Good morning, everyone. And welcome to the Shenandoah Telecommunications’ Third Quarter 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I will like to turn the call 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 September 30, 2016. 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 shentel.com. Please note that an audio replay of the call will be made available today. The results were set forth in the press release announcing this call. Rather 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 statements. 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. This was another great quarter, you’ll see significant changes from prior periods, along with the promising impact of having a full quarter results from the acquired business. We continue to upgrade the network in the acquired markets with the expectation of significantly enhancing our value proposition for wireless customers. Over the course of the next year these investments, combined with the efficiency improvements from migrating the final customers to Sprint's back office, imply that we'll see significant improvement in our bottom line after these initiatives are completed. As you will see during this morning's presentation, we have made significant progress on both efforts. On Slide 5, you see that adjusted operating income before depreciation and amortization, or adjusted OIBDA, for the quarter increased about 100% to $73.7 million. Revenues were $157 million in the second quarter, an 84% increase from the prior-year period. These increases were almost entirely due to the nTelos acquisition. As expected, we had a net loss for the quarter, which primarily reflects the acquisition, integration and migration costs we incurred and the incremental depreciation on the acquired assets. Our customer growth numbers were very strong during the quarter for both our Wireless segment and for our Cable segment. Our Wireless highlights begin on Slide 6. We saw a very significant jump in both prepaid and postpaid customer accounts as a result of the acquisition, which more than doubled the number of wireless customers. Our Wireless segment adjusted OIBDA grew 130% to $62.5 million and our continuing OIBDA in the Wireless segment, which is adjusted OIBDA less the benefit received from the waived Sprint management fee over the next six years, grew to $53 million. Turning to Slide 7, our Cable segment continued to show steady progress, and in the quarter generated a solid 30% adjusted OIBDA margin. Operating revenues increased nearly 13% to $27.6 million, while cable adjusted OIBDA grew over 50% to $8.2 million. Customer demand for higher bandwidth data services, pass-through of video cost increases and RGU growth of 6.4% drove this improvement. Slide 8 provides the highlights of our Fiber and Tower businesses. Our Fiber business continues to grow with lease revenues increasing more than 17% to nearly $11 million. Our 181 towers generated nearly $1.8 million in OIBDA from leases. This is up 3.5% compared to the third quarter last year and a result of higher operating expenses with our expanded portfolio. We’re very pleased with our results for the quarter and the progress of our integration efforts. Our extensive planing is paying off and our customers are continuing to benefit from our ongoing enhancements and upgrades to our networks. Throughout these efforts we remain focused on delivering quality services as we meet the growing demands of our customers. I’ll now turn the call back to Adele to review the details of our financial results.

Thank you, Chris. I’ll begin with Slide 10, which shows our changes in profitability. As we anticipated when we acquired nTelos, profitability dropped in all three metrics shown here. Operating income dropped from $15.1 million in Q3 2015 to a loss of $3.9 million in Q3 2016. Revenues were up by $71.6 million or 84% during this time, with the Wireless segment and its expanded footprint contributing $68.5 million of that growth. However, operating expenses grew by $90.6 million, the 3Q 2016 expenses included $50.8 million in incremental one-time costs and non-cash costs associated with the nTelos acquisition. This included depreciation and amortization, which was up $32.9 million, primarily as a result of the tangible and intangible assets recorded in the nTelos acquisition. Acquisition, integration and migration, or AIM costs, grew by $18 million. In 3Q 2016 these costs included handset replacements, early termination fees on overlapping cell sites, the cost to operate the nTelos back office until the customers are migrated to the Sprint back office, severance and the additional retail store staff required to support the migration process. During previous calls we estimated that AIM costs, including $24 million of financing fees and certain investment banker and other professional fees paid by nTelos at the time of the acquisition, would total $130 million to $150 million, when the migration is complete in late 2017. At this point we expect to be at the low end of this range. We have already incurred $78 million of these costs, and expect that roughly $18 million will be incurred in the fourth quarter of 2016 and the remainder in 2017. We borrowed $810 million to fund the acquisition and an additional $25 million since then. As a result we incurred an incremental $7 million of interest cost in Q3, 2016 over…

