NTELOS Holdings Corp. (NTLS, Financial) filed Quarterly Report for the period ended 2009-03-31.
Ntelos Holdings is a leading provider of wireless and wireline communications services to consumers and businesses in Virginia and West Virginia under the Ntelos brand name. It concentrate on providing services to meet the current and future communciations needs of customers and that it believed in representing high growth opportunities. Its wireless operations are composed of an Ntelos branded retail business and a wholesale business that operates under an exclusive contract with Sprint Nextel Corp. NTELOS Holdings Corp. has a market cap of $675.6 million; its shares were traded at around $15.98 with a P/E ratio of 16.3 and P/S ratio of 1.2. The dividend yield of NTELOS Holdings Corp. stocks is 6.5%.
Operating income increased $7.5 million over the comparative quarter, from $26.1 million for the quarter ended March 31, 2008 to $33.6 million for the quarter ended March 31, 2009. Operating margin increased from 19.8% for the quarter ended March 31, 2008 to 23.9% for the quarter ended March 31, 2009.
Net income attributable to NTELOS Holdings Corp. increased $8.9 million over the comparative quarter. In addition to the $7.5 million increase in operating income, interest expense decreased $3.5 million and the change in gain/loss on interest rate swap was favorable $4.1 million, improving from a loss of $3.2 million in the first quarter of 2008 to a gain of $0.9 million in the first quarter of 2009. These changes, which served to increase net income, were partially offset by a $0.4 million decrease in other income, consisting primarily of interest income, an increase in income tax expense of $5.6 million and an increase in net income attributable to noncontrolling interests of $0.2 million.
The increase in subscriber revenue reflects increased postpay revenue of $3.4 million, or 6.7%, $3.0 million of which is from growth in data revenue. Offsetting this increase was a decline in prepay revenues of $2.0 million due to lower prepay ARPU brought about by competitive pricing reductions and economic conditions which contributed to subscribers changing to or purchasing lower priced plans. Underlying the 57.1% growth in data revenue was the technology upgrade to EV-DO (deployed to 74% of our cell sites by March 31, 2009), and an increased sales emphasis on smart phones and other data-centric handsets coupled with a richer array of data packages. The total data ARPU for all prepay and postpay products was $8.78 for the first quarter of 2009 compared to $7.08 for the first quarter of 2008, an increase of 24.1%, reflecting the increased take-rate on data packages and increased usage rates. Growth in data ARPU has largely offset declines in voice ARPU resulting from economic and competitive pressure, leading to blended ARPU of $54.58 for the first quarter of 2009, 4.2% below blended ARPU of $56.95 for the first quarter of 2008. Pro forma of the handset insurance reporting change (see footnote 1 to the ARPU reconciliation table above), blended ARPU decreased only slightly from the comparative quarter, from $54.67 in 2008 to $54.58 in 2009. In addition to the data ARPU growth, total subscribers increased from approximately 421,300 at March 31, 2008 to approximately 444,500 at March 31, 2009, a 23,200, or 5.5%, net subscriber growth.
The quarter-over-quarter increase in wholesale and roaming revenues was driven by a $4.8 million, or 19.9%, increase in revenue from the Strategic Network Alliance. Additionally, roaming revenues from other carriers grew $0.8 million. Our wholesale revenues derived from the Strategic Network Alliance are primarily from the voice usage by Sprint and Sprint affiliate customers who live in the Strategic Network Alliance service area (home
WIRELINE COMMUNICATIONS REVENUESWireline communications revenues increased $1.2 million, or 3.8%, with revenues from strategic products increasing $1.1 million, or 8.5%, revenues from RLEC increasing $0.3 million, or 1.8%, and other Competitive revenues decreasing $0.2 million, or 5.9%.
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Ntelos Holdings is a leading provider of wireless and wireline communications services to consumers and businesses in Virginia and West Virginia under the Ntelos brand name. It concentrate on providing services to meet the current and future communciations needs of customers and that it believed in representing high growth opportunities. Its wireless operations are composed of an Ntelos branded retail business and a wholesale business that operates under an exclusive contract with Sprint Nextel Corp. NTELOS Holdings Corp. has a market cap of $675.6 million; its shares were traded at around $15.98 with a P/E ratio of 16.3 and P/S ratio of 1.2. The dividend yield of NTELOS Holdings Corp. stocks is 6.5%.
