WAYNESBORO, Va. -- NTELOS announced today that it has executed an agreement to purchase certain fiber optic and network assets and related transport and data service revenues from Allegheny Energy, Inc. in a deal valued at $27 million.
The purchase includes approximately 2,200 route miles of fiber located primarily in central and western Pennsylvania and West Virginia, with portions also in Maryland, Kentucky and Ohio. There are currently two points of interconnection between the existing NTELOS fiber network and the transaction fiber assets, one each in Virginia and West Virginia.
“The purchase of these fiber assets and related revenues is significant for NTELOS as we continue to re-position our wireline business from a provider of voice access lines to a provider of high-bandwidth data products,” Frank L. Berry, NTELOS executive vice president and president of wireline operations, said in a press release issued by the company. “In addition to meaningful contributions from the customer base already in place, the expanded market area will provide NTELOS with many opportunities for new business within our core competency and consistent with our focus on strategic data and transport products.”
Projected 2009 service revenues, including revenues from NTELOS, and adjusted EBITDA, pro forma for the terms and conditions of the agreement, on this 2,200 route mile fiber network are approximately $8.0 million and $4.5 million respectively. Based on the run rate for the first six months of 2009, NTELOS’ competitive wireline segment currently generates an annualized adjusted EBITDA of approximately $27 million, utilizing its current 2,300 route mile fiber network.
NTELOS is a current customer on portions of the assets to be purchased and, as such, will achieve immediate expense synergies of approximately .5 million annually upon closing. These synergies, together with the revenue generation of the assets, result in the transaction being immediately accretive to adjusted EBITDA and free cash flow for NTELOS.
The purchase price for the transaction assets is approximately $27 million. NTELOS intends to fund the purchase from available cash on hand and the transaction is not contingent upon financing. Closing, which is expected by year-end 2009, is subject to regulatory approvals and customary closing conditions.
About NTELOS
NTELOS Holdings Corp. is an integrated communications provider with headquarters in Waynesboro, VA. NTELOS provides products and services to customers in Virginia, West Virginia, Kentucky, Ohio, Tennessee, Maryland and North Carolina, including wireless phone service, local and long distance telephone services, IPTV–based video services and data services for internet access and wide area networking. Detailed information about NTELOS is available at www.ntelos.com .
Allegheny Energy
Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers electric service to 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit the company’s Web site at www.alleghenyenergy.com .
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