Good morning, everyone. Welcome to Shenandoah Telecommunications Second Quarter 2024 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 for Shentel.

Good morning and thank you for joining us. The purpose of today’s call is to review Shentel’s results for the second quarter of 2024. 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 shentel.com website. 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 2 of the presentation, which contains our Safe Harbor disclaimer and 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 hope everyone is well. Before we discuss our second quarter financial and operating results, I’d like to comment on progress with execution of our Glo Fiber expansion strategy and network build-out. When we developed our Glo Fiber business plan 5 years ago, we identified a few operating metrics that we believe are key to driving returns on investment. Cost to pass a home was estimated to be in the $1,000 to $1,400 range. As we reach the halfway point of our targeted passings, we have seen cost increase, but we remain within this range. ARPU was estimated to be in the low to mid $70 range. Given higher take rates on Internet speeds of 1-gig and above, our Glo Fiber broadband data ARPU is about 10% higher than our original assumptions. Terminal penetration is expected to be in the 35% to 40% range in most markets. While we are still in the early years of penetration for many of our market rollouts, our oldest cohorts have achieved or are trending well to reach this range. There are a couple of early indicator factors that give us confidence we will be able to repeat our penetration success in additional markets. Our monthly churn rate continues to be in the low 1% range. We think this industry-leading metric is due to our ability to offer superior product value backed by outstanding local customer service. Our most recent net promoter score for Glo Fiber broadband service was 69, which compares very favorably to low single-digit or even negative scores for our cable competition. Network reliability, the fastest symmetrical broadband speeds, excellent local customer service and fair pricing are differentiators. We also note that approximately 95% of our passings only have one broadband competitor.…

Thank you, Chris, and good morning. I’ll start on Slide 6 for our financial results for the second quarter. Revenue grew 29% to $85.8 million in the second quarter of 2024. The former Horizon markets contributed $16.7 million of revenue. Excluding the former Horizon markets, revenues grew 3.6% over the same period a year ago due to $5.4 million or 67% growth in Glo Fiber revenue, partially offset by declines in commercial RLEC and incumbent broadband market revenues. Glo Fiber expansion markets grew broadband data RGUs by 56% and data ARPU by 9%, driving the 3.6% revenue growth. Commercial revenue declined due to the expected decline in T-Mobile revenue. As reported throughout 2023, T-Mobile disconnected backhaul circuits as part of their decommissioning of the former Sprint network. The revenue decline reflects a full period of these disconnects and a reduction in related early termination fees. We still expect about $7 million in lower T-Mobile revenue in 2024 compared to 2023 and for commercial fiber revenue to return to mid- to high single-digit growth rates starting in 2025 as previously disclosed. RLEC revenue decline was driven by DSL migrations to our faster broadband services and a decline in government support revenue. We expect the government support revenue to increase in the second half of 2024. Incumbent broadband market revenue decline was due to lower data subscribers in the approximately 20% of our passings where we face another broadband provider. Although our competitive response has been effective in maintaining ARPU levels and reducing churn in these markets, gross adds have declined in these markets driving the decline in subscribers and revenue. Adjusted EBITDA grew 20% to $23.3 million in the second quarter 2024. The former Horizon markets contributed $3.7 million of adjusted EBITDA. Excluding Horizon, adjusted EBITDA grew slightly from the same…

Thank you, Jim, and good morning. I’ll start on Slide 10 with an update on our integrated broadband network. With the launch of multi-gigabit broadband services in Sussex County, Delaware, and Warrenton, Virginia, we now offer Glo Fiber in 27 markets across six states. We continue to build additional passings in our existing markets, and we have engineering, permitting and/or construction in progress in five additional markets, including our newest market of Steubenville, Ohio. Our extensive fiber optic network that connects our broadband markets now consists of over 16,000 route miles of flavor. As shown on Slide 11, we now have approved franchise agreements in place for 633,000 Glo Fiber passings, including 62,000 in our new Ohio expansion markets. In addition, we have 28,000 passings approved as part of government grant projects in unserved areas, including 4,500 in former Horizon markets. We constructed almost 24,000 new fiber passings in the second quarter, bringing our total fiber passings to more than 302,000, including our new Glo Fiber expansion markets in Ohio and government subsidized builds. We are pleased with our construction pace, and we’ve built 30% more passing in the second quarter of 2024 than we built in the second quarter of 2023. Our construction pipeline is robust with 358,000 additional passings in various stages of engineering, permitting and construction, including 51,000 passings in Ohio. As we ramp up Glo Fiber construction in our expansion markets, we continue to see strong customer growth as shown on Slide 12. Year-over-year, we increased our number of Glo Fiber customers by 62% and ended the second quarter at over 53,000. This includes almost 2,000 customers from the Horizon acquisition as well as almost 5,000 net adds in the second quarter. Our total number of data, video and voice revenue generating units reached almost 65,000…

[Operator Instructions] And your first question comes from the line of Frank Louthan with Raymond James. Please go ahead.

