Shentel Executive Vice President and Chief Operating Officer Dave Heimbach appeared on C-SPAN recently with Matt Polka, the President of the American Communications Association on the show The Communicators. The men along with the host, Peter Slen, discussed issues affecting smaller telecommunications companies such as whether cable companies would continue providing video or move to broadband-only, extending broadband farther in rural areas, 5G and the reauthorization of the law governing the fees and rules for broadcast TV to be sent to rural areas.
We’re Shentel. We may be new to you, but we’ve been in business since 1902. Back then, we were a small phone company serving our neighbors in Virginia’s Northern Shenandoah Valley. Today we bring advanced broadband services, digital TV, high-speed Internet and phone services to more of our neighbors in Virginia, West Virginia, and Maryland.
Why Choose Us?
We’re Shentel. We may be new to you, but we’ve been in business since 1902. Back then, we were a small phone company serving our neighbors in Virginia’s Northern Shenandoah Valley. Today we bring advanced broadband services, digital TV, high-speed Internet and phone services to more of our neighbors in Virginia, West Virginia, and Maryland. We specialize in providing advanced services to rural and underserved markets, because we believe you deserve the same level of service that you would expect from a larger metropolitan area.
Technology Leader
For more than 100 years, Shentel has been connecting communities like yours to other towns, cities, and communities across the world, through our High-Speed Internet, TV and Home Phone services. We have a long history of leading the way for allowing advanced services to reach our rural customers. Our commitment continues today as we upgrade our cable network and make plans to increase broadband Internet speeds across our rural footprint. We will continue to be a leader in the rural broadband market.
Customer Service
We don’t believe that you need to sacrifice customer service, or be bound to a long-term contract and be subject to cancellation fees to get quality service. At Shentel we staff our call centers with local people that live in your community. You can be sure when you call, or come into one of our stores, you will find that customer satisfaction is our number one priority.
May 9, 2019
Shentel reports first quarter 2019 results
Shenandoah Telecommunications Company Reports First Quarter 2019 Results Quarterly Operating Income Increased 47.9% to $24.8 million Highest first quarter organic net growth in Wireless subscribers in Company history
Shentel announced strong first quarter results, reflecting continued revenue growth and significantly improved profitability. Wireless service revenue demonstrated solid growth driven by the net addition of 5,776 postpaid wireless customers and 8,516 prepaid wireless subscribers, including record gross activations for the Boost brand. Postpaid gross and net activations reached an all-time high as compared to any historical first quarter. Growth in the Cable Segment was bolstered primarily by continued increases in broadband subscribers.
First Quarter 2019 Highlights • Operating revenue of $158.8 million grew 3.1% • Operating income grew 47.9% to $24.8 million • Net income of $13.9 million, or $0.28 per share • Adjusted OIBDA of $73.0 million grew 6.3% • Acquired Big Sandy Broadband, Inc. ("Big Sandy"), adding approximately 4,800 revenue generating units.
Consolidated First Quarter 2019 Results
• Net income for the three months ended March 31, 2019 was $13.9 million, resulting in net income per share of $0.28, compared with $0.13 per share in the first quarter of 2018, reflecting an increase of approximately 115%.
• Operating revenue for the first quarter of 2019 was $158.8 million, representing a year-over-year increase of 3.1%, driven by strong subscriber growth in the Wireless and Cable segments.
• Operating expenses for the three months ended March 31, 2019 were $134.1 million, compared with $137.4 million for the equivalent quarter in the prior year primarily due to a decline in network costs for the Wireless segment attributable to repricing backhaul circuits and migrating voice traffic from traditional circuit-switched facilities to more cost effective VoIP facilities. The decrease was offset by higher costs for the Cable segment primarily due to our deployment of higherspeed data access packages and infrastructure investments necessary to support its growing cable and fiber networks.
• Operating income for the three months ended March 31, 2019 increased 47.9% to $24.8 million from $16.8 million in the prior year quarter.
• Adjusted OIBDA increased 6.3% to $73.0 million for the three months ended March 31, 2019, driven by subscriber growth in the Wireless and Cable segments.
Wireless
• Shentel served 800,952 wireless postpaid customers at March 31, 2019, an increase of 3.4% over 774,861 subscribers as of March 31, 2018. As of March 31, 2019, tablets and data devices were 9.8% of the postpaid base.
• Shentel served 267,220 wireless prepaid customers at March 31, 2019, an increase of 6.8% over 250,191 subscribers as of March 31, 2018. First quarter prepaid churn was 4.14%, representing an improvement of 28 basis points compared with the prior year.
• Wireless operating revenue increased 2.5%, to $115.7 million for the three months ended March 31, 2019, compared with $112.8 million in the first quarter of 2018, primarily driven by a 3.4% increase in postpaid subscribers and a 6.8% increase in prepaid PCS subscribers.
