What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-02-28 compared with 2021-02-25 · 101 added, 133 removed, 147 unchanged (61% of the section changed)

4 unchanged sentences

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.

Intensifying competition may limit our ability to continue to grow our revenue.

The low interest rate environment and the increasing demand for faster residential internet bandwidth driven by working and learning from home since the outbreak of COVID-19 has increased the availability of capital to fund fiber-to-the-home (“FTTH”) overbuilds in areas historically served by incumbent cable and incumbent local telephone providers.

If new FTTH competitors overbuild our incumbent cable service areas, some of our subscribers may select other providers’ offerings based on price, bandwidth speeds, capabilities or personal preferences.

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.

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 continue to grow our revenue.

Prospective competitors of our Broadband segment may receive grants from federal or state universal service funds or other subsidies.

Some of those potential competitors may receive support under the Connect America Fund, Rural Development Opportunity Fund, American Rescue Plant Act or Infrastructure Investment and Jobs Act to build broadband facilities to unserved homes that do not meet the minimum broadband speeds in some areas already served by our Beam fixed wireless and DSL networks and adjacent to our cable and FTTH footprint.

As a result, new competitors may invest in cable and FTTH markets, increasing the number of competitors we face in our network area and in the areas we hope to expand our broadband network in the future.

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

Incumbent cable companies also face competition from direct broadcast satellite providers, and from large providers of wireline telecommunications services (such as Verizon, Lumen 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.

If direct broadcast satellite providers and large wireline telecommunications service providers were to expand their upgraded networks into our cable and FTTH footprint, then Shentel would face increased competition within our existing footprint and potential decreases in revenue from existing sources.

The Company’s Commercial Fiber business faces intense competition from several local and national providers.

Most of our competitors possess greater resources, have greater brand recognition, have more extensive coverage areas, have access to 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 a significant numbers of our customers elect to move to competing providers, our Commercial Fiber revenues could be adversely affected.

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

1 unchanged sentence

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

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

Our future growth is primarily dependent upon our expansion 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 expansion strategy includes our FTTH broadband service, which we offer under the Glo Fiber brand.

This brand is 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.

1 unchanged sentence

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.

Difficulty in obtaining necessary resources may also adversely affect our ability to expand into new markets as could our ability to adequately market a new brand to customers unfamiliar to us as we expand to markets where we do not currently operate.

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.

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.

We may incur significant churn from our largest customer who represents 8% of our revenues.

We lease space on our towers and provide backhaul and transport services to T-Mobile to support their wireless network in our markets.

T-Mobile has announced plans to decommission parts of their recently acquired networks which could lead to a material loss of revenue being generated from our tower and broadband segments.

We may not be able to replace the churn with new revenue from other carriers where our towers and fiber is located in a timely basis or at all.

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.

We have begun to realign our corporate expenses to reflect the sale of our Wireless assets and operations, and to scale for our planned Broadband growth.

We anticipate that this initiative will take multiple years and will 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 could be limited.

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

As a result, we could experience greater operating costs, our revenue could decline and we may lose existing customers and fail to attract new customers.

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

The telecommunications industry is experiencing significant technological change, evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences.

Technological advances, industry changes, changes in the regulatory environment and the availability of additional spectrum or additional flexibility with respect to the use of currently available spectrum could cause the technology we use to become obsolete.

Technological advances, industry changes and changes in the regulatory environment could cause the technology we use to become obsolete.

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

1 unchanged sentence

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

As a result, our financial performance may be negatively impacted.

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.

1 unchanged sentence

Some published reports predict that warming global temperatures will increase the frequency and severity of such weather-related events.

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.

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

Our programming costs are subject to demands for increased payments.

5 unchanged sentences

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.

