Forward-Looking Statements
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:
Increasing competition in the communications industry; and
A complex and uncertain regulatory environment.
A further list and description of these risks, uncertainties and other factors can be found
in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2008. Copies of this Form 10-K, as well as subsequent filings, 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.
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 effectors 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 business and for budget planning purposes.
0.27
0.80
18.8
36.7
130.4
2007
11.1
0.30
Cash Dividend Per Share
30.0
1.04
Earnings Per Share
29.8
24.4
Total Net Income
24.4
45.6
Operating Income
10.8
144.4
Revenues
Percent
Change
2008
Comparative Results
(in millions, except per share amounts)
Converged Services Operating Losses
in millions
Converged Services and the Triple Play
Business Case for Converged Services
Bundled service provider focused on small/medium
markets in the Mid-Atlantic and southeast
Core competence of Triple Play offering: voice, video
and data
Differentiate service based on tailored offerings,
service quality and excellent customer service
Franchised Cable Model (MSO)
Triple play bundle with opportunity for integrated
services in the future
Local community focus – excellent customer service
and local content
Wireless Capital Expenditures
in millions
North River Telephone Cooperative
Proximity to Shentel
LEC territory
Existing Shentel
fiber south of
Harrisonburg
1,000 access lines
Upgrade to offer
DSL service to all
customers
Long-Term Stock Performance
December 2001 – April 2008
Long-Term Stock Performance
December 2001 – April 2009
Total Return - 5 Years
Earnings Per Share – Net Income
1
1 EPS and Fully Diluted EPS include $0.27 per share as a result of the one time gain related to the liquidation of the Rural Telephone Bank
$0.27
$0.50
Earnings Per Share – Continuing Operations
1
1 EPS and Fully Diluted EPS include $0.27 per share as a result of the one time gain related to the liquidation of the Rural Telephone Bank
Up 26%
$0.27
$0.62
Cash Flows
in millions
2007 2008 Change
Net Cash from Operations $43.7 $50.1 $6.4
Capital Expenditures ($29.1) ($65.5) ($36.4)
Cable TV Acquisition ($10.9) ($10.9)
Borrowings $23.7 $23.7
Debt Repayments ($4.1) ($4.2) ($0.1)
Dividends ($5.8) ($6.5) ($0.7)
Other ($0.9) $1.3 $2.2
Increase in Cash Balance $3.8 ($12.0) ($15.8)
First Quarter 2009 – Revenues
in millions
First Quarter 2009 – Operating Income
First Quarter 2009 – Net Income
in millions
First Quarter 2009 – Earnings per Share
Sale of Converged Services
Change in competitive environment
Regulatory issues
Difficulty of reaching scale
Shrinking video margins
Increasing internet capacity demand and
decreasing margins
PCS Subscriber Growth
Customer Additions
in thousands
Capital Expenditures – Wireless
in millions
# Cell Sites 332 346 411 478
% Covered POPs 77% 79% 85% 89%
# EVDO Sites 0 52 211 318
EVDO % Covered POPs N/A 27% 86% 92%
Other
Capacity
Coverage
EVDO
Mobile
Why Large Increase in Wireless Construction?
Keep ahead of capacity requirements
Continue to roll out high speed data (EVDO)
Coverage issues in Central PA
Sprint
Our relationship is still positive but affiliates not
a priority
Significant staff reductions
Still losing customers but at a slower rate
Improved customer service indexes
Focusing on price advantage over Verizon and
AT&T
Playing defense rather than offense
Internet Services Customers
in thousands
1
2
1 DSL only available within LEC area
2 Dial-up offered inside and outside the LEC area
Internet Services Revenues
in millions
DSL
1
Dial-up
2
1 DSL only available within LEC area
2 Dial-up offered inside and outside the LEC area
Cable TV Subscribers
in thousands
1 Includes Rapid Communications acquisition – December 2008
1
Digital
Basic
Rapid Cable Acquisition
December 2008
Alleghany County Virginia and throughout West
Virginia
17,000 subscribers and 44,000 homes passed
$10,000,000 purchase price or $590 per
subscriber
$25,000,000 system upgrades primarily in
2009
Cable TV Overview
Complimentary (with LEC business)
Offensive positioning (Outside ILEC)
60,000 homes passed
One-way now, two-way in 2009/2010
Year end 2009 – HD, DVR, VOD, Internet, Voice