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What changed in SHENANDOAH TELECOMMUNICATIONS CO/VA/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SHENANDOAH TELECOMMUNICATIONS CO/VA/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+290 added−251 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in SHENANDOAH TELECOMMUNICATIONS CO/VA/'s 2023 10-K

290 paragraphs added · 251 removed · 200 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

90 edited+11 added−15 removed102 unchanged
Biggest changeWith the influx of government grants now available to subsidize broadband FTTH construction to unserved areas, we ceased our Beam fixed wireless network, operations and services in 2022 as it was not designed to compete against the faster broadband services offered by fiber networks. We incurred $12.4 million in impairment, accelerated depreciation and restructuring charges in 2022 as a result.
Biggest changeIn November 2021, Congress passed the Infrastructure Investment and Jobs Act that will provide an additional $42.5 billion to states to fund broadband construction and adoption programs that prioritize the expansion of high-speed broadband to unserved homes across the country. 7 Table of Contents With the influx of government grants now available to subsidize broadband FTTH construction to unserved areas, we ceased our Beam fixed wireless network, operations and services in 2022 as it was not designed to compete against the faster broadband services offered by fiber networks.
Non-broadcast channels (including satellite-delivered cable programming, such as ESPN, HBO and the Discovery Channel) are not subject to must-carry/retransmission consent regulations or a compulsory copyright license. The Company negotiates directly or through the National Cable Television Cooperative (“NCTC”) with these cable programmers for the right to carry their programming.
Non-broadcast channels (including satellite-delivered cable programming, such as ESPN, HBO and the Discovery Channel) are not subject to must-carry/retransmission consent regulations or a compulsory copyright license. The Company negotiates directly or through the National Cable Television Cooperative with these cable programmers for the right to carry their programming.
Some states, including Virginia and West Virginia, have enacted regulations and franchise provisions that also can affect certain aspects of a cable operator’s operations. Our business can be significantly impacted by changes to the existing regulatory framework, whether caused by legislation or administrative or judicial actions.
Some states, including Virginia and West Virginia, have enacted regulations and franchise provisions that also can affect certain aspects of a cable operator’s operations. Our business may be significantly impacted by changes to the existing regulatory framework, whether caused by legislation or administrative or judicial actions.
As well as ensuring compensation competitiveness, the primary objectives of Shentel’s compensation programs are as follows: • Create a competitive advantage to attract, motivate and retain the necessary talent for the Company; • Focus both individual and organizational effort around strategy execution, accountability and Company core values for achieving key business outcomes; • Emphasize individual performance-based differentiation linked to corporate and shareholder values. • Establish job and salary structures that are market driven and reviewed on an ongoing basis in order to maintain long-term competitiveness; • Ensure that pay processes are easily understood; 13 Table of Contents • Provide a consistent approach to delivering ongoing competitive compensation to employees of the Company.
As well as ensuring compensation competitiveness, the primary objectives of Shentel’s compensation programs are as follows: • Create a competitive advantage to attract, motivate and retain the necessary talent for the Company; 14 Table of Contents • Focus both individual and organizational effort around strategy execution, accountability and Company core values for achieving key business outcomes; • Emphasize individual performance-based differentiation linked to corporate and shareholder values. • Establish job and salary structures that are market driven and reviewed on an ongoing basis in order to maintain long-term competitiveness; • Ensure that pay processes are easily understood; • Provide a consistent approach to delivering ongoing competitive compensation to employees of the Company.
Incumbent cable television companies, which have historically provided video service, face competition from direct broadcast satellite providers such as Dish and DirecTV and on-line video services, such as Netflix, YouTube TV, Hulu, Disney and Amazon.
Incumbent cable television companies, which have historically provided video service, also face competition from direct broadcast satellite providers such as Dish and DirecTV and on-line video services, such as Netflix, YouTube TV, Hulu, Disney and Amazon.
Our recent efforts have been focused in three areas: inspiring innovation through an inclusive and diverse culture; expanding our efforts to recruit, hire and retain experienced, diverse talent; and identifying strategic initiatives to accelerate our inclusion and diversity programs.
Our efforts have been focused in three areas: inspiring innovation through an inclusive and diverse culture; expanding our efforts to recruit, hire and retain experienced, diverse talent; and identifying strategic initiatives to accelerate our inclusion and diversity programs.
Regulation of Broadband Internet and Cable Video Services We provide broadband internet, video, voice and fiber services to residential and business customers in franchise areas covering portions of Virginia, West Virginia, western Maryland, central Pennsylvania and eastern Kentucky.
Regulation of Broadband Internet and Cable Video Services We provide broadband internet, video, voice and fiber services to residential and business customers in franchise areas covering portions of Virginia, West Virginia, Maryland, central Pennsylvania and eastern Kentucky.
Prior to joining Uniti, he served as CFO of multiple public and private telecommunication companies, including PEG Bandwidth, Hargray Communications and UbiquiTel Inc. He previously held senior finance positions with AT&T and Comcast. Mr. Volk holds a Bachelor of Science Degree in Accounting from the University of Delaware and a Master of Business Administration from Villanova University. Ms.
Prior to joining Uniti, he served as CFO of multiple public and private telecommunication companies, including PEG Bandwidth, Hargray Communications and UbiquiTel Inc. He previously held senior finance positions with AT&T and Comcast. Mr. Volk holds a Bachelor of Science Degree in Accounting from the University of Delaware and a Master of Business Administration from Villanova University. Mrs.
The terms and conditions of franchises vary among jurisdictions, but franchises generally last for a fixed term and are subject to renewal, require the cable operator to collect a franchise fee of as much as 5% of the cable operator’s gross revenue from video services, and contain certain service quality and customer service obligations.
The terms and conditions of franchises vary among jurisdictions, but franchises generally last for a fixed term and are subject to renewal, require the cable operator to collect a franchise fee of 5% of the cable operator’s gross revenue from video services, and contain certain service quality and customer service obligations.
As a result of the FCC’s December 2017 decision to reclassify broadband Internet access service as an “information service,” the FTC has the authority to enforce against unfair or deceptive acts and practices, to protect the privacy of Internet service customers, including our use and disclosure of certain customer information.
As a result of the FCC’s December 2017 decision, discussed above, to reclassify broadband Internet access service as an “information service,” the FTC has the authority to enforce against unfair or deceptive acts and practices, to protect the privacy of Internet service customers, including our use and disclosure of certain customer information.
Romps is a certified public accountant and earned a B.A. in Accounting from Michigan State University and MBA from the Kellogg Graduate School of Management at Northwestern University. Mr. Mason is Senior Vice President Engineering and Operations at Shentel and is responsible for leading the Company's network strategy, engineering, construction and operations functions.
Romps is a certified public accountant and earned a B.A. in Accounting from Michigan State University and MBA from the Kellogg Graduate School of Management at Northwestern University. Mr. Mason is Senior Vice President Engineering and Operations at Shentel and is responsible for leading our network strategy, engineering, construction and operations functions. Mr.
Compliance with the CCPA may increase the cost of providing our services to customers who may be residents in California and increase our litigation exposure. In 2020 Virginia enacted a new consumer privacy law. Firms were required to come into compliance by January 2023.
Compliance with the CCPA may increase the cost of providing our services to customers who may be residents in California and increase our litigation exposure. In 2020, Virginia enacted a new consumer privacy law. Companies were required to come into compliance by January 2023.
On January 30, 2020, the FCC adopted an order approving the Rural Digital Opportunity Fund (“RDOF”) to disburse $20.4 billion over the course of ten years to subsidize the deployment of networks for the provision of high-speed broadband internet access and voice services in unserved areas via a reverse auction, some of which may be directed to competitive providers in some of the states in which we operate.
On January 30, 2020, the FCC adopted an order approving the Rural Digital Opportunity Fund to disburse $20.4 billion over the course of 10 years to subsidize the deployment of networks for the provision of high-speed broadband internet access and voice services in unserved areas via a reverse auction, some of which may be directed to competitive providers in some of the states in which we operate.
Description of Business Broadband Reporting Segment Our Broadband segment provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, and Kentucky, via fiber optic services under the brand name of Glo Fiber and hybrid fiber coaxial cable under the brand name of Shentel.
Description of Business Broadband Reporting Segment Our Broadband segment provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optics under the brand name of Glo Fiber and hybrid fiber coaxial cable under the brand name of Shentel.
Shenandoah Telephone receives disbursements from the federal USF. In October 2011, the FCC adopted comprehensive changes to the universal service program. Some of the FCC’s reforms impact the rules that govern disbursements from the USF to RLECs such as Shenandoah Telephone, and to other providers.
Universal Service Fund (“USF”). Shenandoah Telephone receives disbursements from the federal USF. In October 2011, the FCC adopted comprehensive changes to the universal service program. Some of the FCC’s reforms impact the rules that govern disbursements from the USF to RLECs such as Shenandoah Telephone, and to other providers.
We cannot predict whether, when and to what extent such refunds may be due. On October 27, 2011, the FCC adopted a number of broad changes to the intercarrier compensation rules governing the interstate access rates charged by small-to-mid-sized RLECs such as Shenandoah Telephone that have had a material impact on our revenues.
We cannot predict whether, when and to what extent such refunds may be due. On October 27, 2011, the FCC adopted a number of broad changes to the intercarrier compensation rules governing the interstate access rates charged by small-to-mid-sized RLECs such as Shenandoah Telephone that have had a 11 Table of Contents material impact on our revenues.
ITEM 1. BUSINESS Our Company Shenandoah Telecommunications Company (“Shentel”, “we”, “our”, “us”, or the “Company”), provides broadband services through its high speed, state-of-the-art fiber-optic and cable networks to customers in the Mid-Atlantic United States. The Company's services include: broadband internet, video, and voice; fiber-optic Ethernet, wavelength and leasing; and tower colocation leasing.
ITEM 1. BUSINESS Our Company Shenandoah Telecommunications Company and its subsidiaries (“Shentel”, “we”, “our”, “us”, or the “Company”), provide broadband services through its high speed, state-of-the-art fiber-optic and cable networks to customers in the Mid-Atlantic United States. The Company’s services include: broadband internet, video and voice; fiber-optic Ethernet, wavelength and leasing; and tower colocation leasing.
These changes have had a negative impact on our revenues and expenses for voice services at particular times over this multi-year period. Further regulatory changes are being considered that could impact our VoIP service.
These changes have had a negative impact on our revenues for voice services at particular times over this multi-year period. Further regulatory changes are being considered that could impact our VoIP service.
Cheng is Senior Vice President and Chief Information Officer for Shentel. She leads the Information Technology organization, Enterprise Project Management Office (“EPMO”), and Enterprise Risk Management program, and is responsible for our Customer Care and Tech Support functions.
Cheng is Senior Vice President and Chief Information Officer for Shentel. She leads the Information Technology organization, Enterprise Project Management Office (EPMO) and Enterprise Risk Management program, and is responsible for our Customer Care and Tech Support functions.
The contents of our website are not a part of this report. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding the Company. 16 Table of Contents
The contents of our website are not a part of this report. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding the Company. 17 Table of Contents
In 2017, the FCC adopted an order repudiating its treatment of broadband as a telecommunications service, reclassifying broadband as an information service, and eliminating the 2015 rules other than the transparency requirement, which was eased in significant ways. The FCC also ruled that state regulators may not impose obligations similar to federal obligations that the FCC removed.
In 2017, the FCC adopted an order repudiating its treatment of broadband as a telecommunications service, reclassifying broadband as an information service, and eliminating the 2015 Net Neutrality rules other than the transparency requirement, which the FCC eased in significant ways. The FCC also ruled that state regulators may not impose obligations similar to federal obligations that the FCC removed.
Compliance with FAA, environmental or historic preservation requirements could significantly delay or prevent the registration or construction of a particular tower or make tower construction more costly. On July 15, 2016, Congress enacted new tower marking requirements for certain towers located in rural areas, which may increase our operational costs.
Compliance with FAA, environmental or historic preservation requirements could significantly delay or prevent the registration or construction of a particular tower or make tower construction more costly. On July 15, 2016, Congress enacted new tower marking requirements for certain towers located in rural areas, which may increase our 13 Table of Contents operational costs.
The EBB program provides a subsidy of up to $50 per month toward Internet service to the service provider for most eligible low-income households that elect the benefit and demonstrate their qualification.
The EBB program provided a subsidy of up to $50 per month toward Internet service to the service provider for most eligible low-income households that elect the benefit and demonstrate their qualification.
Of the states in which Shentel operates, Virginia and Kentucky currently regulate cooperatively owned pole attachments. In 2018, the FCC interpreted another federal law governing state and local regulation of public rights of way to impose cost-based limitations on what government entities may charge for pole attachments.
Of the states in which Shentel operates, Virginia and Kentucky currently regulate cooperatively owned pole attachments. In addition, the FCC has interpreted another federal law governing state and local regulation of public rights of way to impose cost-based limitations on what government entities may charge for pole attachments.
At the same time, several states (including California, but not anywhere we operate) have adopted state obligations replacing the Internet access (“Net Neutrality” type) obligations that the FCC removed, and we expect that additional states will consider the imposition of new regulations on Internet services like those that we offer.
At the same time, several states (including California, but not states in which we operate) have adopted state obligations replacing the Internet access (“Net Neutrality” type) obligations that the FCC removed, and we expect that additional states will consider the imposition of new regulations on Internet services like those that we offer.
We cannot predict if or when additional changes will be made to the current FCC accessibility rules, or whether and how such changes will affect us. Voice over Internet Protocol “VoIP” Services . We provide voice communications services over our cable network utilizing interconnected VoIP technology and service arrangements.
We cannot predict if or when additional changes will be made to the current FCC accessibility rules, or whether and how such changes will affect us. Voice over Internet Protocol “VoIP” Services . We provide voice communications services over our cable and fiber networks utilizing interconnected VoIP technology and service arrangements.
The FCC, USAC and other authorities have conducted, and in the future are expected to continue to conduct, more extensive audits of USF support recipients, as well as other heightened oversight activities. The impact of these activities on the Company, if any, is uncertain. Other Regulatory Obligations.
The FCC, USAC and other authorities have conducted, and in the future are expected to continue to conduct, more extensive audits of USF support recipients, as well as other heightened oversight activities. The impact of these activities on the Company, if any, is uncertain. 12 Table of Contents Other Regulatory Obligations.
The 2015 rules also imposed a transparency requirement, i.e., an obligation to disclose all material terms and conditions of our service to consumers.
The 2015 Net Neutrality rules also imposed a transparency requirement, i.e., an obligation to disclose all material terms and conditions of our service to consumers.
Before that, he held a variety of leadership roles over his 20+ year career with Cincinnati Bell, culminating in Vice President of Field Operations. He received his Bachelor of Science degree in Electrical Engineering from Ohio University and has an MBA from Xavier University. Mr. Rieger is Vice President Legal, General Counsel & Corporate Secretary for Shentel.
Before that, he held a variety of leadership roles over his more than 20 years career with Cincinnati Bell, culminating in Vice President of Field Operations. He received his Bachelor of Science degree in Electrical Engineering from Ohio University and has an MBA from Xavier University. Mr. Rieger is General Counsel, Vice President Legal and Corporate Secretary for Shentel.
Those rules were upheld by a federal court in 2021, but the court limited the amount of the in-kind franchise fee contribution credit to the operator’s marginal costs rather than its market valuation. Pole Attachments.
Those rules were upheld by a federal court in 2021, but the court limited the amount of the in-kind franchise fee contribution credit to the operator’s marginal costs rather than its market valuation. 8 Table of Contents Pole Attachments.
