Good morning, everyone, and welcome to the Shenandoah Telecommunications First Quarter 2014 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Adele Skolits, CFO. Please go ahead, ma'am.

Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the quarter ended March 31, 2014. Our results were announced in a press release distributed this morning, and the presentation we’ll be reviewing is included on the Investor page of our website at www.shentel.com. Please note that an audio replay of the call will be made available later today. The details were set forth in the press release announcing this call. With us on the call today are: Christopher French, our President and Chief Executive Officer; and Earle MacKenzie, our Executive Vice President and Chief Operating Officer. After our prepared remarks, we'll conduct a question-and-answer session. As always, let me refer you to Slide 2 of the presentation, which contains our Safe Harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from these statements. Shentel provides a detailed discussion of various risk factors in our SEC filings, which you’re strongly encouraged to review. You’re cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement. Also, in an effort to provide useful information to investors, we note on Slide 3 that our comments today include non-GAAP financial measures. Details on these measures, including why we use them, and reconciliations to the most comparable GAAP measures are included in our SEC filings. These reconciliations are also provided in an Appendix to today's slide presentation. I'll turn the call over to Chris now.

Thank you, Adele. We appreciate everyone joining us this morning. We had a good quarter, and I'm delighted to share news of the company's continued growth. On Slide 5, you'll see the first quarter 2014 net income increased 3.2% to $8.6 million compared to the prior year, attributable primarily to continued growth in the wireless and cable segments. Adjusted operating income before depreciation, amortization or OIBDA for the quarter increased 7% to $31.7 million. Revenues were $80.5 million in the first quarter, a 6% increase from the prior year period. Revenues increased chiefly as a result of wireless subscriber growth, increased data fees and enhanced product mix. Our cable segment revenues also improved as a result of an increase in the number of revenue-generating units or RGUs and higher average revenue per customer. Our wireless highlights start on Slide 6. Postpaid customers grew by 4.2% over last year, and prepaid customers by 3.1%. Operating revenue grew 6.1%, improving by $2.9 million. Turning to Slide 7. We also experienced substantial improvements in cable segment's operating performance. Operating revenues increased 10.6% to $20.5 million while cable adjusted OIBDA grew by 27% to $3.8 million. Strong growth of 6.1% in RGUs drove this increase. As discussed on Slide 8, our solid performance is being driven by many things, including 2 huge network upgrades that were completed in 2013. First, on the wireless side, we completed a $115 million upgrade to 4G LTE, the biggest capital investment in our company's history. New and existing customers are embracing our enhanced service, and we've seen better coverage, stronger indoor signals, faster download speeds and enhanced crystal-clear voice quality. Second, with the 2013 completion of upgrades to our cable infrastructure, we have strengthened our cable offering. Customer demand continues to grow for high-speed broadband services and premium digital TV packages, and we are positioned to meet those demands. Our reputation and customer trust has grown dramatically over the past 3 years. Our Net Promoter Score, which measures how likely a customer will recommend Shentel, was poor 3 years ago. Since then, we have achieved gains that the research firm deemed remarkable. We have a lot of work ahead of us, but I am proud of the progress the team here is making. I'll now turn the call back to Adele to review the details of our financial results.

Thank you, Chris. Before I review the financial results, I'd like to review 2 changes we made to our segment reporting during the quarter. First, in late 2013, the company restructured its management team, primarily to align our organization with our operating segments, wireless, cable and wireline, rather than on a functional basis, such as sales and marketing, operations and engineering. As part of this restructuring, the company determined that the operations associated with the video product offered in Shenandoah County, Virginia would be included in the wireline segment. The video services offered in Shenandoah County share much of the network, which the regulated telephone company uses to service customers. These services had previously been included in the Cable segment. Second, primarily as a result of the restructuring, the company's allocations of certain shared general and administrative expenses were updated to reflect how our senior management team makes financial decisions and manages resources. Since the Vice Presidents managing the operating segments do not directly control these expenses, the company has chosen to record these expenses at the holding company. As a result, certain cost, including finance and accounting, executive management, legal, IT and human resources are now recorded in the other segment as Corporate Costs. In this way, segment performance presents a clearer picture of the trends in an individual segment's profitability. In our press release, we included a table showing a pro forma set of segment financial statements for the past 2 years by quarter and for the full years, which reflects these changes on a comparable basis with the current reporting. Moving on to the Q1 '14 results. I'll begin with Slide 10. Our key financial metrics, including operating income, net income and earnings per share, all rose approximately 3% in Q1 '14 over Q1 '13. We had…

