Shenandoah Telecommunications CEO Discusses Q4 2010 Results - Earnings Call Transcript

Union Drilling, Inc. (UDRL)

Q4 2010 Earnings Conference Call

March 7, 2011, 10:00 am ET

Executives

Adele Skolits – VP, Finance and CFO

Christopher French – President and CEO

Earle MacKenzie – EVP and COO

Analysts

Charlie Kesio [ph] – Raymond James

Greg Burns – Sidoti & Co.

Barry Sine – CapStone Investments

Will Lauber – Sterling Capital

Ric Prentiss – Raymond James

Presentation

Operator

Good morning everyone, and welcome to the Shenandoah Telecommunications Fourth Quarter of 2010 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. Adele Skolits, CFO. Please go ahead ma’am.

Adele Skolits

Good morning and thank you for joining us. The purpose of today’s call is to review Shentel’s results for the quarter ended December 31, 2010.

Our results were announced in a press release distributed this morning and the presentation we’ll be reviewing is included on our website at www.shentel.com. Please note that a replay of this call will be made available later today. The details were set forth in the press release announcing this call.

With us on the call today are Christopher French, our President and Chief Executive Officer; and Earle MacKenzie, our Executive Vice President and Chief Operating Officer. After our prepared remarks, we’ll conduct a question-and-answer session.

I’ll begin with slide two of the presentation. While we don’t provide guidance with respect to specific future financial results, we caution that this call may contain forward-looking statements, which involve a number of known and unknown risks and uncertainties. These may cause our actual results to differ materially from these statements.

Shentel provides a detailed discussion of various risk factors in our SEC filings, which you are strongly encouraged to review. You’re cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements.

Also, in an effort to provide useful information to investors, we note on slide three that our comments today include non-GAAP financial measures. Details on these measures, including why we use them and reconciliations to the most comparable GAAP measures, are included in our SEC filings.

I’ll turn the call over to Chris now.

Christopher French

Thank you, Adele. We appreciate everyone joining us this morning.

We had a great fourth quarter both in terms of customer growth and progress with expansion of our cable and wireless businesses. On slide 5 we list some of the highlights in these areas.

As of the end of the year, total postpaid and prepaid wireless customers exceeded 300,000. Total cable segment revenue generating units or RGUs surpassed 100,000 at year’s end. At the end of November, we closed on the announced purchase of two markets from Suddenlink, passing approximately 7000 homes and including 3900 RGUs.

In our wireless segment, we continued to have great success in our prepaid business, which grew by 10,775 net ads in the fourth quarter, and 17,071 since we began offering Virgin Mobile and Boost prepaid wireless services in July. Earle will be reviewing our operating results in greater detail later on this call.

Highlights of the accomplishments in our cable segment are shown on slide six. Upgrades of all systems purchased from Rapid Communication in December 2008 are now complete. We are making progress on the upgrade’s needs in the cable markets acquired from JetBroadband last July 30. We have completed the work needed on two thirds of the total mileage of outside plan, and will finish the first system upgrade in the first quarter.

As of the end of 2010, we were able to offer high-speed data to 89%, and voice to 73% of our acquired video homes passed, helping us to add 9972 RGUs in 2010. Wireless segment highlights are shown on slide seven. On top of the customer base we acquired from Sprint Nextel, prepaid customers grew by 17,071 in 2010. Postpaid wireless PCS customers are up 6% from the year ago. Continued postpaid growth was helped by churn of just 1.9% for 2010 relative to 2.1% for 2009.

Financial results on a consolidated basis are shown on slide eight. We are reporting net income of 18.1 million for 2010 compared to 15.1 million for 2009. Results for both the years include an impairment charge on our discontinued convert services operation. Impairment loss was 17.5 million in 2009, and we recorded an additional 1.9 million impairment in 2010.

Net income from continuing operations was 18.7 million for 2010, as compared to 25.1 million in the prior year. 2010’s results were impacted by transaction related expenses, and additional interest expense from our JetBroadband acquisition. The net after-tax loss from our new prepaid business and the final cost from closing our defined benefit pension plan. We also recognized a gain from the sale of our telephone directory of 2.4 million after-tax. Adele will review the financial results in more detail in a moment.

We have still not reached agreement for the sale of our convert services business, although we continue to work with potential buyers. This process remains challenging, but we continue to expect that a sale will ultimately be achieved. In December, the company increased its annual cash dividend to $0.33 per share, a 3% over 2009. We even had 14 consecutive years of dividend increases, and they have been paid every year since we paid the first dividend in 1960.

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