Shentel's fiber sales jumped 22% in 2015 to $22M as enterprise, carrier demand rose

Shentel continues to find gold in selling wholesale fiber services to enterprise and carrier customers in its serving area, a trend that continued into the fourth quarter as total sales for the year rose 22 percent to $22 million.

The service provider saw gains in new external fiber lease contracts with $12 million in wireline and $10 million and cable fiber sales.

Shentel also set a path for fiber services growth by expanding its fiber network in parts of four states. This build will enable Shentel to pursue a mix of dark and lit fiber-based services for business and wholesale wireless customers.

"We signed $22 million of new fiber contracts in 2015 with $10 million in the cable footprint," said Earle MacKenzie, EVP and COO of Shentel, during the fourth quarter earnings call, according to a Seeking Alpha transcript. "We've recently finished a new cable, our new fiber route in Southern Pennsylvania and we're excited about the opportunities to build fiber to ours and other cell sites and expand enterprise sales."

Shentel's wireline segment revenues rose 15.3 percent to $18.1 million, up from $15.7 million in the fourth quarter of 2014.

Driven by growth in new fiber contracts, Shentel's carrier access and fiber revenue for the quarter was $11.8 million, an increase from $9.8 million for the same quarter last year. Affiliated and non-affiliated fiber revenues grew almost 10 percent during the quarter.

Wireline operating expenses increased 7.4 percent or $0.9 million to $13.5 million for fourth quarter 2015, primarily due to costs to support new fiber contracts.

In addition to higher fiber revenues, Shentel said its wireline segment saw higher Internet service fees as customers upgraded their services.

While Shentel saw its traditional phone line losses ramp in 2015, with 1,313 cutting their lines, the telco noted that out of that figure 1,172 kept their broadband service. Shentel no longer requires its traditional phone customers to purchase a phone line to get broadband DSL service. As of the end of the quarter, Shentel had a total of 13,100 DSL subscribers.

The service provider now offers speeds of 15 Mbps to 100 Mbps on its cable network, which overlaps about two-thirds of the homes Shentel serves with its regulated phone service.

"We also launched broadband speeds of 15 megabits to 101 megabits on a Cable network, which overlaps approximately two-thirds of the homes passed in our regulated phone service area," MacKenzie said. "Of the total 1,313 access line losses in the fourth quarter 1,172 customers dropped their phone line but kept their broadband. Because they gave up the bundled discount these 1,172 customers are paying more for their broadband service, offsetting part of the loss of regulated phone revenues."

Adjusted OIBDA for the wireline segment for fourth quarter 2015 was $8 million, as compared to $6.3 million in fourth quarter 2014.

From an overall financial perspective, net income rose 40 percent to $12.1 million, up from $8.6 million in the fourth quarter of 2014, primarily due to what Shentel said were operating improvements in the cable segment as well as continued growth in the wireless and wireline segments.

The telco also saw operating income jump 33 percent year-over-year to $21.7 million.

For more:
- see the earnings release
- see the Seeking Alpha earnings transcript

Special Report: From Adtran to Zayo: Tracking wireline telecom earnings in Q4 2015

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