10q10k10q10k.net

What changed in SHENANDOAH TELECOMMUNICATIONS CO/VA/'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of SHENANDOAH TELECOMMUNICATIONS CO/VA/'s 2023 and 2024 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 2024 report.

+293 added−324 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-21)

Top changes in SHENANDOAH TELECOMMUNICATIONS CO/VA/'s 2024 10-K

293 paragraphs added · 324 removed · 179 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

73 edited+28 added−54 removed76 unchanged
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.
Biggest changeIn November 2021, Congress passed the Infrastructure Investment and Jobs Act (“IIJA”) that will provide an additional $42.5 billion for the Broadband Equity, Access, and Deployment (“BEAD”) Program to fund broadband construction and adoption programs that prioritize the expansion of high-speed broadband to unserved homes across the country. The Company has not been awarded any grants under the BEAD Program.
If an agreement cannot be reached, parties to interconnection negotiations can submit unresolved issues to federal or state regulators for arbitration. Disputes regarding intercarrier compensation can be brought in a number of forums (depending on the nature and jurisdiction of the dispute) including state public utility commissions (“PUCs”), the FCC, and the courts.
If an agreement cannot be reached, parties to interconnection negotiations can submit unresolved issues to federal or state regulators for arbitration. Disputes regarding intercarrier compensation can be brought in a number of forums (depending on the nature and jurisdiction of the dispute) including state public utility commissions (“PUCs”), the FCC, and the courts. Regulation of Intercarrier Compensation.
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.
We cannot predict the nature and pace of these and other developments or the effect they may have on our operations. Regulation of Telephone Services State Regulation . Shenandoah Telephone Company (“Shenandoah Telephone”) is a RLEC serving Shenandoah County, Virginia and portions of the Virginia counties of Rockingham, Frederick, and Augusta.
Our ability to provide video service may be affected by a wide range of additional regulatory and related issues, including FCC regulations pertaining to licensing of systems and facilities, set-top boxes, equipment compatibility, program exclusivity blackouts, commercial leased access of video channels by unaffiliated third parties, advertising, maintenance of online public files, accessibility to persons with disabilities, emergency alerts, equal employment opportunity, privacy, consumer protection, and technical standards.
Our ability to provide our services may be affected by a wide range of additional regulatory and related issues, including FCC regulations pertaining to licensing of systems and facilities, set-top boxes, equipment compatibility, program exclusivity blackouts, commercial leased access of video channels by unaffiliated third parties, advertising, maintenance of online public files, accessibility to persons with disabilities, emergency alerts, equal employment opportunity, privacy, consumer protection, and technical standards.
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.
In January 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.
In 2019, the FCC clarified that the value of in-kind contribution requirements set forth in cable franchises (such as channel capacity set aside for public, educational and governmental (“PEG”) use or free cable service to public buildings) is subject to the statutory cap on franchise fees, and it reaffirmed that state and local authorities are barred from imposing franchise fees on cable systems providing non-cable services such as Internet services.
The FCC has clarified that the value of in-kind contribution requirements set forth in cable franchises (such as channel capacity set aside for public, educational and governmental (“PEG”) use or free cable service to public buildings) is subject to the statutory cap on franchise fees, and it reaffirmed that state and local authorities are barred from imposing franchise fees on cable systems providing non-cable services such as Internet services.
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.
Some states, including Virginia and West Virginia, have enacted regulations and franchise provisions that also can affect certain aspects of a cable provider’s operations. Our business may be significantly impacted by changes to the existing regulatory framework, whether caused by legislation or administrative or judicial actions.
The “one touch” make-ready rules allow new attachers to alter certain components of existing attachments for “simple make-ready” (i.e. where the alteration of existing attachments does not involve a reasonable expectation of a service outage, splicing, pole replacement or relocation of a wireless attachment).
“One touch” make-ready rules exist which allow new attachers to alter certain components of existing attachments for “simple make-ready” (i.e. where the alteration of existing attachments does not involve a reasonable expectation of a service outage, splicing, pole replacement or relocation of a wireless attachment).
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.
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 28 years of experience in the telecommunications industry.
In 2015, the FCC determined that broadband Internet access services, such as those we offer, were a form of telecommunications service under the Communications Act of 1934, as amended (the “Communications Act”), and, on that basis, imposed rules (commonly referred to as “Net Neutrality” rules) banning service providers from blocking access to lawful content, restricting data rates for downloading lawful content, prohibiting the attachment of non-harmful devices, giving special transmission priority to affiliates and offering third parties the ability to pay for priority routing.
In 2015, the FCC determined that broadband Internet access services, such as those we offer, were a form of telecommunications service under the Communications Act of 1934, as amended (the “Communications Act”), and, on that basis, imposed rules (commonly referred to as “Net Neutrality” rules) banning service providers from blocking access to lawful content, restricting data rates for downloading lawful content, prohibiting the attachment of non-harmful devices, giving special transmission priority to affiliates 5 Table of Conten t s and offering third parties the ability to pay for priority routing.
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.
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; 11 Table of Conten t s • 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.
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 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.
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.
Incumbent cable television companies, which have historically provided video service, also face competition from direct broadcast satellite providers such as Dish and DirecTV and online video services, such as Netflix, YouTube TV, Hulu, Disney and Amazon.
Regulation Our operations are subject to regulation by the Federal Communications Commission (“FCC”), the Virginia State Corporation Commission (“VSCC”), the West Virginia Public Service Commission, the Maryland Public Service Commission, the Pennsylvania Public Utility Commission, the Kentucky Public Service Commission and other federal, state, and local governmental agencies.
Regulation Our operations are subject to regulation by the Federal Communications Commission (“FCC”), the Virginia State Corporation Commission (“VSCC”), the West Virginia Public Service Commission, the Maryland Public Service Commission, the Pennsylvania Public Utility Commission, the Kentucky Public Service Commission, the Ohio Public Utilities Commission, the Delaware Public Service Commission and other federal, state, and local governmental agencies.
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.
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 enacted legislation which has been challenged in court, and we cannot predict how any other state legislation and court challenges will be resolved.
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.
Those rules were upheld by a federal court, 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.
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.
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. 8 Table of Conten t s Voice over Internet Protocol “VoIP” Services . We provide voice communications services over our cable and fiber networks utilizing interconnected VoIP technology and service arrangements.
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.
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 66 April 1988 Edward H. McKay Executive Vice President and Chief Operating Officer 52 July 2021 James J. Volk Senior Vice President and Chief Financial Officer 61 June 2019 Elaine M.
If the Universal Service Administrative Company (“USAC”) were required to account for the USF program in accordance with generally accepted accounting principles for federal agencies under the Anti-Deficiency Act (the “ADA”), it could cause delays in USF payments to fund recipients and significantly increase the amount of USF contribution payments charged to wireline and wireless consumers.
If USAC were required to account for the USF program in accordance with generally accepted accounting principles for federal agencies under the Anti-Deficiency Act (the “ADA”), it could cause delays in USF payments to fund recipients and significantly increase the amount of USF contribution payments charged to wireline and wireless consumers.
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.
We will continue to poll our employees, as appropriate, and build action plans to address feedback shared by our team members. 12 Table of Conten t s 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.
Moreover, irrespective of these cases, and as demonstrated by the FCC’s inconsistent positions over time, it is possible that the FCC might further revise its approach to broadband Internet access in the future, or that Congress might enact legislation affecting the rules applicable to the service.
Moreover, irrespective of these cases, and as demonstrated by the FCC’s changing approach with Net Neutrality rules over time, it is possible that the FCC might further revise its approach to broadband Internet access in the future, or that Congress might enact legislation affecting the rules applicable to the service.
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.
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 (currently defined by the FCC) 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.
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
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. 14 Table of Conten t s
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.
Description of Business Shentel provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, Kentucky, Delaware, Ohio and Indiana via fiber optics under the brand name of Glo Fiber and hybrid fiber coaxial cable under the brand name of Shentel.
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.
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, Pennsylvania, Kentucky, Delaware, Ohio and Indiana.
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.
Our Glo Fiber FTTH service passes approximately 346,000 homes and businesses and competes against the incumbent local telephone companies’ DSL, internet and voice services via hybrid fiber and copper-based networks and the incumbent cable companies’ broadband, video and voice services utilizing hybrid fiber-coaxial cable networks. Competition is also intense and growing in the market for video services.
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.
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.
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.
These services are subject to federal laws 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 packaging and consumer protection restrictions on cable operators.
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.
Competition As the incumbent broadband provider passing approximately 239,000 homes and businesses, we compete against incumbent local telephone companies that provide digital subscriber line (“DSL”), internet and voice services over hybrid fiber and copper-based networks as well as broadband overbuilder providers that offer data, voice, and video services over hybrid coaxial cable or fiber optic networks.
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.
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. 10 Table of Conten t s Regulation of Our Other Services Transfers, Assignments and Changes of Control of Spectrum Licenses.
