form8-k.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 8, 2011
___________________

Shenandoah Telecommunications Company

(Exact name of registrant as specified in its charter)
__________________

Virginia
0-9881
54-1162807
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
500 Shentel Way
P.O. Box 459
Edinburg, VA
 
 
22824
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:  (540) 984-4141
 
Not applicable

(Former name or former address, if changed since last report.)

 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


 
1

 

Item 7.01 Regulation FD Disclosure.

The following information is furnished pursuant to Regulation FD:  On August 8, 2011, Shenandoah Telecommunications Company held its second quarter 2011 earnings release conference call.  The materials attached hereto as Exhibit 99.1 were utilized during the conference call.  These materials are also available on the Company’s website.

These materials may contain forward-looking statements about Shenandoah Telecommunications 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 or similar words, or by discussions of strategy or risks and uncertainties.  Shenandoah Telecommunications undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
 
Item 9.01  Financial Statements and Exhibits.

 
(c)
Exhibits

The following exhibit is furnished with this Current Report on Form 8-K.

 
Second Quarter 2011 Earnings Release Conference Call Slides
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SHENANDOAH TELECOMMUNICATIONS COMPANY
(Registrant)
 


August 8, 2011
/S/ Adele M. Skolits
 
 
Adele M. Skolits
 
 
Vice President - Finance and
 
 
Chief Financial Officer
 
 
(Duly Authorized Officer)
 
 
 
2

ex99_1.htm

2Q 2011 Earnings Conference Call
August 8, 2011
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:
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.
 
 

 
 
3
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.
 
 

 
 
4
Chris French
CEO and President
 
 

 
 
5
Wireless Highlights
PCS Customers (000s)
q Prepaid - Q2’11 net
 additions of 11,089 and
 91,332 prepaid subs at
 6/30
q Postpaid Churn
 improves -
Q2’11 churn
 of 1.6% compared to
 1.7%
for Q2’10 and 1.8%
 for Q1’11
 
 

 
 
6
Cable Highlights
q Growth
 u Total Cable RGUs 131 thousand at end of Q2 2011
q Triple Play
 u Gains in digital video, high-speed Internet, and voice
 services
q Cable Upgrades
 u Former JetBroadband markets are approximately 10%
 complete
q Sales Momentum
 u 2Q 2011 net RGU additions of 310, net of temporary
 losses due to college students leaving for the summer
 
 

 
 
7
2011 Financial Highlights
q 2010 Pension Expense
 - 2Q’10 is net of $2.1 million of
 after-tax pension settlement
q Depreciation and
 Amortization Expense
 - Increased $3.4 million, after tax,
 due to cable and prepaid sub
 acquisitions
q Interest Expense
 - Increased $1.6 million, after tax,
 related to new debt required to
 fund cable acquisition
q Cable Growth
 - Generated OIBDA of $1.4 million
Net Income
(in millions)
Net Income from Continuing Operations
(in millions)
 
 

 
 
8
Adele Skolits
CFO and VP of Finance
 
 

 
 
9
Profitability
Adjusted OIBDA ($ millions)
 
 

 
 
10
Adjusted OIBDA by Segment
 
 

 
 
11
Wireless Segment - Change in Adjusted
OIBDA Q2’10 vs. Q2’11
 
 

 
 
12
Cable Segment - Change in Adjusted
OIBDA Q2’10 vs. Q2’11
 
 

 
 
13
Wireline Segment - Change in Adjusted
OIBDA Q2’10 vs. Q2’11
 
 

 
 
14
Earle MacKenzie
EVP and COO
 
 

 
 
15
Key Operational Results - Wireless
PCS Postpaid Customers (000s)
 
 

 
 
16
Key Operational Results - Wireless
Gross Additions - Postpaid
Net Additions - Postpaid
n Q2 2011 net adds of
 3,037, a 4% increase over
 Q2 2010
n Q2 2011 churn of 1.6%
 improved from 1.7% in Q2
 2010
 
 

 
 
17
Key Operational Results - PCS
Gross Billed Revenue per Postpaid User - Data & Voice 1
1 - Before Service credits, bad debt, Sprint Nextel fees.
 
 

 
 
18
PCS Revenues
Gross Billed Revenues - Postpaid ($ millions)
$37.2
$41.0
*-The Net Service Fee percentage increased from 8.8% to 12% effective 6/1/10
 
 

 
 
19
Postpaid PCS Customers Top Picks Q2 2011
n Top Service Plans - 75% of
 Gross Adds
 u Everything Data Family
 1500 - 52%
 u Everything 450 - 17%
 u Everything Messaging
 Family 1500 - 6%
n Top Devices - New Activations
 - All Channels
 u LG Optimus   22% 
 u HTC EVO 4G           15%
 u LG Rumor Touch 9%
 u Sanyo Vero               7%
 u Samsung Epic 4G  5%
 u Mobile Data Cards   5%
 u Mobile Computing   2%
 
 

 
 
20
PCS Prepaid Statistics
Gross Additions (000s)
Cumulative Customers
 6/30/11   91,332
 3/31/11   80,243
12/31/10   66,956
  9/30/10   56,181
 7/1/10   49,885
 
 

 
 
21
PCS Prepaid Statistics
Churn %
Average Gross Billed Revenue
 
 

 
 
22
Key Operational Results - Wireline
n Modest access line loss
 of 2% in past 12 months
n Continued broadband
 penetration in LEC area
 to 52%
n 5% growth in DSL
 customers since 6/30/10,
 offsetting access line
 losses to keep total
 connections at 35.7
 thousand
Access lines (000s)
Internet Customers (000s)
 
 

 
 
23
RGU Growth by Quarter - Cable
 
 

 
 
24
Key Operational Results - Cable
Note: Video homes passed includes 16K homes located in Shenandoah County, VA, where internet and
voice services are not available from the cable company.
 
 

 
 
25
Investing in the Future
n Increased planned Wireless
 spending for 2011 EVDO
 growth
n Upgrade of Jet Network is
 approximately 10% complete
n All Virginia systems upgrades
 projected to be completed in
 2011
n West Virginia and Maryland
 systems upgrades to be
 completed in 2012
Capex Spending
$13.5
 
 

 
 
26
Q&A
 
 

 
 
27
Appendix
 
 

 
 
28
Non-GAAP Financial Measure - Billed Revenue per Postpaid Subscriber
Dollars in thousands (except subscribers and revenue per subscriber)
 
 
2Q 2010
 
2Q 2011
Gross billed revenue
 
 
 
 
 
 
 
Wireless segment total operating revenues
$ 30,031
 
$ 37,534
Equipment revenue
 (1,287)
 
 (1,059)
Tower Lease Revenue
 (2,006)
 
 (2,198)
Prepaid Net Service Revenues
 
 
 (5,304)
Other revenue
 (474)
 
 (470)
Wireless service revenue - postpaid
 26,264
 
 28,503
Service credits
 3,714
 
 4,178
Write-offs
 1,381
 
 1,067
Management fee
 2,606
 
 2,887
Service fee
 3,213
 
 4,328
Gross billed revenue - postpaid
$ 37,178
 
$ 40,963
 
 
 
 
Average postpaid subscribers
225,824
 
239,308
 
 
 
 
Billed revenue per postpaid subscriber
 54.88
 
 57.06