Shenandoah Telecommunications Co: Form 10-Q for the period ended Sep 30, 2026
Filed with the SEC on Oct 28, 2026 and accepted by EDGAR at Oct 28, 2026, 08:04 ET.
Management's discussion and analysis
As filed, 33,814 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
The following management’s discussion and analysis includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will,” “should,” “could” or “plan” and similar expressions as they relate to Shenandoah Telecommunications Company or its management are intended to identify these forward-looking statements. All statements regarding Shenandoah Telecommunications Company’s expected future financial position, operating results and cash flows, business strategy, financing plans, forecasted trends relating to the markets in which Shenandoah Telecommunications Company operates and similar matters are forward-looking statements. We cannot assure you that the Company’s expectations expressed or implied in these forward-looking statements will turn out to be correct. The Company’s actual results could be materially different from its expectations because of various factors, including, but not limited to, those discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2025 (“2025 Form 10-K”). The forward-looking statements included in this Form 10-Q are made only as of the date of the statement. We undertake no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events, except as required by law.
The following management’s discussion and analysis should be read in conjunction with the Company’s 2025 Form 10-K, including the consolidated financial statements and related notes included therein.
Overview
Shenandoah Telecommunications Company (“Shentel”, “we”, “our”, “us”, or the “Company”) is a provider of a comprehensive range of broadband communication services in eight contiguous states in the eastern United States.
Recent Developments
Additions to ABS Trust
On October 1, 2026, and pursuant to the securitization agreement governing the ABS Notes, the Company contributed approximately $238.6 million of gross additional fiber network assets and added approximately 116,500 homes passed and over 18,000 customers to the ABS Entities. The consolidated Trust collateral pool increased to approximately 431,200 homes passed and 102,200 data customers. The cash flow from these contributed assets will be used to service the obligations under Shentel's ABS Notes and the Company anticipates that the contribution of these assets will create additional available capacity on the VFN.
Results of Operations
Three Months Ended September 30, 2026 Compared with the Three Months Ended September 30, 2025
The Company’s unaudited condensed consolidated results from operations are summarized as follows:
($ in thousands)
| Broadband operating revenue | Three Months Ended September 30, 2026 | % of Revenue | 2025 | % of Revenue | Change $% | |
|---|---|---|---|---|---|---|
| Residential & SMB - Incumbent Broadband Markets | $39,103 | 41.6% | $41,935 | 46.7% | $(2,832) | (6.8)% |
| Residential & SMB - Glo Fiber Expansion Markets | 28,166 | 30.0% | 21,305 | 23.7% | 6,861 | 32.2% |
| Commercial Fiber | 21,126 | 22.5% | 19,957 | 22.2% | 1,169 | 5.9% |
| RLEC & Other | 5,539 | 5.9% | 6,599 | 7.3% | (1,060) | (16.1)% |
| Total revenue | 93,934 | 100.0% | 89,796 | 100.0% | 4,138 | 4.6% |
| Operating expenses | ||||||
| Cost of services, exclusive of depreciation and amortization | 32,919 | 35.0% | 32,384 | 36.1% | 535 | 1.7% |
| Selling, general and administrative | 29,153 | 31.0% | 29,791 | 33.2% | (638) | (2.1)% |
| Restructuring, integration and acquisition | 152 | 0.2% | 293 | 0.3% | (141) | (48.1)% |
| Depreciation and amortization | 33,687 | 35.9% | 34,492 | 38.4% | (805) | (2.3)% |
| Total operating expenses | 95,911 | 102.1% | 96,960 | 108.0% | (1,049) | (1.1)% |
| Operating loss | (1,977) | (2.1)% | (7,164) | (8.0)% | 5,187 | (72.4)% |
| Other (expense) income: | ||||||
| Interest expense | (10,497) | (11.2)% | (6,789) | (7.6)% | (3,708) | 54.6% |
| Other income, net | 246 | 0.3% | 1,589 | 1.8% | (1,343) | (84.5)% |
| Loss before income taxes | (12,228) | (13.0)% | (12,364) | (13.8)% | 136 | (1.1)% |
| Income tax benefit | (3,048) | (3.2)% | (2,974) | (3.3)% | (74) | 2.5% |
| Net loss | (9,180) | (9.8)% | (9,390) | (10.5)% | 210 | (2.2)% |
| Dividends on redeemable noncontrolling interest | 1,633 | 1.7% | 1,523 | 1.7% | 110 | 7.2% |
| Net loss attributable to common shareholders | $(10,813) | (11.5)% | $(10,913) | (12.2)% | $100 | (0.9)% |
Residential & SMB - Incumbent Broadband Markets revenue
Revenue from residential and small and medium business (“SMB”) customers in Incumbent Broadband Markets is primarily earned through the Company’s provision of data, video and voice services over primarily HFC cable and to a lesser extent FTTH networks in incumbent markets.