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.
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 eight contiguous states in the eastern United States. The Company’s services include: broadband internet, video and voice; high-speed Ethernet, dark fiber leasing; and managed network services.
Kentucky, Pennsylvania and West Virginia, three states in which we operate, self-regulate IO pole attachments, but do so using essentially the same rate formula and other pole attachment rules as the FCC. The FCC pole attachment rules also do not govern government or cooperatively owned utilities. States, however, are free to regulate such utilities and some do.
Delaware, Kentucky, Ohio, Pennsylvania and West Virginia, five states in which we operate, self-regulate IO pole attachments, but do so using essentially the same rate formula and other pole attachment rules as the FCC. The FCC pole attachment rules also do not govern government or cooperatively owned utilities.
For example, the FCC has largely deregulated DSL and other broadband services offered by RLECs. Such changes benefit our RLEC, but could make it more difficult for us (or for NECA) to tariff and pool DSL costs.
The FCC and other authorities continue to consider policies to encourage nationwide advanced broadband infrastructure development. For example, the FCC has largely deregulated DSL and other broadband services offered by RLECs. Such changes benefit our RLEC, but could make it more difficult for us (or for NECA) to tariff and pool DSL costs.
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.
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.
We also provide eligible employees the ability to participate in a 401(k) Plan which has competitive Company contributions, as well as generous health and welfare benefits, paid time off, employee assistance programs, and educational assistance, among many others. Diversity and Inclusion We believe that a diverse workforce is critical to our success.
We also provide eligible employees the ability to participate in a 401(k) Plan which has competitive Company contributions, as well as generous health and welfare benefits, paid time off, employee assistance programs, and educational assistance, among many others.
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.
Cheng Senior Vice President and Chief Information Officer 51 March 2019 Heather K. Tormey Vice President and Chief Human Resources Officer 51 July 2019 Richard W. Mason Jr. Senior Vice President Engineering and Operations 51 July 2021 Derek C.
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.
Shentel’s operations continue to be in compliance with the law as of December 31, 2024. We expect federal and state efforts to regulate online privacy, data security and cybersecurity to continue in 2025. We cannot predict whether any of these efforts will be successful, or how new legislation and regulations, if any, would affect our business.
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.
Tormey 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. Prior to American Woodmark, Ms.
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.
Rieger General Counsel, Vice President Legal and Corporate Secretary 44 February 2022 Dara Leslie Senior Vice President Sales & Marketing 57 June 2022 Glenn Lytle Senior Vice President Commercial Sales 49 April 2024 Mr. French is President and Chief Executive Officer for Shentel. He is responsible for the overall leadership and strategic direction of the Company.
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.
Shentel also leases dark fiber and provides Ethernet and 4 Table of Conten t s wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area under the brand name of Glo Fiber Business.
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.
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.
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.
In March 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 $122.2 million in grants to serve approximately 27,200 unserved homes in the states of Virginia, Maryland, West Virginia and Ohio. The grants will be paid to the Company as certain milestones are completed.
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.
Employee Engagement Our annual employee satisfaction survey captures critical indicators of employee engagement and provides an overall understanding of employee favorability. During 2024, 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.
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.
Several states have proposed or 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.
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.
The Company owns an extensive regional network with approximately 16,800 route miles of fiber. For more information, please visit www.shentel.com.
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.
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.
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.
The Net Neutrality rules also imposed a transparency requirement, i.e., an obligation to disclose all material terms and conditions of our service to consumers. The Net Neutrality rules have been a matter of debate and have been revoked and reinstated throughout the years since their inception.
The Company began fulfilling its obligation in during 2023 and expects to complete that process by the end of 2026.
The Company began fulfilling its obligation in 2023 and expects to complete the majority of its obligations under these programs by the end of 2026.
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.
Shentel’s Broadband business also provides voice and DSL telephone services as a Rural Local Exchange Carrier (“RLEC”) to customers in Shenandoah County and portions of adjacent counties in Virginia, and in Ross County and portions of adjacent counties in Ohio. These integrated networks are connected by approximately 16,800 route miles of fiber.
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.
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.
Exceeding the Occupational Safety and Health Administration (“OSHA”) Regulations is the expectation for Shentel. We have achieved this level of success through our deliberate creation and management of both regional and corporate safety committees.
Exceeding the Occupational Safety and Health Administration (“OSHA”) Regulations is the expectation for Shentel. We have achieved this level of success through our deliberate creation and management of both regional and corporate safety committees. 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.
Approximately 17% of our incumbent cable passings compete with a wireline broadband competitor. In addition, we compete with fixed wireless broadband services and indirectly with wireless substitution as the bandwidth speeds from wireless providers have increased with network upgrades to 5 th generation technology.
In addition, we compete with fixed wireless broadband services and indirectly with wireless substitution as the bandwidth speeds from wireless providers have increased with 5th generation network technology upgrades.
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.
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.
We leverage our training and talent management efforts to ensure we have ready-now successors identified as the Company continues to grow and evolve. Employee Engagement Our annual employee satisfaction survey captures critical indicators of employee engagement and provides an overall understanding of employee favorability.
We leverage our training and talent management efforts to ensure we have ready-now successors identified as the Company continues to grow and evolve.
Many states and local authorities have considered legislative or other actions that would impose additional restrictions on our ability to collect, use and disclose certain information.
Many states and local authorities have considered legislative or other actions that would impose additional restrictions on our ability to collect, use and disclose certain information. In 2020, Virginia enacted a new consumer privacy law. Companies were required to come into compliance by January 2023.
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.
We cannot predict whether the FCC will impose additional obligations on our VoIP services in the future. 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.
If for some reason a licensee cannot meet these safe harbor requirements, it can file a detailed renewal showing based on the actual service provided by the station. Construction and Operation of Tower Facilities.
If for some reason a licensee cannot meet these safe harbor requirements, it can file a detailed renewal showing based on the actual service provided by the station. Human Capital Management As of December 31, 2024, the Company employed 1,089 people, geographically located predominately in and around the Mid-Atlantic region of the United States.
The VSCC also regulates rates, service areas, service standards, accounting methods, affiliated transactions and certain other financial transactions.
The VSCC also oversees implementation of certain provisions of the federal and state telecommunications laws, including interconnection requirements, promotion of competition, and consumer protection standards. The VSCC also regulates certain rates, service areas, service standards, accounting methods, affiliated transactions and certain other financial transactions.
As a result of our Company providing Lifeline-supported services, we are subject to increased reporting and recordkeeping requirements, and could be subject to increased regulatory oversight, investigations or audits. In May 2021, the FCC introduced the temporary Emergency Broadband Benefit (“EBB”) program to help qualifying disadvantaged households pay for Internet service.
In 2017, the FCC released a Lifeline order that clarifies these regulations and proposed reforms aimed at improving program integrity. As a result of our Company providing Lifeline-supported services, we are subject to increased reporting and recordkeeping requirements, and could be subject to increased regulatory oversight, investigations or audits.
In October 2023, the FCC adopted a Notice of Proposed Rulemaking that proposes to reclassify broadband internet service as a telecommunications service and reinstate Net Neutrality rules. As the Internet has matured, it has become the subject of increasing regulatory interest. Congress and Federal regulators have adopted a wide range of measures directly or potentially affecting Internet use.
As the Internet has matured, it has become the subject of increasing regulatory interest. Congress and Federal regulators have adopted a wide range of measures directly or potentially affecting Internet use. The adoption of new Internet regulations or policies could adversely affect our business.
Congress extended this benefit through the new Affordable Connectivity Program (“ACP”) that in 2022 replaced EBB with a $30 subsidy for service provided to most of the same consumers. ACP is expected to end in 2024 unless Congress passes legislation to increase the funding to support this program.
Congress extended this benefit through the new Affordable Connectivity Program (“ACP”) that in 2022 replaced EBB with a $30 subsidy for service provided to most of the same consumers. The ACP ended in 2024. As a result of the ACP’s cessation, the Company’s eligible subscribers may not be able to afford broadband service, which could reduce our revenues. Must-Carry/Retransmission Consent.
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.
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. Most recently, Horizon pursued a strategy of investing in fiber to the home (“FTTH”) in tier 3 & 4 markets in Ohio.
Our ability to compete effectively with our competitors in video will depend, in part, on price, content cost and variety, service quality and the convenience of our service offerings. A continuing trend toward consolidation, mergers, acquisitions and strategic alliances in the telecommunications industry could also increase the level of competition we face by further strengthening of our competitors.
Our ability to compete effectively with our competitors in video will depend, in part, on price, content cost and variety, service quality, access to content and the convenience of our service offerings. A recent trend towards convergence of wireless and fiber broadband service offerings has started consolidation in the FTTH segment.
Although similar to telephone service in some ways, our VoIP service arrangement utilizes different technology and is subject to many of the same rules and regulations applicable to traditional telephone service. The FCC order adopted on October 27, 2011 established rules governing intercarrier compensation payments for the origination and termination of telephone traffic between carriers and VoIP providers.
