Sprint wholesale partner Shenandoah Communications posted $13.9 million in net income in the first quarter, marking a year-over-year increase of 35 percent. But its cable and wireline business drove the lion's share of its revenues.
Shentel, as the company is known, reported $3.8 million in wireless service revenues, up 7.9 percent year over year, due partly to increasing revenues from prepaid users selecting more expensive services. The company also said Sprint reduced the postpaid fees it retains on Shentel's sales of its services.
Shentel reported 2,719 net postpaid additions during the quarter, down from 3,211 net postpaid adds during the first quarter of 2015. Net prepaid subscribers declined by 301, down dramatically from the 2,621 prepaid adds it reported during the prior year.
The operator said it saw reductions in postpaid billed revenues as users opted for lower-priced service plans associated with leasing and installment billing programs for their phones.
Earle MacKenzie, Shentel's COO, said during an earnings call with analysts that while Shentel is seeing decreased ARPU, ever-increasing consumption of mobile data may eventually lead to higher monthly customer invoices.
"You have got the shift, the subsidized plans to the non-subsidized plans," MacKenzie said, according to a Seeking Alpha transcript. "You have price promotions that are entering and exiting the market all the time, and you have got the counter to that, (which) is customers are using more and more data. The fact is that our data usage went up 70 percent. I wish we had added 70 percent increasing customers but we didn't. What that's showing you is the existing customers continue to use more and more data.
"And as customers exceed those data buckets, we are going to start seeing overages," he continued. "So I really am, I guess the word is optimistic, that we may see a continued decline for a couple of more quarters but at some point in time as customers fill up the larger buckets that they have bought, they either are going to have to buy larger data buckets on a recurring basis or still have overages."
Shentel said recently that the FCC had approved its proposed $640 million acquisition of nTelos, paving the way for the deal to close in the coming weeks. The acquisition will see the nTelos brand discontinued as roughly 300,000 of its customers become Sprint-branded users managed by Shentel, and nTelos' retail stores will be converted into Sprint-branded locations also managed by Shentel.
Shentel will see its wireless customer base exceed 1 million upon the closing of the acquisition. That figure would make Shentel the sixth or seventh largest wireless carrier in the United States.
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