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NTELOS Holdings Corp. Reports Second Quarter 2014 Results

Companies mentioned in this article: NTELOS Holdings Corp.

WAYNESBORO, Va., July 28, 2014 /PRNewswire/ -- NTELOS Holdings Corp. (the "Company," NASDAQ: NTLS), a leading regional provider of nationwide wireless voice and data communications and home to the "best value in wireless," announced today operating and financial results for its second quarter ended June 30, 2014.

Second Quarter 2014 Highlights

    --  Extended and amended Strategic Network Alliance ("SNA") with Sprint
        until December 2022;
    --  Launched 4G LTE in Richmond and Norfolk metropolitan markets, providing
        coverage of 2.8 million POPs as of June 30, 2014;
    --  Operating revenues were $117.8 million for the second quarter 2014;
        compared to $119.9 million for the second quarter 2013; and
    --  Adjusted EBITDA was $34.4 million for the second quarter 2014, compared
        to $41.2 million for the second quarter 2013.

"The successful extension and expansion of our SNA with Sprint during the quarter marked a significant milestone for nTelos. We are pleased with this outcome as it paves the way for nTelos to build the most robust network in our footprint and to deliver an improved user experience to our retail and wholesale customers," said Michael A. Huber, Chairman of the Board of NTELOS Holdings Corp.

Subscriber Highlights

Total Subscribers

    --  Total subscribers were 458,100 as of June 30, 2014, compared to 454,800
        for the same period of 2013;
    --  Total subscriber gross additions for the second quarter 2014 were
        39,000, compared to 40,100 for the same period of 2013; and
    --  Total net subscriber additions for the second quarter 2014 were 400,
        compared to 3,800 for the same period of 2013.

Postpay Subscribers

    --  Postpay subscriber gross additions for the second quarter 2014 were
        20,400, compared to 16,300 for the second quarter 2013 and 20,200 for
        the first quarter 2014;
    --  Net postpay subscriber additions were 3,300 for the second quarter 2014,
        compared to 200 for the second quarter 2013 and 300 for the first
        quarter 2014;
    --  Postpay churn for the second quarter 2014 was 1.8%, compared to 1.8% for
        the second quarter 2013;
    --  ARPA increased 2.9% to $137.20 for the second quarter 2014, compared to
        $133.34 for the same period in 2013; and
    --  As of June 30, 2014, total postpay subscribers were 308,200.

Prepay Subscribers

    --  Prepay subscriber gross additions for the second quarter 2014 were
        18,600, compared to 23,800 for the second quarter 2013 and 25,200 for
        the first quarter 2014;
    --  Net prepay subscriber additions (losses) were (2,900) for the second
        quarter 2014, compared to 3,600 for the second quarter 2013 and 3,100
        for the first quarter 2014;
    --  Prepay churn for the second quarter 2014 was 4.5%, compared to 4.4% for
        the second quarter 2013; and
    --  As of June 30, 2014, total prepay subscribers were 149,900.

"During the quarter, we delivered solid results in an increasingly competitive operating environment. We will continue to make strategic investments in the business to improve our operations and to drive increased shareholder value," said Stebbins B. Chandor, EVP & Chief Financial Officer of NTELOS Holdings Corp.

Net Income
Net income after net income attributable to noncontrolling interests was $0.5 million, or $0.02 per diluted share, for the first quarter 2014, compared to $9.4 million, or $0.43 per diluted share, for the second quarter 2013.

Business Outlook
For the year ending December 31, 2014, the Company reiterates its full year 2014 Adjusted EBITDA guidance of between $128.0 million and $135.0 million and full year 2014 capital expenditures guidance of between $110.0 million and $120.0 million.

Conference Call
The Company will host a conference call with investors and analysts to discuss its second quarter 2014 results this morning, July 28, 2014, at 8:00 a.m. ET. To participate, please dial 1-888-317-6002, 1-855-669-9657 in Canada and 1-412-317-1083 for international, approximately 10 minutes before the scheduled start of the call. The conference call and accompanying presentation will also be accessible live on the Investor Relations section of the Company's website at http://ir.ntelos.com.

An archive of the conference call will be available online at http://ir.ntelos.com beginning approximately one hour after the call. A replay will also be available via telephone by dialing 1-877-344-7529, 1-855-669-9658 in Canada or 1-412-317-0088 internationally and entering access code 10049798 beginning approximately one hour after the call and continuing until August 12, 2014.