Although similar to telephone service in some ways, our VoIP service arrangement utilizes different technology and is subject to many of the same rules and regulations applicable to traditional telephone service. Regulatory changes are being considered that could impact our VoIP service.
Additionally, Mrs. Cheng is a founding board member of Charlottesville Women in Tech, a non-profit organization which encourages women to join and thrive in technology careers. Ms. Tormey is Vice President and Chief Human Resources Officer at Shentel. She joined the Company in July 2019. Ms.
She received her Bachelor of Arts degree from Vassar College and her Masters of Business 13 Table of Conten t s Administration from the University of Rochester. Additionally, Mrs. Cheng is a founding board member of Charlottesville Women in Tech, a non-profit organization which encourages women to join and thrive in technology careers. Ms.
Most recently, Horizon has pursued a strategy of investing in FTTH in tier 3 & 4 markets in Ohio. The description of the Company’s business set forth below reflects the operations of the Company prior to the completion of the Horizon Transaction.
The description of the Company’s business set forth below reflects the operations of the Company after the completion of the Horizon Transaction.
Our Chief Human Resources Officer (“CHRO”) is responsible for developing and executing the Company’s human capital management strategy in alignment with the business. This includes the attraction, acquisition, development, retention and engagement of talent to deliver on the Company’s strategy, the design of employee compensation and benefits programs and oversight of our diversity and inclusion efforts.
Approximately 28% of our employees were female and approximately 24% of employees in management positions were female. Our Chief Human Resources Officer (“CHRO”) is responsible for developing and executing the Company’s human capital management strategy in alignment with the business.
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.
Mason is Senior Vice President Engineering and Operations at Shentel and is responsible for leading our network strategy, engineering, construction and operations functions. Mr. Mason has served in his current role since July 2021.
Shenandoah Telephone is subject to requirements relating to CPNI, CALEA implementation, interconnection, access to rights of way, number portability, number pooling, accessibility of telecommunications for those with disabilities, robocalls mitigation and protection for consumer privacy. The FCC and other authorities continue to consider policies to encourage nationwide advanced broadband infrastructure development.
Shenandoah Telephone and Chillicothe Telephone are subject to requirements relating to the use and safeguard of customer proprietary network information, law enforcement access, interconnection, access to rights of way, number portability, number pooling, accessibility of telecommunications for those with disabilities, payment of various regulatory fees, robocall mitigation and protection of national security.
We cannot predict whether or when any such new marketing restrictions may be imposed on us or what effect they would have on our ability to provide cable service. Must-Carry/Retransmission Consent. Local broadcast television stations can require a cable operator to carry their signals pursuant to federal “must-carry” requirements.
We cannot predict 6 Table of Conten t s whether or when any such new marketing restrictions may be imposed on us or what effect they would have on our ability to provide cable service. In May 2021, the FCC introduced the temporary Emergency Broadband Benefit (“EBB”) program to help qualifying disadvantaged households pay for Internet service.
Shenandoah Telephone’s rates for local exchange service, intrastate toll service and intrastate access charges are subject to the approval of the VSCC. The VSCC also establishes and oversees implementation of certain provisions of the federal and state telecommunications laws, including interconnection requirements, promotion of competition, and consumer protection standards.
The Chillicothe Telephone Company (“Chillicothe Telephone”) is a RLEC serving Ross County, Ohio. Shenandoah Telephone’s rates for local exchange service, intrastate toll service and intrastate access charges are subject to the review and approval of the VSCC.
In 2016, the FCC released a second substantial Lifeline order that amended the program to provide support for broadband services and phase out support for voice services. Included among the new rules was a requirement that any eligible telecommunications carrier (“ETC”) which offered broadband service, on its own or through an affiliate, must also offer Lifeline-supported broadband service.
Under current FCC regulations, any eligible telecommunications carrier (“ETC”) which offers broadband service, on its own or through an affiliate, must also offer Lifeline-supported broadband service. Due to this requirement, our Company began offering Lifeline-supported broadband in areas where it operates as an ETC.
Ms. Leslie has a master’s degree from Old Dominion University and a bachelor’s degree from the University of North Carolina at Greensboro. Websites and Additional Information The Company maintains a corporate website at www.shentel.com.
Prior to Horizon, Mr. Lytle served as Vice President of Sales at Segra, where he was responsible for developing and growing the enterprise business, and he has also held a senior leadership role at Comcast. Mr. Lytle earned a bachelor’s degree from Baldwin Wallace University. Websites and Additional Information The Company maintains a corporate website at www.shentel.com.
Removed
Pending Acquisition of Horizon Acquisition Parent LLC On October 24, 2023, Shentel entered into a definitive agreement to acquire 100% of the equity interests in Horizon Acquisition Parent LLC (“Horizon”) for $385 million (the “Horizon Transaction”). Consideration will consist of $305 million in cash and $80 million of Shentel common stock.
Added
Acquisition of Horizon Acquisition Parent LLC On April 1, 2024 (the “Closing Date”), Shentel completed its previously announced acquisition of Horizon Acquisition Parent LLC, a Delaware limited liability company (“Horizon”), pursuant to the terms of an Agreement and Plan of Merger, dated October 24, 2023, by and among Shentel, Horizon, and the sellers set forth on the signature pages thereto (each, a “Seller” and collectively, the “Sellers”) and the other parties thereto (as amended by the First Amendment to Agreement and Plan of Merger, dated April 1, 2024, the “Merger Agreement”).
Removed
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.
Added
Subject to the terms and conditions of the Merger Agreement, on the Closing Date, Shentel acquired 100% of the outstanding equity interests of Horizon in exchange for (i) issuing 4,100,375 shares of Shentel’s common stock, no par value (“Common Stock”), to an investment fund managed by affiliates of GCM Grosvenor, which is one of the Sellers (the “Selling Shareholder”); and (ii) paying $347 million which consisted of cash consideration to the other Sellers and certain third parties, including Horizon’s existing lenders to discharge debt, and payments for working capital adjustments and reimbursement of capital expenditures incurred by the Sellers, subject to post-closing adjustments.
Removed
Substantially all of our owned towers are built on ground that we lease from the respective landlords.
Added
The Selling Shareholder agreed to an investor rights agreement with the Company, pursuant to which, as long as the Selling Shareholder beneficially owns at least 5.0% of Shentel’s outstanding Common Stock, the Selling Shareholder has the right to nominate a director to Shentel’s Board and is subject to certain standstill provisions and voting covenants.
Removed
Tower competition We compete with other public tower companies, such as American Tower Co., Crown Castle International Corp., SBA Communications Corp., and private tower companies, private equity sponsored firms, carrier-affiliated tower companies, and owners of other alternative structures.

… 75 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

54 edited+17 added−35 removed82 unchanged
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.
Biggest changeAs of December 31, 2024, we had borrowed $418.0 million in term loans under our Credit Agreement, dated as of July 1, 2021 (as amended by (i) Amendment No. 1 to Credit Agreement, dated as of May 17, 2023, (ii) Consent and Amendment No. 2 to Credit Agreement, dated as of October 24, 2023, and (iii) Amendment No. 3, dated as of April 1, 2024, the “Credit Agreement”), with various financial institutions party thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders, which contains (i) a $150 million available revolving credit facility due June 2026 (the “Revolver”), (ii) a $150 million delayed draw amortizing term loan due July 1, 2026 (“Term Loan A-1”), (iii) a $150 million delayed draw amortizing term loan due July 1, 2028 (“Term Loan A-2”), and (iv) a $225 million delayed draw amortizing term loan due July 2028 (“Term Loan A-3” and collectively with Term Loan A-1 and Term Loan A-2, the “Term Loans”).
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.
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; • 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 market for talent for key roles in our industry, including executive officers and key personnel to support our engineering, sales, service delivery, information technology, finance and accounting functions, is highly competitive and could adversely impact our ability to retain and hire new key employees and contractors.
Specifically, the market for talent for key roles in our industry, including executive officers and key personnel to support our engineering, sales, service delivery, information technology, finance and accounting functions, is highly competitive and could adversely impact our ability to retain and hire new key employees and contractors.
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.
Significant disruptions to the supply chain could adversely impact our growth, operations and revenue projections. The supply of critical supplies, such as modems, consumer Wi-Fi equipment, energy, 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.
This strategy requires considerable management resources and capital investment and it is uncertain whether and when it will contribute to positive free cash flow and the degree to which we will otherwise achieve our strategic objectives, on a timely basis or at all.
The expansion strategy requires considerable management resources and capital investment and it is uncertain whether and when it will contribute to positive free cash flow and the degree to which we will otherwise achieve our strategic objectives, on a timely basis or at all.
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.
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 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.
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.
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.
