What Shenandoah Telecommunications (SHEN) Said on Its Q3 Earnings Call

Key Points

• Q3 performance strengthened: Revenue rose 4.6% year over year to $93.9 million and adjusted EBITDA increased 11.8% to $33.2 million, driven by operating leverage in the expanding fiber business.
• Fiber growth accelerated: Glo Fiber added a record 8,600 data customers, bringing its total to approximately 109,000, while fiber revenue grew 19.5% and represented 52% of consolidated revenue. The company expects to reach about 517,000 Glo Fiber passings by year-end as expansion nears completion.
• Spending outlook increased: Shenandoah reiterated 2026 revenue and adjusted EBITDA guidance but raised its capital-expenditure forecast to $255 million-$275 million, partly due to additional fiber construction and delayed government reimbursements. Management expects positive free cash flow beginning in 2027 and net leverage below four times EBITDA by 2029.

Shenandoah Telecommunications NASDAQ: SHEN reported third-quarter 2026 revenue growth and accelerating fiber subscriber additions as the company neared completion of its planned network expansion.

Total revenue increased 4.6% from a year earlier to $93.9 million, while adjusted EBITDA rose 11.8% to $33.2 million. President and Chief Executive Officer Ed McKay said the faster EBITDA growth reflected operating leverage from the company’s expanding fiber operations.

Combined Glo Fiber and commercial fiber revenue grew 19.5% year over year and accounted for 52% of consolidated revenue during the quarter. The company expects fiber revenue to reach about 60% of total revenue by 2028.

Fiber Expansion Nears Completion

Glo Fiber passed approximately 501,000 homes and businesses at the end of the third quarter, after adding 25,000 passings during the period. Shenandoah now expects to pass roughly 517,000 locations by year-end, up from its prior expectation of 510,000.

The company’s integrated network included more than 20,000 fiber route miles across eight states and approximately 755,000 total broadband passings at quarter-end. Shenandoah said it was 97% complete with its Glo Fiber expansion and 99% complete with its incumbent broadband expansion as of Sept. 30.

Glo Fiber added a record 8,600 data customers during the quarter, an increase of 48% from the third quarter of 2025. The business ended the period with about 109,000 data customers, up 32% year over year, and more than 127,000 revenue-generating units, up 31%.

Broadband data penetration in Glo Fiber markets reached 21.7%, rising 68 basis points sequentially and 108 basis points from a year earlier. Markets launched in 2019 and 2020 averaged penetration of 38.5%, above the company’s medium-term target of 37%.

McKay attributed customer growth in part to Glo Fiber’s five-year price guarantee and expanded door-to-door sales channel. He said the company continues to see “significant success” adding Glo Fiber customers and believes it has substantial room to grow penetration.

Glo Fiber’s broadband data average revenue per user was just under $76, down 1% year over year, which management said was consistent with expectations following the introduction of five-year price-guarantee plans. More than 83% of new residential customers selected service speeds of 1 gigabit or higher, including 20% choosing 2-gig service and 5% choosing 5-gig service.

Commercial and Incumbent Operations

In the commercial fiber business, incremental monthly sales bookings exceeded $185,000 during the quarter, driven by demand from commercial and enterprise customers, wireless carriers and wholesale customers. The service delivery team installed $178,000 in new monthly revenue. Average monthly compression and disconnect churn was 0.5% over the past 12 months.

In incumbent broadband markets, the company ended the quarter with more than 110,000 broadband data customers, down less than 2% year over year. Revenue declined by $2.8 million, primarily because of lower video revenue and lower data revenue. Video revenue was affected by a 13% decline in video revenue-generating units as customers continued to shift to streaming services.

Broadband data churn in incumbent markets rose modestly to 1.76%, which McKay said reflected wired-broadband competition and softer demand in some rural markets where inflation has pressured household budgets. Data ARPU in those markets declined 3% year over year to about $80. Management said it saw churn improve in September and expects churn and ARPU to gradually stabilize as it adjusts pricing and product offerings.

Shenandoah said satellite competition has had virtually no effect on churn in Glo Fiber markets. In its incumbent broadband markets, management said satellite’s churn impact was less than 10 basis points, peaked during the first quarter, and has declined in each subsequent quarter.

Guidance, Capital Spending and Debt

The company reiterated its 2026 operating outlook for revenue of $370 million to $377 million and adjusted EBITDA of $131 million to $136 million.

However, Shenandoah raised its capital-expenditure outlook to $255 million to $275 million from a previous range of $220 million to $250 million. Chief Financial Officer Jim Volk said approximately $10 million of the increase is tied to building 7,000 additional Glo Fiber passings, while about $15 million reflects the expected timing of government grant reimbursements extending into 2027.

During the first nine months of 2026, the company invested $215 million in capital expenditures and collected $22 million in government grants, resulting in net capital expenditures of $193 million, down 9% from the prior-year period.

As of Sept. 30, Shenandoah had $760 million in outstanding debt and total available liquidity of $139 million. The company has no debt maturities until 2029, and 75% of its debt is fixed rate.

Volk said management expects positive free cash flow beginning in 2027, supported by low-double-digit adjusted EBITDA growth, capital intensity in the mid-20% range, and a debt cost of approximately 5.9% to 6%. The company expects net leverage of about 5.7 to 5.8 times EBITDA at year-end, below five times by the end of 2027, and below four times by 2029.

About Shenandoah Telecommunications (NASDAQ:SHEN)

Shenandoah Telecommunications Company, also known as Shentel, is a telecommunications provider headquartered in Edinburg, Virginia. The company delivers broadband communications services to residential and commercial customers, with a focus on high-speed internet, fiber-optic connectivity, video and voice services.

Shentel operates its Glo Fiber network in selected communities and provides broadband services through its legacy cable and fiber networks. Its service territory primarily includes markets in Virginia, West Virginia, Maryland and Pennsylvania.

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