Group 1 - The company is on track to complete its fiber-to-the-home build-out, expecting to reach approximately 510,000 homes passed by the end of 2026, up from 427,000 at the end of 2025 [2] - The fourth quarter of the previous year was noted as the best quarter for the company, indicating strong momentum going into the current year [2] - Terminal penetration rates are projected to reach the high 30s within 5 to 7 years after launching a market, although some isolated markets may see lower penetration due to competition from telcos [3]

Summary of Shenandoah Telecommunications Company (NasdaqGS:SHEN) 2026 Conference Call Company Overview - **Company**: Shenandoah Telecommunications Company (Shentel) - **Industry**: Telecommunications, specifically focusing on fiber to the home (Glo Fiber) and commercial fiber services Key Points Glo Fiber Build-Out - Shentel is on track to complete the build-out of Glo Fiber, expecting to reach approximately **510,000 homes passed** by the end of 2026, up from **427,000** at the end of 2025 [3][4] - The company aims for a terminal penetration rate of **37%** across its markets within **5-7 years** of launching services [4] Competitive Landscape - In **90%** of its markets, Shentel faces only one competitor, typically a cable company [5] - The company maintains a **first mover advantage** in many areas, which helps mitigate competition [5][6] - Approximately **88%** of Shentel's passings are in duopoly markets, primarily competing against cable providers [6] Pricing Strategy and Customer Service - Shentel focuses on technology and local customer service rather than competing solely on price [7] - The company has high **Net Promoter Scores (NPS)** of **61**, contributing to low customer churn rates of about **1% per month** [9][10] Commercial Business Growth - The commercial segment saw nearly **10%** growth in bookings in the latter half of 2025, driven by strong relationships with tower companies and K-12 schools [12][13] - Shentel is expanding into the **hyperscale data center** market, which presents significant growth opportunities [19][20] Capital Structure and Financing - Shentel introduced an **Asset-Backed Security (ABS)** structure to minimize capital costs, reducing debt costs by **170 basis points**, saving approximately **$11 million** annually [38][39] - The company expects to turn **free cash flow positive** by **2027** and anticipates a peak net leverage of **5.3-5.4 times** by the end of 2026 [43][44] M&A Strategy - Shentel is focused on completing its current build and may pursue **tuck-in acquisitions** in the fiber to the home space, with potential for more transformative M&A after achieving free cash flow positivity [53][54] - The company believes the fiber to the home consolidation is just beginning, with many smaller companies likely seeking liquidity in the future [55][56] Financial Outlook - For 2026, Shentel projects **4% revenue growth** and **12% EBITDA growth**, with expectations of **300 to 400 basis points** margin expansion [63][65] - The company anticipates capital intensity to be in the **15%-25% range**, with residential business likely closer to **25%** due to the costs associated with new customer connections [71][72] AI and Operational Efficiency - Shentel is exploring AI initiatives to enhance customer service and operational efficiency, aiming to reduce costs and improve service delivery [68][69] Return to Shareholders - Currently, Shentel pays a small dividend of about **1%** yield, which may be increased once free cash flow is generated [79] - Share repurchase programs are also being considered, contingent on the status of preferred stock [80] Additional Insights - Shentel's unique fiber routes and strong customer relationships contribute to exceptionally low churn rates in both residential (1%) and commercial (0.6%) segments [18] - The company is strategically positioned to leverage its existing infrastructure and customer base to capitalize on future growth opportunities in the telecommunications sector [19][20]