• Wireless operating expenses decreased 5.5% in the first quarter of 2019 to $90.3 million, compared with $95.5 million for the three months ended March 31, 2018. This decrease was primarily due to a $2.9 million decrease in depreciation and amortization as a result of the retirement of assets acquired in the nTelos acquisition; a $1.3 million decrease in cost of goods sold as a result of decreased equipment costs; a $0.3 million decrease in cost of services due to the repricing of Wireless backhaul circuits to market rates and migrating Wireless voice traffic from traditional circuit-switched facilities to more cost effective VoIP facilities; and a $0.8 million decrease in selling, general and administrative due to a prior year reassessment of property taxes in West Virginia.
• Wireless Adjusted OIBDA for the three months ended March 31, 2019 increased 7.4% to $61.8 million, compared with $57.6 million for the three months ended March 31, 2018. Wireless Continuing OIBDA for the three months ended March 31, 2019 was $52.2 million, compared with $48.5 million for the three months ended March 31, 2018.
Cable
• Total Revenue Generating Units increased 4.5% in the first quarter of 2019 to 139,504 which includes the addition of approximately 4,800 Big Sandy subscribers, compared with 133,439 for the three months ended March 31, 2018.
• Cable operating revenue for the first quarter of 2019 was $33.7 million, representing a quarter over quarter increase of 6.3% compared with $31.7 million for the prior year first quarter. The increase was primarily attributable to increases in broadband and voice subscribers, higher video rates implemented to pass through programming cost increases, and customers selecting or upgrading to higher-speed data access packages.
• Cable operating expenses for the first quarter of 2019 were $28.0 million, a quarter over quarter increase of 7.0% compared with $26.2 million for the three months ended March 31, 2018. The increase was primarily due to our deployment of higher-speed data access packages and investments in infrastructure necessary to support the growth of the cable and fiber network.
• Cable Adjusted OIBDA for the three months ended March 31, 2019 was $12.1 million, compared with $11.7 million for the three months ended March 31, 2018.
Wireline
• Wireline operating revenue for the three months ended March 31, 2019 was $18.9 million, compared with $19.7 million for the prior year first quarter. The decrease in operating revenue was primarily attributable to repricing Wireless backhaul circuits to market rates and migrating Wireless voice traffic from traditional circuit-switched facilities to more cost effective VoIP facilities.
• Wireline operating expenses for the three months ended March 31, 2019 were $14.6 million, a quarter-overquarter decrease of 2.5% compared with $14.9 million for the three months ended March 31, 2018. The decline in operating expenses was primarily attributable to a reduction in network costs.
• Wireline Adjusted OIBDA for the three months ended March 31, 2019 was $7.8 million, compared with $8.1 million for the prior year equivalent quarter.
“Shentel delivered solid first quarter results, building on the success we achieved in 2018. We achieved consolidated revenue growth, dramatically increased operating income, significantly improved profitability, and continued OIBDA growth in the first quarter,” said President and CEO Chris E. French, “We saw customer growth in all of our operating segments, highlighted by record customer additions in both our Wireless and Cable businesses.
“The investments we’ve made to improve the reliability and coverage of our network and to expand our base of stores have elevated brand recognition in the markets we serve, enabling us to attract new customers and drive growth in both our postpaid and prepaid customer base. Our Cable segment continued to see increased RGUs and revenue as customers upgraded their service plans to accommodate a growing need for higher bandwidth. We were pleased to add the assets of Big Sandy Broadband, which expands our service area in Kentucky. Shentel is well-positioned to continue to provide our customers with the best service in our expanding footprint and we look forward to driving continued growth as we move through 2019.”
Other Information
• Capital expenditures budgeted for 2019 have been updated to reflect the acquisition of Big Sandy and are expected to be approximately $149.5 million, including $64.1 million in the Wireless segment primarily for wireless network capacity improvements. In addition, $55.0 million is budgeted primarily to support growth in our Cable segment including new fiber routes and continuing investments in DOCSIS 3.1 upgrades, $20.5 million in Wireline projects including expansion of the fiber network, and $9.9 million primarily for IT and other miscellaneous projects.
• Capital expenditures were $44.4 million for the three months ended March 31, 2019 compared with $24.4 million in the comparable 2018 period.
• The Company expanded its Cable segment into the adjacent market of eastern Kentucky through the acquisition of Big Sandy on February 28, 2019.
• Outstanding debt at March 31, 2019 totaled $751.3 million, net of unamortized loan costs, compared to $770.2 million as of December 31, 2018. During the quarter, the Company reduced debt $19.9 million, including a voluntary $15.0 million prepayment in addition to the scheduled quarterly payment. As of March 31, 2019, no amounts were outstanding under the revolving line of credit. The total leverage ratio as of March 31, 2019 was 2.42.
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