Residential & SMB - Incumbent Broadband Markets revenue decreased by $2.8 million, or 6.8%. The decrease was primarily due to lower video and data revenue. Video revenue declined due to a 13.0% decrease in video RGUs as customers switched to streaming video services. Data revenue declined primarily due to a 3.0% decline in data ARPU, driven in part by our rate card in markets where we face a fixed broadband competitor and in part due to our recently implemented rate card in lower demographic markets experiencing softer demand.
Residential & SMB - Glo Fiber Expansion Markets revenue
Revenue from residential and SMB customers in Glo Fiber Expansion Markets is primarily earned through the Company’s provision of data, video and voice services over FTTH networks in new greenfield expansion markets.
Residential & SMB - Glo Fiber Expansion Markets revenue increased by $6.9 million, or 32.2%. The increase was primarily due to a 31.8% increase in data RGUs driven by the Company’s increase in penetration rates and increase in passings.
Commercial Fiber revenue
Shentel’s Commercial Fiber revenue is primarily earned through the Company’s provision of high-speed Ethernet, dedicated internet access, wavelength services, dark fiber leasing and managed services over fiber optic networks to commercial customers.
Commercial Fiber revenue increased by $1.2 million, or 5.9%. The increase was due to increases in recurring revenue from additional circuit services sold to both new and existing customers.
RLEC & Other revenue
Shentel’s RLEC & Other revenue is primarily earned through the Company’s provision of voice and DSL telephone services over copper networks, primarily in Shenandoah County, Virginia and Ross County, Ohio. Shentel also earns governmental support revenue through the federal Universal Service Fund (“USF”).
RLEC & Other revenue decreased by $1.1 million, or 16.1%. The decrease was primarily due to a 35.5% decrease in DSL RGUs and, to a lesser extent, a decrease in government support revenue.
Cost of services, exclusive of depreciation and amortization
Cost of services primarily consist of costs to acquire and deliver video programming, internal labor to maintain our network and service our customers, third party network maintenance, and line expenses
Cost of services increased by $0.5 million, or 1.7%. The increase was partially due to increased building & fleet maintenance and fuel expenses as well as increased pole attachment rent expense from expansion of the Glo Fiber network and regulatory fees with the growth in customers.
Selling, general and administrative
Selling, general and administrative expenses consist of employee compensation, advertising, software maintenance, stock-based compensation, and operating taxes.
Selling, general and administrative expense decreased by $0.6 million, or 2.1%. The decrease was partially due to lower advertising and stock compensation expense, offset in part by higher operating and property taxes, software maintenance expenses, and payroll related expenses.
Restructuring, integration and acquisition
Restructuring, integration and acquisition expense decreased by $0.1 million, or 48.1%, primarily due to transaction fees incurred in the prior year that did not recur in 2026.
Depreciation and amortization
Depreciation and amortization decreased by $0.8 million, or 2.3%. The decrease was primarily due to a $3.2 million decline in write-offs, partially offset by new depreciation associated with assets placed in service as part of the continued expansion of the Glo Fiber network.
Interest expense
Interest expense increased by $3.7 million, or 54.6%. The increase was primarily due to an increase in the Company’s outstanding debt as well as less capitalized interest due to less plant under construction than in prior year.
Other income, net
Other income, net decreased by $1.3 million, or 84.5%. The decrease was primarily due to a reclassification of gains on interest rate swap from accumulated other comprehensive income in the prior year that did not recur in 2026, as well as lower patronage income.
Income tax benefit
Income tax benefit increased by $0.1 million, or 2.5%. The increase was primarily due to changes in the annual effective tax rate year over year.