Additionally, the lack of certain equipment could limit our ability to service existing customers. 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, the lack of certain equipment and/or supplies could limit our ability to service existing customers. Significant impact to supply chains could materially and adversely affect our business, including reduced revenues, loss of customers and limitations on future growth.
Some of our competitors possess greater resources, have greater brand recognition, have more extensive coverage areas, have access to spectrum or 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.
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.
In the event the Company does not fulfill its commitment to extend its existing broadband network within the time frame allotted, the performance of the broadband network is inadequate, the Company is considered insolvent or the Company fails to meets its funding requirements of the grant projects, the Company may be declared in default of the grant contract.
In the event the Company does not fulfill its commitment to extend its existing broadband network within the time frame allotted, the performance of the broadband network is inadequate, the Company is considered insolvent or the Company fails to meets its funding requirements of the grant projects, the Company may be declared in default of the grant 21 Table of Conten t s contract.
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 not be able to generate sufficient cash flows 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. 22 Table of Conten t s Our level of indebtedness could adversely affect our financial health and ability to compete.
The loss of the services of key members of executive management or other employees or contractors in critical roles, and the inability or delay in hiring new key employees and contractors could materially and adversely affect our ability to manage and expand our business and our future operational and financial results.
The loss of the 18 Table of Conten t s services of key members of executive management or other employees or contractors in critical roles, and the inability or delay in hiring new key employees and contractors could materially and adversely affect our ability to manage and expand our business and our future operational and financial results.
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.
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.
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.
As of December 31, 2024, the Company has been awarded grants totaling approximately $149.8 million. Most of the grants awarded under the above programs are funded through the American Rescue Plan Act.
In the event that we have incorrectly calculated, assessed or remitted amounts that were due to governmental authorities, we could be subject to additional taxes, fines, penalties or other adverse actions, which could materially impact our business, financial condition and operating results.
In the event that we have incorrectly calculated, assessed or remitted amounts that were due to governmental authorities, we could be subject to additional taxes, fines, penalties or other adverse actions, which could materially impact our business, 23 Table of Conten t s financial condition and operating results.
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.
As a result, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2026. 15 Table of Conten t s Additionally, we must obtain pole attachment agreements, franchise agreements, construction permits and other regulatory approvals to commence operations in these communities.
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.
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.
This brand is relatively new in the marketplace and the success of our strategy will depend on the degree to which we are able to successfully establish and continue to enhance this brand, which is not assured.
The Glo Fiber brand, which is also used in our Commercial Fiber business, is relatively new in the marketplace and the success of our strategy will depend on the degree to which we are able to successfully establish and continue to enhance this brand, which is not assured.
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 or an altogether lack of government grant payments may adversely affect our liquidity and ability to complete our performance obligations.
Some of those potential competitors may receive support under the Connect America Fund, Rural Development Opportunity Fund, American Rescue Plant Act or Infrastructure Investment and Jobs Act to build broadband facilities to unserved homes that do not meet the minimum broadband speeds in some areas already served by our DSL networks and adjacent to our cable and FTTH footprint.
Further, competitors in our RLEC markets may receive support under the Connect America Fund, Rural Development Opportunity Fund, American Rescue Plant Act or Infrastructure Investment and Jobs Act to build broadband facilities to unserved homes that do not meet the minimum broadband speeds in some areas already served by our DSL networks.
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.
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.
Our future growth is primarily dependent upon our expansion strategy, which may or may not be successful. We are strategically focused on driving growth by expanding our broadband network in order to provide service in communities that are near or adjacent to our network. This expansion strategy includes our FTTH broadband service, which we offer under the Glo Fiber brand.
We are strategically focused on driving growth by expanding our broadband network in order to provide service in communities that are near or adjacent to our network. This expansion strategy includes our FTTH broadband service, which we offer under the Glo Fiber brand.
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.
As the recipient of these grants, the Company has committed to expand its broadband network and improve broadband services to approximately 27,200 unserved homes in the states of Virginia, Maryland, West Virginia and Ohio and upgrade our middle mile network in Ohio within a specified period, as agreed to by the Company and each municipality.
If we are not able to integrate the business and assets of Horizon in an efficient and effective manner, the anticipated benefits and cost savings may not be realized fully, or at all, or may take longer to realize than expected, and the financial results of our operations may be affected materially and adversely.
If we are not able to finalize integration of Horizon’s business and assets in an efficient and effective manner, the anticipated benefits and cost savings may not be realized fully or may take longer to realize than expected, and the financial results of our operations and the value of our common stock may be adversely affected.
Failure to comply with financial and operating covenants or make scheduled payments under our Credit Agreement may restrict our ability to borrow and could accelerate repayment of outstanding debt.
Failure to comply with financial and operating covenants or make scheduled payments under our Credit Agreement may restrict our ability to borrow and could accelerate repayment of outstanding debt. Under the Credit Agreement, we are required to comply with specified financial and operating covenants in addition to making scheduled payments.
As of December 31, 2023, we had $300 million of total indebtedness. Our level of indebtedness could have important adverse consequences.
As of December 31, 2024, we had $418.0 million of total indebtedness. Our level of indebtedness could have important adverse consequences.
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.
Our industry is subject to 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.
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict how further outbreaks of COVID-19 or other future pandemics will impact the Company, and there is no guarantee that efforts by Shentel, designed to address adverse impacts of COVID-19 or other pandemics, will be effective.
Given the ongoing 17 Table of Conten t s and dynamic nature of the circumstances, it is difficult to predict how future pandemics will impact the Company, and there is no guarantee that efforts by Shentel, designed to address adverse impacts of future pandemics, will be effective.
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.
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. 20 Table of Conten t s Changes to key regulatory requirements can affect our ability to compete.
If our costs to expand our networks are greater than we anticipate, we may not have sufficient capital nor be able to secure additional capital on terms acceptable to us and may have to curtail our expansion plans.
If we are unable to refinance our June 2026 maturities on terms acceptable to us, secure additional capital on terms acceptable to us or our costs to expand our networks are greater than we anticipate, we may not have sufficient capital to complete our expansion plans and may have to curtail our expansion plans.
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.
It is predicted that warming global temperatures will increase the frequency and severity of such weather-related events. 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.
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.
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.
Congress and Federal regulators have adopted a wide range of measures directly or potentially affecting Internet use. The adoption of new Internet regulations or policies could adversely affect our business.
Congress and Federal regulators have adopted a wide range of measures directly or potentially affecting Internet use. The adoption of new Internet regulations or policies could adversely affect our business. The Net Neutrality rules have been a matter of debate and have been revoked and reinstated throughout the years since their inception.
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.
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. Risks Relating to the Horizon Transaction The Horizon Transaction may not achieve the intended benefits or may disrupt our current plans and operations.
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 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 sales, general and administrative (“SG&A”) costs, including corporate overhead, are a higher percentage of revenue than larger broadband companies due to a lack of relative scale.
Our sales, general and administrative (“SG&A”) costs, including corporate overhead, are a higher percentage of revenue than larger broadband companies due to a lack of relative scale. We anticipate it will take multiple years of growth to reduce our SG&A as a percentage of revenue to be comparable to our broadband peers.
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.
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.
If we are unable to raise our customers’ rates, these increased programming costs could have an adverse impact on our results of operations.
While we pass programming rate increases on to our video customers, we may experience higher churn and lower revenues. If we are unable to raise our customers’ rates, these increased programming costs could have an adverse impact on our results of operations.
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.
These upgrades will require significant capital investment and management oversight over the next five years. If we are unable to complete these upgrades, we may lose customers to our competitors and our Incumbent Broadband revenues could be adversely affected 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 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.
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.
The Company may fail to complete its performance obligations in regard to government grant awards and incur liquidated damages and/or create an event of default that could allow the municipality to cancel the grant.
The Company may fail to complete its performance obligations in regard to government grant awards and incur liquidated damages and/or create an event of default that could allow the municipality to cancel the grant. In partnership with counties in the respective states, Shentel has been awarded grants through various broadband infrastructure grant programs in Virginia, Maryland, West Virginia and Ohio.
Our distribution networks may be subject to weather-related events that could damage our networks and impact service delivery, such as downed transmission lines, flooded facilities, power outages, fuel shortages, network congestion, delay or failure, damaged or destroyed property and equipment, and work interruptions. It is predicted that warming global temperatures will increase the frequency and severity of such weather-related events.
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. 19 Table of Conten t s Our distribution networks may be subject to weather-related events that could damage our networks and impact service delivery, such as downed transmission lines, flooded facilities, power outages, fuel shortages, network congestion, delay or failure, damaged or destroyed property and equipment, and work interruptions.
The integration of the business and assets of Horizon will require significant time and focus from our management following the completion of the Horizon Transaction, and may divert attention from our day-to-day operations and our other businesses. Additionally, consummation of the Horizon Transaction could disrupt current plans and operations, which could delay the achievement of our strategic objectives.