Complying with these requirements may impose costs on the Company or compel the Company to alter the way it provides or promotes its services. Accessibility . The FCC imposes obligations on multi-channel video programming distributors (“MVPDs”), intended to ensure that individuals with disabilities are able to access and use video programming services and 8 Table of Contents equipment.
Complying with these requirements may impose costs on the Company or compel the Company to alter the way it provides or promotes its services. Accessibility . The FCC imposes obligations on multi-channel video programming distributors (“MVPDs”), intended to ensure that individuals with disabilities are able to access and use video programming services and equipment.
She has over 20 years of experience in the broadband industry, including 10 years with Comcast as Vice President of Sales and Marketing for the Big South Region and Vice President of Marketing for the Central Division, seven years with Atlantic Broadband as Vice President/General Manager of the Maryland-Delaware markets and Vice President of Customer Care and Marketing, and six years with Charter in various leadership roles.
She joined Shentel in June 2022 and has over 20 years of experience in the broadband industry, including 10 years with Comcast as Vice President of Sales and Marketing for the Big South Region and Vice President of Marketing for the Central Division, seven years with Atlantic Broadband as Vice President/General Manager of the Maryland-Delaware markets and Vice President of Customer Care and Marketing, and six years with Charter in various leadership roles.
Our commitment to safety has also allowed us to achieve a 2022 OSHA Incident Rate of approximately 1.6, compared to the national utilities industry benchmark of 2.1. Compensation and Benefits We provide employees with compensation and benefits packages that are market-driven and aligned to a consistent Shentel Compensation and Rewards Philosophy.
Our commitment to safety has also allowed us to achieve a 2023 OSHA Incident Rate of approximately 1.2, compared to the national utilities industry benchmark of 1.7. Compensation and Benefits We provide employees with compensation and benefits packages that are market-driven and aligned to a consistent Shentel Compensation and Rewards Philosophy.
Further, the FCC recently adopted a plan to reallocate for other purposes certain spectrum currently used by satellite providers to deliver video programming to individual cable systems, which could be disruptive to the satellite video delivery platform we rely 9 Table of Contents upon to provide our video services.
Further, the FCC recently adopted a plan to reallocate for other purposes certain spectrum currently used by satellite providers to deliver video programming to individual cable systems, which could be disruptive to the satellite video delivery platform we rely upon to provide our video services.
Our spectrum licenses for our service area are scheduled to expire on various dates. Spectrum licensees have an expectation of license renewal if they can satisfy three "safe harbor" certifications which, if made, will result in routine processing and grant of the license renewal application.
Our spectrum licenses for our service area are scheduled to expire on various dates. Spectrum licensees have an expectation of license renewal if they can satisfy three “safe harbor” certifications which, if made, will result in routine processing and grant of the license renewal application.
We will continue to poll our employees and build action plans to address feedback shared by our team members. 14 Table of Contents Information About Our Executive Officers The following table presents information about our executive officers who, other than Christopher E. French, are not members of our board of directors.
We will continue to poll our employees, as appropriate, and build action plans to address feedback shared by our team members. 15 Table of Contents Information About Our Executive Officers The following table presents information about our executive officers who, other than Christopher E. French, are not members of our board of directors.
The Broadband segment also leases dark fiber and provides Ethernet and wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area under the brand names of Glo Fiber Enterprise and Glo Fiber Wholesale.
The Broadband segment also leases dark fiber and provides Ethernet and wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area under the brand name of Glo Fiber Business.
We expect continued federal and other state efforts to regulate online privacy, data security and cybersecurity to continue in 2023. We cannot predict whether any of these efforts will be successful, or how new legislation and regulations, if any, would affect our business.
We expect federal and state efforts to regulate online privacy, data security and cybersecurity to continue in 2024. We cannot predict whether any of these efforts will be successful, or how new legislation and regulations, if any, would affect our business.
Rieger General Counsel, Vice President Legal and Corporate Secretary 42 February 2022 Dara Leslie Senior Vice President Sales & Marketing 55 June 2022 Mr. French is President and Chief Executive Officer for Shentel. He is responsible for the overall leadership and strategic direction of the Company.
Rieger General Counsel, Vice President Legal and Corporate Secretary 43 February 2022 Dara Leslie Senior Vice President Sales & Marketing 56 June 2022 Mr. French is President and Chief Executive Officer for Shentel. He is responsible for the overall leadership and strategic direction of the Company.
In this decision the FCC re-classified broadband internet access service as an unregulated information service, thus eliminating all federal regulatory “network neutrality” obligations beyond requiring broadband providers to accurately disclose network management practices, performance, and commercial terms of service. These issues may be revisited by the FCC in the current or future administrations.
In this decision, the FCC reclassified broadband internet access service as an unregulated information service, 6 Table of Contents thus eliminating all federal regulatory “network neutrality” obligations beyond requiring broadband providers to accurately disclose network management practices, performance, and commercial terms of service. These issues may be revisited by the FCC in the current or future administrations.
We make available free of charge, through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8‑K and all amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such reports with or to the Securities and Exchange Commission (“SEC”).
We make available free of charge, through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8‑K and all amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such reports with or to the SEC.
Cheng Senior Vice President and Chief Information Officer 49 March 2019 Heather K. Tormey Vice President and Chief Human Resources Officer 49 July 2019 Dennis A. Romps Vice President and Chief Accounting Officer 55 July 2021 Richard W. Mason Jr. Senior Vice President Engineering and Operations 49 July 2021 Derek C.
Cheng Senior Vice President and Chief Information Officer 50 March 2019 Heather K. Tormey Vice President and Chief Human Resources Officer 50 July 2019 Dennis A. Romps Vice President and Chief Accounting Officer 56 July 2021 Richard W. Mason Jr. Senior Vice President Engineering and Operations 50 July 2021 Derek C.
He has held board and officer positions in both state and national telecommunication associations, including service as a member of the Leadership Committee of the USTelecom Association, a director of the Organization for the Promotion and Advancement of Small Telecommunications Companies (“OPASTCO”) and was president and director of the Virginia Telecommunications Industry Association. Mr.
He has held board and officer positions in both state and national telecommunication associations, including service as a director of the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), membership on the Leadership Committee of the USTelecom Association, and was president and director of the Virginia Telecommunications Industry Association. Mr.
Our executive officers serve at the pleasure of the Board of Directors. Name Title Age Date in Position Christopher E. French President and Chief Executive Officer 64 April 1988 Edward H. McKay Executive Vice President and Chief Operating Officer 50 July 2021 James J. Volk Senior Vice President and Chief Financial Officer 58 June 2019 Elaine M.
Our executive officers serve at the pleasure of the Board of Directors. Name Title Age Date in Position Christopher E. French President and Chief Executive Officer 65 April 1988 Edward H. McKay Executive Vice President and Chief Operating Officer 51 July 2021 James J. Volk Senior Vice President and Chief Financial Officer 60 June 2019 Elaine M.
The VSCC has jurisdiction over local telephone companies’ intrastate intercarrier compensation rates, and has indicated in the past that it might open a generic proceeding on the rates charged for intrastate access, although the scope and likelihood of such a proceeding is unclear in light of the FCC’s overhaul of the intercarrier compensation rules (discussed above), which affect states’ jurisdiction over intrastate access charges. 10 Table of Contents Universal Service Fund (“USF”).
The VSCC has jurisdiction over local telephone companies’ intrastate intercarrier compensation rates, and has indicated in the past that it might open a generic proceeding on the rates charged for intrastate access, although the scope and likelihood of such a proceeding is unclear in light of the FCC’s overhaul of the intercarrier compensation rules (discussed above), which affect states’ jurisdiction over intrastate access charges.
Other state laws and regulations may be adopted in the future, but will likely be subject to legal challenges. California’s legislation has been challenged in court. We cannot predict how any such state legislation and court challenges will be resolved.
Other state laws and regulations may be adopted in the future, and have been proposed in states in which we operate, but will likely be subject to legal challenges. California’s legislation has been challenged in court. We cannot predict how any such state legislation and court challenges will be resolved.
She joined the Company in March 15 Table of Contents 2019 and has more than 20 years of experience in diverse business environments across all areas of Information Technology. Prior to joining Shentel, Ms. Cheng served as Chief Information Officer and Managing Director of Global Strategic Design for CFA Institute in Charlottesville, Va.
She joined the Company in March 2019 and has more than 20 years of experience in diverse business environments across all areas of Information Technology. Prior to joining Shentel, Mrs. Cheng served as Chief Information Officer and Managing Director of Global Strategic Design for CFA Institute in Charlottesville, Va. Prior to her time at CFA Institute, Mrs.
We believe that site location and capacity, price, and leasing 4 Table of Contents terms have been, and will continue to be, significant competitive factors affecting owners, operators and managers of communications sites.
We believe that zoning approval of site location and capacity, price, and leasing terms have been, and will continue to be, significant competitive factors affecting owners, operators and managers of communications sites.
During 2022, we conducted our most recent enterprise-wide engagement survey, with the assistance of third party consultants, which focused on measuring engagement, inclusion, and overall employee satisfaction.
During 2023, we conducted our annual enterprise-wide engagement survey, with the assistance of third party consultants, which focused on measuring engagement, inclusion and overall employee satisfaction.
Our long distance rates are not subject to FCC regulation, but we are required to offer long distance service through a subsidiary other than Shenandoah Telephone, to disclose our long distance rates on a website, to maintain geographically averaged rates, to pay contributions to the USF and make other mandatory payments based on our long-distance revenues, and to comply with other filing and regulatory requirements.
Our long distance rates are not subject to FCC regulation, but we are required to offer long distance service through a subsidiary other than Shenandoah Telephone, to disclose our long distance rates on a website, to maintain geographically averaged rates, to pay contributions to the USF and make other mandatory payments based on our long-distance revenues, and to comply with other filing and regulatory requirements, including enhanced recordkeeping and quarterly reporting obligations and being subject to greater oversight.
In 2021, Congress passed the America Rescue Plan Act to subsidize the deployment of high-speed broadband internet access in unserved areas. We were awarded approximately $71 million in grants to serve approximately 23,600 unserved homes in the states of Virginia, West Virginia and Maryland. The grants will be paid to the Company as certain milestones are completed.
In 2021, Congress passed the American Rescue Plan Act to subsidize the deployment of high-speed broadband internet access in unserved areas. We were awarded approximately $85.8 million in grants to serve approximately 25,000 unserved homes in the states of Virginia, West Virginia and Maryland. The grants will be paid to the Company as certain milestones are completed.
He joined Shentel in May 2019 as Vice President and Head of Business Operations responsible for Enterprise Program Management, Performance Management and Process Excellence across all business segments. Prior to joining Shentel, Mr. Mason was Head of Install and Repair Operations at Google Fiber.
Mason has served in his current role since July 2021. He joined Shentel in May 2019 as Vice President and Head of Business Operations responsible for Enterprise Program Management, Performance Management and Process Excellence across all business segments. Prior to joining Shentel, Mr. Mason was Head of Install and Repair Operations at Google Fiber.
Our FTTH service passes over 147,000 homes and competes against the incumbent local telephone companies' DSL and voice services via hybrid fiber and copper-based networks and the incumbent cable companies' broadband service utilizing hybrid fiber coaxial networks. Competition is also intense and growing in the market for video services.
Our Glo Fiber FTTH service passes approximately 234,000 homes and competes against the incumbent local telephone companies’ DSL and voice services via hybrid fiber and copper-based networks and the incumbent cable companies’ broadband service utilizing hybrid fiber-coaxial cable networks. 5 Table of Contents Competition is also intense and growing in the market for video services.
We cannot predict the nature and pace of these and other developments or the effect they may have on our operations. Regulation of Shenandoah Telephone Company (“Shenandoah Telephone”) State Regulation . Shenandoah Telephone Company is a rural incumbent local exchange carrier (“RLEC”) serving Shenandoah County, Virginia and portions of Rockingham and Augusta County Virginia.
We cannot predict the nature and pace of these and other developments or the effect they may have on our operations. Regulation of Shenandoah Telephone Company (“Shenandoah Telephone”) State Regulation . Shenandoah Telephone Company is a RLEC serving Shenandoah County, Virginia and portions of the Virginia counties of Rockingham, Frederick, and Augusta.
Local broadcast television stations can require a cable operator to carry their signals pursuant to federal “must-carry” requirements. Alternatively, local television stations may require that a cable operator obtain “retransmission consent” for carriage of the station’s signal, which can enable a popular local television station to obtain concessions from the cable operator for the right to carry the station’s signal.
Alternatively, local television stations may require that a cable operator obtain “retransmission consent” for carriage of the station’s signal, which can enable a popular local television station to obtain concessions from the cable operator for the right to carry the station’s signal.
Shentel's operations are in compliance with the new Virginia law as of December 31, 2022. In 2021, Colorado enacted the Colorado Privacy Act, modeled largely after its predecessor in Virginia and in part after the CCPA, which will go into effect on July 1, 2023.
Shentel’s operations continue to be in compliance with the law as of December 31, 2023. In 2021, Colorado enacted the Colorado Privacy Act, modeled largely after its predecessor in Virginia and in part after the CCPA, which went into effect on July 1, 2023.
He has more than 27 years of experience in the telecommunications industry, and has served in a variety of senior financial management roles with both large corporations and high growth, early stage telecommunication providers. He most recently served as Vice President, Finance and Investor Relations of Uniti Group Inc.
He joined Shentel in June 2019, has more than 28 years of experience in the telecommunications industry and has served in a variety of senior financial management roles with both large corporations and high growth, early stage telecommunication providers. Prior to joining Shentel, he served as Vice President, Finance and Investor Relations of Uniti Group Inc.
The cost of acquiring the right to carry cable programming can increase as programmers demand rate increases. Franchise Matters. Cable and FTTH operators generally must apply for and obtain non-exclusive franchises from local or state franchising authorities before providing video and data services.
The cost of acquiring the right to carry cable programming can increase as programmers demand rate increases and we cannot predict the extent to which any potential costs may impact our business. Franchise Matters. Cable and FTTH operators generally must apply for and obtain non-exclusive franchises from local or state franchising authorities before providing video and data services.
He played a key role in the growth and success of Shentel's former wireless business, led the expansion of the fiber-rich network supporting the Company’s cable and wireline business, and was responsible for delivering on Shentel’s broadband Fiber First growth strategy for Glo Fiber. Mr.
Prior to his current role, he served as Senior Vice President of Engineering and Operations. He played a key role in the growth and success of Shentel’s former wireless business, led the expansion of the fiber-rich network supporting the Company’s cable and wireline business, and was responsible for delivering on Shentel’s broadband Fiber First growth strategy for Glo Fiber. Mr.
On January 29, 2015, the FCC, in a nation-wide proceeding evaluating whether advanced broadband is being deployed in a reasonable and timely fashion, increased the minimum connection speeds required to qualify as advanced broadband service to 25 Mbps for downloads and 3 Mbps for uploads.
The adoption of new Internet regulations or policies could adversely affect our business. On January 29, 2015, the FCC, in a nation-wide proceeding evaluating whether advanced broadband is being deployed in a reasonable and timely fashion, increased the minimum connection speeds required to qualify as advanced broadband service to 25 Mbps for downloads and 3 Mbps for uploads.
The Company owns an extensive regional network with over 8,300 route miles of fiber and over 220 macro cellular towers. For more information, please visit www.shentel.com.
The Company owns an extensive regional network with approximately 9,900 route miles of fiber and 219 macro cellular towers. For more information, please visit www.shentel.com.
A significant number of states today have processes in place for obtaining state-wide franchises, and legislation and regulation have been introduced from time to time in Congress, the FCC, and in various states, including those in which we provide some form of video or data service, that would modify franchising processes, potentially lowering barriers to entry and increasing competition in the marketplace for video services.
