Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Investor Presentation (October 2013)
41 slides from Shenandoah Telecommunications's investor presentation, October 2013
Slide 1: Investor Presentation
NASDAQ: SHEN Shenandoah Telecommunications Company INVESTOR PRESENTATION October 2013
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-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 4: Company Overview
Company Overview Providing a broad range of diversified communications services to customers in the Mid-Atlantic United States and the exclusive personal communications service ("PCS") Affiliate of Sprint in portions of Pennsylvania, Maryland, Virginia and West Virginia. Diverse Revenue Streams •
Slide 5: Building Value Since 1902
Building Value Since 1902 $9 Book Value per share $0.35 Dividend payment per share $8 4G $0.30 Book Value per share* $7 $0.25 Dividend payment per share $6 $5 $0.20 $4 $0.15 $3 Founded in 1902 as a farmer’s mutual $0.10 $2 $0.05 $1 $0 $0.00 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982
Slide 6: Tail End of Significant Capital Expenditures
Tail End of Significant Capital Expenditures We Are Here 2008-2010 2010-2013 2014 Acquisitions Upgrades Reduced CapEx Cable Cable • Capital Expenditures • Acquired various cable • Upgraded acquired networks to offer should decrease after assets in West Virginia, “Triple Play” with robust high speed
Slide 7: External Revenues by Segment
External Revenues by Segment $90,000 $80,000 Cable Wireless $70,000 Wireline $60,000 ($ in thousands) $50,000 $40,000 $30,000 $20,000 $10,000 $0 7
Slide 8: Historical Net Income
Historical Net Income $20 $18.1 $18 $16.3 $16.2 $16 $15.1 $14 $13.0 ($ in millions) $12 $10.0 $10 $8 $6 $4 $2 $0 2009 2010 2011 2012 Six Six Months Months 6/30/12 6/30/13 8
Slide 9: Adjusted OIBDA by Segment
Adjusted OIBDA by Segment $25 Wireless 23.0 22.1 Wireline 21.0 20.1 $20 Cable 19.4 18.9 18.7 17.8 16.9 $15 ($ in millions) $10 5.7 5.9 6.1 5.8 5.8 6.1 6.0 6.3 5.5 $5 2.5 2.4 2.3 1.4 1.6 1.5 1.8 0.5 $0 -0.6 ($5) 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 9
Slide 10: Wireless Segment
AXSHENTEL WIRELESS SEGMENT
Slide 11: Network Overview
Network Overview • One of only 2 Sprint affiliates • 2.1 million covered POPs • 398k total subscribers 19% penetration of covered POPs • 525 base stations • 88% of POPs covered by 4G LTE 11
Slide 12: Attractive Relationship With Sprint Nextel
Attractive Relationship With Sprint Nextel LONG TERM CONTRACT: Initial contract term to 2024 Two 10-year renewals Payment at termination 22% Fee (Management: 8%; Service: 14%); capped for the duration of the contract SPRINT PROVIDES: Spectrum Brand National Platform Access to Sprint
Slide 13: Why We Invested in Sprint's Network Vision
Why We Invested in Sprint’s Network Vision Provide 4G LTE service in entire coverage area Keeps Shentel’s network aligned with Sprint’s Allows Shentel to remain competitive with Verizon and AT&T Improve customers’ experience Provide better in-building and overall coverage Converted thous
Slide 14: PCS Subscriber Growth
PCS Subscriber Growth Postpaid Prepaid 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 14
Slide 15: Diverse PCS Sales Channels
Diverse PCS Sales Channels Retail Channels Corporate 15 Branded 23 Local 8 Agents Nationals (Big Box 75 Retailers) Total 121 15
Slide 16: Growth Rate and Penetration Compare Well to Peers
Growth Rate and Penetration Compare Well to Peers Shentel US Sprint Verizon AT&T nTelos Leap PCS Cellular Nextel Wireless Mobile Covered POPS 2,063 6,000 31,822 96,200 282,000 302,000 317,000 (in 000s) % Growth 6.9% 7.1% (13.4%) (18.0%) (5.0%) 6.3% 2.5% Penetration 19.3% 7.6% 15.8% 5.0% 19.0% 33.2%
Slide 17: PCS Revenues
PCS Revenues Gross Billed Revenues - Postpaid ($ millions) $49.6 $45.3 Sprint Management 9.0 & Service Fees 8.2 1.6 Bad Debt 1.6 3.5 3.9 Discounts and Credits $35.7 Net Revenue $32.4 Q2'12 Q2'13 17
Slide 18: Key PCS Results
Key PCS Results Gross Billed Revenue per Postpaid User – Data & Voice 1 1 – Before Service credits, bad debt, Sprint fees. 18
Slide 19: PCS Revenues
PCS Revenues Gross Billed Revenues - Prepaid ($ millions) $11.2 0.6 $8.3 Service Fees 0.5 $10.6 Net Revenue $7.8 Q2'12 Q2'13 19
Slide 20: Key PCS Results
Key PCS Results Gross Billed Revenue per Prepaid User $28.16 $23.40 Q2'12 Q2'13 20
Slide 21: Mobile Tower Leasing
