NTELOS Holdings Corp. Reports Third Quarter 2015 Results

WAYNESBORO, Va., Oct. 28, 2015 /PRNewswire/ -- NTELOS Holdings Corp. (NASDAQ: NTLS) ("nTelos" or the "Company") announced today operating and financial results for its third quarter ended September 30, 2015.

On August 10, 2015, the Company entered into a definitive agreement to be acquired by Shenandoah Telecommunications Company ("Shentel"; NASDAQ: SHEN) for $9.25 in cash per share. A vote to approve the merger will be held at the Company's Annual Meeting of Stockholders on November 11, 2015. The proposed acquisition by Shentel is expected to close in early 2016 subject to customary closing conditions. In addition to stockholder approval, the transaction must be approved by certain federal and state regulatory agencies. On September 22, 2015, the Company received notification from the Federal Trade Commission of the early termination of the applicable waiting period required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Additionally, the Company expects that the public notice period mandated by the Federal Communications Commission ("FCC") will commence shortly and that the FCC's review of the proposed transaction will be completed by early 2016. The Company has received all necessary state regulatory approvals. For additional information regarding the transaction and the necessary regulatory approvals required in connection with the proposed merger, please see the Company's filings with the Securities and Exchange Commission ("SEC"), including the definitive proxy statement filed with the SEC on October 13, 2015. 

The "Highlights" and "Subscriber Update" sections represent results of operations for the Company's Western Markets, which are included in the supplemental schedules provided.

Highlights

• Revenues increased slightly to $88.3 million for the third quarter 2015, compared to $88.2 million for the third quarter 2014;
• Adjusted EBITDA was $23.1 million for the third quarter 2015, compared to $32.9 million for the third quarter 2014. Adjusted EBITDA during the third quarter 2015 reflected lower wholesale revenue and the absorption of corporate overhead previously allocated to the Eastern Markets in 2014;
• Net subscriber additions for the nine months ended September 30, 2015 of 18,100 exceeded net subscriber additions for the full year 2014 of 14,600; and
• Approximately 65% of covered POPs have access to our LTE network, exceeding the original year end 2015 goal of 50%. 

Subscriber Update

Total Subscribers

• Total subscribers were 300,200 as of September 30, 2015, compared to 297,500 for the second quarter 2015 and 277,100 for the third quarter 2014;
• Total subscriber gross additions for the third quarter 2015 were 25,500, compared to 25,700 for the second quarter 2015 and 24,600 for the third quarter 2014; and
• Total subscriber net additions for the third quarter 2015 were 2,700, compared to 7,400 for the second quarter 2015 and 3,100 for the third quarter 2014.

Postpay Subscribers

• Postpay subscriber gross additions for the third quarter 2015 were 15,400, compared to 14,300 for the second quarter 2015 and 15,500 for the third quarter 2014; 
• Net postpay subscriber additions were 2,100 for the third quarter 2015, compared to 4,300 for the second quarter 2015 and 3,000 for the third quarter 2014;
• Postpay churn for the third quarter 2015 was 1.9%, compared to 1.5% for second first quarter 2015 and 1.9% for the third quarter 2014;
• ARPA was $112.81 for the third quarter 2015, compared to $133.83 for the third quarter 2014; and
• As of September 30, 2015, total postpay subscribers were 231,300.

Prepay Subscribers

• Prepay subscriber gross additions for the third quarter 2015 were 10,100, compared to 11,400 for the second quarter 2015 and 9,100 for the third quarter 2014;
• Net prepay subscriber additions were 600 for the third quarter 2015, compared to 3,100 for the second quarter 2015 and 100 for the third quarter 2014;
• Prepay churn for the third quarter 2015 was 4.6%, compared to 4.1% for the second quarter 2015 and 4.9% for the third quarter 2014; and
• As of September 30, 2015, total prepay subscribers were 68,900.

Eastern Markets Wind Down Update

In the fourth quarter of 2014, the Company announced a strategic refocus of its business operations in its western Virginia and West Virginia markets ("Western Markets" or "Markets"). The Company is currently in the process of winding down commercial operations in its Eastern Markets, which it expects to complete by November 15, 2015.

During the nine months ended September 30, 2015, the Company reduced its Eastern Markets subscribers by 123,300 as part of winding down operations in an orderly manner. Eastern Markets Adjusted EBITDA for the nine months ended September 30, 2015 was $12.7 million, and is not included in Western Markets Adjusted EBITDA as discussed above.

Net Income

Net income (loss) of nTelos Holdings, after net income attributable to noncontrolling interests, was $(9.0) million, or $(0.42) per basic share, for the third quarter 2015, compared to $0.8 million, or $0.04 per diluted share, for the third quarter 2014.

Liquidity

Total cash, including both restricted and unrestricted cash, at the end of the third quarter 2015 was $111.0 million, compared to $75.7 million at the end of the fourth quarter 2014.  

Business Outlook

As a result of the announcement that the Company has entered into a definitive agreement to be acquired by Shentel, the Company will no longer provide operating or financial guidance.

Conference Call

As a result of the announcement that the Company has entered into a definitive agreement to be acquired by Shentel, the Company will not host a third quarter 2015 conference call and webcast.

Non-GAAP Measures

Adjusted EBITDA is defined as net income attributable to NTELOS Holdings Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, transaction related costs, restructuring and asset impairment charges, gain/loss on sale or disposal of assets and derivatives, net income attributable to noncontrolling interests, other expenses/income, equity-based compensation charges, separation charges, secondary offering costs, adjustments for impact of recognizing deferred gain associated with towers sold to Grain Management  and adjustments for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis.

