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Item 1A. Risk Factors

2021-02-25 compared with 2020-02-26 · 192 added, 286 removed, 88 unchanged (84% of the section changed)

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The following risks (or additional risks and uncertainties not presently known to us) could materially affect our financial condition, liquidity, or operating results, as well as the price of our common stock.

Risks Related to Our Business and the Telecommunications Industry

Intensifying competition in all segments of our business may limit our ability to sustain profitable operations.

Risks Related to Our Business

Intensifying competition may limit our ability to sustain profitable operations.

As new technologies are developed and deployed by competitors in our service area, some of our subscribers may select other providers’ offerings based on price, capabilities or personal preferences.

Most of our competitors possess greater resources, have more extensive coverage areas and offer more services than we do.

Most of our competitors possess greater resources, have greater brand recognition, have more extensive coverage areas, have access to spectrum or technologies not available to us, are able to offer bundled service offerings that we are not able to duplicate and offer more services than we do.

If significant numbers of our subscribers elect to move to competing providers, or if market saturation limits the rate of new subscriber additions, we may not be able to sustain profitable operations.

The Company’s revenue from fiber leases may be adversely impacted by price competition for these facilities.

Consumers are increasingly accessing video content from alternative sources, such as Internet-based “over the top” providers such as Netflix, Amazon, and Hulu, and related platforms.

The influx of competitors in this area, together with the development of new technologies to support them, are resulting in significant changes in the video business models and regulatory provisions that have applied to the provision of video and other services.

These developments have led to a loss of video subscribers due to "cord cutting" as customers adopt alternative sources and may lead to a decline in the demand, price and profitability of our cable and related video services.

Incumbent cable companies also face competition from direct broadcast satellite providers, and from large providers of wireline telecommunications services (such as Verizon, CenturyLink and AT&T), which have upgraded their networks in certain markets outside of our cable footprint to provide video services in addition to voice and broadband services and may offer bundled service offerings that we are not able to duplicate.

Wireless providers are also entering the market for video services by making such services available on handsets and tablets.

In some areas, direct broadcast satellite providers have partnered with large incumbent telecommunications service providers to offer triple-play services.

Nationwide, incumbent local exchange carriers have experienced a decrease in access lines due to the effect of wireless and wireline competition.

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There is a significant risk that this downward trend will have an adverse effect on the Company’s landline telephone operations in the future.

The Company’s revenue from fiber leases may be adversely impacted by price competition for these facilities.

Our future growth is partially d e pendent upon our edge-out strategy, which may or may not be successful.

We are strategically focused on driving growth by expanding our broadband network in order to provide service in communities that are near or adjacent to our network.

This edge-out strategy includes our fiber to the home and fixed wireless broadband services, which we offer under the Glo Fiber and Beam Internet brands, respectively.

These brands are relatively new in the marketplace.

This strategy requires considerable management resources and capital investment and it is uncertain whether and when it will contribute to positive free cash flow.

As a result, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2023.

Additionally, we must obtain pole attachment agreements, franchises, construction permits, and other regulatory approvals to commence operations in these communities.

Delays in entering into pole attachment agreements, receiving the necessary franchises and construction permits, procuring needed contractors, materials or supplies, and conducting the construction itself could adversely impact our scheduled construction plans.

Difficulty in obtaining necessary resources may also adversely affect our ability to expand into new markets.

We may face resistance from competitors who are already in markets we wish to enter.

If our expectations regarding our ability to attract customers in these communities are not met, or if the capital requirements to complete the network investment or the

time required to attract our expected level of customers are incorrect, our financial performance may be negatively impacted.

Many of our competitors are larger than we are and possess greater resources than we do.

In some instances, we compete against companies with fewer regulatory burdens, greater personnel resources, greater resources for marketing, greater brand name recognition, and long-established relationships with regulatory authorities and customers.

We are realigning our corporate expenses to reflect the forthcoming sale of our Wireless assets and operations.

This initiative will take multiple years and be enabled by certain of our information technology initiatives.

If we are unable to sufficiently build the necessary infrastructure and internal support functions to scale and expand our network and customer base, our potential growth would be limited.

We may not be able to successfully compete with these competitors or be able to make the operational or financial investments necessary to successfully serve the targeted customer base.

Alternative technologies, changes in the regulatory environment and current uncertainties in the marketplace may reduce future demand for existing telecommunication services.

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We may not be able to respond to such changes and implement new technology on a timely basis or at an acceptable cost.

Adverse economic conditions in the United States and in our market area involving significantly reduced consumer spending could have a negative impact on our results of operations.

Sprint's subscribers are individual consumers and businesses.

Any national economic weakness, restricted credit markets or high unemployment rates could depress consumer spending and harm our operating performance.

In addition, subscribers in our Sprint Affiliate Area are located in a relatively concentrated geographic area;

therefore, any material adverse economic conditions that affect our geographic markets in particular could have a disproportionately negative impact on our results.

Regulation by government agencies may increase our costs of providing service or require changes in services, either of which could impair our financial performance.

Our operations are subject to varying degrees of regulation by the FCC, the Federal Trade Commission, the Federal Aviation Administration, the Environmental Protection Agency and the Occupational Safety and Health Administration, as well as by state and local regulatory agencies and franchising authorities.

Action by these regulatory bodies could negatively affect our operations and our costs of doing business.

Our access revenue may be adversely impacted by legislative or regulatory actions or by technology developments that decrease access rates or exempt certain traffic from paying for access to our regulated telephone network.

On October 27, 2011, the FCC adopted a number of broad changes to the intercarrier compensation rules governing the interstate access rates charged by incumbent local exchange carriers, including small-to-mid-sized RLECs such as Shenandoah Telephone.

For example, the FCC adopted a national “bill and keep” framework, which has resulted in

substantial reductions in the access charges paid by long distance carriers and other interconnecting carriers, eliminating such payments in many instances, accompanied by increases to the subscriber line charges paid by business and residential end users.

In addition, the FCC has changed some of the rules that determine what compensation carriers, including but not limited to wireless carriers, competitive local exchange carriers, VoIP providers and providers of other Internet-enabled services, should pay (and receive) for their traffic that is interconnected with RLEC networks.

More recently, the FCC initiated a further proceeding to consider whether additional changes to interconnection obligations are needed, including how and where companies interconnect their networks with the networks of other providers.

These changes, and potential future changes, to such compensation regulations could increase our expenses or further reduce our revenues.

In addition, the Company is working to resolve routine interconnection and intercarrier compensation-related disputes concerning the volume of traffic exchanged between the Company and third parties, appropriate access rates, and terms for the origination and termination of traffic on third-party networks.

Additionally, we may be required to select one developing or new technology over another and may not choose the technology that is ultimately determined to be the most economic, efficient or attractive to customers.

We may also encounter difficulties in implementing new technologies, products and services and may encounter disruptions in service as a result.

Our distribution networks may be subject to weather-related events that may damage our networks and adversely impact our ability to deliver promised services or increase costs related to such events.

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Should such predictions be correct or if for other reasons there are more weather-related events, and should such events impact the Mid-Atlantic region covered by our networks more frequently or more severely than in the past, our revenues and expenses could be materially adversely impacted.

Our success largely depends on our ability to retain and recruit key personnel, and any failure to do so could adversely affect our ability to manage our business.

