Good morning, everyone. And welcome to the Shenandoah Telecommunications Fourth Quarter and Year-End 2017 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. Jennifer Belodeau of IMS and Investors Relations for Shentel.

Good morning and thank you for joining us. The purpose of today's call is to review Shentel's results for the quarter and year ended December 31, 2017. Our results were announced in a press release distributed this morning, and the presentation we'll be reviewing is included on our Investor page at our shentel.com website. Please note that an audio replay of the call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Christopher French, our President and Chief Executive Officer; Earle MacKenzie, our Executive Vice President and Chief Operating Officer; and Jim Woodward, Senior Vice President, Finance and Chief Financial 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 the 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 now turn the call over to Chris.

Thank you, Jenn. We appreciate everyone joining us this morning. We continue to make significant progress on many different initiatives, growing the company and serving our communities and customers. As of year-end 2017, we had completed over 60% of our planned expansion sites in the former nTelos area and are well on the way to finishing the remainder of this year. With our improved network, we are well-positioned to drive customer growth in these markets. The fourth quarter marked our first full quarter of sales after completing the upgrade to 4G LTE in the former nTelos area and we’re very pleased with our results. Earlier this month, we again amended our agreement with Sprint to expand our affiliate service territory. With this most recent expansion, we will serve a population of over $7 million in the mid-Atlantic region. The expansion allows us to build networks that will improve coverage between our existing service areas and Sprint's metro networks, providing a better experience and more reliable service for our customers, as well as introducing significant opportunities for our continued growth. For the year, Slide 5 shows the income statement increases reflecting the benefit from a full year’s results from the acquired nTelos markets. Revenue reads $612 million and operating income more than doubled to $46.5 million. Adjusted OIBDA was $281 million, representing a 46% margin and a 14% increase over the prior year. On Slide 6, you’ll see that our fourth quarter revenue declined slightly whereas operating income increased 48% to 18 million. This quarter included the one-time non-cash benefit related to the new tax law, but absent that net income would be $7 million. We continue to generate strong cash flows from operations with fourth-quarter adjusted OIBDA of $71 million, representing an OIBDA margin of 47%. Slide 7 shows our…

Thank you, Chris, and good morning everyone. I’ll begin with Slide 12, which shows changes in our operating revenues and net income. Revenues for the fourth quarter 2017 were $152 million, compared to $156 million in 2016. The decrease is primarily the result of lower average revenue per wireless subscriber, which was driven by lower price plans from Sprint and the move away from subsidized plans. Our operating income increased to $18 million or 48% over the prior year's quarter. We recorded net income of $61 million, compared to a slight loss of $200,000 in the last quarter. Net income includes a one-time non-cash benefit of $53 million related to the remeasurement of our deferred taxes to reflect the lower tax rates as part of the 2017 Tax Act. While we have made a reasonable estimate of the impact of the Tax Act on our deferred tax assets and liabilities that estimate could change as we complete our analysis of all the impacts of the 2017 Tax Act. Excluding the impact of tax reform, our 2017 Q4 net income would be 7 million, compared to a loss of 200,000 in 2016. Moving to Slide 13, adjusted OIBDA for Q4 was $71 million, compared to 76 million in 2016, representing an adjusted OIBDA margin of 47%. Also, on Slide 13 is continuing OIBDA, which includes the impact of the waived Sprint management fee. I’d also like to point out that excluding the impact of integration and acquisition related expenses, adjusted OIBDA was even with last year at $70 million. As a reminder, when we acquired nTelos, Sprint committed to waiving the 8% postpaid and 6% prepaid management fees up to $4.2 million a month until the total waived fee reaches 256 million. We provide the continuing OIBDA measure to ensure that…

