Q4 2023 Shenandoah Telecommunications Co Earnings Call

February 21, 2024

Operator: Copyright Australian Broadcasting Corporation Good morning, everyone. Welcome to Shenandoah Telecommunications' fourth quarter 2023 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analysis at Shentel. Good morning, and thank you for joining us.

Okay.

Good morning, everyone.

Speaker Change: Welcome to Shenandoah Telecommunications fourth quarter 2023 earnings conference call.

Speaker Change: Today's conference is being recorded.

Speaker Change: At this time I would like to turn the conference over to Mr. Kirk Andrews director of financial planning and analysis that Chantal.

Kirk Andrews: Good morning, and thank you for joining us.

Kirk Andrews: The purpose of today's call is to review Shentel's results for the fourth quarter and full year 2023. Our results were announced in a press release distributed this morning, and the presentation we'll be reviewing is included on the investor page of our website, www.schmintel.com. Please note that an audio replay of this call will be made available later today.

Kirk Andrews: On today's call to review <unk> results for the fourth quarter and full year 2023.

Kirk Andrews: Our results were announced in a press release distributed this morning and the presentation. We'll be reviewing is included on the Investor page at our website Www Dot <unk> dot com.

Kirk Andrews: Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call.

Kirk Andrews: The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer, Ed McKay, Executive Vice President and Chief Operating Officer, and Jim Volk, Senior Vice President of Finance and CFO. After our prepared remarks, we will conduct a question and answer session. As always, let me refer you to slide two of the presentation, which contains our safe harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from this statement.

Speaker Change: With us on the call today are Chris French President and Chief Executive Officer at Mackay Executive Vice President and Chief operating Officer, and Jim Volk, Senior Vice President of Finance and CFO.

Speaker Change: After our prepared remarks, we will conduct a question and answer session.

Speaker Change: As always let me refer you to slide two of the presentation, which contains our safe Harbor disclaimer and remind you that this conference call may include forward looking statements subject to certain risks and uncertainties.

Speaker Change: These may cause our actual results to differ materially from these statements.

Speaker Change: Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you're encouraged to review.

Kirk Andrews: [inaudible] Please be careful not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Chris. Go ahead, Chris.

Speaker Change: You are cautioned not to place undue reliance on these forward looking statements except as required by law, we undertake no obligation to publicly update or revise any forward looking statements.

Speaker Change: And with that I'll now turn the call over to Chris go ahead, Chris.

Christopher E. French: Thanks, Kirk. We appreciate everyone joining us this morning, and I hope everyone is well. 2023 was another strong year for Shintell as we continued executing our Glow Fiber Expansion Plan. As you can see on slide four, consolidated revenues and adjusted EBITDA grew approximately 8% and 19%, respectively, driven by the Glowfiber subscriber group. Since our first full year of launching Glowfiber in 2020, our consolidated revenue and adjusted EVA-DA have grown at a compound annual growth rate of approximately 9% and 18%, respectively. We believe this is an industry-leading pace among publicly traded broadband companies. As noted on slide five, we had over 41,700 Glowfiber subscribers as of December 2023, an increase of over 71% compared to 2022 and over 10 times the number of 2020 subscribers.

Chris French: Thanks, Kurt we appreciate everyone joining us this morning, and I hope everyone is well.

Chris French: 23 was another strong year for <unk> as we continued executing our glo fiber expansion plan.

Chris French: As you can see on slide four consolidated revenues and adjusted EBITDA grew approximately 8% and 19% respectively, driven by Glo fiber subscriber growth.

Chris French: Since our first full year of launching Glo fiber in 2020, our consolidated revenue and adjusted EBITDA have grown at a compound annual growth rate of approximately 9% and 18% respectively.

Chris French: We believe this is an industry leading pace among publicly traded broadband companies.

Chris French: As noted on slide five we had over 41700 glo fiber subscribers as of December 2023, an increase of over 71% compared to 2022 and over 10 times 2000 Twenty's subscribers.

Christopher E. French: Flow fiber revenues have grown over 160% per year over the past three years, fueling our industry-leading consolidated revenue and adjusted EBITDA growth rate. Moving to slide six, we added over 86,000 new glow fiber passings in 2023, almost a 20% increase from 2022, and over a threefold increase from 2020. Our sales team has more than kept pace with our construction.

Chris French: Glo fiber revenues have grown over 160% per year over the past three years fueling our industry, leading consolidated revenue and adjusted EBITDA growth rates.

Chris French: Moving to slide six.

Chris French: Added over 86000, new Glo fiber passing in 2023, almost a 20% increase from 2022 and over a three fold increase from 2020 levels are.

Chris French: Our sales team has more than kept pace with our construction team.

Christopher E. French: We added over 17,000 Glowfiber Net customers, representing a more than 32% increase over 2022 and a 62% annual growth rate since 2020. We expect to accelerate the pace of glow fiber construction and sales again in the next year, continuing the annual improvements we've made in each of the past three years. Before I turn the call over to Jim, I'd like to give an update on our pending acquisition of Horizon Telecom. We've received most of the required regulatory approvals and expect to close the transaction in the second quarter, depending on the timing of the remaining regulatory approvals. The Shentel and Horizon teams have been working well together in planning for the integration of the two companies.

Chris French: We added over 17000, glo fiber net customers, representing a more than 32% increase over 2022, and a 62% annual growth rate since 2020.

Chris French: We expect to accelerate the pace of Glo fiber construction and sales again in the next year continuing the annual improvements we've made in each of the past three years.

Speaker Change: Before I turn the call over to Jim I'd like to give an update on our pending acquisition of horizon Telecom.

Jim Volk: We've received most of the required regulatory approvals and expect to close the transaction in the second quarter, depending on the timing of the remaining regulatory approval.

Jim Volk: <unk> had a RASM teams have been working well together and planning for the integration of the two companies.

Christopher E. French: We now expect most of the system integration work to be completed in the first quarter of 2025. With that, I'll now turn the call over to Jim to review the details of our financial results. Thank you, Chris, and good morning, everyone.

Jim Volk: Now expect most of the system integration work to be completed in the first quarter of 2025.

Jim Volk: With that I'll now turn the call over to Jim to review the details of our financial results.

Jim Volk: Thank you, Chris and good morning, everyone.

Jim Volk: I will start with our broadband financial results for 2023 on slide eight.

James J. Volk: I will start with our broadband financial results. [inaudible] Broadband revenue grew 20.3 million, or 8.1%, to 269.3 million. As Chris just mentioned, Glow Fiber revenue was the primary catalyst, growing 16.8 million or 92% from the prior year with strong customer growth of over 71% and a 4% increase in data subscriber RPIs. Cable market revenues, excluding the impact of our discontinued BEAM service.

