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Regional mobile carrier NTELOS (NTLS -21.8%) has crashed after FBR says it believes Sprint (S)...

Regional mobile carrier NTELOS (NTLS -21.8%) has crashed after FBR says it believes Sprint (S) will end its wholesale deal, with an announcement set for FY13 (ends in March). FBR, which is downgrading shares to Underperform and lowering its PT to $5 from $15, notes the Sprint deal accounted for 32.4% of NTELOS' 2011 wireless revenue, and 57.4% of its adjusted EBITDA.
Comments (5)
  • So, if FBR believes this and believes their numbers accurate, why not cut the price target by 1/3 (since it's 1/3 of NTLS revenue) instead of by 2/3 like they have here? Or are they just guessing as usual?
    30 Nov 2012, 10:01 AM Reply Like
  • Capital intensive business. Losing 1/3 of revenue can mean losing 100% of EPS
    30 Nov 2012, 10:54 AM Reply Like
  • believe wholesale business is gradually going away anyway and being replaced by wireless and cloud solutions. I would think that Sprint is actively courting its CLEC partners to get involved as the CLEC has the business relationships and Sprint does not want to lose those wholesale customers to its rivals such as AT&T. I would think that NTelos’ management has a plan for this eventual outcome. I would think the FCC and the telecom industry has a vested interest to gradually phase in the new technology. This is especially true for rural areas like the ones that NTelos serves. Since FBR makes a market in NTLS and does research on the company, it stands to greatly benefit from this highly controversial analyst opinion. This is the same analyst that just told us to buy the stock some months ago. This is likely hedge fund manipulation using a single analyst opinion to drive a thinly traded stock down through a regional market maker that stands to profit handsomely. I am long NTLS and considering adding to my position in the next 72 hours.
    30 Nov 2012, 01:56 PM Reply Like
  • I hope you're correct. I added a bit to my position on the open today.
    30 Nov 2012, 04:20 PM Reply Like
  • Sprint would need to build a lot of towers in that foot print to replace it's current footprint on Ntelos, unless it frees up sufficient 800mhz capacity from iDEN spectrum, but would need all new handsets in its installed base in order to use 800mhz. So FBR analyst is really a fool. What makes the most sense is for Sprint to buy the network -- it's a classic rent/own decision. A "build" decision is foolhardy because Ntleos already has the advantage of leveraging two brands and two distribution systems over the same network. For Sprint to build a de novo network with only half the loading of the current network, and thus dramatically impair economics to itself and to Ntelos is simply dumb, and would be at best a tactical step to either negotiate improved rate card from Ntelos or otherwise to make ntelos cheaper to buy. Half the network are fed by Ntelos affiliate Lumos Netowrks (shared board members and Quadrangle controlled for both) for the fiber back-haul.

     

    anyway the FBR analyst probably should go back to playing fantasy football or playing Pick-6; he's got a better chance of making an intelligent assessment in those situations than he has in this instance.
    1 Dec 2012, 03:30 PM Reply Like
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