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DATE

Friday, May 1, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • President and CEO — Edward McKay
  • EVP and CFO — James Volk

TAKEAWAYS

  • Glo Fiber Net Customer Additions -- 6,000 net added, up 9%, bringing the total to 94,000.
  • Total Glo Fiber Passings -- Reached 449,000, with 22,000 added in the quarter; target is 510,000 by end of 2026.
  • Glo Fiber Penetration -- 20.9%, increasing 30 bps sequentially and 150 bps year over year; mature 2019-2020 cohorts report 37.5%.
  • 5-Year Price Guarantee Uptake -- "Nearly 82% of our new residential customers in the first quarter [selected] speeds of 1 gig or higher."
  • Glo Fiber RGUs -- Total revenue-generating units surpassed 110,000, up 31%.
  • Commercial Fiber Sales Bookings -- $196,000 in new monthly bookings, with 167,000 installed as new incremental monthly revenue.
  • Churn Rates -- Glo Fiber monthly average churn at 0.92%; Incumbent broadband monthly data churn at 1.46%, rising modestly due to satellite competition.
  • Commercial Fiber Churn -- "Average monthly compression and disconnect churn remained very low at 0.4%."
  • Stable Average Revenue Per User (ARPU) -- Glo Fiber broadband ARPU stable at>$77 sequentially and year over year; incumbent broadband ARPU $82, down 1.6% from aggressive rate card strategy.
  • Incumbent Broadband Trends -- 111,000 broadband data customers and 156,000 RGUs, with video RGUs down 14.6% and data ARPU declines, driven by streaming substitution and competition.
  • Subsidized Passings -- 23,000 aggregate subsidized passings have 37% penetration; 2023 cohort exceeds 52%; oldest cohort at 71%.
  • Revenue -- $92.2 million, up 4.8%; Glo Fiber expansion market revenue rose $6.4 million or 34.6%, Commercial Fiber revenue up $900,000 or 4.7%, incumbent broadband revenue down $2.2 million from lower video and data ARPU.
  • Adjusted EBITDA -- $31.7 million, up $4.1 million or 15%; margin increased 300 bps to 34.4%.
  • CapEx -- $64.3 million net after $11.5 million government grant collected; 16% decrease over prior year.
  • Liquidity and Debt -- $707 million outstanding debt, $636 million net debt, no maturities until 2029, with $195 million total available liquidity including $44 million cash and $68 million available under RCF.
  • 2026 Annual Guidance -- Revenue of $370 million-$377 million, adjusted EBITDA of $131 million-$136 million, and net CapEx of $220 million-$250 million.
  • Fiber Network Scale -- 19,000+ route miles spanning 8 states; focus on expansion in Virginia, Pennsylvania, Maryland, and Ohio.

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RISKS

  • Incumbent broadband markets show a 4% year-over-year decline in RGUs, driven by a 14.6% drop in video RGUs and increased customer migration to streaming video services.
  • Monthly broadband churn in incumbent markets rose to 1.46% due to satellite competitor promotional activity in rural territories.
  • ARPU in incumbent broadband declined 1.6% because of aggressive pricing and new customer acquisition in competitive markets.
  • RLEC segment revenue dropped $800,000, attributed to a 28% fall in DSL RGUs and lower government grant support.

SUMMARY

Shenandoah Telecommunications Company (SHEN +3.56%) reported consistent fiber-driven growth as Glo Fiber net additions and penetration advanced, while legacy broadband segments experienced continued attrition and margin pressure. ARPU trends diverged, with Glo Fiber stable and incumbent markets challenged by both competitive pricing tactics and technology shifts. The completion of Glo Fiber market launches was confirmed, and management reiterated 2026 guidance, emphasizing a transition toward positive free cash flow by 2027. Construction intensity declined, as reflected in lower CapEx and the substantial progress toward subsidized build targets. Management identified future catalysts in declining capital requirements and anticipated benefits from an improved cost structure post-debt refinancing.

