Shenandoah Telecommunications Company (SHEN) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2020 Earnings Conference Call. At this time all participant lines are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions].I would now like to hand the conference over to your speaker today, John Nesbett of IMS and Investor Relations for Shenandoah. Please go ahead.

Good morning and thank you for joining us. The purpose for today's call is to review Shentel's results for the first quarter 2020. Our results were announced in a press release distributed this morning and the presentation we'll be reviewing is included in our Investor page at our website, www.shentel.com.Please note that an audio replay of this 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 Chris French, President and Chief Executive Officer; Dave Heimbach, Executive Vice President and Chief Operating Officer; and Jim Volk, Senior Vice President of Finance and CFO.After our prepared remarks we will conduct a question-and-answer session. As always, let me refer you to slide two 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. Hence, I’ll provide a detailed discussion of various risk factors in our SEC filings, which you're encouraged to review. You're cautioned to not 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.Okay, with that, I'll turn the call over to Chris now. Go ahead, Chris.

Thanks John. We appreciate everyone joining us this morning and I hope everyone is healthy and safe. These are uncertain times as we all try to navigate the impacts of the COVID-19 pandemic and work towards a rational and safe return to some sense of normalcy.I want to start by first thanking our employees and members of our management team. I couldn't be more proud of how they all quickly and efficiently adjusted to a new way of doing business. In an extremely short amount of time we were able to implement many practices to address employee safety, while continuing to deliver our services to customers who are relying on our essential services and networks more than ever.Slide four provides a high level outline of some of our actions taken to protect our employees, as well as our customers and communities. With telecommunications deemed and essential service, we were able to seamlessly continue most of our customer facing operations. Although we did have to temporarily close about 40% of our Sprint branded retail stores.Additionally, you can see several other initiatives we implemented to benefit our customers during this difficult period. The temporary changes include upgrading broadband speeds of more than 27,000 customers to a minimum of 50Mbps, increasing broadband data allowances, suspending disconnects for customers unable to pay due to COVID-19 and introducing a lower cost prepaid broadband plan.Jim and Dave will provide more details in their reports, but you'll see that our broadband and tower segment results were generally unaffected by COVID-19. In our wireless segment, we had good financial results, but the pandemic impacted subscriber growth.Wireless recurring revenue from our 1.1 million PCS subscribers remained steady, but postpaid subscriber sales momentum began to slow in the second half of March as a result of the temporary closure of Sprint branded retail stores in the stay-at-home directives. We expect that this interruption will continue until communities more fully re-open, but do not expect that the long-term growth prospects of our wireless business will be materially affected.Moving the slide five, you see our growing cash flow generation, strong liquidity and modest leverage that positioned us well to weather the economic downturn driven by COVID-19. Normalized free cash flow for the first quarter 2020 more than doubled to $36 million from the same period a year ago, driven by the strength of our wireless segment.As of March 31 we had $195 million in liquidity, with the net leverage ratio of 2.4 based on approximately $600 million of net debt in annualized first quarter 2020 adjusted operating income before depreciation and amortization. Despite the current economic uncertainties, our businesses are continuing to grow and our strong balance sheet positions us well for new growth opportunities.In addition to the pandemic, our PCS operation also faces uncertainty as a result of the recently completed April 1 business combination of T-Mobile and Sprint. When that merger closed on the first, T-Mobile delivered to the company a network technology brand and combination conversion notice pursuant to the terms of our affiliate agreement with Sprint.As outlined on slide six, this notice starts a 90-day period to negotiate mutually agreeable terms and conditions under which we would continue as an affiliate of T-Mobile or other alternative transactions. If the parties have not reached a mutually acceptable agreement by June 30, T-Mobile will have a 60-day period to exercise an option to purchase the assets of our PCS operations for 90% of the entire business value through an appraisal process as outlined in our affiliate agreement.If T-Mobile does not exercise its purchase option, Shentel would then have a 60-day period to exercise an option to purchase the legacy T-Mobile network and subscribers in our service area. If we do not exercise our purchase option, T-Mobile must then sell or decommission its legacy network and customers in our service area.We're focused on attaining an outcome that is in the best interest of our shareholders. As we work through this process, we will not provide any additional updates or make any additional comments regarding ongoing negotiations with T-Mobile, unless and until it is appropriate to do so.With that, I'll now turn the call over to Jim to review the details of our financial results.

