Good day ladies and gentlemen, and welcome to the Shenandoah Telecommunications Company Fourth 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 to follow at that time. (Operator instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host for today, Ms. Adele Skolits, Chief Financial Officer. Ma’am you may begin.

Good morning and thank you for joining us. The purpose of today’s call is to review Shentel’s results for the quarter and year ended December 31, 2012. Our results were announced in a press release distributed yesterday and the presentation we’ll be reviewing is included on the investor page of our website at www.shentel.com. For those of you participating via the web, the slides will be advanced automatically. Please note that an audio 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. As always, let me refer you to Slide 2 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 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. These reconciliations are also provided in an Appendix to today's presentation. 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. We are pleased to report two very significant achievements in our Wireless segment for the fourth quarter of 2012. At the end of the quarter, we had upgraded 224 of our 516 cell sites as part of our Network Vision project with 200 of these sites on air with 4G LTE service. In addition, we concluded our conversations with Sprint regarding the economics of the prepaid program. As a result, in the fourth quarter of 2012, we recognized a favorable settlement of $11.8 million for the nine quarters ended September 30, 2012. This settlement reflected a reduction of the cost charged by Sprint since the inception of the prepaid program. Moving to Slide 6, I am pleased to report another year of strong financial results. Revenue growth once again led the way with consolidated revenues up 14.7% for the full-year 2012 over 2011. Wireless customer growth and RGU growth in our Cable segment drove the revenue increase. Growth in average billings per customer in the Cable segment, and particularly in the Wireless segment also contributed significantly to the revenue growth. For these reasons, adjusted OIBDA had a similar increase of 14.6% over 2011. The Wireless segment results given on Slide 7 highlights some of the reasons for its continued and extraordinary growth. Postpaid customers have grown by 5.7% between 2011 and 2012. Prepaid customers have grown by 19.7% in the last year. Reductions and churn contributed to the growth in the customer base with postpaid churn down 2 basis points in the fourth quarter of 2012 over the fourth quarter of 2011. Prepaid churn was down 21 basis points in the same time period. Cable segment highlights are shown on Slide 8. We experienced a 2.7% increase in Cable segment RGUs during 2012 to a total of approximately 114,891 RGUs at year-end. Our final system upgrade is now underway and we expect it to be completed in 2013. As a result of our annual testing in the fourth quarter of 2012 the company recorded an $11 million non-cash goodwill impairment charge in the Cable segment. Factors currently affecting the valuation included weak economic conditions, under performance relative to industry operating margins and penetration levels and continued capital spending. Despite this charge, we believe that the broadband opportunity in the long-term value of our Cable business remains strong and we will continue to work to improve its return. Another fourth quarter event to note was our Board of Directors declaring an annual cash dividend of $0.33 per share. This is the same amount as the prior year, but with the increase in earnings the payout ratio decreased to approximately 48%. This was the 53rd consecutive year of paying an annual dividend. I will now turn the call back to Adele to review the details of our financial results.

Thank you, Chris. I will begin with Slide 10, which shows our growth in profitability and adjusted Operating Income Before Depreciation and Amortization or OIBDA. In the topline, you can see that we had nearly a $1.3 million or a 16% increase in operating income for 4Q ‘12 over 4Q ’11. For the year-ended December 31, 2012, operating income was up nearly $2.4 million or 7% over 2011. And the rest of these tables we have adjusted for the significant non-cash or non-routine items and expenses. These adjustments include the favourable $11.8 million prepaid adjustment and the unfavourable $11 million goodwill impairment charge Chris referred to earlier. As you can see for Q4, ’12, adjusted OIBDA is up nearly $2.9 million over Q4, ‘11 or 12.5%. For the year ended December 31, 2012, adjusted OIBDA is at $13.6 million or 14.6% On Slide 11, I have provided the long-term view of the adjusted OIBDA which has grown by $41.9 million over the last five years. This represents the compound annual growth rate of 10.5%. The rate of growth is also been accelerating in the more recent years. The chart on the right shows the Wireless segment has contributed significantly to this growth, however, the Cable segment has begun to make an increasing contribution in recent years. On Slide 12, I’ve provided diluted earnings per share or EPS with and without the adjustments related to the prepaid settlement, Cable goodwill impairment and other non-routine items outlined further in the Appendix to this presentation. Diluted EPS before adjustment rose from $0.57 to $0.69 or 29%. After adjustment, EPS rose from $0.65 to $0.84. This also equates to a 29% increase. To better understand the forces driving changes in our business I have provided the fourth quarter OIBDA results by segment on Slide…