  • Management described three “catalysts converging” for medium-term free cash flow growth: “low double-digit adjusted EBITDA growth rates driven by our fiber businesses, declining capital intensity as we exit the construction phase of our business plan and declining cost of capital after refinancing our debt in 2025.”
  • Glo Fiber’s expansion is nearing completion, with “all planned Glo Fiber markets have now been launched,” and executives confirmed focus has shifted to infill passings within existing geographies.
  • Data center expansion in rural markets was identified as a future commercial fiber growth segment; management indicated that about 20 data centers are planned near the company’s network across 8 states.
  • Commercial Fiber business is expected to achieve “we're generally expecting mid-single-digit revenue growth rates from the commercial business over like a 3- or 4-year period,” as stated by Volk.
  • Management reported that “about 2/3 of the passings, we are the only fixed wireline provider,” implying retained pricing leverage in select markets.
  • CEO McKay reported that increased customer churn from Starlink occurred only “in the most rural areas of our incumbent broadband market,” with mitigative action taken via speed upgrades and value propositions.

INDUSTRY GLOSSARY

  • Passings: Homes or businesses within reach of the company's network infrastructure and eligible for service installation.
  • Revenue-Generating Unit (RGU): An individual service subscription—data, voice, or video—for which the company can charge recurring fees.
  • ARPU: Average revenue per user, a key metric for customer revenue trends.
  • RLEC: Rural Local Exchange Carrier; telecommunications services provider for rural regions.
  • VFN: Variable Funding Note, a type of credit facility referenced for borrowing capacity.
  • RCF: Revolving Credit Facility, a flexible line of credit for corporate liquidity.

Full Conference Call Transcript

Edward McKay: Thanks, Lucas. Good morning, everyone, and thank you for joining us today. Starting on Slide 4, I'll share some of our first quarter highlights. During the quarter, we released 22,000 passings to sales, bringing our total Glo Fiber expansion markets passings to 449,000. We added approximately 6,000 Glo Fiber net customers in the first quarter, a 9% improvement over the prior year period, and we now serve a total of 94,000 customers. Our Commercial Fiber business also delivered a strong quarter with 196,000 in sales bookings and revenue growth of 4.7% year-over-year. Collectively, these results demonstrate the excellent momentum we continue to see in our fiber businesses. We were also pleased with our first quarter financial results.

Consolidated revenues and adjusted EBITDA grew 4.8% and 15% year-over-year, respectively, and we remain on track to deliver positive free cash flow in 2027. Turning to Slide 5. We highlight our integrated broadband network that spans more than 19,000 fiber route miles across 8 states with over 700,000 total broadband passings. As shown on the map, all planned Glo Fiber markets have now been launched, and our primary focus is adding passings in our existing Virginia, Pennsylvania, Maryland and Ohio markets. We remain on track to complete our Glo Fiber expansion in 2026, reaching 510,000 passings. On Slide 6, our sales and marketing team continues to drive strong growth across our Glo Fiber expansion markets.

And during the first quarter, we added approximately 6,000 new customers and nearly 7,000 total video, voice and data revenue-generating units. Our 5-year price guarantee rate card introduced in the second half of 2025 is gaining traction, supported by the expansion of our door-to-door sales channel. Over the past 12 months, we have added more than 23,000 new data customers, more than 26,000 total RGUs as well. Total Glo Fiber revenue-generating units surpassed 110,000 in the first quarter, up 31% compared to the prior year. Moving to Slide 7. First quarter construction was strong with over 22,000 passings added, bringing the total to more than 449,000.

Coupled with the continued increase in homes passed, penetration rose to 20.9%, a 30 basis point increase over the fourth quarter and 150 basis point increase year-over-year. Penetration trends across our Glo Fiber cohorts are shown on Slide 8 and reflect blended penetration rates for both residential and small and medium business passings. We are expecting data penetration rates of approximately 37%, 5 to 7 years after launching the market, and our most mature cohorts launched in 2019 and 2020 have now exceeded this with an average penetration rate of 37.5%. In addition to providing the fastest speeds in our markets, we continue to focus on providing outstanding local customer service.