Thanks, Adele. The third quarter was very busy in our Wireless segment with continued great progress on the integration of nTelos and strong growth in our legacy area. To-date the progress has been as we had expected or better. As we anticipated, we continue to see loss of customers in the nTelos’ area as we are working to upgrade the network from 3G to 4G LTE and adding additional coverage. We expect the loss of customers to continue until late next year when the network upgrade will be substantially complete. We saw elevated churn when we upgraded our legacy network to 4G LTE and in our new area we are also performing a customer migration at the same time. Slide 16 shows our gross and net changes in our postpaid wireless space. In our legacy area we had an almost 5% increase in gross adds over the same quarter last year. But due to a slightly increase in churn from 1.4% to 1.55% the net adds were 5,670. We track churn by county and find that customers are almost twice as likely to churn if they live in county on the perimeter of our service area as those that live in the middle of our service area. We continue to focus on quality adds with 86% of our net addition being phones. We had strong gross adds in our new area of almost 21,000, but with churn at 2.37% we had a net loss of 4,448 postpaid customers. In total, we had postpaid net adds of 1,222. In our legacy area 31% of gross adds selected the lease option, 45% installment purchase and 24% wanted subsidized phone option. The split for upgrade were 37% lease, 37% installment sales and 26% remained unsubsidized plans. 42% of our legacy base remains on…

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

Absolutely. [Operator Instructions] We'll go to Ric Prentiss of Raymond James for our first question.

Thanks, good morning.

Good morning.

Good morning.

Hi, couple of questions. Obviously now we’ve got a full quarter of the nTelos acquisition. A couple of detailed questions and then a bigger picture one. In the appendix Slide 30, it talks about the reconciliation of Wireless revenues and the other revenue line was almost $3 million in the quarter, I think last quarter it was almost $2 million, what’s happening on that line item, exactly because obviously it’s continuing to grow.

I'm sorry, Ric. I'm not seeing that on Slide 30.

Slide 30, at least in the deck I printed.

Oh, I see $2,849.

Yes, exactly.

Let me think about that while you ask your next question.

Okay, sure. Then the affiliate extension, the amortization of that, I think that came in at $5.6 million this quarter. Is that the normal run rate we should expect on the affiliated amortization of $5.6 million a quarter?

It is.

Okay. And the bigger picture, as you think through that other revenue item, is margins were clearly impressive this time. I think we were on the high end of the Street at $65 million for the quarter for the whole Company and you came in $8 million or so above that. As we think of margins and how the different moving pieces of this acquisition, which is creating a lot of opportunity, how should we think about margins on the wireless business moving forward? I think they came in above 50% this quarter. Some more costs coming out. But we are just trying to figure out, what should we think of on wireless margins in the short, medium, and long term?

Wireless margins are largely dependent upon billing rates. And Earle can speak to this as well. But I don't believe we are at the bottom of the U that we expect with respect to billing rates Ric. So I expect that we will see some diminution of the margin on Wireless until those rates come back up as we inevitably expect them to.

Adele is correct. I think we still see several more dollars decrease in average revenue, but I think once again if you kind of look at short-term that’s kind of short-term issue, medium and long term bill, Ric we are going to start to be able to realize some economies of scale. One that we’re just starting to see now is the building of Fiber-to-the-Tower that will allow us to move not so much, if you look at just Wireless, but on a combined basis, we’ll be moving from paying third-parties to paying ourselves or that backhaul. And so you’ll see continued affiliate revenues going up in the Wireline business and in the Cable business. Probably more so even in the Cable business than the Wireline because of the fact that a lot of fiber that we own in the Cable business overlaps the nTelos footprint. We’re also going to continue to see the efficiencies in just manpower, as we continue to move through and completely affiliate-ize the area. We’ve already started looking at stores and we're starting to consolidate some of the stores. We have our Sprint store and nTelos store that was relatively close. We’ve been evaluating the activity of both of those. But we are not going to be closing those stores too quickly because we're still using those primarily for migration. And so we want to make sure that we have plenty of opportunities for the customers to migrate. And so I think what you're going to see is probably a dip in the margins in the short run, meaning over the next year or so. But then as we finish up the migrations, we expect the margins to stay in that high 40% to 50% range.