Non-GAAP Measures
Adjusted EBITDA is defined as net income attributable to NTELOS Holdings Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, gain/loss on sale of assets and derivatives, net income attributable to noncontrolling interests, other expenses/income, equity-based compensation charges, separation charges, secondary offering costs, net loss from discontinued operations, adjustments for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis and acquisition related charges.

ARPA, or average monthly revenue per account, is computed by dividing service revenues per period by the average number of accounts during that period. Please see the footnotes in the exhibits for a complete definition of this measure.

Adjusted EBITDA is a key metric used by investors to determine if the Company is generating sufficient cash flows to continue to produce shareholder value and provide liquidity for future growth. ARPA provides management with useful information concerning the appeal of the Company's postpay rate plans and service offerings and the Company's performance in attracting and retaining high value customers.

Adjusted EBITDA and ARPA are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Please refer to the exhibits and materials posted on the Company's website for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with GAAP and for a discussion of the presentation, comparability and use of such financial performance measures.

During the quarter, the Company terminated approximately 2,100 postpay subscribers that repeatedly exceeded their terms and conditions relating to permitted usage. Additionally, the Company changed its business rules related to reporting of long-term, non-revenue producing prepay subscribers. This change resulted in approximately 8,200 prepay subscribers being excluded from our ending subscriber base. The impact of these Company-initiated terminations and change in business rules is reflected in the ending subscriber totals as of June 30, 2014 and is not reflected in our disconnections, net additions and churn calculations for the periods ended June 30, 2014.

About NTELOS
NTELOS Holdings Corp. (NTLS), operating through its subsidiaries as "nTelos Wireless," is headquartered in Waynesboro, VA, and provides high-speed, dependable nationwide voice and data coverage for approximately 458,100 retail subscribers based in Virginia, West Virginia and portions of Maryland, North Carolina, Pennsylvania, Ohio and Kentucky. The Company's licensed territories have a total population of approximately 8.0 million residents, of which its wireless network covers approximately 6.0 million residents. The Company is also the exclusive wholesale provider of network services to Sprint Corporation in the western Virginia and West Virginia portions of its territories for all Sprint CDMA and LTE wireless customers.

FORWARD-LOOKING STATEMENTS
Any statements contained in this press release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. The words "anticipates," "believes," "expects," "intends," "plans," "estimates," "targets," "projects," "should," "may," "will" and similar words and expressions are intended to identify forward-looking statements. Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise. There are important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements. We advise the reader to review in detail the cautionary statements and risk factors included in our SEC filings, including our most recent Annual Report filed on Form 10-K.

Exhibits:

    --  Condensed Consolidated Balance Sheets
    --  Condensed Consolidated Statements of Income
    --  Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to
        Adjusted EBITDA
    --  Key Metrics
    --  ARPA Reconciliation - Postpay

Investor Relations Contacts:

Jeffrey Goldberger / Rob Fink
KCSA Strategic Communications
P: 212-896-1249 / 212-896-1206
Email: jgoldberger@kcsa.com / rfink@kcsa.com


    NTELOS Holdings Corp.
    ---------------------

    Condensed Consolidated Balance
     Sheets                                          (Unaudited)        (Unaudited)

                                                  June 30, 2014  December 31, 2013
                                                  -------------  -----------------

    (In thousands)


                                   ASSETS

    Current Assets

                       Cash                            $108,340             $88,441

                       Restricted cash                    2,167               2,167

                        Accounts
                        receivable,
                        net                              41,947              37,740

                        Inventories and
                        supplies                         15,501              23,962

                        Deferred income
                        taxes                             8,970              10,650

                        Prepaid
                        expenses and
                        other current
                        assets                           18,819              20,808

                                                        195,744             183,768
                                                        -------             -------


    Securities and Investments                          1,499               1,499


    Property, Plant and Equipment, net                320,795             319,376


    Intangible Assets

                       Goodwill                          63,700              63,700

                        Radio spectrum
                        licenses                        131,838             131,834

                       Customer
                        relationships
                        and
                        trademarks,
                        net                               5,479               6,985