Mobile Tower Leasing Steady Recurring Cash Flow Tower lease revenue of Non-affiliate Revenue Affiliate Revenue (In Millions) $9.1 million in 2012 with $6 million of EBITDA $3.8 $3.1 Long-term opportunity to increase leasing revenues $5.8 $5.9 given growing demand for data TTM 6/30/12 TTM 6/30/13
Slide 22: Cable Segment
AXSHENTEL CABLE SEGMENT
Slide 23: Cable: Important Growth Initiative Since 2008
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” o
Slide 24: Cable Network
Cable Network MD WV DC VA Shentel Fiber Routes Leased Routes Shentel POP Planned Routes Internet POP Master Headend 24
Slide 25: Cable Competitive Advantage
Cable Competitive Advantage Shentel Cable Improved customer experience: higher speeds, lower cost, and choice to bundle or pick and choose services We own/control our backbone fiber network and our telephone switch Local/Regional focus Competitors Verizon/CenturyLink/Frontier Dish/DirecTV DS
Slide 26: Sequential RGU Growth
Sequential RGU Growth Video High Speed Internet Voice 125,000 116,576 116,115 114,006 112,493 114,762 114,891 10,618 11,849 12,307 12,840 13,622 11,133 100,000 38,856 38,623 40,387 41,025 42,479 42,564 75,000 50,000 64,532 62,737 62,526 59,929 61,559 61,257 25,000 - Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'
Slide 27: Average Monthly Revenue is Growing
Average Monthly Revenue is Growing Average Monthly Revenue per RGU Average Monthly Revenue per Customer* *Average monthly revenue per video subscriber was $92.38 and $104.99 for Q2 2012 and Q2 2013, respectively. 27
Slide 28: How Does Shentel Compare?
How Does Shentel Compare? June 30, Peer 2011 2012 2013 Average* Video Homes Passed 180,050 183,190 184,615 Penetration 36.6% 34.2% 32.5% 35.9% High-speed Internet Available Homes 150,623 157,153 166,675 Penetration 22.4% 24.6% 25.5% 26.0% Voice Available Homes 129,027 150,759 161,709 Penetration 6.0
Slide 29: Wireline Segment
AXSHENTEL WIRELINE SEGMENT
Slide 30: Key Wireline Operational Results
Key Wireline Operational Results Access lines (000s) Access line loss of 1.1% in 23.1 22.7 22.4 22.3 past 12 months vs. 9.0% for the industry* Broadband penetration in LEC Q4'11 Q2'12 Q4'12 Q2'13 area at 56.1% Total connections at 6/30/13 of DSL Customers (000s) 35.0 thousand 12.4 12.5 12.6 12
Slide 31: Wireline Segment – New Signed Contracts
Wireline Segment – New Signed Contracts 18.0 $16.0 16.0 $13.6 14.0 $11.2 12.0 $ in millions 10.0 8.0 $5.3 6.0 4.0 2.0 - 2010 2011 2012 YTD 2013 2010, 2011 and 2012 amounts are annual totals; 2013 amount is for the six months ended June 30. Typical contract length is 60 months 31
Slide 32: Fiber Network
Fiber Network 3,600+ fiber route-miles 40% in Wireline markets 60% in Cable markets MD DC WV VA Shentel Fiber Routes Leased Routes Planned Routes 32 32
Slide 33: Capital Investment
AXSHENTEL CAPITAL INVESTMENT
Slide 34: Investing in the Future
Investing in the Future Capex Spending ($ millions) Last phase of Cable upgrade is underway and expected to be complete by end of 2013. Network Vision spend of $55M in 2012. Budget of $60M in 2013. Success-based spending is 23% of total 2013 budget. * Capex spending for 2012 included $24.7 mil
Slide 35: Q&A
AXSHENTEL Q&A
Slide 36: Appendix
AXSHENTEL APPENDIX
Slide 37: Postpaid PCS Customers
Postpaid PCS Customers Top Picks 2Q13 Top Service Plans – 74% of Top Devices – New Activations Gross Adds – All Channels ► iPhone 25% ► Everything Data 1500 – 55% ► Everything Data 450 – 19% ► Samsung Galaxy S III 21% ► Samsung Galaxy Victory 8% Smartphones made up 70% of the Postpaid base in
Slide 38: PCS Postpaid Statistics
PCS Postpaid Statistics Gross Additions (000s) Cumulative Customers (000s) Net Additions Gross Additions 266.3 264.0 18.4 18.6 262.9 15.8 15.2 16.0 16.1 258.9 255.0 250.7 4.3 3.8 4.0 2.1 2.3 1.1 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 38
Slide 39: PCS Prepaid Statistics
PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) *The loss of customers in Q2’13 related to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program. 39
Slide 40: PCS Postpaid Statistics
PCS Postpaid Statistics Churn % Average Gross Billed Revenue 1.89% Voice Data 1.87% 1.87% 62.87 62.76 1.86% 60.57 60.68 61.58 61.83 28.66 28.90 29.35 30.22 31.06 31.29 1.62% 1.60% 31.91 31.78 32.23 31.61 31.81 31.47 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 40
Slide 41: PCS Prepaid Statistics
PCS Prepaid Statistics Churn % Average Gross Billed Revenue 41
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