Ric, to follow-up on your initial question, the bulk of the $2.7 million in other revenues in wireless relates to federal universal service charges to the nTelos customers on the nTelos billing system. We don’t participate in the recording of those revenues when we are operating under the affiliate agreement, but as long as we have customers who are being billed through the nTelos back office, you will continue to see revenues there.

Okay, so that will be a benefit until all those migrate off?

Right.

Okay, and then cable TV margins were quite good as well versus what we were looking for. You talk to the broadband and the people signing up with the opposite upward moving ARPU on cable side, how should we think about cable margins going forward? Putting an eight on the front digit of the EBITDA was certainly good to see.

Well, our Cable margins are now – where the margins are now at 30%.

Okay.

And as long as we continue to sell more of the more profitable high-speed data products and less of the video service, those will continue to improve. There are large competitors in this industry who have OIBDA margins in excess of 40%. I don't think we will get there just because of our densities, but it's reasonable to expect that we would continue to see that grow.

Okay. And migration goals, Earle, mentioned that you guys have been very successful. You've already done more than you thought you'd do in the whole year. Help us understand how you're thinking about the seasonality on the postpaid side. Obviously you mentioned prepaid, you got to get them all done by year-end. But postpaid, how you think about holiday season versus how long you think it will take to migrate the rest of the post paid base?

Well, we expect that probably the amount of migrations will be less in the fourth quarter than what we've seen in the run rate simply because we hope we continue to add gross adds. But to be very honest Ric, we're not pushing, really the pedal to the metal in the nTelos area yet for new customers. We don't want to make the mistake, bringing customers on while we are still upgrading the network, have them have an unpleasant experience and then get a bad taste in their mouth, leave, and then it will be very, very hard for us to get them back. So our direction to our distribution in the new area has been primarily the focus on migrations, but obviously we’re doing a reasonable number of gross ads also. When I look at kind of next year, at the current run rate, we would be finished mid year or so. But I think what we're going to find is that they will slow down as we go through next year. So I think realistically we’re expecting that it will be finished probably September, October next year. And as we get close to the last couple of thousands, we will really push and either force them either to migrate or turn them off.

That's very helpful. Thanks guys.

You're welcome.

Our next question comes from Hamed Khorsand, BWS Financial. Your line is open.

Hi good morning. Just a follow-up on that last conversation, that's where I wanted to start off with. What gets the customer migrating? In last quarter, it was a partial quarter, you had 50,000 that migrated. This quarter you've had a total that's now reached 105,000. So I'm assuming 55,000 migrated but you had an extra month in the quarter. So what's the strategy as far as migrating these customers so this rate doesn't decline like this?

Hamed this is Earle. Basically, we can kind of speed up and slow down the migrations based on how we are contacting the customer. And we also look at it by geography, because what we don't want to have the customer come into the store and stand around waiting to have their phone migrated. So first, we put out a lot of communications encouraging customers to make an appointment. If they make an appointment basically they have priority over somebody who just walks into the store. Second, we are sending letters, and emails and texts to the customers as the migration slow in any particular geography in order to encourage them to come in. So I think that we’re able to turn the faucet up and down based on what’s happening in the marketplace and what’s happening in a particular store. And so I think we’ll continue to see good pace until we reach that last 20% or so of customers who will just procrastinate. And in that case we’ll probably have to be starting to call them and be more direct in getting them into the stores.