Thank you, Adele. I would like to start by giving you a status report on our Network Vision project. We're very pleased and have made great progress. All the following was accomplished in the years since we signed the addendum with Sprint. Slide 18 provides you some key metrics as of February 25. To-date, 413 of the 520 sites we plan to have in service by year end 2013 had all the leasing and zoning issues resolved and are ready for construction. We've 267 of the sites on air with LTE launched on 222 sites. With just over 40% of the sites completed, because we focused on areas where we have the highest density of customers and usage, LTE is now available to approximately 67% of our covered POPS. We’ve launched service in nine of our 13 market areas. The project is moving along well and we should be done by year end. We still expect to meet our Network Vision budget of $115 million over the two-year construction period. Continuing on wireless, slide 19 shows our ongoing strong growth in postpaid wireless with a 5.7% growth in customers in 2012. At year end 2012, we had 262,892 postpaid customers. Slide 20 provides detail of the fourth quarter and the entire year. In the fourth quarter, we had 4,025 net adds on 18,624 gross additions compared to 5,072 net on 18,955 gross in 2011. Our churn rate in the fourth quarter was 1.87% down slightly from a year ago. Sales through Shentel controlled channels for the fourth quarter were at 49% versus 55% last year. For the entire year, we had 14,272 net adds on 69,124 gross adds compared to 13,811 net on 65,240 gross in 2011. Annual churn was virtually flat to last year at 1.79%. For 2012, we…

And this concludes our prepared remarks. Would you review the instructions for posing a question?

(Operator Instructions) Our first question comes from the line of Ric Prentiss from Raymond James. Your line is open please go ahead.

Couple of questions. First obviously you’ve had a lot of success with the iPhone, it’s now upto 18% your base. Listening to some of the Canadian operators, and other operators this conference call season, they have talked about the dramatic reduction in churn, when they got the iPhone. Can you talk a little bit about what you’ve seen with churn behaviour with iPhone and other iconic devices out there like the Galaxy S3 probably?

Ric this is Earle. We’ve only had the iPhone for about a year, a little over a year so I am not sure that we have seen the big impact yet for churn. With two-year contracts, I think where we will really be able to see the impact is starting towards the end of this year as those two-year contracts come up for renewal.

And on the vision plan may be extending beyond that. In the Sprint Softbank proxy that was filed, Sprint had a couple of business cases in there, with and without Clearwire to use 2.5 gigahertz frequency to expand the network. How would that play out with your affiliate agreement of what might occur in your area?

Once again this is Earle. Today our contract with Sprint doesn’t address the 2.5 spectrum. But we anticipate that based on our relationship with Sprint that we could modify our contract to include that. From our standpoint we would see the use of that spectrum really in areas where we have high density and high usage. With 54 megahertz of spectrum today, our overall network we think we have an adequate amount of spectrum for quite a while. What we would do though in hot spots where we had high demand is we could add additional capacity using the network vision platform, use that spectrum and be able to handle the additional capacity needs kind of in the core of our network.

Sure, makes sense that high frequency is much better in the dense urban areas. On the low frequency side how is that going along as far as rolling, because the agreement with Sprint now includes I believe the low frequency, what progress have you made in utilizing that?

Plan right now is we will be rolling out the initial 800 service in the second quarter for voice, and that will provide us better in building coverage and also better propagation that at the 1900. And then we anticipate by year end when the idea network has been turned off and that spectrum cleared we’ll get the additional spectrum when we will launch LTE on that 800.

Our next question comes from the line of Barry Sine from Drexel Hamilton. Your line is open, please go ahead.

Adele just a quick housekeeping question, when do you expect to filed the K?

The K will be filed early Tuesday morning.

Okay. First area I want to address is the RGU performance you are showing on the Cable business, it seems a little bit disappointing; what's your view of 2.7% growth and what are you doing in the market from a marketing perspective to try and bump that up?