Thank you, Adele. Good morning, everyone. My presentation starts on Slide 17. We ended the first quarter with 275,025 postpaid customers, an increase of 1,304 since year end. Our smartphone penetration continues to grow, reaching 77% of the postpaid base. Slide 18 provides the detail of the net adds for the quarter. We had similar gross adds for the first quarter of last year with lower churn of 1.73%, the result being 1,304 net adds, a 22% increase. During the first quarter of last year, we were still getting iDEN conversions, which numbered 1,745 with net adds of 1,065. Of course, there were no iDEN conversions this year. We saw a significant increase in sales in the Shentel channels at 55% of gross adds compared to 45% last year. Postpaid upgrades in the first quarter were 4.6% of the base, a significant decrease from the fourth quarter and a little lower than our historical percentages. As we stated in our year-end earnings call, we do not have the ability to offer easy pay or Framily until April. We did launch both products on April 11. We believe not having Framily and easy pay did have an impact on our results, particularly in the second half of the quarter. We saw an increase in port-outs to most carriers, including T-Mobile, who historically has been a net port-in carrier. This shift causes us to have higher churn and lower net adds than the trends we were experiencing earlier in the quarter. Since it's only been a few weeks, we don't have enough data to say what will be the impact of having Framily and easy pay. I would like to take a moment to clarify the impact of easy pay on Shentel. We will realize the benefit of no subsidy on a…

This concludes our prepared remarks. Nova, would you now review the instructions for posting a question?

[Operator Instructions] And our first question comes from Alan Salinas of Raymond James.

This is Alan here, in for Ric Prentiss. A big topic on the Sprint call was their tablet sales. I was wondering, are you guys selling any tablets now in 1Q? And if not, do you guys expect to ramp that up as the year progresses?

Alan, this is Earle. We did sell a nominal number of tablets. To date, we have about 3,200 total tablets in our base. So we have not focused on tablets. They are a lower revenue-generating -- our concern is that people buy them and use them primarily on Wi-Fi. And so it's not been a product that we have focused on. But we'll continue to monitor it. And if we see the market changing, then we will be selling more tablets.

[Operator Instructions] And our next question comes from the line of Barry Sine of Drexel Hamilton.

So obviously, I'm still kind of digesting the results, but obviously, a very good quarter again. A lot of different moving pieces, and thank you, Adele, for calling all those out. As of, I think you said April 11, you now have easy pay and Framily. So looking forward, are you -- is everything done with? Are you done with the charges for the LTE upgrade? Do you have the network? Do you have the plans in place? And what is the outlook for the rest of the year on the wireless side?

Barry, this is Earle. As of the 11th of April, we have all the systems in place to be able to sell Framily and easy pay. We did have some work to do with Sprint because of the fact that the decision was made that Sprint would carry the paper. We had to have the procedures in place where we actually are taking the equipment out of our inventory to satisfy the customers' need. But then Sprint reimburses us for that inventory and then basically is recording the entire transaction on their books. So we have all of that in place, and we have started offering the Framily plan, similar to what Sprint's been doing in its stores. As far as the network: Yes, the network is complete. As I mentioned, we are very, very happy that we've been able to now launch LTE at 800. Only have 15 sites up so I don't have a lot of stats yet, but it is working. We are -- have 80 sites now up where we have the second carrier at 1900, and that is also going well for us. And the reason we've been able to do that is because, as I mentioned, 51% of our usage is now on LTE -- data usage is now on LTE. So we've been able to true-up or free-up some of the capacity we had for 3G, and allowed us to harvest that second carrier. Which we think puts us in very good position as we continue to move our customers, especially the WiMAX customers of those WiMAX phones to the LTE phones. So as far as the expense levels as far -- of operating the network, the first quarters will become a pretty normalized level going forward. We are adding some sites this year. I think we have 22 in the budget for capacity, and so there will be some additional operating expenses related to those sites, but that's pretty nominal compared to the base that we have of 525.

