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Sprint to Overbuild on nTelos


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FBR: Sprint to overbuild capacity in NTELOS territory; NTELOS dives • 10:17 AM

 

FBR's checks indicate Sprint (S +0.6%), flush with SoftBank cash and ramping 4G capex, plans to "overbuild" capacity in territory now covered by a wholesale agreement with Virginia-based regional carrier NTELOS (NTLS -10.6%), unless a "material expense reduction" is negotiated.

As a result, FBR, which has named NTELOS a top short, sees the company's Sprint-related revenue diving to $82.9M in 2015, and $26.6M in 2016. NTELOS' 2012 Wholesale & Other revenue (mostly Sprint-related) totaled $168.9M (+17% Y/Y).

That, in turn, leads FBR to think NTELOS could break its 5:1 leverage covenant ratio by the end of Q3 2015.

Wells Fargo previously noted that while Sprint's current deal with NTELOS lasts until July '15, Sprint can overbuild starting in 2014.

Hedge fund manager Mike Bergen estimates at least 75% of NTELOS' EBITDA, and perhaps over 100% of its free cash flow, comes from Sprint. He also thinks the company's spectrum is of little value.

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It's called leverage. The story says plans are in place unless "a material expense reduction is negotiated." It's called playing hardball.  NTelos and Sprint have been in a contract spat for about a year now regarding how much nTelos is supposed to pay to sprint.  They've also been very reluctant to commit to upgrading their network. I guess we'll see if nTelos blinks.

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It's called leverage. The story says plans are in place unless "a material expense reduction is negotiated." It's called playing hardball. NTelos and Sprint have been in a contract spat for about a year now regarding how much nTelos is supposed to pay to sprint. They've also been very reluctant to commit to upgrading their network. I guess we'll see if nTelos blinks.

Agreed. This is just like Sprint did with Clearwire back in October 2011. nTelos is bankrupt without Sprint. And Sprint is shooting across their bow to leverage a deal. Is it a deal on network usage, or a deal on a possible purchase? That's the unknown at this time.

 

If it is a network deal that Sprint is looking for, then Sprint also is probably looking for a network upgrade build out commitment, and possible inclusions of 800/2600 to some extent too. Will be interesting to watch.

 

Robert via Samsung Galaxy Note 8.0 using Tapatalk

 

 

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Agreed. This is just like Sprint did with Clearwire back in October 2011. nTelos is bankrupt without Sprint. And Sprint is shooting across their bow to leverage a deal. Is it a deal on network usage, or a deal on a possible purchase? That's the unknown at this time.

 

If it is a network deal that Sprint is looking for, then Sprint also is probably looking for a network upgrade build out commitment, and possible inclusions of 800/2600 to some extent too. Will be interesting to watch.

 

Robert via Samsung Galaxy Note 8.0 using Tapatalk

 

 I believe that nTelos is angling just to get bought out. Sprint probably doesn't want the hassle of taking on their network, unless the price is right.  I'm sure Sprint would love nTelos to act like Shentel, which has been blazing fast in deploying NV. 

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The fact that Dish Network was reported to be testing rural broadband with Ntelos makes me hesitant to believe that Ntelos is disinterested in network evolution.   Any cookie jar that Captain Howdy is dangling his chubby digits has the potential to be problematic for Sprint.  I love this new aggressiveness from Sprint.  Would not be surprised to learn that Captain Howdy is tempting Ntelos with a few of the $$ he can't get anyone else to take. 

 

Its also possible that Ntelos has received a non-public bid from Dish, approached Sprint about it hoping Sprint would top it, and been answered by Sprint's statement "we will build our own".  Charlie's acquisition of any of Sprint's affiliates would become impossible for Sprint to maintain peacefully. 

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The fact that Dish Network was reported to be testing rural broadband with Ntelos makes me hesitant to believe that Ntelos is disinterested in network evolution.   Any cookie jar that Captain Howdy is dangling his chubby digits has the potential to be problematic for Sprint.  I love this new aggressiveness for Sprint.  

