Shenandoah Telecommunications ((SHEN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Shenandoah Telecommunications showcased a mixed sentiment, with notable achievements in Glo Fiber revenues and passings, alongside improvements in consolidated revenue and EBITDA. However, these positive developments were tempered by declines in incumbent broadband, commercial fiber, and RLEC revenues, highlighting the challenges the company faces in adapting to market shifts and increasing competition.
Glo Fiber Milestone Achievement
Glo Fiber reached a significant milestone with 400,000 total passings, marking a year-over-year growth of 81,000. The Glo Fiber data revenue-generating units saw a substantial increase of 39.5% year-over-year, and Glo Fiber revenues surged by 41.1% to $21.3 million, underscoring the robust demand for fiber services.
Consolidated Revenue and EBITDA Growth
Shenandoah Telecommunications reported consolidated revenues of $89.8 million, a 2.5% increase from the previous year. Adjusted EBITDA also showed impressive growth, rising 11.7% to $29.7 million, with margins expanding by 300 basis points to 33%, reflecting improved operational efficiency.
Fiber Network Expansion
The company made significant strides in its fiber network expansion, constructing over 1,700 route miles of fiber in the past year. Additionally, they completed construction on 89% of the planned 22,000 government-subsidized unserved passings, demonstrating their commitment to expanding connectivity.
Low Churn and High ARPU
Shenandoah Telecommunications maintained a low monthly broadband data churn rate of 1.17%, while the broadband data average revenue per user (ARPU) remained strong at approximately $77, indicating customer satisfaction and revenue stability.
Incumbent Broadband Revenue Decline
The company faced challenges in its incumbent broadband markets, with revenues declining by $1.6 million. This was primarily due to a 15% decline in video RGUs as customers increasingly opted for streaming services over traditional video offerings.
Commercial Fiber Revenue Challenges
Commercial fiber revenue experienced a decline of $1.1 million, impacted by a $900,000 noncash deferred revenue adjustment and a $500,000 decrease in early termination fees, reflecting the competitive pressures in the commercial segment.
RLEC Revenue Decrease
RLEC revenue fell by $1.3 million, mainly due to reduced government support revenue and a significant 21% decrease in DSL subscribers, highlighting the shift away from traditional DSL services.
Forward-Looking Guidance
Looking ahead, Shenandoah Telecommunications reiterated its annual guidance, projecting 2025 revenues between $352 million and $357 million, and adjusted EBITDA ranging from $113 million to $118 million. The company plans to complete its network expansion by the end of 2026 and aims to achieve positive free cash flow for the full year 2027, indicating a strategic focus on long-term growth and financial stability.
In summary, the earnings call of Shenandoah Telecommunications reflected a positive sentiment with significant growth in Glo Fiber and improvements in consolidated revenue and EBITDA. However, challenges remain in incumbent broadband and commercial fiber segments. The company’s forward-looking guidance suggests a strategic focus on expansion and financial stability, aiming for continued growth in the coming years.