Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Investor Presentation (October 2018)
39 slides from Shenandoah Telecommunications's investor presentation, Oct 4, 2018
Slide 1: Shenandoah Telecommunications Company Investor Presentation June 2018
Shenandoah Telecommunications Company I NVESTOR P RESENTATION J UNE 2018 NASDAQ: SHEN
Slide 2: Safe Harbor Statement
2 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
3 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 activit
Slide 4: Shentel's Mission and Vision
4 Shentel works to ensure that rural communities have access to the same level of telecommunication services as found in urban areas in the U.S. Shentel is committed to enriching the lives of the subscribers and customers it serves with the highest quality of communications services by investing hea
Slide 5: Company Overview
5 Company Overview ▪ Diverse Revenue Streams • 3 complementary revenue streams: Wireless, Cable and Wireline ▪ Tower Leasing Business Provides Steady Recurring Cash Flow • 193 towers generated $2.8 million of revenue in Q2’18, an increase of 3.7% over Q2’17 ▪ Fiber • We control 5,525 route miles of
Slide 6: Shentel history: acquisitions, upgrades, expansion
AXSHENTEL 2008 - 2010 2010 - 2013 Acquisitions Upgrades '* Acquired cabl © Upgraded acquired assets in West dew to oter Virginia, Maryland and Virginia riple Pi © Streamlined network to gain operating iciency Wireless. '* Acquired 50,000 © Invested heavily in Virgin Mobile Mca le bare! customers a 4
Slide 7: Consolidated - Historical Net Income
7 Consolidated - Historical Net Income $33.9 $40.9 ($0.9) $66.4 $12.7 -$5 $5 $15 $25 $35 $45 $55 $65 $75 2014 2015 2016 2017 Q2'18 YTD ($ in millions) * Includes a one - time non - cash tax benefit of $53.4 million as a result of the remeasurement of our deferred tax assets and liabilities as of 12/
Slide 8: Consolidated - Adjusted OIBDA
8 Consolidated - Adjusted OIBDA $132.1 $150.9 $246.1 $280.9 $138.4 $0 $50 $100 $150 $200 $250 $300 2014 2015 2016 2017 Q2'18 YTD 2014 2015
Slide 9: Wireless
AXSHENTEL WIRELESS
Slide 10: Wireless Network Coverage
• 7.0 million Market POPs • 5.9 million Covered POPs • 1.0 million total subscribers • 17.5% penetration of covered POPs • 1,770 CDMA base stations (sites) Wireless Network Coverage 10
Slide 11: Wireless Network Expansion
11 Wireless Network Expansion Effective February 1, 2018 Current Markets New Expansion Markets Optional Expansion Markets
Slide 12: Wireless – Adjusted OIBDA
12 $101.4 $110.1 $200.1 $230.4 $117.6 $0 $50 $100 $150 $200 $250 2014 2015 2016 2017 Q2'18 YTD 2014 2015 2016 Wireless – Adjusted OIBDA
Slide 13: Wireless - Subscriber Growth
13 Wireless - Subscriber Growth (1) Prepaid totals in 2015, 2016, and 2017 were adjusted to exclude Lifeline subscribers. (2) Includes 405k postpaid and 155k prepaid Sprint customers in the acquired territory (5/6/16). (3) Includes 19.1k postpaid and 4.5k prepaid Sprint customers in the acquired ter
Slide 14: Wireless - Attractive Contract With Sprint
14 Wireless - Attractive Contract With Sprint ▪ Contract through November 2029 ▪ Two 10 - year renewals ▪ Payment at termination of 90% EBV (entire business value) for PCS. ▪ Postpaid revenues received from Sprint are recorded net of an 8% Management Fee and an 8.6% Net Service Fee that is retained
Slide 15: Wireless - Affiliate Terms
15 Wireless - Affiliate Terms SHENTEL PROVIDES ▪ Network (Towers, Cell Sites, Backhaul, Local Switch) ▪ Local Sales and Service ▪ Local Advertising & Promotions SPRINT PROVIDES Net Service Fee ▪ Billing/Collections ▪ Customer Care ▪ Long Distance ▪ Equipment Financing Postpaid Payment = 8.6% of Post
Slide 16: Wireless - Mobile Tower Leasing
16 Wireless - Mobile Tower Leasing Steady Recurring Cash Flow ▪ Long - term opportunity to increase leasing revenues given growing demand for data ▪ Company owns 193 towers Mobile Tower Revenue ($ millions)
Slide 17: Cable
AXSHENTEL CABLE
Slide 18: Cable – Adjusted OIBDA
18 Cable – Adjusted OIBDA $15.4 $24.5 $31.8 $40.5 $23.9 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 2014 2015 2016 2017 Q2'18 YTD 2014 2015 2016
Slide 19: Fiber network map
19 Shepherdstown Charleston Summersville Weston Beckley Covington Franklin Petersburg Amherst Atlanta , GA ( Telx ) Martinsville Danville Rustburg Appomattox Farmville Crewe Rocky Mount Dinwiddie Clarksville Blackstone Kenbridge Lawrenceville Radford Wytheville Keysville Lebanon Pineville Welch Lees
Slide 20: Cable Competitive Advantage
20 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 telc
Slide 21: Cable – RGUs and Average Revenue
21 Cable – RGUs and Average Revenue Average Monthly Revenue per RGU* Average Monthly Revenue per Customer* * Refer to the Appendix for a reconciliation of Cable segment operating revenues to Average Revenue per RGUs and per Customer Re lationships. Revenue Generating Units (RGU ) ■ Video ■ High Spee
Slide 22: Cable - How Does Shentel Compare?
