Good morning, everyone. Welcome to Shenandoah Telecommunications Fourth Quarter 2023 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analysis at Shentel.

Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the fourth quarter and full year 2023. Our results were announced in a press release distributed this morning, and the presentation we'll be reviewing is included on the Investor page at our website, www.shentel.com. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer; Ed McKay, Executive Vice President and Chief Operating Officer; and Jim Volk, Senior Vice President of Finance and CFO. After our prepared remarks, we will conduct a question-and-answer session. As always, let me refer you to slide two of the presentation, which contains our safe harbor disclaimer. I'll remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from the statements. Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. You are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Chris. Go ahead, Chris.

Thanks, Kirk. We appreciate everyone joining us this morning, and I hope everyone is well. 2023 was another strong year for Shentel as we continued executing our Glo Fiber expansion plan. As you can see on slide four, consolidated revenues and adjusted EBITDA grew approximately 8% and 19%, respectively, driven by Glo Fiber subscriber growth. Since our first full year of launching Glo Fiber in 2020, our consolidated revenue and adjusted EBITDA have grown at a compound annual growth rate of approximately 9% and 18%, respectively. We believe this is an industry-leading pace among publicly-traded broadband companies. As noted on slide five, we had over 41,700 Glo Fiber subscribers as of December 2023, an increase of over 71% compared to 2022 and over 10 times 2020 subscribers. Glo Fiber revenues have grown over 160% per year over the past three years, fueling our industry-leading consolidated revenue and adjusted EBITDA growth rates. Moving to slide six. We added over 86,000 new Go Fiber passings in 2023, almost a 20% increase from 2022 and over a threefold increase from 2020 levels. Our sales team has more than kept pace with our construction team. We added over 17,000 Glo Fiber net customers, representing a more than 32% increase over 2022 and a 62% annual growth rate since 2020. We expect to accelerate the pace of Glo Giber construction and sales, again, in the next year, continuing the annual improvements we've made in each of the past three years. Before I turn the call over to Jim, I'd like to give an update on our pending acquisition of Horizon Telecom. We've received most of the required regulatory approvals and expect to close the transaction the second quarter, depending on the timing of the remaining regulatory approval. The Shentel and Horizon teams have been working well together in planning for the integration of the two companies. We now expect most of the system integration work to be completed in the first quarter of 2025. With that, I'll now turn the call over to Jim to review the details of our financial results.

Thank you, Chris, and good morning, everyone. I will start with our broadband financial results for 2023 on slide eight. Broadband revenue grew $20.3 million, or 8.1%, to $269.3 million. As Chris just mentioned, Glo Fiber revenue was the primary catalyst, growing $16.8 million, or 92%, from the prior year, with strong customer growth of over 71%, and a 4% increase in data subscriber ARPU. Cable market revenues, excluding the impact of our discontinued Beam service, grew $2.5 million, or 1.4%, due primarily to 1.8% growth in data subscriber ARPU. Commercial fiber revenue grew $3.3 million, or 8.5%, due primarily to $3 million in nonrecurring early termination fees related to backhaul circuit disconnects. T-Mobile disconnected 338 backhaul circuits during 2023 as part of the previously announced shutdown of the former Sprint network. With most of the T-Mobile backhaul disconnects now behind us, we expect commercial fiber revenue in 2024 to decline by $3 million in lower backhaul revenue from a full year of lower T-Mobile backhaul circuits, $3 million in lower nonrecurring early termination fees, and $1 million in additional T-Mobile churn in 2024, partially offset by continued growth in other customer segments. We expect commercial fiber revenue to return to mid- to high-single-digit growth rates, starting at 2025. Broadband adjusted EBITDA grew $15.8 million, or 17.6%, to $105.8 million in 2023 when compared to 2022, due to the previously mentioned revenue growth of $20.3 million, partially offset by $4.6 million in higher advertising expenses to support the Glo Fiber expansion. Broadband adjusted EBITDA margins expanded 320 basis points year-over-year to 39.3% as we continue to see the benefits of operating leverage of our fiber network, as the broadband cost of service declined slightly year-over-year despite adding over 17,000 Go Fiber customers over the past year. On slide nine, Tower…

Thank you, Jim, and good morning, everyone. I'll start on slide 14 with an update on our integrated broadband network. We had a record quarter for fiber construction, adding over 33,000 new fiber passings and constructing almost 500 new route miles of fiber. The fourth quarter marked a milestone where Glo Fiber now passes more homes and businesses than our incumbent cable markets. In the fourth quarter, we launched the new Glo Fiber market of Salisbury, Maryland, and we now offer Glo Fiber multi-gigabit service in 22 markets with three additional market launches planned for 2024. Turning to slide 15, our total number of approved Glo Fiber passings has grown to 564,000, primarily driven by a new franchise agreement to expand fiber services to approximately 40,000 additional homes and businesses in Frederick County, Maryland. We now have 74 franchise agreements in 25 markets across five states. We continued to work through challenges with pole attachment permits and underground locates, and our engineering and construction teams delivered a very strong fourth quarter, adding over 31,000 new Glo Fiber passings and over 2,000 government subsidized fiber passings, bringing our total fiber passings to over 236,000. Our number of planned government subsidized passings decreased slightly quarter-over-quarter as we decreased the scope of one government grant project. However, our government -- our construction backlog remains very robust with approximately 351,000 incremental fiber passings approved for construction. As we ramp up Glo Fiber construction, we continue to see strong customer growth, as shown on slide 16. We added over 4,300 Glo Fiber customers in the fourth quarter to finish the year at over 41,700, and our data penetration rate reached 17.8%, up from 16.5% at the end of 2022. Our total number of data, video, and voice revenue generating units has reached over 51,000, up…

[Operator Instructions] Our first question will come from the line of Frank Louthan with Raymond James.