Thank you, Chris, and good morning everyone. Please refer to slide eight. Consolidated revenues were $153.2 million in the first quarter of 2020 as compared to $158.8 million in the first quarter 2019. The change was due to an $8.5 million decline in the wireless segment revenues, partially offset by strong growth of $2.9 million and $700,000 in the broadband and tower segments.The primary driver in the wireless segment change was due to a $4.5 million decline in Sprint travel revenue in the first quarter of 2020, resulting from the ongoing dispute with Sprint over resetting the travel fee. The binding arbitration hearing for the Sprint travel fee is scheduled for later this quarter with a ruling expected shortly thereafter.Consolidated adjusted OIBDA for the quarter was $64.2 million compared to $67.7 million in the same period of last year due to the pending Sprint dispute. Excluding Sprint travel revenue, consolidated adjusted OIBDA increased 1.6%.Turning to slide nine, consolidated operating income was $23.1 million for the first quarter 2020 or down $1.7 million from a year ago. Earnings per share for the quarter was $0.27 per diluted share compared to $0.28 per diluted share in the prior year period. The Sprint travel revenue decline was the primary driver for both the clients.Turning now to our segment results on slide 10, our wireless revenues for the first quarter 2020 decreased $8.5 million to $104.1 million for the same period a year ago. The decline in revenue was due to a $4.5 million decreases in the Sprint travel revenue as mentioned earlier, a $3 million decline due to higher amortized customer contract costs that are netted against revenues and a $2.5 million decline in equipment sales as more customers bought things online or through third party dealers, partially offset by a $1.7 million increase in postpaid and prepaid revenue from growth in subscribers.First quarter 2020 adjusted OIBDA for the wireless segment decreased $5.4 million year-over-year to $49.2 million. In addition to the revenue decline of $8.5 million, tower rent expense increased $1 million from 92 more cell sites at March 2020 versus the same date a year ago, partially offset by a $1.9 million decline in equipment cost of goods sold, $1 million in lower advertising expense and $800,000 one-time sales and used tax refund.Moving the slide 11, revenue in our broadband segment grew $2.9 million or 6.2% to $49.8 million in the first quarter of 2020, driven by an increase of $2.5 million in cable, residential and SMB revenue, due primarily from a 9.9% increase in broadband RGUs and lower bundling discounts and promotions.As Dave will expand on shortly, we have great momentum in broadband growth in both our incumbent cable and new Glo Fiber services. Fiber enterprise and wholesale revenue grew $1.1 million due to an increase in enterprise and backhaul circuits, while RLEC revenues declined $550,000 or 9.7% lower DSL and switched access revenue.Broadband adjusted OIBDA for the first quarter grew 4.3% or $900,000 to $20.9 million compared to $20 million in the first quarter 2019. As expected, the launch of Glo Fiber diluted broadband adjusted OIBDA by $1 million in the first quarter. Excluding Glo Fiber, our broadband adjusted OIBDA growth rate and margins would have been approximately 9.5% and 44% respectively.On slide 12 tower segment revenues grew 22.9% to $3.7 million and adjusted OIBDA grew 25.5% to $2.3 million for the first quarter of 2020, due to 10.9% growth in tenants and a 11.4% increase in the average lease rate.And now I'll turn the call over to Dave.