The integration of the business and assets of Horizon has required and will continue to require significant time and focus from our management, and may divert attention from our day-to-day operations and our other businesses.
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.
The Company operates data services and cable television systems in largely rural areas of Virginia, West Virginia, Maryland, Pennsylvania, Kentucky, Delaware, Ohio and Indiana 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.
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.
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.
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.
In some areas, wireless providers have partnered with broadband providers to offer a converged bundle of broadband and wireless. 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.
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.
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.
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.
As a result, our financial performance may be negatively impacted. 16 Table of Conten t s 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.
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.
Further, if new competitors offer lower prices, we may need to offer more value to retain our customers driving lower revenue per subscriber. 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.
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.
In some instances, we compete against companies that have greater financial and personnel resources, greater brand name recognition, more extensive coverage areas, access to spectrum or technologies not available to us and long-established relationships with regulatory authorities and customers.
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.
We may also encounter difficulties in implementing new technologies, products and services and may encounter disruptions in service as a result. Additionally, as adoption of Artificial Intelligence (AI) technologies becomes a critical component of business, our pace of adoption for AI could impact our cost structure relative to peers.
Changes in governmental regulations or changes in these relationships could have a material adverse effect on our business and our results of operations. We may incur more churn than estimated from our largest customer. We lease space on our towers and provide backhaul and transport services to T-Mobile to support their wireless network in our markets.
Changes in governmental regulations or changes in these relationships could have a material adverse effect on our business and our results of operations. Some of our competitors are larger than we are and possess greater resources than we do.
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.
Approximately 28% of the passings in our incumbent broadband business currently have a FTTH or cable competitor, including 23% of our incumbent cable passings and 100% of our FTTH passings in our Ohio incumbent telephone market. Wireless and satellite providers are also entering the market for broadband.
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.
We have experienced reductions in the number of access lines and DSL subscriptions in our RLEC markets and we anticipate that the long-term trend may continue.
Removed
If significant numbers of our subscribers elect to move to competing providers, or if market saturation limits the rate of new subscriber additions, we may not be able to continue to grow our revenue. Prospective competitors of our Broadband segment may receive grants from federal or state universal service funds or other subsidies.
Added
Additionally, a recent trend towards convergence of wireless and fiber broadband service offerings has started consolidation in the FTTH segment. If this trend continues, mergers, acquisitions and strategic alliances with large wireless carriers could also increase the level of competition we face.
Removed
As a result, new competitors may invest in cable and FTTH markets, increasing the number of competitors we face in our network area and in the areas we hope to expand our broadband network in the future.
Added
As a result, new competitors may overbuild these markets and our RLEC revenue decline may accelerate. The Company’s commercial fiber business faces intense competition from several local and national providers.
Removed
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.
Added
If a significant number of our customers elect to move to competing providers, our Commercial Fiber revenues could be adversely affected. Our future growth is primarily dependent upon our expansion strategy, which may or may not be successful.
Removed
If a significant numbers of our customers elect to move to competing providers, our Commercial Fiber revenues could be adversely affected. Nationwide, incumbent local exchange carriers have experienced a decrease in access lines and DSL subscribers due to the effect of broadband and wireless competition.
Added
Incumbent telephone competitors may choose to overbuild their copper networks with fiber after we invest.
Removed
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.
Added
These additional resources may allow these competitors to offer bundled service offerings that we are not able to duplicate and offer more services than we do. 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.
Removed
Further, we may not be able to replace the churn with new revenue from other carriers where our towers and fiber are located in a timely basis or at all leading to lower revenue and earnings. Some of our competitors are larger than we are and possess greater resources than we do.
Added
Should we be slow or unsuccessful in leveraging AI appropriately, our margin position may be lower relative to peers.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
Although our SG&A as a percentage of revenues has declined since the sale of our wireless segment partially enabled by certain of our information technology initiatives, we anticipate it will take multiple years of organic growth, merger and acquisitions to reduce our SG&A as a percentage of revenue to be comparable to our broadband peers.
Added
For example, we may experience unforeseen operating difficulties that require significant financial and managerial resources that would otherwise be available for the ongoing development of our existing operations, attrition of key personnel from Horizon, and other unexpected costs or charges.
Removed
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.
Added
Service Level Agreements (“SLAs”) with Horizon’s largest customers may cause material fluctuations in the combined companies’ financial results. 32% of Horizon’s revenues are with the national wireless service providers who have carrier grade SLAs for network reliability and mean time to restore outages.
Removed
Our ability to complete the Horizon Transaction is subject to risks and uncertainties, including, but not limited to, the risks that we may be unable to obtain the governmental and regulatory approvals required to consummate the Horizon Transaction, or required governmental and regulatory approvals may delay the Horizon Transaction or result in the imposition of conditions that are not favorable to us or that could cause the parties to abandon the Horizon Transaction.
Added
If Horizon, and their network vendors providing off-network backhaul circuits to certain cellular towers, do not meet the SLAs, contractual monetary penalties may be incurred which would have an adverse effect on revenues and profitability. Network investments may be required to remediate the issues.
Removed
Furthermore, we have incurred approximately $3 million in transaction costs and will continue to incur transaction costs relating to the Horizon Transaction, including legal, accounting, financial advisory, regulatory and other expenses. In general, these expenses are payable regardless of whether the Horizon Transaction is completed successfully.
Added
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.
Removed
In addition, we could face litigation in the event the Horizon Transaction is not consummated, which could subject us to significant liability for damages and result in the incurrence of substantial additional legal fees.
Added
Additionally, recent uncertainty related to future U.S. government budget, operations and spending decisions could result in disruptions of governmental operations and payments from federal agencies. Such disruptions could also impact municipalities’ ability to fund grant payments.

… 26 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed19 unchanged
Biggest changeThe Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”) will ultimately decide if an incident is material. Considerations of materiality will include a variety of factors, including, for example, the extent of expected financial cost, customers impacted, operational impacts, and/or data exposed or lost as a result of the incident.
Biggest changeConsiderations of materiality will include a variety of factors, including, for 24 Table of Conten t s example, the extent of expected financial cost, customers impacted, operational impacts, and/or data exposed or lost as a result of the incident.
In the case of an information security incident or breach, the Director of Information Security and CIO will follow the Company’s Incident Response Plan and follow communication protocols within the plan, which, depending on the severity of the incident, include escalation timelines and responsibilities that involve updating the Audit Committee and the Board of Directors, as applicable. 30 Table of Contents
In the case of an information security incident or breach, the Director of Information Security and CIO will follow the Company’s Incident Response Plan and follow communication protocols within the plan, which, depending on the severity of the incident, include escalation timelines and responsibilities that involve updating the Audit Committee and the Board of Directors, as applicable. 25 Table of Conten t s
The Director of Information Security has over 18 years of experience in the information technology and information security fields and the CIO has over 28 years of experience in the information technology and information security fields.
The Director of Information Security has over 19 years of experience in the information technology and information security fields and the CIO has over 29 years of experience in the information technology and information security fields.
Should a security breach or incident occur, the Chief Information Officer (the “CIO”) in collaboration with the Company’s General Counsel, Chief Accounting Officer (the “CAO”) and Chief Operating Officer (the “COO”) will 29 Table of Contents evaluate the materiality of any specific incident.
Should a security breach or incident occur, the Chief Information Officer (the “CIO”) in collaboration with the Company’s General Counsel, Chief Accounting Officer (the “CAO”) and Chief Operating Officer (the “COO”) will evaluate the materiality of any specific incident. The Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”) will ultimately decide if an incident is material.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeITEM 2. PROPERTIES The Company owns or leases switching and data centers, office and retail space, and warehouses that support its operations located across a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, and Kentucky.
Biggest changeITEM 2. PROPERTIES The Company owns or leases switching and data centers, office and retail space, warehouses, fiber optic hubs and points of presence that support its operations located across a multi-state area covering Virginia, Pennsylvania, West Virginia, Maryland, Kentucky, Delaware, Ohio and Indiana.
The 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.
The Company considers the properties owned or leased generally to be in good operating condition and suitable for its business operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeRegardless of final outcomes, however, any such proceedings, claims, and investigations may nonetheless impose a significant burden on management and employees and be costly to defend, with unfavorable preliminary or interim rulings. 31 Table of Contents PART II
Biggest changeRegardless of final outcomes, however, any such proceedings, claims, and investigations may nonetheless impose a significant burden on management and employees and be costly to defend, with unfavorable preliminary or interim rulings. 26 Table of Conten t s PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed3 unchanged
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.
Biggest changeThe graph tracks the performance of a $100 investment, with the reinvestment of all dividends, from December 31, 2019 to December 31, 2024. 27 Table of Conten t s 2019 2020 2021 2022 2023 2024 Shenandoah Telecommunications Company $ 100 $ 105 $ 101 $ 63 $ 86 $ 51 NDAQ US $ 100 $ 121 $ 153 $ 123 $ 155 $ 193 NDAQ Telecom Stocks $ 100 $ 110 $ 116 $ 90 $ 101 $ 123 Holders As of February 13, 2025, there were 3,902 holders of record of the Company’s common stock.
