Shenandoah Telecommunications NASDAQ: SHEN reported first-quarter 2026 results highlighted by continued growth in its Glo Fiber expansion markets, improving profitability, and steady progress toward completing its fiber buildout by the end of 2026.
Fiber expansion drives customer and revenue growth
President and CEO Ed McKay said the company “released 22,000 passings to sales” during the quarter, bringing total Glo Fiber expansion market passings to 449,000. Shentel added approximately 6,000 Glo Fiber net customers in the first quarter, which McKay said was a 9% improvement over the prior-year period, bringing the total to 94,000 customers.
McKay pointed to momentum in customer additions and product mix, noting that over the past 12 months the company added more than 23,000 new data customers and more than 26,000 total revenue-generating units (RGUs). Total Glo Fiber RGUs surpassed 110,000 in the first quarter, up 31% year-over-year.
On network build progress, McKay said all planned Glo Fiber markets have now been launched, with the company’s focus shifting to adding passings within existing Virginia, Pennsylvania, Maryland, and Ohio markets. Management reiterated expectations to complete the Glo Fiber expansion in 2026 and reach 510,000 passings.
Penetration across the Glo Fiber footprint rose to 20.9% in the quarter, up 30 basis points from the fourth quarter and 150 basis points year-over-year. McKay said the company expects data penetration rates of about 37% five to seven years after launching a market, and that its most mature 2019 and 2020 cohorts have exceeded that level with an average penetration rate of 37.5%.
Churn and ARPU trends: stable in Glo Fiber, mixed in incumbent markets
McKay said average monthly churn in Glo Fiber was 0.92% in the first quarter, which he said remains “among the best in the industry.” Broadband data average revenue per user (ARPU) in Glo Fiber was stable sequentially and year-over-year at more than $77, according to McKay.
He also highlighted an upsell trend toward faster speeds: nearly 82% of new residential customers in the quarter selected speeds of 1 gig or higher, including 18% choosing 2 gig service and 5% selecting 5 gig service. In response to an analyst question on whether that mix is sustainable, McKay said the company’s five-year price guarantees on higher speed tiers could keep ARPU “fairly flat” in the medium term, but added, “Longer term, I think there’s opportunity there,” and said the company believes demand for higher speeds is “sustainable going forward.”
In incumbent broadband markets, McKay said the company ended the quarter serving more than 111,000 broadband data customers. Total data, voice, and video RGUs were more than 156,000, down 4% year-over-year, which he attributed primarily to customers moving from traditional video to streaming services.
Monthly broadband data churn in incumbent markets was 1.46% for the quarter, stable sequentially but up modestly year-over-year. McKay said the uptick was tied to “promotional activity from satellite competition” in some of Shentel’s most rural markets without a fixed wireline competitor. He said the company implemented a speed increase late in the quarter, providing higher speeds at the same price “to better differentiate our service from satellite offerings.”
McKay later described the competitive situation as largely confined to the most rural parts of the incumbent footprint, telling analysts the company saw “really no impact in Glo Fiber and no impact in the majority of our incumbent passings.” He said the satellite competitor offered “$15 off for 4 months” and, in his view, “the biggest factor was they offered free equipment” that had previously cost $350. McKay added that many customers who left were on legacy rate cards and that providing “more value for the same price” could help mitigate the impact.
Incumbent broadband data ARPU declined 1.6% year-over-year to $82, which McKay attributed to adding customers with more aggressive pricing in competitive markets. CFO Jim Volk added that in the incumbent business “about two-thirds of the passings, we are the only fixed wireline provider,” and said management believes it has some pricing power in those areas.
Commercial fiber bookings and data center opportunity
Shentel’s commercial fiber business posted what McKay called a “strong quarter,” with $196,000 in incremental monthly sales bookings and revenue growth of 4.7% year-over-year. He said demand came from wireless carriers, wholesale customers, and school systems, while the service delivery team installed $167,000 in new monthly revenue during the quarter. McKay noted that the acquired Horizon backlog that elevated installation activity in 2025 is now “substantially complete.” Average monthly compression and disconnect churn in commercial fiber was 0.4% in the quarter.