Thanks, Jim, and good morning everyone. On slide 14 we show the key metrics of our post-date wireless business. We had approximately 848,000 postpaid subscribers at the end of the first quarter. Until the impact of the coronavirus pandemic took hold in the second half of March, postpaid gross adds were up 8% year-over-year. However as Chris mentioned, approximately 40% of our Sprint branded retail stores were temporarily closed in the second half of March, which drove a 13% reduction in sales through our dealer channel year-over-year and was only partially offset by increases in our national and web channels.As a result, postpaid growth adds for the first quarter of 2020 were up only slightly year-over-year with the mix of phone and connected device additions roughly in line with the same period in the prior year.Postpaid net adds were driven entirely by connected devices for the first quarter 2020 and were approximately 3,600 as compared to 5,800 in the first quarter of 2019. While the mix of phone versus connected device net adds in the quarter were similar to the first quarter and the prior two years, we estimate that had we maintain consistent growth and net trend throughout the month of March, we would have posted positive net phone adds in the quarter.Lastly, 5.6% of our postpaid based upgraded their phone in the quarter and 12.9% of the base was comprised of connected devices such as watches and tablets at the end of 2020. Combined postpaid churn was flat year-over-year at 1.9%. As others in the industry have reported we to expect our voluntary churn to decline commensurate with the drop we're seen in postpaid gross adds, as overall porting activity has declined and will likely persist through at least the second quarter.Turning to involuntary churn, as a result of the new collections policy enacted by the new T-Mobile in April after the close of the merger, non-pay disconnects have been accelerated by approximately one month. As such, we expect our involuntary disconnects to double in the month of April before returning to normal levels.We've also supported Sprint’s adoption of The Keep Americas Connected Pledge, which has temporarily suspended non-pay disconnects related to the coronavirus for approximately 4% of our postpaid subscribers and will likely also cause an increase in involuntary churn once the pledge expires, likely by the end of the second quarter.Postpaid ARPU declined $1.96 year-to-year driven primarily by Sprint promotional discounting and to a lesser extent the increase in the mix of connected devices in the base. However, amidst all if this dislocation as a result of the pandemic, this quarter marks the tenth consecutive quarter we've enjoyed a positive port-in to port-out ratio and postdate with the 1.08:1 ratio for the first quarter of 2020.As we previously reported, we've seen a steady decline in our porting ratio over the last several quarters as weakness in the Sprint brand has begun impacting consumer behavior in our markets, particularly in relation to Verizon.Moving to slide 15, we had approximately 279,000 prepaid subscribers at the end of the first quarter 2020. Prepaid growth and net additions were just over 39,000 and 5,000 respectively with first quarter churn consistent with the prior year.We were pleased with the performance of our prepaid business, which was in-line with our expectations in spite of some weakness in gross adds as a result of pandemic driven reductions in retail traffic and some more recent competitive inroads by metro and the cable MVNOs.First quarter ARPU decreased slightly by 21% year-over-year as the mix of our prepaid subscribers on the Boost brand increased to 99% with Sprint's transition of Virgin Mobile branded subscribers to the Boost brand.Turning to slide 16 in the broadband business, total income and cable RGUs grew 1.5% in the first quarter to approximately 171,000 compared to approximately 168,800 in the prior year. We added roughly 3,000 net Broadband RGUs in the quarter through organic growth, which is a 50% increase in the prior year period, and we're very pleased to report that our legacy Broadband penetration increased from 38.3% in the first quarter last year to 41.7% this quarter on the strength of our new Broadband speeds and rate card.Broadband data churn declined five basis points to1.48% in the first quarter, which represents the 12th consecutive quarter of year-over-year churn