Regional operator and Sprint (NYSE: S) wholesale partner nTelos Wireless experienced strong growth in the first quarter in its Western markets, with net subscriber adds totaling 8,000, up from 5,000 in fourth quarter of 2014. The company said the period was its best for net adds since 2007. In addition, the company said it is winding down its Eastern markets by migrating approximately 50,000 customers off its network. Many of those subscribers were ported to Sprint through a deal with the operator, however nTelos would not reveal how many.
Specifically, nTelos CEO Rod Dir said that the company had reduced its Eastern markets subscriber count from 175,000 to 124,700 at the end of first quarter by porting lines to Sprint. Late last year, nTelos announced it would exit its business in eastern Virginia and instead focus its efforts on its West Virginia and western Virginia markets--an area bolstered by nTelos' spectrum-licensing and network-roaming agreements with longtime partner Sprint. The move has resulted in a reduction of the carrier's subscriber base from around 500,000 to 290,100 today.
NTelos is also discontinuing activations and closing retail stores in its Eastern markets and reducing its headcount. Dir said that the company's headcount is now 725, down from 1,000. He said the carrier's overhead has been reduced by $1.8 million.
The company also reported a postpaid churn rate of 1.7 percent, which was its lowest rate since second quarter 2013. Executives attributed the lower churn to the company's introductory LTE offering, which it focused in cities like Roanoke, Va."Customers understand we are investing and building out our network," Dir said during a conference call with investors.
Dir said the company currently has LTE deployed in 44 percent of its network and about 50 percent of its POPs are covered by LTE. The company plans to increase that to 65 percent of POPs covered with LTE by year-end. Dir said LTE is deployed in about 202 cell sites.
Dir also said that the company sold 91 of its 103 cell towers to an affiliate of Grain Management for $39.3 million. And it closed on its deal to sell some of its 1900 MHz PCS spectrum to T-Mobile US for $56 million.
Interestingly, nTelos executives said T-Mobile (NYSE:TMUS) is building out LTE in nTelos' footprint, potentially setting up a battle between the two carriers. But nTelos executives said T-Mobile's efforts haven't been significant, nor have they seen T-Mobile increasing its sales and marketing efforts in the area.
In its first-quarter results, nTelos said around 75 percent of its new customers are electing to sign up for its new equipment installation plans (EIP), but it expects that number to drop to 60 percent to 65 percent once it begins charging an activation fee. As part of a promotion in the first quarter, nTelos waived those activation fees.
Here is a look at some of nTelos' key metrics:
Customers: NTelos' total subscribers were 290,100 as of March 31, compared with 282,100 in the fourth quarter of 2014. Total subscriber gross adds were 27,500 for the first quarter, down from 28,300 in fourth quarter 2014. Postpaid subscriber gross adds were 15,700, compared to 18,600 for fourth quarter 2014. Total postpaid subscribers were 224,700 as of March 31. Total prepaid subscribers were 65,400 as of March 31.
Tablets: The company started selling tablets at the end of January and by March 31 reported it had sold 1,000 iPads.
Churn: Postpaid churn was 1.7 percent, down from 2 percent in first quarter 2014. Average revenue per account was $122.04 for first quarter, compared to $136.60 for first quarter 2014.
Financials: Western markets revenue was $95.3 million, up 7 percent from $89.2 million in first quarter 2014. EBITDA was $27.3 million for the first quarter, compared to $33.3 million for first quarter 2014.
For more:
- see this release
Special Report: Wireless in the first quarter of 2015
Related Articles:
T-Mobile completes $56M purchase of PCS spectrum from nTelos
NTelos to sell off 103 of its remaining cell towers for $41M to Grain Management
NTelos reports improved traction in Western markets, aims to cover 50% of customers with LTE by year-end
NTelos to expand LTE network in Virginia and West Virginia
This story was updated May 20 to note that while many nTelos subscribers were ported to Sprint through a deal with the carrier, the company has not said how many.