[May 03, 2010]

NTELOS Holdings Corp. Reports First Quarter 2010 Operating Results

NTELOS Holdings Corp. (NASDAQ: NTLS), a leading provider of wireless and wireline communications services (branded as NTELOS) in Virginia, West Virginia and Pennsylvania, today announced operating results for its first quarter of 2010.

Operating highlights include:

• Operating revenues of $137.6 million, up 3% over previous quarter
• Adjusted EBITDA (a non-GAAP measure) of $54.2 million, representing a 39% margin
• Wireless adjusted EBITDA for first quarter 2010 of $38.1 million, up 6% from fourth quarter 2009
• Wireless adjusted EBITDA margin of 37%, up sequentially from last quarter
• Wireless monthly subscriber churn improved 25 basis points from previous quarter
• Wireless postpay data ARPU for first quarter 2010 up 10% from last quarter and up 26% from first quarter 2009
• Wireline adjusted EBITDA for first quarter 2010 of $18.6 million, a record for the segment

"Our first quarter results reflect improvement in several areas," said James A. Hyde, CEO of NTELOS Holdings Corp. "Most notably, our wireless subscriber growth was significantly positive and our best net addition performance since first quarter last year. Wireless subscriber churn improved nicely for the third consecutive quarter and our postpay data ARPU continued to grow, exceeding twelve dollars in March."

Recent Developments

Declaration of Dividend: On April 30, 2010, the Board of Directors of NTELOS Holdings Corp. declared a quarterly cash dividend on its common stock in the amount of $0.28 per share to be paid on July 14, 2010 to stockholders of record on June 14, 2010.

Hunter Appointed Executive Vice President, President Wireless: Conrad J. Hunter was appointed as Executive Vice President, President - Wireless, effective April 12, 2010. Previously, Mr. Hunter was Executive Vice President and Chief Operating Officer for iPCS (News - Alert) Wireless since August 2007. From February 2000 until July 2007, Mr. Hunter was a Vice President of United States Cellular Corporation, most recently Vice President, Midwest Operations. Prior to joining United States Cellular Corporation, Mr. Hunter was Vice President and General Manager of the Virginia region of PrimeCo PCS, which was acquired by NTELOS in 2000.

Business Segment Highlights

Wireless

• Wireless operating revenues for the first quarter 2010 were $104.0 million, up 2% from fourth quarter 2009. Adjusted EBITDA for Wireless was $38.1 million for the first quarter 2010, up 6% from fourth quarter 2009. Wireless adjusted EBITDA margins improved sequentially from 35% in fourth quarter 2009 to 37% in first quarter 2010. Wireless operating expenses were $65.9 million for the first quarter 2010, down 1% from both first and fourth quarters of 2009, , reflecting lower equipment costs of sales for the FRAWG products. Revenues from the Sprint (News - Alert) wholesale agreement were $27.1 million for first quarter 2010, supported by the $9.0 million per month minimum and reflecting the travel data rate reset effective July 1, 2009. The calculated revenues underlying the minimum increased $0.6 million from fourth quarter 2009 to $23.8 million.
• Retail wireless subscribers were 445,277 at March 31, 2010, reflecting 6,748 net subscriber additions in first quarter 2010. Wireless gross subscriber additions for first quarter 2010 were 48,047, up 8% from fourth quarter 2009, with sales success of the new FRAWG prepay product in the Virginia East markets partially offsetting a year-over-year decline in postpay gross additions. Churn rates for the first quarter 2010 improved for the third consecutive quarter with total monthly subscriber churn of 3.1%.
• Postpay ARPU was $56.29 for the first quarter of 2010 with postpay data ARPU continuing solid growth, increasing $2.47, or 26%, from $9.37 in first quarter 2009 to $11.84 in first quarter 2010. Sequentially, postpay data ARPU is up 10%, or $1.10, compared to fourth quarter 2009.

"We are pleased with our first quarter subscriber results and the performance of our FRAWG product shows we can compete with the national carriers in the unlimited prepay space," said Hyde. "Postpay subscriber growth remains a challenge, but we are nonetheless encouraged by these first quarter wireless results, especially the strength in gross additions, the continued churn improvement and the lift in wireless margins."

Wireline

• Wireline operating revenues for the first quarter 2010 were $33.4 million, up 8% from fourth quarter 2009. Adjusted EBITDA for Wireline was $18.6 million for the first quarter 2010, up 4% from the last quarter. Both revenue and adjusted EBITDA reflect increases related to the previously announced fiber asset acquisition completed on December 31, 2009.
• RLEC: RLEC revenues for the first quarter of 2010 were $14.2 million, up 3% from fourth quarter 2009 as an increase in tandem switched access revenues from other carriers partially offset a decline in access lines. RLEC adjusted EBITDA was $10.0 million for first quarter 2010, compared to $10.2 million in fourth quarter 2009, down slightly due to heavy weather related repair and maintenance expenses.

