iPCS, Inc. Q2 2008 Earnings Call Transcript

iPCS, Inc. (IPCS)

Q2 2008 Earnings Call

August 1, 2008 9:00 am ET

Executives

Tim Yager - President and Chief Executive Officer

Steb Chandor - Executive Vice President and Chief Financial Officer

Conrad Hunter - Executive Vice President and Chief Operating Officer

Michael Polyviou - Financial Dynamics, Investor Relations

Analysts

Ric Prentiss - Raymond James

Ana Goshko - Banc of America

Jonathan Schildkraut - Jefferies

Presentation

Operator

Welcome to the iPCS second quarter 2008 earnings conference call. (Operator Instructions) It is now my pleasure to turn the floor over to Michael Polyviou with Financial Dynamics.

Michael Polyviou

Thanks for joining us to discuss iPCS's results for the second quarter ended June 30, 2008 which were announced in a press release issued yesterday. If you do not have a copy of iPCS's press release or presentation, a copy can be found on the company's website at www.ipcswirelessinc.com.

Please note that a replay of this call will be made available later today approximately around 2:00 pm Eastern Time; the details are set forth in the press release. Before I turn the call over to Tim Yager, President and CEO, I have a few housekeeping matters to go over.

Let me remind everyone that management's discussion this morning will likely contain forward-looking statements which statements often include words like, believes, expects, plans, anticipates, intends, projects, estimates, may, might, would or similar words. Such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by and information currently available to management.

A variety of factors could cause actual results to differ materially from those anticipated in iPCS's forward-looking statements. For a detailed discussion of these factors and other cautionary statements that could cause actual results to differ from those described in management’s discussion, please refer to iPCS's filings with the SEC, particularly the Risk Factors section of iPCS's annual report on Form 10-K, as such section may have been updated in subsequent filings with the SEC.

Investors and analysts should not place undue reliance on forward-looking statements. In addition, management will discuss certain non-GAAP financial measures. Please refer to the iPCS's press release for a reconciliation of these non-GAAP financial measures, to figures derived using GAAP.

Now I’d like to turn the call over to Tim Yager, President and CEO of iPCS; Tim.

Tim Yager

I'd like to welcome everyone to our earnings call, this morning. I'm joined today by Steb Chandor, our Executive Vice President and Chief Financial Officer; and Conrad Hunter, Executive Vice President and Chief Operating Officer. To begin for the second quarter we reported adjusted EBITDA of $25.2 million after adding back $1.8 million of Sprint related litigation expenses. This is an increase of 30% from the similarly adjusted EBITDA in 2007 of $19.4 million.

We are reaffirming our previously announced full year 2008 EBITDA guidance although as a result of current trends and improvements made in EBITDA during the first and second quarters, we continue to believe we will end the year towards the high-end of our adjusted EBITDA guidance of $95 million to $105 million. Additionally we expect that our 2009 adjusted EBITDA growth will be at or above 20%.

As we previously announced iPCS had approximately 62,000 gross additions during the quarter compared to approximately 68,000 for the prior year quarter. The lower gross ads this year were inline with our expectations as we continue to pursue an improved overall credit mix in our subscriber base in lower churn. As such we are pleased with the churn of 2.3% came in lower than expected resulting a net additions of approximately 13,400.

Our earnings subscriber base for the quarter was approximately 82% prime up from 74% in the year ago period. We believe the tightening of our credit scoring last fall continues to have a positive impact on churn and we’ll reduce our high bad debt expense to more reasonable levels. Many of the poor credit subscribers have churned off and we anticipate reduced bad debt expense in the second half of 2008.

The flooding in eastern Iowa in mid June has had a negligible impact on our overall results for the quarter despite disrupting service at two tower locations and disabling two stores. This service was restored within a few days and one store was operational again within a week; however, one store was significantly damaged and remains closed. We anticipate reopening in another location by early August, which was planned before the flood. We are thankful that none of our associates were injured in the event.

Our network continues to perform very well and we’re spending significant capital this year to further expand our footprint, capacity and EVDO Rev A coverage. The rate of deployment of EVDO Rev A during the first six months of the year has allowed us to cover 6.6 million pops, a milestone that entitles us to a $0.15 reduction to our Sprint CCPU fee.

