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October 29, 1999 ALAMOSA PCS HOLDINGS INC (APCS) S-1 Filing (SEC form S1) Alamosa is a provider of wireless personal communications services (PCS) in the southwestern and midwestern United States. We are part of the Sprint PCS network. Sprint PCS, directly and through affiliates such as us, provides wireless services in more than 4,000 cities and communities across the country. We have the exclusive right to provide digital PCS services under the Sprint and Sprint PCS brand names in a territory comprising approximately 9.2 million licensed pops. These pops are primarily located in smaller cities and in markets with above average growth rates in Texas, New Mexico, Arizona, Colorado and Wisconsin. We entered into the Sprint PCS Agreements in July 1998. Recently, we signed a letter of intent with Sprint PCS to modify the Sprint PCS Agreements to expand our territory so that it will include approximately 9.2 million licensed pops. We launched Sprint PCS service in Laredo in June 1999, and have since commenced service in ten additional markets: Albuquerque, Santa Fe, El Paso, Las Cruces, Lubbock, Amarillo, Midland, Odessa, Abilene and San Angelo. Our systems reach approximately 2.7 million covered pops out of approximately 3.9 million licensed pops in those markets. We expect to have a total of approximately 5.0 million covered pops by the end of 2000, and 5.9 million covered pops by the end of 2001, at which point we expect to have completed our build-out obligations to Sprint PCS and expect to have covered approximately 64% of the licensed pops in our territory. As of September 30, 1999, we served approximately 9,850 Sprint PCS subscribers based in our territory. We were formed in July 1998, as a Texas limited liability company. Immediately before the closing of this offering, we will reorganize into a Delaware holding company structure. See "The Reorganization." STRATEGIC RELATIONSHIP WITH SPRINT PCS We believe that our strategic relationship with Sprint PCS provides significant competitive advantages. Sprint PCS is a national provider of wireless services and products. Sprint PCS's subscriber base has more than tripled in size since the end of June 1998, making Sprint PCS one of the fastest growing wireless service providers in the United States. Under the Sprint PCS Agreements, we have the exclusive right to provide wireless services under the Sprint and Sprint PCS brand names in our territory. Sprint PCS handles our billing and collections and pays us 92% of "collected revenues" from subscribers based in our territory and retains the remaining 8%, as more fully described in "The Sprint PCS Agreements -- The Management Agreement -- Service Pricing, Roaming and Fees." We also receive 100% of other revenues, including handset revenues and fees for each minute that Sprint PCS customers based outside our territory use our portion of the Sprint PCS network. We believe that our affiliation with Sprint PCS allows us to establish high quality, branded wireless services more quickly, at a lower cost and with lower initial capital requirements than would otherwise be possible. Specifically, we benefit from: - Immediate Brand Recognition. We market products and services directly under the Sprint and Sprint PCS brand names. We immediately benefit from the recognizable Sprint and Sprint PCS brand names and national advertising campaigns as we open markets. - Existing Distribution Channels. We benefit from relationships with major national retailers who distribute Sprint PCS products and services under existing Sprint PCS contracts, including RadioShack, Circuit City, Best Buy, K-Mart, Office Max and Office Depot. Our markets contain approximately 280 of these third party retail outlets. - Sprint PCS's National Footprint. Customers in our territory can immediately access the growing Sprint PCS wireless network, with service in more than 4,000 cities and communities across the United States. - High Capacity Network. Sprint PCS built its network around code division multiple access (CDMA) digital technology, which we believe provides advantages in capacity, voice-quality, security and handset battery life. - Sprint PCS's Licensed Spectrum. Our early stage financing requirements have been reduced as a result of Sprint PCS's investment of approximately $100 million to purchase the PCS licenses in our territory and to pay other costs related to the licensed spectrum. - Better Equipment Availability and Pricing. We expect to be able to acquire handsets and network equipment more quickly and at a lower cost than we could without our affiliation with Sprint PCS. - Established Back Office Support Services. We are able to accelerate our market launches and capitalize upon economies of scale by contracting with Sprint PCS to provide critical back office services, including customer activation, handset logistics, billing, customer care and network monitoring services. - Access to New Wireless Services. We have access to new wireless services introduced by Sprint PCS, including wireless Internet access. ATTRACTIVE MARKET FOOTPRINT We believe that our territory is attractive for several reasons, including: - High Growth Markets. The overall population growth rate in our territory was approximately 1.5% per year, approximately 45% above the national average. We serve nine of the 50 fastest growing markets in the United States, including all of Laredo and a portion of Las Vegas, the two fastest growing markets. - Fewer Competitors. We expect to face fewer competitors in our markets than is generally the case for carriers operating in more urban markets. As of September 30, 1999, three or fewer carriers (other than Alamosa) operated in markets that comprise over 80% of the licensed pops in our territory. By comparison, less than 10% of the licensed pops in the 50 most populated markets in the United States are served by four or fewer carriers. In addition, no single competitor or affiliated group of competitors has launched service that reaches more than half of the licensed pops in our territory. - Opportunity for Sprint PCS Roaming Revenue. We anticipate that we will have significant roaming revenue from Sprint PCS subscribers based outside our territory who use our portion of the Sprint PCS network. Our territory adjoins several major Sprint PCS markets, including Dallas/Fort Worth, Phoenix, Minneapolis, Denver, Las Vegas, Milwaukee, San Antonio and Austin, from which we expect significant Sprint PCS roaming revenue. The metropolitan statistical areas (as defined by the U.S. Census Bureau) in which these markets are located contain approximately 19.3 million licensed pops. LAUNCHED SERVICE AND FULLY FUNDED PLAN OF NETWORK BUILD-OUT We have launched Sprint PCS service in eleven markets with approximately 2.7 million covered pops out of the 3.9 million licensed pops in those markets. We anticipate that the proceeds of this offering, when combined with previously funded equity and the committed level of debt financing from Nortel Networks, Inc. (Nortel), will be adequate to fund required capital expenditures, working capital requirements, operating losses and other cash needs of our business. Further, we believe that this level of financing is adequate to achieve the objective in our business plan of covering approximately 64% of the licensed pops in our territory by the end of 2001 and to exceed the build-out requirements contained in the Sprint PCS Agreements. For more information see "Risk Factors -- Risks Particular to Alamosa -- We may not achieve or sustain operating profitability or positive cash flow from operating activities" and "-- We may need more capital than we currently project to build-out our portion of the Sprint PCS network." | ||||||||||||||
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