Shenandoah Telecommunications (SHEN) 2025 Conference Transcript

Summary of Shenandoah Telecommunications (SHEN) 2025 Conference Call Company Overview - Shenandoah Telecommunications Company, founded in 1902, has transformed from a telephone company to a broadband provider, focusing on fiber-to-the-home services [4][3] - Projected revenue for the year is over $350 million, with a significant regional fiber optic network spanning 18,000 route-miles from Chicago to Washington, D.C. [4][5] - The business split is approximately 75% residential and 25% commercial, with a focus on expanding fiber services [4][5] Fiber Build Strategy - The company has passed about 380,000 homes and businesses with its Glo Fiber service and aims to reach between 500,000 and 550,000 by the end of 2026 [5][6] - Targeting areas where they are the first fiber provider, with a focus on achieving a 37% terminal penetration rate and a 15%+ unlevered IRR [8][6] - The cost to pass is approximately $1,000 to $1,400 per home, with a current average of 80 to 90 homes passed per route-mile [48][49] Competitive Landscape - Competes primarily against Comcast (two-thirds of markets) and a combination of Charter and Cox [11] - Observed aggressive promotional pricing from competitors, but no significant impact on sales or churn due to lack of mobile offerings [12][14] - The company has a low churn rate of about 1% and a net promoter score of 69, indicating strong customer satisfaction [39][40] Recent Acquisitions - Acquired Horizon Telecom in Ohio, doubling the size of the commercial fiber business and enhancing regional network capabilities [18][19] - The acquisition strategy includes integrating smaller players within the region, with successful integration processes already in place [27][28] Financial Strategy and Capital Allocation - Upsized credit facility to $675 million and issued $80 million in preferred equity to support growth [20] - Plans to refinance the credit facility, potentially lowering the cost of debt by about 100 basis points [20] - Expected to reach free cash flow positive status by 2027, with a focus on returning capital to shareholders through dividends or share buybacks [83][88] Government Funding and Market Dynamics - Awarded over $100 million in grant funds for building to unserved areas, primarily through the American Rescue Plan Act [59] - Limited opportunities in BEAD funding due to low density in targeted areas, leading to a focus on Glo Fiber markets instead [60][61] - The permitting process remains a challenge, impacting the pace of fiber builds [54][66] Customer Service and Market Approach - Emphasizes local customer service with representatives from the markets served, leading to high customer satisfaction and low abandonment rates [35][37] - Engages in community marketing and direct sales efforts, with a significant portion of sales coming from door-to-door efforts [34] Future Outlook - The company sees potential for growth in smaller markets, with limited competition from larger providers [43] - Plans to continue focusing on high ARPU segments, with over 50% of new customers opting for gigabit plans [58] - Anticipates further consolidation in the telecom industry, positioning itself as a potential consolidator of smaller players [27][24]