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    SHEN
    Earnings call· Jun 2026(Q2 FY26)

    SHENANDOAH TELECOMMUNICATIONS CO/VA/ Q2 FY26 earnings call SHEN

    Jul 29, 2026 Source

    Executive summary

    Shenandoah Telecommunications Company Q2 FY26 — Record Fiber Net Adds and Strong EBITDA Growth

    Shenandoah Telecommunications reported a strong second quarter, driven by record Glow Fiber net additions and significant growth in fiber revenue, which now constitutes over half of consolidated revenue. The company is on track to complete its fiber buildout by year-end, positioning it for positive free cash flow in 2027, despite some revenue declines in legacy incumbent and RLEC segments due to competitive pressures and shifts to streaming services.

    Highlights

    5

    • Achieved record 6,200 Glow Fiber Net Additions during the quarter.

    • Surpassed 100,000 Glow Fiber data customers, representing 31.3% year-over-year growth.

    • Fiber revenue grew 21.4% year-over-year, now representing 51% of consolidated revenue.

    • Consolidated revenue grew 5.5% to $93.5 million, and adjusted EBITDA grew 12.9% to $32 million.

    • Glow Fiber penetration rose to 21.1%, a 93 basis point increase year-over-year.

    Concerns

    4

    • Incumbent broadband markets revenue declined $2.5 million due to lower video and data revenues.

    • RLEC revenue declined $1 million, primarily due to a 31% decline in DSL RGUs and lower government grant support.

    • Broadband data ARPU in incumbent markets declined 2.6% year-over-year to $81, partly due to competitive rate cards.

    • Broadband data monthly churn in incumbent markets increased to 1.73% due to seasonal moves, wired competition, and softer demand in rural markets.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $370 million to $377 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $131 million to $136 million
    high materiality
    High
    Full-year 2026 CapEx net government grant reimbursements
    $220 million to $250 million
    high materiality
    High
    Glow Fiber Expansion Completion
    Substantially complete
    high materiality
    High
    Free Cash Flow
    Positive and growing
    high materiality
    High
    Adjusted EBITDA Margin Growth
    300 to 400 basis points a year
    high materiality
    High
    Consolidated EBITDA Margin
    40%
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Glow Fiber
    Achieved record net additions and surpassed 100,000 data customers. Penetration continues to rise, with mature cohorts averaging 35%, providing confidence in reaching the 37% objective. Churn remains low, with nearly half driven by customer relocations.
    Net Additions: 6,200Data Customers: 100,000Data Customers YoY Growth: 31.3%Total RGUs: 117,000Total RGUs YoY Growth: 30%Passings Added (Q2): 26,000Total Passings: 475,000Penetration: 21.1%Penetration QoQ Increase: 20 bpsPenetration YoY Increase: 93 bpsAverage Monthly Churn: 1.21%Churn from Relocating Customers: 59 bpsChurn from Transfers: 13 bpsBroadband Data ARPU: just under $77
    		—32.8%——
    Commercial Fiber
    Strong demand from commercial and enterprise customers, including wireless carriers, wholesale customers, and school systems, drove significant sales bookings and new revenue installations. Churn remained very low.
    Incremental Monthly Sales Bookings: $180,000New Monthly Revenue Installed: $209,000Average Monthly Compression and Disconnect Churn: 0.4%
    		—9.8%——
    Fiber (Combined Glow Fiber & Commercial Fiber)
    Combined fiber revenue exceeded incumbent broadband and RLEC revenue for the first time, representing 51% of total consolidated revenue.
    		—21.4%——
    Incumbent Broadband Markets
    Revenue decline primarily due to lower video revenue from streaming shifts and lower data ARPU. Churn increased due to seasonal moves, wired competition, and softer rural demand. A new rate card in rural markets reduced satellite-related churn.
    Broadband Data Customers: more than 110,000Broadband Data Customers YoY Decline: less than 1%Video RGUs Decline: 14.1%Total Broadband Passings: increased slightly QoQSubsidized Fiber Passings (expected H2 2026): 1,100Broadband Data Monthly Churn: 1.73%Churn from Customer Moves: 65 bpsChurn from Transfers: 23 bpsBroadband Data ARPU: $81Broadband Data ARPU YoY Decline: 2.6%
    		declined $2.5 million———
    RLEC
    Revenue decline primarily due to lower DSL revenue and lower government grant support. Approximately half of the DSL RGU decline was due to transfers to Shentel's own broadband service.
    DSL RGUs Decline: 31%
    		declined $1 million———

    Operational metrics

    31
    Consolidated Revenue
    $93.5 million5.5% annual increase
    Q2 FY26

    Driven by strong fiber revenue growth.