 

They're not disinterested. They just don't want to foot the bill for it. I think their preference would be just to get bought out by a big player and let them deal with it. I think that big player would be sprint since the two companies have such a long history together. That DISH deal was probably nTelos trying to gain some leverage of their own. 

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That DISH deal was probably nTelos trying to gain some leverage of their own. 

If they were only doing it to provoke Sprint, their timing was poor.  No one expected Sprint to go after Clear or make any acquisitions while the Softbank buyout was pending.    I agree, they probably don't want to assume any more debt, but i'd just about put money on Dish playing a role in this squabble. 

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If they were only doing it to provoke Sprint, their timing was poor.  No one expected Sprint to go after Clear or make any acquisitions while the Softbank buyout was pending.    I agree, they probably don't want to assume any more debt, but i'd just about put money on Dish playing a role in this squabble. 

 

My guess is that Sprint and nTelos have been doing this acquisition dance for a while.  They both know that their roaming agreement expires in july of 2015.  They both know that nTelos has to upgrade to 4g.  They both know Sprint is nTelos' largest revenue source.  Maybe Dish wants to get involved, but this is such a low stakes proposition.  Softbank has bested them twice for much bigger prizes.  I suppose the downside for Sprint in losing nTelos would be the time and effort it would take to get towers put up.  I still think the likely result is a deal on terms that are favorable to Sprint.  It doesn't really matter if it's acquisition or roaming.  

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Either way its good news for me. Im glad sprint is pushing back for us trapped on the island known as Ntelos. Sooner the better. Sending a sos Sprint! Ha

 

It'd be nice from my perspective too in terms of closing the I-81 gap between Abingdon/Meadowview and Harrisonburg when I'm making trips to/from PA.

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August 21, 2013]

 

nTelos investors 'spooked' by Sprint overbuild plans [Global Data Point]

 

digg(Global Data Point Via Acquire Media NewsEdge) Investors in Virginia-based mobile operator nTelos Wireless are reportedly concerned at rumours that Sprint Corporation plans to roll out Long Term Evolution (LTE) coverage in portions of selected nTelos markets as early as next year. According to RCR Wireless which cites a report by FBR Capital, Sprint is considering outsourcing the planned network build to its affiliate, Shenandoah Telecommunications (ShenTel), which currently serves an adjacent area. nTelos is currently a Sprint roaming partner, providing CDMA services to Sprint customers that roam into its markets, as well as tapping Sprint for nationwide roaming coverage. According to TeleGeography's GlobalComms Database, the so-called 'Strategic Network Alliance' is due to expire on 31 July 2015, subject to an automatic three-year extension. nTelos has previously reported that the agreement provides a minimum of USD9 million per month in revenues. The recent flurry of M&A activity in the US has prompted industry insiders to tout nTelos as a possible takeover candidate, and Sprint's aggressive rollout strategy may yet force the smaller firm's hand.

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August 21, 2013]

 

nTelos investors 'spooked' by Sprint overbuild plans [Global Data Point]

 

digg(Global Data Point Via Acquire Media NewsEdge) Investors in Virginia-based mobile operator nTelos Wireless are reportedly concerned at rumours that Sprint Corporation plans to roll out Long Term Evolution (LTE) coverage in portions of selected nTelos markets as early as next year. According to RCR Wireless which cites a report by FBR Capital, Sprint is considering outsourcing the planned network build to its affiliate, Shenandoah Telecommunications (ShenTel), which currently serves an adjacent area. nTelos is currently a Sprint roaming partner, providing CDMA services to Sprint customers that roam into its markets, as well as tapping Sprint for nationwide roaming coverage. According to TeleGeography's GlobalComms Database, the so-called 'Strategic Network Alliance' is due to expire on 31 July 2015, subject to an automatic three-year extension. nTelos has previously reported that the agreement provides a minimum of USD9 million per month in revenues. The recent flurry of M&A activity in the US has prompted industry insiders to tout nTelos as a possible takeover candidate, and Sprint's aggressive rollout strategy may yet force the smaller firm's hand.

Sure is time to fix this issue.  Sure is a very noticeable issue for many people. Look at Shentel's build-out and then look at Ntelos.

Way past time to settle this. If Shentel would be agreeable to overbuild this territory, I would allow it to be done immediately.