    Deferred Charges and Other Assets                  11,117               9,089


    Total Assets                                     $730,172            $716,251
                                                     ========            ========



                           LIABILITIES AND EQUITY

    Current Liabilities

                        Current portion
                        of long-term
                        debt                             $5,835              $5,410

                        Accounts
                        payable                          21,812              33,677

                        Dividends
                        payable                           9,104               9,034

                        Accrued
                        expenses and
                        other current
                        liabilities                      32,318              31,389

                                                         69,069              79,510
                                                         ------              ------


    Long-Term Debt                                    521,978             484,956


    Other Long-Term Liabilities                       109,716             107,992


    Equity                                             29,409              43,793


    Total Liabilities and Equity                     $730,172            $716,251
                                                     ========            ========


    NTELOS Holdings Corp.
    ---------------------

    Condensed Consolidated Statements of Income                                                                                Three Months Ended                                  Six Months Ended
    -------------------------------------------                                                                                ------------------                                  ----------------

                                                                                                                                  (Unaudited)                                         (Unaudited)

    (In thousands, except per share amounts)                                                                June 30, 2014 June 30, 2013                      June 30, 2014   June 30, 2013
    ---------------------------------------                                                                 ------------- -------------                      -------------   -------------


    Operating Revenues                                                                                           $117,795       $119,859                            $239,877         $239,204


    Operating Expenses

                                                              Cost of sales and services                                         47,439               42,567                          94,763               87,102

                                                              Customer operations                                                31,329               29,977                          65,420               60,931

                                                              Corporate operations                                                9,194                7,760                          18,931               15,664

                                                              Depreciation and amortization                                      19,929               20,443                          38,996               38,899

                                                              Gain on sale of intangible assets                                       -             (4,442)                              -             (4,442)

                                                                                                                              107,891               96,305                         218,110              198,154
                                                                                                                              -------               ------                         -------              -------


    Operating Income                                                                                                            9,904               23,554                          21,767               41,050


    Other Expense

                                                              Interest expense                                                  (8,315)             (7,398)                       (16,274)            (14,759)

                                                              Other income (expense), net                                          (92)                 151                         (1,164)               (218)
                                                                                                                                 ----                  ---                                               -----

                                                                                                                              (8,407)             (7,247)                       (17,438)            (14,977)
                                                                                                                               ------               ------                         -------              -------


    Income before Income Taxes                                                                                                  1,497               16,307                           4,329               26,073


    Income Taxes                                                                                                                  640                6,380                           1,750               10,124
                                                                                                                                  ---                -----                           -----               ------

    Net Income                                                                                                                    857                9,927                           2,579               15,949


    Net Income Attributable to Noncontrolling Interests                                                                         (373)               (541)                          (809)             (1,070)


    Net Income Attributable to NTELOS Holdings Corp.                                                                 $484         $9,386                              $1,770          $14,879
                                                                                                                     ====         ======                              ======          =======



    Earnings per Share Attributable to NTELOS Holdings Corp.:


                                                              Basic                                                               $0.02                $0.45                           $0.08                $0.71
                                                              =====                                                               =====                                               =====

                                                              Weighted average shares outstanding - basic                        21,099               21,027                          21,090               20,962
                                                                                                                               ======               ======                                              ======


                                                              Diluted                                                             $0.02                $0.43                           $0.08                $0.69

                                                              Weighted average shares outstanding - diluted                      22,039               21,779                          22,037               21,613
                                                                                                                               ======               ======                                              ======


    Cash Dividends Declared per Share - Common Stock                                                                $0.42          $0.42                               $0.84            $0.84
                                                                                                                    =====          =====                               =====            =====


    NTELOS Holdings Corp.
    ---------------------

    Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA

    (In thousands)
    -------------

                                                                                                              Three Months Ended                                              Six Months Ended
                                                                                                             ------------------                                              ----------------

                                                                                                                                 June 30, 2014                                                  June 30, 2013  June 30, 2014   June 30, 2013
                                                                                                                                 -------------                                                  -------------  -------------   -------------

                           Net income attributable to NTELOS Holdings Corp.                                                               $484                                                          $9,386          $1,770          $14,879

                           Net income attributable to noncontrolling interests                                                             373                                                             541             809            1,070
                                                                                                                                           ---                                                             ---             ---            -----