improvement. Average revenue per customer increased to $114.62 versus prior year, driven by a combination of broadband speed upgrades and annual video price increases.Substantially all homes passed in our cable markets are now capable of broadband speeds of up to 1 gigabit per second, with approximately 64% of our residential base in the upgraded areas having migrated to the new powerhouse rate card. This time last year, roughly half of residential subscribers were on rate plans of 10 megabits per second or less. Now 69% of subscribers are on plans of 25 megabits per second or higher, with an average subscribe download speed at 64 megabits per second, which is well out of the reach of our DSL competitors. We are achieving our goal of constructing an even deeper competitive moat the incumbent cable markets we serve.Turning to slide 17, we launched three additional markets with our Glo Fiber service in the first quarter of 2020, more than doubling our homes passed to approximately 5,300. Glo Fiber had 453 customers at the end of the first quarter, with an 8.5% total penetration rate and 682 total RGUs.We are seeing a 33% attachment rate for our streaming TV service and an 18% attachment rate for our home phone service, both of which are significantly exceeding our initial projections. In our first cohort in neighborhoods in Harrisonburg, Virginia, we are achieving as aggregate residential broadband penetration rate of approximately 15% after 90-days with some neighborhoods exceeding 25% penetration.Low fiber product level ARPU is ahead of our expectations as well on all three products in the triple play with one particular bright spot of note, our 1 gig symmetrical broadband service. Our 1 gig speed tier is achieving a nearly 30% adoption rate and retails for $90 a month with whole home WiFi, which in spite of a higher pricing Comcast 1 gig service demonstrates the value consumers clearly perceive and a symmetrical fiber based, reliable offering from a regional provider with local customer service.On slide 18, we depict that our Fiber and Cable footprint, including a table to summarize our progress in each Glo Fiber market. Construction is well underway in our first four active markets, which include Harrisonburg, Staunton, Front Royal and Winchester Virginia. We’ll also begin construction this year in Roanoke, Lynchburg and Salem, Virginia with a planned commercial launch in the first half of 2021. Together, these first seven markets comprised just over 77,000 residential and commercial target passing.We also continue to make great progress toward our goal of launching a new fixed wireless broadband offering in the second half of 2020, targeting roughly 300,000 rural households across portions of Virginia, West Virginia and Southeastern Ohio, leveraging our recently acquired 2.5 gigahertz license spectrum.We now have active beta customers on the new fixed wireless network achieving 100 megabit per second download speeds, far exceeding offers by DSL, Satellite and WISP competitors in these un-cabled areas of our spectrum foot print. We will continue to update you on the status of both our Glo Fiber and fixed wireless initiatives as we progress in our build plans and launch of commercial services over the next several quarters.Turning to slide 19, we added one new tower in the first quarter of 2020. Tenants increased 10.9% year-over-year to 408. We had a backlog of 128 open orders related to upgrades of existing tenants or the addition of new tenants at the end of March 2020.Finally, slide 20 provides an update to our 2020 capital spending results. Capital expenditures were $32 million in the first quarter compared to $44 million in the first quarter 2019. For 2020 we are updating our capital spending guidance to between $125 million and $148 million with all the reduction to prior guidance reflected in our wireless segment.As we previously disclosed, we have temporarily deferred certain wireless network expansion projects in the Richmond Silver territory as we await further clarity on the impact to our wireless business related to our ongoing negotiations with the new T-Mobile. However, with our strong liquidity and cash flow generation, we continue to invest aggressively in our Broadband and Fiber networks despite the coronavirus induced economic uncertainty and our current operating environment.Thank you very much and operator, we're now ready for questions.

