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Shenandoah Telecommunications Company (SHEN) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Communication Services· Jul 29, 2026

Source: earnings call transcript

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

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

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———

Deals & partnerships

Horizon Expansion of commercial fiber business

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

Major hyperscaler Master 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

Incumbent Broadband Revenue Decline Q2 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 Decline Q2 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 Markets Q2 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 Markets Q2 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 Markets Q2 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 Activity Q2 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

Glow Fiber Penetration Rate

next quarter
Current 21.1%
Target Continued 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.

Find out whether SHEN delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.