Nine Months Ended September 30, 2026 Compared with the Nine Months Ended September 30, 2025
The Company’s unaudited condensed consolidated results from operations are summarized as follows:
($ in thousands)
| Broadband operating revenue | Nine Months Ended September 30, 2026 | % of Revenue | 2025 | % of Revenue | Change $% | |
|---|---|---|---|---|---|---|
| Residential & SMB - Incumbent Broadband Markets | $120,528 | 43.1% | $128,131 | 48.1% | $(7,603) | (5.9)% |
| Residential & SMB - Glo Fiber Expansion Markets | 79,283 | 28.4% | 59,545 | 22.4% | 19,738 | 33.1% |
| Commercial Fiber | 63,054 | 22.6% | 59,052 | 22.2% | 4,002 | 6.8% |
| RLEC & Other | 16,684 | 5.9% | 19,534 | 7.3% | (2,850) | (14.6)% |
| Total revenue | 279,549 | 100.0% | 266,262 | 100.0% | 13,287 | 5.0% |
| Operating expenses | ||||||
| Cost of services, exclusive of depreciation and amortization | 97,446 | 34.9% | 98,038 | 36.8% | (592) | (0.6)% |
| Selling, general and administrative | 93,562 | 33.5% | 90,526 | 34.0% | 3,036 | 3.4% |
| Restructuring, integration and acquisition | 2,726 | 1.0% | 1,009 | 0.4% | 1,717 | 170.2% |
| Depreciation and amortization | 99,277 | 35.5% | 99,053 | 37.2% | 224 | 0.2% |
| Total operating expenses | 293,011 | 104.8% | 288,626 | 108.4% | 4,385 | 1.5% |
| Operating loss | (13,462) | (4.8)% | (22,364) | (8.4)% | 8,902 | (39.8)% |
| Other (expense) income: | ||||||
| Interest expense | (29,628) | (10.6)% | (17,684) | (6.6)% | (11,944) | 67.5% |
| Other income, net | 763 | 0.3% | 5,337 | 2.0% | (4,574) | (85.7)% |
| Loss before income taxes | (42,327) | (15.1)% | (34,711) | (13.0)% | (7,616) | 21.9% |
| Income tax benefit | (9,697) | (3.5)% | (7,141) | (2.7)% | (2,556) | 35.8% |
| Net loss | (32,630) | (11.7)% | (27,570) | (10.4)% | (5,060) | NMF |
| Dividends on redeemable noncontrolling interest | 4,815 | 1.7% | 4,492 | 1.7% | 323 | NMF |
| Net loss attributable to common shareholders | $(37,445) | (13.4)% | $(32,062) | (12.0)% | $(5,383) | NMF |
Residential & SMB - Incumbent Broadband Markets revenue
Residential & SMB - Incumbent Broadband Markets revenue decreased by $7.6 million, or 5.9%. The decrease was primarily due to lower video and data revenue. Video revenue declined due to a 13.9% decrease in video RGUs as customers switched to streaming video services. Data revenue declined primarily due to a 2.4% decline in data ARPU, driven in part by our rate card in markets where we face a fixed broadband competitor and in part due to our recently implemented rate card in lower demographic markets experiencing softer demand.
Residential & SMB - Glo Fiber Expansion Markets revenue
Residential & SMB - Glo Fiber Expansion Markets revenue increased by $19.7 million, or 33.1%. The increase was primarily due to a 32.5% increase in data RGUs driven by the Company’s increase in penetration rates and increase in passings.
Commercial Fiber revenue
Commercial Fiber revenue increased by $4.0 million, or 6.8%. The increase was due to increases in recurring revenue from additional circuit services sold to both new and existing customers.
RLEC & Other revenue
RLEC & Other revenue decreased by $2.9 million, or 14.6%. The decrease was primarily due to a 31.4% decrease in DSL RGUs and a decrease in government support revenue.
Cost of services, exclusive of depreciation and amortization
Cost of services decreased by $0.6 million, or 0.6%. The decrease was due to indirect cost reimbursements on government grant projects and decreases in network and field maintenance and payroll related expenses, offset by increased building & fleet maintenance and fuel expenses as well as increased pole attachment rent expense.
Selling, general and administrative
Selling, general and administrative expense increased by $3.0 million, or 3.4%. The increase was due to increases in stock compensation, operating and property taxes, software maintenance expenses, and payroll related expenses.
Restructuring, integration and acquisition
Restructuring, integration and acquisition expense increased by $1.7 million, or 170.2%, primarily related to severance costs incurred associated with the previously announced reduction in force in 2026.
Depreciation and amortization
Depreciation and amortization increased by $0.2 million, or 0.2%. The increase is largely due to depreciation associated with new assets placed in service as part of the Company’s expansion of the Glo Fiber network, offset by lower inventory asset write-offs in 2026 as compared to the prior year as well as fewer project cost write-offs for markets under construction but cancelled due to higher costs to build.
Interest expense
Interest expense increased by $11.9 million, or 67.5%. The increase was primarily due to an increase in the Company’s outstanding debt and debt issuance costs, and less capitalized interest due to less plant under construction than in the prior year.
Other income, net
Other income, net decreased by $4.6 million, or 85.7%. The decrease was primarily due to a favorable settlement of the Horizon acquisition related escrow claim and reclassification of gains on interest rate swap from accumulated other comprehensive income in the prior year that did not recur in 2026 as well as lower patronage income in the current year.