As shown on Slide 9, our average monthly churn was 0.92% in the first quarter, which continues to be among the best in the industry. Broadband data average revenue per user for the first quarter was stable sequentially and year-over-year at more than $77. We continue to have success selling up the rate card with nearly 82% of our new residential customers in the first quarter, selecting speeds of 1 gig or higher, including 18% choosing 2-gig service and 5% choosing 5-gig service. Our commercial fiber business is highlighted on Slide 10. In the first quarter, incremental monthly sales bookings exceeded 196,000, driven by strong demand from wireless carriers, wholesale customers and school systems.

Our service delivery team installed 167,000 in new monthly revenue during the quarter and the acquired Verizon backlog that drove elevated installation activity in 2025 is now substantially complete. Average monthly compression and disconnect churn remained very low at 0.4% in the first quarter, reflecting exceptional support from both our network operations center and sales team. Turning to Slide 11. We show our operating results for our incumbent broadband markets. At the end of the first quarter, we served more than 111,000 broadband data customers. Data, voice and video RGUs totaled more than 156,000 at year-end, down 4% year-over-year, primarily due to video customers moving to online streaming services.

Total broadband passings in our incumbent markets stayed steady compared to the fourth quarter, and we expect to complete 1,800 additional government-subsidized incumbent grant passings in 2026, primarily in West Virginia. As shown on Slide 12, the recently constructed subsidized passings represent a strong growth segment for our incumbent markets with data penetration exceeding 40% within 6 quarters of a neighborhood launch. Average penetration in our 2023 cohorts is over 52% with the oldest cohort reaching 71%. We've already achieved an aggregate penetration of 37% across 23,000 subsidized passings. Moving to Slide 13. Monthly broadband data churn was stable sequentially and up modestly year-over-year at 1.46% for the first quarter.

The slight uptick in churn was due to promotional activity from satellite competition in some of our most rural markets without a fixed Wireline competitor. In these markets, we implemented a speed increase late in the first quarter, providing customers with higher speeds at the same price to better differentiate our service from satellite offerings. Across approximately 1/3 of our passings where we face another fixed broadband competitor, our rate card strategy of offering greater value with higher speeds at the same price continues to be effective at mitigating churn. As expected, broadband data ARPU declined 1.6% from a year ago to $82, driven by the addition of new customers with more aggressive pricing in our competitive markets.

I'll now turn the call over to Jim to walk you through our first quarter financial results.

James Volk: Thank you, Ed, and good morning, everyone. I'll start on Slide 15 with financial results for the first quarter. Revenues grew 4.8% to $92.2 million, driven by another quarter of strong Glo Fiber expansion market revenue growth of $6.4 million or 34.6% due to a 33.7% increase in data subscribers and stable data ARPU. Commercial Fiber revenue grew $900,000 or 4.7% year-over-year, driven primarily by growth among existing customers in the enterprise and carrier verticals.

Incumbent broadband markets revenue declined $2.2 million, primarily due to lower video revenue from a 14.6% decline in video RGUs as customers switched to streaming video services and to a lesser extent, lower data revenues due to a 1.6% decline in data ARPU from a more aggressive rate card in competitive markets. RLEC revenues declined $800,000, primarily due to lower DSL revenue from a 28% decline in DSL RGUs and lower government grant support revenues. Approximately half of the decline in DSL RGUs was due to customer upgrades to our broadband service. Adjusted EBITDA grew $4.1 million or 15% to $31.7 million, driven by $4.3 million in revenue growth and slightly higher operating expenses.

Adjusted EBITDA margins increased 300 basis points to 34.4% in the first quarter of 2026 as compared to the first quarter 2025 due to a combination of high incremental margins in Glo Fiber, fewer lower-margin video customers and a favorable true-up related to a government grant. Turning to Slide 16. We reiterate our annual guidance for 2026. We expect revenues of $370 million to $377 million, adjusted EBITDA of $131 million to $136 million and CapEx net of grant reimbursements to be $220 million to $250 million. Moving to Slide 17. We invested $75.8 million in capital expenditures in the first quarter 2026 and collected $11.5 million in government grants for net CapEx of $64.3 million.