Jim Volk: Broadband revenue grew 23 million or eight 1% to $269 3 million.

Jim Volk: As Chris just mentioned Glo fiber revenue was the primary catalysts around $16 8 million or 92% from the prior year with strong customer growth of over 71% and a 4% increase in data subscriber market.

Jim Volk: Cable market revenues, excluding the impact of our discontinued <unk> service grew.

Jim Volk: <unk> grew to $5 million or one 4% due primarily to one 8% growth in data subscribers.

Jim Volk: Commercial fiber revenue grew $3 3 million or eight 5% due primarily to $3 million and nonrecurring early termination fees related to backhaul circuit disconnects.

Jim Volk: Mobile disconnected 338 backhaul circuits during 2023 as part of the previously announced shutdown of the former Sprint network.

Jim Volk: With most of the T mobile backhaul disconnects now behind US, we expect commercial fiber revenue in 2024 to decline by 3 million and lower backhaul revenue from a full year of lower T mobile backhaul circuits.

James J. Volk: Group 2.5 million, or 1.4, due primarily to 1.8% growth in data subscribers. Commercial fiber revenue grew $3.3 million, or 8.5%, due primarily to $3 million in non-recurring early termination related to backhaul circuits. T-Mobile disconnected 338 backhaul circuits during 2023 as part of the previously announced shutdown of the former Sprint network, with most of the T-Mobile backhaul disconnects now behind, We expect commercial fiber revenue in 2024 to decline by $3 million in lower backhaul revenue from a full year of lower T-Mobile backhaul service. $3 million in lower, non-recurring early termination, had $1 million in additional T-Mobile churn in We expect commercial fiber revenue to return to mid to high single-digit growth rates starting in 2025.

Jim Volk: $3 million and lower nonrecurring early termination fees at.

Jim Volk: And $1 million in additional T mobile churn in 2024.

Jim Volk: Partially offset by continued growth in other customer segments.

Jim Volk: We expect commercial fiber revenue to return to mid to high single digit growth rates starting in 2025.

Jim Volk: Broadband adjusted EBITDA grew $15 8 million or 17, 6% to $105 8 million in 2023, when compared to 2022.

Jim Volk: Due to the previously mentioned revenue growth of $23 million, partially offset by $4 6 million and higher advertising expenses to <unk>.

Jim Volk: Support the Glo fiber expansion.

Jim Volk: Broadband adjusted EBITDA margin expanded 320 basis points year over year to 39, 3% as we continue to see the benefits of operating leverage our fiber network as.

Jim Volk: As the broadband cost of service on slightly year over year.

Jim Volk: Spite, adding over 17000, both fiber customers over the past year.

Jim Volk: On slide nine.

Jim Volk: Our segment revenue declined slightly to $18 6 million due primarily to lower intercompany revenue for the decommissioning of the fixed wireless network in 2022.

James J. Volk: Broadband adjusted EBITDA grew 15.8 million or 17.6% to 105.8 million in 2023 when compared to 2022, due to the previously mentioned revenue growth of $20.3 million, partially offset by 4, and Higher Average IT Expenses to support the Globe Fiber Extension. Broadband adjusted EBITDA margins expanded 320 basis points year-over-year to 39.3% as we continue to see the benefits of operating leverage of our fiber network, as the broadband cost of service declined slightly year over year, despite adding over 17,000 Rode Fiber customers over the past year. On slide nine.

Jim Volk: We have not recognized any tower lease churn from T. Mobile to date, we still expect T mobile to terminate 53 leases as part of the previously announced <unk> walk agreement.

Jim Volk: Finding is uncertain.

Jim Volk: These 53 leases will continue to generate rental revenue until all required equipment distribute lease property and an inspection notices issued.

Jim Volk: Our adjusted EBITDA declined 300000 to $11 6 million due primarily to the lower intercompany revenue.

Jim Volk: Moving to slide 10.

Jim Volk: Consolidated revenue grew seven 5% to $287 4 million in 2023 due to the previously mentioned growth in broadband.

Jim Volk: Consolidated adjusted EBITDA grew 19, 3% to $90 6 million also due to growth in broadband.

Jim Volk: Adjusted EBIT margins expanded year over year from 28, 4% to 31, 5% in 2023 due to the scaling of our fiber network.

James J. Volk: Power segment revenue declined slightly to $18.6 million due primarily to lower intercompany revenue from the decommissioning of BeamFix wireless network in 2022. We have not recognized any tower lease churn from T-Mobile to date. However, we still expect T-Mobile to terminate 53 leases, as part of the previously announced TAYN welcome, so the timing is uncertain.

Jim Volk: Please note that we expect our consolidated revenue and adjusted EBITDA growth rates to slow in 2024 due to the previously mentioned 7 million an expected decline in broadband T mobile revenue.

Jim Volk: We expect consolidated revenue and adjusted EBITDA returned to similar growth rates in 2025, as we reported over the past three years.

Jim Volk: We have $239 million of liquidity as of December 31st as displayed on slide 11, consisting of a $139 million in cash and $100 million in available revolving line of credit.

James J. Volk: These 53 leases will continue to generate rental revenue until all required equipment is removed from the leased property and an inspection notice is issued. Tower-adjusted EBITDA declines $300,000 to $11.6 million due primarily to lower intercompany revenue. Moving to slide 10. Consolidated Revenue Group, 7.5% $287.4 million in 2023 due to the previously mentioned growth in broadband. Consolidated Adjusted EBITDA grew 19.3% to 90.6 million; also, due to growth in broadband, adjusted EBITDA margins expanded year over year from 28.4% to 31.5% in 2023 due to the scaling of our fiber network. Please note that we expect our consolidated revenue and adjusted EBITDA growth rates to slow in 2024 due to the previously mentioned $7 million in expected decline in broadband T-Mobile revenue.

Jim Volk: We drew down the remainder of our $300 million delayed draw term loans during the fourth quarter prior to the expiration of its availability.

Jim Volk: This liquidity position does not include the incremental $356 million and committed credit facility.

Jim Volk: <unk> equity financings related to the horizon transaction, which will close on the same day as the horizon merger.

Jim Volk: Negative free cash flow for 2023 was $143 million or $28 million more than prior year due primarily to increased investments in expanding glo fiber and government subsidized construction to answer.

Jim Volk: Partially offset by $26 million income tax and sales tax refunds in 2023.

Jim Volk: Please note we received $17 3 million in proceeds from the closing of the two five.

Vectren sale.

Jim Volk: In one and $1 9 million of government grants related to uncertain construction that are reported separately from capital expenditures and the cash flow from investing activities.

