NTELOS (NTLS) Revises FY09 Outlook; Provides Selected Q1 Results

April 20, 2009 8:50 AM EDT

NTELOS Holdings Corp. (NASDAQ: NTLS) today announced revised 2009 financial guidance and selected Q1 results:

• Wireless wholesale revenue projections revised for the first half of 2009 to reflect corrected Sprint usage information
  
• Changes to guidance also reflect recent operating trends, the current economic environment and implementation of cost saving initiatives
  
• Strong wireless data usage continues to be the primary driver of growth. For the first quarter, smartphones and aircards represented a record 26% of postpay gross adds
  
• Management affirms prior guidance for 2009 free cash flow growth of 25%-35%
  
• Quarterly dividend rates unaffected by updated guidance

The revised guidance reflects the recent correction by NTELOS of billing information used by the Company related to its Strategic Network Alliance agreement with Sprint Nextel, recent trends in the business, and management's expectations for the remainder of 2009 in light of the current economic conditions. The Company has taken initiatives to offset the impact of these elements, and the revised guidance reflects these initiatives as well.

Changes to Sprint-related revenue include the discovery that portions of usage by Sprint customers had been incorrectly classified in the Company’s billing process, for Sprint billing only. Wireless wholesale revenue was overstated by approximately $3.9 million, or 0.7% of previously reported consolidated revenue, in 2008, which is not considered material. In addition, guidance for the first six months of 2009 reflected this overstated trend, which has now been adjusted in the updated guidance. As previously reported, Sprint-related revenues for the second half of 2009 are expected to be at the $9 million monthly minimum due to the July 1, 2009 travel data rate reset provided for in the Sprint agreement.

NTELOS now expects 2009 consolidated operating revenues to be between $562 million and $571 million. Wireless operating revenues are expected to be between $438 million and $444 million, with total wireless wholesale and roaming revenues of $116 million to $118 million. Total wireline operating revenues are expected to be between $124 million and $127 million. Operating income is expected to be between $123 million and $134 million and net income is expected to be between $59 million and $67 million. Consolidated adjusted EBITDA is now expected to be between $230 million and $236 million. Wireless adjusted EBITDA is now expected to be between $167 million and $171 million and wireline adjusted EBITDA is now expected to be between $69 million and $71 million.

Consolidated capital expenditures for 2009 are expected to be between $109 million and $115 million. Wireless capital expenditures are expected to be between $58 million and $62 million; Wireline between $32 million and $34 million; and Other to be approximately $19 million.

Using the midpoints of these new guidance ranges, 2009 operating income is projected to be 11% over 2008; Net income to be 40% over 2008; and free cash flow to be more than 33% over 2008 free cash flow.

The Company currently estimates that the impact of the Sprint correction for 2008 financial results will be a reduction of wireless wholesale revenues and adjusted EBITDA of $3.9 million ($2.4 million after tax, or $0.06 per share). Quarterly for 2008, this amount is estimated to be $0.2 million, $0.9 million and $2.8 million in second, third and fourth quarters 2008, respectively. Revised 2008 consolidated operating revenues are estimated to be $535.9 million, operating income to be $115.6 million, net income to be $44.8 million, and basic and diluted earnings per share to be $1.07 and $1.06, respectively. Revised 2008 consolidated adjusted EBITDA is estimated to be $223.2 million. The final impact for 2008 will be reflected for comparative purposes through revisions to 2008 results in subsequent quarterly releases and filings.

The Company’s compliance with its financial covenants or its ability to continue the payment of dividends is not affected by these matters.

Selected First Quarter 2009 Results

Wireless gross subscriber additions for first quarter 2009 were 50,426, up 7% from 46,953 in first quarter 2008. Postpay gross subscriber additions, which generally represent higher-paying customers with long-term contracts, were 23,205 for first quarter 2009, an increase of 34% over the prior year. Smartphone and air card sales for the quarter represented 26% of postpay sales.

Total wireless monthly subscriber churn was 3.1% for the first quarter 2009, slightly improved from the previous quarter. Postpay churn for the quarter was 2.2%, slightly higher than the previous quarter. Net wireless subscriber additions for first quarter 2009 were 9,467. Postpay growth for first quarter 2009 was 3,261, or 34% of the total, compared to 12% of the total for first quarter 2008.

Total long-term debt at March 31, 2009 was approximately $606.5 million, with cash and cash equivalents of approximately $65.6 million.

Wireless wholesale revenues derived from the Strategic Network Alliance Agreement with Sprint were approximately $28.8 million for first quarter 2009 compared to approximately $24.0 million for first quarter 2008.

NTELOS expects to announce final first quarter 2009 financial results on April 30, 2009 and to host a conference call the following morning, May 1, 2009, to discuss operating results for the quarter and changes to 2009 company guidance.

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