The reduction, which was effective July 1, will reduce the CCPU rate to 635 per subscriber from the current rate of 650. I am delighted to say that we are on Phase III, 7 million EVDO Rev A covered pops during the third quarter, which will allow us to receive an additional $0.15 reduction to our CCPU fee. Achieving these milestones during 2008 will allow us to begin the fourth quarter with total reductions of $0.30 per subscriber in CCPU. That $0.30 reduction results in a 2009 Sprint CCPU rate of $5.85.

Additionally, we are nearing completion of our network build out in the Grand Rapids market to manage the iDEN coverage, so that we can be in a position to launch Q-Chat. We are monitoring the progress Sprint is making in the initial market launch of the service and hope to be in a position to offer the product this fall. We believe this is an upside to our current business plan.

We are accelerating net coverage build plans for early 2009 in several of our markets into the fourth quarter of 2008, to take advantage of discounts and network equipment and to maintain momentum into 2009. As such we are revising our 2008 CapEx guidance to $70 million to $75 million from $60 million to $65 million.

We are excited about our results thus far in 2008. We’ll continue to focus on EBITDA growth by enhancing our networks capacity; coverage and improving the customer experience to reduce churn. We will also continue to focus on increasing ARPU through sales of high value rate plan such as the $99 Simply Everything plans.

I would now like to turn the call to Conrad to provide additional detail in the operations of the business; Conrad.

Conrad Hunter

I’m pleased to report that our operations continue to improve and we see growth opportunity in the markets we serve. During the second quarter we completed several significant initiatives such as; completed the re-organization and relocation of our sales operations team that provide logistic and analytical support for all channels of distribution. We transitioned our customer base completely over to the new Ensemble Uniform Billing Platform provided by Sprint.

We built 67 new sales sites for enhanced and expanding coverage in selective markets, expanded our covered EVDO Rev A pops from $2.5 million to $6.6 million, successfully launched the new Simply Everything rate plan portfolio and the award winning Samsung Instinct Devise and finally realigned our sales and operations teams into three reasonably focus centers of excellence.

Our conversion to the Ensemble Uniform Billing Platform was essentially completed during the second quarter with minimal operational customer facing issues. The migration should enhance our ability to better serve our customer at the point of sale and allow us to take full advantage of Sprints care and marketing initiatives to our exciting base. In addition, we are hopeful that in connection with the conversion we will receive more visibility into our customer metrics as we move forward.

We continue to focus on improving our channels of distribution by adding exclusively branded Sprint dealers that our customer centric and who have the proper leadership resources in our market. We ended the quarter with 104 of these doors and expect to add six to eight more in the third quarter.

Our plan to upgrade seven to ten of our company owned retail stores to the Gemini format are on target for completion by end of the third quarter. This new format should improve the customer’s experience, by allowing a better demonstration of complete bundles of wireless products and in getting hands-on experience with Sprints now network on the data side of the portfolio.

On the topic of data products and services we experience significant sales growth in the number of data cards sold quarter-over-quarter. We believe this will continue to improve as a result of expanded voice and EVDO coverage Tim spoke of earlier, also Best Buy Mobile, a national distributor has dramatically improve their focus on selling Sprint data card which directly benefits us in most of our markets.

We made tremendous progress in the second quarter in rolling out new training, education and processes aimed at reducing churn and making sure our associates are clearly setting proper expectations for the customer in terms of the first bill and then assertively making the follow-up calls to ensure our customers stay with us.

All our stores now conduct hurdles during each shift change to discuss the importance of customer satisfaction, daily objectives and new product offerings, which is proving to be an effective method in executing our sales and marketing initiatives. The Simply Everything planned in conjunction with the launch of the Samsung Instinct has been successful for us and for the quarter approximately 15% of our gross additions were attributed to these new plans, in which the percentage is growing monthly.

The Instinct has performed remarkably well by our early indications and we sold out of our initial allocation within just a few days of launch. Unlike the iPhone, we’ve had no technical issues with activation or setup and customer feedback has been positive. Sprint advertising nationally was effective in generating interest and demand of the product and it works well.