ARPA, or average monthly revenue per account, is computed by dividing service revenues per period by the average number of accounts during that period. Please see the footnotes in the exhibits for a complete definition of this measure.

ABPU, or average billings per user, is computed by adding average monthly postpaid service billings to users and equipment installment plan (EIP) billings divided by the average number of postpaid users during the period, further divided by the number of months in the period. NTELOS believes average postpaid customer billings per user is indicative of estimated cash collection, including equipment installments, from customers each month.

Adjusted EBITDA is a key metric used by investors to determine if the Company is generating sufficient cash flows to continue to produce shareholder value and provide liquidity for future growth. ARPA and ABPU provides management with useful information concerning the appeal of the Company's postpay rate plans and service offerings and the Company's performance in attracting and retaining high value customers.

Adjusted EBITDA, ARPA and ABPU are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Please refer to the exhibits and materials posted on the Company's website for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with GAAP and for a discussion of the presentation, comparability and use of such financial performance measures.

About NTELOS

NTELOS Holdings Corp. (NTLS), operating through its subsidiaries as "nTelos Wireless," is headquartered in Waynesboro, VA, and provides high-speed, dependable nationwide voice and data coverage for approximately 300,200 retail subscribers based in its Western Markets, comprised of western Virginia, West Virginia and portions of Maryland, North Carolina, Pennsylvania, Ohio and Kentucky. The Company's licensed territories in the Western Markets have a total population of approximately 4.4 million residents, of which its wireless network covers approximately 3.1 million residents. The Company is also the exclusive wholesale provider of wireless network services to Sprint Corporation in portions of its western Virginia and West Virginia territories for all Sprint wireless customers.

FORWARD-LOOKING STATEMENTS

This document may contain statements, estimates or projections that constitute "forward-looking statements" as defined under U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "plan," "estimate," "anticipate," "project," "will," "may" "should," and similar expressions identify forward-looking statements, which generally are not historical in nature.

Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. The forward-looking statements are or may be based on a series of projections and estimates and involve risks and uncertainties. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A, Risk Factors" and elsewhere in this quarterly report and in our Annual Report on Form 10-K for the year ended December 31, 2014 and those described from time to time in our future reports filed with the Securities and Exchange Commission ("SEC").

Additionally, there are risks and uncertainties associated with the proposed acquisition by Shentel such as: (1) the Company may be unable to obtain stockholder approval as required for the proposed merger with Shenandoah Telecommunications Company ("Shentel"); (2) conditions to the closing of the merger, including, without limitation, the consummation of certain transactions between Shentel and Sprint, may not be satisfied and required regulatory approvals may not be obtained; (3) the merger may involve unexpected costs, liabilities or delays; (4) the risks related to disruption of management's attention from the Company's ongoing business operations due to the transaction, (5) the effect of the announcement of the merger on the ability of the Company to retain and hire key personnel and maintain relationships with its customers, suppliers and others with whom it does business, or on its operating results and business generally, (6) the outcome of any legal proceedings related to the merger; (7) the Company may be adversely affected by other economic, business, and/or competitive factors; (8) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (9) changes in the legal or regulatory environment; and (10) other risks to consummation of the merger, including the risk that the merger will not be consummated within the expected time period or at all. If the merger is consummated, the Company stockholders will cease to have any equity interest in the Company and will have no right to participate in its earnings and future growth.

Additional Information and Where to Find It

This document does not constitute a solicitation of any vote or approval. In connection with the proposed transaction, NTELOS has filed with the SEC and mailed or otherwise provided to its stockholders a proxy statement regarding the proposed transaction. BEFORE MAKING ANY VOTING DECISION, NTELOS'S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY AND ALL OTHER DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the proxy statement and other documents that NTELOS has filed with the SEC from the SEC's website at www.sec.gov and on NTELOS's investor relations section website at ir.ntelos.com. In addition, the proxy statement and other documents filed by NTELOS with the SEC may be obtained from NTELOS free of charge by directing a request to NTELOS's Public Relations advisor at KCSA Strategic Communications, 880 Third Avenue, 6th Floor, New York, NY 10022.

NTELOS and its directors, executive officers and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from NTELOS stockholders with respect to the proposed acquisition of NTELOS. Security holders may obtain information regarding the names, affiliations and interests of such individuals in NTELOS's Annual Report on Form 10-K for the year ended December 31, 2014. Additional information regarding the interests of such individuals in the proposed acquisition of NTELOS is included in the proxy statement filed with the SEC. These documents may be obtained free of charge from the SEC's website at www.sec.gov and NTELOS's investor relations website at ir.ntelos.com.

Exhibits:

• Consolidated Financial Statements
  • Condensed Consolidated Balance Sheets
  • Condensed Consolidated Statements of Operations
    
• Consolidated Operating Metrics
  • Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
  • Key Metrics
  • ARPA Reconciliation – Postpay
  • ABPU Reconciliation – Postpay
• Western Markets Operating Metrics
  • Western Markets Condensed Consolidated Statements of Operating Income
  • Western Markets Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
  • Western Markets Key Metrics
  • Western Markets ARPA Reconciliation – Postpay
  • Western Markets ABPU Reconciliation – Postpay
    
    

SOURCE NTELOS Holdings Corp.