Income tax benefit
Income tax benefit increased by $2.6 million, or 35.8%. The increase was due to higher pre-tax loss than in the prior year.
Additional Information
Shentel provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, Kentucky, Delaware, Ohio and Indiana, via fiber optic and hybrid fiber coaxial cable networks. We also lease dark fiber and provide Ethernet, Dedicated Internet Access and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. Shentel’s Broadband business also provides voice and DSL telephone services as a Rural Local Exchange Carrier (“RLEC”) to customers in Shenandoah County and portions of adjacent counties in Virginia, and in Ross County and portions of adjacent counties in Ohio. These integrated networks are connected by over 20,000 route miles of fiber.
The following table indicates selected operating statistics.
| Homes and businesses passed (1) | Three Months Ended September 30, 2026 | 2025 |
|---|---|---|
| Incumbent Broadband Markets | 254,019 | 248,002 |
| Glo Fiber Expansion Markets | 500,584 | 400,323 |
| Total homes and businesses passed | 754,603 | 648,325 |
| Residential & SMB RGUs: | ||
| Incumbent Broadband Markets | 110,032 | 111,900 |
| Glo Fiber Expansion Markets | 108,787 | 82,662 |
| Broadband Data | 218,819 | 194,562 |
| Video | 34,325 | 36,601 |
| Voice | 27,350 | 26,477 |
| Total Residential & SMB RGUs (excludes RLEC) | 280,494 | 257,640 |
| Residential & SMB Penetration (2) | ||
| Incumbent Broadband Markets | 43.3% | 45.1% |
| Glo Fiber Expansion Markets | 21.7% | 20.6% |
| Broadband Data | 29.0% | 30.0% |
| Video | 4.5% | 5.6% |
| Voice | 3.8% | 4.4% |
| Residential & SMB ARPU (3) | ||
| Incumbent Broadband Markets | $79.84 | $82.34 |
| Glo Fiber Expansion Markets | $75.96 | $76.81 |
| Broadband Data | $77.95 | $80.03 |
| Video | $128.85 | $125.38 |
| Voice | $31.87 | $32.62 |
| Fiber route miles | 20,085 | 18,077 |
| Total fiber miles (4) | 2,133,729 | 1,957,272 |
(1) Homes and businesses are considered passed (“passings”) if we can connect them to our network without further extending the distribution system. Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services.
(2) Penetration is calculated by dividing the number of users by the number of passings or available homes, as appropriate.
(3) ARPU calculation = (Residential & SMB Revenue) / average RGUs / 3 months.
(4) Total fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.
Financial Condition, Liquidity and Capital Resources
Sources and Uses of Cash:
Shentel’s principal sources of liquidity are our cash and cash equivalents, restricted cash, cash generated from operations, government grants and borrowing capacity available under the Company’s VFN and RCF.
In 2021, Congress passed the American Rescue Plan Act and the Infrastructure Investment and Jobs Act to subsidize the deployment of high-speed broadband internet access in unserved areas. We have been awarded approximately $152.3 million in grants to serve unserved homes in the states of Virginia, Ohio, Maryland and West Virginia and to upgrade the capacity of the Ohio middle mile network. The grants will be paid to the Company as certain milestones are completed. As of September 30, 2026, and including indirect cost reimbursements, the Company has received a total of $125.4 million in cash receipts and has $26.9 million in remaining reimbursements available under these grant programs. The Company expects to substantially complete its obligations under these programs by the end of 2026.
As of September 30, 2026, the Company’s total available liquidity was $138.6 million, consisting of (i) unrestricted cash and cash equivalents totaling $18.6 million; (ii) restricted cash as required by the ABS Indenture totaling $27.0 million (iii) $49.8 million of availability under Shentel Broadband’s RCF; (iv) $16.3 million.under Shentel Issuer’s VFN; and (v) an aggregate of $26.9 million remaining reimbursements available under government grants, which reimbursements are subject to fulfilling the terms of the underlying agreements. In addition, the Company has $84.2 million of VFN commitments that are not available to draw as of September 30, 2026. The available capacity of the VFN will increase based on the secured fiber network revenue growth from the ABS Entities multiplied by (i) a margin as defined in the ABS Indenture and (ii) a 6.25x multiple.
Net cash provided by operating activities from continuing operations was approximately $76.6 million during the nine months ended September 30, 2026, representing an increase of $2.2 million compared with the prior year period, primarily driven by timing of changes in working capital.
