NTELOS Holdings Corp. Announces Strategic Refocus

NTELOS Holdings Corp. (NASDAQ: NTLS) (the "Company" or "NTELOS"), a leading regional provider of nationwidewireless voice and data communications and home to the "best value inwireless," announced today several strategic initiatives to refocus on itsWestern Markets.After an extensive review of its operations and in an effort to maximizelong-term shareholder value, the Board of Directors of NTELOS has decided tofocus the Company's business operations exclusively in its Western Markets(West Virginia and western Virginia), where it has experienced strongoperating performance, has a favorable competitive position for its brandedretail offering and benefits operationally and financially from its StrategicNetwork Alliance ("SNA") with Sprint. On May 22, 2014, NTELOS successfullyamended and extended its agreement with Sprint to serve as the exclusivenetwork provider in the SNA territory through the end of 2022.To effect this strategic decision, NTELOS has commenced an orderly exit fromits Eastern Markets (eastern Virginia), which include the operating markets ofHampton Roads/Norfolk and Richmond. As an initial step, NTELOS has enteredinto an agreement to sell its 1900 MHz PCS wireless spectrum licenses coveringthese markets to T-Mobile for approximately $56.0 million in cash. Thetransaction is subject to customary closing conditions, including regulatoryapproval by the Federal Communications Commission, and is expected to close inApril of 2015. In addition, NTELOS will wind down its network and retailoperations in its Eastern Markets over the next year. This is expected toinclude a transition of its subscribers to another carrier.With the exit from the Eastern Markets, the Company intends to strengthen itsWestern Markets' network and operating results with the expansion of 4G LTEservices, improved retail performance and enhanced service capabilities. "Theinitiatives we are announcing today enable us to focus our operations wherethe opportunity is greatest and where we are the most competitive againstother carriers," stated Rod Dir, NTELOS's President and Chief OperatingOfficer. "We look forward to bringing our customers in West Virginia andwestern Virginia a terrific 4G experience."NTELOS will have increased financial flexibility to invest in its WesternMarkets from the cash generated from the wind down of its Eastern Markets andthe elimination of capital expenditures and costs that would otherwise beincurred in future periods in the Eastern Markets. In addition to theseactivities, NTELOS is exploring potential opportunities to monetize othernon-core assets, including the sale of owned towers and undeployed spectrum."In an effort to strengthen our retail sales performance and leverage ourstrategic relationship with Sprint, we are right-sizing our business andredirecting our resources on our Western Markets, which provide us thegreatest opportunity for sustained, profitable growth. At the same time, weare exiting markets that have become increasingly competitive and where wehave been unable to achieve acceptable financial returns," said Michael A.Huber, Chairman of the Board of NTELOS Holdings Corp. "Focusing on our WesternMarkets, where we benefit from a strong branded retail presence and access tomulti-band spectrum in the SNA territory, will allow us to make additionalinvestments to improve the experience of our customers. We believe theseinvestments will enable us to increase our market share, ultimately leading togreater operating efficiency and profitability. The initiatives we announcedtoday improve the strategic coherence of our business as well as enhance ourability to seek opportunities to leverage our strategic assets as we build outour 4G LTE network."The table below provides a brief comparison of the Eastern and WesternMarkets, as of September 30, 2014: Western as % of Category Existing Western Markets ExistingPOPs 8.0 million 4.4 million 55%Covered POPs 6.0 million 3.0 million 50%Retail Subscribers 457,200 277,100 59%FY 2014 YTD SNA Billed Revenue $115.4 million $115.4 million 100%Total Cell Sites 1,446 998 69%Please see the attached table for quarterly subscriber activity for theWestern Markets, beginning with the first quarter of 2013. Eastern Markets Wind Down o NTELOS expects to implement a transition plan for its subscribers in the Eastern Markets over the next 12 months, with a targeted shut down date of November 15, 2015. During this transition period, NTELOS will continue to provide a quality network experience to its subscribers while minimizing discretionary expenditures. o Upon closing of the spectrum transaction, NTELOS will lease back a portion of the spectrum for continued operations. NTELOS is contractually obligated to release all the sold spectrum to the buyer on or before on November 15, 2015. o NTELOS anticipates that it will incur costs of approximately $55.0 million to complete the wind down process, of which approximately $15.0 million is contractually payable between now and the end of 2015. o NTELOS will explore the potential sale of additional Eastern Markets assets prior to the wind down date which may result in incremental proceeds for the Company. Stephens, Inc. and UBS Investment Bank advised the Company on this transactionand will continue to advise the Company as it explores opportunities tomonetize other Eastern Markets assets.Business Outlook The wireless sector in which NTELOS operates is characterized by intensecompetition and has seen increasing promotional activity and price competitionin recent quarters. Although the Company does not expect the overallcompetitive dynamics of the wireless sector to improve, it is reiteratingprevious full year guidance for 2014: o Adjusted EBITDA of between $128.0 million and $132.0 million, and o Capital expenditures of approximately $105.0 million.In addition, for the quarter ended December 31, 2014, the Company expects toincur impairment charges related to certain long-lived assets currently beingutilized in the Eastern Markets and the spectrum being sold.The Company is also providing a preliminary outlook for full year 2015Adjusted EBITDA of between $100.0 million and $108.0 million. This outlookreflects the Company's current view of the competitive retail wireless market,the estimated decline in SNA billed revenue as previously disclosed and therecognition of only a portion of the estimated annual savings associated withthe realignment of the business commensurate with a smaller retail subscriberbase. This range excludes the expected revenue, expenses and one-time chargesrelated to the wind down of the Eastern Markets. Capital expenditures for2015 are expected to be modestly less than 2015 Adjusted EBITDA.Conference CallThe Company will host a conference call with investors and analysts to discussthe transaction today, December 2, 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 forinternational, approximately 10 minutes before the scheduled start of thecall. The conference call and accompanying presentation will also beaccessible live on the Investor Relations section of the Company's website athttp://ir.ntelos.com.An archive of the conference call will be available online athttp://ir.ntelos.com beginning approximately one hour after the call. A replaywill also be available via telephone by dialing 1-877-344-7529, 1-855-669-9658in Canada or 1-412-317-0088 internationally and entering access code 10056862beginning approximately one hour after the call and continuing until December16, 2014.Non-GAAP MeasuresAdjusted EBITDA is defined as net income attributable to NTELOS Holdings Corp.before interest, income taxes, depreciation and amortization, accretion ofasset retirement obligations, transaction related costs, restructuring andasset impairment charges, gain/loss on sale or disposal of assets andderivatives, net income attributable to noncontrolling interests, otherexpenses/income, equity-based compensation charges, separation charges,secondary offering costs, and adjustments for impact of recognizing a portionof the billed SNA contract revenues on a straight line basis.Adjusted EBITDA is a key metric used by investors to determine if the Companyis generating sufficient cash flows to continue to produce shareholder valueand provide liquidity for future growth. Adjusted EBITDA is a non-GAAP financial performance measure. It should not beconsidered in isolation or as an alternative to measures determined inaccordance with accounting principles generally accepted in the United Statesof America ("GAAP"). Please refer to the exhibits and materials posted on theCompany's website for a reconciliation of non-GAAP financial performancemeasures to the most comparable measures reported in accordance with GAAP andfor a discussion of the presentation, comparability and use of such financialperformance measures.