Sorry. Hey. Great. Thank you. I wanted to see, have you seen any changes or indication that Verizon is expanding its fiber upgrades in your markets? And then can you walk us through the pace of the tower decommissioning by T-Mobile, or how much have they dropped this year? And what kind of notices have you gotten for the rest of the year on that business? Thanks.

Frank, this is Ed. I will comment first on Verizon and then kick it over to Jim to talk about T-Mobile. But from a Verizon fiber-to-the-home standpoint, we have not seen any material activity in our markets. We have seen a few isolated neighborhoods where they build fiber-to-the-home, but never a significant announcements or construction projects underway that we have seen.

Yes. And Frank, could you repeat the question on T-Mobile, please?

Yes. Can you just – can you quantify sort of the pace of revenue that’s been lost as T-Mobile’s kind of decommission things this year? And any indications or notices they have given you for what that will look like for the full year? How much of that will go away in 2024?

Okay. Yes. So, Frank, most of the – almost all of the disconnects for the backhaul occurred in ‘23. We have had a few lingering ones that came in, in the first half of ‘24, but relatively very small dollars. So, the guidance that we shared with you earlier in the year was we expect about $7 million less in T-Mobile revenue in ‘24 compared to ‘23. To-date, it looks like we are about $3.5 million of that so far has come through. So, it looks like we are right on schedule with where we thought we would be.

Okay. That’s helpful. And then…

Yes, Frank, just to add to it. We have about 170 backhaul circuits that are under long-term contracts. I think we have 6 years left on the contracts. So, we are basically at a steady pace now from that revenue streams. And of course, our team is working to expand that relationship and add additional backhaul circuits down the road. But we have hit the point that we are at the steady state, if that also helps to answer your question.

Okay. Great. And then as far as your 2026 debt stack, when does that go current in 2025? And what conversations have you had about trying to refinance that?

Yes. So, $150 million of our term loans matures in June of ‘26. We haven’t – I haven’t had any concrete conversations with our banks on refinancing at this stage. I am kind of targeting the second half of next year to take care of doing the refinancing. And whether that’s under the current term facility that we have today with our banks or whether that’s on a new facility, to be determined. We are looking at different options of how to minimize our cost of debt.

Got it. Okay. Great. Thank you.

Thanks Frank.

Your next question comes from the line of Hamed Khorsand with BWS Financial. Please go ahead.

Hi. Good morning. So, first question I had is, do you feel obligated or pressured in any way to lower pricing in your markets where you are seeing competition at all or another format is also where you are entering with Glo Fiber for the first time. Do you think that you have to enter with a lower rate card?

Yes. Hamed, this is Ed. I will start off with that. We really don’t at this point, 95% of our passings in Glo Fiber don’t have a fiber competitor. So, we believe we have the superior product from a speed standpoint. We are really focused on local customer service and fair straightforward pricing. So, we do not feel the need to offer significant discounts as we go into these markets, and we have had success adding customers without doing that.

Okay. And those customers are coming on with you as Glo Fiber. Are they quickly opting for the higher speeds, or are they transitioning after 6 months or 12 months to a different speed?

We do see some upgrades, but out of the gate, over half of our customers are selecting 1 gig speed or higher. Last quarter, it was 43% selecting 1 gig and then actually 7% selected 2 gig speeds. So, we are – out of the gate, we are seeing customers self-select the higher speeds.

Alright. And my last question was about the CapEx plan for this year. Given the commentary about cost rising, any plan to accelerate some of the CapEx?

So, at this point, we don’t plan to accelerate the CapEx. Really, what’s keeping us from doing that is permitting and make-ready work for pole attachments, that’s the biggest challenge that’s keeping our construction pace where it is currently, so I would say at this point, we don’t plan to accelerate the CapEx.

Thank you.

Thank you.

That concludes our Q&A session. I will now turn the conference back over to Jim Volk, Senior Vice President of Finance and CFO for our closing remarks.

Thank you for all – everyone for joining us today. We look forward to updating on our fiber first strategy and progress in the future quarters. Have a good day.

Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.