Highlight of Business Operations:
In wireless, our first quarter 2009 gross subscriber additions were over 50,000, a record level of quarterly additions. Our wireless network upgrade to EV-DO and network expansion and improvements from cell site additions in recent years, coupled with a more robust handset offering contributed to these record-level additions. Offsetting this growth, however, was the current economic climate which contributed to slower wireless net subscriber growth as a result of an increase in customer churn in the second half of 2008 and the first quarter of 2009. These higher churn levels are expected to continue throughout the remainder of 2009. Additionally, postpay competition is expected to stiffen as the market gets closer to saturation. Competition with prepaid products also will likely intensify as more competitors target this segment as a means to sustain growth and increase market share. Average monthly revenues per handset/unit in service, or ARPU, from voice is expected to continue to decline due to competitive and economic conditions. However, we anticipate data ARPU will continue to grow and offset the decline in voice ARPU. Our wireless network upgrade to EV-DO has helped increase retail data ARPU by $1.70 over the first quarter of 2008 and $0.86 over the fourth quarter of 2008. Higher handset subsidy costs are expected in 2009 as compared to 2008 due to an expected higher mix of smart phones and data cards associated with the projected growth in data ARPU. During the first quarter of 2009 smart phone and data card sales represented 27% of postpay sales for the quarter, up from 9% in the first quarter of 2008 and 18% in the fourth quarter of 2008. Data ARPU and revenue are expected to grow due to the continued increase in penetration and usage escalating from our EV-DO deployment, however, this upgrade has resulted in a significant increase in network expenses and data cost of sales, both of which are captured in cost of sales and services. The network expenses will increase in 2009 due to having a full year of expenses related to EV-DO markets deployed during 2008 and to new EV-DO deployment in 2009. Capital expenditures associated with the EV-DO upgrade will decrease as a large portion of that upgrade was completed in 2008.Operating income increased $7.5 million over the comparative quarter, from $26.1 million for the quarter ended March 31, 2008 to $33.6 million for the quarter ended March 31, 2009. Operating margin increased from 19.8% for the quarter ended March 31, 2008 to 23.9% for the quarter ended March 31, 2009.
Net income attributable to NTELOS Holdings Corp. increased $8.9 million over the comparative quarter. In addition to the $7.5 million increase in operating income, interest expense decreased $3.5 million and the change in gain/loss on interest rate swap was favorable $4.1 million, improving from a loss of $3.2 million in the first quarter of 2008 to a gain of $0.9 million in the first quarter of 2009. These changes, which served to increase net income, were partially offset by a $0.4 million decrease in other income, consisting primarily of interest income, an increase in income tax expense of $5.6 million and an increase in net income attributable to noncontrolling interests of $0.2 million.
The increase in subscriber revenue reflects increased postpay revenue of $3.4 million, or 6.7%, $3.0 million of which is from growth in data revenue. Offsetting this increase was a decline in prepay revenues of $2.0 million due to lower prepay ARPU brought about by competitive pricing reductions and economic conditions which contributed to subscribers changing to or purchasing lower priced plans. Underlying the 57.1% growth in data revenue was the technology upgrade to EV-DO (deployed to 74% of our cell sites by March 31, 2009), and an increased sales emphasis on smart phones and other data-centric handsets coupled with a richer array of data packages. The total data ARPU for all prepay and postpay products was $8.78 for the first quarter of 2009 compared to $7.08 for the first quarter of 2008, an increase of 24.1%, reflecting the increased take-rate on data packages and increased usage rates. Growth in data ARPU has largely offset declines in voice ARPU resulting from economic and competitive pressure, leading to blended ARPU of $54.58 for the first quarter of 2009, 4.2% below blended ARPU of $56.95 for the first quarter of 2008. Pro forma of the handset insurance reporting change (see footnote 1 to the ARPU reconciliation table above), blended ARPU decreased only slightly from the comparative quarter, from $54.67 in 2008 to $54.58 in 2009. In addition to the data ARPU growth, total subscribers increased from approximately 421,300 at March 31, 2008 to approximately 444,500 at March 31, 2009, a 23,200, or 5.5%, net subscriber growth.
The quarter-over-quarter increase in wholesale and roaming revenues was driven by a $4.8 million, or 19.9%, increase in revenue from the Strategic Network Alliance. Additionally, roaming revenues from other carriers grew $0.8 million. Our wholesale revenues derived from the Strategic Network Alliance are primarily from the voice usage by Sprint and Sprint affiliate customers who live in the Strategic Network Alliance service area (home
WIRELINE COMMUNICATIONS REVENUESWireline communications revenues increased $1.2 million, or 3.8%, with revenues from strategic products increasing $1.1 million, or 8.5%, revenues from RLEC increasing $0.3 million, or 1.8%, and other Competitive revenues decreasing $0.2 million, or 5.9%.
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