Focused on the customer’s experience, selling value and improving ARPU is being intensively focused on by our entire team. For the quarter, ARPU was flat compared to the first quarter, but we’re encouraged by the improvements in ARPU that were recorded for the month of June. We believe Simply Everything plans are having a positive impact on ARPU and we are seeing dramatic change in the selling behavior of our associates as they now lead with a $99 Simply Everything plan versus a promotional offer. We believe this as related to their confidence and the plan of simplicity and ease of use along with the improvement in our voice and data coverage.

Finally, our capital plan to build between 160 and 180 new sale sites this year is on pace with over 67 sites built in Q2. As stated earlier, we achieved $6.6 million covered EVDO pops and we expect to surpass $7 million during the third quarter. Our second quarter build results are impressive in spite of the catastrophic flooding we responded to in Eastern Iowa and I’m happy to report we had minimal disruption to our customers; thanks to the efforts of our network and sales teams.

Our network plan is to launch Q-Chat, Sprint, CDMA and Nextel Direct Connect service in our largest market of Grand Rapids at Michigan this fall. This new product offering will enhance our opportunity to attract higher value business enterprise customers and those associated with the various service trades in our markets. We continue to build out to Nextel, our best-in-class parity and several other markets in preparation for additional launches of its service in the month ahead.

We are determined to build out a best-in-class network for both voice and data, to dramatically improve our customer’s network and service experience, pursue profitable growth and maximize our operational relationship with Sprint. We are aggressively promoting our data cards and services; these efforts will reduce churn, improve voice and data ARPU and drive share holder value.

I am pleased with the progress we have made on several fronts and I’m excited about the prospects for iPCS for the remainder of the year. I would now like to turn the call over to Steb Chandor for a look at our financials metrics.

Steb Chandor

iPCS ended the second quarter with 654,000 subscribers and a covered pop penetration rate of approximately 5.4% representing a year-over-year growth of 6.9% in our ending subscriber base. We ended the second quarter with approximately 227,000 reseller subscribers in our territory which was down from the approximately 249,000 at the end of the first quarter.

As Tim mentioned, gross additions for the quarter were approximately 62,000 down from 68,000 during the same period last year which was expected given our efforts to improve subscriber credit quality and reduce churn. We experienced a drop in gross ads across most of our channels consistent with the late 2007 tightening of our credit policies. We remain comfortable with our guidance of between 250,000 and 280,000 gross additions for the full year 2008.

Churn; net of 30 day deactivations for the quarter was 2.3% up 10 basis points from the year ago period and flat as compared with the first quarter. As Tim mentioned we believe the bulk of our four credit subscribers have churned off and we expect that involuntary churn will remain below the levels we experienced in the second half of 2007.

Total revenue for the quarter was a $129.4 million compared to a $133.2 million for the prior year quarter. However, it is important to note that beginning January 1 of this year as per the terms of our amended agreements with Sprint we no longer receive revenue from Sprint for 3G data roaming.

Adjusting second quarter 2007 results by removing this revenue, yields pro forma revenue of $122.9 million for 2007 which results in a year-over-year growth of 5.3%; as previously mentioned adjusted EBITDA increased 30% year-over-year demonstrating the continuing leverage in our business.

ARPU excluding roaming for the quarter was $48.44 down from $49.80 in the year earlier quarter, but was flat as compared with the first quarter. Declines in voice ARPU have slowed over the past few quarters and 2Q voice ARPU was actually higher than that of the first quarter and we remain encouraged about our ability to grow our ARPU.

Data ARPU was up slightly from the first quarter and up $0.74 from the year ago quarter at $11.49. Total ARPU which includes roaming was $65 for the quarter, compared to $72 in the year earlier quarter. This decrease primarily reflects the elimination of data roaming revenue I previously mentioned, which contributed approximately $6 of the year ago ARPU.

For the June quarter, Cash Cost Per User or CCPU excluding roaming and litigation expense was $31, compared to the prior year quarter CCPU was down $2.50. Bad debt expense for the quarter was $4.8 million, up slightly from the $4.3 million in the prior year quarter, but down from the $5.4 million incurred in the first quarter of this year.