Our operational results have depended, and our future results will depend, upon the retention and continued performance of our management team.

The competitive environment for management talent in our industry could adversely impact our ability to retain and hire new key employees for management positions.

The loss of the services of key members of management and the inability or delay in hiring new key employees could adversely affect our ability to manage our business and our future operational and financial results.

Moreover, our inability to attract and retain sufficient qualified accounting personnel has adversely affected, and could continue to adversely affect, our ability to maintain an effective system of internal controls or our ability to produce reliable financial reports, which could materially and adversely affect our business and our stock price.

Our programming costs are subject to demands for increased payments.

The cable television industry has continued to experience an increase in the cost of programming, especially sports programming and retransmission fees.

In addition, as we add programming to our video services for existing customers or distribute existing programming to more customers, we incur increased programming expenses.

Broadcasters affiliated with major over-the-air network services have been increasing their demands for cash payments and other concessions for the right to carry local network television signals on our cable systems.

As compared to large national providers, our smaller base of subscribers limits our ability to negotiate lower programming costs.

If we are unable to raise our customers’ rates, these increased programming costs could have an adverse impact on our results of operations.

Moreover, as our programming contracts and retransmission agreements with programming providers expire, there can be no assurance that they will be renewed on acceptable terms which could lead to a loss of video customers.

Negative outcomes of legal proceedings may adversely affect our business and financial condition.

We may become involved in legal proceedings from time to time.

These proceedings may be complicated, costly and disruptive to our business operations.

We might also incur significant expenses in defending these matters or may be required to pay significant fines, awards and settlements.

Any of these potential outcomes, such as judgments, awards, settlements or orders could have a material adverse effect on our business, financial condition, operating results or our ability to do business.

We may not benefit from our acquisition strategy.

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• even if acquired companies eventually contribute to an increase in our cash flows or financial performance, such acquisitions may adversely affect our operating results in the short term as a result of transaction-related expenses we will have to pay or the higher operating and administrative expenses we may incur in the periods immediately following an acquisition as we seek to integrate the acquired business into our operations;

we may not be able to realize anticipated synergies or eliminate as many anticipated redundant costs;

• we may not be able to realize anticipated synergies, achieve the desired level of integration of the acquired business or eliminate as many redundant costs;

• we may not be able to maintain relationships with customers, suppliers and other business partners of the acquired business;

• our operating and financial systems and controls and information services may not be compatible with those of the companies we may acquire and may not be adequate to support our integration efforts, and any steps we take to improve these systems and controls may not be sufficient;

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• acquired businesses may have unexpected liabilities and contingencies, which could be significant.

Our ability to comply with the financial covenants in our credit agreement depends primarily on our ability to generate sufficient operating cash flow.

Our ability to comply with the financial covenants under the agreement governing our secured credit facilities will depend primarily on our success in generating sufficient operating cash flow.

Under our credit agreement, we are subject to a total leverage ratio covenant, a minimum debt service coverage ratio covenant and a minimum liquidity test.

Industry conditions and financial, business and other factors, including those we identify as risk factors in this and our other reports, will affect our ability to generate the cash flows we need to satisfy those financial tests and ratios.

Our failure to satisfy the tests or ratios could result in a default and acceleration of repayment of the indebtedness under our credit facilities.

If the maturity of our indebtedness were accelerated, we may not have sufficient funds to repay such indebtedness.

In such event, to the extent permitted by our credit agreement and applicable law, our lenders would be entitled to proceed against the collateral securing the indebtedness, which includes substantially all of our assets and the assets of our subsidiaries.

Our level of indebtedness could adversely affect our financial health and ability to compete.

As of December 31, 2019 , we had $732.0 million of total indebtedness.

Our level of indebtedness could have important adverse consequences.

For example, it may:

increase our vulnerability to general adverse economic and industry conditions, including interest rate increases, because as of December 31, 2019 , a significant portion of our borrowings were, and may continue to be, subject to variable rates of interest;

require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends and other general corporate purposes;

limit our ability to borrow additional funds to alleviate liquidity constraints, as a result of financial and other restrictive covenants in our credit agreement;

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

place us at a competitive disadvantage relative to companies that have less indebtedness.

In addition, our secured credit facilities impose operating and financial restrictions that limit our discretion on some business matters, which could make it more difficult for us to expand, finance our operations and engage in other business activities that may be in our interest.

These restrictions limit our ability and that of our subsidiaries to, among other things:

incur additional indebtedness and additional liens on our assets;

engage in certain mergers or acquisitions or asset dispositions;

pay dividends, repurchase our securities or make other distributions;

voluntarily prepay other indebtedness;

enter into transactions with affiliated persons;

make certain investments;

change the nature of our business.

In addition to the term loan secured indebtedness we have incurred and the $75 million of revolving credit indebtedness we may draw against from time to time, we may incur additional indebtedness under our credit facilities.

Any additional indebtedness we may incur in the future may subject us to similar or even more restrictive conditions.

Our ability to refinance our indebtedness in the future, should circumstances require it, will depend on our ability in the future to generate cash flows from operations and to raise additional funds, including through the offering of equity or debt securities and through our access to bank debt markets.

We may not be able to generate sufficient cash flows from operations or to raise additional funds in amounts necessary for us to repay our indebtedness when such indebtedness becomes due and to meet our other cash needs.

Adverse economic conditions in the United States and in our market area involving significantly reduced consumer spending could have a negative impact on our results of operations.

Unfavorable general economic conditions could negatively affect our business.

Although it is difficult to predict the impact of general economic conditions on our business, these conditions could adversely affect the affordability of, and customer demand for our services, and could cause customers to delay or forgo purchases of our services.

Any national economic weakness, restricted credit markets, or high unemployment rates could depress consumer spending and harm our operating performance.

In addition, any material adverse economic conditions that affect our geographic markets in particular could have a disproportionately negative impact on our results.

The COVID-19 pandemic has disrupted, and the future outbreak of other highly infectious or contagious diseases could disrupt, the operation of our business resulting in adverse impacts to our financial condition, results of operations, and cash flow and could create significant volatility in the trading and value of the Company’s common stock.

Since being reported in December 2019, an outbreak of a new strain of coronavirus (“COVID-19”) has spread globally, including to every state in the United States.

In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States declared a national emergency.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption of financial markets, and another pandemic in the future could have similar effects.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of COVID-19 on the Company, and there is no guarantee that efforts by Shentel, designed to address adverse impacts of the coronavirus, will be effective.

Governments in the markets in which we operate have taken a number of actions in response to the pandemic, including mandating that residents stay at home, temporarily closing businesses that are not considered essential and limiting hours of businesses or the number of customers that may be served.

The Company has also limited non-essential travel, in-person meetings and large employee meetings, while also implementing a work-from-home policy to encourage all employees whose job responsibilities permit remote working to do so.

Our transition to a work-from-home policy for many employees could impact the ability of our employees to advance research and development projects as efficiently or productively as they could in an office setting.

The extent and duration of ongoing workplace restrictions and limitations, particularly in sites with significant headcount, could adversely impact our operations and our ability to execute on strategic imperatives for our business.

Continued restrictions on travel and limitations on interaction with customers may impact our sales and marketing activities, including our ability to secure new customers, to qualify and sell new products, or to grow sales with customers where or with whom we do not have a longer-standing supply relationship.