CapEx declined 16% compared to the first quarter of 2025 due to completing 91% of the incumbent broadband markets government subsidized builds to unserved areas in 2025. We have also completed construction of 88% of our target Glo Fiber passings as of March 31 and expect to complete the Glo Fiber expansion by the end of '26. I'd now like to update you on our liquidity and debt maturities on Slide 18. As of March 31, we had $707 million in outstanding debt and $636 million of net debt. We have no debt maturities until 2029.

Total available liquidity was approximately $195 million as of March 31, consisting of $44 million of cash and cash equivalents, $27 million in restricted cash, $18 million available under the VFN, $68 million available under the RCF and $38 million remaining reimbursements available under government grants. In addition, the company has over $117 million of VFN commitments that are not available to draw as of March 31. We expect the available VFN capacity to reach the commitment levels with continued growth in the secured fiber network revenues from the ABS entities.

In summary, as noted on Slide 19, we have 3 catalysts converging that we expect will lead us to generating and growing positive free cash flow in 2027 and beyond. low double-digit adjusted EBITDA growth rates driven by our fiber businesses, declining capital intensity as we exit the construction phase of our business plan and declining cost of capital after refinancing our debt in 2025. Thank you. And operator, we are now ready for questions.

Operator: [Operator Instructions] Our first question comes from Hamed Khorsand with BWS Financial.

Hamed Khorsand: First question is just, are you seeing any changes or challenges in adding subscribers given the competitive nature that you're talking about in your markets?

Edward McKay: In our Glo Fiber markets, we're not. Our net adds were up 9% over the first quarter of 2025. So we're very pleased with our progress there. We did mention in our incumbent markets, we did see a little bit of churn to Starlink with some of the promotional offers they launched in the first quarter. But other than that, we're on plan as expected.

Hamed Khorsand: Okay. And then as far as the change of goes ending your construction phase and going into more of a subscriber growth phase here, are you going to be increasing marketing expense? Or is this -- should we expect just CapEx to decline and it's just going to be incremental here to cash flow?

Edward McKay: Yes. I would expect marketing expense to be similar and the primary impact will be the decline in CapEx.

Operator: Our next question comes from Christian Schwab with Craig-Hallum.

Christian Schwab: Yes. Congratulations on the solid results. On your ASP on the Glo Fiber business and the recent areas and trends of moving from just not just 1 gig speed or higher at 82%, but having people want 2% and 5%. Do you think those trends are sustainable over a multiyear period? And do you have any target expectations for customers' needs for higher speeds at 2 gigabytes, excuse me, and above as your penetration rates go to your target levels on the fiber that's been laid in the last few years, meaning your blended ASP at $77, I think in most markets, your 1 gig product is priced around $65.

So do you see ASP trends in that business increasing over time? Or is it too early to tell?

Edward McKay: I'd say medium term, we are offering 5-year price guarantees on the higher speed tiers. But longer term, I think there's opportunity there. And we were very pleased with the speed mix in the past quarter. The demand is out there for those higher speeds, and we do think that's sustainable going forward.

Christian Schwab: Okay. Fantastic. And then on the commercial fiber business, could you just remind us what your growth objectives are there and how you see that market over a multiyear time frame doing for you? And the potential for you to add additional subscribers?

Edward McKay: Well, I'll start, and then I'll pass it over to Jim. One opportunity we do see is with the data centers moving out to our more rural areas, we think that's an additional opportunity for incremental revenue. We're really not playing in the hyperscalers space today. There have been several data center announcements in our markets. We think we certainly have the opportunity to win our share of those services, and that would be additive to our current revenue. And I'll let Jim talk a little about the growth projections.

James Volk: Yes, Christian, we're generally expecting mid-single-digit revenue growth rates from the commercial business over like a 3- or 4-year period. It's important to note, this is a little bit of a lumpy business. Some of the larger deals like what Ed mentioned that we're working on, on the hyperscalers and some of the carrier business tends to be a little lumpy. But we do have -- each quarter, we're adding more enterprise customers along the way as well. But yes, we think there's a nice growth opportunity here in the mid-single-digit growth rates.

