant and Equipment (3.5) (7.8) Payments on Long-term Debt (1.0) (1.0) Other sources (uses) of cash 0.6) 0.3) Ending Cash 20.9) 23.0) 27
Slide 28: Operations Review
SHENANDOAH TELECOMMUNICATIONS COMPANY 2008 ANNUAL SHAREHOLDERS MEETING OPERATIONS REVIEW
Slide 29: PCS Subscriber Growth
PCS Subscriber Growth 187,303 122,975 85,139 47,318 8,483 1999 2001 2003 2005 2007 29
Slide 30: Customer Additions
Customer Additions 80,000 Net Adds Gross Adds 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2003 2004 2005 2006 2007 30
Slide 31: PCS Total Revenue
PCS Total Revenue (in millions) $120 $100 $80 $60 $40 $20 $0 2003 2004 2005 2006 2007* * New contract amendment 31
Slide 32: PCS Service Revenue
Service Revenue PCS Service Revenue ARPU (in millions, except ARPU) $140 $56 $120 $53 $100 $50 $80 $47 $60 $44 $40 $41 $20 $38 $0 $35 2003 2004 2005 2006 2007 32
Slide 33: PCS Data Revenue
Data Revenue PCS Data Revenue ARPU (in millions, except ARPU) $24 $11 $20 $9 $16 $7 $12 $5 $8 $4 $4 $2 $0 $0 2003 2004 2005 2006 2007 33
Slide 34: PCS Distribution
PCS Distribution 2005 17% 2006 11% 5% 26% 24% 60% 57% 6% 14% 2007 19% Shentel Controlled 61% Radio Shack Regional Other 34
Slide 35: Sprint Subscribers
Sprint Subscribers 50 (in millions) 45 *** 40 ** ** 35 30 25 * * * 20 15 10 5 0 2003 2004 2005* 2006** 2007*** * Includes Nextel merger, US Unwired, Gulf Coast and IWO ** Includes acquisition of Nextel Partners, Alamosa, UbiquiTel and Enterprise Communications *** Includes acquisition of Northern PC
Slide 36: Sprint Subscriber Net Additions
Sprint Subscriber Net Additions (in millions) 25.0 20.0 15.0 10.0 * 5.0 ** 0.0 2003 2004 2005* 2006** *** 2007*** -5.0 * Includes Nextel merger, US Unwired, Gulf Coast and IWO ** Includes acquisition of Nextel Partners, Alamosa, UbiquiTel and Enterprise Communications *** Includes acquisition of Nor
Slide 37: Sprint Issues
Sprint Issues • Merger of equals – clash of cultures • Integration issues • High churn • Poor customer service • Lack of strong marketing and sales plan 37
Slide 38: Recent Changes at Sprint
Recent Changes at Sprint • New CEO – December 2007 • Reorganize • Focus on the basics • Simplified “Everything” plans 38
Slide 39: PCS Construction
PCS Construction (in thousands) $40,000 Capacity EVDO Coverage $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 2006 2007 2008 2009 39
Slide 40: Why Large Increase in PCS Construction?
Why Large Increase in PCS Construction? • Keep ahead of capacity requirements • Continue to roll out high speed data (EVDO) • Offer Q-Chat before the end of 2009 • Coverage issues in Central PA 40
Slide 41: Cumulative Local Access Line Losses
Cumulative Local Access Line Losses 2004 2005 2006 2007 0% -2% Shentel -4% -6% -8% LEC w/o Bell -10% -12% -14% -16% Total LEC -18% -20% -22% 41
Slide 42: Internet Customers
Internet Customers 21,000 DSL Dial-Up 18,000 15,000 12,000 9,000 6,000 3,000 0 2002 2003 2004 2005 2006 2007 42
Slide 43: Internet Revenue
Internet Revenue (in millions) $6 DSL Dial-Up $5 $4 $3 $2 $1 $0 2002 2003 2004 2005 2006 2007 43
Slide 44: Converged Services Subscribers
Converged Services Subscribers 45,000 40,000 Voice Voice 35,000 Voice 30,000 Video Video Video 25,000 20,000 Data Data Data 15,000 10,000 2005 2006 2007 44
Slide 45: Converged Services Revenues
Converged Services Revenues (in millions) $12 $10 Voice Voice Voice $8 Video Video $6 Video $4 Data Data $2 Data $0 2005 2006 2007 45
Slide 46: Converged Services Losses
Converged Services Losses (in millions) 2005 2006 2007 $0 ($1) ($2) ($3) ($4) ($5) ($6) ($7) 46
Slide 47: Converged Services Issues
Converged Services Issues • Need for scale to be profitable • FCC rules to restrict exclusive contracts • Aggressive tactics by cable companies • Rely on 3rd party for video content • Fast changing marketplace 47
Slide 48: Why Converged Services
Why Converged Services • Demand for an alternative to the cable/telephone companies • Shentel’s core competence – Voice, Data and Video • Shentel unique position • Unrestricted growth 48
Slide 49: Shenandoah Telecommunications Company 2008 Annual Shareholders Meeting
SHENANDOAH TELECOMMUNICATIONS COMPANY 2008 ANNUAL SHAREHOLDERS MEETING
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