In addition, the current COVID-19 pandemic, or a future pandemic, could have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

• additional disruptions or delays in our operations or network performance, as well as network maintenance and construction, testing, supervisory and customer support activities, and inventory and supply procurement;

• increases in operating costs, inventory shortages and/or a decrease in productivity related to travel bans and social distancing efforts, which could include delays in our ability to install broadband services at customer locations or require our vendors and contractors to incur additional costs that may be passed on to us;

• a deterioration in our ability to operate in affected areas or delays in the supply of products or services to us from vendors that are needed for our efficient operations;

• increases in health insurance and labor-related costs arising from illness, quarantine and the implementation of social distancing and work-from-home measures;

• increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us, our customers or other third parties as a result of employees or third-party vendors' employees working remotely;

• a decrease in the ability of our counterparties to meet their obligations to us in full, or at all;

• a general reduction in business and economic activity may severely impact our customers and may cause them to be unable to pay for services provided;

• the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption.

Shentel has implemented policies and procedures designed to mitigate the risk of adverse impacts of the COVID-19 pandemic, or a future pandemic, on the Company’s operations, but may incur additional costs to ensure continuity of

business operations caused by COVID-19, or other future pandemics, which could adversely affect its financial condition and results of operations.

However, the extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact.

Additionally, to the extent the COVID-19 pandemic adversely affects our business, financial condition or results of operations, it may heighten other risks described in this "Risk Factors" section.

We have an underfunded non-contributory defined benefit pension plan.

Through our acquisition of nTelos, we assumed nTelos’ non-contributory defined benefit pension plan and other post-retirement benefit plans, covering all employees who met eligibility requirements and were employed by nTelos prior to October 1, 2003.

This pension plan was closed to nTelos employees hired on or after October 1, 2003.

As of December 31, 2020, the plan was underfunded by approximately $8.0 million.

Refer to Note 2, Summary of Significant Accounting Policies , included with the Notes to our consolidated financial statements for additional information regarding the accounting for the defined benefit pension and other postretirement benefit plans.

We do not expect that we will be required to make a cash contribution to the underfunded pension plan in 2021, but we may be required to make cash contributions in future periods depending on the level of interest rates and investment returns on plan assets.

Disruptions of our information technology infrastructure could harm our business.

We depend on our information technology infrastructure to achieve our business objectives.

A disruption of our infrastructure could be caused by a natural disaster, manufacturing failure, telecommunications system failure, cybersecurity attack, intrusion or incident, or defective or improperly installed new or upgraded business management systems.

Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.

A disruption of our infrastructure could be caused by a natural disaster, manufacturing failure, telecommunications system failure, cybersecurity or terrorist attack, intrusion or incident, or defective or improperly installed new or upgraded business management systems.

Although we make significant efforts to maintain the security and integrity of the Company's information technology infrastructure, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests.

Portions of our information technology infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.

In the event of any such disruption, we may be unable to conduct our business in the normal course.

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We also could incur significant expense in repairing system damage and taking other remedial measures.

We have identified material weaknesses in our internal controls over financial reporting that, if not properly corrected, could materially adversely affect our operations and result in material misstatements in our financial statements.

In accordance with Section 404 of the Sarbanes-Oxley Act, we, along with our independent registered public accounting firm, are required to report on the effectiveness of our internal controls over financial reporting.

Failure to design and maintain effective internal controls could constitute a material weakness which could result in inaccurate financial statements, inaccurate disclosures or failure to prevent fraud.

As of December 31, 2020, we did not maintain an effective control environment attributable to certain identified material weaknesses.

We describe these material weaknesses in Item 9A.

Controls and Procedures in this Annual Report on Form 10-K.

The identified control deficiencies create a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis, and therefore we concluded that the deficiencies represent material weaknesses in the Company’s internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2020.

We cannot provide any assurance that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future.

The existence of these or other material weaknesses in our internal controls over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price.

Implementation of our new ERP system could disrupt business operations.

Our current ERP system will no longer be supported by the software vendor after January 2023.

We are planning to implement a new ERP system over the next 18 months to replace the current system.

Implementing a new ERP system is not only costly but complex and difficult.

The implementation requires significant investments of time, money and resources and may result in the diversion of senior management’s attention from our ongoing operations.

Furthermore, the implementation will result in changes to many of our existing operational, financial and administrative business processes.

The new ERP system will require both the implementation of new internal controls and changes to existing internal control frameworks and procedures.

If unexpected delays, technical problems or other significant issues arise in connection with the implementation, it could have a material negative impact on our operations, business, financial results and financial condition.

There can be no assurance that we will successfully implement our new ERP system or that we will avoid these and other negative impacts from our implementation efforts.

Our success largely depends on our ability to retain and recruit key personnel, and any failure to do so could adversely affect our ability to manage our business.

Our operational results have depended, and our future results will depend, upon the retention and continued performance of our management team, as well as the attraction and retention of relevant engineering and construction resources.

The competitive environment for these talents in our industry could adversely impact our ability to retain and hire new key employees and contractors.

The loss of the services of key members of management and the inability or delay in hiring new key employees and contractors could adversely affect our ability to manage our business and our future operational and financial results.

Moreover, an inability to attract and retain sufficient qualified accounting personnel could adversely affect our ability to maintain an effective system of internal controls or our ability to produce reliable financial reports, which could materially and adversely affect our business and our stock price.

We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm and other serious negative consequences if we sustain cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers or other third parties.

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In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs,” cybersecurity vulnerabilities and other problems that could unexpectedly interfere with the operation or security of our systems.

The shift to our workforce working remotely as a result of the COVID-19 pandemic has amplified certain risks to our operations and business, including increased demand on our information technology infrastructure and systems, increased phishing and other cybersecurity attacks as hackers and malicious actors try to exploit the uncertainty surrounding the COVID-19 pandemic, and an increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased numbers), and any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyber-attacks, may adversely affect our business.

To date, interruptions of our information technology infrastructure have been infrequent and have not had a material impact on our operations.

However, because technology is increasingly complex and cyber-attacks are increasingly sophisticated and more frequent, there can be no assurance that such incidents will not have a material adverse effect on us in the future.

on us in the future.

The consequences of a breach of our security measures, a cyber-related service or operational disruption, or a breach of personal, confidential, proprietary or sensitive data caused by a hacker or other malicious actor could be significant for us, our customers and other affected third parties.

For example, the consequences could

include damage to infrastructure and property, impairment of business operations, disruptions to customer service, financial costs and harm to our liquidity, costs associated with remediation, loss of revenues, loss of customers, competitive disadvantage, legal expenses associated with litigation, regulatory action, fines or penalties or damage to our brand and reputation.

For example, the consequences could include damage to infrastructure and property, impairment of business operations, disruptions to customer service, financial costs and harm to our liquidity, costs associated with remediation, loss of revenues, loss of customers, competitive disadvantage, legal expenses associated with litigation, regulatory action, fines or penalties or damage to our brand and reputation.

In addition, the costs to us to eliminate or address the foregoing security challenges and vulnerabilities before or after a cyber incident could be significant.

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We have incurred, and will continue to incur, expenses to comply with privacy and security standards and protocols imposed by law, regulation, industry standards and contractual obligations.