                           Net income                                                                                                     $857                                                          $9,927          $2,579          $15,949


                           Interest expense                                                                                              8,315                                                           7,398          16,274           14,759

                           Income taxes                                                                                                    640                                                           6,380           1,750           10,124

                           Other expense (income), net                                                                                      92                                                           (151)          1,164              218
                           ---------------------------                                                                                     ---                                                            ----           -----              ---

                           Operating income                                                                                             $9,904                                                         $23,554         $21,767          $41,050


                           Depreciation and amortization                                                                                19,929                                                          20,443          38,996           38,899

                           Gain on sale of intangible assets                                                                                 -                                                        (4,442)              -         (4,442)

                           Accretion of asset retirement obligations                                                                       331                                                             173             646              316

                           Equity-based compensation                                                                                     1,283                                                           1,460           2,594            2,781

                           SNA straight-line adjustment (1)                                                                              2,043                                                               -          2,043                -

                           Other (2)                                                                                                       874                                                               -          2,241                -
                           --------                                                                                                        ---                                                             ---          -----              ---

                           Adjusted EBITDA                                                                                             $34,364                                                         $41,188         $68,287          $78,604
                                                                                                                                       =======                                                         =======         =======          =======


                                                                                          (1) Adjustment for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis.

                                                                                          (2) Other includes legal and advisory fees related to new Sprint agreement and certain employee

                           separation charges.


    NTELOS Holdings Corp.
    ---------------------

    Key Metrics                                                                                                                                                                                                Six Months Ended
    -----------                                                                                                                                                                                                ----------------

                                                                                Quarter Ended:                                         6/30/2013            9/30/2013  12/31/2013   3/31/2014    6/30/2014                   6/30/2013      6/30/2014
                                                                                --------------                                         ---------            ---------  ----------   ---------    ---------                   ---------      ---------

    Subscribers
    -----------

                    Beginning Subscribers                                                                                                451,000               454,800      457,100      464,600       468,000                      439,600         464,600

                                                                                       Postpay                                           299,700               298,700      298,000      306,700       306,800                      297,400         306,700

                                                                                        Prepay                                           151,300               156,100      159,100      157,900       161,200                      142,200         157,900


                    Gross Additions                                                                                                       40,100                44,500       50,800       45,400        39,000                       88,600          84,400

                                                                                       Postpay                                            16,300                20,000       28,700       20,200        20,400                       36,500          40,600

                                                                                        Prepay                                            23,800                24,500       22,100       25,200        18,600                       52,100          43,800


                    Disconnections (1)                                                                                                    36,300                42,200       43,300       42,000        38,600                       73,400          80,600

                                                                                       Postpay                                            16,100                19,600       19,800       19,900        17,100                       33,000          37,000

                                                                                        Prepay                                            20,200                22,600       23,500       22,100        21,500                       40,400          43,600


                    Net Additions (Losses) (1)                                                                                             3,800                 2,300        7,500        3,400           400                       15,200           3,800

                                                                                       Postpay                                               200                   400        8,900          300         3,300                        3,500           3,600

                                                                                        Prepay                                             3,600                 1,900      (1,400)       3,100       (2,900)                      11,700             200


                    Ending Subscribers (1)                                                                                               454,800               457,100      464,600      468,000       458,100                      454,800         458,100

                                                                                       Postpay                                           298,700               298,000      306,700      306,800       308,200                      298,700         308,200

                                                                                        Prepay                                           156,100               159,100      157,900      161,200       149,900                      156,100         149,900


                    Churn, net (1)                                                                                                          2.7%                 3.1%        3.1%        3.0%         2.8%                        2.7%           2.9%

                                                                                       Postpay                                              1.8%                 2.2%        2.2%        2.2%         1.8%                        1.8%           2.0%

                                                                                        Prepay                                              4.4%                 4.8%        4.9%        4.6%         4.5%                        4.5%           4.6%



    Other Items
    -----------


                    ARPA Statistics
                    ---------------


                    ARPA                                                                                                                 $133.34               $136.90      $136.88      $137.47       $137.20                      $132.01         $137.34

                    Ending Postpay Accounts                                                                                              141,400               140,200      141,200      138,400       140,500                      141,400         140,500

                    Postpay Subscribers per Account                                                                                          2.1                   2.1          2.2          2.2           2.2                          2.1             2.2