Core Insights - Shentel's Glo Fiber expansion has shown significant growth, surpassing incumbent broadband revenue in Q4 2025, with a focus on a "fiber-first" strategy and plans to achieve positive free cash flow by 2027 [3][5][19] Company Performance - Shentel reported Q4 2025 revenue of $91.6 million, a 7.2% increase year-over-year, with Adjusted EBITDA rising 31.3% to $33.5 million [5][14][15] - The company ended 2025 with approximately 427,000 homes and businesses passed in Glo Fiber markets, an increase of 81,000 from the previous year [2][6] - Glo Fiber customer additions totaled 5,300 in Q4 and 23,000 for the full year, with total RGUs surpassing 103,000, reflecting a 33% year-over-year growth [7][11] Strategic Initiatives - Management emphasized four strategic pillars: building on legacy operations, completing fiber network expansion, accelerating growth, and positioning for positive free cash flow in 2027 [3] - A workforce reduction of about 10% is planned to align with construction completion, expected to save approximately $12.3 million annually starting in 2027 [4][19] Financial Guidance - For 2026, Shentel projects revenue between $370 million and $377 million and Adjusted EBITDA between $131 million and $136 million [16] - The company invested $359 million in capital expenditures in 2025, with a net CapEx of $296 million after collecting $63 million in government grants [17] Market Position and Competition - Glo Fiber's broadband data ARPU increased to over $77 in Q4, with a notable shift towards higher-speed plans [9][10] - The company has seen a decline in incumbent broadband revenue due to competition and changing consumer preferences, particularly in video services [14][11] Debt Management - A refinancing in December reduced the weighted average interest rate on debt to about 5.75%, saving approximately $11 million annually in cash interest [5][18] - As of December 31, 2025, Shentel had $642 million in outstanding debt, reflecting a significant reduction in interest costs [18]

Group 1 - The company is reducing its workforce by 10% to align staffing with the transition from a heavy construction phase to an operational and sales-focused growth phase [1] - Strategic withdrawal from certain Ohio markets is due to rising aerial make-ready costs that threaten the company's 15% internal rate of return hurdle [1] - High customer satisfaction is indicated by a Net Promoter Score of 61, which helps defend against cable competitors and maintains low churn levels near 1% [1] Group 2 - Aggregate penetration in subsidized incumbent markets has reached 31% across more than 22,000 passings constructed in previously unserved areas through government grants [2] - Glo Fiber data RGU growth of 35% is driven by disciplined expansion into duopoly markets where 88% of passings face only one fixed competitor [2] - Fiber-based business lines surpassed incumbent broadband revenue for the first time in Q4 2025, indicating a fundamental shift in the company's revenue mix [2] - Management projects an inflection to positive free cash flow in 2027, driven by the completion of major Glo Fiber construction and declining capital intensity [2] - 2026 guidance assumes a 21% decline in net CapEx as the company enters the 'home stretch' of its fiber expansion across four primary states [2] - Data ARPU is expected to decline by approximately 1% over the next few quarters due to new 5-year price guarantee promotional plans [2] - Adjusted EBITDA margins are projected to decline slightly in the first half of 2026 before expanding again in the second half of 2026 [2] - The company expects to achieve low double-digit EBITDA growth over the next five years as fiber assets mature and capital intensity drops toward the 25-30% range [2]

