Shentel’s fiber revenue jumps 13%, third-party fiber contracts grow in 2017

two utility workers setting up a fiber cabinet on a sidewalk
Shentel's second-quarter fiber lease revenue was $11.7 million, with $6.7 million in affiliated revenue and $5 million in nonaffiliated revenue.

Shentel continues to benefit from fiber sales to carriers and local enterprises in its market, with carrier access and fiber revenue rising 6.1% year over year to $13 million after signing a number of new fiber contracts during the second quarter.

Overall second-quarter fiber lease revenue was $11.7 million, with $6.7 million in affiliated revenue and $5 million in nonaffiliated revenue.

“Total fiber revenue is up over 13% in the past year, with growth in both affiliated and nonaffiliated revenue,” said Earle MacKenzie, COO and EVP, during the second-quarter earnings call, according to a Seeking Alpha transcript.

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Within the fiber lease and external lease contract segments, Shentel saw mixed results.

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External fiber lease contract revenues declined during the quarter. While wireline segment fiber lease revenues remained flat at $4.5 million, cable fiber contract revenues declined to $1.9 million.

“The increase in affiliated revenue is due primarily to replacing third parties with our own fiber-to-the-tower,” MacKenzie said. “New third-party fiber contracts are down from the same period last year, but we have a robust funnel and expect 2017 to exceed 2016 in total new contract values.”

In the wireline consumer segment, Shentel’s broadband service revenue offset the loss of regulated voice service revenues. Shentel’s 5.8% voice access line loss was the result of no longer requiring customers to purchase internet service. Beginning in the fourth quarter of 2015, subscribers were offered a cable modem internet option up to 101 Mbps.

As of the end of the second quarter, Shentel had a total of 14,600 broadband subscribers. Shentel’s wireline broadband base consists of 13,200 DSL and 1,400 cable modem subscribers.

Wireline operating expenses rose 5.6% or $0.8 million to $14.2 million for the second quarter, primarily due to costs to support new fiber contracts.

Overall wireline segment revenue rose 5.3% to $19.6 million in the second quarter, up from $18.6 million in the second quarter of 2016.

From an overall financial perspective, Shentel reported total revenues of $153.3 million, up 17.6% compared to $130.3 million for the 2016 second quarter.

The company noted that the second quarter of 2016 was the first quarter that included results of the nTelos acquisition and exchange transaction with Sprint completed on May 6, 2016.

While all segments reported revenue increases, Shentel said the Wireless segment had the largest increase in the current quarter.

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