22 (1) Excludes cable and internet customers reported through the Wireline segment. (2) Peer Average information derived from SNL Kagan data as of 9/30/2017 for 10 comparably sized companies: Anne Arundel Bro adb and; Comporium Communications; Fidelity Communications Company; Hargray Cable; MetroCas
Slide 23: Wireline
AXSHENTEL WIRELINE
Slide 24: Wireline – Adjusted OIBDA
24 $28.0 $29.7 $32.6 $34.3 $16.1 $0 $5 $10 $15 $20 $25 $30 $35 $40 2014 2015 2016 2017 Q2'18 YTD 2014 2015 2016 Wireline – Adjusted OIBDA
Slide 25: Wireline - Key Operational Results
25 Wireline - Key Operational Results ▪ Access line loss of 5.9 % in past 12 months. ▪ 4, 850 video subscribers at June 30, 2018. Access lines (000s) DSL & Cable Modem Customers (000s)
Slide 26: Fiber network map
26 Shepherdstown Charleston Summersville Weston Beckley Covington Franklin Petersburg Amherst Atlanta , GA ( Telx ) Martinsville Danville Rustburg Appomattox Farmville Crewe Rocky Mount Dinwiddie Clarksville Blackstone Kenbridge Lawrenceville Radford Wytheville Keysville Lebanon Pineville Welch Lees
Slide 27: Wireline and Cable Fiber Revenue
27 Wireline and Cable Fiber Revenue ($ millions) Fiber Lease Revenue
Slide 28: Capital Investment
AXSHENTEL CAPITAL INVESTMENT
Slide 29: Capital Expenditures
29 Capital Expenditures Investing in the Future Capital Expenditures ($ millions) 52% Upgrades and Expansion of Acquired Territories 14% Network Maintenance 13% Success - Based 12% Network Capacity 9% Network Expansion 2018 Capex Budget :
Slide 30: Q&A
AXSHENTEL Q&A
Slide 31: Appendix
AXSHENTEL APPENDIX
Slide 32: Adjusted OIBDA by Segment - Quarterly Results
32 Adjusted OIBDA by Segment - Quarterly Results Three Months Ended June 30, 2018 (in thousands) Wireless Cable Wireline Other Consolidated Operating Income $ 19,780 $ 6,083 $ 4,793 $ (11,958 ) $ 18,698 Impact of ASC topic 606 (924 ) 4 (25 ) — (945 ) Depreciation and amortization 31,565 6,179 3,240
Slide 33: Wireless Segment – Change in Adjusted OIBDA
33 Wireless Segment – Change in Adjusted OIBDA Q 2 '18 vs. Q 2 '17 ($ millions) Revenue Impact $2.7 million Expense Impact $(0.8) million 53% Adj OIBDA Margin 52% Adj OIBDA Margin
Slide 34: Cable Segment – Change in Adjusted OIBDA
34 Cable Segment – Change in Adjusted OIBDA Q 2 '18 vs. Q 2 '17 ($ millions)
Slide 35: Wireless - Postpaid Statistics
35 Postpaid Churn Postpaid ARPU* Wireless - Postpaid Statistics *ARPU represents Average Revenue Per Unit. See reconciliation of Wireless segment operating revenues to Postpaid ARPU.
Slide 36: Wireless - Prepaid Statistics
36 Prepaid Churn Prepaid ARPU* Wireless - Prepaid Statistics *ARPU represents Average Revenue Per User. See reconciliation of Wireless segment operating revenues to Prepaid ARPU. 7.3 2.6 1.2 (38.3)
Slide 37: Average Monthly Billed Revenue per Subscriber
37 Average Monthly Billed Revenue per Subsciber – Postpaid and Prepaid * Represents a four point monthly average ** Average Monthly Billed revenue per subscriber = (Billed revenue excluding write - offs*1,000) / Average subscribers / 3 months ($ in thousands, except subscribers and revenue per subsc
Slide 38: Cable - Non-GAAP Financial Measure Average Revenue
38 Cable - Non - GAAP Financial Measure Average Revenue * Represents a four point monthly average **ARPU calculation = (Video, Internet & Voice Revenue * 1,000) / Average Subscribers / 3 months Q2'18 Q2'17 Service Revenue $ 27,100 $ 25,145 Fiber, FUSC, Pass - through & Other 2,106 2,080 Internal Rev
Slide 39: Total Wireless Distribution
39 Total Wireless Distribution June 30, 2018 December 31, 2017 Company Owned Stores 35 40 Agent Postpaid Stores 117 102 Nationals – Postpaid 64 65 Total Postpaid Stores 216 207 Agent Boost Stores 136 125 Nationals – Boost 251 276 Total Boost Stores 387 401
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