In addition, from time to time legislation and regulation are introduced in Congress, the FCC and in various states, including those in which we provide some form of video or data service, that would modify franchising processes, potentially lowering barriers to entry and increasing competition in the marketplace for video services.
Tormey (formerly Banks) is Vice President and Chief Human Resources Officer at Shentel. She joined the Company in July 2019. Ms. Tormey brings more than 20 years of experience in leading and managing strategic HR initiatives to Shentel. Prior to joining Shentel, Ms. Tormey was the Chief Human Resources Officer of American Woodmark, headquartered in Winchester, Virginia.
Tormey brings more than 20 years of experience in leading and managing strategic HR initiatives to Shentel. Prior to joining Shentel, Ms. Tormey was the Chief Human Resources Officer of American Woodmark, headquartered in Winchester, Virginia. Prior to American Woodmark, Ms.
Courts and the FCC are routinely asked to review whether state and local zoning and land-use actions should be preempted by federal law, and the FCC also is routinely asked to consider other issues affecting wireless facilities siting in other proceedings.
Courts and the FCC are routinely asked to review whether state and local zoning and land-use actions should be preempted by federal law, and the FCC also is routinely asked to consider other issues affecting wireless facilities siting in other proceedings. We cannot predict the outcome of these proceedings or the effect they may have on us.
The Broadband segment also provides voice and data services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a Rural Local Exchange Carrier (“RLEC”). These integrated networks are connected by an approximately 8,300 fiber route mile network.
The Broadband segment also provides voice and digital subscriber line (“DSL”) telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a Rural Local Exchange Carrier (“RLEC”). These integrated networks are connected by approximately 9,900 route miles of fiber.
In December 2013, the FCC adopted a rule requiring all 911 service providers that serve a public safety answering point (a “PSAP”) or other local emergency responder, to take reasonable measures to ensure 911 circuit diversity, availability of backup power at central offices that directly serve PSAPs, and diversity of network monitoring links.
As a 911 service provider that serves a public safety answering point (a “PSAP”) or other local emergency responder, we must take reasonable measures to ensure 911 circuit diversity, availability of backup power at central offices that directly serve PSAPs, and diversity of network monitoring links.
The Broadband segment served 220,856 Revenue Generating Units (“RGUs”) at December 31, 2022, representing an increase of 9.2%, from December 31, 2021. Tower Reporting Segment Our Tower segment owns over 220 macro cell towers and leases colocation space on the towers to wireless communications providers.
The Broadband segment served 235,298 Revenue Generating Units (“RGUs”) at December 31, 2023, representing an increase of 6.5%, from December 31, 2022. Tower Reporting Segment Our Tower segment owns 219 macro cellular towers and leases colocation space on the towers to wireless communications providers.
We believe that our ability to obtain franchises or our franchise renewal prospects are generally favorable but cannot guarantee the initial franchise award or future renewal of any individual franchise.
We believe that our ability to obtain franchises or our franchise renewal prospects are generally favorable, but we cannot guarantee the initial franchise award or future renewal of any individual franchise. A significant number of states today have processes in place for obtaining state-wide franchises.
In addition, the Chief Executive Officer (“CEO”) and CHRO regularly update the Company’s board of directors and its committees on the operation and status of these human capital trends and management programs.
Our CHRO continuously evaluates, modifies and enhances our internal processes and technologies to increase employee engagement, productivity and effectiveness. In addition, our Chief Executive Officer (“CEO”) and CHRO regularly update the Company’s board of directors and its committees on the operation and status of these human capital trends and management programs.
He is a graduate of the University of Virginia, where he earned master’s and bachelor’s degrees in electrical engineering. He represents the Company on the Board of ACA Connects and the Board of ValleyNet. Mr. Volk is Senior Vice President and Chief Financial Officer. He joined Shentel in June 2019.
McKay began his telecommunications industry career in 1996, including previous management positions at UUNET and Verizon. He is a graduate of the University of Virginia, where he earned master’s and bachelor’s degrees in Electrical Engineering, and he represents the Company on the Board of ACA Connects. Mr. Volk is Senior Vice President and Chief Financial Officer for Shentel.
In addition, restrictions exist, and new restrictions are considered from time to time by Congress, federal agencies and states, on the extent to which customers may receive unsolicited telemarketing calls, text messages, junk e-mail or spam.
These efforts have the potential to create a patchwork of differing and/or conflicting state and/or federal regulations, and to increase the cost of providing our services. 9 Table of Contents In addition, restrictions exist, and new restrictions are considered from time to time by Congress, federal agencies and states, on the extent to which customers may receive unsolicited telemarketing calls, text messages, junk e-mail or spam.
Some other state attempts to regulate VoIP have been blocked by federal courts on the basis of the FCC’s preemption of certain state regulations or on the basis that VoIP services are information services, but as with Internet services, there is uncertainty as to the extent to which courts will preempt state regulation in the future.
Some other state attempts to regulate VoIP have been blocked by federal courts on the basis of the FCC’s preemption of certain state regulations or on the basis that VoIP services are information services, but as with Internet services, there is uncertainty as to the extent to which courts will preempt state regulation in the future. 10 Table of Contents We have registered with, or obtained certificates or authorizations from, the FCC and the state regulatory authorities in those states in which we offer competitive voice services in order to ensure the continuity of our services and to maintain needed network interconnection arrangements.
Prior to her time at CFA Institute, Ms. Cheng held a number of different roles over 16 years with M&T Bank in Buffalo, NY, including Group Vice President, Technology Business Services, Vice President of Retail Operations and Assistant Vice President, Web Product Owner.
Cheng held 16 Table of Contents a number of different roles over 16 years with M&T Bank in Buffalo, NY, including Group Vice President, Technology Business Services, Vice President of Retail Operations and Assistant Vice President, Web Product Owner. She received her Bachelor of Arts degree from Vassar College and her Masters of Business Administration from the University of Rochester.
Pricing and Packaging . Our video and broadband internet services are not subject to rate regulation. In December 2020 these services became subject to a federal law requiring itemization of certain charges in notices and invoices to customers, and we must also comply with generally-applicable marketing and advertising requirements.
In December 2020, these services became subject to a federal law requiring itemization of certain charges in notices and invoices to customers, and we must also comply with generally-applicable marketing and advertising requirements. Congress and the FCC from time to time have considered imposing new pricing, packaging and consumer protection restrictions on cable operators.
McKay is Executive Vice President and Chief Operating Officer for Shentel. He has served in this role since July 2021 and is responsible for leading Shentel’s entire integrated broadband business, including the Shentel Cable, Glo Fiber, Glo Fiber Enterprise and Glo Fiber Wholesale brands, and the Company’s tower portfolio.
McKay is Executive Vice President and Chief Operating Officer for Shentel and is responsible for leading the Company’s integrated broadband business, including the Shentel and Glo Fiber brands. He joined Shentel in 2004, has served as Executive Vice President and Chief Operating Officer since 2021 and has more than 25 years of experience in the telecommunications industry.
In addition, funding from the American Rescue Plan Act, the Coronavirus Aid, Relief, and Economic Security Act, and the FCC’s Rural Digital Opportunities Fund, and state programs such as the Virginia Telecommunications Initiative (“VATI”), Maryland Network Infrastructure Grant Program and West Virginia Broadband Development Fund are likely to subsidize broadband construction to unserved homes.
Federal and state governments have launched numerous programs to provide subsidies for the construction of high-speed broadband facilities to homes that do not have access to broadband service of 25 Mbps for downloads and 3 Mbps for uploads, including federal funding from the American Rescue Plan Act, the Coronavirus Aid, Relief, and Economic Security Act and the FCC’s Rural Digital Opportunities Fund, and state programs such as the Virginia Telecommunications Initiative (“VATI”), Maryland Network Infrastructure Grant Program and West Virginia Broadband Development Fund.
Prior to American Woodmark, Ms. Tormey held numerous HR leadership positions with a variety of organizations across a range of industries, including Carlisle FoodService Products, UTC Aerospace Systems, Goodrich Corporation, Northern Power Systems, and IGT.
Tormey held numerous HR leadership positions with a variety of organizations across a range of industries, including Carlisle FoodService Products, UTC Aerospace Systems, Goodrich Corporation, Northern Power Systems, and IGT. She holds a Bachelor of Science in Psychology from Florida State University and a Master of Arts in Industrial Organizational Psychology from the University of New Haven. Mr.
She holds a Bachelor of Science in Psychology from Florida State University and a Master of Arts in Industrial Organizational Psychology from the University of New Haven. Mr. Romps is Vice President and Chief Accounting Officer for Shentel. He is responsible for all accounting, financial reporting, internal controls, SEC, Sarbanes-Oxley and income tax compliance. Mr.
Romps is Vice President and Chief Accounting Officer for Shentel and is responsible for all accounting, financial reporting, internal controls, SEC, Sarbanes-Oxley and income tax compliance. Mr.
This interpretation was upheld against challenge by the United States Court of Appeals for the Ninth Circuit. 7 Table of Contents In 2018, the FCC adopted rules to permit a “one-touch” make-ready process for poles subject to its jurisdiction.
In 2018, the FCC adopted rules to permit a “one-touch” make-ready process for poles subject to its jurisdiction.
Competition Broadband competition As the incumbent cable provider passing over 212,000 homes, we compete directly against the incumbent local telephone companies in 100% of our passings that provide DSL data and voice services over hybrid fiber and copper-based networks, a broadband overbuilder provider in approximately 13% of our passings that provision broadband service over hybrid fiber coaxial cable or fiber optics networks and indirectly from wireless substitution as the bandwidth speeds from wireless providers have increased with network upgrades to 5 th generation technology.
Competition Broadband competition As the incumbent cable provider passing approximately 216,000 homes and businesses, we compete directly against the incumbent local telephone companies that provide data and voice services over hybrid fiber and copper-based networks as well as broadband overbuilder providers that provide data, voice, and video services over hybrid coaxial cable or fiber optic networks.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs of December 31, 2022, we had borrowed $75 million in delayed draw term loans under our 2021 credit agreement which contains: (i) a $100 million, five-year undrawn revolving credit facility, (ii) a $150 million five-year delayed draw amortizing term loan, and (iii) a $150 million seven-year delayed draw amortizing term loan.
Biggest changeAs of December 31, 2023, we had borrowed $300 million in delayed draw term loans under our Credit Agreement, dated as of July 1, 2021, with various financial institutions party thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders, as amended by Amendment No. 1 to the Credit Agreement, dated as of May 17, 2023 (collectively, the “Credit Agreement”), which contains: (i) a $100 million, five-year undrawn revolving credit facility, (ii) a fully drawn $150 million five-year delayed draw amortizing term loan, and (iii) a fully drawn $150 million seven-year delayed draw amortizing term loan.
The evaluation of business acquisition opportunities and the integration of any acquired businesses pose a number of significant risks, including the following: • acquisitions may place significant strain on our management and financial and other resources by requiring us to expend a substantial amount of time and resources in the pursuit of acquisitions that we may not complete, or to devote significant attention to the various integration efforts of any newly acquired businesses, all of which will require the allocation of limited resources; • acquisitions may not have a positive impact on our cash flows or financial performance; • even if acquired businesses eventually contribute to an increase in our cash flows or financial performance, such acquisitions may adversely affect our operating results in the short term as a result of transaction-related expenses we will have to pay or the higher operating and administrative expenses we may incur in the periods immediately following an acquisition as we seek to integrate the acquired business into our operations; • we may not be able to realize anticipated synergies, achieve the desired level of integration of the acquired business or eliminate as many redundant costs; • we may not be able to maintain relationships with customers, suppliers and other business partners of the acquired business; 19 Table of Contents • our operating and financial systems and controls and information services may not be compatible with those of the businesses we may acquire and may not be adequate to support our integration efforts, and any steps we take to improve these systems and controls may not be sufficient; • our business plans and projections used to justify the acquisitions and expansion investments may be based on assumptions of revenues per subscriber, penetration rates in specific markets where we operate and expected operating costs and these assumptions may not develop as projected, which may negatively impact our profitability or the value of our intangible assets; • growth through acquisitions will increase our need for qualified personnel, who may not be available to us or, if they were employed by a business we acquire, remain with us after the acquisition; and • acquired businesses may have unexpected liabilities and contingencies, which could be significant.
The evaluation of business acquisition opportunities and the integration of any acquired businesses pose a number of significant risks, including the following: • acquisitions may place significant strain on our management and financial and other resources by requiring us to expend a substantial amount of time and resources in the pursuit of acquisitions that we may not complete, or to devote significant attention to the various integration efforts of any newly acquired businesses, all of which will require the allocation of limited resources; • acquisitions may not have a positive impact on our cash flows or financial performance; • even if acquired businesses eventually contribute to an increase in our cash flows or financial performance, such acquisitions may adversely affect our operating results in the short term as a result of transaction-related expenses we will have to pay or the higher operating and administrative expenses we may incur in the periods immediately following an acquisition as we seek to integrate the acquired business into our operations; • we may not be able to realize anticipated synergies, achieve the desired level of integration of the acquired business or eliminate as many redundant costs; • we may not be able to maintain relationships with customers, suppliers and other business partners of the acquired business; 20 Table of Contents • our operating and financial systems and controls and information services may not be compatible with those of the businesses we may acquire and may not be adequate to support our integration efforts, and any steps we take to improve these systems and controls may not be sufficient; • our business plans and projections used to justify the acquisitions and expansion investments may be based on assumptions of revenues per subscriber, penetration rates in specific markets where we operate and expected operating costs and these assumptions may not develop as projected, which may negatively impact our profitability or the value of our intangible assets; • growth through acquisitions will increase our need for qualified personnel, who may not be available to us or, if they were employed by a business we acquire, remain with us after the acquisition; and • acquired businesses may have unexpected liabilities and contingencies, which could be significant.
A disruption of our information technology infrastructure or operations, or the infrastructure or operations of certain vendors who provide information technology services to us or our customers, could be caused by a natural disaster, energy or manufacturing failure, telecommunications system failure, ransomware attack, cybersecurity or terrorist attack, intrusion or incident, or defective or improperly installed new or upgraded business management systems.
A disruption of our information technology infrastructure or overall operations, or the infrastructure or operations of certain vendors who provide information technology or overall operations services to us or our customers, could be caused by a natural disaster, energy or manufacturing failure, telecommunications system failure, ransomware attack, cybersecurity attack, terrorist attack, intrusion or incident or defective or improperly installed new or upgraded business management systems.
Although the Company has instituted a distributed-first work environment, further evolution of the current COVID-19 pandemic, or a future pandemic, could have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors: • additional disruptions or delays in our operations or network performance, as well as network maintenance and construction, testing, supervisory and customer support activities, and inventory and supply procurement; • increases in operating costs, inventory shortages and/or a decrease in productivity related to travel bans, employee illness or quarantine and social distancing efforts, which could include delays in our ability to install broadband services at customer locations or require our vendors and contractors to incur additional costs that may be passed on to us; • a deterioration in our ability to operate in affected areas or delays in the supply of products or services to us from vendors that are needed for our efficient operations or growth objectives; • increases in health insurance and labor-related costs arising from illness, quarantine and the implementation of social distancing and work-from-home measures; • inability to obtain needed contract labor due to illness, quarantine or increased hospitalizations; • increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us, our customers or other third parties as a result of employees or third-party vendors' employees working remotely; • a decrease in the ability of our counterparties to meet their obligations to us in full, or at all; • a general reduction in business and economic activity may severely impact our customers and may cause them to be unable to pay for services provided; and • the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption and/or impact the ability for us to manage and implement the planned build out and expansion of our network.
