Analyst thinks Shentel lacks funds, does not need Ntelos deal
Recent reports about a potential Shenandoah Telecommunications acquisition of fellow regional telecom operator Ntelos may have impacted stock prices, but some investors are not moved.
Macquarie Capital analyst Kevin Smithen noted in a recent research report that the firm felt the dip in Shenandoah’s stock price connected with a Financial Times report is overblown. The firm cited doubts about Shenandoah, which is also known as Shentel, being able to raise the necessary funds as well as the telecom operator being too smart to open up additional reliance on network partner Sprint for its views.
Smithen also noted that Shenandoah is likely taking subscribers from Ntelos in markets where they overlap, further muddying the need for an acquisition. Instead of a potential Ntelos deal, Smithen said he would expect Shenandoah to look at something in the cable market or at another wireless property.
The Financial Times report cited rumors that Shenandoah was preparing a $200 million offer for Ntelos. The report sent Shenandoah’s stock price sharply downward, though it has since recovered most of the loss, while Ntelos’ stock spiked.
Both operators offer wireless services in portions of Virginia, West Virginia and Maryland, though Ntelos recently completed the sale of its “eastern” operations to T-Mobile US as well as tower assets as it looked to consolidate its own operations. Both operators also work closely with Sprint to provide nationwide roaming, with Shenandoah securing an LTE roaming agreement with the larger carrier in 2012, while Ntelos scored a deal last year.
Ntelos reported it lost 34,200 customers during the first quarter as it exited some of its eastern Virginia markets and focused its operating efforts on markets in western Virginia and West Virginia. Ntelos management noted that while the move impacted overall customer numbers for the quarter, it did see subscriber additions in its western markets that it had “not seen in years.”
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