Thank you. [Operator Instructions]. Our first question comes from the line of Ric Prentiss with Raymond James. Your line is now open.

Thanks, good morning. Hope you guys and your family and employees are doing well with the COVID-19 and staying safe. First question I have for you is with COVID-19 impacting, I appreciate the color on the postpaid stores, how about on the prepaid side? How many prepaid stores have been closed and what do you expect the impact might be on the prepaid side of the business?

Hey Ric, good morning. This is Dave. Thanks for the well wishes and hope the same is true of you and yours as well. On the prepaid side of the business Ric, we did see a modest impact, but it was far less than on the postpaid side. Most of our prepaid dealers are in strip malls and not – you know malls per se or big retail establishments and designated as essential services managed to for the most parts stay opened. There were some temporary closures there, but they didn't last long and substantially all of our prepaid doors are opened at this point. So thus you know the results that we saw there in prepaid, which I think you know exceeded your expectations and were generally in line with our expectations for the first quarter.

That's good. And speaking of prepaid, how does the anticipated sale of the boost brand from the new T-Mobile to Dish affect you guys and do you have an updated thought on when that might occur. We hear it might be happening soon.

Yeah, our affiliate agreement as you know is with Sprint and the agreement contemplates both postpaid and prepaid and so as we continue in our negotiations with T-Mobile, our position is we're negotiating on behalf of all of our subscribers not a subset. So as you know, the prepaid subs were excluded in the arrangement that Dish and T-Mobile came to as part of the approval process there and that's still the current state as we sit here today.

And speaking to the Sprint T-Mobile, I know first you said no update on the negotiations until there is something to say, but conceptually back on slide six when you talked about the time line, how many subscribers do you guys think T-Mobile has in your footprint? Is it about that have little, you know like 600,000 subscribers that might be in your footprint if it were to go down that option two standpoint, and if so, how do you feel about your ability to fund if it was to go down option two as far as you buying into the footprint?

I’ll answer the first part Ric and then I’ll tee-up Jim to answer the second part. On the first part we would just be speculating on the number of T-Mobile subs. Our own analysis you know, that is we got some help with some third parties to do suggest it’s. We think they have roughly half the subs that we do, but we don't know for sure and so you know I think that's probably a better question ask the T-Mobile guys if they want to disclose that, we are uncertain as we sit here. In terms of financing, Jim do you want to handle that one?

Sure, yeah Ric, the agreement outlines you know two ways that we could purchase these assets if they declined their option on our wireless business. One of them is 75% of the cost, the enterprise value per subscriber that T-Mobile had immediately when the merger closed. That number is around $1,500 per sub, which would imply – yeah, well purchase price per sub of about $1,100. If you assume a 45% OIBDA margin, that would apply a purchase price of around 5.8x, which we think is very attractive and it’s something we'd be very interested doing. But as you know T-Mobile comes to that first before we have access to that option.

Great, I appreciate that. And then final one from me, any thoughts about what COVID-19 means as far as ARPU trends? I know usually overtures are being weighed, but any thought of what might be trends in ARPU on postpaid and prepaid?

ARPU trends as you know, a record tough for us to predict, given the fact that we sell off the Sprint’s rate card nationally and so as I'm sure you would note, we've seen a modest decline sequentially and year-over-year in postpaid ARPU and we don't see any reason for that to materially change in terms of the trajectory, you know related to COVID-19.I think most of what we’re tuned into on the COVID-19 impact is going to relate to this interplay between involuntary churn and voluntary churn and on the whole we think, but don't know that you know with the reduction in voluntary, in sub-voluntary churn category, even in spite of some uptick in the involuntary churn category, that on the whole we should be relatively in-line with what we had expected. But we are monitoring that situation closely, but ARPU is a tough one for us to predict.

Again, thoughts are with you guys and everybody as we go through this difficult time. Thanks for taking the questions.

Thanks Ric.

Thanks Ric.

Thanks Ric.

Thank you. Our next question comes from the line of Zachary Silver with B. Riley FBR. Your line is now open.

Okay great, thanks for hearing the question and I'm glad to hear that you all are safe and well.The first one for me, I know that every time I talk about how the discussions around a potential new affiliate agreement are going, but hypothetically speaking, if T-Mobile were to buy the PCS business and you were to get a significant cash infusion from the sale of that, could you talk about what priorities would be for the use of that cash? I mean you know whether it be broadband, more communications infrastructure or return to capital. Any color there would be helpful?

