October 11, 2012 / 3:01 PM / 5 years ago

TEXT-S&P assigns 'BB-' rating to NTELOS term loan

Oct 11 () - Standard & Poor's Ratings Services today assigned its 'BB-'
rating to Waynesboro, Va.-based regional wireless carrier NTELOS Holdings Corp.
 (NTELOS; BB-/Stable/--) subsidiary NTELOS Inc.'s proposed $475 million
senior secured term loan facility due 2019. The company will use proceeds to
refinance the approximately $460 million outstanding on the current term loan
which matures in 2015. The recovery rating of '4' indicates our expectation for
average (30% to 50%) recovery of principal in the event of a payment default and
reflects our revised approach to estimating wireless enterprise value in a
default scenario by using the greater of a multiple of projected bankruptcy
emergence-level EBITDA or a discrete asset value, based on the book value of
spectrum and a discounted value of network assets. In NTELOS' case, the cash
flow multiple approach results in the greater valuation. Our projected
distressed EBITDA multiple for NTELOS is 4x and recognizes the company's limited
geographic footprint as well as the substantial, and growing reliance on a
wholesale contract with Sprint Spectrum L.P. Our `BB-' corporate credit ratings
on NTELOS are not affected by the refinancing. The $35 million revolving credit 
facility ('BB' issue-level rating) will be terminated as part of the 
refinancing.

Our ratings on NTELOS recognize the limited scale and geographic diversity of 
its wireless properties; intense competition from national and prepaid 
carriers; the characteristically higher churn of its prepaid customers which 
account for about a third of NTELOS' retail wireless customer base. As a 
regional wireless carrier, NTELOS is at a disadvantage compared with national 
carriers' given the latter's scale economies, superior access to popular 
wireless devices, and the ability to carry traffic nationwide largely on their 
own--not leased--network. A favorable rating consideration is the good 
visibility on the material, and growing, portion of revenue and cash flow from 
NTELOS' strategic alliance with Sprint Spectrum L.P. under which NTELOS is the 
exclusive personal communication services provider to Sprint's CDMA customers 
in NTELOS' western Virginia and West Virginia service areas. However, given 
the increasing importance of the Sprint relationship, the potential that the 
contract might not be renewed after July 2015 is a material risk.

RELATED CRITERIA AND RESEARCH
     -- Criteria For Assigning 'CCC+', 'CCC','CCC-', And 'CC' Ratings, Oct. 1, 
2012
     -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
     -- U.S. Telecom And Cable Companies' Maturities Are Manageable, But 
Lower-Rated Issuers Face Some Liquidity Challenges, July 23, 2012
     -- A Matter of Policy: U.S. Telecom Companies Maintain High Dividend 
Payouts, But For How Long?, May 30, 2012
     -- A Matter of Policy: U.S. Cable And Satellite-TV Companies Ratchet Up 
Shareholder Payouts, May 16, 2012
     -- Top 10 Investor Questions: U.S. Telecom and Cable Industries, May 10, 
2012
     -- Assessing The Four-Notch Rating Gap Between The Two U.S. 
Direct-To-Home Satellite Video Operators, May 9, 2012
     -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011

RATINGS LIST

NTELOS Holdings Corp.
NTELOS Inc.
 Corporate Credit Rating              BB-/Stable/--

New Rating

NTELOS Inc.
 $475 Mil. Sr. Sec. Term Ln Due 2019  BB-
   Recovery Rating                    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.

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