Negative outcomes of legal proceedings may adversely affect our business and financial condition.

We may become involved in legal proceedings from time to time.

These proceedings may be complicated, costly and disruptive to our business operations.

We might also incur significant expenses in defending these matters or may be required to pay significant fines, awards and settlements.

As of December 31, 2019 , we did not maintain an effective control environment attributable to certain identified material weaknesses.

We describe these material weaknesses in Item 9A.

Controls and Procedures in this Annual Report on Form 10-K.

These control deficiencies create a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis, and therefore we concluded that the deficiencies represent material weaknesses in the Company’s internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2019 .

We cannot provide any assurance that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future.

We have an underfunded non-contributory defined benefit pension plan.

This pension plan was closed to nTelos employees hired on or after October 1, 2003.

As of December 31, 2019 , the plan was underfunded by approximately $6.8 million .

Refer to Note 2 , Summary of Significant Accounting Policies , included with the Notes to our consolidated financial statements for additional information regarding the accounting for the defined benefit pension and other postretirement benefit plans.

We do not expect that we will be required to make a cash contribution to the underfunded pension plan in 2020 , but we may be required to make cash contributions in future periods depending on the level of interest rates and investment returns on plan assets.

Our business may be impacted by new or changing tax laws or regulations and actions by federal, state and/or local agencies, or how judicial authorities apply tax laws.

In connection with the products and services we sell, we calculate, collect and remit various federal, state and local taxes, surcharges and regulatory fees to numerous federal, state and local governmental authorities, including federal USF contributions and common carrier regulatory fees.

In addition, we incur and pay state and local taxes and fees on purchases of goods and services used in our business.

Tax laws are subject to change as new laws are passed and new interpretations of the law are issued or applied.

In many cases, the application of tax laws (including the recently enacted Tax Cuts and Jobs Act) is uncertain and subject to differing interpretations, especially when evaluated against new technologies and telecommunications services, such as broadband internet access and cloud related services.

In the event that we have incorrectly calculated, assessed or remitted amounts that were due to governmental authorities, we could be subject to additional taxes, fines, penalties or other adverse actions, which could materially impact our business, financial condition and operating results.

In the event that federal, state and/or local municipalities were to significantly increase taxes on our network, operations or services, or seek to impose new taxes, it could have a material adverse effect on our business, financial condition, operating results or ability to do business.

Our previously announced stock repurchase program, and any subsequent stock purchase program put in place from time to time, could affect the price of our common stock, increase the volatility of our common stock and could diminish our cash reserves.

Such repurchase program may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

We may have a stock repurchase program in place from time to time.

Any such stock repurchase program adopted will not obligate the Company to repurchase any dollar amount or number of shares of common stock and may be suspended or discontinued at any time, which could cause the market price of our common stock to decline.

The timing and actual number of shares repurchased under any such stock repurchase program depends on a variety of factors including the timing of open trading windows, the price of our common stock, corporate and regulatory requirements and other market conditions.

We may affect repurchases under any stock repurchase program from time to time in the open market, in privately negotiated transactions or otherwise.

Repurchases pursuant to any such stock repurchase program could affect our stock price and increase its volatility.

The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.

There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock.

Although our stock repurchase program is intended to enhance stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions.

Refer to Note 1 , Nature of Operations of the Notes to the Consolidated Financial Statements included in Part II of this Form 10-K for further information.

Risks Related to our Wireless and Tower Segments and the Wireless Industry

New disclosure or usage requirements could adversely affect the results of our wireless operations.

The FCC may impose additional consumer protection requirements upon wireless service providers, including billing-related disclosures and usage alerts.

Such requirements could increase costs related to or impact the amount of revenue we receive from our wireless services.

Regulation by governmental authorities or potential litigation relating to the use of wireless handsets while driving could adversely affect the results of our wireless operations.

Some studies have indicated that some aspects of using wireless handsets while driving may impair driver's attention in certain circumstances, making accidents more likely.

These concerns could lead to litigation relating to accidents, deaths or serious bodily injuries, or to new restrictions or regulations on wireless phone use.

A number of state and local governments are considering or have enacted legislation that would restrict or prohibit the use of a wireless handset while driving a vehicle or, alternatively, require the use of a hands-free handset.

Additionally, certain federal agencies

have adopted rules and proposed guidelines for the use of wireless handsets while operating commercial and non-commercial vehicles.

These rules, and any legislation that could be enacted, may require wireless service providers to supply to their subscribers hands-free enhanced services, such as voice-activated dialing and hands-free speaker phones and headsets, in order to continue generating revenue from subscribers, who make many of their calls while on the road.

If we are unable to provide hands-free services and products to subscribers in a timely and adequate fashion, the volume of wireless phone usage would likely decrease, and the ability of our wireless operations to generate revenues would suffer.

Our business may suffer as a result of competitive pressures.

Our revenue growth is primarily dependent on the growth of Sprint wireless subscribers and monthly recurring charges to these users.

Competitive pressures in the wireless services industry have increased.

These competitive pressures in the wireless telecommunications market have caused some major carriers to offer unlimited plans at lower prices.

Increased price competition could lead to lower monthly recurring charges or a loss of subscribers in the future.

Continued competitive pressures could require Sprint to lower its prices, which will limit growth in monthly recurring charges to subscribers and could adversely affect our revenues, profitability and cash flows from operations.

We may not be able to implement our business plan successfully if our operating costs are higher than we anticipate.

Increased competition may lead to higher promotional costs to acquire Sprint's subscribers.

If these costs are more than we anticipate, the actual amount of funds available to implement our operating strategy and business plan may fall short of our estimates.

The dynamic nature of the wireless market may limit management’s ability to correctly identify causes of volatility in key operating performance measures.

Our business plan and estimated future operating results are based on estimates of key operating performance measures, including subscriber growth, subscriber turnover, commonly known as churn, average monthly revenue per subscriber, equipment revenue, subscriber acquisition costs and other operating costs.

Continued moves by all carriers to offer installment billing and leasing for wireless handsets will have an effect on revenues, cost of goods sold and churn.

The dynamic nature of the wireless market, economic conditions, increased competition in the wireless telecommunications industry, the entry of potential new competitors due to past or future FCC spectrum auctions, new service offerings by Sprint or competitors at lower prices and other issues facing the wireless telecommunications industry in general have created a level of uncertainty that may adversely affect our ability to predict these key measures of performance.

We may experience a high rate of affiliate subscriber turnover, in our territory, which could adversely affect our future financial performance.

Because of significant competition in the industry, the emergence of cable companies as MVNOs, changes to Sprint’s competitive position, the pending merger of Sprint and T-Mobile, and economic uncertainty, among other factors, subscriber turnover or churn has been higher than our competitors and may increase which could cause an adverse impact to our financial results.

A high rate of churn could increase the sales and marketing costs we incur in obtaining new subscribers, especially because, consistent with industry practice, even with the introduction of wireless handset installment billing and leasing, we expect to continue to subsidize a portion of the costs related to the purchases of wireless handsets by some subscribers.

Our business could be adversely affected by customer concerns over radio frequency emissions, findings of product liability for health/safety risks from wireless devices and transmission equipment, as well as by changes to regulations/radio frequency emission standards.

We do not manufacture the devices or other equipment that we sell, and we depend on our suppliers to provide defect-free and safe equipment.

