Ntelos reported strong western market growth, with financials in line with estimates

A recent shift in market focus looks to be paying off for regional telecom operator Ntelos, which reported second-quarter results slightly ahead of expectations.

Late last year Ntelos announced plans to sell off spectrum in its eastern markets to T-Mobile US for $56 million as part of an exit strategy from those markets. That deal closed in April, with the carrier leasing back a portion of that spectrum in a move to continue serving customers in its eastern footprint through November, at which point the carrier said it will shut down those operations. The decommissioning of services will include the closing of retail operations and the transfer of approximately 180,000 current subscribers in those markets to “another carrier.”

Looking strictly at its western markets, Ntelos said it added 7,400 net connections during the second quarter, which was more than double the 3,000 net additions posted across that region last year. The latest growth was dominated by postpaid customers that accounted for 4,300 net additions, with prepaid customers accounting for 3,100 net additions. Ntelos ended Q2 with 297,500 customers in its western footprint.

Customer growth was boosted by a combination of lower churn, which dropped from 2.3% last year to 2.1% this year, and an increase in gross customer additions.

As has become more common across the market, customer spending has shifted due to increased competition and the move toward equipment installment plans. Ntelos reported average revenue per account dropped from $136.61 during Q2 2014, to $117.18 this year, with the number of lines per account dipping from 2.3 last year to 2.2 this year.

Ntelos’ total revenue dropped year-over-year from $118 million during Q2 2014, to $108.3 million this year. The change included a significant dip in service revenue, relatively flat wholesale revenue and a near doubling in equipment sales.

Operating expenses dropped a slightly larger percentage, which helped bolster net income from $484,000 last year to $1.6 million this year.

Revenue generated through the company’s “strategic network alliance” with Sprint dropped year-over-year from $36.8 million last year to $36 million this year. That deal calls for Ntelos to continue as Sprint’s exclusive network provider in Ntelos’ home markets across portions of Virginia and West Virginia, including Sprint customers having access to Ntelos’ recently launched LTE services. Ntelos will also gain access to Sprint’s 800 MHz, 1.9 GHz and 2.5 GHz spectrum across its footprint connected to using that spectrum to expand LTE services over the next three years as part of Sprint’s Network Vision and Spark program.

Ntelos did report significant progress in the rollout of LTE services, noting 53.1% coverage of its western footprint at midyear, which is ahead of its year-end goal of 50% coverage. The carrier said it had LTE equipment on 27.2% of its total cell sites at the end of Q2.

Bored? Why not follow me on Twitter