Although the Company has instituted a distributed-first work environment, the COVID-19 pandemic did, and a future pandemic could, have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors: • additional disruptions or delays in our operations or network performance, as well as network maintenance and construction, testing, supervisory and customer support activities, and inventory and supply procurement; • increases in operating costs, inventory shortages and/or a decrease in productivity related to travel bans, employee illness or quarantine and social distancing efforts, which could include delays in our ability to install broadband services at customer locations or require our vendors and contractors to incur additional costs that may be passed on to us; • a deterioration in our ability to operate in affected areas or delays in the supply of products or services to us from vendors that are needed for our efficient operations or growth objectives; • increases in health insurance and labor-related costs arising from illness, quarantine and the implementation of social distancing and work-from-home measures; • inability to obtain needed contract labor due to illness, quarantine or increased hospitalizations; • increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us, our customers or other third parties as a result of employees or third-party vendors’ employees working remotely; • a decrease in the ability of our counterparties to meet their obligations to us in full, or at all; • a general reduction in business and economic activity may severely impact our customers and may cause them to be unable to pay for services provided; and • the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption and/or impact the ability for us to manage and implement the planned build out and expansion of our network.
Threat actors may be able to develop and deploy viruses, worms, ransomware and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our systems causing operational damage that could impact our ability to serve customers and result in financial losses.
Threat actors may be able to develop and deploy viruses, worms, ransomware and other malicious software programs that attack our products or otherwise exploit security vulnerabilities of our systems causing operational damage that could impact our ability to serve customers and result in financial losses.
Any national economic weakness, restricted credit markets, high interest rates, high inflation or high unemployment rates could depress consumer spending, increase our expenses and harm our operating performance. In addition, any material adverse economic conditions that affect our geographic markets in particular could have a disproportionately negative impact on our results.
Any national economic weakness, restricted credit markets, high interest rates, high inflation or high unemployment rates could depress consumer spending, increase our expenses and harm our operating performance. In addition, any adverse economic conditions that affect our geographic markets in particular could have a disproportionately negative impact on our results.
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption of financial markets, and another pandemic in the future could have similar effects.
The COVID-19 pandemic negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets, and another pandemic in the future could have similar effects.
We have experienced reductions in the number of access lines and DSL subscriptions to date, and based on industry experience we anticipate that the long-term trend toward 17 Table of Contents declining subscriber counts will continue. There is a risk that this downward trend will have an adverse effect on the Company’s landline telephone operations in the future.
We have experienced reductions in the number of access lines 18 Table of Contents and DSL subscriptions to date, and based on industry experience we anticipate that the long-term trend toward declining subscriber counts may continue. There is a risk that this downward trend will have an adverse effect on the Company’s landline telephone operations in the future.
New competitors in our FTTH markets may lead to lower market share than anticipated and lead to lower returns on investments than originally planned. Consumers are increasingly accessing video content from alternative sources, such as Internet-based “over the top” providers such as Netflix, YouTube TV, Amazon, Disney+, Hulu, and related platforms.
New competitors in our FTTH markets may lead to lower market share than anticipated and lead to lower returns on investments than originally planned. Consumers are increasingly accessing video content from direct broadcast satellite providers and alternative sources, such as Internet-based “over the top” providers such as Netflix, YouTube TV, Hulu, Disney+, Amazon and related platforms.
If there are more weather-related events, and should such events impact the East Coast region covered by our networks more frequently or more severely than in the past, our revenues and expenses could be materially adversely impacted.
If there are more weather-related events, and should such events impact the region covered by our networks more frequently or more severely than in the past, our revenues and expenses could be materially adversely impacted.
As discussed in the Risks Related to our Business section above, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2025 as we invest in our network and subscriber growth and expansion initiatives.
As discussed in the Risks Related to our Business section above, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2026 as we invest in our network and subscriber growth and expansion initiatives.
As use of these services continues to grow, our broadband customers will likely use much more bandwidth than in the past. If this occurs, we could be required to make significant capital expenditures to increase network capacity in order to avoid service disruptions, service degradation or slower transmission speeds for our customers.
As use of these services continues to grow, our broadband customers will likely use much more bandwidth than in the past. If this occurs, we could be required to make 26 Table of Contents significant capital expenditures to increase network capacity in order to avoid service disruptions, service degradation or slower transmission speeds for our customers.
We may be materially adversely affected by regulatory, legal and economic changes relating to our physical plant. Our systems depend on physical facilities, including transmission equipment and miles of fiber and cable. Significant portions of those physical facilities occupy public rights-of-way and are subject to local ordinances and governmental regulations.
We may be materially adversely affected by regulatory, legal and economic changes relating to our physical plant. Our systems depend on physical facilities, including transmission equipment and miles of fiber and cable. Significant portions of those physical facilities occupy land in the public rights-of-way and are subject to local ordinances and governmental regulations.
The telecommunications industry is experiencing significant technological change, evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences. Technological advances, 18 Table of Contents industry changes and changes in the regulatory environment could cause the technology we use to become obsolete.
The telecommunications industry is experiencing significant technological change, evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences. Technological advances, industry changes and changes in the regulatory environment could cause the technology we use to become obsolete.
Our operations are subject to varying degrees of regulation by the FCC, the Federal Trade Commission, the Federal Aviation Administration, the Environmental Protection Agency and the Occupational Safety and Health Administration, as well as by state and local regulatory agencies and franchising authorities. Action by these regulatory bodies could negatively affect our operations and our costs of doing business.
Our operations are subject to varying degrees of regulation by the FCC, the FTC, the Federal Aviation Administration, the Environmental Protection Agency and the Occupational Safety and Health Administration, as well as by state and local regulatory agencies and franchising authorities. Action by these regulatory bodies could negatively affect our operations and our costs of doing business.
Under the credit agreement for our delayed draw term loans, we are required to comply with specified financial and operating covenants in addition to making scheduled payments, which may limit our ability to borrow additional funds to alleviate liquidity constraints and limit our flexibility in planning for, or reacting to, changes in our business 25 Table of Contents and the industry in which we operate and otherwise limit our ability to operate our business as we otherwise might operate it.
Under the Credit Agreement for our delayed draw term loans, we are required to comply with specified financial and operating covenants in addition to making scheduled payments, which may limit our ability to borrow additional funds to alleviate liquidity constraints and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and otherwise limit our ability to operate our business as we otherwise might operate it.
Negative outcomes of legal proceedings may adversely affect our business and financial condition. We become involved in legal proceedings from time to time. While we are not currently involved in any material legal proceedings, potential future proceedings may be complicated, costly and disruptive to our business operations.
Negative outcomes of legal proceedings may adversely affect our business and financial condition, results of operations and cash flows. We become involved in legal proceedings from time to time. While we are not currently involved in any material legal proceedings, potential future proceedings may be complicated, costly and disruptive to our business operations.
In some instances, we compete against companies with greater financial and personnel resources, greater brand name recognition, and long-established relationships with regulatory authorities and customers. We may not be able to successfully compete with these larger competitors to attract new customers and key personnel and retain existing customers and key personnel.
In some instances, we compete against companies with greater financial and personnel resources, greater brand name recognition, and long-established relationships with regulatory authorities and customers. We may not be able to successfully compete with these larger competitors to attract new customers and key personnel and retain existing 19 Table of Contents customers and key personnel.
As a result, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2025. Additionally, we must obtain pole attachment agreements, franchises, construction permits and other regulatory approvals to commence operations in these communities.
As a result, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2026. Additionally, we must obtain pole attachment agreements, franchise agreements, construction permits and other regulatory approvals to commence operations in these communities.
Moreover, an 21 Table of Contents inability to retain sufficient qualified personnel throughout our organization or to attract new personnel as we grow our business could adversely affect our ability to achieve our operational, sales and financial goals impacting our financial results, financial condition and our stock price.
Moreover, an inability to retain sufficient qualified personnel throughout our organization or to attract new personnel as we grow our business could adversely affect our ability to achieve our operational, sales and financial goals impacting our financial results, financial condition and our stock price.
As the recipient of these grants, the Company has committed to expand its broadband network and improve broadband services to approximately 23,600 unserved homes in the states of Virginia, Maryland and West Virginia within a specified period, as agreed to by the Company and each municipality.
As the recipient of these grants, the Company has committed to expand its broadband network and improve broadband services to approximately 25,000 unserved homes in the states of Virginia, Maryland and West Virginia within a specified period, as agreed to by the Company and each municipality.
Although it is difficult to predict the impact of general economic conditions on our business, these conditions could adversely affect the affordability of, and customer demand for our services, and could cause customers to delay or forgo purchases of our services.
Although it is difficult to predict the impact of general economic conditions on our business, these conditions could adversely affect the affordability of, and customer demand for our services, and could cause customers to delay or forgo purchases of our services or could negatively impact customer payment for already contracted services.
Should those third-party suppliers be impacted by either materials, equipment or resources, their inability to provide services to us could also negatively impact our ability to deliver network services or build out future network.
Should those third-party suppliers be impacted by a shortage of materials, equipment or resources, their inability to provide services to us could also negatively impact our ability to deliver network services or build out future network.
Although we make significant efforts to maintain the security and integrity of the Company's information technology infrastructure, there can be no assurance that our security efforts and disaster recovery measures will be effective or that attempted security breaches or catastrophic disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests.
Although we make significant efforts to maintain the security and integrity of the Company’s operations and information technology infrastructure, there can be no assurance that our security 21 Table of Contents efforts, business impact planning and disaster recovery measures will be effective or that attempted security breaches or catastrophic disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests.
In connection with the products and services we sell, we calculate, collect and remit various federal, state and local taxes, surcharges and regulatory fees to numerous federal, state and local governmental authorities, including federal USF contributions and regulatory fees.
In connection with the products and services we sell, we calculate, collect and remit various federal, state and local taxes, surcharges and regulatory fees to numerous federal, state and local governmental authorities, including federal 28 Table of Contents USF contributions and regulatory fees.
Shentel has implemented policies and procedures designed to mitigate the risk of adverse impacts of the COVID-19 pandemic, or a future pandemic, on the Company’s operations, but may incur additional costs to ensure continuity of business operations caused by progression of the COVID-19 pandemic, or other future pandemics, which could adversely affect its financial condition and results of operations.
Shentel has implemented policies and procedures designed to mitigate the risk of adverse impacts of a future pandemic on the Company’s operations, but we may still incur additional costs to ensure continuity of business operations caused by future pandemics, which could adversely affect its financial condition and results of operations.
Changes to the FCC's Universal Service Fund framework may adversely our Broadband revenue. The FCC's USF provides regulatory support to rural local exchange carriers to promote universal service and to eligible schools and libraries through the e-rate program to obtain subsidized internet access and telecommunication services. Recent lawsuits have asked the courts to declare the universal service framework illegal.
The FCC’s USF provides regulatory support to rural local exchange carriers to promote universal service and to eligible schools and libraries through the e-rate program to obtain subsidized internet access and telecommunication services. Recent lawsuits have asked the courts to declare the universal service framework illegal.
If new FTTH competitors overbuild our incumbent cable service areas, some of our subscribers may select other providers’ offerings based on price, bandwidth speeds, capabilities or personal preference. Further, if new competitors offers lower prices, we may need to offer more value to retain our customers driving lower revenue per subscriber.
If competitive overbuilds increase in our incumbent cable service areas, more of our subscribers may select other providers’ offerings based on price, bandwidth speeds, capabilities or personal preference. Further, if new competitors offer lower prices, we may need to offer more value to retain our customers driving lower revenue per subscriber.
Any reduction in the USF from these lawsuits, or other means, could negatively impact the regulatory support revenue received by the Company's RLEC business and the ability for schools and libraries to pay the Company for internet access and telecommunication services. Changes to key regulatory requirements can affect our ability to compete.
Any reduction in the USF from these lawsuits, or other means, could negatively impact the regulatory support revenue received by the Company’s RLEC business and the ability for schools and libraries to pay the Company for internet access and telecommunication services.
If our local franchises are not renewed at expiration we would have to cease operations or, operate under either temporary operating agreements or without a franchise while negotiating renewal terms with the local franchising authorities.
Franchise authorities often demand concessions or other commitments as a condition to renewal. If our local franchises are not renewed at expiration we would have to cease operations or, operate under either temporary operating agreements or without a franchise while negotiating renewal terms with the local franchising authorities.
For example, it may: • increase our vulnerability to general adverse economic and industry conditions, including rising interest rates, because as of December 31, 2022, all of our borrowings were, and may continue to be, subject to variable rates of interest; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends and other general corporate purposes; and • place us at a competitive disadvantage relative to companies that have less indebtedness.
For example, it may: • increase our vulnerability to general adverse economic and industry conditions, including rising interest rates; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends and other general corporate purposes; and • place us at a competitive disadvantage relative to companies that have less indebtedness.
These developments have led to a loss of video subscribers due to “cord cutting” as customers adopt alternative sources and may lead to a decline in the demand, price and profitability of our video services.
These developments have led to a loss of video subscribers due to “cord cutting” as customers adopt alternative sources of accessing video content. We expect these trends to continue, which may lead to a decline in the demand, price and profitability of our video services.
We may not benefit from our acquisition strategy. As part of our business strategy, we regularly evaluate opportunities to enhance the value of the Company by pursuing acquisitions of other businesses.
As part of our business strategy, we regularly evaluate opportunities to enhance the value of the Company by pursuing acquisitions of other businesses.
We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm and other serious negative consequences if we sustain cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers or other third parties.
We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm and other serious negative consequences if we sustain cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers or other third parties. 22 Table of Contents We utilize our information technology infrastructure to manage and store various proprietary information and sensitive or confidential data relating to our operations.
As a result, we could experience lower revenues, higher sales and marketing expenses and lower earnings. Alternative technologies, changes in the regulatory environment and current uncertainties in the marketplace may reduce future demand for existing telecommunication services and materially increase our capital expenditures.
As a result, we could experience lower revenues, higher sales and marketing expenses and lower earnings, which could have an adverse effect on our business and our results of operations. Alternative technologies, changes in the regulatory environment and current uncertainties in the marketplace may reduce future demand for existing telecommunication services and materially increase our capital expenditures.
The COVID-19 pandemic has disrupted, and the future outbreak of other highly infectious or contagious diseases could disrupt, the operation of our business resulting in adverse impacts to our financial condition, results of operations, and cash flow and could create significant volatility in the trading and value of the Company’s common stock.
The future outbreak of another significant pandemic, like the COVID-19 pandemic, could disrupt the operation of our business resulting in adverse impacts to our financial condition, results of operations and cash flow and could create significant volatility in the trading and value of the Company’s common stock.
Delays in entering into pole attachment agreements, receiving the necessary franchises and construction permits, procuring needed contractors, materials or supplies, and conducting the construction itself could adversely impact our scheduled construction plans and, ultimately, our expansion strategy.
Delays in entering into pole attachment agreements, obtaining franchise agreements, obtaining construction permits, procuring needed contractors, materials or supplies at a reasonable cost, and conducting the construction itself could adversely impact our scheduled construction plans and, ultimately, our expansion strategy.
Our industry is subject to extensive governmental regulation, which impacts many aspects of our operations. Legislators and regulators at all levels of government frequently consider changing, and sometimes do change, existing statutes, regulations, and interpretations thereof. Future legislative, judicial, or administrative actions may increase our costs or impose additional challenges and restrictions on our business.
