Shentel set to pay investors $937 million after wireless sale

Shenandoah Valley
Shentel continues to expand its Glo Fiber and Beam fixed wireless services throughout its markets in and around Virginia. (Pixabay)

Coming off the completion of a $1.94 billion wireless asset sale, Shenandoah Telecommunications (Shentel) next week will pay $937 million to its investors in the form of an $18.75-per-share dividend, Shentel chief Chris French said on the company’s second quarter earnings call Friday.

That dividend, to be issued Monday, follows T-Mobile’s purchase of wireless assets, including more than 1 million customers, from Shentel in a deal that was initiated by T-Mobile as part of its larger Sprint acquisition (Shentel was a longtime Sprint PCS affiliate.)

The wireless sale also will make T-Mobile Shentel’s largest customer, accounting for 7.5% of total revenue, and will allow the independent telco to complete its “transformation into a broadband-centric company” and “fully focus on our growing broadband businesses,” including Shentel’s Glo Fiber and Beam fixed wireless services, said French, who is chairman, CEO and president of Shentel.

Other kinds of transformation may lie ahead, however. Shentel earlier this month announced $400 in financing from a revolving credit facility and delayed-draw term loans that will allow the company “to be opportunistic on the mergers and acquisitions front,” said Jim Volk Shentel CFO and senior vice president, on the earnings call.

Shentel leaders did not comment on any near-term M&A prospects, and Ed McKay, Shentel COO and executive vice president, said on the call that for Shentel to pursue such a deal it would need to be a “unique” opportunity with a smaller company, or a “transformative” deal with a larger on that would allow the company to further expand its Glo Fiber and Beam services.

Running the numbers

Shentel showed in the second quarter of 2021 that it continues to expand those services and reap revenue from them regardless of M&A prospects. Total revenue for the quarter was up 11.7% year-over-year to about $60.7 million, and most of that--roughly $56.2 million--came from broadband services. Broadband revenue increased 12.2%, or by about $6.1 million, compared to the second quarter of 2020.

The remaining revenue of roughly $4.6 million came from the company’s tower segment, which saw a year-over-year revenue increase of 8.3%.

Regarding subscribers, Shentel’s total broadband net additions for the second quarter came in at 3,900, including 1,645 net adds for Glo Fiber and 372 for Beam, respectively. Shentel also increased its total passings of homes and businesses for these services to about 279,000, about 19.000 more passings than it reported in the first quarter of 2021.

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As Shentel continues to push availability of these services to more potential customers, the company is expecting that its capital expenses for the full year of 2021 will be at the high end of its previous guidance of between $157 million and $168 million. Company leaders explained that as its Glo Fiber expansion works its way into low-density suburban areas, the cost of passing home with the service is increasing.

While a materials shortage continues to affect many industries, Shentel said it has not yet been hit by supply chain challenges, as it has placed orders for both fiber and customer premises equipment a year out from its needs. McKay also said the company has not had problems finding contractors to complete its broadband expansion work, but added that Shentel is continuing to closely monitor both supply and labor trends.