Jump to content

Sprint to Overbuild on nTelos


Rickie546

Recommended Posts

From seeking alpha

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.

Read comments

S price at time of publication: $6.96. Check S price now »

 

New! Follow more tech stocks: click to download Seeking Alpha’s new Tech Investor App!

 

Focus Articles on S

Is Sprint A Sell After The Earnings Report? by Adetokunbo Abiola

Sprint Looks To A New Future With Softbank, But Subscriber Growth A Concern by Trefis

Is Sprint A Strong Buy? Not So Fast by Harmohan Parmar

Press Releases on S

Sprint Reports Second Quarter 2013 Results (Business Wire)

Sprint Launches Unlimited Guarantee and New Unlimited, My Way Plan (PR Newswire)

Sprint Launches Unlimited Guarantee and New Unlimited, My Way Plan (Business Wire)

Related Articles on S

Is Windstream A Good Pick? by Adetokunbo Abiola

Tracking David Einhorn's Portfolio - Q2 2013 Update by John Vincent

Verizon Communications: Best Of The Bunch And The Market Knows It by Roger S. Conrad

StockTalk on S: S StockTalk | Twitter S | Twitter $S | S Instablogs

 

Recent Market Alerts on S: All currents | Earnings | Dividends | M&A | On the move

 

Transcripts on S

Sprint Nextel's CEO Discusses Q2 2013 Results - Earnings Call Transcript

Sprint Nextel Corp. (S) Management Discusses Q2 2013 Results (Webcast) by SA Transcripts

Sprint Nextel's CEO Discusses Q1 2013 Results - Earnings Call Transcript

Why are you receiving this? You subscribed to real-time Market Currents alerts at Seeking Alpha.

If this email was forwarded to you and you wish to subscribe to this email, click here.

 

Manage your emails:

Get alerts on additional tickers and manage all your email alert choices here

I’m getting too many emails: manage your email alert choices

I’m no longer following S: unsubscribe from all S email alerts

This type of alert isn't helpful to me: unsubscribe from Market Currents (breaking news) alerts on S

 

To ensure you receive these emails in the future, please add account@seekingalpha.com to your address book, contacts or list of safe senders.

 

Prices in this email are BATS Last Sale quotes.

 

Sent by Seeking Alpha, 345 7th Ave. Suite 1400 New York, NY y

 

▶ Show quoted text

  • Like 4
Link to comment
Share on other sites

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.

  • Like 9
Link to comment
Share on other sites

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

 

 

  • Like 2
Link to comment
Share on other sites

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. 

  • Like 2
Link to comment
Share on other sites

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. 

  • Like 3
Link to comment
Share on other sites

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. 

Link to comment
Share on other sites

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. 

Link to comment
Share on other sites

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.  

  • Like 2
Link to comment
Share on other sites

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.

  • Like 1
Link to comment
Share on other sites

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.

  • Like 4
Link to comment
Share on other sites

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.

  • Like 5
Link to comment
Share on other sites

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

  • Like 2
Link to comment
Share on other sites

Do they even use cellphones in nTelos territory?  They certainly do not use them to call 911; instead, they just wander in to the emergency room.

 

http://www.nbc.com/saturday-night-live/video/appalachian-emergency-room/n12005/

 

:P

 

AJ

  • Like 1
Link to comment
Share on other sites

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:

Link to comment
Share on other sites

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

 

 

Link to comment
Share on other sites

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?

Link to comment
Share on other sites

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.

Link to comment
Share on other sites

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? 

Link to comment
Share on other sites

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.

Link to comment
Share on other sites

Does Shentel own the contracts? 

 

Traditional affiliates do own their contracts.

 

AJ

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • large.unreadcontent.png.6ef00db54e758d06

  • gallery_1_23_9202.png

  • Posts

    • Just got back from Puerto Rico. I spent a lot of time going around the San Juan metro area, predominantly in Viejo San Juan, Santurce, Isla Verde, and a short stop in University Gardens.  T-Mobile's network still performs as well today as it did when I last tested and in my opinion is the best on the island. n41 is still at 100MHz in most areas though I did record a few areas with only 80MHz. Yesterday the FCC announced that they're finally granting T-Mobile their Auction 108 winnings so we'll probably finally see that increase. They also have 15MHz of n25 and 15MHz of n25 and 15MHz n71. The fastest speed I recorded while there was 922 down and 120 up, presumably aggregating n41+n25 and potentially n71 as well but I wasn't able to confirm that. A couple of things I noticed about their network are that their is a ton of split-sector n25 deployed in San Juan, much like in the U.S. I even noticed some n41 sites that had 4 or more sectors. The weirdest being the site on top of SJU Airport where they have 6 n41 sectors each broadcasting 80MHz of n41. AT&T SIMs roam on LIberty's network but they still treat it as the home network. In my opinion they're the second best network in Puerto Rico. Liberty is still using the AT&T MCC-MNC code and is pretty much coasting on AT&T's network upgrades. They have 10MHz n5 virtually everywhere but I never saw my phone connect to any other 5G bands. Their saving grace was just how much spectrum they have to aggregate across midband and lowband. I'd see combos like 10MHz n5 + 20MHz B2 + 10MHz B66 + 10MHz Band 30 + 5MHz Band 2 and get upwards of 200Mbps. Coverage was slightly worse than T-Mobile in my experience, even indoors which is a surprise given T-Mobile usually struggles a bit indoors due to their macro density. Verizon is roaming on Claro in Puerto Rico just as they have been for years. No idea if there is 5G roaming because I was connected to LTE the entire time. Toggling 5G didn't do anything and both pings and speeds weren't great. Speeds were in the 20-40Mbps range consistently and pings over 200ms. For comparison T-Mobile's pings are in the teens and Liberty pings are in the 40's even when roaming using an AT&T SIM. Claro's network is ok in my experience with nothing really notable about it.  — — — — — Here are some pics of sites that I took:
    • WTB instructed to process all 2.5GHz licenses across the USA. They are only giving up some spectrum in certain markets of Hawaii.
    • Is this just for licenses in Hawaii?
    • Yeah, it basically directs the bureau to proceed with granting the applications in the normal course.  It's no longer being held by the AT&T objection. - Trip
    • I checked some counties for T-Mobile auction 108 licenses and the licenses have not been granted yet.  I expect it will take a few days or longer.
  • Recently Browsing

    • No registered users viewing this page.
×
×
  • Create New...