TEXT-S&P: NTELOS Holdings 'BB-' rating on watch negative

Mon Dec 17, 2012 4:51pm EST

Overview
     -- We are placing our ratings on NTELOS Holdings Corp., including
the `BB-' corporate credit rating, on CreditWatch with negative implications.
     -- Softbank Corp. has a definitive agreement to purchase a majority stake 
in Sprint Nextel Corp. subject to regulatory approvals.
     -- The Softbank transaction could improve Sprint Nextel's liquidity and 
increase chances that Sprint Nextel might invest in its own network in 
NTELOS's footprint and not renew its wholesale carriage contract with NTELOS 
under favorable terms.

Rating Action
On Dec. 17, 2012, Standard & Poor's Ratings Services placed its 'BB-' 
corporate credit rating and 'BB-' issue level rating on Waynesboro, Va.-based 
regional wireless provider, NTELOS Holdings Corp., on CreditWatch with 
negative implications. NTELOS's current wholesale services agreement with 
Sprint Nextel's Spectrum L.P. unit has grown to account for around 40% of 
NTELOS's service revenues. The CreditWatch reflects our view that Japan's 
Softbank's (BBB/Watch Negative/--) pending acquisition of Sprint Nextel 
(B+/Watch Positive/--) could lessen prospects for NTELOS to renew its 
wholesale services agreement with Sprint Nextel, under favorable terms, when 
it ends in July 2015.  

Rationale
The CreditWatch action reflects the possibility that Softbank's purchase of 
70% of Sprint Nextel, if completed, could improve Sprint Nextel's liquidity 
and make it more likely to consider investing its own network in the NTELOS 
footprint instead of renewing its wholesale services agreement with NTELOS. 
Under its current agreement with Sprint Nextel, which runs through July 2015, 
NTELOS is the exclusive personal communication services (PCS) provider to 
Sprint Nextel's code-division multiple access (CDMA) customers in NTELOS's 
western Virginia and West Virginia service areas. NTELOS operates its own 
retail wireless business with more than 400,000 customers, but the Sprint 
Nextel wholesale segment has grown in importance. Sprint Nextel guarantees 
NTELOS minimum monthly revenues of $9 million under the current contract, but 
actual revenues have risen well above the guarantee level, now averaging 
roughly $14 million monthly and accounting for around 40% of NTELOS's total 
service revenues. Our current rating already cites as a material risk the 
potential that the Sprint Nextel wholesale contract might not be renegotiated, 
or might be renegotiated on considerably less favorable terms. The negative 
CreditWatch indicates that Softbank's acquisition of Sprint Nextel could 
increase that risk. NTELOS reported approximately $450 million of debt 
outstanding on Sept. 30, 2012.

CreditWatch
In resolving the CreditWatch, we will assess the improvement to Sprint 
Nextel's liquidity if Softbank closes on its acquisition of 70% of Sprint 
Nextel. That assessment will, in turn, reflect our view of credit support for 
Sprint Nextel, if any, from higher rated Softbank. We would downgrade NTELOS 
if we viewed the Softbank transaction as markedly improving Sprint Nextel's 
liquidity, thereby increasing the chance that Sprint Nextel might consider 
investing in its own network in the NTLEOS footprint and either not review its 
wholesale services agreement with NTELOS or enter into a new agreement, after 
the current one expires, under terms significantly less favorable to NTELOS. A 
downgrade based on that scenario would likely be limited to a single notch. 
However, if other developments suggested that there was a significant 
likelihood that the wholesale contract would not be renewed or would be 
renewed under materially less favorable terms, the magnitude of a downgrade 
could be greater. 

Related Criteria And Research
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July 23, 2012
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gsdirect/showArticlePage.do?object_id=7336287&rev_id=13&sid=1020407&sind=A&", 
May 30, 2012
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sdirect/showArticlePage.do?object_id=7329454&rev_id=3&sid=1020407&sind=A&", 
May 16, 2012
     -- 
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7309815&rev_id=8&sid=1020407&sind=A&", May 10, 2012
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sdirect/showArticlePage.do?object_id=7299963&rev_id=3&sid=1020407&sind=A&", 
May 9, 2012
     -- 
"here
6881137&rev_id=1&sid=1020407&sind=A&", Sept. 28, 2011
 Ratings List
Ratings Placed On CreditWatch
                                        To                 From
NTELOS Holdings Corp.
NTELOS Inc.
 Corporate Credit Rating                BB-/Watch Neg/--   BB-/Stable/--

NTELOS Inc.
 Senior Secured                         BB-/Watch Neg      BB-
  Recovery Rating                       4                  4


Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.