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NTELOS Holdings Corp. Reports Third Quarter 2011 Operating Results

NTELOS Holdings Corp. (“the Company,” NASDAQ: NTLS), a leading wireless nationwide voice and data communications provider with operations in Virginia, West Virginia, Pennsylvania, Kentucky, Ohio, Maryland and North Carolina, today announced operating results for its third quarter of 2011. The Company completed the spinoff of Lumos Networks Corp. (“Lumos Networks”), its wireline operations, on October 31, 2011. These results for the third quarter of 2011 and for the nine months ended September 30, 2011 include the wireline operations, consistent with historical consolidated and segment reporting.

“We are delighted to have completed the separation of our wireless and wireline operations,” said James A. Hyde, president and chief executive officer of the Company. “This event is clearly the most significant in the company’s 114 year history and reflects our commitment to best positioning both companies for the future. It is truly an exciting time as both companies now move forward with highly-focused strategies to capitalize on the growth opportunities unique to each. The process required a tremendous amount of work on the part of employees in both companies and the successful completion is a testament to their dedication and efforts.”

Operating highlights for the third quarter of 2011 include:

  • Consolidated adjusted EBITDA (a non-GAAP measure) was $63.5 million, up 15% over third quarter 2010
  • Smartphone and data card sales represented 76% of wireless postpay gross additions for the quarter
  • Wireless Sprint wholesale revenues for third quarter 2011 were $35.4 million
  • Wireless adjusted EBITDA was $39.6 million, up 9% over third quarter 2010 and 10% over the previous quarter

Recent Developments

Separation Complete: The Company completed the separation of its wireless and wireline operations with the spin-off of Lumos Networks (Nasdaq: LMOS) on October 31, 2011. A reverse split of one share for every two shares of the Company’s common stock was completed on this date, after market close, and stockholders of record on October 24, 2011 received one share of Lumos Networks common stock for every share of the Company’s common stock held, after giving effect to the reverse split. In conjunction with the separation, the Company received a cash distribution from Lumos Networks of $315 million and paid down $283 million of its credit facility. The common stock of both the Company and Lumos Networks began trading separately and “regular-way” at the open on the Nasdaq Stock Market on November 1, 2011. The Company’s common stock will trade under the symbol “NTLSD” for approximately 20 trading days following the separation and will resume trading under the symbol “NTLS” thereafter.

Declaration of Dividend: On November 3, 2011, the Company’s Board of Directors declared a quarterly cash dividend on its common stock in the amount of $0.42 per share to be paid on January 12, 2012 to stockholders of record on December 16, 2011. This quarterly dividend is the first for the Company declared on a post-reverse split, post separation basis.

Business Segment Highlights

Wireless

  • Wireless operating revenues for the third quarter 2011 were $107.3 million, up 7% from third quarter 2010 primarily due to an $8.3 million increase in Sprint wholesale revenues. Subscriber revenues were $62.5 million compared to $66.1 million in third quarter 2010 due to declines in both postpay and prepay subscriber revenues. Subscriber revenues for second quarter 2011 were $63.5 million.
  • Adjusted EBITDA for Wireless was $39.6 million for the third quarter 2011 compared to $36.4 million for third quarter 2010, an increase of 9%.
  • Retail subscribers were 414,990 as of September 30, 2011, down 9,806 from the end of the previous quarter. The subscriber loss was primarily the result of seasonally-higher third quarter customer churn and slightly lower sales. Voluntary postpay churn remained stable for the quarter. Total subscriber churn for third quarter 2011 was 3.7%. Wireless postpay subscribers were 295,091 at quarter end with postpay gross subscriber additions of 16,527.
  • Prepay gross subscriber additions were 20,015, up 14% from third quarter 2010 and up 4% from second quarter 2011. These results are primarily due to the continued success of the $45 per month, all-inclusive rate plan introduced in June 2011, which eliminated a competitive pricing disadvantage and, through anticipated churn reductions, potentially enhances lifetime revenues.
  • Revenues from the Sprint wholesale agreement were $35.4 million for third quarter 2011, up 31% from third quarter 2010.
  • Sales of smartphones represented 66% of postpay gross additions for third quarter 2011, compared to 17% in third quarter 2010; sales of smartphones and data cards combined represented 76% of postpay gross additions. Additionally, nearly 10,000 postpay devices were upgraded to smartphones during third quarter 2011, compared to approximately 5,200 in third quarter 2010. These related costs are fully reflected in the quarter, while revenues are expected to continue to benefit future periods. At September 30, 2011, smartphone and data card penetration of the postpay subscriber base was 34% compared to 18% at September 30, 2010.
  • Postpay ARPU was $56.26 for the third quarter of 2011, compared to $57.53 for the third quarter of 2010. Postpay data ARPU for the third quarter increased $1.96, or 14%, from $14.06 in third quarter 2010, to $16.02.

“We exercised disciplined cost control during the expected seasonally slow third quarter sales period. This, combined with continued growth in the Sprint wholesale business, resulted in the 10% sequential increase in adjusted EBITDA,” said Hyde. “We are encouraged by the increasing wholesale revenues and are optimistic the improvements we have made in our distribution channels, brand and value proposition, and device lineup will drive a strong fourth quarter in our retail business.”

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