SHEN — Shenandoah Telecommunications Company

Summary of Shenandoah Telecommunications Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenues: Increased by 4.8% year-over-year to $92.2 million.
• Adjusted EBITDA: Grew 15% to $31.7 million, with margins improving by 300 basis points to 34.4%.
• Glo Fiber Expansion: Added 22,000 passings, totaling 449,000, with a 9% year-over-year increase in net customers to 94,000.
• Commercial Fiber Revenue: Increased by 4.7% year-over-year, contributing $900,000 to total revenue.
• Churn Rate: Average monthly churn for broadband data was stable at 0.92%, while incumbent broadband churn increased slightly to 1.46%.
• ARPU: Broadband data ARPU remained stable at over $77, but declined 1.6% year-over-year to $82 in competitive markets.

2. Strategic Updates and Business Highlights:

• Glo Fiber Growth: Strong momentum with 110,000 total revenue-generating units, up 31% year-over-year.
• Expansion Plans: On track to complete Glo Fiber expansion by the end of 2026, targeting 510,000 passings.
• Customer Acquisition: Successful marketing strategies, including a 5-year price guarantee, contributed to customer growth.
• Commercial Fiber Opportunities: Anticipated growth from data centers moving to rural areas, with potential for mid-single-digit revenue growth over the next few years.

3. Forward Guidance and Outlook:

• 2026 Guidance: Revenues expected between $370 million and $377 million, with adjusted EBITDA between $131 million and $136 million. CapEx projected at $220 million to $250 million.
• Free Cash Flow: Anticipated to turn positive in 2027, driven by declining capital intensity and improved EBITDA growth.

4. Challenges and Points of Concern:

• Incumbent Market Decline: Revenue from incumbent broadband markets fell by $2.2 million, primarily due to a 14.6% decline in video RGUs as customers shift to streaming services.
• Competitive Pressures: Increased competition from Starlink in rural areas led to slight churn; however, Glo Fiber markets remained largely unaffected.
• ARPU Concerns: While Glo Fiber ARPU is stable, the incumbent market is experiencing slight declines due to aggressive pricing from competitors.

5. Notable Q&A Insights:

• Subscriber Growth: Management noted strong subscriber additions in Glo Fiber markets, with some churn in rural areas due to Starlink promotions.
• Marketing Strategy: Plans to maintain marketing expenses while reducing CapEx as the company transitions to a subscriber growth phase.
• Pricing Power: Mixed outlook on pricing power; stable ARPU expected in Glo Fiber, but slight declines noted in the incumbent business due to competition.
• Data Center Opportunities: Management highlighted potential growth from data centers, with 20 being built near their fiber network, although specific revenue projections were not provided.

Overall, Shentel's Q1 2026 results reflect solid growth in their Glo Fiber business, while facing challenges in their incumbent markets due to competition and changing consumer preferences. The company remains optimistic about its strategic initiatives and future cash flow generation.