Shentel’s Glo Fiber is fueling customer additions and revenue growth

“We’re very pleased with our results for 2024, which was a pivotal year for our company as we successfully expanded into Ohio through our acquisition of Horizon and set new records for construction sales in our Glo Fiber business,” said French during the company’s fourth-quarter earnings report.

Jim Volk, CFO and SVP of Finance, reported revenues of $328.1 million for the full year, a 22% year-over-year increase. The former Horizon markets contributed $47.7 million of revenue; excluding these, revenues grew 4.3% year-over-year.

Glo Fiber revenue was $21.4 million, which Volk attributed to an increase in subscribers and ARPU.

“The legacy Glo Fiber revenue growth was partially offset by declines in commercial fiber and incumbent broadband markets revenue,” said Volk.

Commercial revenue declined $5.8 million, which Volk attributed to $7.1 million in T-Mobile revenue churn.

“As reported throughout 2023, T-Mobile disconnected backhaul circuits as part of their decommissioning of the former Sprint network,” said Volk. “The revenue churn reflects a full period of these disconnects and a reduction in related early termination fees. We expect the commercial fiber revenue to return to mid to high single-digit growth rates in future periods.”

Incumbent broadband markets revenue declined $5 million, attributed to a decline in video RGUs due to cord cutting and a decline in data RGUs due to the ending of the ACP program.

Adjusted EBITDA was $94.6 million, up 20%, with the former Horizon markets contributing $10.7 million. Excluding Horizon, adjusted EBITDA grew $4.9 million, 6% year over year.

“2024 was a transition year for Shentel as we sold our Tower business in March 2024, acquired Horizon in April 2024, incurred higher Horizon operating expenses during the integration period, and experienced lower Shentel legacy growth due to $7.1 million in T-Mobile revenue churn,” said Volk. “With these onetime events behind us, we expect our long-term consolidated revenue and adjusted EBITDA compounded annual growth rates will return to similar levels that we achieved after we launch Glo Fiber.”

For the fourth quarter, revenues were $85.4 million, up 25% year over year. Excluding Horizon, revenues grew $3.4 million, or 5%, in the quarter. Adjusted EBITDA for the fourth quarter was $25.5 million, a 28% year-over-year increase.

Fiber buildouts

COO and executive vice president Edward McKay reported that Shentel added over 103,000 new fiber passings and more than 1,400 new route miles of fiber in 2024. The company now passes more than 585,000 homes and businesses, with 61% of passings served with fiber in Glo Fiber expansion markets or as part of government-subsidized projects.

“Our pipeline for construction opportunities remains robust with 323,000 potential additional passings,” said McKay. “This is more than enough to complete the construction phase of our fiber expansion initiative by year-end 2026, and we plan to add more than 100,000 fiber passings in each of the next 2 years.”

Shentel added approximately 5,900 net broadband customers in the fourth quarter and more than 21,000 net customers for the full year, ending 2024 with 65,000 total customers, up 56% year-over-year.

McKay reported that the broadband data penetration rate in the Glo Fiber expansion markets was 18.8% at the end of 2024. Average penetration in mature markets was 26% at the end of the year.

Shentel ended the year with over 111,000 broadband data subscribers in its incumbent broadband markets, which include incumbent cable markets and telephone markets with fiber-to-the-home passings.

Broadband ARPU was $81.30, up 2.5% year-over-year, which McKay attributed to a combination of rate adjustments and customers selecting higher speed tiers.

Capital expenditures were $300 million in 2024, driven primarily by network expansions in Glo Fiber and government-subsidized markets and expenditures in the Horizon markets.

“In 2024, gross capital spending on government grant projects was approximately $83 million, and we received approximately $19 million in reimbursements,” said McKay. “These projects include broadband expansion to unserved areas in both incumbent cable and Glo Fiber markets, as well as a middle-mile fiber network upgrade and expansion to support our commercial fiber business in Ohio. Grant funding is expected to cover more than 50% of the total costs for these projects.”

Shentel expects to receive $111 million in reimbursements in the coming years and projects capital spending to be between $250 million and $280 million in 2025.

“Our planned Glo Fiber investment of $175 million to $190 million will extend fiber to approximately 95,000 new passings and connect new customers,” said McKay. “In our incumbent broadband business, we plan to invest $40 million to $50 million in capital projects, including extending broadband service to approximately 9,000 government-subsidized unserved homes and upgrading networks in competitive markets to support multi-gigabit speeds. Our planned commercial fiber investments are expected to be in the $35 million to $40 million range for success-based spending for new revenue and upgrades to the former Horizon network, including the government grant project to expand our middle-mile network and upgrade to 400-gig capable core network.”

Going forward, Shentel expects long-term capital investments in both Glo Fiber and the incumbent broadband businesses to be between 15% and 25% of revenues.