Okay. Is there a loss in profitability as you are losing prepaid customers?

Well obviously, but we expected to lose a fairly significant number. I mean prepaid are the most difficult ones to migrate because you don’t have a lot of information about the customer. That’s the kind of the fact of prepaid is many times you don’t know even who is the person is. Actually nTelos had some pretty good records on a number of their prepaid customers and we have been able to reach out to them. But the prepaid customer base is kind of fickle and they jump from carrier to carrier more quickly than the postpaid. What we’ve also been finding is, customers who we have counted as churn actually have gone into a boost store on their own and converted. And we’ve actually been able to track thousands of customers that fall into that category, simply because we do have some information. It’s strange to me, but once again its not unusual for the prepaid, is they actually gave up their phone number and got a new phone number. Because we could have tracked them very easily as they had done a phone number swamp. But what they did is they’ve gone in and they’ve got a new phone number, but we had some information about whether an email address, or billing addressing, or some information that has allowed us to kind of tie those customers together. But generally the prepaid is going to be a higher churn. And then with the sale of the assurance customers, along with Sprint changing the formula that they use to disconnect or count prepaid customers’ churn, we are going to see a very, very high churn in the fourth quarter. But based on the numbers that we have today and the number of customers that we’re migrating daily, we’re going to basically hit our target of prepaid customers that we moved over.

What are you expecting to be the net loss here? You gained only 140,000 prepaid customers.

I’m not sure I understand your question?

When you acquired nTelos, sorry, you added about a net of about 140,000 prepaid customers. So far you've lost something around 13,000 or so, if my math is right. So I’m just trying to assess how many of those 140,000 you are looking to lose?

Well we are probably going to loss 30,000 when they move – the assurance customers move into the joint venture. If you do a ratio of the expected – Sprint announced that they were going to lose two million customers when they shorten the life or shorten the time period to turn them off. If you just do a ratio based on the number of customers we have versus Sprint’s total, we’re going to be loss between 30,000 and 35,000 customers just by shortening the time to disconnect them for not re-upping. Once again, that’s no revenue because they are not active customers today, so if the customer count without ARPU. So actually revenue should be neutral on that. And then we expected to be losing in excess of 5% to 6% of our customers per month as we were doing the migration. So if you look at all of those numbers, we were going to lose – we will lose well over a half of those customers by the time we finish the migration.

Okay, all right. Thank you.

[Operator Instructions] Our next question comes from Amy Young of Macquarie. Your line is open.

Hi, good morning, this is Alessandra Gonzalez [ph] for Amy. So my first question is on churn. Where are the Intelo subs churning to? And have there been any changes in competitive pressures that we should be aware of?

No. When you look at the port-in versus port-out ratios, the new area, basically we're losing one customer for every half one we are gaining. And that was pretty much where they were from a port-in, port-out ratio prior to acquiring them. And we’re not seeing them go to any one carrier, we're basically seeing them go to all three. And it really depends very much on where they're located. As we stated before, AT&T has the strongest competitive network generally in West Virginia. Verizon has the stronger competitive network in Virginia. And you find that U.S. Cellular has some pockets, particularly in Northeast part of West Virginia and around the Lynchburg area, where their systems are the best. So it kind of depends on geography where they go. But the ratios really haven't changed from before we bought the company.

Got it, thank you. And then lastly, how long will the higher OpEx levels last for and what's the normalized rate we should be thinking about?

The normalized rate would be the rate without the AIM costs, as we're calling them the acquisition, integration and migration costs. So if you were to subtract those out of the OpEx, you would get what is more of a normalized rate.

Got it. Thank you.

Your welcome.

There are no further questions. I like to turn the call back over to Adele Skolits for any closing remarks.

Thank you for participating. Please let me know if there are additional details you would like us to include on future calls. My contact information was provided on the press release.

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