As reflected on slide 12, our outstanding debt was 300 million as at December 31, we.

Jim Volk: We have no significant debt maturities until 2026.

Jim Volk: Now I'll turn the call over to Ed.

Ed: Thank you Jim and good morning, everyone.

Ed: I'll start on slide 14, with an update on our integrated broadband network, we had a record quarter for fiber construction, adding over 33000, new fiber passive and constructing almost 500, new route miles of fiber.

Ed: The fourth quarter marked a milestone for glo fiber now passes more homes and businesses that are encumbered cable markets.

James J. Volk: We expect consolidated revenue and adjusted EBITDA to return to similar growth rates in 2025 as we've reported over the past three years. We have $239 million of liquidity as of December 31st, as displayed on slide 11, consisting of $139 million in cash and $100 million in an available revolving line of credit. We drew down the remainder of our $300 million delay draw term loans during the fourth quarter prior to the expiration of its availability.

Ed: In the fourth quarter, we launched new the new Glo fiber market of Salisbury, Maryland, and we now offer glo fiber multi gigabit service in 22 markets with three additional market launches planned for 2024.

Ed: Turning to slide 15, our total number of approved Glo fiber passes has grown to 564000, primarily driven by a new franchise agreement to expand fiber services to approximately 40000 additional homes and businesses in Frederick County, Maryland.

Ed: Now have 74 franchise agreements in 25 markets across five states.

Edward H. McKay: This liquidity position does not include the incremental $356 million in committed credit facility and pervert equity financing related to the Horizon transaction, which will close on the same day as the Horizon merger. Negative free cash flow for 2023 was $143 million, or $28 million more than the prior year, due primarily to increased investments in expanding low fiber and government-subsidized construction to unserved tenants, partially offset by $26 million in income tax and sales tax refunds in 2023. Please note we received $17.3 million in proceeds from the closing of the 2.5 GHz spectrum sale and 1.9 million in government grants related to unserved home construction that are reported separately from capital expenditures in the Cash Flow from Investing Activity. As reflected on slide 12, our outstanding debt was $300 million as of December 31st. We have no significant debt maturities until 2026. And now, I'll turn the call over to Ed. Thank you, Jim, and good morning, everyone.

Ed: We continue to work through challenges with pole attachment permits and underground locates and our engineering and construction teams delivered a very strong fourth quarter, adding over 31000, new glo fiber passes and over 2000 government subsidized fiber passes bringing our total fiber passengers to over 236000.

A number of planned government subsidized passengers decreased slightly quarter over quarter as we decrease the scope of one government Grant project. However, our government our construction backlog remains very robust with approximately 351000 incremental fiber passes approved for construction.

Ed: As we wrap up glo fiber construction, we continue to see strong customer growth as shown on slide 16.

Ed: We added over 4300, glo fiber customers in the fourth quarter to finish the year at over 41700, and our data penetration rate reached 17, 8% up from 16, 5% at the end of 2022.

Ed: Our total number of data video and voice revenue generating units has reached over 51000 up approximately 65% year over year.

Ed: As Jim mentioned, our broadband data average revenue per user increased by 4% year over year to over $76 driven by a combination of additional equipment revenue and customers selecting higher speed tiers.

Ed: For the quarter, 47% of our new residential subscribers adopted speed tiers of one gigawatt higher including approximately 4% that took speeds of two giga wire.

Ed: At the end of the fourth quarter, approximately 11% of our total glo fiber customers subscribe to video service and approximately 12% subscribed to voice service.

Edward H. McKay: I'll start on slide 14 with an update on our integrated broadband network. We had a record quarter for fiber construction, adding over 33,000 new fiber routes and constructing almost 500 new route miles of fiber. The fourth quarter marked a milestone where Glowfiber now passes more homes and businesses than our incumbent cable market. In the fourth quarter, we launched the new Glowfiber market of Salisbury, Maryland, and we now offer Glowfiber multi-gigabit service in 22 markets with three additional market launches planned for 2024. Turning to slide 15, our total number of approved Glow Fiber Passings has grown to 564,000, primarily driven by a new franchise agreement to expand fiber services to approximately 40,000 additional homeless and businesses in Frederick County, Maryland. We now have 74 franchise agreements in 25 markets across five states.

Ed: And finally, our churn remained very low at 1.0% for 2023, an improvement of seven basis points over the prior year as we continue to focus on providing the fastest speeds in our markets outstanding local customer service and fair straightforward pricing.

Ed: Moving to slide 17, we highlight our data penetration rates as our markets age.

Ed: All of our cohorts showed improvements in the fourth quarter, and we continue to see penetration rates above 18% after one year and above 30% after three years.

Ed: Our oldest cohort launched four years ago has now reached a penetration rate of almost 39%.

Ed: Ultimately, we expect to reach average terminal penetration rate of about 38% five years to six years after new passenger launched.

Ed: Yes.

Ed: Let's move on to our operating results for our cable markets on slide 18.

Ed: Broadband data subscribers remained flat year over year and quarter over quarter, and we ended the year with over 109000.

Ed: Our total revenue generating units decreased by about 3% year over year as we continued to see declines in video service and residential voice service due to cord cutting.

Ed: Our broadband data penetration decreased slightly year over year from 51, 7% at the end of 2022% to 58% at the end of 2023.

Edward H. McKay: We continued to work through challenges with pole attachment permits and underground locates, and our engineering and construction teams delivered a very strong fourth quarter, adding over 31,000 new GLO fiber passings and over 2,000 government-subsidized fiber passings, bringing our total fiber passings to over 236,000. Our number of planned government-subsidized passings decreased slightly quarter over quarter as we decreased the scope of one government grant project.

Ed: Although our broadband data customers was flat year over year, we added approximately 37000, new passengers in 2023, primarily as part of government subsidized projects in Unserved areas.

Ed: Broadband data churn was $1 five 8% for the fourth quarter of 2023, an improvement of five basis points year over year as we increased broadband speeds in the second half of the year, given customer higher speeds and more value for the same price.

Ed: For the entire year churn was 165% up about seven basis points year over year due to overbuild of competition in some markets.

Edward H. McKay: However, our construction backlog remains very robust, with approximately 351,000 incremental fiber passings approved for construction. As we ramp up glow fiber construction, we continue to see strong customer growth, as shown on slide 16. We added over 4,300 Glowfiber customers in the fourth quarter to finish the year at over 41,700, and our data penetration rate reached 17.8%, up from 16.5% at the end of 2022. Our total number of data, video, and voice revenue-generating units has reached over 51,000, up approximately 65% year over year. As Jim mentioned, our broadband data average revenue per user increased by 4% year over year to over $76, driven by a combination of additional equipment revenue and customers selecting higher speed tiers. For the quarter, 47% of our new residential subscribers adopted speed tiers of one gigabit or higher, including approximately 4% that took speeds of two gigabits or higher. At the end of the fourth quarter, approximately 11% of our total Glowfiber customers subscribe to the video service, and approximately 12% subscribe to voice.