Net cash used in investing activities was approximately $192.1 million during the nine months ended September 30, 2026, representing a decrease of $17.8 million compared with the prior year period. The primary driver was a $36.5 million decrease in capital expenditures due to the substantial completion of government grant construction projects in Incumbent Broadband Markets in 2025, partially offset by a $17.8 million decrease in cash receipts from government grant programs.
Net cash provided by financing activities was approximately $112.9 million during the nine months ended September 30, 2026, representing a decrease of $1.1 million compared with the prior year period. This decrease was primarily driven by higher payments on financing arrangements than the prior year.
Indebtedness:
As of September 30, 2026, the Company’s net indebtedness was approximately $747.1 million, including $759.9 million in outstanding ABS Notes, the VFN, and the RCF, net of unamortized loan fees of $12.8 million. The borrowed Class A-2 Notes and the Class B Notes incur interest at 5.64% and 6.03%, respectively. The borrowed VFN and RCF bear interest at a variable rate determined by one-month term SOFR, plus a margin based on net leverage. The weighted-average interest rate was 5.84% for the ABS Notes, VFN, and RCF at September 30, 2026.
Shentel’s ABS Notes, which include Class A-2 Notes and Class B Notes, have outstanding balances of $489.1 million and $78.3 million, respectively. Shentel Issuer’s VFN has an outstanding balance of $74.5 million. Shentel’s RCF has an outstanding balance of $118.0 million. The ABS Notes have a contractually stated anticipated repayment date (“ARD”) of December 2030 with the exception of the VFN. The initial anticipated repayment date for the VFN is December 2029 which may be extended, at the option of Shentel, to December 2030, subject to the satisfaction of certain conditions. Shentel has not made any borrowings under its LFN as of September 30, 2026. Amounts borrowed under the LFN do not have an anticipated repayment date. The legal final maturity date of each class of the ABS Notes is in December 2055. If Shentel has not repaid or refinanced any Series 2025-1 Notes prior to the relevant ARD, additional interest will accrue on outstanding principal. Shentel Broadband’s RCF matures on December 5, 2030. No principal payments on Shentel Broadband’s RCF are required prior to the final maturity date.
Shentel and its non-ABS Entities have no recourse of the loans of the ABS Entities. Likewise, the ABS Entities have no recourse of the loans of Shentel Broadband.
Refer to Note 8, Debt, in the Company’s unaudited condensed consolidated financial statements within this Form 10-Q and Note 10, Debt, in the Company’s consolidated financial statements in the Company’s 2025 Form 10-K for more information about the outstanding debt.
As of September 30, 2026, the Company was in compliance with the financial covenants related to our outstanding debt.
We expect our cash on hand, restricted cash, cash flows from operations, availability of funds from our RCF and VFN agreements and government grants will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months. There can be no assurance that we will continue to generate cash flows at or above current levels.
During the nine months ended September 30, 2026, our capital expenditures of $215.0 million exceeded our net cash provided by operating activities by $138.4 million, and we expect our capital expenditures to exceed the cash flows provided from operations through 2026, in line with the timing of our Glo Fiber network expansion.
The actual amount and timing of our future capital requirements may differ materially from our estimates depending on the demand for our products and services, new market developments and expansion opportunities.
Our cash flows from operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and other adverse public health developments, and other conditions. Our ability to attract and maintain a sufficient customer base is critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results.
During 2025, Shentel formed Shentel Guarantor LLC, Shentel Issuer LLC, Shentel Asset Entity I LLC and Shentel Asset Entity II LLC (collectively, the “ABS Entities”), each a bankruptcy-remote subsidiary of the Company. The ABS Entities were formed as part of a securitization transaction, pursuant to which certain of the Company’s fiber network assets and related customer contracts primarily in Virginia, Ohio, Pennsylvania, Indiana, Maryland and West Virginia were contributed to Shentel Asset Entity I LLC and Shentel Asset Entity II LLC (collectively, the “ABS Asset Entities”). As of September 30, 2026, all of the Company’s commercial fiber network assets and approximately 316,000 Glo Fiber passings were contributed to the ABS Asset Entities. The cash flow from these contributed assets are used to service the obligations under Shentel’s ABS Notes.