This is Earle. As you recall on our last call, we have launched a new branding campaign at the end of the year basically in the October timeframe and that ran for about six weeks. One of the things that we've been tracking over the last couple of years is Shentel’s name recognition and also the cable company, the subscribers and potential subscribers’ opinion of the cable company; a year and a half ago when we did our initial name recognition only about 50% of the non-customers knew who we were. That grew to about 55% to 60% in the subsequent year and then we did a new market survey at the end of December, early December, excuse me, and that name recognition now with our new branding campaign is now over 75%. So we've seen nice growth in name recognition. We are not in markets where we can really use a lot of mass media, so it does take time. But realistically, you are not going to sell something to somebody who doesn't know you exist. So at this point, we need to really focus on getting that 25% to know who we are. The other thing that we have been surveying is the overall reputation of the cable company whether it’s Shentel or any other cable company. I think we've talked about this numerous times before that there have been a lot of different owners of the cable systems where we now serve and unfortunately we have suffered from their lack of performance and so although that is starting to turn around and we are seeing nice improvement in the perception of the cable company by non-customers, we still have ways to go in turning around that image to match kind of the image we have where we've…

Okay, that’s great. That’s very, very helpful. A follow-on on the Cable segment, the plan presumably is in great shape now, serves small businesses that you pass in that area; what are you doing from a marketing standpoint offer, lets say bundles of voice lines and internet to small businesses in those markets?

Well, we haven't made a big deal about it at this point, but we launched about nine months ago, an initiative to go after small business, primarily with data and voice. Although, it's surprising how many have end up throwing a video on top of it, but we compete against almost a third, third, third with Frontier, CenturyLink and Verizon and we’ve had a good response across all three of those. We actually set ourselves relatively modest objectives for 2012, but we exceeded those. We have gotten very good responses and actually I would encourage you to kind of go on our YouTube site, we have actually have produced a couple of business focused testimonial ads that we've been running cross-channel and on broadcast where it made sense and we're getting some good response and we virtually have had no churn from any business customers. So once we get them, they seem to be very, very happy with our service. So that’s something we are emphasizing. We have had several additional B2B sales reps at the beginning of the year. So that’s going to become a bigger part of our business and once it becomes material enough to I talk about well actually start breaking it out and giving some more detail.

Last question on cables, question is for Chris. Your annual shareholder meeting is coming up shortly, what's your view, what do you going to tell shareholders you have invested a lot of capital acquiring and upgrading cable plan, in terms of your feeling whether this capital has been well spent whether you are seeing the return on that you want, what your view for shareholders?

I think good question that really may be has two answers. So the latter part, no we are not happy with the return on the debt investment yet. But I do think it's a good long-term investment, I think some of the things that Earle just conveyed of what we are trying to overcome there with the product history in that market. And also it’s not something that the improvements we make through the cable upgrade, the systems immediately translates into the additional customers and all that. We have taken the long-term approach. As Earle mentioned, we are trying to avoid the gimmick promotions and all that. And I think we have found, as we found in really all our business segments, the focus has to be on the service first and as we continue to improve their customer experience whether it's in the actual quality of the service, whether it's in the delivery of the service through the call centres and through the technicians out in the field that all those things start to build momentum and we feel they are moving in the positive direction. I don't want to blame everything on the economy but certainly as we launched into these expansions with these acquisitions our timing could have been a little bit better as we started that really when we got into the economic downturn, but I think as we look at all the investments we have made, they are in the right place, we think these markets have potential and we think the demand for broadband, in particular is going to continue to be strong and it will ultimately allow us to make a good return.

Okay, thank you, Chris. A question on the wireless may be this is for Earle, are you also in the wireless segment, you spent a lot of capital upgrading the plant to be able to offer 4G services and you have got 4G in some of your markets now, you have been selling that. Are you seeing any differential now that the sales people have 4G in the (inaudible) cell or are you seeing greater customer sign up rate, more sign ups any significant difference, now that they have 4G versus the market that don't have 4G and are you seeing a return on the investment?

We have made the conscious decision to kind of not to spend a lot of money advertising the fact that we have LTE. We have been selling LTE phones for well over a year. So customers have kind of discovered that LTE is available without us doing a lot of advertising or press release. We have made, unlike some of others and even Sprint who has announced and made campaign on a relatively modest deployment of LTE. We have decided that we want to wait until we get probably past the 75% getting towards to 75% to 80% of the POPS covered and then we will start to push it as far as a campaign. We do talked to the customers one-on-one when they come into the store and as you know Barry you've been here, we have a tremendous amount of royalty and we have a lot of people coming into our stores. So, its not that our customers are not aware of it but we haven't really I think seen any real lifts yet from non-customers as far as being aware that we have LTE. Since Verizon already has LTE in this area, we are just being very, very careful about not over selling what we have until we really have a comparable product.