Ed: <unk> increased approximately one 8% year over year to $82 75.

Turning to slide 19, we highlight our broadband enterprise and wholesale commercial fiber business in.

Ed: In 2023, we booked new sales with monthly revenue totaling approximately 350000 down about 5% year over year.

Ed: Our new installed monthly revenue for 2023 was 353000 and we finished the year with an installation backlog of approximately 140000 in monthly revenue.

Ed: For cell site backhaul connections T mobile continues to reduce the number of circuits as part of the sprint network rationalization project.

Ed: In the fourth quarter of 2023, they removed 57 connections.

Ed: As Jim mentioned, we expect additional churn as they complete their network turned down this year at 167 of the remaining 190 backhaul connections are under a long term contract.

Ed: Excluding T mobile churn and revenue compression remained low at 0.4% for 2023.

Ed: Turning to slide 20 in our tower segment. We ended 2023 with 453 total tower tenants and slightly over two tenants per tower.

Ed: Our third party tower tenants remained steady ending the year at 437, however, our intercompany leases increased with new leases for <unk> broadband network equipment at several additional tower sites.

Ed: As Jim mentioned, we do expect T mobile to eventually reduce the number of tower leases as they complete their sprint network rationalization project.

Ed: And finally, our total number of towers decreased to 219, as we decommission two non revenue towers and transferred one non revenue tower to our broadband segment.

Ed: Yes.

Edward H. McKay: And finally, our churn remained very low at 1.0% for 2023, an improvement of seven basis points over the prior year, as we continue to focus on providing the fastest speeds in our markets, outstanding local customer service, and fair, straightforward pricing. Moving to slide 17, we highlight our data penetration rates as our markets age. All of our cohorts showed improvements in the fourth quarter, and we continue to see penetration rates above 18% after one year and above 30% after three years.

Ed: Our 2023 capital spending and guidance for 2024 are reflected on slide 21.

Ed: With strong glo fiber construction results in the fourth quarter. We finished 2023 with capital spending at the higher end of our previous guidance range at approximately $257 million.

Ed: The significant increase over 2022 was driven by investments in Glo fiber and government subsidized passes.

Ed: In 2023, we invested $31 million in government subsidized projects and we expect to be reimbursed for approximately 50% of these costs as we complete construction.

Ed: Our glo fiber investment was $182 million in 2023, including approximately $156 million to design and construct new passes and approximately $17 million to connect new customers.

Edward H. McKay: Our oldest cohort launched four years ago has now reached a penetration rate of almost 39%. Ultimately, we expect to reach an average terminal penetration rate of about 38% five to six years after new transmitters are launched. Let's move on to our operating results for our cable markets on slide 18. Broadband data subscribers remain flat year over year and quarter over quarter, and we ended the year with over 109,000.

Ed: For 2024, we're projecting capital spending in the $260 to $290 million range as we continued to accelerate construction for glo fiber and government grant projects.

Ed: We plan to invest approximately $32 million net of government subsidies to expand broadband to approximately 7000 unserved homes.

Ed: We also plan to invest about $190 million and glo fiber, including approximately $160 million to expand service to 100000, new passes and $24 million to connect new customers.

Edward H. McKay: Our total revenue-generating units decreased by about 3% year over year as we continue to see declines in video service and residential voice service due to cord cutting. Our broadband data penetration decreased slightly year over year from 51.7% at the end of 2022 to 50.8% at the end of 2023. Although our broadband data customers were flat year over year, we added approximately 37,000 new customers in 2023, primarily as part of government-subsidized projects in unserved areas. [inaudible] For the entire year, churn was 1.65%, up about seven basis points year over year due to overbuilder competition in some markets, and proving increased approximately 1.8% year over year to $82.75. Turning to slide 19, we highlight our broadband enterprise and wholesale commercial fiber.

Ed: For our commercial fiber business, we have budgeted approximately $11 million in success based spending we.

Ed: We've also budgeted about $41 million in our incumbent cable business, including $10 million of DOCSIS upgrades to improve to add additional capacity and provide higher speeds in competitive markets.

Speaker Change: Thank you very much and operator, we're now ready for questions.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Okay.

Speaker Change: Our first question will come from the line of Frank Louthan with Raymond James.

Frank Louthan: Great. Thank you.

Frank Louthan: Get the horizon deal completed and Youre kind of at a full construction ramp and how many homes do you expect to be passing per year and then what.

Frank Louthan: Sort of the catch up from from the marketing standpoint.

Frank Louthan: How many you think you can you can add in.

Frank Louthan: The first question and second question is T mobile selling fixed wireless in the legacy wireless markets, where that you sold to them. Thank you.

Frank Louthan: Okay.

Fragrance: Fragrance as well answer the T. Mobile question first yes, yes. They do offer there they are fixed wireless service in the legacy markets that we sold to them up to this point, we've not seen any material impact from.

Edward H. McKay: In 2023, we will book new sales with monthly revenue totaling approximately $350,000, down about 5% year over year. Our new installed monthly revenue for 2023 was $353,000, and we finished the year with an installation backlog of approximately $140,000 in monthly revenue. For cell site backhaul connections, T-Mobile continues to reduce the number of circuits as part of their Sprint Network Rationalization Project.

Fragrance: T mobile fixed wireless.

Speaker Change: As far as the construction rate as I mentioned, we plan on building 100000 additional glo fiber passes this year, we do believe we'll be able to accelerate that somewhat.

Speaker Change: With the addition of horizon as well so we expect that pace over 100000 patents.

Speaker Change: Okay, Alright, thank you very much.

Speaker Change: Okay.

Edward H. McKay: In the fourth quarter of 2023, they removed 57 conne, As Jim mentioned, we expect additional churn as they complete their network turndown this year and 167 of the remaining 190 backhaul connections are under a long-term contract. Excluding T-Mobile, churn and revenue compression will remain low at 0.4% for 2023. Turning to slide 20 in our tower segment, we ended 2023 with 453 total tower tenants and slightly over two tenants per tower. Our third-party tower tenants remained steady, ending the year at 437.

Speaker Change: Our next question will come from the line of Dan <unk> with B Riley Securities.

Speaker Change: Sure.

Dan: Yeah, Hey, guys.

Dan: Thanks for taking the questions.

Dan: <unk>.

Dan: I noticed you talked about exploring other strategic alternatives in the press release to maybe rates and growth capital.

