Good day ladies and gentlemen, and welcome to the Shenandoah Telecommunications’ Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session with instructions following at that time. (Operator instructions) As a reminder, this conference is being recorded. Now I will turn the conference over to Adele Skolits, Chief Financial Officer. Please begin.

Good morning and thank you for joining us. The purpose of today’s call is to review Shentel’s results for the quarter ended September 30, 2012. Our results were announced in a press release distributed this morning and the presentation we’ll be reviewing is included on our website at www.shentel.com. Please note that a replay of the call will be made available later today. The details were set forth in the press release announcing this call. With us on the call today are Christopher French, our President and Chief Executive Officer; and Earle MacKenzie, our Executive Vice President and Chief Operating Officer. After our prepared remarks, we will conduct a question-and-answer session. I’ll begin with Slide 2 of the presentation. While we don’t provide guidance with respect to specific future financial results, we caution that this call may contain forward-looking statements, which involve a number of known and unknown risks and uncertainties. These may cause our actual results to differ materially from these 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. I’ll turn the call over to Chris now.

Thank you, Adele. We appreciate everyone joining us this morning. I will begin on slide 5. By now you have all heard about Softbank’s proposed acquisition of 70% ownership in Sprint Nextel. It has always been our position that anything that makes Sprint a stronger more viable competitor is good for Shentel, and we think the Softbank deal is a very big positive. While we have no additional information on the transaction, other than what has been shared in the public domain, we do know that our affiliate agreement survives any change of control with Sprint. As you know, earlier this year the initial term of our agreement was extended to 2024. Given our great relationship with Sprint, we expect many years of continued partnership between our companies. I’m pleased to report another quarter of strong financial results, although our progress is masked by some one time events that we will describe in a moment. First I would like to highlight the underlying business trends that give us confidence in the fundamentals of our business. Revenue growth again led the way with customer growth and demand for additional data services making important contributions. Our Network Vision project to transition to 4G LTE continued in the third quarter with installations of base stations to replace existing 3G cell sites. In our cable segment, adjusted operating income before depreciation and amortization improved by $1.1 million over third-quarter 2011. As a result of our financial progress, our board of directors declared a cash dividend of $0.33 per share, which will be paid on November 30 to shareholders of record as of November 7. This is our 53rd consecutive year of paying an annual dividend. Financial highlights are shown on slide 6. Net income was $1.4 million for the quarter, down from $3 million…

Thank you, Chris. I will begin on slide 10 with a summary of our recently restructured debt facility. On September 14, 2012, we restructured the existing variable rate debt facility. The revised terms included an incremental $60 million variable rate term loan, bringing the total amount outstanding through this facility to $230 million, which was fully drawn at execution. The terms allow the company to pay interest only for the first two years. Quarterly principal payments of approximately $5.75 million will begin December 31, 2014, through maturity on September 30, 2019, when the balance of approximately $121 million will become due on September 30, 2019. While the rate of the term loan will vary based on leverage, initially it is set at LIBOR plus 2.75. We had fixed 75% of the amount outstanding through a hedge at a rate of 3.88%. The remaining balance is fixed through an existing swap at 4% through July 31, 2013, although the amount swapped through this instrument will decrease in roughly equal quarterly amounts until then. This facility continues to provide for an undrawn revolver of $50 million, and an accordion of $100 million. The covenants were revised to reflect the expected impact of the 4G project on our financial results. The table on slide 11 shows the adjusted operating income before depreciation and amortization, or OIBDA for Q3 ‘12 with $22.6 million or up $400,000 from Q3 ‘11. Adjusted OIBDA excludes the impact of the non-routine adjustments Chris just mentioned. Excluded are those related to accelerated depreciation, 2011 tax estimates, gains on equipment trade-in, and the unamortized debt issuance cost. Adjusted OIBDA would however include the 500,000 in cost to repair the storm damage to our network in 3Q ’12. To better understand the forces driving the changes in the ongoing business, I've…