3 unchanged sentences

The evaluation of business acquisition opportunities and the integration of any acquired businesses pose a number of significant risks, including the following:

• acquisitions may place significant strain on our management, financial and other resources by requiring us to expend a substantial amount of time and resources in the pursuit of acquisitions that we may not complete, or to devote significant attention to the various integration efforts of any newly acquired businesses, all of which will require the allocation of limited resources;

• acquisitions may place significant strain on our management and financial and other resources by requiring us to expend a substantial amount of time and resources in the pursuit of acquisitions that we may not complete, or to devote significant attention to the various integration efforts of any newly acquired businesses, all of which will require the allocation of limited resources;

• acquisitions may not have a positive impact on our cash flows or financial performance;

7 unchanged sentences

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

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.

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.

2 unchanged sentences

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.

The Company has 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.

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.

1 unchanged sentence

• 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 operating costs, inventory shortages and/or a decrease in productivity related to travel bans, employee illness or quarantine 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 or growth objectives;

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

2 unchanged sentences

• 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;

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

• 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 and/or impact the ability for us to manage and implement the planned build out and expansion of our network.

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 progression of the COVID-19 pandemic, 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 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.

Disruptions of our information technology infrastructure or operations could harm our business.

A disruption of our information technology infrastructure or operations, or the infrastructure or operations of certain vendors who provide information technology services to us or our customers, could be caused by a natural disaster, energy or manufacturing failure, telecommunications system failure, ransomware attack, cybersecurity or terrorist attack, intrusion or incident, or defective or improperly installed new or upgraded business management systems.

effective or that attempted security breaches or catastrophic 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.

1 unchanged sentence

Moreover, our business involves the processing, storage and transmission of data, which would also be negatively affected by such an event.

A disruption of our infrastructure could cause us to lose customers and revenue, particularly during a period of heavy demand for our services.

A disruption of our information technology infrastructure or operations could also cause us to lose customers and revenue, particularly during a period of heavy demand for our services.

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

5 unchanged sentences

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.

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 that our internal control over financial reporting was not effective as of December 31, 2021.

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

1 unchanged sentence

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.

Our current ERP system will be replaced during 2022 as the system will no longer be supported by the software vendor after January 2023.

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.

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

The new ERP system will require us to implement new internal controls and to change our existing internal control framework and procedures during 2022.

If unexpected delays, costs, 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.

If we do not further reduce corporate overhead costs following the sale of our Wireless segment, our earnings and margins will be lower than the larger peer broadband companies.

Our sales, general and administrative costs, including corporate overhead, are a higher percentage of revenue than larger broadband companies due to a lack of relative scale.

If we cannot further reduce our corporate expenses, our earnings and margins will be lower than our peers which may affect the value of our stock price.

Our success depends on consistent supply of physical goods and services to build and sustain services to customers.

Significant disruptions to the supply chain could adversely impact our growth and revenue projections.

The supply of critical physical supplies, such as modems, consumer Wi-Fi equipment, and fiber is important to our business operations.

These materials form the core components needed to deliver both video and data services to our customers.

We work to ensure we have a forward-looking supply of these items and redundancy of supply types and

However, global impacts to supply chains across all suppliers and manufacturers could result in significant supply issues.

If supplies to these items became severely impacted, our plans to build out new networks could be adversely impacted.

Additionally, the lack of certain equipment could limit our ability to service existing customers.

Significant impact to physical equipment supply chains could materially and adversely affect our business, including reduced revenues, loss of customers and limitations on future growth.

Additionally, at times we choose to leverage third-party suppliers to help us deliver services to customers because of efficiency reasons or because third-parties provide a service we cannot replicate easily.

Should those third-party suppliers be impacted by either materials, equipment or resources, their inability to provide services to us could also negatively impact our ability to deliver network services or build out future network.

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.

Our historical operational and financial 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 key roles across our organization.

The competition for talent for key roles in our industry, including our executive officers and key personnel to support our engineering, sales, service delivery, information technology, finance and accounting functions, is highly competitive and could adversely impact our ability to retain and hire new employees and contractors.

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

Moreover, an inability to retain sufficient qualified personnel throughout our organization or to attract new personnel as we grow our business could adversely affect our ability to remediate the material weaknesses over financial reporting and thereafter maintain an effective system of internal controls and our ability to produce reliable financial reports, which could materially and adversely affect our financial results, financial condition 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.