    Adjusted EBITDA
    $32 million12.9% year-over-year increase
    Q2 FY26

    Increased 200 basis points compared to Q2 2025.

    Incremental Adjusted EBITDA Margin
    73%
    Q2 FY26

    Reflects efficiency in growth.

    Capital Expenditures
    $146 million
    H1 FY26

    Gross capital expenditures for the first half of the year.

    Government Grants Collected
    $20 million
    H1 FY26

    Collected in the first half of the year, offsetting CapEx.

    Net Capital Expenditures
    $126 million18% decline
    H1 FY26

    Declined due to reduced incumbent government subsidized construction.

    Outstanding Debt
    $728 million
    as of June 30th

    Total outstanding debt.

    Net Debt
    $674 million
    as of June 30th

    Net debt position.

    Fixed Rate Debt Percentage
    78%
    as of June 30th

    Provides protection against short-term interest rate increases.

    Total Available Liquidity
    $159 million
    as of June 30th

    Comprised of cash, restricted cash, and available credit facilities.

    Cash and Cash Equivalents
    $24 million
    as of June 30th

    Part of total available liquidity.

    Restricted Cash
    $31 million
    as of June 30th

    Required by the ABS InVenture, part of total available liquidity.

    Available under VFN
    $2 million
    as of June 30th

    Part of total available liquidity.

    Available under Revolving Credit Facility
    $75 million
    as of June 30th

    Part of total available liquidity.

    Remaining Government Grant Reimbursements
    $27 million
    as of June 30th

    Expected reimbursements, part of total available liquidity.

    VFN Commitments Not Available to Draw
    $105 million
    as of June 30th

    Expected to reach commitment levels with continued growth in secured fiber network revenues from ABS entities.

    Fiber Route Miles
    19,800
    Q2 FY26

    Spans across eight states.

    Total Broadband Passings
    730,000
    Q2 FY26

    Across the integrated broadband network.

    Fiber Passings Added
    97,000
    past 12 months

    Related to Glow Fiber expansion.

    New Residential Customers Selecting 1 Gig or Higher
    >80%
    Q2 FY26

    Demonstrates strong customer demand for higher speed products.

    New Residential Customers Selecting 2 Gig Service
    ~19%
    Q2 FY26

    Part of strong demand for higher speed products.

    New Residential Customers Selecting 5 Gig Service
    ~5%
    Q2 FY26

    Part of strong demand for higher speed products.

    Incumbent Broadband Footprint Overlap with Wired Competitor
    ~35%
    Q2 FY26

    Indicates competitive pressure in these markets.

    Subsidized Passings Construction Complete
    95%
    as of June 30th

    Expected to be substantially complete by end of 2026.

    Target Glow Fiber Passings Construction Complete
    93%
    as of June 30th

    Expected to be substantially complete by end of 2026.

    Incumbent Subsidized Passings Data Penetration (18 months)
    >40%
    within 18 months of launch

    Represents strong growth opportunity for incumbent markets.

    Incumbent Subsidized Passings Data Penetration (2023 cohorts)
    >59%
    2023 cohorts

    With the oldest cohort reaching over 72% penetration.

    Aggregate Penetration across 23,000 subsidized passes
    40%
    Q2 FY26

    Achieved across a significant number of subsidized passes.

    DSL RGU Transfers to Own Broadband Service
    ~50%
    Q2 FY26

    Approximately half of the decline in DSL RGUs was due to transfers to Shentel's own broadband service.

    Operating Expenses
    $1.3 millionhigher
    Q2 FY26

    Offset revenue growth in adjusted EBITDA calculation.

    Second Half 2026 Revenue and Adjusted EBITDA Impact
    favorably impacted
    H2 FY26

    Expected due to continued high margin growth fiber revenue and lower operating expenses from reduction in force.

    Industry KPIs

    3
    MetricValueDetails
    Recurring revenue retention51%%
    Broadband fwa net adds split6,200net additions
    Net debt EBITDA deleveraging path$674 millionUSD

    Deals & partnerships

    2
    HorizonExpansion of commercial fiber business

    The Horizon acquisition contributed to the expansion of Shentel's commercial fiber business, aligning with the Fiber First strategy.

    Major hyperscalerMaster service agreement for data center services

    An MSA is in place with a major hyperscaler, enabling them to potentially buy services in the future, leveraging Shentel's existing fiber and conduit near data centers.

    Risks & headwinds

    6
    Incumbent Broadband Revenue DeclineQ2 FY26

    $2.5 million decline

    Mitigation: New competitive rate card in rural markets to improve churn and drive growth; focus on balancing subscriber growth, retention, and ARPU.

    RLEC Revenue DeclineQ2 FY26

    $1 million decline, 31% DSL RGU decline

    Mitigation: Approximately 50% of DSL RGU decline transferred to own broadband service, indicating internal migration rather than full loss.

