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 rising 300 basis points to 34.4%.
• Glo Fiber Expansion: Added 22,000 passings, totaling 449,000. Net customer additions were 6,000, a 9% increase year-over-year.
• Commercial Fiber Revenue: Grew by 4.7% year-over-year, totaling $900,000.
• Incumbent Markets: Revenue declined by $2.2 million due to a 14.6% drop in video RGUs and a 1.6% decrease in data ARPU.
• Churn Rate: Average monthly churn for broadband data was stable at 1.46%, with a slight increase attributed to competition from satellite providers.

2. Strategic Updates and Business Highlights

• Glo Fiber Expansion: The company is on track to complete its Glo Fiber expansion to 510,000 passings by the end of 2026.
• Customer Growth: Strong growth in Glo Fiber with 110,000 total revenue-generating units, a 31% increase year-over-year.
• Service Offerings: 82% of new residential customers opted for speeds of 1 gig or higher, with increasing demand for higher-speed options (2-gig and 5-gig).
• Commercial Fiber: Strong demand from wireless carriers and schools, with expectations of 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; adjusted EBITDA projected at $131 million to $136 million; CapEx forecasted at $220 million to $250 million.
• Free Cash Flow: Anticipated positive free cash flow by 2027, driven by declining capital intensity and improved EBITDA growth.

4. Bad News, Challenges, or Points of Concern

• Incumbent Market Decline: Revenue from incumbent broadband markets decreased, primarily due to a significant drop in video customers and competitive pricing pressures.
• Churn from Competition: Increased competition from Starlink in rural areas led to some customer churn, although the company noted that Glo Fiber markets remained unaffected.
• ARPU Concerns: Slight decline in ARPU in incumbent markets, with expectations of flat ARPU in the near term for Glo Fiber.

5. Notable Q&A Insights

• Subscriber Growth: Management expressed confidence in subscriber growth in Glo Fiber markets despite competition, noting a 9% increase in net adds.
• Marketing and CapEx: Future marketing expenses are expected to remain stable as CapEx declines, transitioning to a focus on subscriber growth.
• Competitive Landscape: The company is actively addressing competition by enhancing service offerings and increasing speeds in response to promotional activities from competitors like Starlink.
• Data Center Opportunities: There is potential for growth in the commercial fiber business, particularly with data centers moving to rural areas, leveraging the company's extensive fiber network.

Overall, Shentel reported solid growth in its fiber businesses while facing challenges in its incumbent markets due to competition and changing consumer preferences. The company remains optimistic about future growth and cash flow generation.