Great. Thank you. When you get the Horizon deal completed and you're kind of at a full construction ramp, how many homes do you expect to be passing per year? And then what is sort of the catch-up from the marketing standpoint? How many you think you can add? And -- this is the first question. Second question, is T-Mobile selling fixed wireless in the legacy wireless markets where -- that you sold to them? Thank you.

Yes. Frank, this is Ed. So, I'll answer the T-Mobile question first. Yes, they do offer their fixed wireless service in the legacy markets that we sold to them. Up to this point, we have not seen any material impact from T-Mobile fixed wireless. As far as the construction rate, as I mentioned, we plan on building 100,000 additional Glo Fiber passings this year. We do believe we'll be able to accelerate that somewhat with the addition of Horizon as well. So, we expect a pace over 100,000 passings.

Okay. All right. Thank you very much.

Our next question will come from the line of Dan Day with B. Riley Securities.

Yes. Hey, guys, thanks for taking the questions. So, just, I noticed you talked about exploring other strategic alternatives in the press release to maybe raise some growth capital. Just maybe frame up what those might look like. Obviously, you talked about a tower sale. If you could provide an update there. And just as you think about strategic alternatives, whether you'd think about a sale of any non-tower assets. Thanks.

Yes. Dan, we're looking at multiple options to raise additional growth capital. Towers is one of the possibilities. We don't have anything to update today on that. The important thing to note is we don't really need the capital until '25, so we have plenty of time to explore different alternatives. Another possibility that we've taken an early look at is maybe entering the asset securitization market, the ABS market, for some of our more chore fiber markets. So, we're going to explore all different options and then come out with what we think is the best option to continue to provide capital to grow our business.

Okay. Great. Thanks, Jim. And then just on the capex guidance for 2024, you talked about the increase in the incumbent cable DOCSIS upgrades, all that sort of stuff. Like is this new sort of $40 million-ish maintenance capex run rate in incumbent cable the way we should think about it, or is this sort of a onetime upgrade and then we sort of go back to a little lower than that? And then just to be clear, on the 180 to 200 guidance for Glo and fiber-to-the-home, are you including any passings from the incremental 100,000 from the Horizon acquisition there, or would that all be capex upside to that?

Yes. So, this is Ed, I'll answer the Horizon question first. The 100,000 that I mentioned was just the legacy Shentel Glo Fiber business, not any incremental passings from Horizon. And as far as the cable capex, the guidance is roughly $40 million in total capex for 2024. As I mentioned, about $10 million of that is DOCSIS upgrades. So, I think over the next five years, as we do complete our DOCSIS upgrades, we'll see some elevated capex there, and then we'll come down as we complete the DOCSIS upgrades.

Yes. Dan, on the DOCSIS upgrades, we're planning to spend about $65 million over the next five years. About $10 million of that will be this year. So, you can layer that in on the top. And once we complete that project, you should see the cable markets capex come down again. And...

I guess to ask the question on the Glo Fiber one a little bit different way, if you do execute on some of the passings in the, say, Ohio markets, like would there be -- would that $190 million need to come up to account for that, I guess is the question I was asking.

Yes. Dan, we will -- once the deal closes -- and right now we're looking at likely second quarter, we will provide updated guidance on the capital spending for '24. It will go up for -- as we continue to invest in the Ohio markets, as you mentioned. And also the number of passings on the fiber-to-the-home side will give you some updated guidance on that as well. We do expect to add about 100,000 homes in the Ohio markets over the next three years. How many are going to come on in '24? We'll provide an update once the deal closes.

Awesome. Thanks, guys.

Yes. Thank you, Dan.

[Operator Instructions] Our next question will come from the line of Hamed Khorsand with BWS Financial.

Hi, good morning. So, the first question I had was, are you seeing any changes in the competitive landscape regarding Glo Fiber in recent months and quarter as you're talking about this -- the overbuild?

So, no significant changes in the competitive landscape. We still primarily compete with one of the big incumbent cable providers there, and they've continued with promotional pricing. But no significant changes as far as what they're offering from a package standpoint.

Okay. And are you doing anything different on the promotional standpoint as you enter these new markets?

No, we're still really leading with fair, straightforward pricing. We do offer the first month of service free. But we're not providing these deep promotional discounts that our incumbent cable competitor is providing.

Okay. And then as far as the subscribers signing on initially, did -- are you seeing any changes in the packages they're subscribing to? Are they opting initially for the higher-tier price, or are they coming in at the lower tier?

They're continuing to shift more toward the higher tiers. As I mentioned, almost half of our new customers are signing up for gigabit speeds or higher. So, we're definitely capturing the higher end of the market as customers want more bandwidth.

And my last question is that, has there been any changes as far as your cost and your capital expenditure model? And how much has that been?

So, I will say we previously gave a range of $1,000 to $1,400 per passing for new construction for Glo Fiber. We are at the higher end of that range now. We're building in some less dense areas. And the cost for construction has gone up. We've seen it level off in the past year, but we did see some significant increases before that.

Okay. Great. Thank you.

Thanks, Hamed.

That concludes today's question-and-answer session. I'd like to turn the call back to Jim Volk for closing remarks.

Yes. Thank you, all, for joining. We look forward to updating you in 2024 of what we expect will be a very exciting year. Thanks, everyone, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.