Regional U.S. operator Shenandoah Telecommunications (Shentel) kicked its fiber plans into high gear, revealing during a Q3 earnings call it has raised its expansion target by 50% and now aims to reach 450,000 serviceable addresses by 2026. At the same time, however, the operator said it would pause further expansion of its Beam Internet fixed wireless access service.
On the call, Shentel CEO Chris French cited “strong momentum” behind its Glo Fiber product's business development, construction and sales as driving factors for the move.
“We have executed 17 new franchise agreements in 2021, adding approximately 160,000 future passings for a total of 304,000 passings with franchise approvals. Further, we have an attractive funnel of additional markets that have met our investment criteria which we expect will lead to franchise agreements in the coming quarters,” he said. “We’re very bullish about our Glo Fiber results and prospects, and over the next five years plan to invest more than $500 million building fiber to the home and connecting customers.”
French also pointed to an influx of government funding for broadband as a reason for the shift, noting more than $1.3 billion in support is expected to be made available in the five states where Shentel operates. COO Ed McKay stated the operator has identified approximately 32,000 unserved homes where it is pursing government grants to subsidize broadband construction costs for fiber, fixed wireless or a hybrid of both.
Shentel was previously targeting fiber to 300,000 locations by the end of 2026 and sought to expand Beam and its legacy HFC service to 215,000 locations apiece in the same timeframe.
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Now, it’s goal for Beam is to complete builds already in progress to reach 28,000 locations, which it expects to do by the end of this year. McKay said work on Beam after that will be paused until Shentel has “better visibility in areas where government grants are awarded.” The new target for its HFC expansion is to reach 220,000 locations by end-2026, he noted.
McKay added its target for overall broadband passings by 2026 remains unchanged at 730,000, but fiber is now set to account for 64% of this total while fixed wireless will account for just 6%.
The company has already launched Glo Fiber in Harrisonburg, Staunton, Front Royal, Winchester, Salem, Roanoke and Lynchburg, Virginia. Forthcoming launches will include Hanover and Carlisle, Pennsylvania, Martinsburg and Jefferson County, West Virginia, and Frederick, Maryland in Q4; and Blacksburg, Suffolk and Williamsburg, Virigina, and Lancaster and York Counties in Pennsylvania in 2022.
Metrics
Glo Fiber passed 60,836 locations as of the end of Q3 2021, up from 22,347 passings in the year-ago quarter. Cable passings stood at 211,013 while Beam had 24,347. Shentel ended the quarter with 9,272 revenue generating units (RGUs) from Glo Fiber, up year on year from 2,802. It also had 105,116 Cable RGUs and 1,191 Beam RGUs.
McKay said a construction rate of more than 14,000 passings in the quarter was a new record and more than 55% higher than what it achieved in Q3 2020.
Consolidated revenue grew 12.8% to $62.2 million, with net income hitting $893.1 million thanks to a gain of $886.7 million related to the sale of its wireless operation to T-Mobile. Broadband revenue specifically grew 14.2% to $57.9 million.