Management also discussed potential opportunities tied to data center development. McKay said the company is seeing “several data center announcements” in its markets and believes it can win a share of related services, which he said would be additive to current revenue. He emphasized the company’s footprint of “19,000 plus route miles of fiber,” stretching “from Chicago, all the way to the Washington D.C., Ashburn, Virginia, area,” with routes through markets including Columbus and Pittsburgh.
Volk said the company generally expects mid-single digit revenue growth in the commercial business over a three- to four-year period, while cautioning that it can be “a little bit of a lumpy business.” On potential data center revenue, Volk said it would be “a little premature” to provide expectations, but noted there are “about 20 data centers being either built or built close to our fiber” across the eight states where Shentel operates, adding that it is not clear whether all will ultimately be built.
Financial results, guidance reaffirmed, and capital intensity set to decline
Volk reported first-quarter revenue rose 4.8% to $92.2 million. The increase was driven by Glo Fiber expansion market revenue growth of $6.4 million, or 34.6%, which he attributed to a 33.7% increase in data subscribers and stable data ARPU. Commercial fiber revenue increased $900,000, or 4.7%, driven primarily by growth among existing enterprise and carrier customers.
Those gains were partially offset by declines in other segments. Volk said incumbent broadband market revenue fell $2.2 million, primarily due to lower video revenue from a 14.6% decline in video RGUs, and to a lesser extent, lower data revenue from the 1.6% decline in data ARPU. RLEC revenue declined $800,000, which he attributed mainly to lower DSL revenue from a 28% drop in DSL RGUs and lower government grant support revenues; Volk said about half of the DSL RGU decline was due to customers upgrading to broadband service.
Adjusted EBITDA increased $4.1 million, or 15%, to $31.7 million. Adjusted EBITDA margin expanded 300 basis points year-over-year to 34.4%, which Volk attributed to high incremental margins in Glo Fiber, fewer lower-margin video customers, and “a favorable true-up related to a government grant.”
The company reiterated its full-year 2026 guidance:
- Revenue of $370 million to $377 million
- Adjusted EBITDA of $131 million to $136 million
- Capital expenditures, net of grant reimbursements, of $220 million to $250 million
Capital spending in the quarter totaled $75.8 million, with $11.5 million of government grants collected, resulting in net CapEx of $64.3 million. Volk said CapEx declined 16% year-over-year due to completing 91% of the incumbent markets’ government-subsidized builds to unserved areas in 2025. As of March 31, the company had completed 88% of its target Glo Fiber passings.
On liquidity and leverage, Volk said Shentel ended the quarter with $707 million in outstanding debt and $636 million of net debt, with no maturities until 2029. Total available liquidity was about $195 million as of March 31, comprised of cash and cash equivalents, restricted cash, and availability under financing facilities and remaining grant reimbursements.
Looking ahead, Volk said the company sees three converging catalysts that it expects will drive “generating and growing positive free cash flow in 2027 and beyond”: low double-digit adjusted EBITDA growth from fiber, declining capital intensity as construction winds down, and a declining cost of capital following a 2025 debt refinancing. In the Q&A, McKay added that as the company transitions from construction to subscriber growth, he expects marketing expense to remain “similar,” with the “primary impact” coming from lower CapEx.
About Shenandoah Telecommunications NASDAQ: SHEN
Shenandoah Telecommunications Company operates as a diversified communications provider offering both wireless and wireline services across rural markets in the Mid-Atlantic region. Headquartered in Edinburg, Virginia, the company designs, builds and maintains network infrastructure to deliver mobile connectivity, high-speed broadband access and related telecommunications solutions to residential, business and wholesale customers.
In its wireless segment, the company owns and operates a portfolio of cellular towers and associated spectrum under a long-term partnership with a national carrier.
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