Okay, I'll come back and ask the same question in six more months?

Absolutely.

So last question I guess this is for Adele on slide 32, the CapEx spending, the wireless part is about $76 million budgeted for 2013 capital spending. Of that about $60 million is for the Network Vision. If I think about 2014 I know you are not giving guidance, I'm assuming that $76 million is going to come down pretty dramatically probably not by the full $60 million, is that directionally the way to think about that?

It certainly is and I think capital intensity ratio as you no doubt know Barry in this industry range from 10% to 15% of revenues.

So that's a good way to think about your business.

It sure is.

Our next question comes from the line of Greg Burns from Sidoti & Company. Your line is open. Please go ahead. Greg Burns - Sidoti & Company: For the fourth quarter how much was the benefit from the Sprint prepaid adjustment to the cost they are allocating to you?

The benefit in the fourth quarter alone was about $2 million. Greg Burns - Sidoti & Company: Okay. And in terms of the goodwill impairment charge was that related to Jet or Rapid or a little bit of both, you know where was that impairment taken?

That's a great question Greg. It actually had three layers associated with it. The first layer actually was related to the original acquisition of the cable business in Shenandoah County. That acquisition carried goodwill of about $5.6 million originally and had been amortized to the extent GAAP allowed you to do so through 2002 down to about $3.3 million. So of the nearly $11 million goodwill impairment $3.3 million of it originated there. [$700,000] came family the Rapid acquisitions and the remainder was associated with Jet. So that goodwill fair value was evaluated on the cable segment as a whole. Greg Burns - Sidoti & Company: And in terms of the write downs, was from when you acquired these assets to now, I mean has it just been harder to overcome the negative perception or the bad reputation or has there been anything else like competitive pressures that popped up that you weren't expecting going into the market?

No, I think we had our eyes wide open as far as the competition that we would be facing, I mean, we have always competed against companies much larger than ourselves. So we had no delusion about competing against DirecTV or DISH or Verizon or CenturyLink. I think probably the two things that really have probably been different than we what anticipated and I talk you about one and that was how long it is taking us to really change that perception. We are in the impression that our actions would speak loud and I think they have but just not nearly as quickly as we had hoped. The other has been the change in the video business. To be very honest, when we were doing these acquisitions, it’s only a couple of years ago but a lot has happened in the last two years is that the video business has changed dramatically. Over the top has materialized I think much quicker than anyone anticipated and the programming cost are going through the roof led by sports programming. If you look at the billions of dollars of contracts that have been signed in the last couple of years for long-term sports contracts that is becoming a material part of what's driving the annual increases in programming costs. And so, being a smaller provider we don't have the economies and scale that the Comcast or DirecTV has and it has impacted our ability because if you look at our numbers and we hadn't have the video losses, we would have some very robust growth. We anticipated we could do extremely on internet and voice which we have. What we did not anticipate very honestly is the change in the video market and how much that has impacted us in the short-term. Greg Burns - Sidoti & Company: Okay. In terms of the decline in the video subscribers, do you think that’s coming more from core cutters and over the top services or are they porting over to competitors.

I think it’s both, we try as much as we can to get answer from customers who leave us, it's always more difficult to get information from somebody after they have left. But I do believe that the very aggressive plans that DirecTV and dish has had especially and people do specifically mentioned this one, the NFL ticket, DirecTV has taken a very different strategy in the last two years on the NFL ticket. They have used it as a very strong promotion during the latter half of the year and they significantly drop the price of renewal. And so when they initially did it, we figured that there would be a bounce back when people realize that the following year they’d have to pay high price, but they significantly cut the price on that. I think they had to for competition reason on their side. As far as over-the-top the answer is, absolutely. The fact that a good number of those 70% of the customers, I won’t say the majority but a growing number of those 70% of the customers that don't buy video from us are basically using it to get their video product. If you could share news some place other than television and you are not a sports fanatic, you can get a fairly robust amount of programming now between all of the services that are over the top. And so there is a segment of the population that has moved to that. Whether that will be a long term trend or after a year till they come back to linear video, we just don't know yet. But I think what we are working very hard to do is to not have that customer leave our video product with any kind of a negative impression of Shentel. But if they make that change, they will come back to us.

(Operator Instructions) And we have a follow up from the line of Ric Prentiss from Raymond James. Your line is open, please go ahead.

I just want to come back to the comment on the prepaid fourth quarter loan was at $2 million benefit. Is that something we should expect to continue and possibly grow then versus what we’ve seen historically as prepaid growth?