Legislators and regulators at all levels of government frequently consider changing, and sometimes do change, existing statutes, regulations, and interpretations thereof. Future legislative, judicial, or administrative actions may increase our costs or impose additional challenges and restrictions on our business.
Most of our competitors possess greater resources, have greater brand recognition, have more extensive coverage areas, have access to technologies not available to us, are able to offer bundled service offerings that we are not able to duplicate and offer more services than we do.
The Company’s Commercial Fiber business faces intense competition from several local and national providers. Most of our competitors possess greater resources, have greater brand recognition, have more extensive coverage areas, have access to technologies not available to us, are able to offer bundled service offerings that we are not able to duplicate and offer more services than we do.
The 2015 rules also imposed a “transparency” requirement, i.e., an obligation to disclose all material terms and conditions of our service to consumers. 24 Table of Contents In December 2017, the FCC adopted an order repudiating its prior (2015) treatment of broadband as a “telecommunications service,” reclassifying broadband as an “information service,” and eliminating the rules it had imposed at that time (other than a transparency/disclosure-requirement, which it eased in significant ways).
In December 2017, the FCC adopted an order repudiating its prior (2015) treatment of broadband as a “telecommunications service,” reclassifying broadband as an “information service,” and eliminating the rules it had imposed at that time (other than a transparency/disclosure-requirement, which it eased in significant ways).
In contrast, utility poles owned by municipalities or cooperatives are not subject to federal regulation and are, with exceptions, generally exempt from state regulation and their attachment rates tend to be higher.
In contrast, utility poles owned by municipalities or cooperatives are not subject to federal regulation and are, with exceptions, generally exempt from state regulation and their attachment rates tend to be higher. Future regulatory changes in this area could impact the pole attachment rates we pay utility companies.
If we are unable to raise our customers’ rates, these increased programming costs could have an adverse impact on our results of operations. Moreover, as our programming contracts and retransmission agreements with programming providers expire, there can be no assurance that they will be renewed on acceptable terms which could lead to a loss of video customers.
Moreover, as our programming contracts and retransmission agreements with programming providers expire, there can be no assurance that they will be renewed on acceptable terms, which could lead to a loss of video customers and could have an adverse effect on our business and our results of operations. We may not benefit from our acquisition strategy.
If we cannot further reduce our expenses, our earnings and margins may be lower than our peers which may affect the value of our stock price. Our success depends on consistent supply of physical goods and services to build and sustain services to customers. Significant disruptions to the supply chain could adversely impact our growth and revenue projections.
If we cannot further grow our revenues at a faster pace than our expenses, our earnings and margins may be lower than our peers which may affect the value of our stock price. Our success depends on consistent supply of physical goods and services to build and sustain services to customers.
The increasing demand for faster residential internet bandwidth driven by working and learning from home since the outbreak of COVID-19 has increased the availability of capital to fund FTTH overbuilds in areas historically served by incumbent cable and incumbent local telephone providers.
The increasing demand for faster residential internet bandwidth driven by working and learning from home since the outbreak of COVID-19 has increased the availability of capital to fund FTTH and cable overbuilds, and approximately 17% of the passings in our incumbent cable business currently have a FTTH or cable competitor.
We may be subject to data breaches and disruptions of the information technology systems we use for these purposes. Our industry has witnessed an increase in the frequency, intensity and sophistication of cybersecurity incidents caused by threat actors such as foreign governments, criminals, hacktivists, terrorists and insider threats.
Our industry has witnessed an increase in the frequency, intensity and sophistication of cybersecurity incidents caused by threat actors such as foreign governments, criminals, hacktivists, terrorists and insider threats.
We utilize our information technology infrastructure to manage and store various proprietary information and sensitive or confidential data relating to our operations. We routinely process, store and transmit large amounts of data for our customers, including sensitive and personally identifiable information. We depend on our information technology infrastructure to conduct business operations and provide customer services.
We routinely process, store and transmit large amounts of data for our customers, including sensitive and personally identifiable information. We depend on our information technology infrastructure to conduct business operations and provide customer services. We may be subject to data breaches and disruptions of the information technology systems we use for these purposes.
The supply of critical physical supplies, such as modems, consumer Wi-Fi equipment, optical equipment and fiber is important to our business operations. These materials form the core components needed to deliver both video and data services to our customers. We work to ensure we have a forward-looking supply of these items and redundancy of supply types and suppliers.
Significant disruptions to the supply chain could adversely impact our growth and revenue projections. The supply of critical physical supplies, such as modems, consumer Wi-Fi equipment, optical equipment and fiber is important to our business operations. These materials form the core components needed to deliver both video and data services to our customers.
However, global impacts to supply chains across all suppliers and manufacturers could result in significant supply issues. If supplies to these items became severely impacted, our plans to build out new networks could be adversely impacted. Additionally, the lack of certain equipment could limit our ability to service existing customers.
We work to ensure we have a forward-looking supply of these items and redundancy of supply types and suppliers. However, global impacts to supply chains across all suppliers and manufacturers could result in significant supply issues. If supplies to these items became severely impacted, our plans to build out new networks could be adversely impacted.
The Company operates data services and cable television systems in largely rural areas of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky pursuant to local franchise agreements. These franchises are not exclusive, and other entities may secure franchise authorizations in the future, thereby increasing direct competition to the Company.
The Company operates data services and cable television systems in largely rural areas of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky pursuant to local franchise agreements.
Finally, our business growth strategy requires us to leverage third party partners to assist with our planned construction and development of our FTTH networks in new markets. These third party contractors are currently in high demand. Should the Company be unable to secure sufficient third party labor contracts or acquire at a reasonable cost, our growth strategy may be impacted.
Furthermore, our business growth strategy requires us to leverage third party partners to assist with our planned construction and development of our FTTH networks in new markets. These third party contractors are currently in high demand.
Notification to customers could also result in reputational damage which could result in loss of customers or future customers due to a lack of confidence in our ability to secure their data. 22 Table of Contents Risks Related to Regulation and Legislation Regulation by government agencies may increase our costs of providing service or require changes in services, either of which could impair our financial performance.
Risks Related to Regulation and Legislation Regulation by government agencies may increase our costs of providing service or require changes in services, either of which could impair our financial performance.
We also could incur significant expense in repairing system damage and taking other remedial measures. Our earnings, margins and stock price may be adversely impacted by our current cost structure. Our sales, general and administrative costs, including corporate overhead, are a higher percentage of revenue than larger broadband companies due to a lack of relative scale.
We also could incur significant expense in repairing system damage and taking other remedial measures. Our earnings, margins and stock price may be adversely impacted by our current cost structure as a result of our relative size.
T-Mobile has announced plans to decommission parts of their recently acquired Sprint network. Shentel estimates revenue churn from T-Mobile is expected to be approximately $9 million. The churn from T-Mobile may be more than we estimated.
T-Mobile has begun to decommission parts of their recently acquired Sprint network and disconnect backhaul circuits with us. Shentel estimates the remaining revenue churn from T-Mobile to be approximately $1 million for the Broadband segment and $2 million for the Tower segment. The churn from T-Mobile may be more than we estimated.
Further, climate change regulations may require us to alter our proposed business plans or increase our operating costs due to increased regulation or environmental considerations, and could adversely affect our business and reputation. Our programming costs are subject to demands for increased payments.
Further, climate change regulations 23 Table of Contents may require us to alter our proposed business plans or increase our operating costs due to increased regulation or environmental considerations, and could adversely affect our business and reputation. Risks Relating to the Horizon Transaction Failure to complete the Horizon Transaction could negatively impact our stock price.
Significant impact to physical equipment supply chains could materially and adversely affect our business, including reduced revenues, loss of customers and limitations on future growth. Additionally, at times we choose to leverage third-party suppliers to help us deliver services to customers because of efficiency reasons or because third-parties provide a service we cannot replicate easily.
Additionally, at times we choose to leverage third-party suppliers to help us deliver services to customers because of efficiency reasons or because third-parties provide a service we cannot replicate easily.
Broadcasters affiliated with major over-the-air network services have been increasing their demands for cash payments and other concessions for the right to carry local network television signals on our cable systems. As compared to large national providers, our smaller base of subscribers limits our ability to negotiate lower programming costs.
In addition, as we add programming to our video services for existing customers or distribute existing programming to more customers, we incur increased programming expenses. Broadcasters affiliated with major over-the-air network services have been increasing their demands for cash payments and other concessions for the right to carry local network television signals on our cable systems.
Upon drawing on available debt under our credit agreement, we may not be able to generate sufficient cash flows from operations in 2026 and beyond or to raise additional capital in amounts necessary for us to repay the future indebtedness when such indebtedness becomes due and to meet our other cash needs.
We may not be able to generate sufficient cash flows 27 Table of Contents from operations to raise additional capital in amounts necessary for us to repay our outstanding indebtedness when such indebtedness becomes due and to meet our other cash needs. Our level of indebtedness could adversely affect our financial health and ability to compete.
We may also encounter difficulties in implementing new technologies, products and services and may encounter disruptions in service as a result. As a result, our financial performance may be negatively impacted. Climate change could disrupt our operations and our distribution networks, cause us to incur increased costs related to such events, or otherwise negatively affect our business.
We may also encounter difficulties in implementing new technologies, products and services and may encounter disruptions in service as a result. As a result, our financial performance may be negatively impacted.
Many franchises establish comprehensive facilities and service requirements, as well as specific customer service standards and monetary penalties for non-compliance. In many cases, franchises are terminable if the franchisee fails to comply with significant provisions set forth in the franchise agreement governing system operations. Franchises are generally granted for fixed terms and must be periodically renewed.
In many cases, franchises are terminable if the franchisee fails to comply with significant provisions set forth in the franchise agreement governing system operations. Franchises are generally granted for fixed terms and must be periodically renewed. Franchising authorities may resist granting a renewal if either past performance or the prospective operating proposal is considered inadequate.
We have incurred, and will continue to incur, expenses to comply with privacy and security standards and protocols imposed by law, regulation, industry standards and contractual obligations.
We have incurred, and will continue to incur, expenses to comply with privacy and security standards and protocols imposed by law, regulation, industry standards and contractual obligations. Notification to customers could also result in reputational damage which could result in loss of customers or future customers due to a lack of confidence in our ability to secure their data.
Future regulatory changes in this area could impact the pole attachment rates we pay utility companies. 23 Table of Contents The timing of receipt of government grant payments may adversely affect our liquidity and ability to complete our performance obligations.
The timing of receipt of government grant payments may adversely affect our liquidity and ability to complete our performance obligations.
Our level of indebtedness could have important adverse consequences.
As of December 31, 2023, we had $300 million of total indebtedness. Our level of indebtedness could have important adverse consequences.
The cable television industry has continued to experience an increase in the cost of programming, especially sports programming and retransmission fees. In addition, as we add programming to our video services for existing customers or distribute existing programming to more customers, we incur increased programming expenses.
Our programming costs continue to increase and our relative size limits our ability to negotiate more favorable terms, which may have an adverse effect on our business and our results of operations. The cable television industry has continued to experience an increase in the cost of programming, especially sports programming and retransmission fees.
Most of the grants administered by the above state agencies are funded through the American Rescue Plan Act.
As of December 31, 2023, the Company has been awarded grants totaling approximately $85.8 million. Most of the grants awarded under the above programs are funded through the American Rescue Plan Act.
Wireless providers are also entering the market for broadband and video services. In some areas, direct wireless providers have partnered with large incumbent cable and other telecommunications service providers to offer triple-play services and even quad-play bundles which include wireless plans.
In some areas, wireless providers have partnered with broadband providers to offer quad-play bundles which include broadband, voice, video and wireless. Additionally, our hybrid fiber coaxial cable network will require upgrades in the future in order to meet expected demand from customers and to maintain network parity with potential FTTH competitors.
Removed
Incumbent cable companies like us also face competition from direct broadcast satellite providers, and from large providers of wireline telecommunications services (such as Verizon, Lumen and AT&T), which have upgraded their networks in certain markets outside of our cable footprint to provide video services in addition to voice and broadband services and may offer bundled service offerings that we are not able to duplicate.
Added
The Company’s incumbent cable business faces competition from telephone providers (such as Frontier and Lumos), which have upgraded their networks in certain markets inside of our cable footprint, and FTTH and cable overbuilder providers. Wireless providers are also entering the market for broadband.
Removed
If wireless providers or direct broadcast satellite providers collaborate with large wireline telecommunications service providers to expand their upgraded networks into our cable and FTTH footprint, then Shentel would face increased competition within our existing footprint and potential decreases in revenue from existing sources. The Company’s Commercial Fiber business faces intense competition from several local and national providers.
Added
These upgrades will require significant capital and management oversight over the next five years. If we are unable to complete these upgrades or more broadband competition evolves from quad play service offerings or overbuilding activity in our markets, our broadband revenues could be adversely affected in the future.
Removed
Since being reported in December 2019, various strains of coronavirus (“COVID-19”) have spread globally, including to every state in the United States. In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States declared a national emergency.
Added
Furthermore, attaching the Company’s cables to utility poles governed by the pole attachment agreements requires significant coordination with the owners of the utility poles which may result in delays if the owners of the utility poles cannot dedicate sufficient resources to assist in the attachment process.
Removed
However, the extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact.
Added
Similarly, Shentel must coordinate with local utility service providers when installing cables underground to ensure all current infrastructure, such as existing cabling or gas lines, is properly located. Delays related to locate services may result in delays in Shentel’s overall expansion strategy.
Removed
Additionally, to the extent the COVID-19 pandemic adversely affects our business, financial condition or results of operations, it may heighten other risks described in this “Risk Factors” section. 20 Table of Contents Disruptions of our information technology infrastructure or operations could harm our business.
Added
As compared to large national providers, our smaller base of subscribers limits our ability to negotiate lower programming costs. While we pass programming rate increases on to our video customers, we may experience higher churn and lower revenues.
Removed
We have begun to realign our expenses and to scale for our planned construction and development of our FTTH networks in new markets. We anticipate that this initiative will take multiple years and will be enabled by certain of our information technology initiatives.
Added
If we are unable to raise our customers’ rates, these increased programming costs could have an adverse impact on our results of operations.
Removed
Franchising authorities may resist granting a renewal if either past performance or the prospective operating proposal is considered inadequate. Franchise authorities often demand concessions or other commitments as a condition to renewal.
Added
Disruptions of our information technology infrastructure or operations could harm our business.
Removed
In 2022, the Company was awarded grants totaling approximately $71 million and entered into contracts with the Virginia Department of Housing and Community Development (DHCD) Virginia Telecommunication Initiative (VATI), Department of Housing and Community Development Office of Statewide Broadband Maryland Infrastructure grant and West Virginia Department of Economic Development Office of Broadband grant.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company also has fiber optic 26 Table of Contents hubs or points of presence in Pennsylvania, Maryland, Virginia, Kentucky and West Virginia. The Company considers the properties owned or leased generally to be in good operating condition and suitable for its business operations.
Biggest changeThe Company also has fiber optic hubs or points of presence in Pennsylvania, Maryland, Virginia, Kentucky and West Virginia. The Company considers the properties owned or leased generally to be in good operating condition and suitable for its business operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph tracks the performance of a $100 investment, with the reinvestment of all dividends, from December 31, 2017 to December 31, 2022. 28 Table of Contents 2017 2018 2019 2020 2021 2022 Shenandoah Telecommunications Company $ 100 $ 132 $ 125 $ 131 $ 126 $ 79 NDAQ US $ 100 $ 95 $ 124 $ 150 $ 189 $ 152 NDAQ Telecom Stocks $ 100 $ 93 $ 118 $ 129 $ 136 $ 106 Holders As of February 16, 2023, there were 4,082 holders of record of the Company’s common stock.