Our current period results continue to reflect the negative impact of large increase in sub-prime credit class subscribers during 2007; however, many of these subscribers have since churned off and we expect that our bad debt expense as compared to prior year periods will moderate as we move through 2008.

Total CCPU, which includes roaming expense, was $41 for the quarter down from $48 for the prior year quarter. The year-over-year decrease primarily reflects the elimination of data roaming expense we pay Sprint, which contributed $6 in the year ago CCPU.

Our roaming ratio with Sprint, which no longer includes any 3G data roaming, was 1.5 to 1 for the quarter. This is up from 1.4 to 1 we reported in the prior year quarter and reflects the continued trend of higher ratios year-over-year reversing a negative trend experience over the past few year of year-over-year decreases. As was in the case in the first quarter and through the second half of last year, the year-over-year improvement in the ratio primarily reflects stronger growth in revenue as compared to expense growth.

We continue to monitor our roaming revenue and expense to gauge the impact of higher fuel prices and weaker economic conditions as some slowdown in general travel has already been reported across the U.S. Our Cost of Subscriber Acquisition or CPGA in the second quarter was $358 down slightly from the prior year period of $364. While fixed costs per subscriber increased due to fuel gross ads compared to the prior year period, declines in the variable cost during the quarter offset the increase.

Our reported net loss of $600,000 was $43 million better than the same quarter of last year due in large part to the $30.5 million one-time charge for the early extinguishment of debt related to our refinancing in ’07. Even adjusting out this item year-over-year improvement in our net loss was substantial moving from a $13.1 million loss in the second quarter of ’07 to $600,000 loss in the second quarter of 2008.

Capital expenditures for the second quarter totaled $26.6 million compared to $12.7 million in the year ago quarter and stood at $41 million for the first six months of the year. Turning to the balance sheet we had approximately $66 million in cash as of the end of the quarter.

With respect to guidance we are reaffirming our full year 2008 guidance for gross additions and adjusted EBITDA. Specifically, gross additions are between $250,000 and 280,000; adjusted EBITDA are between $95 million and $105 million excluding expenses related to the Sprint litigation. As Tim noted earlier we are revising upward our CapEx guidance for 2008 to $70 million to $75 million from $60 million to $65 million.

Now I’ll turn the call back over to Tim; Tim.

Tim Yager

Before I turn the call over for the question-and-answer session, I’d like to address our relationship with Sprint. As you are aware Sprint began a new chapter in our litigation on May 7, when on the morning that Sprint announced its plans for a WiMax joint venture with Clearwire and others, it also filed a complaint for declaratory judgment at the Chancery Court of Delaware seeking a ruling that the proposed WiMax transaction is not a violation of the $0.03 agreement between Sprint and iPCS’s operating subsidiaries.

On May 12 we filed a complaint in the Circuit Court of Cook County, Illinois against Sprint seeking injunction, against Sprint’s consummation of the recently announced Clearwire WiMax transaction and its plans to compete against us and so the transaction is modified to comply with our agreements on the grounds that the joint ventures operation in our exclusive territory would breach our agreements.

The judge of Illinois has stayed our complaint, pending action taken at Delaware. We are scheduled to have a hearing in the Illinois case on August 22 where Sprint’s motion to dismiss the Illinois case and our motion to lift the stay will be heard. On July 14, the Chancery Court of Delaware granted our motion to dismiss Horizon Personal Communications and Bright Personal Communications Services LLC from the Delaware litigation on the basis that the Delaware courts lacked jurisdiction over those operating subsidiaries.

The Court denied our motion to dismiss iPCS Inc and iPCS Wireless. We’re pleased the court dismissed two of the three operating companies’ defendants as we continue to believe the proper venue for this matter is in Illinois. We appealed the Delaware court’s decision to keep iPCS Inc and iPCS Wireless in Delaware to the Delaware Supreme Court and we do not yet know the timing of when the Delaware supreme court will decide whether to hear the iPCS appeal.