The impact is very much related to how many gross ads you have, because most of the adjustment frankly Rick was related to CPGA because you know it’s the cost of acquiring customers.

Very, very seasonal than given that fourth quarter is somewhat big, first quarter could be even bigger than because that’s a big seasonal prepaid and then drop back in 2Q and 3Q?

Absolutely, and obviously that adjustment and succeed in getting that adjustment had a pretty profound affect on the results from the prepaid program. So we were excited about having that.

So its makes a more profitable segment then too. The second question is we appreciate well I will just stay in wireless. Do you have any exposure to the lifeline program in your market areas? Sprint had noted that they had a lot of the program in there with the FCC clean up program coming. They are going to see some significant drop-offs. Is that going to affect you guys.

The answer is it will have some impact on us, all four of our states do offer that program. We have a reasonable number of customers but not a huge percentage of our prepaid is that. But we are anticipating in that April-May timeframe when the clean up is required, we will see an impact of loss of assurance customers. The other thing we've already seen is that the addition of assurance customers have dropped off pretty dramatically as they have tightened up the requirements, and so our prepaid growth of a couple of quarters previously the assurance was in there. I'm not sure we really had any net assurance growth at all. No measureable net assurance growth in the fourth quarter.

So we should be expecting a little bit of a hit probably in the 2Q timeframe.

Right.

And then Adele I appreciate all the extra information and kind of shining the light on the towers were kind of the Godfather of towers it seems, any thoughts that something that you would want to monetize or you are just trying to let people know that this is a business that typically trades on an EBITDA basis, current year in the teens and even into the 20s and clearly you are not getting recognition for that. So is it to shine or light or maybe possibly think that there could be some M&A downstream.

It’s really more the latter at this point Rick. Some of the parts in our case is worth more than the whole at this point, and we believe that the market does not recognize the value of that business. Obviously we always evaluate our options for M&A. Certainly when I approach the market this year about restructuring the financing, I made clear to the potential lenders that that is a very tangible asset that could quickly be monetized if need be. Right now the Board and the management team does not see a need to monetize it, but we certainly could if we needed to. So while we don't have an M&A transaction pending on that, I think it’s important to know that its there if we need it.

It’s very helpful to shine the light on that. And then the other I thought was interesting the new slide on the fiber sales, slide 31. I think Earle that might have been on your side of the deck. First what kind of margins are you making on that business, because clearly it’s a large growth area in the ILEC side.

Obviously it’s a wide range of any one particular project, but because we've been building fiber for many, many years, a lot of this fiber contracts there's very little construction required in order to add the additional revenue. And the fact that we have a very robust core, we may have to build an extension but we are not having to make substantial upgrades to the capacity of the core; other than more electronics rather than fiber itself. So the margins are very high and we expect that we can continue to leverage that kind of a two levels, number one new customers, but what we are finding is almost every customer we have is coming back within 12 or 18 months from signing that three to five year, six year contract and substantially increasing the amount of capacity they want.

Sure. And for us to kind of model it, clearly the affiliate revenue has been going up, I assume that’s putting fiber to the cell at your own sites. Have you completely fibered your sites?

No, we're continuing to build sites. We probably have 40 to 50 this year, I believe, is the number and we're also building fiber to towers that we don’t own either for our own use or to sell to third-party.

Is there some metric you can give us maybe around that revenue line item to think about how many of these you've done and how many you have in your pipeline?

I don’t have those numbers right off the top of my head. We have well over a 100 sites that we have build, and I would say, in our pipeline close to a 100 considering ourselves and what we have close to signing, I won't say that they are signed yet but close to signing with a couple of the other major wireless carriers.

Okay, kind of like the Oliver Twist might have some more served. These guys need more backhaul it sounds like.

Absolutely; and what we're finding is that the two biggest players in wireless are very, very hungry for fiber to areas that we would never have anticipated that would be on their early radar screens. So that gives us kind of a unique opportunity because in many of these areas, we're the only one with fiber.

And I am showing no additional questions in queue. I would like to turn the conference back over to management for any closing remarks.

Thank you for participating. And Ric particularly I appreciate your recognition that the presentation had improved overtime. Certainly if you have comments about what you would like to see in future presentations, I would be happy to take those in my contact information within the press release. Thank you.

Ladies and gentlemen thank you for your participation in today’s conference. This does conclude the program and you may all disconnect. Have a great rest of the day.