• Revenue: Grew 22% to $328.1 million in 2024.
• Horizon Markets Contribution: $47.7 million of revenue during nine months of ownership.
• Glow Fiber Revenue: Increased by $21.4 million, or 61%.
• Adjusted EBITDA: Grew 20% to $94.6 million.
• Liquidity: $400 million as of December 31, including $46 million in cash.
• Outstanding Debt: $418 million at the end of 2024.
• Fiber Passings: Added over 103,000 new fiber passings in 2024.
• Customer Net Additions: Over 21,000 net additions in 2024.
• Broadband Data Penetration Rate: 18.8% at the end of 2024.
• Capital Expenditures: Totaled $300 million in 2024.
• Government Grants: $150 million awarded for broadband network expansion.

• Warning! GuruFocus has detected 5 Warning Signs with SHEN.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Shenandoah Telecommunications Co (NASDAQ:SHEN) successfully integrated six separate systems in nine months, three months ahead of schedule, leading to increased synergy savings.
• Revenue grew by 22% to $328.1 million in 2024, with significant contributions from the former Horizon markets.
• Glow Fiber expansion continues to show strong growth, with customer net additions and revenue increasing at compound annual growth rates of 99% and 135%, respectively.
• The company added over 103,000 new fiber passings and more than 1,400 new route miles of fiber in 2024, marking a record year for fiber construction.
• Shenandoah Telecommunications Co (NASDAQ:SHEN) has a robust pipeline for construction opportunities, with plans to add more than 100,000 fiber passings in each of the next two years.

Negative Points

• Commercial revenue declined by $5.8 million due to expected T-Mobile revenue churn, impacting overall financial performance.
• Incumbent broadband markets revenue declined by $5 million, driven by a 16.9% decline in video RGUs due to cord-cutting trends.
• The company experienced a slight increase in broadband data churn due to the end of the Affordable Connectivity Program.
• Capital expenditures in 2024 were high at $300 million, driven by investments in government-subsidized projects, impacting cash flow.
• Approximately 28% of incumbent passings face competition from cable or fiber competitors, posing challenges to market share retention.

Q & A Highlights

Q: Can you provide details on the revenue adjustment with Horizon and the impact of T-Mobile churn on future financials? A: James Volk, CFO, explained that the advertised revenue from Horizon is not a significant portion, and the T-Mobile churn is now behind them. Most disconnects occurred in 2023, affecting gross margin revenue and net income. The impact of T-Mobile churn is expected to be minimal moving forward.

Q: What is the source of competition in the incumbent data penetration markets, and is there any cannibalization from your fiber business? A: Edward McKay, COO, clarified that there is no cannibalization from Glow Fiber, as it operates in new markets. About 28% of incumbent passings face competition from cable or fiber competitors, primarily from local cable companies and some fiber overbuild activity.

Q: How competitive are the markets shared with other service providers, and what strategies are being used to address this? A: Edward McKay noted that the largest competitors are major cable companies offering discounted pricing on lower-end products. Shenandoah is focusing on middle to high-end products and uses targeted promotions to increase penetration in mature markets.

Q: Are there any promotional strategies for Glow Fiber when entering new markets? A: Edward McKay stated that they typically do not enter new markets with heavily discounted pricing. Initial promotions might include offers like $100 off the total bill for the first year, but they rely on standard pricing to compete effectively.

Q: Has there been any change in the competitive landscape over the past 6 to 12 months? A: Edward McKay mentioned that the pace of construction by competitors has slowed down, and they expect the overlap with competitors to increase slightly to 30% over the next few years. However, due to rural and low-density areas, further overbuilds are less likely.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.