As a reminder in our litigation against Sprint with regard to the Sprint/Nextel merger, original Illinois ruling that Sprint must cease owning, operating and managing the iDEN network in iPCSs Wireless’s territory which is held by the Appellate Court in late March, and Sprint's petitions for Leave to Appeal is still pending before the Illinois Supreme Court.

We still do not expect to hear if the Illinois Supreme Court will grant Sprint’s request for appeal until fall. If the Supreme Court rejects Sprint’s petition for leave to appeal, it is our expectation that the clock will start on the 180 period for Sprint to cease owning, operating and managing the iDEN assets in iPCSs Wireless's territory soon thereafter. If the Illinois Supreme Court grants Sprint's petition for leave to appeal, there will be another Appellate process before the Supreme Court, similar to our recently concluded process before the Illinois Appellate Court.

We continue to believe that Sprint has violated our agreements with them, and we’ll aggressively defend our exclusivity. Beyond the legal battles, I'm pleased to report that our amended relationship with Sprint that we signed in March is working well. As Conrad said we have completed the migration on Ensemble and despite the expected operational issues, the transition went well.

We are benefiting from lower CCPU rates with effect of January 1 and now we have an additional $0.15 reduction effective July 1, after achieving $6.6 million EVDO Rev A covered pops. We plan to have $7 million covered pops during the third quarter resulting in an additional reduction to our CCPU charge of $0.15.

In closing, we continue to feel good about our progress thus far in 2008. We have lowered our cost, provided more predictability to our business, substantially improved our EBITDA year-over-year and successfully defended Sprint’s appeals to our victory in Illinois. We look forward to updating you on the progress in the coming quarters.

I would now like to turn the call over to the operator.

Question-and-Answer Session

(Operator Instructions) Your first question comes from Ric Prentiss of Raymond James.

Ric Prentiss - Raymond James

A couple of questions for you; first, the requisite economy question, given your reaffirmation of the guidance for ’08 and say you are going to hit the high-end or expect towards the high-end and reaffirming the ’09 growth of EBITDA, how do you get comfortable with the visibility on those projections in this kind of a economy, I just wanted to get a sense of how you built up the budget?

Tim Yager

It’s a situation where we continue to believe that despite the economic downturn, people are still spending their available dollars on handsets and I think that we’ve continued to see relatively good foot traffic in our stores as evidence by the Samsung instinct product that essentially sold out nearly day one and so we feel like that we have the sales momentum.

As Steb said in his comment one area where we have a little cautionary note is it relates to travel. People are just going to be driving less to our territory because gas prices are north of $4, but as we look at overall sales we feel like that we’ve got the momentum there, we’ve got the processes in place to continue to accelerate, to maintain our sales despite the economic downturn.

Richard Prentiss - Raymond James

Okay and then on the ARPU side also a little pressure in the quarter, but I think you mentioned that really improved notably in June. For your annual guidance and your look in to ’09 to work, what sort of trends do we need to see absent roaming, but local data kind of ARPU?

Steb Chandor

Rick this is Steb. ARPU as a whole as we said in our prepared comments, the month of June actually was one of our stronger ARPU’s in a period of time and the preliminary information we have to date for July seems to suggest continuing momentum there. So, there is some positive momentum going on if you will.

The other thing that was going on is that we do have credits to go against ARPU. As we talked about we’re essentially complete with the Ensemble conversion and we’ve seen a slight moderation of that credit. That credit amount actually is large enough to make up a good deal of the difference between the ARPU of the second quarter of last year to this year, so it’s something we are focused on.

Then lastly as we mentioned in the prepared comments, our voice ARPU moved up sequentially from the first to the second quarter and that’s the first time we’ve seen that move in any type of recent history. So, again some positive momentum we’re looking at as we look for the rest of this year and in to 2009.

Conrad Hunter

Yes and Rick, this is Conrad. The other thing in the operations we have really focused on the value of Simply Everything and as we stated in the comments we’re actually seeing change in the selling behavior of our associates where they’re actually leading with the $99 dollar rate versus the promotional offer.

We’re also aggressively looking at our base customers that were on older rate plan and with the new Simply Everything rate plan portfolio, it has tremendous value and so we’re addressing that and then lastly just the things we’re doing in the way we do our rebate strategy; we’ve moved upstream. That customers if they want to get the rebate instantly they have to opt for highering rate plan as well, so lots of other things we’re doing as well.