Biggest changeThe graph tracks the performance of a $100 investment, with the reinvestment of all dividends, from December 31, 2018 to December 31, 2023. 32 Table of Contents 2018 2019 2020 2021 2022 2023 Shenandoah Telecommunications Company $ 100 $ 95 $ 99 $ 96 $ 60 $ 82 NDAQ US $ 100 $ 131 $ 159 $ 200 $ 161 $ 203 NDAQ Telecom Stocks $ 100 $ 126 $ 139 $ 146 $ 114 $ 128 Holders As of February 14, 2024, there were 3,957 holders of record of the Company’s common stock.
In conjunction with the vesting of shares or exercise of stock options, the grantees may surrender awards necessary to cover the statutory tax withholding requirements and any amounts required to cover stock option strike prices associated with the transaction. Purchases of Equity Securities by the Issuer or Affiliated Purchasers None. 29 Table of Contents
In conjunction with the vesting of shares or exercise of stock options, the grantees may surrender awards necessary to cover the statutory tax withholding requirements and any amounts required to cover stock option strike prices associated with the transaction. Purchases of Equity Securities by the Issuer or Affiliated Purchasers None. 33 Table of Contents
The table below sets forth the cash dividends per share of our common stock that our board of directors declared during the following years: Years Ended December 31, 2018 2019 2020 2021 2022 Cash Dividend $ 0.27 $ 0.29 $ 0.34 $ 18.82 $ 0.08 Cash dividends in 2021 include a special dividend of $18.75 per share declared in the third quarter of 2021 (the “Special Dividend”) following the sale of our Wireless operations and assets.
The table below sets forth the cash dividends per share of our common stock that our board of directors declared during the following years: Years Ended December 31, 2019 2020 2021 2022 2023 Cash Dividend $ 0.29 $ 0.34 $ 18.82 $ 0.08 $ 0.09 Cash dividends in 2021 include a special dividend of $18.75 per share declared in the third quarter of 2021 following the sale of our Wireless operations and assets.
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's stock is traded on the Nasdaq Global Select Market under the symbol “SHEN.” The following table indicates the closing high and low sales prices per share of common stock as reported by the Nasdaq Global Select Market for each quarter during the last two years: 2022 High Low Fourth Quarter $ 22.79 $ 15.63 Third Quarter 24.50 16.97 Second Quarter 25.93 17.06 First Quarter 26.58 18.77 2021 High Low Fourth Quarter $ 32.71 $ 24.44 Third Quarter 61.53 28.70 Second Quarter 51.82 46.00 First Quarter 52.20 38.77 Stock Performance Graph The following graph and table show the cumulative total shareholder return on the Company’s common stock compared to the Nasdaq US Index and the Nasdaq Telecommunications Index for the period between December 31, 2017 and December 31, 2022.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s stock is traded on the Nasdaq Global Select Market under the symbol “SHEN.” The following table indicates the closing high and low sales prices per share of common stock as reported by the Nasdaq Global Select Market for each quarter during the last two years: 2023 High Low Fourth Quarter $ 25.51 $ 20.02 Third Quarter 23.31 18.02 Second Quarter 21.00 18.20 First Quarter 21.07 15.62 2022 High Low Fourth Quarter $ 22.79 $ 15.63 Third Quarter 24.50 16.97 Second Quarter 25.93 17.06 First Quarter 26.58 18.77 Stock Performance Graph The following graph and table show the cumulative total shareholder return on the Company’s common stock compared to the Nasdaq US Index and the Nasdaq Telecommunications Index for the period between December 31, 2018 and December 31, 2023.
Dividend Reinvestment Plan The Company maintains a dividend reinvestment plan (the “DRIP”) for the benefit of its shareholders. When shareholders remove shares from the DRIP, the Company issues whole shares in book entry form, pays out cash for any fractional shares, and cancels the fractional shares.
Future dividend payments remain subject to the discretion of the Board of Directors. Dividend Reinvestment Plan The Company maintains a dividend reinvestment plan (the “DRIP”) for the benefit of its shareholders. When shareholders remove shares from the DRIP, the Company issues whole shares in book entry form, pays out cash for any fractional shares, and cancels the fractional shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

38 edited+41 added−25 removed19 unchanged
Biggest changeThe following table indicates selected operating statistics of Broadband: December 31, 2022 December 31, 2021 December 31, 2020 Broadband homes and businesses passed (1) 359,529 286,309 237,343 Incumbent Cable 212,050 211,120 208,691 Glo Fiber 147,479 75,189 28,652 Residential & SMB RGUs: Broadband Data 133,930 117,722 102,713 Incumbent Cable 109,644 106,345 98,555 Glo Fiber 24,286 11,377 4,158 Video 46,975 49,945 52,817 Voice 39,951 34,513 32,646 Total Residential & SMB RGUs (excludes RLEC) 220,856 202,180 188,176 Residential & SMB Penetration (2) Broadband Data 37.3 % 41.1 % 43.3 % Incumbent Cable 51.7 % 50.4 % 47.2 % Glo Fiber 16.5 % 15.1 % 14.5 % Video 13.1 % 17.4 % 22.3 % Voice 11.7 % 12.8 % 14.8 % Residential & SMB ARPU (3) Broadband Data $ 80.14 $ 78.62 $ 77.93 Incumbent Cable $ 81.31 $ 79.00 $ 77.97 Glo Fiber $ 73.48 $ 74.02 $ 78.90 Video $ 102.80 $ 100.35 $ 93.17 Voice $ 26.23 $ 28.60 $ 29.44 Fiber route miles 8,346 7,392 6,794 Total fiber miles (4) 656,033 518,467 394,316 _______________________________________________________ (1) Homes and businesses are considered passed (“passings”) if we can connect them to our network without further extending the distribution system.
Biggest changeThese integrated networks are connected by 9,875 route miles of fiber. 37 Table of Contents The following table indicates selected operating statistics of Broadband: December 31, 2023 December 31, 2022 December 31, 2021 Broadband homes and businesses passed (1) 449,635 359,529 286,309 Cable Markets 215,763 212,050 211,120 Glo Fiber Markets 233,872 147,479 75,189 Residential & Small and Medium Business ("SMB") Revenue Generating Units ("RGUs"): Broadband Data 151,389 133,930 117,722 Cable Markets 109,679 109,644 106,345 Glo Fiber Markets 41,710 24,286 11,377 Video 43,152 46,975 49,945 Voice 40,757 39,951 34,513 Total Residential & SMB RGUs (excludes RLEC) 235,298 220,856 202,180 Residential & SMB Penetration (2) Broadband Data 33.7 % 37.3 % 41.1 % Cable Markets 50.8 % 51.7 % 50.4 % Glo Fiber Markets 17.8 % 16.5 % 15.1 % Video 9.6 % 13.1 % 17.4 % Voice 9.5 % 11.7 % 12.8 % Residential & SMB Average Revenue per User ("ARPU") (3) Broadband Data $ 81.27 $ 80.14 $ 78.62 Cable Markets $ 82.75 $ 81.31 $ 79.00 Glo Fiber Markets $ 76.45 $ 73.48 $ 74.02 Video $ 105.71 $ 102.80 $ 100.35 Voice $ 25.19 $ 26.23 $ 28.60 Fiber route miles 9,875 8,346 7,392 Total fiber miles (4) 861,980 656,033 518,467 _______________________________________________________ (1) Homes and businesses are considered passed (“passings”) if we can connect them to our network without further extending the distribution system.
Broadband Our Broadband segment provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, and Kentucky, via hybrid fiber coaxial cable under the brand name of Shentel, fiber optics under the brand name of Glo Fiber.
Broadband Our Broadband segment provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optics under the brand name of Glo Fiber and hybrid fiber coaxial cable under the brand name of Shentel.
Other (expense) income, net Other income, net decreased $10.0 million, or 115.6%, in 2022 compared with 2021, primarily driven by lower net actuarial gains recognized for the Company's pension plan in 2022, decreases in patronage income derived from the CoBank patronage program and decreases in transitional service agreement (“TSA”) income realized in 2022.
Other (expense) income, net Other income, net decreased $10.0 million, or 115.6%, in 2022 compared with 2021, primarily driven by lower net actuarial gains recognized for the Company’s pension plan in 2022, decreases in patronage income derived from the CoBank patronage program and decreases in transitional service agreement income realized in 2022.
A significant portion of the Company’s revenues are derived from customers who may cancel their subscriptions at any time without penalty. As such, the amount of deferred revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from the Company’s existing customers.
A significant portion of the Company’s revenues are derived from customers who may cancel their subscriptions at any time without substantial penalty. As such, the amount of deferred revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from the Company’s existing customers.
Installation fees charged upfront without transfer of commensurate goods or services to the customer are allocated to services and are recognized ratably over the longer of the contract term or the period in which the unrecognized fee remains material to the contract, which we estimate to be one year.
Installation fees charged upfront without transfer of commensurate goods or services to the customer are allocated to services and are recognized ratably over the longer of the contract term or the period in which the unrecognized fee remains material to the contract, which we estimate to be approximately one year.
Overview Shenandoah Telecommunications Company (“Shentel”, “we”, “our”, “us”, or the “Company”), is a provider of a comprehensive range of broadband communication services and cell tower colocation space in the Mid-Atlantic portion of the United States. Management’s Discussion and Analysis is organized around our reporting segments.
Overview Shenandoah Telecommunications Company (“Shentel”, “we”, “our”, “us”, or the “Company”), is a provider of a comprehensive range of broadband communication services and cell tower colocation space in the Mid-Atlantic portion of the United States. Management’s Discussion and Analysis (“MD&A”) is organized around our reporting segments.
Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services. (2) Penetration is calculated by dividing the number of users by the number of passings or available homes, as appropriate.
Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services. (2) Penetration is calculated by dividing the number of RGUs by the number of passings or available homes, as appropriate.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect our 39 Table of Contents reported amounts of assets, liabilities, revenue and expenses, as well as related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, as well as related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected.
Recently Issued Accounting Standards Recently issued accounting standards and their expected impact, if any, are discussed in Note 2, Summary of Significant Accounting Policies in our consolidated financial statements. 41 Table of Contents
Recently Issued Accounting Standards Recently issued accounting standards and their expected impact, if any, are discussed in Note 2, Summary of Significant Accounting Policies in our consolidated financial statements. 46 Table of Contents
If our local franchises are not renewed at expiration we would have to cease operations or, operate under either temporary operating agreements or without a franchise while negotiating renewal terms with the local franchising authorities. 40 Table of Contents Although renewal is not assured, there are provisions in the law that protect the Company from arbitrary or unreasonable denial.
If our local franchises are not renewed at expiration we would have to cease operations or, operate under either temporary operating agreements or without a franchise while negotiating renewal terms with the local franchising authorities. Although renewal is not assured, there are provisions in the law that protect the Company from arbitrary or unreasonable denial.
Corporate operating expenses were down $2.1 million primarily due to lower professional fees. Refer to the discussion of results of operations for the Tower and Broadband segments, included within this annual report, for additional information.
Corporate operating expenses were down $2.1 million primarily due to lower professional fees. Refer to the discussion of results of operations for the Tower and Broadband segments, included within this MD&A, for additional information.
On August 23, 2022, the Company entered into a definitive asset purchase agreement (the “Spectrum Purchase Agreement”) with a wireless carrier pursuant to which the Company agreed to sell certain Federal Communications Commission (“FCC”) spectrum licenses and leases utilized in the Company's Beam branded fixed wireless service for total consideration of approximately $21.5 million, composed of $17.7 million cash and approximately $3.8 million of liabilities to be assumed by the wireless carrier (the “Spectrum Transaction”).
The Spectrum Transaction On August 23, 2022, the Company entered into a definitive asset purchase agreement (the “Spectrum Purchase Agreement”) with a wireless carrier pursuant to which the Company agreed to sell certain FCC spectrum licenses and leases previously utilized in the Company’s Beam branded fixed wireless service for total consideration of approximately $21.1 million, composed of $17.3 million cash and approximately $3.8 million of liabilities to be assumed by the wireless carrier (the “Spectrum Transaction”).
The Broadband segment also leases dark fiber and provides Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and 32 Table of Contents portions of adjacent counties as a Rural Local Exchange Carrier (“RLEC”).
The Broadband segment also leases dark fiber and provides Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. The Broadband segment also provides voice and digital subscriber line (“DSL”) telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a Rural Local Exchange Carrier (“RLEC”).
The Company is no longer reporting Beam customers as part of its Broadband Revenue Generating Units (“RGUs”). 31 Table of Contents Results of Operations Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The Company’s consolidated results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2022 % of Revenue 2021 % of Revenue $ % Revenue $ 267,371 100.0 $ 245,239 100.0 22,132 9.0 Operating expenses 275,329 103.0 247,669 101.0 27,660 11.2 Operating loss (7,958) (3.0) (2,430) (1.0) (5,528) 227.5 Other (expense) income, net (1,348) (0.5) 8,665 3.5 (10,013) (115.6) (Loss) income before taxes (9,306) (3.5) 6,235 2.5 (15,541) (249.3) Income tax benefit (927) (0.3) (1,694) (0.7) 767 45.3 (Loss) income from continuing operations (8,379) (3.1) 7,929 3.2 (16,308) (205.7) Income from discontinued operations, net of tax — — 990,902 404.1 (990,902) (100.0) Net (loss) income $ (8,379) (3.1) $ 998,831 407.3 (1,007,210) (100.8) Revenue Revenue increased approximately $22.1 million, or 9.0%, in 2022 compared with 2021, driven by 9.2% growth in Broadband and 6.9% growth in the Tower segments.
Operating expenses Operating expenses decreased approximately $0.3 million, or 2.8%, in 2023 compared with 2022, primarily driven by lower depreciation as a result of fewer depreciable tower assets in 2023 compared to 2022. 40 Table of Contents Year Ended December 31, 2022 Compared with the Year Ended December 31, 2021 The Company’s consolidated results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2022 % of Revenue 2021 % of Revenue $ % Revenue $ 267,371 100.0 $ 245,239 100.0 22,132 9.0 Operating expenses 275,329 103.0 247,669 101.0 27,660 11.2 Operating loss (7,958) (3.0) (2,430) (1.0) (5,528) 227.5 Other (expense) income, net (1,348) (0.5) 8,665 3.5 (10,013) (115.6) (Loss) income before income taxes (9,306) (3.5) 6,235 2.5 (15,541) (249.3) Income tax benefit (927) (0.3) (1,694) (0.7) 767 45.3 (Loss) income from continuing operations $ (8,379) (3.1) $ 7,929 3.2 (16,308) (205.7) Income from discontinued operations, net of tax — — 990,902 404.1 (990,902) (100.0) Net (loss) income $ (8,379) (3.1) $ 998,831 407.3 (1,007,210) (100.8) Revenue Revenue increased approximately $22.1 million, or 9.0%, in 2022 compared with 2021, driven by 9.2% growth in Broadband and 6.9% growth in the Tower segments.
Refer to the discussion of the results of operations for the Tower and Broadband segments, included within this annual report, for additional information.
Refer to the discussion of the results of operations for the Broadband and Tower segments, included within this MD&A, for additional information.
Refer to the discussion of the results of operations for the Tower and Broadband segments, included within this annual report, for additional information.
Refer to the discussion of the results of operations for the Tower and Broadband segments, included within this MD&A, for additional information.
As a result of the 2022 analysis, we did not identify any cable franchise right assets in which the fair value was less than the carrying value, therefore we did not recognize any impairment charges for the year ended December 31, 2022.