Yes Zack, I can take that one. I think – well one, it's certainly premature to discuss and use it as a proceed since we’re still in discussions with T-Mobile at this point in time and not sure which direction this is going to go. But in general I would say that we’ll look to potentially return some cash to shareholders and if there are some insight visible acquisitions, we will certainly consider that and the ability to fund that with proceeds, but it's not likely that we would leave a large sum of money you know sitting there without the intended purposes for it.

That makes sense. And then when we think about, you know both the Legacy Broadband footprint, as well as some of the new, in particular for the new Glo Fiber build with COVID, are you seeing any difficulties in terms of marketing, installations and you know perhaps longer term could this more self-installs, more digital buying and buying through digital channels, could that potential be a boon to your long term margin trajectory in the business.

Hey Zack, this is Dave, good morning, I’ll fill that one.

Good morning Dave.

We have been very, very fortunate thus far in our broadband growth ambitions too and as Chris noted in his opening remarks, not really have seen any material impact from COVID-19. In fact, this might surprise you, but you know our door-to-door sales engine which we rely on for our Glo Fiber growth strategy has largely proceeded unabated, although with new safety measures and not entering customers’ homes and you know wearing masks and conducting business six feet away and so forth, but as you might expect a lot of people are at home right now, and with a lot of people home, they are able to answer the door and interact with our folks and that's been a pleasant surprise in all of this, and candidly I think folks welcomed the distraction from sheltering in place.We have seen a bit of a mixed bag on permitting and make ready in our construction engine in a couple of the municipalities that we're building in, but that's been offset by a couple of the other municipalities asking us to accelerate, because they recognize the critical need for broadband infrastructure at this time and they welcome the competition and the investment we're making. So on balance I would say that we're doing as well as we expected to in spite of COVID-19.In terms of channel mix on a go-forward and you know more turning to digital, yeah we expect that over time you know that that will continue to increase and we do expect some improvements to our cost structure and not having to pay folks commissions for sales that come in through the online channel, and really I think that benefit will mostly start to accrue as we get further scale in that business, because right now certainly most of the increase we are getting for Glo Fiber are when are you going to be in my neighborhood, and which is a great problem to have. So, but yet we would expect margin improvement down the road as digital sales increase.

Got it, thank you. And then one more if I could. Just on the – there was you know some churn impact that you guys were talking about that you see in the second quarter from – the first would be The Keep Americans Connected, doing that and then I think there was – you said something about T-Mobile there, about the way that disconnects are recognized there. Just if you could go through that again that would be helpful?

Yeah, so both of those relate to postpaid wireless and what we saw in the first 10 days of April or so is essentially a new non-paid treatment collection policy that was enacted, that accelerated non-pay disconnects by about a month Zack and that drove the big one-time blip in the processing of non-pay disconnect.You know as we move throughout the course of the month with the offsetting lower voluntary churn that we’re seeing as a result of reduction in porting activity with just the general reduction in activity, you know nationally in wireless, we are actually kind of offsetting that one-time blip that we saw in the involve [ph] bucket, and I would say we're restoring to you know what we had expected the churn result to be for the second quarter thus far.What we're uncertain about is to The America Connected Pledge appears to be impacting about 4% of our postpaid days. So call it 33,000, 34,000 subs, somewhere in that zip code, and those folks are getting a temporary stay so to speak in terms of their impacts from COVID-19 and we're uncertain how many of those will eventually turn into a full non-pay disconnect versus not.So that’s a bit of a lingering issue we expect to persist through the balance of the second quarter. I think Chairman Pai if he hasn't already, you know has been working with some companies and some companies have already voluntarily announced that they are going to extent that pledged to the end of June and so we expect there to be tale on that, and you know potentially for that, that bucket of subscribers to grow here over the next quarter, but you know, we'll just have to keep a close eye on that one.

Got it. ! Thank you guys.

Sure.

Thank you. [Operator Instructions]. Our next question comes from the line of Hamed Khorsand with BWS Financial. Your line is now open.