Supplemental Financing Reporting Requirements:
Our RCF requires consolidated financial statements of restricted subsidiaries under the RCF (the “Non-ABS Entities” or the “Restricted Subsidiaries”) and unrestricted subsidiaries (the “ABS Entities” or the “Unrestricted Subsidiaries”). Below are the unaudited condensed consolidating balance sheets as of September 30, 2026 and December 31, 2025, and the unaudited condensed consolidating statements of operations for the three and nine months ended September 30, 2026.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| ASSETS Current assets: | As of September 30, 2026 Unrestricted Subsidiaries (ABS Entities) | Restricted Subsidiaries (Non-ABS Entities) | Eliminations | Consolidated |
|---|---|---|---|---|
| Cash and cash equivalents | $— | $18,647 | $— | $18,647 |
| Restricted cash and cash equivalents | 27,009 | — | — | 27,009 |
| Accounts receivable | 9,868 | 21,107 | (8,590) | 22,385 |
| Prepaid expenses and other | 6,095 | 16,374 | (2,405) | 20,064 |
| Total current assets | 42,972 | 56,128 | (10,995) | 88,105 |
| Investments | — | 355,266 | (338,958) | 16,308 |
| Property, plant and equipment, net | 819,838 | 891,306 | — | 1,711,144 |
| Goodwill and intangible assets, net | 7,515 | 148,196 | — | 155,711 |
| Operating lease right-of-use assets | 9,997 | 9,019 | — | 19,016 |
| Deferred charges and other assets | 127,693 | 8,606 | (117,334) | 18,965 |
| Total assets | $1,008,015 | $1,468,521 | $(467,287) | $2,009,249 |
| LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $11,603 | $65,206 | $(8,590) | $68,219 |
| Advanced billings and customer deposits | 10,254 | 10,620 | (2,405) | 18,469 |
| Accrued compensation | — | 16,816 | — | 16,816 |
| Accrued liabilities and other | 5,770 | 15,533 | (1,493) | 19,810 |
| Total current liabilities | 27,627 | 108,175 | (12,488) | 123,314 |
| Long-term debt, less current maturities, net of unamortized loan fees | 629,472 | 117,619 | — | 747,091 |
| Other long-term liabilities: | ||||
| Deferred income taxes | — | 147,921 | — | 147,921 |
| Other liabilities | 34,011 | 128,778 | (115,840) | 46,949 |
| Total other long-term liabilities | 34,011 | 276,699 | (115,840) | 194,870 |
| Temporary equity: | ||||
| Redeemable noncontrolling interest | — | 93,321 | — | 93,321 |
| Shareholders’ equity: | ||||
| Total shareholders’ equity | 316,905 | 872,707 | (338,959) | 850,653 |
| Total liabilities, temporary equity and shareholders’ equity | $1,008,015 | $1,468,521 | $(467,287) | $2,009,249 |
31
(in thousands)
| ASSETS Current assets: | As of December 31, 2025 Unrestricted Subsidiaries (ABS Entities) | Restricted Subsidiaries (Non-ABS Entities) | Eliminations | Consolidated |
|---|---|---|---|---|
| Cash and cash equivalents | $— | $27,259 | $— | $27,259 |
| Restricted cash and cash equivalents | 20,945 | — | — | 20,945 |
| Accounts receivable | 12,580 | 31,880 | (12,963) | 31,497 |
| Prepaid expenses and other | 5,344 | 14,803 | (2,405) | 17,742 |
| Total current assets | 38,869 | 73,942 | (15,368) | 97,443 |
| Investments | — | 392,737 | (376,227) | 16,510 |
| Property, plant and equipment, net | 793,874 | 807,735 | — | 1,601,609 |
| Goodwill and intangible assets, net | 8,234 | 148,657 | — | 156,891 |
| Operating lease right-of-use assets | 10,199 | 9,458 | — | 19,657 |
| Deferred charges and other assets | 129,635 | 7,794 | (118,777) | 18,652 |
| Total assets | $980,811 | $1,440,323 | $(510,372) | $1,910,762 |
| LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $7,561 | $66,757 | $(12,963) | $61,355 |
| Advanced billings and customer deposits | 8,953 | 10,361 | (2,405) | 16,909 |
| Accrued compensation | — | 13,334 | — | 13,334 |
| Accrued liabilities and other | 3,894 | 14,116 | (1,112) | 16,898 |
| Total current liabilities | 20,408 | 104,568 | (16,480) | 108,496 |
| Long-term debt, less current maturities, net of unamortized loan fees | 554,288 | 73,949 | — | 628,237 |
| Other long-term liabilities: | ||||
| Deferred income taxes | — | 157,618 | — | 157,618 |
| Other liabilities | 33,628 | 131,159 | (117,665) | 47,122 |
| Total other long-term liabilities | 33,628 | 288,777 | (117,665) | 204,740 |
| Temporary equity: | ||||
| Redeemable noncontrolling interest | — | 88,506 | — | 88,506 |
| Shareholders’ equity: | ||||
| Total shareholders’ equity | 372,487 | 884,523 | (376,227) | 880,783 |
| Total liabilities, temporary equity and shareholders’ equity | $980,811 | $1,440,323 | $(510,372) | $1,910,762 |
32