Financial Data and Key Metrics Changes - Revenues grew 7.2% to $91.6 million in Q4 2025, driven by strong Glo Fiber expansion market revenue growth of $6.5 million, or 39% [19] - Adjusted EBITDA increased by $8 million, or 31.3%, to $33.5 million, with adjusted EBITDA margins rising 670 basis points to 36.5% [21] - Broadband data average revenue per user (ARPU) increased to over $77 in Q4, representing a 2.3% year-over-year increase [11] Business Line Data and Key Metrics Changes - Glo Fiber data RGUs grew 35% in 2025 to 88,000, with total Glo Fiber revenue generating units surpassing 103,000 by year-end, up 33% compared to the prior year [5][9] - Incumbent broadband markets revenue declined by $1.7 million, primarily due to a 14.8% decline in video RGUs as customers switched to streaming services [20] - Commercial fiber revenue grew by $2 million, or 10.8% year-over-year, driven by a negative deferred revenue adjustment in Q4 2024 [19] Market Data and Key Metrics Changes - 88% of Glo Fiber passings are in duopoly markets, with only one fixed broadband competitor, while 70% of incumbent market passings have no fixed broadband competitor [7] - Government-subsidized passings in incumbent broadband markets more than doubled year-over-year to 22,000, with penetration reaching 31% [5] Company Strategy and Development Direction - The company is focused on a fiber-first strategy, aiming to complete its fiber network expansion and achieve positive free cash flow by 2027 [4][18] - The primary focus for 2026 is adding passings in Virginia, Pennsylvania, Maryland, and Ohio markets, despite reducing targeted passings in certain Ohio markets due to rising costs [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory moving into 2026, highlighting strong customer growth and a robust balance sheet [7] - The company anticipates a slight decline in adjusted EBITDA margin in the first half of 2026, followed by expansion in the second half [21] Other Important Information - A workforce reduction of approximately 10% was announced to align staffing levels with the planned completion of the Glo Fiber construction phase, expected to incur $3.1 million in restructuring costs [17] - The company successfully refinanced its debt, saving approximately 170 basis points in cash interest expense and extending maturities to 2030 [6][27] Q&A Session Summary Question: CapEx savings from Ohio markets - The CapEx per passing is roughly $1,400, with a focus on construction labor, which constitutes about 75% of that cost. The decision to pass on certain markets was based on return on investment concerns due to rising costs [32][33] Question: Competitive pressures and the 5-year price guarantee - The introduction of the 5-year price guarantee was a response to competition, and while there was an initial impact on gross ads, it was mitigated after launching the guarantee [40][41] Question: M&A strategy and target characteristics - The company is currently focused on completing its build plan and accelerating customer growth, with interest in acquiring pure play fiber providers in the future [42]

Financial Data and Key Metrics Changes - Revenues grew 7.2% to $91.6 million in Q4 2025, driven by strong Glo Fiber expansion market revenue growth of $6.5 million, or 39% [19] - Adjusted EBITDA increased by $8 million, or 31.3%, to $33.5 million, with adjusted EBITDA margins rising 670 basis points to 36.5% [21] - Broadband data average revenue per user (ARPU) increased to over $77 in Q4, representing a 2.3% year-over-year increase [11] Business Line Data and Key Metrics Changes - Glo Fiber data RGUs grew 35% in 2025 to 88,000, with total Glo Fiber revenue generating units surpassing 103,000 by year-end, up 33% compared to the prior year [5][9] - Incumbent broadband markets revenue declined by $1.7 million, primarily due to lower video and data revenues from a 14.8% decline in video RGUs [20] - Commercial fiber revenue grew $2 million or 10.8% year-over-year, driven by a negative deferred revenue adjustment in Q4 2024 [19] Market Data and Key Metrics Changes - 88% of Glo Fiber passings are in duopoly markets, with only one fixed broadband competitor, while 70% of incumbent market passings have no fixed broadband competitor [7] - Government-subsidized passings in incumbent broadband markets more than doubled year-over-year to 22,000, with penetration reaching 31% [5] Company Strategy and Development Direction - The company is focused on a fiber-first strategy, aiming to complete its fiber network expansion and achieve positive free cash flow by 2027 [4][18] - The primary focus for 2026 is adding passings in Virginia, Pennsylvania, Maryland, and Ohio markets, despite reducing targeted passings in certain Ohio markets due to rising costs [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory moving into 2026, highlighting strong customer growth and a strengthened balance sheet [7] - The company anticipates a slight decline in adjusted EBITDA margin in the first half of 2026, followed by expansion in the second half [21] Other Important Information - A workforce reduction of approximately 10% was announced to align staffing levels with the planned completion of the Glo Fiber construction phase, expected to incur $3.1 million in restructuring costs [17] - The company successfully refinanced its debt, saving approximately 170 basis points in cash interest expense and extending maturities to 2030 [6][27] Q&A Session Summary Question: CapEx savings from Ohio markets - The CapEx per passing is roughly $1,400, with a focus on construction labor, which constitutes about 75% of that cost. The decision to pass on certain markets was due to the return on investment not meeting expectations [32][33] Question: Competitive pressures and price guarantees - The introduction of a 5-year price guarantee was in response to competition, and while there was an initial impact on gross ads, it was mitigated after launching the company's own guarantee [40][41] Question: M&A strategy - The company is currently focused on completing its build plan and accelerating customer growth, with interest in acquiring pure play fiber providers in the future [42]