    Broadband Data ARPU Decline in Incumbent MarketsQ2 FY26

    2.6% year-over-year decline to $81

    Mitigation: New pricing strategy in rural markets (reduced ARPU by 1.6%) has already improved satellite-related churn and is expected to drive higher growth ads and churn improvement.

    Broadband Data Churn Increase in Incumbent MarketsQ2 FY26

    1.73% monthly churn

    Mitigation: New rural rate card improved satellite-related churn; continued monitoring of competitive activity across all technologies; some churn is due to normal seasonal move activity.

    Inflationary Pressure on Rural MarketsQ2 FY26

    Softer demand in rural markets with weaker demographics

    Mitigation: New pricing strategy introduced in rural markets to maximize long-term revenue by balancing subscriber growth, retention, and ARPU.

    Seasonal Customer Move ActivityQ2 FY26

    59 bps of Glow Fiber churn, 65 bps of Incumbent Broadband churn

    Mitigation: Normal seasonal activity; some customers transfer service to new Shentel addresses (13 bps in Glow Fiber, 23 bps in Incumbent Broadband).

    What to watch in Q3 FY26

    5

    Glow Fiber Penetration Rate

    next quarter
    Current21.1%
    TargetContinued increase towards 37% for mature cohorts

    Why it matters

    Sustained penetration growth is key to realizing the long-term value of the fiber buildout investment.

    Penetration rose to 21.1%, 20 basis point increase over the first quarter, and a 93 basis point increase year over year. We're expecting data penetration rates of approximately 37% five to seven years after launching a market.

    Q&A highlights

    5

    Can you provide an update on the data center opportunity, especially regarding the master service agreement with a hyperscaler and whether one customer is sufficient?

    Ed McKay stated that while there's nothing specific to report yet, they have a master service agreement with a major hyperscaler. He noted that their existing fiber and conduit near data centers provide a strategic advantage, allowing them to provide service with less significant capital investment.

    “We do have a master service agreement in place with a major hyperscaler that will enable them to potentially buy services in the future. So we're still confident in the opportunity going forward.”

    asked by Christian Schwab · answered by Edward McKay

    2 min read6 chapters

    Detailed Narrative

    01

    Fiber First Strategy Success

    Shentel's Fiber First strategy, initiated with early investment in fiber-to-the-home starting in 2019 and expansion through the Horizon acquisition, is yielding strong results. Fiber businesses now account for 51% of consolidated revenue, reflecting successful residential and commercial growth and leveraging strategic proximity to major data center hubs in Ashburn, Virginia, and Columbus, Ohio.

    02

    Glow Fiber Expansion and Penetration

    The company achieved a record 6,200 Glow Fiber net additions, surpassing 100,000 data customers with 31.3% year-over-year growth. Construction is 93% complete for target Glow Fiber passings, with 475,000 total passings and 21.1% penetration, up 93 basis points year-over-year. Most mature cohorts launched during the two years ending in Q3 2021 have surpassed the five-year mark and currently average 35% penetration, providing confidence in reaching the 37% objective.

    03

    Commercial Fiber Momentum

    Commercial fiber saw incremental monthly sales bookings exceeding $180,000 and new monthly revenue installations of $209,000. This growth is driven by strong demand from enterprise customers, wireless carriers, wholesale clients, and school systems. The business maintains a very low average monthly compression and disconnect churn of 0.4%, reflecting strong customer support and service delivery.

    04

    Incumbent Market Dynamics and Pricing Strategy

    Incumbent broadband markets experienced a modest decline of less than 1% year-over-year in data customers and a faster decline in RGUs due to video subscriber losses to streaming services. A new rate card introduced in rural markets, while reducing ARPU by an additional 1.6%, has already improved satellite-related churn and is expected to drive higher growth ads and further churn improvement over the coming quarters. Approximately 35% of the incumbent footprint faces wired competition.

    05

    Financial Performance and Outlook

    Consolidated revenue increased 5.5% to $93.5 million, and adjusted EBITDA grew 12.9% to $32 million, with an incremental adjusted EBITDA margin of 73%. The company reiterates its FY26 guidance for revenue ($370M-$377M), adjusted EBITDA ($131M-$136M), and net CapEx ($220M-$250M). Shentel expects to achieve positive and growing free cash flow in 2027 and beyond, driven by EBITDA growth, declining capital intensity, and lower cost of capital.

    06

    Data Center Opportunity Progress

    Shentel is making progress on its data center opportunity, having a master service agreement in place with a major hyperscaler. The company's existing fiber and conduit in close proximity to data centers provide a strategic advantage, enabling service provision with potentially less significant capital investment compared to other providers.

    AI-generated summary of the company’s earnings call. Not investment advice.