Thanks Jim and good morning. I’ll start on Slide 18. We provided year-end subscriber numbers and fourth quarter activity in the press release on January 22, but I’ll recap. We ended the year with 737,000 postpaid and 226,000 prepaid wireless subs, excluding assurance customers. As of year-end, approximately 26% of our postpaid customers remain on subsidized rate plans. On Slide 19, we had 51,442 fourth quarter gross postpaid ads, which was a 7% increase over fourth quarter 2016. The exciting news is that 57% of the gross ads wherein the former nTelos area, which has approximately 52% of the covered pops. We had 14,035 net adds in 2017 with 8,643 net adds in the fourth quarter. Over 55% of the fourth-quarter net ads wherein the former nTelos area. 67% of the fourth-quarter net ads were phones with 33% being data and data devices. Tablets and data devices. Included in the data devices were approximately 1,100 Apple watches, which were – had free service for 90 days, upgrades in the fourth quarter where higher at 9.4% of the postpaid base. We reported a fourth-quarter port-in ratio of 1.24 to 1. Additional good news is the port-in ratio in the former nTelos area grew from approximately 1.1 to 1 in October, up to 1.4 to 1 in December. We have seen that momentum continue into 2018 with the port-in ratio averaging 1.4 to 1 in the former nTelos area for January and February. Sales have been particularly strong investor Virginia. With the integration and transformation of nTelos complete, we don't plan to provide separate stats for the former nTelos area going forward. Slide 20 shows the churn numbers that we have previously reported along with postpaid ARPU. The decrease in fourth-quarter ARPU is primarily due to further reductions in postpaid customers on…

Thank you. That concludes our prepared remarks. Operator, would you review the instructions for posting the question.

Absolutely. [Operator Instructions] We will go first to Ric Prentiss of Raymond James. Your line is open.

Hi guys it’s [indiscernible] on for Ric. Just had a quick one on the cost of goods and services and wireless seem to drop quarter and year-over-year, is that related to the straight-line or what was driving that?

Yes, primarily it was, very little of it was a straight line, but the cost of goods in wireless over time had more to do I think with the reflection and revenues.

Great. Thanks.

Thank you. Our next question comes from Amy Young of Macquarie. Your line is now open.

Good morning Earle, good morning Jim. Hope you are doing well? Couple of quick questions. First, on the new expansion deal that you have with Sprint. Can you just clarify the CapEx expectations for 2018? Is it 162 [ph] that you're expect contemplate the 56 [ph] over the next 3 years? And then I have a couple of more follow-ups. Thanks.

Yes, this is Earle. Yes, it does. It includes - money is to finish up the approximately 90 sites that we have to do in the nTelos area in order to finish up that expansion. It includes dollars for the Parkersburg, Cumberland expansion that we announced last year and it also includes some dollars, but not a significant number of amount of the 56 for the most recent expansion and that obviously takes some time to do planning. So, most of what we will be spending in that part of the expansion will be in the fourth quarter of this year.

Got it. And then did I hear this correctly that you’re basically inheriting 60,000 subs or 59 rather? Can you help us walk through what kind of penetration rates we should be assuming for 1.1 million over the next two years, obviously your track record has been – your track record is developing very strong now. So, we should we assume kind of the same penetration rates that you have been able to achieve with nTelos in this new expansion agreement?

Over time the answer is, yes. We do expect that we can achieve the same kind of results, but realistically it’s going to take us 18 months to 24 months to get there because the coverage although there is some coverage and some customers there, there is not great coverage yet, and we’re not going to spend a lot of marketing dollars in these areas until we have a competitive network. So, I think the way – the best way to think about it is that most of the growth accelerated growth for this year will come out of the nTelos footprint. Towards the middle of next year, we will start seeing numbers come out of the Parkersburg, Cumberland area and then towards the end of 2019, early 2020 is when we will start seeing numbers accelerate out of the most recent expansion.

Got you. And then, maybe if I could just squeeze in one last question. I think you're expecting that OpEx is going to be little bit elevated in 2018 and 2019 as a result of this, can you just give us a sense on the magnitude of the jumps? Thanks.

Yes, I think the best way to think about it is, we’re talking about between last year and this year adding 300 plus new sell sites. The average cost per month for a new cell site is about 55, $5600 a month when you look at the rent on the tower or the backhaul, the electricity and maintenance. So, you can see that over $60,000 per sell side per month is a fairly significant increase in expenses. Obviously, all that’s not coming in one month because we’re building those towers, those sites over that period of time, but we will see the cost of goods sold part of the income statement increase as we are bringing on these sites.

Great. Thank you.

You're welcome.

Thank you. Our next question comes from the line of Hamed Khorsand of BWS Financials. Your line is now open.

