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8-K - SHENANDOAH TELECOMMUNICATIONS COMPANY 8-K 3-2-2012 - SHENANDOAH TELECOMMUNICATIONS CO/VA/form8k.htm

 
4Q 2011 Earnings Conference Call
 
March 2, 2012
Exhibit 99.1
 
 

 
 
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. These statements can be identified by the use of forward-looking
terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,”
“should,” “could,” or “anticipates” or the negative or other variation of these similar
words, or by discussions of strategy or risks and uncertainties. These statements are
based on current expectations of future events. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual results could vary
materially from the Company’s expectations and projections. Important factors that
could cause actual results to differ materially from such forward-looking statements
include, without limitation, risks related to the following:
 
qIncreasing competition in the communications industry; and
 
qA complex and uncertain regulatory environment.
 
A further list and description of these risks, uncertainties and other factors can be found
in the Company’s SEC filings which are available online at www.sec.gov,
www.shentel.com or on request from the Company. The Company does not undertake
to update any forward-looking statements as a result of new information or future
events or developments.
 
 
 

 
 
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
activities and exclude the effects of certain operating, capital and financing costs and
may differ from comparable information provided by other companies, and they should
not be considered in isolation, as an alternative to, or more meaningful than measures
of financial performance determined in accordance with US generally accepted
accounting principles. These financial performance measures are commonly used in the
industry and are presented because Shentel believes they provide relevant and useful
information to investors. Shentel utilizes these financial performance measures to
assess its ability to meet future capital expenditure and working capital requirements, to
incur indebtedness if necessary, return investment to shareholders and to fund
continued growth. Shentel also uses these financial performance measures to evaluate
the performance of its businesses and for budget planning purposes.
 
 
 

 
 
4
Chris French
CEO and President
 
 

 
 
5
4Q’11 Highlights
 
q Customer Growth
q Revenue Growth
 Revenues reach one-quarter billion
 
 Revenue grew 15% over 4Q’10 to $66.5 million.
 
q Cash Dividend
 52nd consecutive year of annual dividends
 
 
 

 
 
6
Wireless Highlights
 
PCS Customers (000s)
q Rapid Prepaid Growth
 
Q4’11 net additions of 8,828;
 107,100 prepaid subs at
 12/31
q Steady Postpaid growth
 
Postpaid customers up 6% in
 the last year
 
q Postpaid Churn improves
 
Annual churn of 1.8%
 compared to 1.9%
for 2010
 
q Earnings Improve
 
Annual operating income up
 by $5.0 million over 2010
 
 
 

 
 
7
Cable Highlights
 
q Cable Upgrades
 u Former JetBroadband markets acquired in mid-2010
 are approximately 51% complete
 
 u Remainder scheduled for 2012
q RGU Growth
 u Total RGU growth of 7% during 2011
 u 137,238 RGUs at 12/31/2011
 
 

 
 
8
2011 Financial Highlights
 
Net Income
(in millions)
Net Income from Continuing Operations
(in millions)
 
 

 
 
9
Adele Skolits
CFO and VP of Finance
 
 

 
 
10
Profitability
 
Adjusted OIBDA ($ thousands)
 
 

 
 
11
Adjusted OIBDA by Segment
 
 
 

 
 
12
Wireless Segment - Change in Adjusted
OIBDA Q4’11 vs. Q4’10
 
 
 

 
 
13
Cable Segment - Change in Adjusted
OIBDA Q4’11 vs. Q4’10
 
 
 

 
 
14
Wireline Segment - Change in Adjusted
OIBDA Q4’11 vs. Q4’10
 
 
 

 
 
15
Earle MacKenzie
EVP and COO
 
 

 
 
16
Key Operational Results - Wireless
 
PCS Postpaid Customers (000s)
 
 

 
 
17
Key Operational Results - Wireless
 
Annual Gross Additions - Postpaid
Annual Net Additions - Postpaid
n 6% YOY postpaid net
 growth
 
n Q4 2011 net adds of
 5,072, a 21% increase
 over Q4 2010.
 
n Q4 2011 churn of 1.89%
 up from 1.85% in Q4 2010
 
n 2011 annual churn of
 1.78% improved from
 1.89% in 2010
 
 

 
 
18
Key Operational Results - PCS
 
Gross Billed Revenue per Postpaid User - Data & Voice 1
 
1 - Before Service credits, bad debt, Sprint Nextel fees.
 
 

 
 
19
PCS Revenues
Annual Gross Billed Revenues - Postpaid ($ millions)
 
$151.2
$166.2
* The Net Service Fee percentage increased from 8.8% to 12% effective 6/1/2010
 
 

 
 
20
Postpaid PCS Customers Top Picks Q4 2011
 
n Smartphones made up 53% of
 the Postpaid base in Q4 2011,
 up from 48% in Q3 2011 and
 34% in Q4 2010
 
n Top Service Plans - Gross Adds
 
 u Everything Data Family
 1500 - 56%
 u Everything 450 - 18%
 
 u Everything Messaging
 Family 1500 - 2%
 
n Top Devices - New Activations
 - All Channels
 u iPhone    16%
 u HTC EVO 4G  10% 
 u HTC EVO 3D           8%
 u LG Optimus S       7%
 u Nexus S    6%
 
 

 
 
21
iPhone Statistics - Q4’11
 
n 16% of Q4 Gross Adds
 
n 36% of iPhones were sold or upgraded in Shentel-
 controlled channels
n 3.6% of 12/31/11 Postpaid customers had the iPhone
 
 u 58% iPhone 4S
 u 42% iPhone 4
 
 

 
 
22
PCS Prepaid Statistics
Gross Additions (000s)
Cumulative Customers
 
 

 
 
23
PCS Prepaid Statistics
Churn %
Average Gross Billed Revenue
 
 
 

 
 
24
Cable - RGU Growth by Quarter
 
Customers   74,178 74,657 73,930   75,131  75,348
RGU's/Customer 1.73 1.75 1.77   1.81   1.82
 
 

 
 
25
Key Operational Results - Cable
 
Note: Video homes passed includes 16K homes located in Shenandoah County, VA, where internet and
voice services are provided by the Wireline segment.
 
 
 

 
 
26
Key Operational Results - Wireline
 
n Modest access line loss of
 3% in past 12 months
n Continued broadband
 penetration in LEC area to
 53%
n 3% growth in DSL
 customers since 12/31/10,
 partially offsetting access
 line losses, resulting in
 total connections of 35.4
 thousand, down from 35.6
 thousand at 12/31/10
Access lines (000s)
Internet Customers (000s)
 
 

 
 
27
Investing in the Future
 
n Upgrade of Jet Network is
 approximately 51% complete
 
n All remaining systems in
 Virginia, West Virginia and
 Maryland to have upgrades
 completed in 2012
 
n Network Vision expected to
 drive $60M of spend in 2012
Capex Spending
 
 

 
 
28
Investing in the Future - Network Vision
 
n Plan to upgrade 274 cell sites in 2012 and the remaining
 236 in 2013 including:
 
 u Multi-modal base station at each site
 u Expanded backhaul capacity
 u LTE in the PCS G-block
 u Voice service in the 800Mhz block
n Expect to accelerate depreciation by
 
 u $7.3M in 2012
 u $5.3M in 2013
n Expect to launch LTE as early as Q3 2012
 
 
 

 
 
29
Q&A
 
 
 
 

 
 
30
Appendix
 
 
 

 
 
31
Non-GAAP Financial Measure - Billed Revenue per Postpaid Subscriber