Christian Schwab: Great. And then a follow-up on the data center for clarity. Can you just remind us of the miles of fiber that you have and the connectivity potential that you have in data center so people can understand maybe potentially a little bit better why data center customers would be coming to you?

Edward McKay: So 19,000-plus route miles of fiber in total. Our fiber network stretches from Chicago all the way to the Washington, D.C., Ashburn, Virginia area. We get major markets in between like Columbus, Ohio, like Pittsburgh. And we have many unique fiber routes. So as these data centers move out further from the metropolitan areas, seeking areas with land and power, we believe we have the opportunity to take advantages of those unique fiber routes that we have and gain some of that business.

Christian Schwab: Can you give us an idea what the revenue potential would be not this year, but over a multiyear time frame, given that trend as data centers move out a little bit away from metro into rural areas that might want to take advantage of your 19,000 fiber miles. Can you give us an idea of the revenue potential, not an estimate, but maybe an aspiration or goal that you guys may have for that market?

James Volk: Yes, Christian, I think it would be a little premature to get into revenue expectations. But I can tell you, there is about 20 data centers being either built or being built close to our fiber in the 8 states that we operate in. So not clear to me whether all of them are actually going to get built. But if they do get built, we think we're in a prime position to win some business.

Operator: [Operator Instructions] Our next question comes from Vikash Arlaka with New Street Research.

Vikash Harlalka: There's a lot of concern among broadband investor base around pricing power and broadband ARPU growth for the industry. Do you think that broadband businesses have pricing power today? Or are we entering a period of deflation for the business? And then I have a follow-up.

Edward McKay: So I'll say in our Glo Fiber business, we're expecting fairly flat ARPU in the near term. I think over time, we do gain that pricing power. And then our incumbent business, we mentioned earlier, as we've seen some competition in our markets, we have seen a slight decline in ARPU there. So it's -- I think it's a bit of a mix depending on which business you're looking at.

James Volk: Add to that. In our incumbent business, about 2/3 of the passings, we are the only fixed wireline provider. So we do think we have some pricing power there as well.

Vikash Harlalka: Got it. That's helpful. And then I just wanted to go back to your comment about increased competition from Starlink during the quarter. It sounds like the competition was mainly because Starlink had some promotions. And so did you lose customers on the growth add side or churn or both? And do you see this competition as continuing from here? And if so, what's your plan on addressing this increased competition?

Edward McKay: So we only saw the impact in the most rural areas of our incumbent broadband market. We saw really no impact in Glo Fiber and no impact in the majority of our incumbent passings. So what they started offering in the first quarter was $15 off for 4 months as a promotion. But I think the biggest factor was they offered free equipment. It was previously $350 , so we'll see how long this lasts. They could be offering these promotions in preparation for a potential IPO later this year. But we have the ability to increase speeds. So we've done that. Late in the first quarter, we increased speeds significantly in our rural incumbent areas.

Most of those customers that left were on legacy rate cards. So we've given those customers more value for the same price, and we think that will help mitigate.

Operator: Our next question comes from Christian Schwab with Craig-Hallum.

Christian Schwab: Yes. Just a quick follow-up on that. Just on the Starlink promotion in your most rural market, these are very slow speeds. Can you just quantify a little bit more clarity around your commentary to compete with Starlink, how you increased -- give us an idea of what speed you were operating at to what speed you can move customers to compete with Starlink because this really isn't the competition for fiber at 1, 2 and 5 gig speeds.

Edward McKay: Yes. So in all of these markets, we have the ability to offer gigabit speeds. And I think it was a -- customers were looking for a potentially lower-priced alternative. But when you compare our pricing to Starlink's pricing, after that promotional discount expires, we're actually favorable from a pricing standpoint and a speed standpoint. So we'll see how long these customers stay on Starlink. We certainly think we have the opportunity to win some of those back as well.

Operator: Thank you. I would now like to turn the call back over to Ed McKay for any closing remarks.

Edward McKay: Thank you for joining us today. We look forward to updating you on our progress in the future quarters. And operator, that concludes our call.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.