Dan: Just maybe frame up what those might look like and obviously you talked about the tower sale. If you could provide an update there.

Dan: As you think about strategic alternatives, whether you'd think about a sale of any non non tower assets.

Dan: Okay.

Dan: Yes, Dan we're looking at multiple options to raise additional growth capital.

Dan: Towers as one of the possibilities.

Speaker Change: Don't have anything to update today all in on that.

Speaker Change: The important thing to note is we don't really need the capital until 'twenty five so we have plenty plenty of time to explore different alternatives.

Speaker Change: Another possibility that we've taken and normally look at is is maybe entering the asset securitization market. The ABS market for for some of our more mature fiber markets.

Edward H. McKay: However, our intercompany leases increased with new leases for Shentel broadband network equipment at several additional tower sites. As Jim mentioned, we do expect T-Mobile to eventually reduce the number of tower leases as they complete their Sprint Network Rationalization Project. And finally, our total number of towers decreased to 219 as we decommissioned two non-revenue towers and transferred one non-revenue tower to our broadband site. Our 2023 capital spending and guidance for 2024 are reflected on slide 21. With strong glow fiber construction results in the fourth quarter, we finished 2023 with capital spending at the higher end of our previous guidance range at approximately $257 million. A significant increase over 2022 was driven by investments in Glow Fiber and government-subsidized passes. In 2023, we invested $31 million in government-subsidized projects, and we expect to be reimbursed for approximately 50% of these costs as we complete construction.

Speaker Change: So we're going to explore all different options and then come out with what we think is the best option.

Speaker Change: We continue to provide capital to grow our business.

Speaker Change: Okay, great. Thanks, Jim and then just on the <unk>.

Speaker Change: Capex guidance for 2024.

Speaker Change: Talked about the increase in.

Speaker Change: The cable DOCSIS upgrade so that sort of stuff like is this new sort of $40 million ish maintenance capex run rate.

Speaker Change: Incumbent cable the the way we should think about it or is this sort of a one time upgrade and then we sort of go back to a little lower than that.

Speaker Change: And then just to be clear on the 180 to 200.

Speaker Change: Guidance for <unk> and fiber to our U.

Speaker Change: Including any passing from the incremental 100000 from the horizon acquisition, there or would that all be capex upside to that.

Speaker Change: Yes so.

Speaker Change: I'll answer the the Horizon question first the 100000 that I mentioned was just the legacy Centel Glo fiber business not any incremental passengers from horizon.

Speaker Change: And as far as the cable Capex.

Speaker Change: Since youre roughly $40 million to $40 million in total capex.

Speaker Change: For 2024, and as I mentioned about $10 million of that is DOCSIS upgrades. So I.

Speaker Change: I think over the next.

Speaker Change: Five years as we do complete our DOCSIS upgrades, we will see some elevated capex there and then we will come down as we complete the DOCSIS upgrades.

Edward H. McKay: Our Glow Fiber investment was $182 million in 2023, including approximately $156 million to design and construct new passings, and approximately $17 million to connect new customers. For 2024, we're projecting capital spending in the $260 to $290 million range as we continue to accelerate construction for glow fiber and government grant projects. We plan to invest approximately $32 million net of government subsidies to expand broadband to approximately 7,000 unserved homes. We also plan to invest about $190 million in Glow Fiber, including approximately $160 million to expand service to 100,000 new customers and $24 million to connect new customers. For the commercial fiber business, we have budgeted approximately $11 million in success-based spending.

Speaker Change: Yes, Dan.

Dan: On the DOCSIS upgrades, we're planning to spend about $65 million over the next five years.

Dan: About $10 million that will be this year. So you can layer that in and once once we complete that project.

Speaker Change: Should see the cable markets Capex.

Dan: Capex come down again.

Dan: And I guess to ask the question on the Glo fiber, one a little bit different way if you do.

Dan: Execute on some of the past things in the say, Ohio markets like would there be.

Would that would that $190 million each come up to account for that I guess is the question I was asked.

Speaker Change: Yes, Dan we will once the deal closes.

Speaker Change: And right now we're looking at like the second quarter.

Dan: We will we will provide updated guidance on the capital spending for 2004. It will go up for as we continue to invest in the Ohio markets. As you mentioned and also the number of passing on the fiber to the home side will give you some updated guidance on that as well.

Operator: We've also budgeted about $41 million for our incumbent cable business, including $10 million in DOCSIS upgrades to add additional capacity and provide higher speeds in competitive markets. Thank you very much, and Operator, we're now ready for questions. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. (inaudible) Our first question will come from the line of Frank Louthan with Raymond James. Great, thank you.

Dan: We do expect to add about 100000 films in the Ohio markets over the next three years, how many are going to come on in 'twenty four.

Dan: An update once the deal closes.

Speaker Change: Awesome. Thanks, guys.

Speaker Change: Thank you Dan.

Speaker Change: As a reminder, that is star one one to ask a question.

Speaker Change: Our next question will come from the line of Amit <unk> with BW and financials.

Amit: Hi, Good morning. So the first question I had was.

Amit: Are you seeing any changes in the competitive landscape regarding glo fiber in recent months in the quarter.

Frank Garrett Louthan: When you get the Horizon deal completed, and you're kind of at a full construction ramp, how many homes do you expect to be passing per year? And then what is sort of the catch-up from the marketing standpoint? How many do you think you can add?

Speaker Change: Youre talking about.

Speaker Change: The overbuild.

Speaker Change: No no no significant.

Speaker Change: Changes in the competitive landscape, we still primarily compete with one of the big income with cable providers there.

Edward H. McKay: And this is my first question. Second question: is T-Mobile selling fixed wireless in the legacy wireless markets where you sold to them? Thank you, Frank. This is Ed.

Speaker Change: They continue with promotional pricing, but no significant changes as far as what theyre offering from a package standpoint.

Speaker Change: And are you doing anything different on the promotional standpoint as you enter these new markets.

Edward H. McKay: So I'll answer the T-Mobile question first. Yes, they do offer their fixed wireless service in the legacy markets that we sold to them. However, up to this point, we have not seen any material impact from the T-Mobile fixed wireless service.

Speaker Change: We're still really leading with.

Speaker Change: Fair straightforward pricing, we do offer the first month of service free but we're not.

Speaker Change: Providing these deep promotional discounts that are incumbent cable prevent competitor is providing.

Speaker Change: Okay, and then as far as the.

Speaker Change: Subscribers signing on initially.

Edward H. McKay: As far as the construction rate is concerned, as I mentioned, we plan on building 100,000 additional glow fiber passings this year. We do believe we'll be able to accelerate that somewhat with the addition of Horizon as well. So we expect to pace over 100,000 passings. Okay. All right. Thank you very much.

