Shentel continues to find its footing in the fiber-to-the-home (FTTH) market, scaling its Glo Fiber service to 27 markets across six states.
The service provider recently lit multi-gigabit broadband services in Sussex County, Delaware, and Warrenton, Virginia.
Speaking to investors during its second-quarter earnings call, Christopher French, CEO of Shentel, said the company continues to scale the number of locations it passes with fiber.
“We ended the second quarter with approximately 298,000 Glo Fiber passings, including just under 16,000 we acquired as part of the Horizon acquisition,” he said. “This gives a 63% growth rate from a year ago.”
Shentel also saw a gain in its Glo Fiber subscriber base. In its Glo Fiber Expansion Markets, it added approximately 5,000 subscribers. Glo Fiber Expansion Markets ended the quarter with nearly 53,000 subscribers, including approximately 2,000 acquired from Horizon Telecom.
“As of the end of June, we had over 53,000 Glo Fiber customers, representing a 62% year-over-year growth rate,” French said. “We entered July with excellent sales momentum in the seasonally strongest quarter for gross adds.”
New targets ahead
While Shentel saw gains in its Glo Fiber FTTH business in the second quarter, the service provider is pursuing expansion into more markets.
The service provider’s network now consists of 16,000 route miles. Glo Fiber Expansion Market passings grew by approximately 38,000, including 16,000 acquired from its acquisition of Horizon to approximately 298,000.
Ed McKay, EVP and COO of Shentel said the company would offer fiber services in its legacy markets and those it entered via the Horizon deal.
“We continue to build additional passes in our existing markets, and engineering, permitting, and construction are in progress in five additional markets, including our newest market, Steubenville, Ohio,” he said. “We have approved franchise agreements for 633,000 Glo Fiber passings, including 62,000 in our new Ohio expansion markets.”
Shentel also plans to extend fiber to more locations, which are being funded by government grants. The service provider has 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,” McKay said.
Broadband ARPU subscribers rise
Despite competitive pressure from cable and fiber overbuilders in parts of its incumbent markets, Shentel broadband data ARPU rose during the quarter.
Broadband data ARPU increased by 2.4% year over year to more than $84, offsetting most of the revenue decrease from fewer revenue-generating units (RGUs). Glo Fiber expansion markets grew broadband data RGUs by 56% and data ARPU by 9%, driving the 3.6% revenue growth.
Also, Shentel’s broadband data churn improved by 1.69%, up 12 basis points year-over-year.
McKay said the churn improvement came as it “increased broadband speeds over the past year, giving customers higher speeds and more value for the same price.”
RLEC challenges
In its rural ILEC markets (RLEC), Shentel saw revenue decline.
The service provider attributed RLEC revenue challenges to customers migrating from lower-speed DSL services to higher-speed cable and fiber-based services and a drop in government support revenue.
“We expect government support revenue to increase in the second half of 2024,” said Jim Volk, CFO of Shentel. “The incumbent broadband market revenue decline was due to lower data subscribers in approximately 20% of our passings where we face another broadband provider.”
Volk added that while its “competitive response has been effective in maintaining ARPU levels and reducing churn in these markets, gross adds have declined, driving the decline in subscribers and revenue.”
Overall, Shentel's revenue increased during the second quarter to $85.8 million, up $19.2 million, or 28.7%, compared to the same period in 2023.
“The former Horizon markets contributed $16.7 million in revenue,” Volk said. “Excluding the former Horizon markets, Glo Fiber Expansion Markets' revenue grew 67% over the same period in 2023.”
Our overall data penetration decreased to 47.8% at the end of the second quarter, with penetration in the Shentel incumbent cable markets and the Horizon incumbent telephone markets of 49.6% and 21.6%, respectively.
“We believe there is upside in the former Horizon markets to improve penetration and gain parity with the cable provider,” McKay said.
For related articles, visit the Broadband Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.
