Shentel’s CEO says it is on track to complete its fiber broadband build by the end of 2026

Glo Fiber data revenue-generating units grew to 83,000 at the end of the quarter, representing year-over-year growth of 39.5% and Glo Fiber revenues grew 41.1%, reaching $21.3 million.

Speaking to investors during its third-quarter earnings call, Ed McKay, the new CEO of Shentel, said that completing its network expansion “remains a top priority.”

“We remain on track to substantially complete our build by the end of 2026,” he said, adding that “we’re focused on driving penetration rates in Glo Fiber markets and expanding our commercial fiber business.”

Competitive differentiation

Given the dynamics of the broadband markets it serves, Shentel is in a unique competitive position.

As it continues to expand fiber broadband, McKay noted that “our markets have compelling competitive dynamics that differentiate us from our broadband peers.”

A large majority (92%) of Shentel’s Glo Fiber passings are duopoly markets with only one wireline broadband competitor. Likewise, in Shentel’s incumbent markets, 70% of its passings have no wireline broadband competitor.

Shentel continued to find success in achieving new growth in its Glo Fiber expansion markets. During the third quarter, the telco added 6,400 new customers and about 7,200 total data, video and voice revenue-generating units (RGUs).

McKay said that “600 of the new customer additions were from our recent Blacksburg, Virginia acquisition that we closed and integrated in July.”

The service provider also continued to grow its data RGUs and broadband penetration of Glo Fiber passings.

Over the last 12 months, Shentel added over 23,000 data RGUs across the Glo Fiber expansion markets to end the third quarter with approximately 83,000 Glo Fiber customers, up 39% year-over-year. Total Glo Fiber revenue-generating units reached more than 97,000 at the end of the quarter, up 37% from the same period a year ago.

Glo Fiber passings exceeded 400,000 at the end of the third quarter, up 81,000 year-over-year. Broadband data penetration in its Glo Fiber expansion markets climbed 2.1 percentage points to 20.6% at the end of the third quarter.

“Growth in our Glo Fiber expansion markets has followed a consistent, predictable pattern with steady increases in data penetration rates as cohorts mature,” McKay said. “We typically achieve 15% data penetration rates within the first year and 25% by year 3.”

He added that “Our earliest cohorts, which launched in 2019 and 2020, have now reached an average data penetration rate of 37%.”

Overcoming broadband seasonality

While the third quarter typically is a time when the broadband industry sees the highest levels of churn due to greater move churn, especially around schools and universities, it appeared not to influence Shentel’s third-quarter broadband results.

McKay said “broadband data average revenue per user remained strong in the third quarter at roughly $77, supported by customer adoption of higher speed tiers.”

One factor that helped Shentel in the third quarter was a new promotional rate plans that offer enhanced speeds with a 5-year price guarantee. This promotion was in response to Comcast’s move to launch a 5-year price guarantee in Shentel’s markets in June.

McKay said that while Comcast’s promotion had a slight impact on Shentel’s gross addition side, it did not drive additional customer churn, and more of its new customers are choosing higher-speed gigabit service plans.

“As a result of our new plan, we saw an increase in subscriber gross additions in the second half of the quarter, with 68% of our new residential customers choosing speeds of 1 Gbps or higher, including 12% choosing speeds of 2 Gbps and 3% choosing speeds of 5 Gbps,” McKay said.

Enhancing incumbent fiber penetration

While Shentel continues to ramp up its Glo Fiber base in Greenfield markets, it is also growing out its fiber footprint in its legacy rural markets.

It saw a small increase in overall broadband subscribers. In all, Shentel had 112,000 rural broadband data customers, reflecting a year-over-year increase of 580.

However, Shentel’s data, voice and video RGUs were 160,000 at the end of the third quarter, down 3% year-over-year, primarily due to video customers moving to online streaming options.

The service provider also increased rural fiber penetration. As of the end of the third quarter, Shentel passed 248,000 homes and businesses with broadband, up about 14,000 over the same period a year ago.

“This increase was driven by the construction of new government-subsidized passings in previously unserved areas,” McKay said. “As a result, approximately 20% of our incumbent broadband passings are now equipped with fiber-to-the-home technology.”