Speaker Change: Are you seeing any changes in the packages. They are subscribing to are they opting initially for the higher tier priced or are they coming in at the lower tier.

Speaker Change: They're continuing to shift more towards the higher tiers as I mentioned almost half of our new customers are signing up for gigabit speeds or higher.

Speaker Change: So we are definitely capturing the higher end of the market as customers want more bandwidth.

Operator: Our next question will come from the line of Dan Day with B. Reilly Securities. Our next question will come from the line of Dan Day with B. Reilly Securities. Yeah, hey guys, thanks for taking the question.

Speaker Change: And my last question is that.

Speaker Change: Has there been any changes as far as your cost and your cash.

Speaker Change: Capital expenditure model.

Speaker Change: And how much has that been.

Speaker Change: So I will say.

Daniel Paul Day: So just, I noticed you talked about exploring other strategic alternatives in the press release to maybe race and growth capital of maybe race and growth capital of maybe race and growth capital of, Maybe frame up what those might look like. Now, obviously, you talked about a tower sale, if you could provide an update there. As you think about strategic alternatives, whether you'd think about a sale of any non-tower assets, things like that, as you think about strategic alternatives, whether you'd think about a sale of any non-tower assets, things like that, Yeah, Dan, we're looking at multiple options to raise additional growth capital. Towers is one of the possibilities.

Speaker Change: We previously gave a range of $1400 per.

Speaker Change: Per passing.

<unk> new construction for Glo fiber, we are at the higher end of that range now.

Speaker Change: In building and some less dense areas.

Speaker Change: And the cost for construction has has gone up and we've seen it level off in the past year, but we did see some significantly increases.

Speaker Change: The significant increase was before that.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thanks, Amit.

Speaker Change: That concludes today's question and answer session I would like to turn the call back to Jim Volk for closing remarks.

Yes. Thank you all for joining we look forward to updating you in 2024 of what we expect will be a very exciting year. Thanks, everyone and have a great day.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

James J. Volk: We don't have anything to update you on today, but the important thing to note is we don't really need the capital until 2025, so we have plenty of time to explore different alternatives. Another possibility that we've taken an early look at is maybe entering the asset securitization market, the ABS market, for some of our more mature fiber markets. So we're going to explore all different options. Can you continue to provide capital for them to grow up?

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

James J. Volk: Okay, great. Thanks, Jim. And then just on the CapEx guidance for 2024, you talked about the increase in incumbent cable, DOCSIS upgrades, all that sort of stuff. Like, is this new sort of 40 million-ish maintenance CapEx run rate for incumbent cable the way we should think about it, or is this sort of a one-time upgrade, and then we sort of go back to a little lower than that? And then just to be clear, on the 180 to 200 guidance for GLO and fiber-to-the-home, are you including any passings from the incremental 100,000 from the Horizon acquisition there, or would that all be CapEx upside to that? Yeah, so this is Ed.

Speaker Change: Yes.

Speaker Change: [music].

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Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Edward H. McKay: I'll answer the Horizon question first. The $100,000 that I mentioned was just the legacy Chantel Glow Fiber business, not any incremental passings from Horizon. And as far as the cable CapEx, the guidance is roughly $40 million in total CapEx for 2024. As I mentioned, about 10 million of that is DOCSIS upgrades.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: [music].

Okay.

Speaker Change: Okay.

Speaker Change: [music].

James J. Volk: So I think over the next, you know, five years as we do complete our DOCSIS upgrades, we'll see some elevated CAPEX there, and then it will come down as we complete the DOCSIS upgrades. Yeah, Dan, on the DOCSIS upgrades, we're planning to spend about $65 million over the next five years, about $10 million of that will be this year. So you can layer that in, and once we complete that project, you should see the cable markets, you know, CapEx come down. And I guess to ask the question on the glow fiber one a little bit differently, if you do, you know, execute on some of the passing, say, Ohio markets, like would there be, Would that $190 million need to come up to account? I guess that's the question. Yeah, Dan, we will once the deal closes. And right now, we're looking at the likely second quarter.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Yes.

Speaker Change: [music].

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Thanks.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Hum.

Okay.

Speaker Change: Okay.

Okay.

Speaker Change: [music].

James J. Volk: We will we will provide updated guidance. [inaudible] Awesome. Thanks, guys. Yep. Thank you, Dan. As a reminder, that is Star 1-1 to ask a question.

Operator: Our next question will come from the line of Hamed Khorsand with BWS Financial. Hi, good morning. So the first question I had was, Are you seeing any changes in the competitive landscape regarding global fiber in the recent months and quarters? As you're talking about, there's the overbill, So no significant changes in the competitive landscape. We still primarily compete with one of the big incumbent cable providers there. They've continued with promotional pricing, but no significant changes as far as what they're offering from a package standpoint. And are you doing anything different from a promotional standpoint as you enter these new markets?

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: [music].

Speaker Change: Okay.

Okay.

Speaker Change: [music].

Hamed Khorsand: You know, we're still really leading with fair, straightforward pricing. We do offer the first month of service free, but we're not providing these deep promotional discounts that our incumbent cable competitor is providing. Okay, and then as far as subscribers signing on initially, are you seeing any changes in the packages they're subscribing to? Are they initially opting for the higher tier price tier, or are they coming in at the lower tier?

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Right.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Thanks.

Speaker Change: Yes.

Edward H. McKay: They're continuing to shift more toward the higher tiers. As I mentioned, almost half of our new customers are signing up for gigabit speeds or higher. So we're definitely capturing the higher end of the market as customers want more bandwidth. And my last question is, Has there been any change as far as your cost in your capital expenditure model? [inaudible] and how much of that. So I will say we previously gave a range of $1,000 to $1,400 per passing for new construction for glow fiber. We are at the higher end of that range now.

Speaker Change: [music] rebates.

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Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Okay.

Speaker Change: [music].

Edward H. McKay: We're building in some less dense areas, and the cost of construction has gone up. We've seen it level off in the past year, but we did see some significant increases before that. Great, thank you.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Operator: Thanks for that. That concludes today's question and answer session. I'd like to turn the call back to Jim Volk for closing remarks. Yeah, thank you all for joining. We look forward to updating you in 2024 on what we expect will be a very exciting year. Thanks, everyone, and have a great day.

Speaker Change: Okay.

Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, everyone.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: [music].

Kirk Andrews: Welcome to Shenandoah Telecommunications' fourth quarter 2023 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analysis at Shentel. Good morning, and thank you for joining us.

Speaker Change: Okay.

Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Kirk Andrews: The purpose of today's call is to review Shentel's results for the fourth quarter and full year 2023. Our results were announced in a press release distributed this morning, and the presentation we'll be reviewing is included on the investor page of our website, www.shentel.com. Please note that an audio replay of this call will be made available later today.

Speaker Change: Okay.

Speaker Change: [music].

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Speaker Change: Yes.

Speaker Change: Thanks.

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Speaker Change: Thanks.

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Speaker Change: Thank you.

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Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Kirk Andrews: Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. Please exercise caution not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements.

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Speaker Change: Yes.

Speaker Change: Please proceed.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Christopher E. French: Thanks, Kirk. We appreciate everyone joining us this morning, and I hope everyone is well. 2023 was another strong year for Shentel as we continued executing our Glow Fiber Expansion Plan. As you can see on slide four, consolidated revenues and adjusted EBITDA grew approximately 8% and 19%, respectively, driven by the Glowfiber subscriber group. Since our first full year of launching Glowfiber in 2020, our consolidated revenue and adjusted EBITDA have grown at a compound annual growth rate of approximately 9% and 18%, respectively. We believe this is an industry-leading pace among publicly-traded broadband companies. As noted on slide five, we had over 41,700 Glowfiber subscribers as of December 2023, an increase of over 71% compared to 2022 and over 10 times the number of 2020 subscribers. Flow fiber revenues have grown over 160% per year over the past three years, fueling our industry-leading consolidated revenue and adjusted EBITDA growth rate. Moving to slide 6, we added over 86,000 new Glowfiber customers in 2023, almost a 20% increase from 2022, and over a three-fold increase from 2020 levels. Our sales team has more than kept pace with our growth.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: [music].

Speaker Change: Good morning, everyone welcome to Shenandoah Telecommunications fourth quarter 2023 earnings conference call.

Today's conference is being recorded.

Speaker Change: At this time I would like to turn the conference over to Mr. Kirk Andrews director of financial planning and analysis. It Shanteau.

Kirk Andrews: Good morning, and thank you for joining us.

Kirk Andrews: Purpose of todays call it to review <unk> results for the fourth quarter and full year 2023.

Kirk Andrews: Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call.

With us on the call today are Chris French President and Chief Executive Officer, Ed <unk> Executive Vice President and Chief operating Officer, and Jim Volk, Senior Vice President of Finance and CFO.

Kirk Andrews: After our prepared remarks, we will conduct a question and answer session.

Kirk Andrews: As always let me refer you to slide two of the presentation, which contains our safe Harbor disclaimer and remind you that this conference call may include forward looking statements subject to certain risks and uncertainties.

Kirk Andrews: These may cause our actual results to differ materially from these statements.

Kirk Andrews: Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you're encouraged to review.

Kirk Andrews: You are cautioned not to place undue reliance on these forward looking statements except as required by law, we undertake no obligation to publicly update or revise any forward looking statements.

Kirk Andrews: And with that I'll now turn the call over to Chris go ahead, Chris.

Kirk Andrews: Yeah.

Chris French: Thanks, Kurt we appreciate everyone joining us this morning, and I hope everyone is well.

Chris French: 23 was another strong year for <unk> as we continue to executing our glo fiber expansion plan.

Chris French: As you can see on slide four consolidated revenues and adjusted EBITDA grew approximately 8% and 19% respectively, driven by Glo fiber subscriber growth.

Chris French: We believe this is an industry leading pace among publicly traded broadband companies.

As noted on slide five we had over 41700 glo fiber subscribers as of December 2023, an increase of over 71% compared to 2022 and over 10 times 2000 Twenty's subscribers.

Chris French: Hello fiber revenues have grown over 160% per year over the past three years fueling our industry, leading consolidated revenue and adjusted EBITDA growth rates.

James J. Volk: I will start with our broadband financial results, through slide eight. Broadband revenue grew 20.3 million, or 8.1%, to 269.3 million. As Chris just mentioned, Glow Fiber revenue was the primary catalyst, growing 16.8 million or 92% from the prior year with strong customer growth of over 71% and a 4% increase in data subscriber or Cable Market revenues, excluding the impact of our discontinued BEAM service. Group 2.5 million or 1.4, due primarily to 1.8% growth in data subscriber.

Chris French: Moving to slide six.

Chris French: Added over 86000, new Glo fiber passing in 2023, almost a 20% increase from 2022.

Chris French: Over a three fold increase from 2020 levels.

Chris French: Our sales team has more than kept pace with our construction team.

Chris French: We added over 17000, glo fiber net customers, representing a more than 32% increase over 2022, and a 62% annual growth rate since 2020.

Chris French: We expect to accelerate the pace of Glo fiber construction of sales again in the next year continuing the annual improvements we've made in each of the past three years.

James J. Volk: Commercial fiber revenue grew $3.3 million, or 8.5%, due primarily to $3 million in non-recurring early termination related to backhaul circuits. T-Mobile disconnected 338 backhaul circuits during 2023 as part of the previously announced shutdown of the former Sprint network. With most of the T-Mobile backhaul disconnects now behind, we expect commercial fiber revenue in 2024 to decline by $3 million in lower backhaul revenue from a full year of $3 million in lower, non-recurring early termination fees and 1 million in additional T-Mobile churns in 2024, partially offset by continued growth in other customer segments. We expect commercial fiber revenue to return to mid to high single-digit growth rates starting in 2025. Broadband adjusted EBITDA grew by 15.8 million or 17.6% to 105.8 million in 2023 when compared to 2022, due to the previously mentioned revenue growth of $20.3 million.

Chris French: Okay.

Speaker Change: Before I turn the call over to Jim I'd like to give an update on our pending acquisition of horizon Telecom.

Jim Volk: We've received most of the required regulatory approvals and expect to close the transaction in the second quarter, depending on the timing of the remaining regulatory approval.

Jim Volk: <unk> had a RASM teams have been working well together and planning for the integration of the two companies.

Jim Volk: We now expect most of the system integration work to be completed in the first quarter of 2025.

Jim Volk: With that I'll now turn the call over to Jim to review the details of our financial results.

Jim Volk: Thank you, Chris and good morning, everyone.

Jim Volk: I'll start with our block broadband financial results for 2023 on slide eight.

Jim Volk: Broadband revenue grew $23 million or eight 1% to $269 3 million.

Jim Volk: As Chris just mentioned Glo fiber revenue was the primary catalysts growing $16 8 million or 92% for the prior year with strong customer growth of over 71% and a 4% increase in data subscriber market.

Jim Volk: Cable market revenues, excluding the impact of our discontinued <unk> service grew.

Jim Volk: <unk> grew $2 5 million or one 4% due primarily to one 8% growth in data subscribers.

