UPDATE: Jefferies Initiates Coverage on NTELOS Holdings Corp. with Hold Rating, $14 PT on Possible Sprint Deal

In a report published Wednesday, Jefferies analyst Thomas Seitz initiated coverage on NTELOS Holdings Corp.

with a Hold rating and $14.00 price target. In the report, Seitz noted, “NTELOS is a regional facilities-based wireless provider in Virginia and West Virginia with 8M licensed POPs, 6M covered POPs, 440k post- and pre-paid subscribers, and 350M MHz-POPs of licensed spectrum, primarily in the PCS and AWS bands. In its markets, it also provides roaming coverage for Sprint on a wholesale basis – the current agreement expires in 2015. Sprint has PCS licenses covering NTLS' footprint, but has not deployed its network in these markets to date. Given the terrain and the demographics, especially in West Virginia, NTLS faces limited competition – only Verizon and AT&T have built their networks in NTLS' markets. While the relationship with Sprint remains a key investor concern, we believe overbuilding Ntelos' markets may not be an overbearing concern for Sprint management just yet. In our view, Sprint is more likely to focus on expanding and deepening coverage in the rest of the country where it currently has limited LTE, if at all. Over the longer term, we believe NTLS could be a tuck-in acquisition for Sprint; however, the valuation could be impacted if the market expects Sprint to build rather than buy.” NTELOS Holdings Corp. closed on Tuesday at $14.28.