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
| Three Months Ended September 30, 2026 Unrestricted Subsidiaries (ABS Entities) | Restricted Subsidiaries (Non-ABS Entities) | Eliminations | Consolidated | |
|---|---|---|---|---|
| Service revenue and other | $45,311 | $62,046 | $(13,423) | $93,934 |
| Operating expenses: | ||||
| Cost of services exclusive of depreciation and amortization | 18,993 | 21,081 | (7,155) | 32,919 |
| Selling, general and administrative | 7,939 | 27,482 | (6,268) | 29,153 |
| Restructuring, integration and acquisition | — | 152 | — | 152 |
| Depreciation and amortization | 16,141 | 17,546 | — | 33,687 |
| Total operating expenses | 43,073 | 66,261 | (13,423) | 95,911 |
| Operating (loss) income | 2,238 | (4,215) | — | (1,977) |
| Other (expense) income: | ||||
| Interest expense | (8,844) | (1,653) | — | (10,497) |
| Other income (expense), net | 236 | 10 | — | 246 |
| Loss before income taxes | (6,370) | (5,858) | — | (12,228) |
| Income tax benefit | — | (3,048) | — | (3,048) |
| Net loss | $(6,370) | $(2,810) | $— | $(9,180) |
(in thousands)
| Nine Months Ended September 30, 2026 Unrestricted Subsidiaries (ABS Entities) | Restricted Subsidiaries (Non-ABS Entities) | Eliminations | Consolidated | |
|---|---|---|---|---|
| Service revenue and other | $132,401 | $185,595 | $(38,447) | $279,549 |
| Operating expenses: | ||||
| Cost of services exclusive of depreciation and amortization | 55,018 | 62,438 | (20,010) | 97,446 |
| Selling, general and administrative | 22,619 | 89,380 | (18,437) | 93,562 |
| Restructuring, integration and acquisition | — | 2,726 | — | 2,726 |
| Depreciation and amortization | 48,398 | 50,879 | — | 99,277 |
| Total operating expenses | 126,035 | 205,423 | (38,447) | 293,011 |
| Operating (loss) income | 6,366 | (19,828) | — | (13,462) |
| Other (expense) income: | ||||
| Interest expense | (25,337) | (4,291) | — | (29,628) |
| Other income (expense), net | 685 | 78 | — | 763 |
| Loss before income taxes | (18,286) | (24,041) | — | (42,327) |
| Income tax benefit | — | (9,697) | — | (9,697) |
| Net loss | $(18,286) | $(14,344) | $— | $(32,630) |
Horizon Acquisition - Representation and Warranty Insurance Claim:
On April 1, 2024, Shentel completed the acquisition of Horizon Acquisition Parent LLC, a Delaware limited liability company (“Horizon”), pursuant to the terms of an Agreement and Plan of Merger, dated October 24, 2023 (the “Merger Agreement”), by and among Shentel, Horizon, the sellers set forth on the signature pages thereto, and the other parties thereto. Horizon made customary representations and warranties in the Merger Agreement relating to periods prior to, and as of, the closing of the acquisition. Shentel purchased representation and warranty insurance (“RWI”), with a policy limit of $40.0 million to cover potential losses resulting from a breach of these representations and warranties. In June 2026, the Company submitted claims to the RWI carrier seeking coverage for losses arising out of the alleged breaches of representations and warranties in the Merger Agreement. Although we believe that the breaches and our claims are meritorious, no assurance can be given as to whether we will recover all, or any part, of the incurred loss. No gains or receivables have been recognized related to this RWI claim as of and for the period ended September 30, 2026. The RWI claim is separate and unrelated to the Horizon acquisition related escrow claim, which was settled in 2025.
Critical Accounting Policies
There have been no material changes to the critical accounting policies previously disclosed in Part II, Item 8 of our 2025 Form 10-K for the year ended December 31, 2025.
Market risk
As filed, 1,091 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
As of September 30, 2026, the Company has an outstanding debt balance of $759.9 million, which includes ABS Notes, VFN, and the RCF. Shentel’s ABS Notes, which include Class A-2 Notes and Class B Notes, have outstanding balances of $489.1 million and $78.3 million, respectively. The borrowed Class A-2 Notes and the Class B Notes incur interest at the fixed rate 5.64% and 6.03%, respectively; therefore, the Class A-2 and the Class B Notes are not subject to fluctuations in market interest rates. The borrowed RCF bears interest at a variable rate determined by one-month term SOFR, plus a margin based on net leverage. The borrowed VFN bears interest at a variable rate determined by a one-month term SOFR, plus a fixed margin.