Hey, good morning. Just a follow-up on the comments you just made. With what’s going on with the people not paying right now, is that an increase in abnormal increase for you and you just don't have any new adds to offset that right now.

Good morning, Hamed. So we're talking wireless now right?

Yes.

Yeah. Yes, so what our current situation is – Jim, I'll let you chime in on the bad debt reserve front if there's anything to report there, but essentially what we're seeing right now is some temporary dislocation Hamed in terms of the uncertainty related to the revision in the policy that got created by new T-Mobile in addition to this Keep America Connected Pledge and what the short term impacts to non-pay and receivables will be as a result of those.Those are pretty tough for us to predict right now as we sit here. It didn't have any material impact in the first quarter, but that's basically what we're shining the light on for you to say that, yeah we're seeing a reduction in gross adds that I think you just pointed out, and we expect that that reduction in gross adds will abate as we move through the second quarter here and we start to see signs of governors reopening states and retail business activity.Of course our stores are for the most part open at this point and still servicing customers, but we're seeing a big reduction in traffic as you might expect, and so I think that's true nationally.But Jim, do you want comment on any kind of additional reserves or anything that we might be considering.

Sure. Hamed, we did not make any additional reserves to bad-debt on wireless or broadband as of the end of March. We are monitoring them. I would expect, bad debt there is a line factor of when the bad debt hits the financial vis-à-vis when they can voluntary disconnect occurs.So we are going to be monitoring it in the second quarter. We would expect an uptick in both bad debt in the second quarter for both broadband and wireless, but based upon the numbers we are seeing today, I don't think it's going to be significant.

Okay. And then could you talk about just the competitive aspect of the wireless market right now. I know you talked about Verizon earlier, taking advantage of the Sprint brand situation. Are you seeing that even with the pandemic going on? I know your churn still remained elevated throughout Q1.

Yeah Hamed, as we reported to you last quarter as well, we have seen an uptick in port-outs to Version in particular in our territory versus what we've seen this time last year or even in the second and third quarter of last year. And so that's really coming on two fronts, one is there new unlimited retail pricing as well as some of the in roads that Comcast is making. As you know they are a Verizon MVNO and Comcast cable footprint has about a 50% overlap with our wireless footprint. So I'd say the most material change that we're seeing on the postpaid front is with Verizon. The rest of the carrier's, including T-Mobile have largely been consistent with prior quarters in terms of the trends we are seeing.On the prepaid side, we have as I mentioned in my prepared remarks, we have seen some modest competitive inroads in the central PA portions of our footprint by Metro and then to a lesser extent some inroads by the Cable MVNOs on the prepaid side. But I would say at this point, those are just modest upticks, nothing material, but a little bit different trend than what we've seen in prior periods.

Okay and the last one from me is, on the ARPU side, just given there's been an increase in devices, would ARPU continue the decline going forward?

That's been the trend and I can't come up with a good reason Hamed to say that the trend is going to materially change from what it has been. Again, we don't control pricing, that's done through Sprint and now the new T-Mobile and so to your point as the mix of connected devices increases in the base, those have about one third of the ARPU and twice the churn rate of what we see on phones and so as a result that will have a dilutive impact on ARPU going forward.I think you know the bigger impact that we see candidly is on Sprint’s promotional discounting, particularly on the device front, and how will that change as the new T-Mobile gets in, rationalizes Sprints rate card and promotions and plans and so forth. We are uncertain. All I can say is that you know Sprint’s issues are now T-Mobile’s issues and so my expectation is that some more rational behavior will start to come into play here as we get further into the year, and we would welcome that.

Great! Thank you.

Sure.

Thanks Hamed.

Thank you. We have no further questions in the queue at this time. I would now like to turn the call back to Jim Volk for closing remarks.

Well, thanks everyone for joining our call today. I hope everyone stays safe and healthy, and we look forward to reporting our progress on multiple fronts in the next quarter. Thanks everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, you may now disconnect.