                    Strategic Network Alliance Revenues (000's)(2)
                    ---------------------------------------------


                    Billed Revenue                                                                                                       $39,607               $48,644      $39,326      $39,284       $37,997                      $79,759         $77,281

                    Straight-Line Adjustment                                                                                                   -                    -           -           -      (2,043)                           -        (2,043)

                    Spectrum Lease Consideration                                                                                               -                    -           -           -          822                            -            822

                    SNA Revenues - As Reported                                                                                           $39,607               $48,644      $39,326      $39,284       $36,776                      $79,759         $76,060
                                                                                                                                                            =======      =======      =======       =======                                     =======


                    Network Statistics
                    ------------------


                    Licensed Population (millions)                                                                                           7.9                   7.9          8.0          8.0           8.0                          7.9             8.0

                    Covered Population (millions)                                                                                            6.0                   6.0          6.0          6.0           6.0                          6.0             6.0

                    Total Cell Sites                                                                                                       1,432                 1,434        1,444        1,444         1,445                        1,432           1,445



    (1)              During the quarter, the Company terminated approximately 2,100 postpay subscribers that repeatedly exceeded their terms and conditions
                     relating to permitted usage. Additionally, the Company changed its business rules related to reporting of long-term, non-revenue
                     prepay subscribers.  This change resulted in approximately 8,200 prepay subscribers being excluded from our ending subscriber base.
                     The impact of these Company-initiated terminations and change in business rules is reflected in our ending subscriber totals as of
                     June 30, 2014, and is not reflected in our disconnections, net additions and churn calculations for the periods ended June 30, 2014.


    (2)              Effective 5/1/14, SNA Revenues include the impact of recognizing the fixed fee element of SNA contract revenues on a straightline
                     basis, which is a reduction of billed revenue, and the non-cash consideration attributable to spectrum lease.  We have recognized an
                     equal charge for spectrum lease expense within cost of sales and services.


    NTELOS Holdings Corp.
    ---------------------

    ARPA Reconciliation - Postpay                  Three Months Ended              Six Months Ended
    -----------------------------                  ------------------              ----------------

    Average Monthly Revenue per Account (ARPA) (1)                   June 30, 2014                  June 30, 2013  June 30, 2014   June 30, 2013
    ---------------------------------------------                    -------------                  -------------  -------------   -------------

    (In thousands, except for accounts and ARPA)


    Operating revenues                                                    $117,795                        $119,859        $239,877         $239,204

    Less:  prepay service revenues                                        (16,206)                       (16,182)       (33,166)        (31,866)

    Less: equipment revenues                                               (6,560)                        (5,499)       (14,051)        (12,137)

    Less: wholesale and other adjustments                                 (37,900)                       (41,179)       (77,918)        (82,097)

     Postpay service revenues                                              $57,129                         $56,999        $114,742         $113,104


    Average number of postpay accounts                                     138,800                         142,500         139,200          142,800

     Postpay ARPA                                                          $137.20                         $133.34         $137.34          $132.01
     ============                                                          =======                         =======         =======          =======

         (1)    Average
                 monthly
                 revenue per
                 account
                 (ARPA) is
                 computed by
                 dividing
                 postpay
                 service
                 revenues per
                 period by
                 the average
                 number of
                 postpay
                 accounts
                 during that
                 period. ARPA
                 as defined
                 may not be
                 similar to
                 ARPA
                 measures of
                 other
                 companies,
                 is not a
                 measurement
                 under GAAP
                 and should
                 be
                 considered
                 in addition
                 to, but not
                 as a
                 substitute
                 for, the
                 information
                 contained in
                 the
                 Company's
                 consolidated
                 statements
                 of
                 operations.
                 The Company
                 closely
                 monitors the
                 effects of
                 new rate
                 plans and
                 service
                 offerings on
                 ARPA in
                 order to
                 determine
                 their
                 effectiveness.
                  ARPA
                  provides
                 management
                 useful
                 information
                 concerning
                 the appeal
                 of NTELOS
                 rate plans
                 and service
                 offerings
                 and the
                 Company's
                 performance
                 in
                 attracting
                 and
                 retaining
                 high-value
                 customers.

SOURCE NTELOS Holdings Corp.