nTelos holding its own in competitive industry
Jan 05, 2013 (The Daily Progress - McClatchy-Tribune Information Services via COMTEX) --
Driven by unrelenting consumer demand for around-the-clock connectivity, Waynesboro-based nTelos made about $75 million in incremental capital investments and upgrades in 2012 and plans to launch 4G LTE service in several markets this year.
The company's investments in 2012 included new cell towers, expanded wireless service and new retail locations.
In an industry that's become dominated by a handful of mega companies that have millions of customers and hold a large segment of the market, nTelos is still standing on solid ground.
CEO Jim Hyde said the company is comfortable -- but not complacent -- in its niche market as a regional wireless provider with a focus on good prices, good customer service and access to the latest devices, such as the iPhone 5.
"You can't go toe to toe with the big guys and get into a punching match with them," Hyde said. "They're bigger, they're stronger, they're more powerful. It's going to be a bad day for you if you try to do that. But I think if you pick your punches, if you target what you're trying to do and who you're trying to do it for, the big guys are very vulnerable."
Hyde has been in the wireless industry since 1995. Before joining nTelos in 2009, Hyde served as CEO of T-Mobile United Kingdom. The company he oversees today has about 430,000 subscribers in seven states and employs about 1,000 people overall, 600 of them in Waynesboro.
In the third quarter of 2012, the company reported operating revenues of $114.5 million, up 7 percent from the same period in 2011.
"Our products have really changed the way people live their lives and the way business gets done," Hyde said. "People rely on their wireless phones now in a way like never before."
Jeff Kagan, an Atlanta-based analyst who follows the tech, wireless and telecom industries, agreed, describing nTelos as a "really strong" regional company that will likely continue to experience stability and growth.
"The reason that these smaller carriers tend to do well is because they have a better relationship with the customer and they often have more dense coverage in their home area," Kagan said.
In November, however, the outlook wasn't so bright. Speculation that industry giant Sprint would not renew its contract with nTelos sent the Waynesboro company's stock tumbling by more than 20 percent.
Derek Kerton, a principal analyst at a California-based wireless industry consulting firm and chairman of the Telecom Council of Silicon Valley, said regional wireless companies such as nTelos face similar challenges connected to scale.
Specifically, those challenges include being unable to generate the volume of orders to command the attention of manufacturers, the reluctance of device makers to accommodate customization requests and needing to rely more heavily on roaming agreements with other carriers in order to guarantee good connectivity and a steady revenue source. But Kerton said the wireless industry is in no danger of reaching a revenue or market penetration plateau.
"We see [devices] going to younger and younger users, and we see those people getting more and more powerful phones," Kerton said. "Do we see a peak No. We see ongoing absorption of features and functions into the smart phone making it more and more important to people's lives ... The smart phone fulfills the functions of so many devices, it becomes almost irresistible to people."
About two decades ago, Kagan said, all wireless providers were basically regional companies, but through acquisitions and mergers, a handful of giants emerged. I n the early 1990s, regulations eased and the industry exploded.
"That very much stagnated the growth and the penetration of wireless because you had two basically big competitors who owned all of the network, who owned all of the access to customers, and weren't motivated to make that product more affordable," Hyde said. "They were focused more on profit than penetration."
"Regional carriers are scrappy and have to compete hard," Kagan said. "And they can offer benefits to customers because they have boots on the ground and they offer better service."
In the third quarter of 2012, there were more than 1 billion smart phones in use worldwide for the first time, according to techcruch.com, which cited research by global technology research firm Strategy Analytics.
Hyde is confident more growth is on the horizon. "It's been amazing penetration of a product into the mass market, faster than really any other consumer-based product in history," he said. "Faster than the PC, faster than anything you can point to."
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