• Competitive Wireline: Revenues from wireline strategic products increased approximately $2.1 million, or 14%, to $16.5 million in first quarter 2010 from fourth quarter 2009. This improvement is primarily due to increases related to the fiber acquisition, but also to customer growth and continued growth in data connectivity and bandwidth demand. High-speed data and transport products showed significant revenue growth compared to first quarter last year: Broadband, dedicated access and Metro Ethernet were up 10% and IPTV (News - Alert) video was up 105%. Broadband growth in the RLEC footprint continued with a 5% year-over-year customer gain, increasing customer penetration from 48% at March 31, 2009 to 55% at March 31, 2010. Adjusted EBITDA for Competitive Wireline was $8.5 million for the first quarter 2010, an increase of 11% over fourth quarter 2009, reflecting the revenue growth and consistent margins.

"Our high-bandwidth data products are the main growth drivers in wireline and continue to offset the impacts of legacy products and access line losses," stated Hyde. "We are pleased with the significant and immediate impact of the Allegheny acquisition and the margin stability considering transitional and start-up operating expenses in the quarter."

"Wireless subscriber sales and churn levels continued improving trends through first quarter and data ARPU growth remains strong," said Hyde. "Our wireline segment continues to outperform the industry and is poised for continued growth. Overall, our first quarter 2010 results are a solid beginning for the year."

Note: On August 24, 2009, the Company announced that its Board of Directors had approved a share repurchase program authorizing management to repurchase up to $40 million of NTELOS' common stock. To date, 1,046,467 shares have been repurchased for $16.9 million, with no activity in first quarter 2010.

Business Outlook

The Company will provide 2010 financial guidance updates on the First Quarter 2010 Earnings Conference Call scheduled for May 4, 2010 at 10:30 A.M. ET.

Statements are based on management's current expectations. These statements are forward-looking and actual results may differ materially. Please see "Special Note from the Company Regarding Forward-Looking Statements."

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, gain/loss on interest rate swap agreement, net income attributable to noncontrolling interests, other expenses/income, equity based compensation charges and charges from voluntary early retirement and workforce reduction plans.

ARPU, or average monthly revenues per subscriber/unit with service, is computed by dividing service revenues per period by the weighted average number of subscribers with service during that period. Please see the footnotes in the exhibits for a complete definition of this measure.

Adjusted EBITDA and ARPU are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with 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. (NASDAQ: NTLS) is an integrated communications provider with headquarters in Waynesboro, VA. NTELOS provides products and services to customers in Virginia, West Virginia, Pennsylvania, Kentucky, Ohio, Tennessee, Maryland and North Carolina, including wireless phone service, local and long distance telephone services, high capacity transport, data and voice services for Internet access and wide area networking and IPTV-based video services. Detailed information about NTELOS is available at www.ntelos.com.

SPECIAL NOTE FROM THE COMPANY REGARDING FORWARD-LOOKING STATEMENTS

Any statements contained in this presentation that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. The words "anticipates," "believes," "expects," "intends," "plans," "estimates," "targets," "projects," "should," "may," "will" and similar words and expressions are intended to identify forward-looking statements. Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise. Important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include, but are not limited to: rapid development and intense competition in the telecommunications industry; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility; our cash and capital requirements; declining prices for our services; the potential to experience a high rate of customer turnover; our dependence on our affiliation with Sprint Nextel (News - Alert) ("Sprint"); a potential increase in our roaming rates and wireless handset subsidy costs; the potential for Sprint to build networks in our markets; federal and state regulatory fees, requirements and developments; loss of our cell sites; the rates of penetration in the wireless telecommunications industry; our reliance on certain suppliers and vendors; and other unforeseen difficulties that may occur. These risks and uncertainties are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our SEC (News - Alert) filings, including our Annual Reports filed on Forms 10-K.

Exhibits:

• Condensed Consolidated Balance Sheets
• Condensed Consolidated Statements of Operations
• Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Operating Income
• Reconciliation of Operating Income to Adjusted EBITDA

Additional exhibits include:

• Summary of Operating Results
• Customer Summary
• Wireless Customer Detail
• Wireless Key Performance Indicators (KPI)
• Wireless ARPU Reconciliation

These exhibits are available in the Company's 8-K filing with the SEC or on the Company's Investor Relations website.

[ Back To TMCnet.com's Homepage ]