Richard Prentiss - Raymond James

Good, it leads perfectly do the second question then; on the relationship with Sprint not the legal side obviously, can’t really touch that too much here; but operationally if you look at what Hesse’s done in the last few months, how would you feel the changes he made, if anything specific you want to point to, how its effected you guys? Simply Everything sounds like one of them.

Steb Chandor

Yes, Rick clearly Simply Everything has been one. Obviously, Sprint getting our handset with the Instinct is a big plus for us during the quarter and then I think as we talked about in the last earnings call, the biggest cultural shift that we’ve seen is just this notion that the customer matters and the customer first and really trying to focus in on that customer and the Red Carpet Service type stuff, I think is probably the biggest change we’ve seen and it certainly goes hand-in-glove with the efforts that Conrad started almost a year ago when he joined us to really focus in on our churn rather and try to drive that churn number lower.

Richard Prentiss - Raymond James

And then the final question for you on the Q-Chat; I’ve actually been using it to test it out. It seems to be working pretty good both on the CDMA Q-chat, but also CDMA to iDEN Q-Chat. Have you guys tried it out in your markets? I know you said fall ’08 launch for Grand Rapids is kind of your target, but just kind of what your thoughts are on how the Q-Chat phone is working and then when you said upside to your plan, how would that manifest itself, because I think that would probably come in as data and you don’t get to collect for data, do you?

Steb Chandor

The data, you’re correct. In terms of roaming, we wouldn’t have the roaming revenues from the data’s there Rick, but at the end of day as we sell Q-Chat, obviously that opens up a whole host of customers that are push-to-talk centric that we could certainly have a compelling offer to put in front of them with a high quality push-to-talk service, a premium service that would also help us service the Simply Everything plans and carry it from there and then with regard to the first part of your question, we have been testing Q-Chat on our network and thus far it’s been working well.

Richard Prentiss - Raymond James

And just one kind of clarification; if there is an iDEN customer in your markets and they move over onto a CDMA Q-Chat handset will they become your customer and will you actually know if it’s a end-market customer?

Steb Chandor

They would become our customer, because Q-Chat is a CDMA product.

Richard Prentiss - Raymond James

Okay so, if a Sprint iDEN customer in your territory were to get a CDMA phone it would be coming through you.

Steb Chandor

Correct.

Richard Prentiss - Raymond James

And then that customer would come over entirely onto your revenue side?

Steb Chandor

Correct.

Operator

Thank you. Your next question comes from Ana Goshko of Banc of America.

Ana Goshko - Banc of America

First of all on the pace of gross adds in the second half, should we expect it to similar to the first half just seasonally adjusted quarter-by-quarter; is this typical? Or are there some potential changes in the pace that you’ve had in the first half; one from being on the Ensemble billing platform, having an easer time selling in the national retailers; two, from the Instinct handsets or the Simply Everything plan, but on the flip side I know that Hesse at Sprint has the emphasis on gross adds for the sake of gross adds and more of a focus on churn reduction, so is that something that through their channels is impacting you in your territory as well?

Tim Yager

Sure Ana this is Tim. We’re going to continue to focus on both gross and net. Obviously we started our churn reduction efforts a little over a year ago, pretty aggressively and accelerated that by tightening our credit policies in the second half of last year, so we think that we’re well on our way for the churn reduction efforts and related to the gross add I think that the Simply Everything is gaining good traction I feel like the Instinct is helping to get a lot of buzz in our stores.

Even though everyone that comes in line with the Instinct isn’t walking out with the Instinct; some of them maybe walking out of the room with other phones; it’s done a lot to drive traffic to our stores. So, I feel that we certainly have the seasonal up tick in the second half of the year and we’ll continue to focus in hard on doing the blocking and tackling to have a successful end of the year from a gross add perspective.

Ana Goshko - Banc of America

Okay, a clarification on one of the comments from Conrad. I think he was talking about as part of the churn reduction effort, the follow-up calls with new customers; is that something that you’re doing and you can control or is that something that goes to the Sprint call centers and it’s really Sprint controlled?

