NTELOS Holdings Corp. (NTLS, Financial) filed Quarterly Report for the period ended 2009-06-30.
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 $639 million; its shares were traded at around $15.09 with a P/E ratio of 12.7 and P/S ratio of 1.2. The dividend yield of NTELOS Holdings Corp. stocks is 6.8%.
Wireless wholesale revenue was $61.4 million in the first half of 2009; however, effective July 1, 2009, one of the key rate elements will be reset and is expected to be reduced, the impact of which will likely result in total revenue from the Sprint agreement being billed at the $9.0 million monthly minimum for the balance of 2009, the effect of which will slow the rate of growth in operating revenues during the second half of 2009.
Operating revenues increased $9.2 million, or 7.0%, from the three months ended June 30, 2008 to the three months ended June 30, 2009 and increased $17.6 million, or 6.7%, from the six months ended June 30, 2008 to the six months ended June 30, 2009. Wireless PCS accounted for approximately 97% and 92% the respective three- and six-month increases, with growth occurring from retail subscriber revenues, wholesale revenues and equipment sales. Wireline contributed the remaining revenue increases primarily from growth in key strategic product revenues in the Competitive segment.
Operating income increased $5.6 million over the comparative three months, from $29.8 million for the three months ended June 30, 2008 to $35.4 million for the three months ended June 30, 2009. Operating margin increased from 22.8% for the three months ended June 30, 2008 to 25.3% for the three months ended June 30, 2009. Operating income increased $13.0 million over the comparative six months, from $56.0 million for the six months ended June 30, 2008 to $69.0 million for the six months ended June 30, 2009. Operating margin increased from 21.3% for the six months ended June 30, 2008 to 24.6% for the six months ended June 30, 2009. The increases in operating income and the margin expansion for the three- and six-month periods is attributable to the fact that operating expenses only increased 3.6% and 2.2% over the comparative three- and six-month periods, respectively, primarily driven by a decrease in accelerated depreciation as discussed further below.
Net income attributable to NTELOS Holdings Corp. decreased $1.8 million from the comparative three months. Primarily contributing to this decrease was an unfavorable change in gain on interest rate swap of $9.0 million, from a gain of $9.5 million in the three months ended June 30, 2008 to a gain of $0.5 million in the three months ended June 30, 2009, coupled with a $0.5 million decrease in other income, consisting primarily of interest income, and a $0.2 million increase in net income attributable to noncontrolling interests. These changes, which served to decrease net income attributable to NTELOS Holdings Corp., were partially offset by a $5.6 million increase in operating income, a $1.6 million decrease in interest expense and a $0.8 million decrease in income tax expense.
Net income attributable to NTELOS Holdings Corp. increased $7.1 million over the comparative six months. In addition to the $13.0 million increase in operating income, interest expense decreased $5.1 million. These changes, which served to increase net income, were partially offset by a $0.9 million decrease in other income, consisting primarily of interest income, an unfavorable change in gain on interest rate swap of $4.9 million, from a gain of $6.3 million in the six months ended June 30, 2008 to a gain of $1.4 million in the six months ended June 30, 2009, an increase in income tax expense of $4.9 million and an increase in net income attributable to noncontrolling interests of $0.4 million.
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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 $639 million; its shares were traded at around $15.09 with a P/E ratio of 12.7 and P/S ratio of 1.2. The dividend yield of NTELOS Holdings Corp. stocks is 6.8%.
Highlight of Business Operations:
We amended our agreement with Sprint Spectrum L.P. during 2007 to act as their exclusive wholesale provider of network services through July 31, 2015. Under this arrangement, which we refer to as the Strategic Network Alliance, we are the exclusive PCS service provider in our western Virginia and West Virginia service area for all Sprint CDMA wireless customers. For the three months ended June 30, 2009, we realized wholesale revenues of $31.3 million, representing an increase of 26.0% over the three months ended June 30, 2008. Of this total, $30.0 million related to the Strategic Network Alliance. For the six months ended June 30, 2009, we realized wholesale revenues of $61.4 million, representing an increase of 24.3% over the six months ended June 30, 2008. Of this total, $58.7 million related to the Strategic Network Alliance.Wireless wholesale revenue was $61.4 million in the first half of 2009; however, effective July 1, 2009, one of the key rate elements will be reset and is expected to be reduced, the impact of which will likely result in total revenue from the Sprint agreement being billed at the $9.0 million monthly minimum for the balance of 2009, the effect of which will slow the rate of growth in operating revenues during the second half of 2009.
Operating revenues increased $9.2 million, or 7.0%, from the three months ended June 30, 2008 to the three months ended June 30, 2009 and increased $17.6 million, or 6.7%, from the six months ended June 30, 2008 to the six months ended June 30, 2009. Wireless PCS accounted for approximately 97% and 92% the respective three- and six-month increases, with growth occurring from retail subscriber revenues, wholesale revenues and equipment sales. Wireline contributed the remaining revenue increases primarily from growth in key strategic product revenues in the Competitive segment.
Operating income increased $5.6 million over the comparative three months, from $29.8 million for the three months ended June 30, 2008 to $35.4 million for the three months ended June 30, 2009. Operating margin increased from 22.8% for the three months ended June 30, 2008 to 25.3% for the three months ended June 30, 2009. Operating income increased $13.0 million over the comparative six months, from $56.0 million for the six months ended June 30, 2008 to $69.0 million for the six months ended June 30, 2009. Operating margin increased from 21.3% for the six months ended June 30, 2008 to 24.6% for the six months ended June 30, 2009. The increases in operating income and the margin expansion for the three- and six-month periods is attributable to the fact that operating expenses only increased 3.6% and 2.2% over the comparative three- and six-month periods, respectively, primarily driven by a decrease in accelerated depreciation as discussed further below.
Net income attributable to NTELOS Holdings Corp. decreased $1.8 million from the comparative three months. Primarily contributing to this decrease was an unfavorable change in gain on interest rate swap of $9.0 million, from a gain of $9.5 million in the three months ended June 30, 2008 to a gain of $0.5 million in the three months ended June 30, 2009, coupled with a $0.5 million decrease in other income, consisting primarily of interest income, and a $0.2 million increase in net income attributable to noncontrolling interests. These changes, which served to decrease net income attributable to NTELOS Holdings Corp., were partially offset by a $5.6 million increase in operating income, a $1.6 million decrease in interest expense and a $0.8 million decrease in income tax expense.
Net income attributable to NTELOS Holdings Corp. increased $7.1 million over the comparative six months. In addition to the $13.0 million increase in operating income, interest expense decreased $5.1 million. These changes, which served to increase net income, were partially offset by a $0.9 million decrease in other income, consisting primarily of interest income, an unfavorable change in gain on interest rate swap of $4.9 million, from a gain of $6.3 million in the six months ended June 30, 2008 to a gain of $1.4 million in the six months ended June 30, 2009, an increase in income tax expense of $4.9 million and an increase in net income attributable to noncontrolling interests of $0.4 million.
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