Suppliers are required by applicable law to manufacture their devices to meet certain governmentally imposed safety criteria.

However, even if the devices we sell meet the regulatory safety criteria, we could be subject to claims along with the equipment manufacturers and suppliers for any harm caused by products we sell if such products are later found to have design or manufacturing defects.

Allegations have been made that certain radio frequency emissions from and the use of wireless handsets and wireless transmission equipment, such as cell towers, may be linked to various health concerns, including cancer and brain tumors.

Lawsuits have been filed against manufacturers and carriers in the industry claiming damages for alleged health problems arising from the use of wireless handsets.

In addition, the FCC has from time to time gathered data regarding wireless handset emissions and its assessment of this issue may evolve based on its findings.

The FCC has in the past commenced rule makings and inquiries that seek public comment on a variety of issues, including whether revisions to the existing radio frequency standards and testing requirements are warranted.

The media has also reported incidents of handset battery malfunction, including reports of batteries that have overheated.

These allegations may lead to changes in regulatory standards.

There have also been other allegations regarding wireless technology, including allegations that wireless handset emissions may interfere with various electronic medical devices (including hearing aids and pacemakers), airbags and anti-lock brakes.

Defects in the products of our suppliers or their smartphone devices could have a material adverse effect on our business, financial condition, operating results or ability to do business.

Additionally, any decrease in demand for wireless services, increases in the costs of litigation or damage awards resulting from substantiation of harm from such emissions could impair our financial condition and results of operations.

Risks Related to Our Relationship with Sprint

The performance of our Wireless reporting segment may be materially adversely affected by any interruption in, or other adverse change to, Sprint’s business, liquidity or financial condition.

We rely significantly on Sprint’s ongoing operations to continue to offer wireless subscribers in our affiliated service area the seamless national services that Sprint currently provides.

Any interruption in, or other adverse change to, Sprint’s business, liquidity or financial condition could materially adversely affect our results of operations, liquidity and financial condition.

Our business could also be adversely affected if competing national or regional wireless carriers are able to introduce new products and services or otherwise satisfy customers’ service demands more rapidly or more effectively than Sprint.

The costs associated with our ongoing participation in Sprint’s network upgrade and expansion plans may affect our operating results, liquidity and financial position.

Sprint continues to upgrade and expand its wireless network with the intention of improving voice quality, coverage and data speeds while simultaneously reducing future operating costs.

We participate in this plan and, to date, we have made significant upgrades in our service areas, but ongoing modernization efforts are expected to continue.

The continuing success of Sprint’s upgrade and expansion plans will depend on the timing, extent and cost of implementation and the performance of third parties .

Should Sprint’s implementation plan be delayed, our margins could be adversely affected and such effects could be material.

Should Sprint’s future delivery of services expected to be deployed on the upgraded network be delayed, it could potentially result in the loss of Sprint's subscribers to our competitors and adversely affect our revenues, profitability and cash flows from operations.

Sprint may make business decisions that are not in our best interests, which may adversely affect our business and our relationships with subscribers in our territory, increase our expenses and decrease our revenues.

Under its agreements with us, Sprint has a substantial amount of control over the operations of our wireless business.

Accordingly, Sprint may make decisions that could adversely affect our wireless business, such as the following:

Sprint could price its national plans based on its own objectives and could set price levels or other terms that may not be economically advantageous for us;

Sprint could develop products and services that could adversely affect our results of operations;

if Sprint’s costs to perform certain services exceed the costs they expect, subject to limitations under our Sprint Affiliate Agreement, Sprint could seek to increase the amounts charged to us for such services;

Sprint could make decisions that could adversely affect the Sprint brand names, reputation, or products or services, which could adversely affect our business;

Sprint could make technology and network decisions that could greatly increase our capital investment requirements and our operating costs to continue offering the seamless service we provide;

Sprint could restrict our ability to offer new services needed to remain competitive.

This could put us at a competitive disadvantage relative to other wireless service providers if those other wireless service providers begin offering those new services in our market areas, increasing our churn, adversely affecting our ability to obtain new subscribers and reducing our revenues and operating income from wireless services;

Sprint may not be able to provide the amount of spectrum that is necessary to adequately operate our business.

In addition, if the pending business combination between T-Mobile US, Inc.

(T-Mobile) and Sprint is completed, it is possible that the combined company may not want to continue our affiliate services arrangement with Sprint.

For additional information, see the risk factor below titled "Some provisions of the Sprint agreements may diminish the value of our common stock and restrict or diminish the value of our business."

The pending dispute with Sprint over the resetting of the travel fee could have a material adverse effect on our financial and operating results in our Wireless segment.

Under our affiliate agreement with Sprint, we have historically earned and recognized monthly revenue of $1.5 million for providing service to Sprint customers who pass through our network area ("travel revenue").

While we continue to provide these services to Sprint, the agreed upon payments were suspended by Sprint on April 30, 2019.

Accordingly, we have ceased recognizing revenue for the services provided after that date until a new prospective fee through 2021 can be agreed as outlined in our affiliate agreement.

We have triggered the final dispute resolution option of binding arbitration with Sprint which we expect will lead to a resolution for travel fee revenue in the second quarter of 2020.

The outcome of the binding arbitration is uncertain and could have a material adverse effect on our financial and operating results.

Our dependence on Sprint for services may limit our ability to forecast operating results.

Our dependence on Sprint injects a degree of uncertainty into our business and financial planning.

We may, at times, disagree with Sprint concerning the applicability, calculation approach or accuracy of Sprint-supplied revenue data.

We are subject to risks relating to Sprint’s provision of back-office services and to changes in Sprint's products, services, plans and programs.

Any failure by Sprint to provide high-quality back-office services could lead to subscriber dissatisfaction, increased churn or otherwise increased costs or loss of revenue.

We rely on Sprint’s internal support systems, including customer care, billing and back-office support.

Our operations could be disrupted if Sprint is unable to provide or expand its internal support systems while maintaining acceptable service levels, or to efficiently outsource those services and systems through third-party vendors.

In addition, restrictions exist, and new restrictions are considered from time to time by Congress, federal agencies and states.

Our reliance on Sprint to perform those functions could subject us to potential liabilities.

The competitiveness of Sprint’s wireless products and services is a key factor in our ability to attract and retain subscribers.

Changes in Sprint’s wireless products and services may reduce subscriber additions, increase subscriber churn and decrease subscriber credit quality.

Sprint’s roaming arrangements to provide service outside of the Sprint National Network may not be competitive with other wireless service providers, which may restrict our ability to attract and retain subscribers and may increase our costs of doing business.

We rely on Sprint’s roaming arrangements with other wireless service providers for coverage in areas where Sprint wireless service is not available.

If customers are not able to roam quickly or efficiently onto other wireless networks, we may lose current subscribers and Sprint wireless services may be less attractive to new subscribers.

The risks related to our roaming arrangements include the following:

the quality of the service provided by another provider while roaming may not approximate the quality of the service provided by the Sprint wireless network;

the price of a roaming call off network may not be competitive with prices of other wireless companies for roaming calls, or may not be “commercially reasonable” (as determined by the FCC);

customers may not be able to use Sprint’s advanced features, such as voicemail notification, while roaming;

Sprint or the carriers providing the service may not be able to provide accurate billing information on a timely basis.