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.
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, 2020 2021 2022 2023 2024 Cash Dividend $ 0.34 $ 18.82 $ 0.08 $ 0.09 $ 0.10 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.
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
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. 28 Table of Conten t s
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.
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: 2024 High Low Fourth Quarter $ 16.28 $ 12.01 Third Quarter 21.89 13.51 Second Quarter 19.32 11.87 First Quarter 22.27 16.95 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 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, 2019 and December 31, 2024.

Item 7. Management's Discussion & Analysis

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

37 edited+69 added−56 removed5 unchanged
Biggest changeFor 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.
Biggest changeShentel also updated the description for revenues previously reported as “Residential & SMB - Cable Markets” to “Residential & SMB - Incumbent Broadband Markets” and updated the description for revenues previously reported as “Residential & SMB - Glo Fiber Markets” to “Residential & SMB - Glo Fiber Expansion Markets.” The Company’s consolidated results from operations are summarized as follows: Year Ended December 31, Change ($ in thousands) 2023 % of Revenue 2022 % of Revenue $ % External revenue Residential & SMB - Incumbent Broadband Markets $ 176,879 65.7 % $ 175,681 70.6 % 1,198 0.7 % Residential & SMB - Glo Fiber Expansion Markets 35,103 13.0 % 18,293 7.3 % 16,810 91.9 % Commercial Fiber 42,132 15.7 % 38,821 15.6 % 3,311 8.5 % RLEC & Other 15,017 5.6 % 16,116 6.5 % (1,099) (6.8) % Total revenue 269,131 100.0 % 248,911 100.0 % 20,220 8.1 % Operating expenses Cost of services, exclusive of depreciation and amortization 100,850 37.5 % 102,279 41.1 % (1,429) (1.4) % Selling, general and administrative 99,304 36.9 % 91,113 36.6 % 8,191 9.0 % Restructuring, integration and acquisition 2,915 1.1 % 1,251 0.5 % 1,664 133.0 % Impairment expense 2,552 0.9 % 5,241 2.1 % (2,689) (51.3) % Depreciation and amortization 63,368 23.5 % 66,483 26.7 % (3,115) (4.7) % Total operating expenses 268,989 99.9 % 266,367 107.0 % 2,622 1.0 % Operating income (loss) 142 0.1 % (17,456) (7.0) % 17,598 NMF Other income (expense): Interest expense (4,212) (1.6) % (1,577) (0.6) % (2,635) NMF Other income, net 5,587 2.1 % 215 0.1 % 5,372 NMF Income (loss) from continuing operations before income taxes 1,517 0.6 % (18,818) (7.6) % 20,335 NMF Income tax expense (benefit) 501 0.2 % (3,400) (1.4) % 3,901 NMF Income (loss) from continuing operations 1,016 0.4 % (15,418) (6.2) % 16,434 NMF Income from discontinued operations, net of tax 7,022 2.6 % 7,039 2.8 % (17) (0.2) % Net income (loss) $ 8,038 3.0 % $ (8,379) (3.4) % 16,417 NMF Residential & SMB - Incumbent Broadband Markets revenue Residential & SMB - Cable Markets revenue increased approximately $1.2 million, or 0.7%, in the year ended December 31, 2023 compared with the year ended December 31, 2022 primarily due to 1.8% year-over-year growth in data ARPU.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss further below.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting estimates, which we discuss further below.
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.
Critical Accounting Estimates 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.
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.
As of December 31, 2024, the Company was in compliance with the financial covenants in our Credit Agreement. 39 Table of Conten t s 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.
Impairment charges in 2023 were primarily a result of colocation lease right-of-use and remaining Beam 39 Table of Contents fixed wireless assets that are no longer expected to be used and have no alternative use, while impairment charges in 2022 were primarily a result of the Company’s decommissioning of certain Beam fixed wireless sites.
Impairment charges in 2023 were primarily a result of colocation lease right-of-use assets and remaining Beam fixed wireless assets that were no longer expected to be used and had no alternative use, while impairment charges in 2022 were primarily a result of the Company’s decommissioning of certain Beam fixed wireless sites.
This evaluation is either performed on a quantitative or qualitative basis. When performing a quantitative evaluation, we estimate the fair values of our cable franchise rights primarily based on an income approach that involves significant judgment, including the estimate of revenue growth, the amount and timing of capital expenditures, EBITDA margins and the discount rate utilized.
When performing a quantitative evaluation, we estimate the fair values of our cable franchise rights primarily based on an income approach that involves significant judgment, including the estimate of revenue growth, the amount and timing of capital expenditures, EBITDA margins, terminal growth rates and the discount rate utilized.
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
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 Conten t s
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.
During the year ended December 31, 2024, our capital expenditures of $319.1 million exceeded our net cash provided by operating activities from continuing operations by $249.7 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.
Cost of services Cost of services decreased approximately $1.4 million, or 1.4%, in 2023 compared with 2022, primarily driven by lower payroll costs due to higher capitalized labor, partially offset by higher line costs due to the expansion of the network into new markets.
Cost of services Cost of services decreased approximately $1.4 million, or 1.4%, in the year ended December 31, 2023 compared with the year ended December 31, 2022 primarily due to lower payroll costs due to higher volume of internal labor hours capitalized in support of network expansion, and partially offset by higher line costs due to network expansion into new markets.
Depreciation and amortization Depreciation and amortization decreased $1.3 million, or 2.0%, in 2023 compared with 2022, primarily driven by 2022 accelerated depreciation of Beam network assets associated with the Company’s decision to permanently cease Beam operations, for which no equivalent accelerated depreciation was present in 2023.
Depreciation and amortization Depreciation and amortization decreased $3.1 million, or 4.7%, in the year ended December 31, 2023 compared with the year ended December 31, 2022 primarily due to 2022 accelerated depreciation of Beam network assets associated with the Company’s decision to permanently cease Beam operations, for which no equivalent accelerated depreciation was present in 2023.
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.
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.
Selling, general and administrative Selling, general and administrative expense increased $6.1 million, or 10.7%, in 2023 compared with 2022, primarily driven by higher advertising costs associated with the Company’s expansion of Glo Fiber and a change in strategy to drive more gross subscriber additions to low cost sales channels and higher credit losses as uncollectible rates have returned to pre-Covid levels.
Selling, general and administrative Selling, general and administrative expense increased $8.2 million, or 9.0%, in the year ended December 31, 2023 compared with the year ended December 31, 2022 primarily due to higher advertising costs associated with the Company’s expansion of Glo Fiber and a change in strategy to drive more gross subscriber additions to low cost sales channels, and higher credit losses as uncollectible rates returned to pre-Covid levels.
Residential & SMB - Glo Fiber Markets revenue Residential & SMB - Glo Fiber Markets revenue increased approximately $16.8 million, or 91.9%, in 2023 compared with 2022, primarily driven by 71.7% year-over-year growth in data RGUs resulting from the Company’s expansion of Glo Fiber and 4.0% increase in data ARPU.
Residential & SMB - Glo Fiber Expansion Markets revenue Residential & SMB - Glo Fiber Markets revenue increased approximately $16.8 million, or 91.9%, in the year ended December 31, 2023 compared with the year ended December 31, 2022 primarily due to 71.7% year-over-year growth in data RGUs and a 4.0% increase in data ARPU.
Our ability to attract and maintain a sufficient customer base, particularly in our Broadband markets, is critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results. Critical Accounting Policies We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).
Our ability to attract and maintain a sufficient customer base, particularly in our Broadband markets, is critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results.
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.
Other income (expense), net Other income, net was $1.4 million for 2023 compared with other expense, net of $1.4 million for 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 and income related to sales taxes refunds received, partially offset by an increase in interest expense.
These 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.
The following table indicates selected operating statistics : December 31, 2024 December 31, 2023 December 31, 2022 Homes and businesses passed (1) Incumbent Broadband Markets (4) 239,041 215,763 212,050 Glo Fiber Expansion Markets (5) 346,299 233,872 147,479 Total homes and businesses passed 585,340 449,635 359,529 Residential & SMB Revenue Generating Units ("RGUs"): Incumbent Broadband Markets (4) 111,325 109,679 109,644 Glo Fiber Expansion Markets (5) 65,140 41,710 24,286 Broadband Data 176,465 151,389 133,930 Video 40,023 43,152 46,975 Voice 44,831 40,757 39,951 Total Residential & SMB RGUs (excludes RLEC) 261,319 235,298 220,856 Residential & SMB Penetration (2) Incumbent Broadband Markets (4) 46.6 % 50.8 % 51.7 % Glo Fiber Expansion Markets (5) 18.8 % 17.8 % 16.5 % Broadband Data 30.1 % 33.7 % 37.3 % Video 6.8 % 9.6 % 13.1 % Voice 8.0 % 9.5 % 11.7 % Residential & SMB Average Revenue per User ("ARPU") (6) Incumbent Broadband Markets (4) $ 84.81 $ 82.75 $ 81.31 Glo Fiber Expansion Markets (5) $ 81.30 $ 76.45 $ 73.48 Broadband Data $ 83.67 $ 81.27 $ 80.14 Video $ 116.55 $ 105.71 $ 102.80 Voice $ 24.51 $ 25.19 $ 26.23 Fiber route miles 16,830 9,875 8,346 Total fiber miles (3) 1,858,081 861,980 656,033 _______________________________________________________ (1) Homes and businesses are considered passed (“passings”) if we can connect them to our network without further extending the distribution system.
