Attached files
Annual Shareholder Meeting
April 17, 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:
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
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
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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.
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.
Annual Shareholder Meeting
April 17, 2012
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Web
Maps
Shopping
Music
Video
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PCS Subscriber Growth History
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Total Change in Stock Price
Note: Adjusted for stock splits and as of the end of year close.
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Total Change in Dividends per Share
Note: Adjusted for stock splits.
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Earle MacKenzie
COO and EVP
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Key Operational Results - Wireless
PCS Retail Subscribers (000s)
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Key Operational Results - Wireless
PCS Net Additions
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How Does Shentel’s Wireless Compare?
2011 Results (in thousands)
Verizon
AT&T
Sprint
Shentel
US
Cellular
Cellular
Alltel
(ATNI)
(ATNI)
T-
Mobile
Mobile
nTelos
Covered
POPs
POPs
296,000
313,000
277,800
46,888
4,500
280,200
5,915
2011 Net
Adds or
(Loss)
Adds or
(Loss)
5,419
7,699
5,111
54..
(186)
(10)
(1,232)
(18)
Total Subs
107,798
103,247
55,021
5,891
582
33,734
415
Penetration
36.4%
33.0%
19.8%
17.3%.
12.6%
12.9%
12.4%
7.0%
Note: All metrics include wholesale subscribers.
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Key Operational Results - Wireless
PCS Gross Billed Data & Voice
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Investing in the Future
q Keeps Shentel’s network aligned with Sprint’s
q Allows Shentel to remain competitive with Verizon and
AT&T
AT&T
q Improve customers’ experience
q Provide 4G LTE service in entire coverage area
q Provide better in building and overall coverage
q Gives Shentel potential to leverage investment
q Convert existing iDEN customers to our network
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Profile of the Sprint Nextel Relationship - Postpaid
q Contract
Ø Initial term to 2024
Ø Two 10 year renewals
Ø Defined exit value
based on DCF
based on DCF
q Net Service Fee of 12%
(14% maximum):
(14% maximum):
Ø Billing
Ø Customer care
Ø Long distance
Ø Travel/Roaming
Ø National channel
handset subsidies
handset subsidies
q Access to Additional
Spectrum
Spectrum
Ø G Block - PCS
Ø 800Mhz - iDEN
q Management Fee of 8%
(Fixed for life of contract)
(Fixed for life of contract)
Ø Spectrum
Ø Brand
Ø National platform
Ø Access to Sprint
vendors on similar
terms
vendors on similar
terms
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Network Vision - 2012 & 2013
q Plan to upgrade 274 cell sites in 2012 and the remaining
236 in 2013 including:
236 in 2013 including:
Ø Multi-modal base station at each site
Ø Expanded backhaul capacity
Ø LTE in the PCS G-block
Ø Voice service in the 800Mhz block
q Expect to launch LTE as early as Q3 2012
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Cable Service Areas
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Cable Revenue Generating Units (in thousands)
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How Does Shentel Cable Compare?
* Industry Averages are from SNL Kagan's estimate of U.S. totals.
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Why Cable has a Competitive Advantage
q Issues with the Local Telephone Company
Ø Limits of DSL - Is it the new dial up?
Ø Requires significant capital investment to offer comparable
Ø Loss of cash flow from shrinking voice service
Ø Long-term pricing advantages as access revenues decrease
Ø Bundling of satellite video with their voice and DSL
q Issues with Satellite - Dish/DirecTV
Ø Bundling of telco DSL and voice with their video
Ø Satellite internet is fast but has limited capacity
Ø No local presence
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Shentel’s Cable Advantage
q We know Telephone - Our primary competitor
Ø Needs to spend lots of capital to match our service
Ø Unfavorable changes in economics
q Own/control our backbone fiber network
q Own our telephone switch
q Regional focus on small markets
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Investing in the Future - CapEx Spending (in millions)
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Adele Skolits
CFO and VP of Finance
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2011 Financial Highlights
Net Income (in millions)
Net Income from Continuing
Operating (in millions)
Operating (in millions)
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Revenues (in millions)
Note: Effective 2007, Shentel amended its agreement with Sprint Nextel. The net
effect of this amendment was a reduction in both revenues and expenses.
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Mix of Revenues by Quarter (in millions)
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Wireline
Wireless
Cable
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Expenses by Quarter (in millions)
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Debt to Operating Cash Flow
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Cash Dividends Per Share
Annual Shareholder Meeting
April 17, 2012