Jim Volk: Commercial fiber revenue grew three 3 million or eight 5% due primarily to $3 million in nonrecurring early termination fees related to backhaul circuit disconnects.

James J. Volk: Partially offset by 4.6% and higher Advertising Expense to support the Globe Fiber Extension. Broadband adjusted EBITDA margins expanded 320 basis points year-over-year to 39.3% as we continue to see the benefits of operating leverage of our fiber network, as the broadband cost of service declined slightly year over year, despite adding over 17,000 Glowfiber customers over the past year. On slide nine.

Jim Volk: T mobile disconnected 338 backhaul circuits during 2023 as part of the previously announced shutdown of the former Sprint network.

Jim Volk: With most of the T mobile backhaul disconnects now behind US, we expect commercial fiber revenue in 2024 to decline by $3 million and lower backhaul revenue from a full year of lower T mobile backhaul circuits.

Jim Volk: $3 million and lower nonrecurring early termination fees at.

Jim Volk: And 1 million in additional T mobile churn in 2024.

Jim Volk: Partially offset by continued growth in other customer segments.

Jim Volk: We expect commercial fiber revenues to return to mid to high single digit growth rates starting in 2025.

James J. Volk: Power segment revenue declined slightly to $18.6 million due primarily to lower intercompany revenue from the decommissioning of BeamFix Wireless Network in 2022. We have not recognized any tower lease term from T-Mobile to date. We still expect T-Mobile to terminate 53 leases, as part of the previously announced Tey and Walker, so the timing is uncertain.

Jim Volk: Broadband adjusted EBITDA grew $15 8 million or 17, 6% to $105 8 million in 2023, when compared to 2022.

Jim Volk: Due to the previously mentioned revenue growth of $23 million, partially offset by $4 6 million and higher advertising expenses to support the glo fiber expansion.

Jim Volk: Broadband adjusted EBITDA margin expanded 320 basis points year over year to 39, 3% as we continue to see the benefits of operating leverage of our fiber network as.

Jim Volk: As the broadband cost of service declined slightly year over year, despite adding over 17000, both fiber customers over the past year.

Jim Volk: On slide nine.

Jim Volk: Power segment revenue declined slightly to $18 6 million due primarily to lower intercompany revenue for the decommissioning of deemed fixed wireless network in 2022.

Jim Volk: We have not recognized any tower lease churn from T. Mobile to date, we still expect T mobile to terminate 53 leases as part of the previously announced pay and walk agreement.

James J. Volk: Consolidated Revenue Group, 7.5% 287.4 million in 2023 due to the previously mentioned growth in broadband. Consolidated Adjusted EBITDA grew 19.3% to 90.6 million; also, due to growth in broadband, adjusted EBITDA margins expanded year over year from 28.4% to 31.5% in 2023 due to the scaling of our fiber network. Please note that we expect our consolidated revenue and adjusted EBITDA growth rates to slow in 2024 due to the previously mentioned $7 million in expected decline in broadband T-Mobile revenue. We expect consolidated revenue and adjusted EBITDA to return to similar growth rates in 2025 as we've reported over the past three years. We had $239 million of liquidity as of December 31st, as displayed on slide 11, consisting of $139 million in cash and $100 million in an available revolving line of credit. We drew down the remainder of our $300 million delay-draw term loans during the fourth quarter prior to the expiration of its availability.

Jim Volk: Timing is uncertain. These.

Jim Volk: These 53 leases will continue to generate rental revenue until all required equipment distribute a police property and an inspection notices issue.

Jim Volk: Tower adjusted EBITDA declined 300000 to $11 6 million due primarily to the lower intercompany revenue.

Jim Volk: Moving to slide 10.

Jim Volk: Consolidated revenue grew seven 5% to 287 4 million in 2023 due to the previously mentioned growth in broadband.

Jim Volk: Consolidated adjusted EBITDA grew 19, 3% to $90 6 million also due to growth in broadband.

Jim Volk: Adjusted EBIT margins expanded year over year from 28, 4% to 31, 5% in 2023 due to the scaling of our fiber network.

Jim Volk: We expect consolidated revenue and adjusted EBIT Arthur returned to similar growth rates in 2025, as we reported over the past three years.

We have $239 million of liquidity as of December 31st as displayed on slide 11, consisting of $139 million in cash and $100 million in available revolving line of credit.

Jim Volk: We drew down the remainder of our $300 million delayed draw term loans during the fourth quarter prior to the expiration of its availability.

James J. Volk: This liquidity position does not include the incremental $356 million in committed credit facility and pervert equity financing related to the Horizon transaction, which will close on the same day as the Horizon merger. Negative free cash flow for 2023 was $143 million, or $28 million more than the prior year, due primarily to increased investments in expanding glow fiber and government-subsidized construction to unserved tenants, partially offset by $26 million in income tax and sales tax refunds in 2023. Please note that we received 17.3 million in proceeds from the closing of the 2.5 GHz spectrum sale and 1.9 million in government grants related to unserved home construction that are reported separately from capital expenditures in the Cash Flow from Investing activity. As reflected on slide 12, our outstanding debt was $300 million as of December 31st. We have no significant debt maturities until 2026. And now, I'll turn the call over to Ed. Thank you, Jim, and good morning, everyone.

Jim Volk: This liquidity position does not include the incremental $356 million and committed credit facility.

Jim Volk: <unk> equity financings related to the horizon transaction, which will close on the same day as the horizon merger.

Jim Volk: Partially offset by $26 million in income tax and sales tax refunds in 2023.

Jim Volk: Please note we received $17 3 million in proceeds from the closing of the two five <unk>.

Jim Volk: <unk> sale.

Jim Volk: In one and $1 9 million of government grants related to uncertain construction that are reported separately from capital expenditures and the cash flow from investing activities.

Jim Volk: As reflected on slide 12, our outstanding debt was $300 million as of December 31, we have no significant debt maturities until 2026.

Jim Volk: And now I'll turn the call over to Ed.

Ed: Thank you Jim and good morning, everyone.

Ed: The fourth quarter marked a milestone for glo fiber now passes more homes and businesses that are encumbered cable markets.

Ed: Turning to slide 15, our total number of approved Glo fiber passing has grown to 564000, primarily driven by a new franchise agreement to expand fiber services to approximately 40000 additional homes and businesses in Frederick County, Maryland.

Ed: We now have 74 franchise agreements in 25 markets across five states.

Ed: We continued to work through challenges with pole attachment permits and underground locates and our engineering and construction teams delivered a very strong fourth quarter, adding over 31000, new glo fiber passes.

Q4 2023 Shenandoah Telecommunications Co Earnings Call

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