Shentel’s fiber business is no longer a fringe element that trails legacy losses. With its Glo Fiber service surpassing half a million passings, the service provider has reached another step in completing its planned fiber expansion. 

During the third quarter, Shentel added 8,600 Glo Fiber data customers, ending the quarter with about 109,000 data customers, up 32% year over year.

Overall, Shentel’s fiber businesses, including its consumer GLO Fiber business and Commercial Fiber segment, continue to gain momentum, with combined revenue up 19.5% year over year and representing 52% of consolidated revenues in the third quarter.

Ed McKay, CEO of Shentel, said during its third-quarter earnings call that “our fiber businesses continue to gain scale.”

“While many traditional cable operators are navigating broadband subscriber declines, we continue to add customers at a strong pace,” McKay said. “More than half of our revenue now comes from our growing fiber businesses, and with our major network expansion substantially complete by year-end, we believe we are uniquely positioned to convert that growth into expanding margins and positive free cash flow starting in 2027.”

Deepening fiber, customer penetration

Shentel continues to deepen the fiber penetration in the markets it serves for business and consumers.

The provider’s integrated network now includes more than 20,000 fiber route miles across 8 states and approximately 755,000 total broadband passings.

Glo Fiber passes nearly 501,000 homes and businesses with fiber, including 25,000 that came on during the third quarter.

“We remain on track to substantially complete our planned Glo Fiber expansion in 2026 and now expect to pass approximately 517,000 homes and businesses by the end of the year,” McKay said.

Also, Glo Fiber customer growth accelerated in the third quarter, with the addition of 8,600 new subscribers, up 48% year-over-year.

McKay said Shentel’s “5-year price guarantee and expansion of our door-to-door sales channel have been key drivers of this growth.”

During the past year, Shentel added more than 26,000 new data customers and 30,000 total revenue-generating units (RGUs). It ended the third quarter with more than 127,000 Glo Fiber revenue-generating units, up 31% year over year.

Meanwhile, broadband data penetration reached 21.7%, up 68 basis points sequentially and 108 basis points year over year.

But Shentel is not stopping there. With the release of about 100,000 passings to sales, McKay said it has created “a larger base for continued customer growth.”

Our older cohorts continue to increase penetration, with passings launched in 2019 and 2020 now averaging 38.5%, exceeding our medium-term target of 37%.

As it continues to expand its reach and bring in more customers, Shentel is also finding greater demand for its gigabit-level speeds.  

“We continue to move customers up the rate card and differentiate Glo Fiber with faster speeds than our competitors,” McKay said. “Demand for higher-speed products remains strong, with more than 83% of new residential customers selecting speeds of 1 gig or higher in the third quarter, including 20% choosing 2-gig service and 5% choosing 5-gig service.”

ARPU, churn challenges

Despite the gains Shentel saw during the quarter, it did see a slight decline in broadband ARPU and a rise in churn.

Broadband data average revenue per user for the third quarter was down slightly, both sequentially and year-over-year to just under $76.

“The 1% year-over-year decline was consistent with our expectations following the introduction of our 5-year price guarantee plans a year ago,” McKay said.

Likewise, broadband data monthly churn rose “modestly” in the third quarter to 1.76%.

McKay said the churn increase “was driven primarily by competition in wired broadband and softer demand in some of our more rural markets, where inflation continues to pressure household budgets.”

He added that “we saw churn improve in September and expect both churn and ARPU to gradually stabilize over the coming quarters as we make additional changes to our rate card and product offerings to maximize customer lifetime value.”

To stem further losses from copper-based services, Shentel migrated about 4,500 DSL customers to its recently constructed fiber broadband Internet service in its Virginia and Ohio telephone markets since 2023.

“We expect DSL customer base to stabilize after we migrate the remaining 600 DSL customers in the next year or so,” said Jim Volk, CFO of Shentel.

Shentel’s 23,000 subsidized rural market passings completed in recent years, predominantly with fiber, have reached aggregate data penetration of 43%. The 2023 cohorts are averaging more than 60%, with the oldest cohort approaching 72%. These results demonstrate strong customer demand across these previously unserved areas.

“We expect overall penetration to reach approximately 65% over the next few years, representing roughly 5,000 incremental customers on our superior fiber network,” McKay said.

In its incumbent areas, Shentel is seeing some fiber upgrades from other ILEC competitors and cable operators. However, McKay noted that “the majority of our passings in our incumbent business still do not have a wired cable competitor or fiber competitor.”