Some provisions of the Sprint agreements may diminish the value of our common stock and restrict or diminish the value of our PCS business.

On April 29, 2018, T-Mobile and Sprint entered into a business combination agreement, pursuant to which T-Mobile and Sprint agreed to combine their respective businesses.

It is possible that the combined company would not want to continue our affiliate services arrangement with Sprint.

If the transaction is completed and we are unable to enter into a mutually acceptable addendum to the Sprint agreements with the combined company, the combined company under certain circumstances may purchase the operating assets of our wireless operations for a price equal to 90% of the entire business value ("EBV") as that term is defined in our agreement with Sprint.

EBV is calculated as:

(i) the fair market value of a going concern paid by a willing buyer to a willing seller in a change of control transaction;

(ii) valued as if the business will continue to utilize existing brands and operate under existing agreements;

and, (iii) valued as if we have continued access to the spectrum and the frequencies then in use in the network.

Under our agreement with Sprint, the determination of EBV is made by an independent appraisal process using the then-current customary means of valuing a wireless telecommunications business.

In addition, under limited circumstances involving non-renewal of the Sprint agreements or a breach by us, Sprint may purchase the operating assets of our wireless operations for a purchase price of 90% of EBV in the event of non-renewal, or 81% in the event that termination is the result of a material breach of the Agreement by Shentel.

A sale of the operating assets of our wireless operations could create material income tax liabilities that would adversely affect the value of our common stock.

If the combined company purchases our wireless operating assets, our affiliate services arrangement with Sprint would end, which generated approximately 70% of our total consolidated revenue in 2019 , 71% in 2018 and 72% in 2017 .

Sprint also must approve any assignment of the Sprint agreements by us and has a right of first refusal to purchase our wireless operating assets if we decide to sell those assets to a third party.

These restrictions and other restrictions contained in the Sprint agreements could adversely affect the value of our common stock, may limit our ability to sell our wireless operating assets on advantageous terms, may reduce the value a buyer would be willing to pay to acquire those assets and may reduce the EBV, as described in the Sprint agreements.

In addition, the possibility that the combined company may purchase the operating assets of our wireless operations may make it difficult for us to attract or retain employees or subscribers or pursue other business opportunities.

We may have difficulty in obtaining an adequate supply of wireless handsets from Sprint.

We depend on our relationship with Sprint to obtain wireless handsets.

Sprint orders wireless handsets from various manufacturers.

We could have difficulty obtaining specific types of wireless handsets in a timely manner if:

Sprint does not adequately project the need for wireless handsets, or enter into arrangements for new types of wireless handsets or other customer equipment, for itself, its wireless affiliates and its other third-party distribution channels, particularly in connection with the transition to new technologies;

Sprint gives preference to other distribution channels;

we do not adequately project our need for wireless handsets;

Sprint modifies its wireless handset logistics and delivery plan in a manner that restricts or delays access to wireless handsets;

there is an adverse development in the relationship between Sprint and its suppliers or vendors.

The occurrence of any of the foregoing could result in a decrease in the wireless subscribers in our Sprint Affiliate Area or adversely affect our ability to attract new subscribers.

If Sprint does not continue to enhance its nationwide digital wireless network, we may not be able to attract and retain subscribers in our Sprint Affiliate Area .

Our wireless operations are dependent on Sprint’s national network.

Sprint’s digital wireless network may not provide nationwide coverage nor the most advanced offerings from 5th generation ("5G") technology to the same extent as the networks of its competitors, which could adversely affect our ability to attract and retain subscribers in our Sprint Affiliate Area .

Sprint currently covers a significant portion of the population of the United States, Puerto Rico and the U.S.

Virgin Islands.

Sprint offers wireless services, either on its own network or through its roaming agreements, in every part of the United States.

If Sprint’s wireless spectrum licenses are not renewed or are revoked, our wireless business would be harmed.

Wireless spectrum licenses are subject to renewal and revocation by the FCC.

There may be opposition to renewal of Sprint’s wireless licenses upon their expiration, and Sprint’s wireless licenses may not be renewed.

The FCC has adopted specific standards to apply to wireless license renewals.

Any failure by Sprint to comply with these standards could cause revocation or forfeiture of Sprint’s wireless licenses, which would significantly harm us.

If Sprint does not maintain control over its licensed spectrum, our Sprint agreements may be terminated, which would render us unable to continue providing service.

Sprint may also need additional spectrum to keep up with customer demands and the availability and cost of this spectrum could impact our wireless business.

Risks Related to Our Broadband Services

Our Broadband segment faces risks from increasing competition for the provision of video services, including competition resulting from new technologies.

Incumbent cable companies, which have historically provided video service, face competition from direct broadcast satellite providers, and more recently from large providers of wireline telecommunications services (such as Verizon, CenturyLink and AT&T), which have upgraded their networks in certain markets outside of our cable footprint to provide video services in addition to voice and broadband services.

Wireless providers are also entering the market for video services by making such services available on handsets and tablets.

In some areas, direct broadcast satellite providers have partnered with large incumbent telecommunications service providers to offer triple-play services.

Moreover, consumers are increasingly accessing video content from alternative sources, such as Internet-based “over the top” providers such as Netflix, Amazon, and Hulu, and related platforms.

Our programming costs are subject to demands for increased payments.

The cable television industry has continued to experience an increase in the cost of programming, especially sports programming and retransmission fees.

In addition, as we add programming to our video services for existing customers or distribute existing programming to more customers, we incur increased programming expenses.

If we are unable to raise our customers’ rates, these increased programming costs could have an adverse impact on our results of operations.

Risks Related to Regulation and Legislation

Regulation by government agencies may increase our costs of providing service or require changes in services, either of which could impair our financial performance.

Action by these regulatory bodies could negatively affect our operations and our costs of doing business.

Changes to key regulatory requirements can affect our ability to compete.

The cable industry is subject to extensive governmental regulation, which impacts many aspects of our operations.

Legislators and regulators at all levels of government frequently consider changing, and sometimes do change, existing

statutes, regulations, and interpretations thereof.

Our industry is subject to extensive governmental regulation, which impacts many aspects of our operations.

Legislators and regulators at all levels of government frequently consider changing, and sometimes do change, existing statutes, regulations, and interpretations thereof.

Future legislative, judicial, or administrative actions may increase our costs or impose additional challenges and restrictions on our business.

Federal law strictly limits the scope of permissible cable rate regulation, and none of our local franchising authorities currently regulate our rates.

However, as the rates charged to cable consumers have increased, Congress and the FCC have expressed concern about the impact on consumers, and they could impose restrictions affecting cable rates and programming packages that could adversely impact our existing business model.

Federal law strictly limits the scope of permissible cable rate regulation, and none of our local franchising authorities currently regulate our rates for video services.

Our rates for broadband services have historically not been subject to rate regulation.

However, as broadband service is increasingly viewed as an essential service, governments could adopt new laws or regulations related to the prices we charge for our services that could adversely impact our existing business model.

The Company operates cable television systems in largely rural areas of Virginia, West Virginia, Maryland and Kentucky pursuant to local franchise agreements.

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Franchise authorities often demand concessions or other commitments as a condition to renewal.

