Shenandoah Telecommunications Company Q3 FY2025 earnings call

Key Pillars - Building on success: Using AI to streamline technical support and optimize digital marketing. - Successfully completing our build: Glo Fiber passed 400,000 homes and businesses, on track to complete build by end of 2026. - Accelerating growth: Focused on driving penetration rates in Glo Fiber markets and expanding commercial fiber business, growing direct sales team, simplifying online purchase experience. - Achieving positive free cash flow: On track to reach positive free cash flow in 2027, planning refinancing to lower cost of debt. ### Quarter Highlights - Reached 400,000 total Glo Fiber passings, with 21,000 homes released to sales in Q3. - Glo Fiber data revenue-generating units grew 39.5% y-o-y to 83,000, revenues grew 41.1% to $21.3M. - Consolidated revenues up 2.5% y-o-y to $89.8M. - Adjusted EBITDA up 11.7% y-o-y to $29.7M, margins expanded 300 basis points. - Glo Fiber markets added 6,400 new customers and ~7,200 total data, video and voice revenue-generating units in Q3. - Incumbent markets saw 20% of passings equipped with fiber-to-the-home technology.

Glo Fiber: Data revenue-generating units grew to 83,000 at the end of the quarter, representing year-over-year growth of 39.5% and Glo Fiber revenues grew 41.1%, reaching $21.3 million. Consolidated revenues reached $89.8 million, an increase of 2.5% year-over-year. Adjusted EBITDA climbed to $29.7 million, up 11.7% year-over-year, and margins expanded 300 basis points to 33%. Incumbent broadband markets: Served about 112,000 broadband data customers, up 580 year-over-year; data voice and video RGUs totaled 160,000, down 3% year-over-year; total broadband homes and businesses passed grew to 248,000, up about 14,000. Commercial fiber: In the third quarter, sales of almost $157,000 in incremental monthly revenue, an increase of 19% over the prior year quarter.

2025 Guidance - Revenues expected to be $352 million to $357 million. - Adjusted EBITDA expected to be $113 million to $118 million. - CapEx, net of grant reimbursements, expected to be $260 million to $290 million.

Q: So I want to get your thoughts on creating longer-term shareholder value either through M&A, either as a buyer or a seller. Is that on the table? And then, if not, what else can you do for -- to drive higher shareholder returns?

A: The industry is consolidating, and we want to be a player in that. And we think our -- the refinancing we're working on gives us the flexibility to be a player there, and we're looking for opportunities to expand our footprint. We're also looking to drive efficiencies in our business. Some of the technology we're deploying will help us there. And also, we'll be gaining some efficiencies as we wind down our construction process.

Q: I just wanted to say your pricing action you took with Glo Fiber, what sparked that? Are you seeing increased competition or just a lack of consumer willingness to take on the new service that you have to feel like you had to do a new pricing scheme?

A: Comcast launched a 5-year price guarantee in our markets in June. We did see a little bit of impact there on the gross add side, no impact on the churn side, though, but we decided to respond with our own 5-year guarantee. We've got enhanced bandwidth speeds. And that 5-year guarantee started in mid-August, and we've seen a significant lift in gross adds since then. But we continue to believe we have a competitive advantage there, not only with speed, but with our local customer service and our network reliability as well.