Conrad Hunter

Well actually Ana, it’s something that we both do. I mean the great thing about being on this side and doing conversion allows us to have the leverage of that care functionality that Sprint does have. So, they do have, but our people also, we have a program that’s very methodical that we want them to touch the customer also and make sure that personal relationship is solidified, so if they do have an issue, they can still come back to our store, get it resolved, but also then it’s appropriate at that time to ask for referral, so we’re actually both doing it.

Ana Goshko - Banc of America

So, those calls are coming from your stores, from your sales people?

Conrad Hunter

Yes, just a normal sales blocking one-on-one; just doing the follow-up calls to say “Hey thank you for coming in. How is everything working? Did your bill come as expected?” those kind of questions. So, we don’t try to sell them anything. We actually at that time just really asking them how their service was and if there is anything else we can do.

Ana Goshko - Banc of America

Okay and then I apologies, I may have missed it, because I was distracted for 30 seconds, but did you talk about where you stand on the prepaid discussion with Sprint and potentially being able to launch the Boost Prepaid Product by the end of this year?

Timothy Yager

We didn’t talk about it specifically; this is Tim. We are obviously past the June 30 date to which was in our recently amended agreements with Sprint. So, we’re free at this point to work with whomever, whatever provider we feel is most appropriate for the success of our operations. We still hope to have a prepaid offering out there for the fourth quarter, but in any event Conrad has got a team dedicated to the prepaid. It’s an opportunity that we feel is essential for us to get into and hopefully at the third quarter we’ll have a more specific update as related to the timing of prepaid.

Ana Goshko - Banc of America

So, it sounds like you aren’t just going to go with the standard Boost branded prepaid, you’re going to do something on your own; is that fair?

Timothy Yager

I think it’s fair to say that we’re looking at all options and all options are available to us at this point.

Ana Goshko - Banc of America

Okay and then if I may just one last; on your color on the timing in the Nextel, Supreme Court announcement that’s pending, something’s expected in the fall. Have your lawyers given you guidance as to when the Supreme Court in Illinois comes back in to session and when is it potentially typical for them to announce what cases they’ll be hearing. Is that something that’s early September or is there sort of a wide potential range of when you might here something?

Timothy Yager

We haven’t had any substantial updates other than to say, I believe that they’re on recess until after Labor Day. So, certainly at this point I don’t think we would expect to here anything until after that and I certainly don’t want to imply that we’ll know something surely after Labor Day. We still stand by our comments that it would be in the fall timeframe, but my understanding is that they don’t come back from summer recess until after Labor Day.

Operator

Your next question comes from Joe Smith of Jefferies.

Jonathan Schildkraut – Jefferies

This is Jonathan Schildkraut. Hi, guys. A couple of question here; a few housekeeping items; can you give us the roaming MOUs for the quarter as well as the reseller revenues?

Steb Chandor

Roaming minutes on our network for the second quarter were a little over $0.5 billion, about $515 million. It was up about 10% from the prior sequential quarter, sort of typical, but as we mentioned in our prepared comments especially in the second half of the quarter we saw a slowdown on our minutes there and again we’ll be watching the impact on the economy or anything else that maybe if impacting that. Your second question, I recall was reseller revenue. Reseller revenues for the quarter were about $3.9 million.

Jonathan Schildkraut – Jefferies

And that was pretty much the same as it was last quarter, is that right?

Steb Chandor

That is correct. It was just right around $4.4 million.

Jonathan Schildkraut – Jefferies

Great; I just had one more question. There has been some commentary from Sprint that they are going to rollout a Femto-Cell complement to their wireless service and I was wondering if that was something that you were also looking into or would have the ability to participate in? Thank you.

Tim Yager

Sure Jonathan. This is Tim, we are planning to offer the Femto-Cell solution and I’ve had one in my house for six months now and it works terrific. So, we’re looking forward to be able to launch that in our markets.

Operator

(Operator Instructions) There are no further questions.

Tim Yager

Thank you. I’d like to thank everyone for joining us on our second quarter earnings call and we look forward to updating you in the future. Thank you.

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