Shenandoah Telecommunications Company (SHEN) investor relations material

Business overview and growth outlook

• Operates three segments: residential fiber (Glo Fiber), commercial fiber, and incumbent cable, each with distinct growth and competitive dynamics.

• Glo Fiber grew 33% year-over-year in Q2, now at 500,000 passings and over 100,000 subscribers, focusing on rural overbuilds and high-speed tiers.

• Commercial fiber grew 9% year-over-year, driven by carrier and E-Rate programs, with future growth expected from data center connectivity, especially near Columbus, Ohio.

• Incumbent cable business is stable but faces ARPU pressure; growth efforts focus on value propositions and targeted rate card changes in less competitive, rural markets.

• Strategic capital allocation prioritizes fiber expansion and capital-light commercial opportunities, with capital intensity expected to drop below 30% next year.

Competitive landscape and market response

• Starlink and fixed wireless have limited impact except in the most rural, low-income areas; fiber and cable maintain speed and service advantages.

• New rate cards and lower entry-level pricing introduced in March to address churn and improve penetration in rural cable markets.

• Door-to-door sales channel now drives 35-40% of gross adds for Glo Fiber, with increased investment and resource allocation.

• Customer service differentiation and local presence are emphasized, with Net Promoter Scores in the 60% range for Glo Fiber.

• Churn rates have declined following pricing adjustments, and further prepaid and value-based offerings are under consideration.

Financial performance and operational strategy

• ARPU for cable expected to decline about 1% annually over the next few years; Glo Fiber ARPU stable around $77.

• Commercial fiber growth driven by leveraging existing routes for capital-light expansion, targeting hyperscaler data centers.

• Capital expenditures to decrease as fiber build winds down, with a shift to positive free cash flow and lower capital intensity in 2025.

• Announced a 10% workforce reduction to align with lower construction needs and focus on expense management.

• AI deployment and competitive vendor bidding expected to yield over $2 million in annual savings starting next year.