Our local franchises may not be renewed at expiration in which case we would have to cease operations or, operate under either temporary operating agreements or without a franchise while negotiating renewal terms with the local franchising authorities.

We cannot offer assurance that we will be able to comply with all significant provisions of our franchise agreements.

Additionally, although historically we have renewed our franchises without incurring significant costs, we cannot offer assurance that we will be able to renew, or to renew as favorably, our franchises in the future.

If our local franchises are not renewed at expiration we would have to cease operations or, operate under either temporary operating agreements or without a franchise while negotiating renewal terms with the local franchising authorities.

Although we have historically renewed our franchises without incurring significant costs, we cannot offer assurance that we will be able to renew, or to renew as favorably, our franchises in the future.

A termination of or a sustained failure to renew a franchise in one or more key markets or obtaining such franchise on unfavorable terms could adversely affect our business in the affected geographic area.

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Cable system attachments to investor-owned public utility poles historically have been regulated at the federal or state level, generally resulting in reasonable pole attachment rates for attachments used to provide cable service.

In contrast, utility poles owned by municipalities or cooperatives are not subject to federal regulation and are generally exempt from state regulation and their attachment rates tend to be higher.

In contrast, utility poles owned by municipalities or cooperatives are not subject to federal regulation and are, with exceptions, generally exempt from state regulation and their attachment rates tend to be higher.

Future regulatory changes in this area could impact the pole attachment rates we pay utility companies.

In August 2018, the FCC adopted rules, scheduled to become effective 30 days after Office of Management and Budget approval, to permit a “one-touch” make-ready process for poles subject to its jurisdiction.

The "one touch" make-ready rules allow third parties to alter certain components of existing attachments for "simple make-ready" (i.e.

where the alteration of our components does not involve a reasonable expectation of a service outage, splicing, pole replacement or relocation of a wireless attachment).

The rules are intended to promote broadband deployment and competition by facilitating communications attachments, although there are concerns regarding potential damage to existing networks by third parties.

Utility pole owners have appealed the rules to the United States Court of Appeals for the Ninth Circuit.

We cannot predict the effect that these rules will have on our business when they ultimately take effect.

The FCC has periodically considered proposals for new regulations intended to make our cable set-top boxes open to other service providers.

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Alternatively, we could choose to implement network management practices to reduce the network capacity available to bandwidth-intensive activities during certain times in market areas experiencing congestion, which could negatively affect our ability to retain and attract customers in affected markets.

Competitive or regulatory constraints may preclude us from recovering costs of network investments designed to

address these issues, which could adversely impact our operating margins, results of operations, financial condition and cash flows.

Our broadband services may be adversely impacted by legislative or regulatory changes that affect our ability to develop and offer services or that could expose us to liability from customers or others.

Competitive or regulatory constraints may preclude us from recovering costs of network investments designed to address these issues, which could adversely impact our operating margins, results of operations, financial condition and cash flows.

Our services may be adversely impacted by legislative or regulatory changes that affect our ability to develop and offer services or that could expose us to liability from customers or others.

The Company provides broadband Internet access services to its cable and telephone customers through cable modems and DSL.

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Moreover, it is possible that the FCC might further revise its approach to broadband Internet access, or that Congress might enact legislation affecting the rules applicable to the service.

On January 29, 2015, the FCC, in a nation-wide proceeding evaluating whether “advanced broadband” is being deployed in a reasonable and timely fashion, increased the minimum connection speeds required to qualify as advanced broadband service to 25 Mbps for downloads and 3 Mbps for uploads.

As a result, the FCC concluded that advanced broadband was not being sufficiently deployed and initiated a new inquiry into what steps it might take to encourage broadband deployment.

This action may lead the FCC to adopt additional measures affecting our broadband business.

At the same time, the FCC has ongoing proceedings to allocate additional spectrum for advanced wireless service, which could provide additional wireless competition to our broadband business.

On January 30, 2020, the FCC adopted an order approving the disbursement of $20.4 billion over the course of ten years to subsidize the deployment of networks for the provision of high-speed broadband internet access and voice services in areas that are otherwise too costly to be adequately serviced by the market (typically, rural areas).

Areas without access to broadband service at speeds of at least 25/3 Mbps will be targeted.

Competitors may attempt to seek some of the subsidies under this program to compete with our broadband service offerings.

In 2019, the U.S.

Court of Appeals for the District of Columbia upheld the information service reclassification, but vacated the FCC’s blanket prohibition of state utility regulation of broadband services.

The court left open the possibility that individual state laws could still be deemed preempted on a case-by-case basis if it is shown that they conflict with federal law.

In October 2020 the FCC, responding to the court’s remand order, issued a further decision clarifying certain aspects of its earlier order.

In this decision the FCC re-classified broadband internet access service as an unregulated information service, thus eliminating all federal regulatory "network neutrality" obligations beyond requiring broadband providers to accurately disclose network management practices, performance, and commercial terms of service.

These issues may be revisited by the FCC in the current Administration.

The FCC imposes obligations on telecommunications service providers, including broadband Internet access service providers, and multichannel video program distributors, like our cable company, intended to ensure that individuals with disabilities are able to access and use telecommunications and video programming services and equipment.

We cannot predict the nature and pace these requirements and other developments, or the impact they may have on our operations.

Offering voice communications service may subject us to additional regulatory burdens, causing us to incur additional costs.

We offer voice communications services over our broadband network and continue to develop and deploy VoIP services.

The FCC has ruled that competitive telephone companies that support VoIP services, such as those we offer our customers, are entitled to interconnect with incumbent providers of traditional telecommunications services, which ensures that our VoIP services can compete in the market.

The scope of these interconnection rights are sometimes contested by third-party providers, which may affect our ability to compete in the provision of voice services or result in additional costs.

The FCC has also declared that certain VoIP services are not subject to traditional state public utility regulation.

The full extent of the FCC preemption of state and local regulation of VoIP services is not yet clear.

Expanding our offering of these services may require us to obtain certain additional authorizations.

We may not be able to obtain such authorizations in a timely manner, or conditions could be imposed upon such licenses or authorizations that may not be favorable to us.

Telecommunications companies generally are subject to other significant

regulation which could also be extended to VoIP providers.

If additional telecommunications regulations are applied to our VoIP service, it could cause us to incur additional costs.

The FCC has already extended certain traditional telecommunications carrier requirements to many VoIP providers such as us, including E911, USF collection, CALEA, privacy of CPNI, number porting, rural call completion, network outage reporting, disability access, rural call completion and discontinuance of service requirements.

In November 2014, the FCC adopted an order imposing limited backup power obligations on providers of facilities-based fixed, residential voice services that are not otherwise line-powered, including our VoIP services.

This became effective for providers with fewer than 100,000 U.S.

customer lines in August 2016 and now requires the Company to disclose certain information to customers and to make available back up power at the point of sale.

In November 2011, the FCC released an order significantly changing the rules governing intercarrier compensation payments for the origination and termination of telephone traffic between carriers, including VoIP service providers like us.

The Tenth Circuit Court of Appeals upheld the rules in May 2014.

The new rules have resulted in a substantial decrease in intercarrier compensation payments over a multi-year period.

In addition, the transition of the Local Number Portability Administrator may impact our ability to manage number porting and related tasks, and/or may result in additional costs arising from the transition to a new administrator.