Thank you Adele and good morning everyone. Before I get into our operational results, I want to mention our new brand initiative. You may have noticed the new look of our presentation. On October 5, Shentel launched a new logo, colors and branding position. The new look is only for our Wireline and Cable segments. We will continue to use the Sprint brand for our Wireless business. We always plan this branding change, but wanted to wait until our upgrades in our cable network were complete. Our new brand position was designed to target our customer base in smaller communities, and take advantage of our local roots, as well as to differentiate Shentel from the large telecommunication and media companies we compete against. We wanted an identity that easily separated us from our competitors. During the fourth quarter, we’re rebranding our website, offices, vehicles and providing a new look to our customer facing employees, and have launched a brand focused advertising campaign. Moving to slide 16, in the third quarter, we continued consistent growth of postpaid Wireless customers ending the quarter with 258,867, a 6.3% increase over third quarter 2011. That translates into a postpaid penetration rate of 12.6% of covered POPS. Shown on slide 17 are the postpaid gross and net additions for the third quarter of 2011 and 2012. Gross adds were up 2301, or over 14% to 18,427. Net adds were up 1156 over last year to 3842, an increase of 43%. Churn was 1.89% in the third quarter of 2012 compared to 1.85% in the same quarter in 2011. We continue to have iDEN customers migrate to our service. Just as a reminder, since we have no ownership interest in the iDEN customers, they are recorded as new customers to Shentel. In the third quarter, we…

This concludes our prepared remarks. [Tyrone] would you now give the instructions for posing a question?

Yes. Thank you. (Operator instructions) The first question is from Ric Prentiss of Raymond James. Your line is open.

A couple of questions, first on the Softbank offer to Sprint, I know there is probably not much you can say on it, but I was interested in the change of control. I think Chris you mentioned that – note that your affiliate agreement survives any change of control at Sprint. Just wanted to get a little extra color on that and is there any provision if you wanted to trigger something that you incurred and what is it that you get to keep if there were bigger mergers in the future? Raymond James: A couple of questions, first on the Softbank offer to Sprint, I know there is probably not much you can say on it, but I was interested in the change of control. I think Chris you mentioned that – note that your affiliate agreement survives any change of control at Sprint. Just wanted to get a little extra color on that and is there any provision if you wanted to trigger something that you incurred and what is it that you get to keep if there were bigger mergers in the future?

Ric, there is nothing that lets us trigger, for example, a put of the agreement back to Sprint. I didn’t hear your second part of the question. Ric Prentiss – Raymond James: Yes, the second part is hypothetically speaking if there was in the future a bigger merger with Sprint with another national carrier say what would happen to your business I guess is the right way of saying it, if there were a bigger merger with Sprint with another national carrier?

Well, I guess the agreement you know, we – our agreement stays in place as it currently is regardless of who owns Sprint. I guess we can't speculate about other potential transactions. I guess I would think though that given the federal government’s reaction to the proposed AT&T T-Mobile merger that a larger carrier buying Sprint is we don't feel is very likely at all. Ric Prentiss – Raymond James: So if Sprint survives, if the brand survives, you continue to be the Sprint name in your marketplace, and the Sprint marketing arm.

That's correct. Ric Prentiss – Raymond James: Okay.

This is Earle. In addition we are exclusive at the different frequencies that we have with Sprint. Ric Prentiss – Raymond James : Yes, that's what I was kind of getting at, I didn’t ask it very well, and does that now includes the low frequency that Sprint is moving over with the rebranding?

Yes, as part of our new contract with Sprint that we signed earlier this year we got the G Block and also the 800 that's freeing up from turning off the iDEN network. Ric Prentiss – Raymond James: Right, okay. That's great. And then a couple of questions, it's still early in Vision, but could you update us on the number of cell sites you plan to do each year, and also Sprint has mentioned they expect to see some roaming expense savings kind of on the home on home concept. Are you guys expecting to see any roaming benefit as you roll out Vision?

(inaudible) first question, we anticipate that we will have close to 200 sites done by year-end of the 510 that we have, so about 40% of our sites will be finished by year-end. On the roaming, if that really doesn't impact us because roaming is part of the net service fee. So when our customers are roaming that actually is the cost that's picked up by Sprint. So I guess our building of Network Vision will benefit Sprint in that there will be less roaming by our customers within our footprint, but it will have no financial impact on us. Ric Prentiss – Raymond James: It makes sense. One more, Earle you mentioned the rebranding on the nice new slides, how much cost should we expect to see as you guys rebrand the landline and the cable TV in the offices, the vehicles, et cetera, what kind of impact should we look for and they are all going to be contained within fourth quarter?