As a result of the current year evaluation, we did not identify any cable franchise right assets for which the fair value was less than the carrying value. As a result, we did not recognize any impairment charges for the year ended December 31, 2023.
The following table indicates selected operating statistics of the Tower segment: December 31, 2022 December 31, 2021 December 31, 2020 Macro tower sites 222 223 223 Tenants 446 485 427 Average tenants per tower 1.9 2.1 1.8 Tower results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2022 % of Revenue 2021 % of Revenue $ % Tower revenue $ 18,919 100.0 $ 17,704 100.0 % 1,215 6.9 Tower operating expenses 9,407 49.7 8,688 49.1 719 8.3 Tower operating income $ 9,512 50.3 $ 9,016 50.9 496 5.5 Revenue Revenue increased approximately $1.2 million, or 6.9%, in 2022 compared with 2021, primarily driven by a 4.1% increase in average revenue per tenant.
Tower Tower results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2022 % of Revenue 2021 % of Revenue $ % Tower revenue $ 18,919 100.0 $ 17,704 100.0 1,215 6.9 Tower operating expenses 9,407 49.7 8,688 49.1 719 8.3 Tower operating income $ 9,512 50.3 $ 9,016 50.9 496 5.5 Revenue Revenue increased approximately $1.2 million, or 6.9%, in 2022 compared with 2021, primarily driven by a 4.1% increase in average revenue per tenant.
The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a RLEC. These contracts are generally cancellable at the customer’s discretion without penalty at any time. We allocate the total transaction price in these transactions based upon the standalone selling price of each distinct good or service.
The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a RLEC. We allocate the total transaction price in these transactions based upon the standalone selling price of each distinct good or service.
In 2021, Congress passed the America Rescue Plan Act to subsidize the deployment of high-speed broadband internet access in unserved areas. We were awarded approximately $71 million in grants to serve approximately 23,600 unserved homes in the states of Virginia, West Virginia and Maryland. The grants will be paid to the Company as certain milestones are completed.
In 2021, Congress passed the American Rescue Plan Act to subsidize the deployment of high-speed broadband internet access in unserved areas. We have been awarded approximately $85.8 million in grants to serve approximately 25,000 unserved homes in the states of Virginia, West Virginia and Maryland. The grants will be paid to the Company as certain milestones are completed.
Our cash flows from continuing operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions.
The actual amount and timing of our future capital requirements may differ materially from our estimates depending on the demand for our products and services, new market developments and expansion opportunities. 44 Table of Contents Our cash flows from operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions.
Impairment Impairment expense decreased $0.7 million, or 12.4%, in 2022 compared with 2021. Impairment expense in 2021 and 2022 was primarily driven by the Company's decision to permanently cease Beam operations.
Restructuring expense Restructuring expense increased $0.6 million, or 320.3%, in 2022 compared with 2021, primarily driven by the ceasing of Beam operations. 42 Table of Contents Impairment Impairment expense decreased $0.7 million, or 12.4%, in 2022 compared with 2021. Impairment expense in 2021 and 2022 was primarily driven by the Company’s decision to permanently cease Beam operations.
Depreciation and amortization Depreciation and amortization increased $15.2 million, or 31.8%, in 2022 compared with 2021, primarily driven by the Company's network expansion of our Glo Fiber network and the accelerated depreciation of Beam network assets associated with the Company’s decision to permanently cease Beam operations. 34 Table of Contents Tower Our Tower segment owns cell towers and leases colocation space on the towers to wireless communications providers.
Depreciation and amortization Depreciation and amortization increased $15.2 million, or 31.8%, in 2022 compared with 2021, primarily driven by the Company’s network expansion of our Glo Fiber network and the accelerated depreciation of Beam network assets associated with the Company’s decision to permanently cease Beam operations.
For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. 33 Table of Contents Broadband results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2022 % of Revenue 2021 % of Revenue $ % Broadband operating revenue Residential & SMB $ 193,974 77.9 $ 177,530 77.8 16,444 9.3 Commercial Fiber 38,830 15.6 34,931 15.3 3,899 11.2 RLEC & Other 16,211 6.5 15,619 6.8 592 3.8 Total broadband revenue 249,015 100.0 228,080 100.0 20,935 9.2 Broadband operating expenses Cost of services 102,267 41.1 97,283 42.7 4,984 5.1 Selling, general, and administrative 56,776 22.8 47,840 21.0 8,936 18.7 Restructuring expense 849 0.3 202 0.1 647 320.3 Impairment expense 5,241 2.1 5,986 2.6 (745) (12.4) Depreciation and amortization 63,175 25.4 47,937 21.0 15,238 31.8 Total broadband operating expenses 228,308 91.7 199,248 87.4 29,060 14.6 Broadband operating income $ 20,707 8.3 $ 28,832 12.6 (8,125) (28.2) Residential & SMB revenue Residential & SMB revenue increased approximately $16.4 million, or 9.3%, in 2022 compared with 2021, primarily driven by launching services in new markets resulting in 13.8% growth in broadband RGUs.
The decrease was due to the completion of the disposition of our Wireless assets and operations in 2021, with no additional activity occurring in 2022. 41 Table of Contents Broadband Broadband results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2022 % of Revenue 2021 % of Revenue $ % Broadband operating revenue Residential & SMB - Cable Markets (1) $ 175,681 70.6 $ 169,183 74.2 6,498 3.8 Residential & SMB - Glo Fiber Markets (1) 18,293 7.3 8,347 3.7 9,946 119.2 Commercial Fiber 38,830 15.6 34,931 15.3 3,899 11.2 RLEC & Other 16,211 6.5 15,619 6.8 592 3.8 Total broadband revenue 249,015 100.0 228,080 100.0 % 20,935 9.2 Broadband operating expenses Cost of services 102,267 41.1 97,283 42.7 4,984 5.1 Selling, general, and administrative 56,776 22.8 47,840 21.0 8,936 18.7 Restructuring expense 849 0.3 202 0.1 647 320.3 Impairment expense 5,241 2.1 5,986 2.6 (745) (12.4) Depreciation and amortization 63,175 25.4 47,937 21.0 15,238 31.8 Total broadband operating expenses 228,308 91.7 199,248 87.4 29,060 14.6 Broadband operating income $ 20,707 8.3 $ 28,832 12.6 (8,125) (28.2) _________________________________________ (1) Shentel has presented Residential & SMB - Cable Markets and Residential & SMB - Glo Fiber Markets separately for 2023.
Advertising costs increased $2.5 million due primarily to the expansion of Glo Fiber. Software related costs and professional fees increased $2.0 million related to operational system upgrades. Other costs, including bad debt and operating taxes increased $1.7 million. Restructuring expense Restructuring expense increased $0.6 million, or 320.3%, in 2022 compared with 2021, primarily driven by the ceasing of Beam operations.
Advertising costs increased $2.5 million due primarily to the expansion of Glo Fiber. Software related costs and professional fees increased $2.0 million related to operational system upgrades. Other costs, including provision for bad debt and operating taxes increased $1.7 million.
Shentel's cable franchise rights were primarily acquired through business combinations. Cable franchise rights have an indefinite life; therefore, no amortization is recorded for these assets. Costs incurred in negotiating and renewing cable franchise rights are expensed as incurred. The terms and conditions of franchises vary among jurisdictions, but franchises generally last for a fixed term and are subject to renewal.
Shentel’s cable franchise rights were primarily acquired through business 45 Table of Contents combinations. Cable franchise rights have an indefinite life; therefore, no amortization is recorded for these assets. Costs incurred in negotiating and renewing cable franchise rights are expensed as incurred.
We expect our cash on hand, cash flow from continuing operations, and availability of funds from our Credit Agreement as well as government grants will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months. There can be no assurance that we will continue to generate cash flows at or above current levels.
As of December 31, 2023, the Company was in compliance with the financial covenants in our Credit Agreement. We expect our cash on hand, cash flows from continuing operations, and availability of funds from our Credit Agreement as well as government grants will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months.
Substantially all of our owned towers are built on ground that we lease from the respective landlords.
Tower Our Tower segment owns cell towers and leases colocation space on the towers to wireless communications providers. Substantially all of our owned towers are built on ground that we lease from the respective landlords.
The Company expects to its fulfill its performance obligations during the period from 2023 to 2025. As of December 31, 2022, our cash and cash equivalents totaled $44.1 million and the availability under our delayed draw term loans and revolving line of credit was $325.0 million, for total available liquidity of $369.1 million.
The Company expects to fulfill its obligations under these programs by 2026. As of December 31, 2023, our cash and cash equivalents totaled $139.3 million and the availability under our revolving line of credit was $100.0 million, for total available liquidity of $239.3 million.
The renewal process for our state franchises is specified by state law and tends to be a simple process, requiring the filing of a renewal application with information no more burdensome than that contained in our original application. Franchising authorities may resist granting a renewal if either past performance or the prospective operating proposal is considered inadequate.
The terms and conditions of franchises vary among jurisdictions, but franchises generally last for a fixed term and are subject to renewal. The renewal process for our state franchises is specified by state law and tends to be a simple process, requiring the filing of a renewal application with information no more burdensome than that contained in our original application.
Operating expenses Operating expenses increased approximately $0.5 million, or 5.5%, compared to the prior year period, due primarily to increases in ground lease rent expense, and expansion of our tower network team resulting in higher payroll costs, partially offset by a decrease in professional services. 38 Table of Contents Financial Condition, Liquidity and Capital Resources Sources and Uses of Cash: Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations, and borrowings under our Credit Agreement, dated July 1, 2021 (the “Credit Agreement”).
Operating expenses Operating expenses increased approximately $0.7 million, or 8.3%, in 2022 compared with 2021, primarily driven by higher costs of service as a result of higher rent costs and higher depreciation. 43 Table of Contents Financial Condition, Liquidity and Capital Resources Sources and Uses of Cash: Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations, and borrowings under our Credit Agreement.
Franchise authorities often demand concessions or other commitments as a condition to renewal.
Franchising authorities may resist granting a renewal if either past performance or the prospective operating proposal is considered inadequate. Franchise authorities often demand concessions or other commitments as a condition to renewal.
Net cash used in investing activities for continuing operations increased $24.4 million in 2022, compared with 2021, primarily due to a $29.5 million increase in capital expenditures for our Broadband segment to enable our Glo Fiber market expansion, partially offset by an increase in cash received for refunds of FCC spectrum licenses of $4.0 million and sales of assets, including a sale of investments from Shentel's rabbi trust which generated $0.8 million of proceeds.
Net cash used in investing activities from continuing operations was approximately $236.7 million in 2023, representing an increase of $52.5 million compared with 2022, primarily driven by a $66.9 million increase in capital expenditures as a result of higher spending in the Broadband segment to enable our Glo Fiber market expansion, partially offset by $17.3 million in cash proceeds from the closing of the Spectrum Transaction in July 2023.
Tower Tower results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2021 % of Revenue 2020 % of Revenue $ % Tower revenue $ 17,704 100.0 $ 17,055 100.0 649 3.8 Tower operating expenses 8,688 49.1 8,232 48.3 456 5.5 Tower operating income $ 9,016 50.9 $ 8,823 51.7 193 2.2 Revenue Revenue increased approximately $0.6 million, or 3.8%, in 2021 compared with 2020.
The following table indicates selected operating statistics of the Tower segment: December 31, 2023 December 31, 2022 December 31, 2021 Macro tower sites 219 222 223 Tenants 453 446 485 Average tenants per tower 2.0 1.9 2.1 Tower results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2023 % of Revenue 2022 % of Revenue $ % Tower revenue $ 18,635 100.0 $ 18,919 100.0 % (284) (1.5) Tower operating expenses 9,140 49.0 9,407 49.7 (267) (2.8) Tower operating income $ 9,495 51.0 $ 9,512 50.3 (17) (0.2) Revenue Revenue decreased approximately $0.3 million, or 1.5%, in 2023 compared with 2022, primarily driven by lower intercompany lease revenue from ceasing Beam operations in 2022.
Refer to Note 9, Debt in the Company's 2022 Consolidated Financial Statements for information about the Company's Credit Agreement. As of December 31, 2022, the Company was in compliance with the financial covenants in our Credit Agreement.
Based on the outstanding balance as of December 31, 2023, Term Loan A-2 requires quarterly principal repayments of $0.4 million through March 31, 2028, with the remaining balance due June 30, 2028. Refer to Note 9, Debt in the Company’s 2023 Consolidated Financial Statements for information about the Company's Credit Agreement.
We expect our capital expenditures to exceed the cash flow provided from continuing operations through 2025, as we expand our Glo Fiber broadband network to potentially reach over 450,000 passings.
During the year ended December 31, 2023, our capital expenditures of $256.6 million exceeded our net cash provided by operating activities from continuing operations by $142.8 million, and we expect our capital expenditures to exceed the net cash flows provided by continuing operations through 2026, as we expand our Glo Fiber broadband network.
RLEC & Other revenue RLEC & Other revenue decreased approximately $1.0 million, or 5.7%, compared with 2020 due primarily to a decline in residential DSL subscribers, lower switched access revenue, and lower intercompany phone service.
The Company expects approximately $1.0 million of additional annual revenue churn as part of the T-Mobile network rationalization. RLEC & Other revenue RLEC & Other revenue decreased approximately $1.1 million, or 6.7%, in 2023 compared with 2022, primarily driven by a decline in residential DSL subscribers.
Operating expenses Operating expenses increased approximately $24.3 million, or 10.9%, in 2021 compared with 2020, primarily driven by $7.4 million in incremental Broadband operating expenses incurred to support the continuing expansion of Glo Fiber, $1.7 million of restructuring expenses and $6.0 million of impairment expenses incurred primarily as a result of our decision to cease expansion of Beam, $6.4 million in depreciation from growth in our broadband networks, $5.8 million in Broadband maintenance due primarily to higher cable replacements costs, obsolete inventory charges and expensing of software development costs related to our previous ERP system that was replaced in 2022, partially offset by a decline in corporate expenses.
Operating expenses Operating expenses increased approximately $2.4 million, or 0.9%, in 2023 compared with 2022, primarily driven by $2.9 million in incremental Corporate operating expenses, partially offset by a $0.2 million and a $0.3 million decrease in operating expenses in the Broadband and Tower segments, respectively. Corporate operating expenses primarily increased due to transaction costs related to the Horizon Transaction.
Removed
Also see Note 15, Discontinued Operations , and Note 14, Segment Reporting , in our consolidated financial statements for additional information. 2022 Developments Beam fixed wireless: In the fourth quarter of 2021, due to the availability of grants awarded under various governmental initiatives, and in support of rural fiber to the home (“FTTH”) broadband network expansion projects, we decided to cease further expansion of our Beam branded fixed wireless edge-out strategy.
Added
Also see Note 16, Discontinued Operations , and Note 15, Segment Reporting , in our consolidated financial statements for additional information. 2023 Developments Amendment to the Credit Agreement On May 17, 2023, Shentel entered into Amendment No. 1 to Credit Agreement (the “Amendment”) to its existing Credit Agreement, dated as of July 1, 2021, with various financial institutions party thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders (the “Credit Agreement”).
Removed
During the second quarter of 2022, the Company permanently ceased operating 20 of our Beam fixed wireless sites.
Added
The Amendment extended the period during which the Company could borrow under the (i) $150 million five-year delay draw amortizing term loan (the “Term Loan A-1”) and (ii) $150 million seven-year delay draw amortizing term loan (the “Term Loan A-2” and, together with the Term Loan A-1, the “Term Loans”) from July 1, 2023 to December 31, 2023.
Removed
The Spectrum Transaction is expected to close in the first half of 2023, subject to the receipt of regulatory approvals and other customary closing conditions. As a result of the Spectrum Transaction, the Company ceased its Beam service at the remaining Beam fixed wireless sites in the fourth quarter 2022.
Added
The Amendment also extended the date on which the Term Loans must begin to be repaid in quarterly principal installments from September 30, 2023 to March 31, 2024.
Removed
The decrease was due to the completion of the disposition of our Wireless assets and operations in 2021, with no additional activity occurring in 2022.
Added
In addition, the Amendment amended the Credit Agreement to update the benchmark interest rate to a rate based on Term SOFR (as defined in the Amendment), added a 10 bps credit spread adjustment for loans that bear interest based on Term SOFR and made certain other conforming changes. All other material terms and conditions of the Credit Agreement were unchanged.
Removed
These integrated networks are connected by over 8,300 fiber route mile network.
Added
Hedging Arrangements In May 2023, Shentel entered into pay fixed, receive variable interest rate swaps totaling $150.0 million of notional principal (the “Swaps”). The Swaps contain monthly payment terms beginning in May 2024, which extend through their maturity dates in June 2026. The Swaps are designated as a cash flow hedges, representing 50% of the Company’s expected outstanding debt.
Removed
Operating expenses Operating expenses increased approximately $0.7 million, or 8.3%, in 2022 compared with 2021, primarily driven by higher costs of service as a result of higher rent costs and higher depreciation. 35 Table of Contents Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 The Company’s consolidated results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2021 % of Revenue 2020 % of Revenue $ % Revenue $ 245,239 100.0 $ 220,775 100.0 24,464 11.1 Operating expenses 247,669 101.0 223,376 101.2 24,293 10.9 Operating loss (2,430) (1.0) (2,601) (1.2) 171 (6.6) Other income, net 8,665 3.5 3,187 1.4 5,478 171.9 Income before taxes 6,235 2.5 586 0.3 5,649 964.0 Income tax benefit (1,694) (0.7) (990) (0.4) (704) (71.1) Income from continuing operations $ 7,929 3.2 $ 1,576 0.7 6,353 403.1 Income from discontinued operations, net of tax 990,902 404.1 124,097 56.2 866,805 698.5 Net income $ 998,831 407.3 $ 125,673 56.9 873,158 694.8 Revenue Revenue increased approximately $24.5 million, or 11.1%, in 2021 compared with 2020, driven by 11.6% growth in Broadband and 3.8% growth in the Tower segments.
Added
The Company uses the Swaps to manage its exposure to interest rate risk for its long-term variable-rate Term Loans. Pension Plan Termination In 2021, Shentel’s Board of Directors adopted a resolution to terminate its pension plan.
Removed
Other income, net Other income, net increased $5.5 million primarily due to actuarial gains recognized for the Company's post-retirement benefit plans and TSA income realized in 2021.
Added
The Company terminated the pension plan and all benefits were distributed in June 2023 through the combination of lump sum payments and the purchase of non-participating annuity contracts at the option of the pension plan participants.
Removed
Income tax benefit Income tax benefit of approximately $1.7 million increased approximately $0.7 million compared with 2020, primarily due to $5.0 million of non-cash tax benefits derived from the revaluation of our deferred tax liabilities.
Added
The Company made an additional $2.9 million contribution from its cash balance as a result of the settlement and recognized a settlement gain of $0.7 million in other income (expense).
Removed
This revaluation was driven by the change in our estimated state tax rate that was triggered by the disposition of our Wireless assets and operations and a change in West Virginia tax regulations, and was partially offset by a $1.6 million reclassification of income taxes from other comprehensive income resulting from termination of our interest rate swaps, a $1.1 million reduction in excess tax benefits from share based compensation and other, and $1.6 million as a result of changes in taxable income.
Added
The Spectrum Transaction closed on July 6, 2023. 35 Table of Contents The Horizon Transaction On October 24, 2023, Shentel entered into a definitive agreement to acquire 100% of the equity interests Horizon for $385 million (the “Horizon Transaction”). Consideration will consist of $305 million in cash and $80 million of Shentel common stock.
Removed
Income from discontinued operations, net of tax Income from discontinued operations, net of tax, increased $0.9 billion, or 698.5%.
Added
Horizon is a leading commercial fiber provider in Ohio and adjacent states serving national wireless providers, carriers, enterprises, and government, education and healthcare customers. Based in Chillicothe, Ohio, Horizon was founded in 1895 as the incumbent local exchange carrier in Ross County, Ohio and rapidly expanded its fiber network over the past 14 years.
Removed
The increase was primarily due to the completion of the disposition of our Wireless assets and operations for proceeds of approximately $1.9 billion resulting in a gain of $1.2 billion, net of approximately $0.3 billion of income tax expense. 36 Table of Contents Broadband Broadband results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2021 % of Revenue 2020 % of Revenue $ % Broadband operating revenue Residential & SMB $ 177,530 77.8 $ 155,017 75.9 22,513 14.5 Commercial Fiber 34,931 15.3 32,759 16.0 2,172 6.6 RLEC & Other 15,619 6.8 16,571 8.1 (952) (5.7) Total broadband revenue 228,080 100.0 204,347 100.0 % 23,733 11.6 Broadband operating expenses Cost of services 97,283 42.7 84,893 41.5 12,390 14.6 Selling, general, and administrative 47,840 21.0 39,472 19.3 8,368 21.2 Restructuring expense 202 0.1 — — 202 — Impairment expense 5,986 2.6 — — 5,986 — Depreciation and amortization 47,937 21.0 41,076 20.1 6,861 16.7 Total broadband operating expenses 199,248 87.4 165,441 81.0 33,807 20.4 Broadband operating income $ 28,832 12.6 $ 38,906 19.0 (10,074) (25.9) Residential & SMB revenue Residential & SMB revenue increased approximately $22.5 million, or 14.5%, during 2021 primarily driven by launching services in new markets resulting in 15.9% growth in broadband RGUs.
Added
Most recently, Horizon has pursued a strategy of investing in Fiber-to-the-Home (“FTTH”) in tier 3 & 4 markets in Ohio. Financing • Shentel intends to fund the Horizon Transaction with a combination of existing cash resources, revolving credit facility capacity and an amended and upsized credit facility.
Removed
Commercial Fiber revenue Commercial Fiber revenue increased approximately $2.2 million, or 6.6%, during 2021 due primarily to $1.0 million of growth in circuit connections, $0.7 million non-recurring amortized revenue reduction in 2020 and $0.5 million in non-recurring dark fiber sales-type leases in 2021.
Added
The Company has received $275 million in financing commitments from CoBank, Bank of America, Citizens Bank, N.A., and Fifth Third Bank, N.A..
Removed
Cost of services Cost of services increased approximately $12.4 million, or 14.6%, compared with 2020, primarily driven by $5.8 million increase in maintenance due primarily to higher cable replacements costs, obsolete network asset charges and expensing of software development costs related to our previous ERP system, $3.6 million in higher compensation costs to support the expansion of Glo Fiber and Beam, and $1.7 million in higher programming fees.
Added
This financing is expected to close in conjunction with the Horizon Transaction. • GCM Grosvenor (“GCM”), a selling unit holder of Horizon, will exchange its equity interest in Horizon for 4.08 million shares of Shentel common stock with an aggregate value of $80 million based on a reference price of $19.60, resulting in GCM owning approximately 7% of Shentel’s fully diluted common shares after the transaction is closed. • Shentel has entered into a 7% Participating Exchangeable Perpetual Preferred Stock (“Preferred Stock”) investment agreement with Energy Capital Partners (“ECP”), an existing Shentel shareholder and long-time infrastructure investor, to provide $81 million of growth capital to fund the FTTH network expansion, government grant projects and general corporate purposes.
Removed
Selling, general and administrative Selling, general and administrative expense increased $8.4 million or 21.2% compared with 2020 primarily due to $3.8 million in higher compensation and advertising costs to support the expansion of Glo Fiber and Beam, a $2.4 million increase in software development and service fees as we upgrade our operating support, customer relationship and enterprise resource systems and a $1.7 million increase in property taxes, facility expense and other costs.
Added
The dividend on the Preferred Stock can be paid in cash or in-kind at the option of the Company. The Preferred Stock can be exchanged for Shentel common stock at an exchange price of $24.50, a 25% premium to the reference price of $19.60, under certain conditions as outlined in the investment agreement.
Removed
Restructuring expense Restructuring expense was primarily due to severance related expenses from the sale of Wireless assets and operations. Impairment During the fourth quarter, we ceased further expansion of our fixed wireless edge-out strategy.
Added
This financing is expected to close in conjunction with the Horizon Transaction. • The Company plans to raise additional growth capital for the FTTH network expansion, government grant projects and general corporate purposes, which may include the sale of some or all of its tower portfolio as well as exploring other strategic alternatives.
Removed
As a result, in the fourth quarter of 2021, the Company incurred approximately $6.0 million of expenses for impairment of expansionary Beam construction assets. 37 Table of Contents Depreciation and amortization Depreciation and amortization increased $6.9 million or 16.7%, compared with 2020, primarily as a result of our network expansion and the deployment of infrastructure necessary to support our new fiber-to-the-home service, Glo Fiber.
Added
The closing of the Horizon Transaction remains subject to certain regulatory approvals and other customary closing conditions and is expected to close in the first half of 2024. 36 Table of Contents Results of Operations Year Ended December 31, 2023 Compared with the Year Ended December 31, 2022 The Company’s consolidated results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2023 % of Revenue 2022 % of Revenue $ % Revenue $ 287,379 100.0 $ 267,371 100.0 20,008 7.5 Operating expenses 277,755 96.7 275,329 103.0 2,426 0.9 Operating income (loss) 9,624 3.3 (7,958) (3.0) 17,582 (220.9) Other income (expense), net 1,387 0.5 (1,348) (0.5) 2,735 (202.9) Income (loss) before income taxes 11,011 3.8 (9,306) (3.5) 20,317 (218.3) Income tax expense (benefit) 2,973 1.0 (927) (0.3) 3,900 NMF Net income (loss) $ 8,038 2.8 $ (8,379) (3.1) 16,417 (195.9) Revenue Revenue increased approximately $20.0 million, or 7.5%, in 2023 compared with 2022, primarily driven by growth of $20.2 million, or 8.1%, in the Broadband segment, partially offset by decline of $0.3 million, or 1.5%, in the Tower segment.
Removed
This increase was due to a 13.6% increase in tenants and was partially offset by a 3.2% decline in average revenue per tenant.
Added
Refer to the discussion of the results of operations for the Broadband and Tower segments, included within this MD&A, for additional information related to operating expenses for those segments.
Removed
Operating activities from continuing operations generated approximately $74.9 million in 2022, representing an increase of $11.4 million compared with 2021, driven by higher non-cash add backs to net loss, including higher depreciation, stock-based compensation, and bad debt expense, and lower non-cash add backs for income taxes benefits, partially offset by lower income (loss) from operations.
Added
Other income (expense), net Other income (expense), net increased $2.7 million, or 202.9%, in 2023 compared with 2022, primarily driven by a gain recorded in connection with the sale of the Company’s FCC spectrum licenses upon the closing of the Spectrum Transaction in July 2023, sales taxes refunds received, interest income related to tax refunds and a pension settlement gain resulting from the termination of Shentel’s pension plan in June 2023, partially offset by an increase in interest expense.
Removed
Financing activities from continuing operations generated approximately $69.0 million in 2022, compared to net cash used in financing activities for continuing operations of $943.9 million in 2021. The change was primarily the result of a decrease in dividend payments, as the Company made a special dividend payment of $936.3 million in 2021.
Added
Income tax expense (benefit) The Company recognized $3.0 million of income tax expense in 2023, compared with $0.9 million of income tax benefit in 2022. The $3.9 million increase in income tax expense was driven by higher pre-tax income in 2023.
Removed
The Company also generated an additional $75.0 million in cash as a result of borrowings against its delayed draw term loans during 2022. Indebtedness : Throughout 2022, we borrowed $37.5 million under each of the delayed draw term loan facilities available under the Credit Agreement for a total of $75.0 million.
Added
For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. 38 Table of Contents Broadband results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2023 % of Revenue 2022 % of Revenue $ % Broadband operating revenue Residential & SMB - Cable Markets (1) $ 176,879 65.7 $ 175,681 70.6 1,198 0.7 Residential & SMB - Glo Fiber Markets (1) 35,103 13.0 18,293 7.3 16,810 91.9 Commercial Fiber 42,141 15.7 38,830 15.6 3,311 8.5 RLEC & Other 15,130 5.6 16,211 6.5 (1,081) (6.7) Total broadband revenue 269,253 100.0 249,015 100.0 20,238 8.1 Broadband operating expenses Cost of services 100,841 37.5 102,267 41.1 (1,426) (1.4) Selling, general, and administrative 62,834 23.3 56,776 22.8 6,058 10.7 Restructuring expense — — 849 0.3 (849) (100.0) Impairment expense 2,552 0.9 5,241 2.1 (2,689) (51.3) Depreciation and amortization 61,897 23.0 63,175 25.4 (1,278) (2.0) Total broadband operating expenses 228,124 84.7 228,308 91.7 (184) (0.1) Broadband operating income $ 41,129 15.3 $ 20,707 8.3 20,422 98.6 _________________________________________ (1) Shentel has presented Residential & SMB - Cable Markets and Residential & SMB - Glo Fiber Markets separately for 2023.
Removed
We expect to borrow the remaining $225.0 million available under these term loans by June 2023 to fund planned capital expenditures to continue our Glo Fiber network expansion. As of December 31, 2022, the Company’s indebtedness totaled approximately $75 million, net of unamortized loan fees of $46.0 thousand, with an annualized overall weighted average interest rate of approximately 4.63%.
Added
These revenues were previously reported in one line under the description “Residential & SMB”. Shentel has amended the presentation for 2022. Residential & SMB - Cable Markets revenue Residential & SMB - Cable Markets revenue increased approximately $1.2 million, or 0.7%, in 2023 compared with 2022, primarily driven by 1.8% year-over-year growth in data ARPU.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Throughout 2022, we borrowed a total of $75 million pursuant to the variable rate delayed draw term loans available under the Credit Agreement, and we expect to continue to borrow under our Credit Agreement as needed to fund the Company's future capital expenditures.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Throughout 2023, we borrowed a total of $225 million pursuant to the variable rate delayed draw Term Loans available under the Credit Agreement. As of December 31, 2023, Shentel has borrowed the full amount available under our Term Loans.
Removed
We expect to draw an additional $225.0 million against the Credit Agreement by June 2023. Fluctuations in interest rates on future borrowings could result in increased market risk. As of December 31, 2022, the Company had $75 million of gross variable rate debt outstanding, bearing interest at a weighted average rate of 4.63%.
Added
As of December 31, 2023, the Company had $300 million of gross variable rate debt outstanding, bearing interest at 6.95%. An increase in market interest rates of 1.00% would add approximately $3.0 million to annual interest expense. In May 2023, Shentel entered into pay fixed, receive variable interest rate swaps totaling $150.0 million of notional principal (the “Swaps”).
Removed
An increase in market interest rates of 1.00% would add approximately $0.7 million to annual interest expense.
Added
The Swaps contain monthly payment terms beginning in May 2024 which extend through their maturity dates in June 2026. The Swaps are designated as cash flow hedges, representing 50% of the Company’s expected outstanding debt. The Company uses the Swaps to manage its exposure to interest rate risk for its long-term variable-rate Term Loans through interest rate swaps.
Added
When the Swaps’ payments term begins, Shentel will effectively pay a fixed weighted-average interest rate of 2.90%, prior to interest rate margin provided under our credit facility.

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