- Shenandoah Telecommunications (SHEN +21.2%) and NTELOS Holdings (NTLS +23%) are both up sharply in the wake of their news that Shentel is buying out NTELOS in a $640M deal.
- In a conference call to discuss the deal, Shentel CEO Chris French pointed to a combined network that covers 4.3M points of presence and 1M subscribers, essentially doubling Shentel's POPs, revenue and OIBDA.
- The deal's got mildly complicated terms as a three-way transaction ("win-win-win") with Shentel affiliate partner Sprint (NYSE:S), who will compensate Shentel to the tune of $252M in spectrum management fees (to be received in full within 5-6 years) and convert nTelos-brand customers to Sprint-branded, as well as take over NTELOS spectrum.
- As for Sprint's coming to the table to make it happen: "I think it really came down to economics on both sides," said COO Earle MacKenzie. Sprint is "going to save the dollars that they spent or would be spending to buy the wholesale usage from nTelos and, you know, we were able to provide a network. We also were committed to spending additional capex there which will reduce their roaming expenses to others and provided a great return for our shareholders."
- Shentel says it will complete a 4G LTE upgrade where NTELOS had a "good head start."
- Meanwhile, FBR & Co. upgraded Shentel to Outperform, from Market Perform. The analysts raised the price target to $40, from $33; that's 10.9% upside from yesterday's close, though shares now trade at $43.70.
- Previously: NTELOS up 20% on $640M buyout by Shentel (Aug. 10 2015)