A great deal of it will be fourth quarter, but much of it will be capitalized because it is more than just for one quarter or one year. So the impact on the financial statements will be relatively modest. We are running some additional advertising this quarter. So probably a quarter of $1 million of advertising that's related to the branding and maybe another $50,000 or so in expenses, but it is pretty nominal as far as just the new brand launch. Ric Prentiss – Raymond James: That now is already baked into your CapEx guidance that you have now updated?

Yes. Ric Prentiss – Raymond James: Great, thanks guys.

Thanks.

Ric, about 200,000 of the additional expense in cable that you saw in the third quarter was related to advertising and the branding development as well. Ric Prentiss – Raymond James: Okay, thanks Adele.

Thank you. Our next question is from Greg Burns of Sidoti. Your line is open. Greg Burns – Sidoti & Company: I was wondering if you could maybe quantify what the impact of the hurricane is going to be on the financials going forward, I guess Verizon was out saying that the impact could be fairly substantial for them. I was just wondering if you could highlight, you know, what kind of damage it caused your network and maybe what the financial impact is going to be?

Sure Greg, this is Earle. The impact was, I'll talk about the different parts of our business. The impact on the Wireless business was primarily in Pennsylvania. We probably had up to a 100 sites that were impacted. The good news is all of those are already back online and the impact was primarily power related, not really damage. And so that is a pretty nominal amount there other than just the extra overtime for the last couple of days. On our Wireline business, we did have power outages here locally, but we have pretty much everyone back up within 24 hours, once again a pretty nominal impact. The biggest impact was in West Virginia in our Cable business and that was because of the snow. We did get up to three feet of snow in parts of our service area and there still is lots of snow there, but it was primarily in kind of the Central Part of the state and up in the Oakland, Maryland area. At this point we have less than 1000 customers out and it is primarily related to power, and we estimate that the total cost related to this storm will be less than $100,000 across all three segments. Greg Burns – Sidoti & Company: Okay, thanks, and you know, I understand that if Sprint to – there is a change that involved Sprint, you know, you are covered in your agreement last, but what if Sprint goes out and becomes an acquirer maybe, steps in on MetroPCS or looks at Leap, could you just remind us you know, kind of what happened there and what kind of pricings for those companies have in your footprint.

This is Earle. The impact of a Leap or a Metro purchase would be really non-existent for us because neither one of them have a presence in our service area. So, you know, there would be the impact of having a greater number of – Sprint having a greater number of prepaid customers but the impact on us would be really nil. Greg Burns – Sidoti & Company: Okay, and just lastly, you know, if we think about Wireless margins, they have been kind of moving around a bit over the last couple of quarters, with the roll out of 4G service, do they get worse before they get better and you know, kind of how should we think about you know, longer term what the normalized wireless margins are going forward?

You're seeing a significant increase right now Greg associated with handset subsidies both in postpaid as a result of iPhone, and in prepaid as a result of the handset subsidies there. It is hard for me to predict where the prepaid market will go. I believe it is much more highly competitive right now as a result of the forces that you are all quite well aware of, the competitive forces that work in that market. I believe that longer term that prepaid handset subsidies will come down, and those are the two primary factors along with accelerated depreciation that are affecting those wireless results right now. Obviously we expected the accelerated depreciation and that will continue through the replacement of those cell sites in 2013, likely third quarter at this point and that will drop off, but the handset subsidies in postpaid is more the order of the day, prepaid expected to drop over time. Greg Burns – Sidoti & Company: Okay. And then in terms of the subsidies, I know you mentioned that I think 41% of activations on the iPhone were coming through your Shentel controlled channels. Is the number of activations up or down quarter-over-quarter or year-over-year through your channels?

We are up year-over-year. We only started selling the iPhone right at the end of the third quarter last year. So there was a little or no impact in the third quarter last year numbers, and so, you know, the delta is all iPhones as far as comparison of period over period, but we did see an increase in the third quarter versus the second quarter of iPhone sales in total, and then therefore iPhone sales also in our controlled channel. Greg Burns – Sidoti & Company: Okay, thank you.