February 26, 2026 Q4 2025 Earnings Conference Call Safe Harbor Statement This presentation contains forward-looking statements and projections about Shentel regarding, among other things, its business strategy, its prospects and its financial position. These statements can be identified by the use of forward-looking terminology such as "believes," "estimates," "expects," "intends," "may," "will," "plans," "should," "could," or "anticipates" or the negative or other variation of these or similar words, or by ...

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Q3 2025 Highlights - Total revenue reached $89.8 million, a 2.5% year-over-year increase[4] - Adjusted EBITDA grew by 11.8% year-over-year to $29.7 million[4] - Adjusted EBITDA margin expanded by 300 basis points to 33%[4] Glo Fiber Expansion Markets - Glo Fiber expansion markets passed 400,000 locations, with 21,000 released to sales[4] - Data RGUs (Revenue Generating Units) in Glo Fiber expansion markets increased by 39.5% annually[4] - Glo Fiber expansion markets revenue grew by 41.1% annually[4,31] - Year-over-year RGU growth was +37%[8] - Vintage Glo Fiber Expansion Markets Penetration is expected to reach an average terminal penetration of 37%[13] Incumbent Broadband Markets - Approximately 70% of incumbent broadband markets passings have no competitor[5] - Approximately 20% of passings in incumbent broadband markets have FTTH (Fiber to the Home)[18] - Average penetration in Incumbent Broadband Markets Subsidy Cohort is 30%[21] Financial Outlook - The company projects total revenue between $352 million and $357 million for the year ending December 31, 2025, representing an 8.1% increase at the midpoint compared to 2024[38] - Adjusted EBITDA is projected to be between $113 million and $118 million, a 21.6% increase at the midpoint[38]

Core Insights - Shenandoah Telecommunications Company ("Shentel") reported a significant increase in Adjusted EBITDA margin from 27% in Q2 2024 to 33% in Q3 2025, indicating strong operational efficiency following the Horizon acquisition [3][5] - Glo Fiber revenue and subscribers grew by 41% year-over-year, with total passings increasing by 21,000 sequentially to over 400,000 [3][5] Financial Performance - Total revenue for Q3 2025 was $89.8 million, a 2.5% increase compared to Q3 2024 [5] - Glo Fiber Expansion Markets revenue reached $21.3 million, reflecting a 41.1% growth due to a 41.3% increase in average subscribers [5][6] - Net loss from continuing operations was $9.4 million in Q3 2025, compared to a loss of $5.3 million in Q3 2024 [5][28] - Adjusted EBITDA increased by 11.8% to $29.7 million, with the Adjusted EBITDA margin expanding from 30% in Q3 2024 to 33% in Q3 2025 [5][28] Operational Highlights - The company constructed 20,000 Glo Fiber passings and added approximately 5,800 new Glo Fiber customers in Q3 2025 [6] - Residential & SMB - Incumbent Broadband Markets passings grew by 4,000 to a total of 248,000, with 89% of planned passings in previously unserved areas completed [6] - Commercial Fiber revenue declined by $1.1 million, primarily due to non-cash deferred revenue adjustments [6] Capital Expenditures and Financial Outlook - Capital expenditures for the nine months ended September 30, 2025, were $251.5 million, up from $226.5 million in the same period in 2024 [13] - The company reiterated its 2025 financial guidance, projecting total revenue between $352 million and $357 million, and Adjusted EBITDA between $113 million and $118 million [10][11] Liquidity and Debt - As of September 30, 2025, Shentel had total available liquidity of $212.6 million, including $22.6 million in cash and cash equivalents [13] - Total indebtedness was $535.4 million as of September 30, 2025 [13]