So to kind of address the question a little differently, so if I look at first quarter and then how that may look vis-à-vis the rest of the year: First quarter, you didn't have the Framily plan, the easy pay. Now you have those. You talked about some losses, port outs to T-Mobile. So I'm assuming the sense I get is that the following 3 quarters on a wireless postpaid add basis should look a little bit better than what we saw in 1Q as those impacts won't be present the rest of the year?

I think that's probably a pretty good position. The big thing -- another thing to point out was, normally, our distribution between ourselves and third parties or the nationals is 50-50. Because the nationals were not offering Framily, we believe that when a customer, a prospect came into one of the nationals they probably were more likely pushing them towards one of the other carriers. And so if we -- one of the other things we're working on is getting that balance back where we had about the same number of gross adds, but 55% came through our stores. So our stores did have a lot more activity this year than they had last year the first quarter, but we didn't get the same kind of contribution from the nationals. So with Framily now available and launched in the nationals, we're hoping that, that will help also to balance that.

And then, Earle, a similar question on postpaid. So if I think about some of the trends that impacted postpaid in the quarter, you had mentioned Sprint reauthorizing some of the Assurance customers that will bleed into second quarter. You mentioned the fact that the kind of the novelty of prepaid has worn off now that it's been in the market for a year. It sounds like 2Q will look similar to 1Q, but then second half of the year, because the reauthorizations will be done with, maybe a little bit stronger. Is that if a fair way to think about prepaid?

I think it is. If you remember last year, we took a tremendous hit in the second quarter on Assurance reauthorization. I don't believe that the reauthorization will be as big of an impact this year. But they really didn't get started on the reauthorization until it appears about the second week in March. So we had some impact. As I mentioned, it was several thousand customers canceled in the last 3 or 4 -- 3 weeks or so of March, and then we've seen that trend continue into April.

And, of course, second quarter is just seasonally low for prepaid as well. That's always the lowest quarter for prepaid.

Right.

And my last question, you called out T-Mobile. Could you just kind of remind us, educate us, what is your network overlap with T-Mobile in the market you're in? And then what is the marketing/retail store overlap? Are they -- I don't recall seeing them being that visible in a lot of your markets.

Their biggest presence is in the eastern part of Pennsylvania kind of the York, Harrisburg over towards Carlisle area; which represents as far as population, about almost 50% of our total PoPs covered. They do have a good network there. Their network for the Western half of Pennsylvania and then down the Interstate 81 through Virginia, West Virginia, Maryland is primarily interstate coverage. And really, they have no company stores. They do sell through their national contracts, but their store concentration and their customer concentration is primarily in the eastern half of Pennsylvania.

[Operator Instructions]

Nova, looks like that's all the questions -- I'm sorry, we have one more.

And we have another question from the line of Ric Prentiss of Raymond James.

I wanted to ask a question on the easy pay and the Framily plan. Can you update us as far as have you started the Framily plan and the easy pay, and what do you think the effect on EBIT that will be? It's a fairly complicated accounting, I guess.

Ric, this is Earle. We launched that on the 11th of April. So we've had a little over 2 weeks or so of Framily, and so we are seeing some take rate on that. It is growing. As you recall, Sprint has been advertising it nationally for longer than we've been able to offer it. So it has taken some time for people to realize that we now are offering it in our stores. So really, I don't have a lot of data points to share with you. As far as the impact on EBITDA, just to reiterate, we will not be recording any of the transaction related to easy pay on our books. We will get the benefit of not having the -- to have the subsidy. But the revenue and the expense is going to be recorded on Sprint's books because Sprint's going to carry that paper. So what will happen is, a customer will come into our location. We will do the paperwork for easy pay. We will give them a phone out of our inventory. Subsequent to that, Sprint will reimburse us for that inventory that we've done. And so from our standpoint, it really is all a transaction on the balance sheet as far as inventory in and out. And then Sprint will actually be the one recording the revenue, and we'll take the risk of any bad debt.

And when Earle says the revenue, he means exclusively the equipment revenue. Obviously, the service -- the ongoing service revenue would be ours.

So from our standpoint, we would get a lower revenue from that customer offer at the service revenue, but we haven't had the subsidy. So for us, the accounting is a little more straightforward.

And I'm showing no further questions in the queue at this time. I'd like to turn the program back to Ms. Adele Skolits for closing remarks.

Thanks for participating, everyone. I'd like to invite you to let me know if there any additional details you'd like to see in future calls. My contact information was provided on the press release. Thanks, again.

And again, ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now disconnect.