Our business may be impacted by new or changing tax laws or regulations and actions by federal, state and/or local agencies, or how judicial authorities apply tax laws.

We expect to pay over $400 million in federal and state income taxes in 2021 from the pending sale of our Wireless assets and operations to T-Mobile.

If federal or state income tax rates are increased during 2021, we could pay more income taxes and may need to reduce the expected special dividend payable to shareholders, raise additional indebtedness or lower our available liquidity.

In addition, we incur and pay state and local taxes and fees on purchases of goods and services used in our business.

Tax laws are subject to change as new laws are passed and new interpretations of the law are issued or applied.

In many cases, the application of tax laws is uncertain and subject to differing interpretations, especially when evaluated against new technologies and telecommunications services, such as broadband internet access and cloud related services.

Risks Related to the Sale of our Discontinued Wireless Operations

The sale of our discontinued Wireless operations is pending and may not close.

Our discontinued Wireless operations have been an affiliate of Sprint since 1999.

On August 26, 2020, Sprint Corporation (“Sprint”), an indirect subsidiary of T-Mobile US, Inc., ("T-Mobile"), on behalf of and as the direct or indirect owner of Sprint PCS, delivered notice to the Company exercising its option to purchase the assets and operations of our Wireless operations, ("Shentel Wireless"), for 90% of the “Entire Business Value” (as defined under our affiliate agreement and determined pursuant to the appraisal process set forth therein).

Shortly thereafter, the Company committed to a plan to sell the discontinued Wireless operations.

The final and binding appraisal process was completed on February 1, 2021.

Expected sale proceeds are $1.95 billion based upon the appraisal process and other agreements between the parties.

We expect to enter into a definitive asset purchase agreement with T-Mobile during the first quarter 2021 and expect that the transaction will close during the second quarter 2021, subject to customary closing conditions and required regulatory approvals.

The Company currently expects to use the after-tax proceeds from the sale of Shentel Wireless to, among other things:

• As required by our credit agreement, repay approximately $702 million of outstanding term loans and swap liabilities and terminate the respective agreement;

• Issue a special dividend of $18.75 per share to Shentel's shareholders (the "Special Dividend");

• Provide adequate liquidity for growth and potential strategic acquisitions;

• Provide liquidity for general corporate purposes.

While the Company expects to pay the special dividend after the close of the Wireless sale, this declaration is subject to the approval of Shentel’s Board of Directors.

It is uncertain if we will be able to agree to terms with T-Mobile on the asset purchase agreement, secure the required regulatory approvals and close on the transaction with T-Mobile.

If we do not close on the transaction with T-Mobile, we will not be able to declare and pay a special dividend to our shareholders, our ability to continue to profitably operate our wireless business may be compromised and this could cause significant volatility in the trading and value of our common stock.

In the event that the sale of our discontinued Wireless operations does not close, our ability to comply with the financial covenants under the agreement governing our secured credit facilities will depend primarily on our success in generating sufficient operating cash flow.

Under our credit agreement, we are subject to a total leverage ratio covenant, a minimum debt service coverage ratio covenant and a minimum liquidity test.

Our failure to satisfy the tests or ratios could result in a default and acceleration of repayment of the indebtedness under our credit facilities.

If the maturity of our indebtedness were accelerated, we may not have sufficient funds to repay such indebtedness.

Because our Wireless segment has historically represented a large portion of our consolidated revenue, if the sale to of our Wireless assets and operations to T-Mobile is completed, our business will be substantially different.

The revenue generated from our Wireless segment for the years ended December 31, 2020, 2019 and 2018 constituted approximately 67%, 70% and 71% of our consolidated revenue for those years, respectively.

Although we expect the revenue generated from our remaining segments to grow in the future, our business will be substantially different following the sale to of our Wireless assets and operations to T-Mobile, and there can be no assurance that we will achieve sustained growth, reduce Corporate overhead expenses or achieve improvement in our financial condition and results of operations in our remaining segments or in new products or business opportunities we may pursue.

In addition, since our focus following the closing of the sale will be on building long-term shareholder value with our remaining segments, investors and analysts may have different expectations for our company to produce improved quarterly financial results for our remaining segments as compared to the periods prior to the sale to of our Wireless assets and operations.

This might cause fluctuations in our stock price as well as distractions for our management and our board of directors, and might at times conflict with our desire to build long-term stockholder value.

Our stockholders may not receive any distribution from the sale of our Wireless assets and operations and may never receive any return of value.

The Company’s Board of Directors has not made a final determination of the use of the proceeds from the sale of our Wireless assets and operations to T-Mobile.

The Company may use the net proceeds from the sale for general corporate purposes, which may include, without limitation, funding growth initiatives, strategic acquisition opportunities, repayment or refinancing of debt or other corporate obligations, capital expenditures, working capital, and repurchases and redemptions of securities.

Stockholders may not directly receive any liquidity from the sale and the only return to them may be based on any future appreciation in our stock price or upon a future sale or liquidation of us.

Much depends on our future business, including the success or failure of our remaining business.

There are no assurances that we will be successful, and current stockholders may never receive a return on their investment.

There can be no assurances that we will be successful in investing the proceeds of the sale of our Wireless assets and operations.

The process to identify potential investment opportunities, growth initiatives, strategic acquisition opportunities and to evaluate the future returns therefrom and business prospects thereof can be time consuming and uncertain.

Our management could spend or invest the proceeds from the sale of our Wireless assets and operations in ways with which our stockholders may not agree, and our management and the Board of Directors may authorize such spending or investment without seeking stockholder approval.

The investment of these proceeds may not yield a favorable return and there can be no assurances that we will be successful in the investment of these proceeds.

Risks Related to our Indebtedness

We are required to repay all outstanding amounts under our credit agreements when the sale of our discontinued Wireless operations closes.

We may not be able to obtain additional credit facilities on terms that are acceptable to us or as favorable as those of our existing facilities.

Under the agreement governing our secured credit facilities, we are required to repay all of our term loans and terminate our $75 million revolving credit facility when the sale of our discontinued Wireless operations closes.

We may not be able to issue new indebtedness to recapitalize our continuing operations under terms that we find acceptable.

If we do not raise additional indebtedness, we may have to scale back our network edge-out growth strategy or reduce the value of the special dividend that we plan to declare and pay to shareholders following the sale of our wireless business to T-Mobile.

We may not be able to repay future indebtedness raised after the closing of the sale of our wireless operations.

As discussed in the Risks Related to our Business section above, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2023 as we invest in our network edge-out strategy.

We may not be able to generate sufficient cash flows from operations in 2024 and beyond or to raise additional capital in amounts necessary for us to repay any future indebtedness when such indebtedness becomes due and to meet our other cash needs.

Our level of indebtedness could adversely affect our financial health and ability to compete.

As of December 31, 2020, we had $688.5 million of total indebtedness.

Our level of indebtedness could have important adverse consequences.

For example, it may:

• increase our vulnerability to general adverse economic and industry conditions, including interest rate increases, because as of December 31, 2020, a significant portion of our borrowings were, and may continue to be, subject to variable rates of interest;

• require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends and other general corporate purposes;

• limit our ability to borrow additional funds to alleviate liquidity constraints, as a result of financial and other restrictive covenants in our credit agreement;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• place us at a competitive disadvantage relative to companies that have less indebtedness.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors