Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Merger or Acquisition (August 2015)
21 slides from Shenandoah Telecommunications's merger presentation, Aug 11, 2015
Slide 1: Shenandoah Telecommunications Company to Acquire NTELOS Holdings Corp. and Amend Affiliate Agreement with Sprint
NASDAQ: SHEN Shenandoah Telecommunications Company to Acquire NTELOS Holdings Corp. and Amend Affiliate Agreement with Sprint Corp. AUGUST 11, 2015
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our business strategy, our prospects and our f
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: Call Participants
Call Participants Chris French President & Chief Executive Officer Earle MacKenzie Executive Vice President & Chief Operating Officer Adele Skolits Vice President of Finance & Chief Financial Officer 4
Slide 5: Transactions Introduction
Transactions Introduction Strategic acquisition of adjacent operating footprint on attractive terms $5861 million enterprise value; all-cash acquisition of NTELOS Holdings Corp. (“nTelos”) nTelos Acquisition $9.25 per share in cash payable to nTelos shareholders at closing Net consideration
Slide 6: Benefits of the Transactions
Benefits of the Transactions Expected to have a total licensed population (“POP”) of 5.4 million, a network that covers 4.3 million POPs and total subscribers of over 1 million Enhanced Scale and Approximately doubles Shentel’s covered POPs, revenue and OIBDA Network Increases presence in high
Slide 7: nTelos Represents a High-Quality Asset in Complementary Markets
nTelos Represents a High-Quality Asset in Complementary Markets nTelos is a publicly traded regional wireless carrier providing coverage to nTelos Coverage Footprint customers predominantly in Virginia and West Virginia Branded retail business selling PA postpaid and prepaid service Charleston M
Slide 8: Meaningfully Increasing Scale and Aligning Long Term Interests with Sprint
Meaningfully Increasing Scale and Aligning Long Term Interests with Sprint for a Continued Successful Partnership With nTelos and Sprint’s subscribers Run-Rate Wireless Subscribers1 (‘000) Shentel will: Increase its wireless subscriber base by more than 2.3x The combined business is expected t
Slide 9: Transactions Details
Transactions Details $5861 million enterprise value; all-cash consideration $9.25 per share in cash for a total equity value of $208 million Full repayment of nTelos debt Implies 5.6x nTelos 2015E management guidance EBITDA2 nTelos Purchase of 100% of nTelos common stock Transaction Acqu
Slide 10: Net Transactions Consideration
Net Transactions Consideration (1) 1. As of June 30, 2015 10
Slide 11: Summary of Revised Affiliate Agreement
Summary of Revised Affiliate Agreement Initial term through November 2029; extends existing Affiliate Agreement term by 5 years Two 10 year renewal periods Contract Terms Changes calculation of Shentel’s wireless business value upon termination of agreement, from 80% to 90% of EBV Net Servic
Slide 12: Pro Forma Footprint
Pro Forma Footprint GN ShentelCableCoverage > ShentelCoverage GB Overlap Coverage PA MM nTELOS Coverage Morgantown Charleston —— Shentel Fiber Routes —— Shentel Leased Routes & | Shentel Planned Routes IB Shentel Master Headend B ShentelPoP Planned Shentel POP @ internet PoP
Slide 13: Planned Operational Initiatives
Planned Operational Initiatives Complete the wind down of nTelos’ Eastern Markets Complete the 4G LTE build-out and deploy 800 MHz spectrum for voice and LTE Remove 148 duplicate sites Network Add 150 coverage sites Deploy 2.5 GHz spectrum Leverage Shentel fiber network for backhaul Mi
Slide 14: Pro Forma Operating Statistics as of 6/30/15
Pro Forma Operating Statistics as of 6/30/15 1 2 SHENTEL Pro Forma Owned Towers 154 8 NA 162 4 Cell Sites 546 1,010 NA 1,408 Market POPs 2,421,000 4,388,000 3 4,388,000 3 5,449,000 Covered POPs 2,213,000 3,100,000 3 3,100,000 3 4,283,000 % Coverage 91% 68% 68% 79% Postpaid Subs 296,492 223,000 189,0
Slide 15: Illustrative Transactions Run-Rate Economics
Illustrative Transactions Run-Rate Economics nTelos Sprint Total 1 Postpaid Subscribers 223,000 189,000 412,000 1 Prepaid Subscribers 66,500 102,000 168,500 Total Subscribers 289,500 291,000 580,500 ($MM, except ARPU) (2) Blended Postpaid ARPU $55.10 Gross Postpaid Wireless Service Revenue $272 (2)
Slide 16: Financing Details
Financing Details Purchase price fully funded by $960 million in committed debt financing including: $485 million five-year Term Loan A-1 with amortization of 5% in year 1, 10% in years 2 to 4 and 15% in the final year Financing $400 million seven-year Delayed Draw Term Loan A-2 ($325 million
Slide 17: Financing Details (continued)
Financing Details (continued) PRO FORMA DEBT COVENANTS ($MM, except per share data) 2016 2017 2018 2019 2020 Total Leverage Ratio Covenant Maximum Threshold 3.75x 3.75x 3.25x 3.00x 3.00x Debt Service Coverage Ratio Covenant Minimum Threshold 2.00x 2.00x 2.00x 2.00x 2.00x Covenants Minimum Liquidity
Slide 18: Expected Transaction Sources & Uses - As of 6/30/15
Expected Transaction Sources & Uses - As of 6/30/15 SOURCES ($MM) USES ($MM) Cash from Shentel’s Balance Sheet $32 Purchase of nTelos Equity $208 New Revolving Credit Facility1 0 Repay nTelos Net Debt 378 New Term Loan A-1 485 Repay Shentel Debt 213 New Delayed Draw Term Loan A-22 325 Other Transact
Slide 19: Pro Forma Capitalization – As of 6/30/15
Pro Forma Capitalization – As of 6/30/15 ($MM) Transaction Pro Forma Adjustments Cash / Investments $92 ($32) $60 Total Cash $92 ($32) $60 Revolving Credit Facility1 -- -- -- Existing Term Loan A $213 ($213) -- Term Loan A-1 -- 485 $485 2 Delayed Draw Term Loan A-2 -- 325 325 -- Total Debt $213 $597
Slide 20: Transaction Recap
Transaction Recap nTelos is a highly attractive strategic acquisition and should significantly enhance our scale and regional service offering Further solidifies Shentel as a premier wireless provider in the Mid-Atlantic United States Expands and strengthens affiliate relationship with Sprint
Slide 21: Q&A
AXSHENTEL Q&A 21
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