As of September 30, 2026, the Company had $74.5 million and $118.0 million of gross variable rate debt outstanding under the VFN and RCF, respectively. The interest rate was 5.66% and 6.66% for the VFN and RCF, respectively, at September 30, 2026. An increase in market interest rates of 1.00% would add approximately $1.9 million to annual interest expense.
Controls and procedures
As filed, 861 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer and Principal Accounting Officer (the certifying officers) have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2026. Our certifying officers concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Risk factors
As filed, 3,272 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
We discuss in our Annual Report on Form 10-K various risks that may materially affect our business. We use this section to update this discussion to reflect material developments since our Form 10-K was filed. As of September 30, 2026, and except as noted below, there have been no material changes to the risk factors previously disclosed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on February 26, 2026.
Modification of Risk Factors
The Company has modified the following risk factor, previously included under the caption “Item 1A. Risk Factors - Risks Related to Regulation and Legislation” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, to take into account risks associated with potential spending program decisions by the Federal Communications Commission (“FCC”).
Changes to the FCC’s Universal Service Fund (“USF”) framework may adversely impact our Broadband revenue, which may have a material adverse effect on our financial performance and our results of operations.
The FCC’s USF provides regulatory support to rural local exchange carriers to promote universal service and to eligible schools and libraries through the e-rate program and to regional healthcare providers and hospitals through the Rural Healthcare Program to obtain subsidized internet access and telecommunication services. Although unsuccessful, recent lawsuits against the USF have raised questions in Congress regarding future funding for the USF. Any reduction in the USF from similar successful lawsuits, or funding changes by Congress, could negatively impact the regulatory support revenue received by the Company’s RLEC business and the ability for schools, libraries, and healthcare providers to pay the Company for internet access and telecommunication services.
Further, the FCC periodically reviews the spending programs within the USF and has authority to make changes through a majority vote of the commissioners. If the FCC decides to reduce support for certain programs for universal service or subsidized internet access and telecommunications services, our Broadband revenues may be adversely impacted, which may have a material effect on our financial performance and our result of operations.
Additional Risk Factors
The Company has identified an additional risk factor, included below, due to ongoing global geopolitical conflicts and actions taken by governments globally in response to such conflicts including sanctions and trade restrictions.
Continued geopolitical instability or further governmental actions globally could result in additional increases in oil and fuel costs, which may adversely affect our operating expenses and financial results.
Ongoing geopolitical tensions and military conflicts in the Middle East, including the conflict involving Iran, may adversely affect our operations. Escalating conflict in or near major oil‑producing or shipping corridors could lead to higher fuel and energy prices, increasing our transportation and other operational costs. Any sustained increase in fuel prices could negatively impact our margins and may have an adverse effect on our business and results of operations.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2026-09-30. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2026-07-01 to 2026-09-30 | $93.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months2026-01-01 to 2026-09-30 | $279.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Selling, general and administrative | 3 months2026-07-01 to 2026-09-30 | $29.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months2026-01-01 to 2026-09-30 | $93.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months2026-07-01 to 2026-09-30 | −$2.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months2026-01-01 to 2026-09-30 | −$13.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months2026-07-01 to 2026-09-30 | $10.5m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months2026-01-01 to 2026-09-30 | $29.6m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months2026-07-01 to 2026-09-30 | −$3.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months2026-01-01 to 2026-09-30 | −$9.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2026-07-01 to 2026-09-30 | −$9.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months2026-01-01 to 2026-09-30 | −$32.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2026-07-01 to 2026-09-30 | −$0.19 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months2026-01-01 to 2026-09-30 | −$0.67 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2026-07-01 to 2026-09-30 | −$0.19 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months2026-01-01 to 2026-09-30 | −$0.67 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2026-07-01 to 2026-09-30 | 55,814,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months2026-01-01 to 2026-09-30 | 55,715,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months2026-01-01 to 2026-09-30 | $76.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months2026-01-01 to 2026-09-30 | $215.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | At period end2026-09-30 | $18.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2026-09-30 | $88.1m | us-gaap:AssetsCurrent |
| Total assets | At period end2026-09-30 | $2.01bn | us-gaap:Assets |
| Current liabilities | At period end2026-09-30 | $123.3m | us-gaap:LiabilitiesCurrent |
| Long-term debt | At period end2026-09-30 | $747.1m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | At period end2026-09-30 | $850.7m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0000354963-26-000266. Last ingested by Listed: Nov 2, 2026, 20:22 ET. Listed shows no prices and gives no investment advice.