3 unchanged sentences

We may be subject to data breaches and disruptions of the information technology systems we use for these purposes.

Our industry has witnessed an increase in the number, intensity and sophistication of cybersecurity incidents caused by hackers and other malicious actors such as foreign governments, criminals, hacktivists, terrorists and insider threats.

Our industry has witnessed an increase in the frequency, intensity and sophistication of cybersecurity incidents caused by hackers and other malicious actors such as foreign governments, criminals, hacktivists, terrorists and insider threats.

Hackers and other malicious actors may be able to penetrate our network security and misappropriate or compromise our confidential, sensitive, personal or proprietary information, or that of third parties, and engage in the unauthorized use or dissemination of such information.

2 unchanged sentences

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.

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.

Like many other companies, we increasingly leverage third-party SaaS solutions and external service providers to help us deliver services to our customers.

In the delivery of these services, we are dependent on the security infrastructure of those third-party providers.

These providers are also vulnerable to the myriad of cyber-attacks possible in today’s environment.

In the case where a third-party provider becomes victim to an attack it could have an impact on our operations or ability to service customers.

The COVID-19 pandemic has amplified certain risks to our operations and business, increasing 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 and third party suppliers have been infrequent and have not had a material impact on our operations.

The consequences of a breach of our security measures or those of a third-party provider, 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.

17 unchanged sentences

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.

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

These franchises are not exclusive, and other entities may secure franchise authorizations in the future, thereby increasing direct competition to the Company.

5 unchanged sentences

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.

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.

3 unchanged sentences

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

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

If enacted, such new regulations concerning set-top boxes could increase our cost for equipment, affect our relationship with our customers, and/or enable third parties to try to offer equipment that accesses disaggregated cable content merged with other services delivered over the Internet to compete with our premium service offerings.

Increases in broadband usage may cause network capacity limitations, resulting in service disruptions, reduced capacity or slower transmission speeds for our customers.

Regulatory constraints could impact our ability to adequately address increases in broadband usage and may cause network capacity limitations, resulting in service disruptions, reduced capacity or slower transmission speeds for our customers.

Video streaming services, gaming and peer-to-peer file sharing applications use significantly more bandwidth than other Internet activity such as web browsing and email.

As use of these newer services continues to grow, our broadband customers will likely use much more bandwidth than in the past.

As use of these services continues to grow, our broadband customers will likely use much more bandwidth than in the past.

If this occurs, we could be required to make significant capital expenditures to increase network capacity in order to avoid service disruptions, service degradation or slower transmission speeds for our customers.

2 unchanged sentences

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.

The Company provides broadband Internet access services to its fiber, cable, fixed wireless and telephone customers.

As the Internet has matured, it has become the subject of increasing regulatory interest.

13 unchanged sentences

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.

The FCC imposes obligations on telecommunications service providers, including broadband Internet access service providers, and multichannel video program distributors, like our cable company.

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

Risks Related to our Indebtedness

We may not have sufficient capital to fund our expansion plans and may not be able to repay future indebtedness.

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 2025 as we invest in our network expansion strategy.

As of December 31, 2021, we had no indebtedness outstanding under our $400 million credit agreement.

If our costs to expand our networks are greater than we anticipate, we may not have sufficient capital nor be able to secure additional capital on terms acceptable to us and may have to curtail our expansion plans.

Upon drawing on available debt under our credit agreement, we may not be able to generate sufficient cash flows from operations in 2026 and beyond or to raise additional capital in amounts necessary for us to repay the future indebtedness when such indebtedness becomes due and to meet our other cash needs.

General Risk Factors

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.

Any national economic weakness, restricted credit markets, high inflation 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.

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

We become involved in legal proceedings from time to time.

While we are not currently involved in any material legal proceedings, potential future 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.

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 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 regulatory fees.

4 unchanged sentences

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.

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.

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.

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