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.
Income tax expense (benefit) The Company recognized $0.5 million of income tax expense in 2023, compared with $3.4 million of income tax benefit in 2022.
When performing a qualitative assessment, we assess whether events and circumstances indicate that it is more likely than not (that is, a likelihood of more than 50%) that an impairment exists.
When performing this analysis, we also consider the reconciliation of the Company's market capitalization to the reporting unit value and consideration of an appropriate control premium. When performing a qualitative assessment, we assess whether events and circumstances indicate that it is more likely than not (that is, a likelihood of more than 50%) that an impairment exists.
The borrowed amounts bear interest at a variable rate determined by one-month term SOFR, plus a margin of 1.6%. This rate, including the margin, was 6.95% as of December 31, 2023. Shentel’s Term Loans require quarterly payments based on a percentage of the outstanding balance.
Indebtedness : As of December 31, 2024, the Company’s net indebtedness was $416.9 million, including $418.0 million in outstanding term loans, net of unamortized loan fees of $1.1 million. The borrowed amounts bear interest at a variable rate determined by one-month term SOFR, plus a margin based on net leverage.
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.
T-Mobile 36 Table of Conten t s disconnected 338 backhaul circuits during 2023 as part of their previously announced rationalization of the former Sprint network. RLEC & Other revenue RLEC & Other revenue decreased approximately $1.1 million, or 6.8%, in 2023 compared with 2022, primarily driven by a 26.6% decline in residential DSL RGUs.
Net cash provided by operating activities from continuing operations was approximately $113.8 million in 2023, representing an increase of $38.9 million compared with 2022, primarily driven by tax refunds of $25.6 million received during 2023 and changes in working capital, partially offset by settlement of Shentel’s pension plan.
Net cash provided by operating activities from continuing operations was approximately $69.4 million in 2024, representing a decrease of $35.0 million compared with 2023, primarily driven by $24.4 million lower current tax refunds received during 2024 and changes in working capital.
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.
We have been awarded approximately $149.8 million in grants to serve approximately 27,200 unserved homes in the states of Virginia, Maryland, West Virginia and Ohio and to upgrade the capacity of the Ohio middle mile network. The grants will be paid to the Company as certain milestones are completed.
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”).
Amendment No. 3 to Credit Agreement On April 1, 2024, Shentel entered into Amendment No. 3 to Credit Agreement, Incremental Term Loan Funding Agreement, Joinder and Assignment and Assumption (the “Third 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 (as previously amended by Amendment No. 1 to Credit Agreement, dated as of May 17, 2023, and Consent and Amendment No. 2 to Credit Agreement, dated October 24, 2023, the “Credit Agreement”).
Commercial Fiber revenue Commercial Fiber revenue increased approximately $3.3 million, or 8.5%, in 2023 compared with 2022, primarily driven by $3.0 million in T-Mobile non-recurring early termination fees and $0.3 million in recurring revenue driven by year-over-year growth in connections. T-Mobile disconnected 338 backhaul circuits during 2023 as part of their previously announced rationalization of the former Sprint network.
Commercial Fiber revenue Commercial Fiber revenue increased approximately $3.3 million, or 8.5%, in the year ended December 31, 2023 compared with the year ended December 31, 2022 primarily due to $3.0 million in T-Mobile non-recurring early termination fees.
Impairment The Company recorded impairment charges of $2.6 million in 2023, compared with $5.2 million of impairment charges recorded in 2022.
Expenses in 2022 were primarily related to restructuring costs associated with the shut-down of Shentel’s fixed wireless business, Beam. Impairment The Company recorded impairment charges of $2.6 million in 2023, compared with $5.2 million of impairment charges recorded in 2022.
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.
The $3.9 million increase in income tax expense was driven by higher pre-tax income in 2023. 37 Table of Conten t s Additional Information Shentel provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, Kentucky, Delaware, Ohio and Indiana, via fiber optic and hybrid fiber coaxial cable networks.
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.
Cable franchise rights have an indefinite life; therefore, no amortization is recorded for these assets.
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.
Net cash used in investing activities from continuing operations was approximately $645.2 million in 2024, representing an increase of $410.0 million compared with 2023, primarily driven by the payment of $347.4 million to acquire Horizon and to cover transaction costs related to the acquisition, a $64.0 million increase in capital expenditures driven by expansion of Glo Fiber and government-subsidized markets and a $16.0 million decrease in sales of assets, partially offset by $17.3 million increase in grants received related to government funded infrastructure expansion programs.
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”).
We also lease dark fiber and provide Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area.
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.
As of December 31, 2024, the Company had $110.6 million in grants available. The Company expects to fulfill the majority of its obligations under these programs by 2026.
Net cash provided by financing activities from continuing operations was approximately $218.1 million in 2023, representing an increase of $149.1 million compared with 2022, primarily driven by an increase of $150.0 million in borrowings under the Term Loans. The Company received approximately $29.0 million in net cash refunds for income and sales taxes during the year ended December 31, 2023.
Net cash provided by financing activities from continuing operations was approximately $183.9 million in 2024, representing a decrease of $34.3 million compared with 2023, primarily driven by an decrease of $100.0 million in borrowings under the Term Loans, $7.0 million in cash outflows for principal payments on outstanding debt, $4.3 million in higher cash outflows for debt amendment costs and $1.3 million in higher cash outflows for dividends, partially offset by the issuance of $79.4 million in Shentel’s Series A Preferred Stock, net of issuance costs.
Selling, general and administrative Selling, general and administrative expense increased $8.9 million, or 18.7%, in 2022 compared with 2021, primarily driven by the expansion of Glo Fiber and inflation. Payroll related costs increased $2.7 million, primarily due to higher salaries, wages and incentive costs and headcount to support the Glo Fiber expansion.
Selling, general and administrative expense increased by $15.9 million, or 16.0%, in the year ended December 31, 2024 as compared with the year ended December 31, 2023 primarily due to $11.7 million of selling, general and administrative costs incurred in the newly acquired Horizon markets and $4.2 million in higher expenses in th e legacy Shentel markets due to higher advertising costs and sales headcount associated with the Company’s expansion of Shentel’s Glo Fiber network.
(3) Average Revenue Per Data RGU calculation = (Residential & SMB Revenue * 1,000) / average data RGUs / 12 months (4) Total fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance.
(3) Total fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. (4) I ncumbent Broadband Markets consists of Shentel Incumbent Cable Markets and Horizon Incumbent Telephone Markets with Fiber-To-The-Home (“FTTH”) passings.
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.
Term Loan A-1 matures on July 1, 2026 and both Term Loan A-2 and Term Loan A-3 mature on July 1, 2028. Refer to Note 10, Debt in the Company’s 2024 Consolidated Financial Statements for information about the Company's Credit Agreement.
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.
Shentel’s Broadband business also provides voice and DSL telephone services as a RLEC to customers in Shenandoah County and portions of adjacent counties in Virginia, and in Ross County and portions of adjacent counties in Ohio. These integrated networks are connected by 16,830 route miles of fiber.
Our Tower segment leases space on owned cell towers to our Broadband segment, and to other wireless carriers. Revenue from these leases is accounted for under ASC 842. Cable franchise rights Cable franchise rights represent the value attributable to agreements with local franchising authorities, which allows access to homes and businesses via public rights of way.
Based on this assessment, we concluded that the fair value of our reporting unit was higher than its carrying value. Cable franchise rights Cable franchise rights represent the value attributable to agreements with local franchising authorities, which allows access to homes and businesses via public rights of way. Shentel’s cable franchise rights were primarily acquired through business combinations.
In our experience, state and local franchising authorities encourage our entry into the market, and we have historically been successful in renewing these agreements. Shentel evaluates the recoverability of its cable franchise rights at least annually on October 1, or more frequently whenever events or substantive changes in circumstances indicate that the assets might be impaired.
Costs incurred in negotiating and renewing cable franchise rights are expensed as incurred. 40 Table of Conten t s Shentel tests its cable franchise rights for impairment at least annually, or more frequently whenever events or substantive changes in circumstances indicate that the assets might be impaired. The impairment test is performed by analyzing quantitative or qualitative factors, or both.
Removed
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.