Hi, good morning. So, first off as far as the new wireless subscriber ads goes in Q4, was there any impact from the late iPhone launch this past quarter and are you seeing any spillover effect into Q1 because of that late release?

Actually Hamed, probably the iPhone release has little impact this year that I’ve seen in the last several years. What we’re finding is that customers are keeping their phone longer and I think that’s probably is reflected in what you're seeing on some of the promotions that you’re seeing in the marketplace where there has been quite a few buy-one get-one free for the iPhone 8. And so, although it does have some impact no doubt about it, we really haven't seen in 2017 nearly the lift that we have seen in previous years by having the iPhone release.

Okay. And then what’s the timing as far as when you would see the roll-off of the Sprint promo you were talking about? What’s the additional ARPU from the lines 3, 4, and 5?

Hamed really what we’re talking about is, they are certainly the ones that I specifically mentioned in the fourth quarter. They will roll-off in a year, but what’s more important for us is they are all the promotions that Sprint has been giving over the last several years. As you probably know Sprint has announced publicly that they are going to pull back on those promotions, and so we’re expecting them to start to take away some of those promotional dollars from customers starting the end of this quarter into the second quarter on those people who have had promotions for several years. If you remember some of the promotions that they have run in the past is to cut the bill in half and maybe then have five lines for $90. So, we know that it’s not going to happen all at once, but we expect that over the next year and going forward we should start seeing some impact of having those promotions roll-up and potentially that should translate into higher ARPU.

Okay. And lastly, what kind of trends are you seeing as far as the – now that you have more than one quarter of the ad spend increase with the new wireless subscriber additions going to Q1 and Q2, are you seeing any traction here?

Yes, so we're definitely seeing traction. We are, as I mentioned, we had elevated gross ads. We’re starting to see more traffic in the stores in the former and nTelos area. When people are coming in we’re having a very high rate of closing them when we’re able to tell them the story and they understand where our coverage is. And we're starting to see the impact of churn going down. The only part of our nTelos customer base that where the churn hasn't really started to decrease yet, as you recall when we acquired nTelos we got two customer groups. We got the nTelos customer group and we got Sprint's customers in that footprint. The nTelos customers who we’ve had to come into one of our stores and get a new phone and we were able to tell the story to, churn in that group has dropped very, very nicely. What we haven't seen churn dropping yet is in those customers who came over from Sprint because we really had no ability or reason to touch those customers. They were already getting a Sprint bill. They already had a Sprint phone. As the network continues to get better and better we assume that that will impact that group. Perception always lags reality and so as we’re looking forward we expected that the churn in the nTelos area will start dropping over this year and by this time next year we don't really see any reason why the churn in that area would be any different than our legacy area?

Okay. And then finally, just as far as total subscribers go you’ve seen a nice increase as far as postpaid subscribers bill, while you are lagging on prepaid. Are you seeing a conversion here of users going from prepaid to postpaid or is this more just mechanics of last year's accounting adjustments in Sprints adjustments to what it comes to prepaid customer?

That’s a good question. We have not seen a lot of customers moving up from prepaid to postpaid. They really are different segment of the population that buy those. And a lot of what you saw, especially the fourth quarter Hamed is time of the year. Fourth quarter is not the best prepaid quarter, first quarter is. And I can tell you, we’re having a very, very good prepaid first quarter. The other thing that kind of impacts our numbers is the shift within our customer base from Virgin mobile to Boost. Sprint is not spending nearly the money to support the Virgin mobile brand that they are the Boost brand and so what we’re seeing is very nice monthly increases in our Boost customer base, but because that Virgin mobile brand is not being supported at the same level, we’re having decreases in our virgin mobile customer base. So, I guess at some point in time that percentage of our customers that our Virgin mobile be pretty small and will have the biggest impact. We’re still seeing the prepaid business is being very robust, very solid for us and as I mentioned we are having a very, very good first quarter.

All right. Thank you for your time.

You're welcome.

Thank you. And I’m showing no further questions in queue at this time. I would like to turn the conference back over to Jim Woodward for closing remarks.

Thank you everyone for participating in our call today and your interest in Shentel. And we look forward to updating you on our progress in future calls.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect. Everyone, have a good day.