This territory is a genuine mess.   Thanks Netlos for showing how bad things can get screwed up.

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This is exactly what Sprint is trying to do. Spook nTelos investors. I think they want to buy out nTelos for a good price. And investors need to think that either they sell to Sprint for below market, or lose it all when Sprint leaves nTelos and let Shentel over build their market. Either plan will work for Sprint. An nTelos buy out or Shentel affiliate overbuild would be great. And given how well run Shentel is, it probably would be just as fast to start from scratch in nTelos areas as it would to buy them out and convert.

 

However, it is probably a better idea to pick up nTelos than an organic overbuild to prevent a competitor from coming in buying nT and directly competing with you and picking up your Sprint customers in the region. But Sprint has the upper hand in this deal. If they strike a fair deal for nTelos, they could probably close this quickly.

 

Robert via Samsung Galaxy Note 8.0 using Tapatalk

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This is exactly what Sprint is trying to do. Spook nTelos investors. I think they want to buy out nTelos for a good price. And investors need to think that either they sell to Sprint for below market, or lose it all when Sprint leaves nTelos and let Shentel over build their market. Either plan will work for Sprint. An nTelos buy out or Shentel affiliate overbuild would be great. And given how well run Shentel is, it probably would be just as fast to start from scratch in nTelos areas as it would to buy them out and convert.

 

However, it is probably a better idea to pick up nTelos than an organic overbuild to prevent a competitor from coming in buying nT and directly competing with you and picking up your Sprint customers in the region. But Sprint has the upper hand in this deal. If they strike a fair deal for nTelos, they could probably close this quickly.

 

Robert via Samsung Galaxy Note 8.0 using Tapatalk

 

Maybe instead of a direct buyout by Sprint, maybe they'll back Shentel buying out nTelos as an option. :ninja:

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However, it is probably a better idea to pick up nTelos than an organic overbuild to prevent a competitor from coming in buying nT and directly competing with you and picking up your Sprint customers in the region. But Sprint has the upper hand in this deal. If they strike a fair deal for nTelos, they could probably close this quickly.

AFAIK nTelos doesn't own any Sprint customers' contracts (unlike Shentel).

 

I guess the equation for Sprint comes down to whether it makes more sense to buy nTelos and immediately rebuild their legacy network with NV, or overbuild from scratch; cost-wise they can't be that different. nTelos probably needs to be cheap for a buyout to make financial sense.

 

Sent from my EVO using Tapatalk 4

 

 

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Maybe instead of a direct buyout by Sprint, maybe they'll back Shentel buying out nTelos as an option. :ninja:

 

Shentel's market cap ($443M) is barely larger than nTelos's ($347M). I'm not sure an acquistion by Shentel would be doable. Would Sprint be allowed to just give a bunch of cash to Shentel for the explicit purpose of buying another company?

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Shentel's market cap ($443M) is barely larger than nTelos's ($347M). I'm not sure an acquistion by Shentel would be doable. Would Sprint be allowed to just give a bunch of cash to Shentel for the explicit purpose of buying another company?

 

Isn't that half the case with Softbank buying Sprint which made Clear an easy acquisition? Or am I seeing this wrong.

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AFAIK nTelos doesn't own any Sprint customers' contracts (unlike Shentel).

 

I guess the equation for Sprint comes down to whether it makes more sense to buy nTelos and immediately rebuild their legacy network with NV, or overbuild from scratch; cost-wise they can't be that different. nTelos probably needs to be cheap for a buyout to make financial sense.

 

Sent from my EVO using Tapatalk 4

 

Does Shentel own the contracts? 

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Shentel's market cap ($443M) is barely larger than nTelos's ($347M). I'm not sure an acquistion by Shentel would be doable. Would Sprint be allowed to just give a bunch of cash to Shentel for the explicit purpose of buying another company?

 

Isn't that half the case with Softbank buying Sprint which made Clear an easy acquisition? Or am I seeing this wrong.

 

They wouldn't give it to them, but I would imagine they would provide some mix of loans and guarantees at a favorable terms.

 

I also think you might generate warmer feelings from nTelos customers.

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