Added
Overview 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 eight contiguous states in the eastern United States. The Company’s services include: broadband internet, video and voice; high-speed Ethernet, dark fiber leasing; and managed network services.
Removed
Refer to Item 1 above for our description of our reporting segments and a description of their respective business activities.
Added
The Company owns an extensive regional network with approximately 16,800 route miles of fiber. 2024 Developments Horizon Transaction On April 1, 2024 (the “Closing Date”), Shentel completed its previously announced acquisition of Horizon Acquisition Parent LLC, a Delaware limited liability company (“Horizon”), pursuant to the terms of an Agreement and Plan of Merger, dated October 24, 2023, by and among Shentel, Horizon, the sellers set forth on the signature pages thereto (each, a “Seller” and collectively, the “Sellers”) and the other parties thereto (as amended by the First Amendment to Agreement and Plan of Merger, dated April 1, 2024, the “Merger Agreement”).
Removed
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.
Added
Subject to the terms and conditions of the Merger Agreement, on the Closing Date, Shentel acquired 100% of the outstanding equity interests of Horizon in exchange for (i) issuing 4,100,375 shares of Shentel’s common stock, no par value (“Common Stock”), to an investment fund managed by affiliates of GCM Grosvenor, which is one of the Sellers (the “Selling Shareholder”); and (ii) paying $347 million which consisted of cash consideration to the other Sellers and certain third parties, including Horizon’s existing lenders to discharge debt, and payments for working capital adjustments and reimbursement of capital expenditures incurred by the Sellers, subject to post-closing adjustments.
Removed
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.
Added
The Selling Shareholder agreed to an investor rights agreement with the Company, pursuant to which, as long as the Selling Shareholder beneficially owns at least 5.0% of Shentel’s outstanding Common Stock, the Selling Shareholder has the right to nominate a director to Shentel’s Board and is subject to certain standstill provisions and voting covenants.
Removed
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.
Added
The Selling Shareholder is also subject to a one year lockup period for the shares of Common Stock received. Shentel expects to submit claims under a representation and warranty insurance (“RWI”) policy the Company purchased in connection with the Horizon Transaction seeking coverage for breaches of representations and warranties in the Merger Agreement.
Removed
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.
Added
The RWI policy has a coverage limit of $40 million. Although the Company believes that the claims are meritorious, no assurance can be given as to whether the Company will recover all, or any part, of the amounts claimed. No gains or receivables have been recognized related to these insurance claims as of December 31, 2024.
Removed
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.
Added
Series A Preferred Stock Contemporaneously with the execution of the Merger Agreement, on October 24, 2023, Shentel and Shentel Broadband Holding Inc., a wholly-owned subsidiary of Shentel (“Shentel Broadband”), entered into an investment agreement (the “Investment Agreement”) with ECP Fiber Holdings, LP, a Delaware limited partnership (“ECP Investor”), and, solely for the limited purposes set forth therein, Hill City Holdings, LP, a Delaware limited partnership affiliated with ECP Investor.
Removed
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.
Added
Subject to the terms and conditions set forth in the Investment Agreement, on the Closing Date, Shentel Broadband issued to ECP Investor 81,000 shares of Shentel Broadband’s 7% Series A Participating Exchangeable Perpetual Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), at a purchase price of $1,000 per share in exchange for $81 million in cash.
Removed
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).
Added
The Series A Preferred Stock is exchangeable at the option of the Investor or Shentel in certain circumstances for shares of Common Stock at an exchange price of $24.50 per share (as it may be adjusted pursuant to the terms of the Investment Agreement, the “Exchange Price”). 30 Table of Conten t s As a condition to closing the transactions contemplated by the Investment Agreement and Amendment No. 3 to the Credit Agreement, Shentel completed a corporate reorganization of Shentel’s subsidiaries (the “Reorganization”).
Removed
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”).
Added
As a result of the Reorganization effected on the Closing Date, Shentel Broadband Operations LLC, a wholly-owned subsidiary of Shentel Broadband, holds or has equity interest in substantially all of the operating assets of Shentel and was assigned and assumed the Credit Agreement.
Removed
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.
Added
On the Closing Date, Shentel Broadband filed a certificate of designations with the Secretary of State of the State of Delaware authorizing 100,000 shares of Series A Preferred Stock and setting forth the powers, designations, preferences, rights, qualifications, limitations and restrictions of the Series A Preferred Stock (the “Certificate of Designations”).
Removed
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.
Added
The Series A Preferred Stock ranks senior to Shentel’s Common Stock with respect to the payment of dividends and with respect to the distribution of assets upon Shentel Broadband’s liquidation, dissolution or winding up.
Removed
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.
Added
Dividends on the Series A Preferred Stock accrue at 7% per annum compounded and payable quarterly in arrears, and, at Shentel’s option, may be paid in cash or in kind (such dividends paid in kind, “PIK Dividends”).
Removed
The Company has received $275 million in financing commitments from CoBank, Bank of America, Citizens Bank, N.A., and Fifth Third Bank, N.A..
Added
The PIK Dividend rate is subject to increase to 8.5% and 10% after the fifth and seventh anniversaries of the Closing Date, respectively, to the extent any dividends accrued during the period from and including such anniversary dates are paid in the form of PIK Dividends.
Removed
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.
Added
Beginning two years after the Closing Date, Shentel may require the Investor to exchange the Series A Preferred Stock for shares of Common Stock if the price per share of the Common Stock exceeds 125% of the Exchange Price, subject to certain conditions.
Removed
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.
Added
After five years, Shentel may redeem all of the Series A Preferred Stock for the greater of (i) $1,000 per share, plus (a) any accrued PIK Dividend amount and (b) accrued and unpaid dividends to, but excluding the redemption date (to the extent such accrued and unpaid dividends are not included in such PIK Dividend amount), and (ii) the value of the shares of Common Stock for which such Series A Preferred Stock are exchangeable.
Removed
This financing is expected to close in conjunction with the Horizon Transaction. • The Company plans to raise additional growth capital for the FTTH network expansion, government grant projects and general corporate purposes, which may include the sale of some or all of its tower portfolio as well as exploring other strategic alternatives.
Added
Under the terms of the Investment Agreement, the Investor has the right to nominate a director to the Board so long as the Investor beneficially owns at least 7.5% of Shentel’s outstanding Common Stock (including on an as exchanged basis with respect to the Series A Preferred Stock).
Removed
The closing of the Horizon Transaction remains subject to certain regulatory approvals and other customary closing conditions and is expected to close in the first half of 2024. 36 Table of Contents Results of Operations Year Ended December 31, 2023 Compared with the Year Ended December 31, 2022 The Company’s consolidated results from operations are summarized as follows: Year Ended December 31, Change ($ 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.
Added
So long as the Investor beneficially owns at least 7.5% of Shentel’s outstanding Common Stock (including on an as exchanged basis with respect to the Series A Preferred Stock), the Investor is subject to certain standstill provisions and voting covenants and has certain other rights with respect to the shares of Series A Preferred Stock, including, among others, pre-emptive, information and participation rights.
Removed
Refer to the discussion of the results of operations for the Broadband and Tower segments, included within this MD&A, for additional information.
Added
The shares of Series A Preferred Stock are subject to a lock-up until the first anniversary of the Closing Date and are subject to certain other transfer restrictions.
Removed
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.
Added
The Third Amendment provides for, among other things, incremental delay draw term loan commitments under the Credit Agreement in an aggregate amount equal to $225 million and an increase in the revolving commitment under the Credit Agreement in an amount equal to $50 million.
Removed
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.
Added
Sale of Shentel’s Tower Portfolio On March 29, 2024, Shenandoah Mobile, LLC, a wholly-owned subsidiary of Shenandoah Telecommunications Company, completed the initial closing of its previously disclosed sale of substantially all of Shentel’s tower portfolio and operations (“Tower Portfolio”) to Vertical Bridge Holdco, LLC (Vertical Bridge) for $309.9 million (the “Tower Transaction”).
Removed
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.

… 82 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed0 unchanged
Biggest changeWhen 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.
Biggest changeThe Company uses the Swaps to manage its exposure to interest rate risk for a portion of its long-term variable-rate Term Loans through interest rate swaps. When the Swaps’ payments term began, Shentel effectively pays a fixed weighted-average interest rate of 2.90%, prior to interest rate margin provided under our credit facility.
ITEM 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Throughout 2024, we borrowed a total of $125 million pursuant to the variable rate delayed draw Term Loans available under the Credit Agreement. As of December 31, 2024, the Company had $418.0 million of gross variable rate debt outstanding.
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”).
The weighted-average interest rate was 6.42% for the Term Loans at December 31, 2024. An increase in market interest rates of 1.00% would add approximately $4.1 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”).
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.
The Swaps contain monthly payment terms that became effective 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 Term Loan A-1 and A-2 outstanding debt.

Other SHEN 10-K year-over-year comparisons