Shentel reports growth in earnings
Posted 29 April 2016 12:00 AM by julia
Shenandoah Telecommunications Company (“Shentel”) (NASDAQ: SHEN) announces financial and operating results for the three months ended March 31, 2016.
Consolidated First Quarter Results
For the quarter ended March 31, 2016, net income increased 35% to $13.9 million, compared to $10.3 million in the first quarter of 2015, primarily due to growth in the cable and Wireline segments and incremental tax benefits resulting from the adoption of new accounting guidance related to stock compensation transactions. Operating income was $21.3 million, an increase of 15.0% from the same quarter last year.
Adjusted OIBDA (Operating Income Before Depreciation and Amortization) increased 12.8% to $40.4 million in the first quarter of 2016 from $35.8 million in the first quarter of 2015. Total revenues were $92.6 million, an increase of 9.8% compared to $84.3 million for the 2015 first quarter and a 6% increase sequentially compared to fourth quarter 2015. Cable segment revenues increased due to an increase in subscribers and Revenue Generating Units (RGUs), video price increases to offset increases in programming costs, as well as improved product mix with customers selecting higher-speed data packages. Wireless revenues increased related to a reduction in postpaid fees retained by Sprint and improved customer mix for higher rate services in the pre-paid business. Wireline segment revenues increased due to higher fiber lease revenues, as well as higher internet service fees as customers upgraded their services. Total operating expenses were $71.3 million in the first quarter of 2016 compared to $65.8 million in the prior year period.
On April 15, the Company announced that it has received FCC approval for its acquisition of NTELOS Holdings Corp. With this approval, all regulatory reviews of the series of agreements between Shentel and Sprint and Shentel’s acquisition of NTELOS have been completed. Shentel anticipates that the transaction will close within the next few weeks, subject to the remaining closing conditions.
President and CEO Christopher E. French commented, “We’re pleased to have begun 2016 with solid first quarter results, achieving revenue growth across all of our segments, enhanced profitability and increased OIBDA. We saw customer growth in our cable, wireline and postpaid wireless businesses, reflecting the appeal of our state-of-the-art cable and wireless networks, whose consistent coverage and high speed access provide a competitive advantage in our established markets.”
“Additionally, as previously announced earlier this month, we received FCC approval of our acquisition of NTELOS and the related Sprint transactions. With this final regulatory approval, we look forward to closing the merger and bringing together these two companies. In addition to doubling Shentel’s wireless customer base, the combined company will have an enhanced presence in the Mid-Atlantic region, with a significantly increased footprint. We look forward to welcoming NTELOS employees to the Shentel team and to serving the new customers we’ll gain from the acquisition.”
First quarter wireless service revenues increased $3.8 million or 7.9% primarily related to a reduction in the postpaid fees retained by Sprint and to an increase in revenues from pre-paid customers selecting higher rate services. In line with the rest of the wireless industry, the Company experienced continued reductions in postpaid billed revenues as a result of postpaid customers selecting lower-priced service plans associated with leasing and installment billing programs for handsets.
During the first quarter of 2016, net postpaid subscriber additions were 2,719 as compared to 3,211 net postpaid subscriber additions in the first quarter of 2015. Net prepaid subscribers declined by 301 during first quarter 2016, compared to 2,621 added in the first quarter of 2015.
First quarter adjusted OIBDA in the Wireless segment was $28.7 million, an increase of 4.5% from the first quarter of 2015.
“Monthly service fees and handset subsidy costs in the wireless segment have continued to decline as customers select lower revenue service plans related to handset financing and leasing plans,” Mr. French stated. “We benefited from a reduction in Sprint’s fees and the strength and versatility of our network, as pre-paid customers selected higher rate packages.”
Revenue generating units totaled 131,527 at March 31, 2016, an increase of 6.6% over March 31, 2015. The March 31st RGU count includes approximately 5,000 RGSs from the Jan. 1 acquisition of Colane Cable, and approximately 300 video losses as a result of the Company no longer offering the AMC channels.
Adjusted OIBDA in the Cable segment for first quarter 2016 was $7.0 million, up 38.6% from $5.1 million in the first quarter of 2015.
Mr. French stated, “With our enhanced product offerings and service capabilities, we are well positioned to attract customers who expect more from their broadband provider. In addition to providing an attractive alternative for new customers, we are also seeing our existing customers increasing their services selection and transitioning to upgraded monthly subscription plans.”
Adjusted OIBDA for the Wireline segment for first quarter 2016 was $8.3 million, as compared to $6.9 million in first quarter 2015.
Capital expenditures were $20.5 million in the first quarter of 2016 compared to $9.5 million in the comparable 2015 period. Cash and cash equivalents as of March 31, 2016 were $89.2 million, compared to $76.8 million at December 31, 2015. Total outstanding debt at March 31, 2016 totaled $194.0 million, net of unamortized loan costs, compared to $199.7 million as of December 31, 2015. At March 31, 2016, debt as a percent of total assets was 30.8%. The amount available to the Company through its revolver facility was $50 million.
“We believe our solid balance sheet positions us well for the continued growth of our customer base, as well as enabling us to increase our capabilities and enhance our service offerings. We look forward to completing the NTELOS acquisition and to expanding our operations to include additional customers and new markets. With the close of this deal, Shentel will be positioned as one of the top six public wireless providers in the United States,” Mr. French concluded.
About Shenandoah Telecommunications
Shenandoah Telecommunications Company (Shentel) provides a broad range of diversified communications services through its high speed, state-of-the-art network to customers in the Mid-Atlantic United States. The Company’s services include: wireless voice and data; cable video, internet and voice; fiber network and services; and local and long distance telephone. Shentel is the exclusive personal communications service (“PCS”) Affiliate of Sprint in portions of Pennsylvania, Maryland, Virginia and West Virginia. For more information, please visit www.shentel.com.
This release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of unforeseen factors. A discussion of factors that may cause actual results to differ from management's projections, forecasts, estimates and expectations is available in the Company’s filings with the SEC. Those factors may include changes in general economic conditions, increases in costs, changes in regulation and other competitive factors.