Shenandoah Telecommunications (Shentel) is picking up the pace of its Glo Fiber expansion, revealing plans spend $50 million more on greenfield fiber builds in 2023 than it did last year.
On an earnings call, COO Ed McKay said Glo Fiber is already live in 17 greenfield markets outside Shentel’s cable footprint. It’s looking to light up service six more markets across four states this year: Greencastle, Shippensburg and Waynesboro, Pa.; Hanover County, Va.; Salisbury, Md.; and Sussex County, Delaware.
To get there, it plans to invest about $180 million in fiber in in 2023, up from $130.7 million in 2022. That total includes $110 million to complete construction to 100,000 passings, $40 million for engineering, permitting and preliminary construction on another 198,000 passings in its backlog, and $20 million on new customer connections.
It also plans to spend around $40 million on government subsidized broadband expansions, which include 20,000 fiber passings and 3,000 DOCSIS-based connections. About $15 million of that will go toward construction of about 4,000 passings in 2023, with the remaining $25 million dedicated to engineering, permitting and preliminary construction for the 19,000 other passings that are part of that backlog. McKay said it eventually expects to be reimbursed for about half the cost of these subsidized builds, but doesn’t expect to see that money until 2024 and 2025.
In 2022, Shentel increased its construction pace by 64% to deliver 72,290 new fiber passings for the full year to reach a total of 147,000 passings. McKay said labor availability has been steady, but acknowledged inflation has pushed the cost of labor and materials up 5-10%. So, while it’s managed to stay on the lower end of its $1,000 to $1,400 cost per passing range thus far – ending 2022 with a cost of $1,170 – he said that it could inch toward the upper end of that range in 2023.
Bye, bye, Beam
CFO Jim Volk noted Shentel ceased operating its Beam fixed wireless access service in Q4 in anticipation of the close of its sale of Beam’s 2.5 GHz spectrum in the first half of this year.
Shentel inked the deal to sell its spectrum to an unnamed party for $21.2 million in Q3. The move followed its decision to halt its Beam expansion in October 2021 to focus on its fiber build. It revealed plans to sell the spectrum Beam had been using during its Q2 2022 earnings call.
The sale is the latest divestiture of Shentel’s wireless assets. The operator previously sold its mobile business to T-Mobile in early 2021 for $1.95 billion.
Executives said the discontinuation of Beam will result in the elimination of $1.3 million in revenue in 2023.
Financials
Revenue of $70 million in Q4 was up 11.8% year on year, driven by 11% growth in Shentel’s broadband business and 18% growth in its tower segment. However, it posted a loss of $1.8 million, though this was an improvement from a loss of $3.1 million in Q4 2021.
For the full year, Shentel’s revenue grew 9% to $267.4 million. It posted a net loss of $8.4 million, compared to a loss of $7.9 million in 2021.
The company ended 2022 with 24,286 Glo Fiber subscribers and 109,644 cable subscribers, compared to 11,377 fiber and 106,345 cable customers at the end of 2021.