Thank you. And our next question is from Ric Prentiss of Raymond James. Your line is open. Ric Prentiss – Raymond James: Coming after everybody else, but I will ask a couple more in case there is nobody else. Earle, I missed one of the numbers you gave on the $10 bolt-on fee, what percent of the base and is that postpaid or total base that is on the $10 bolt-on/

It is just – only one we look at is the postpaid and 53% of our postpaid customers are paying the $10 fee. Ric Prentiss – Raymond James: Great.

But 61% have a… Ric Prentiss – Raymond James: Smart phone.

Smart phones. So that's the difference of the folks that got [grandfathered] prior to January of last year, who were not charged the $10 fee, but as they upgrade their smart phone for another smart phone then they will be covered by that $10 fee. Ric Prentiss – Raymond James: Great. Thanks, and then on the iDEN so 19.6% of the gross adds this time were people that switched over from iDEN to your platform. Remind us again that when do you have to start paying Sprint for any iDEN customers converted over to your platform, is it start now or is it physically if Sprint brings a customer to you.

If Sprint through their migration activity brings up a customer then we pay the $350 postpaid, $150 prepaid. At this point they brought us just a handful of prepaid customers. They have done some prepaid work in our area, but they have really done no postpaid migration work yet. So the migrations at this point have been through our own efforts or through customers seeking us out, and therefore there has been no fee to Sprint for these customers. Ric Prentiss – Raymond James: And on the cable side, cable was down quarter-to-quarter but up year-over-year, how should we think about the seasonality in the cable business, was it just the returning students, or was there something more about the quarter-to-quarter trend in cable EBITDA?

What we are finding as far as customers, and Adele can speak to the EBIDTA. You know, we are learning – obviously the second quarter is always going to be a weak quarter for us because of those students leaving, and the fact that the universities have fairly significant impact on our customer base. I think what we're going to find is that the third and fourth quarters will generally be our strongest quarters, first quarter will be kind of okay, and the second quarter is going to be weak because of the customers, student customers leaving us. The good news is that you know, they came back and what we found generally was that they brought greater Internet speed, then the students that left us. So on average we kind of traded up by having the students move out and in.

Ric, I would just add to the comment I made earlier that we had about – it was approximately 230,000 of branding cost running through that cable entity in the third quarter, which was unique I think to this year and the branding effort that Earle described. We've got about $350,000 of what I would term seasonal costs related to reconnecting these students, and paying commissions on new customers, and then obviously you have the effect of the storm of over $500,000, and some maintenance costs that you typically would have in the third quarter of the year in addition to that. You know, it is really a combination of the storm, the branding and the seasonality. Ric Prentiss – Raymond James: Sure, and then hopefully we are not into this weather pattern with the storm impact hopefully won’t hit next year, and the rebranding wouldn’t hit next year so there's a certain chunk of it that is really kind of more hopefully one off.

That's right. We believe this branding campaign is a long-term investment that will aid us in increasing the penetration in those markets which is key. Ric Prentiss – Raymond James: Okay. One other quick one on the iPhone, Earle you mentioned 21% of the adds. I assume some of your iPhone sales though were to your base. What percent of phone sales were new to Shen/Sprint, and when you give that number percent of gross adds, I assume that does not include upgrades?

No, it doesn't. 21% is 21% of the gross adds was related to sale of iPhone. Ric Prentiss – Raymond James: But that's not your total iPhone sales though, right?

Right. Ric Prentiss – Raymond James: Do you have an idea of what percent of your iPhone sales were for – new to Sprint Shen that's something you get from Sprint or?

Well, I mean 41% of the 21% were through our channels, and so the 59% of the 21% of gross adds of iPhone sales came through the Sprint national channel. Ric Prentiss – Raymond James: Okay.

So, 20% – 21% in our case of gross adds are new customers that we're acquiring and taking an iPhone. Correct Earle? Ric Prentiss – Raymond James: It is that right way to think of it then?

Yes. Ric Prentiss – Raymond James: Okay, and the sales. Okay, that's good. Thanks.

All right.

Thank you. This ends the Q&A portion of today's conference. I'd like to turn the conference over to Adele Skolits for any closing remarks.

Thank you to everyone for participating. I'd like to invite you to let me know if there are additional details you'd like to see in future calls. My contact information was provided on the press release.

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