What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-02-28 compared with 2021-02-25 · 90 added, 91 removed, 176 unchanged (51% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our “Selected Financial Data” and our consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.

In addition to historical consolidated financial information, the following discussion and analysis may contain forward-looking statements that involve risks, uncertainties and assumptions.

8 unchanged sentences

2021 Developments

Results of Operations

As described in Item 1, Business we earn revenue primarily through our provision of broadband services that include broadband internet, video, voice, and fiber optic Ethernet, wavelength and leasing services in our Broadband segment.

Our Broadband segment revenue is driven primarily by the number of our customers that subscribe to our broadband services, and their selection from our respective rate plans.

Our Tower segment leases colocation space on our owned cell towers to wireless carriers.

Our Tower segment revenue is driven primarily by the number of cell towers that we own, and our ability to secure colocation leases from wireless carriers.

Operating Expenses

Our operating expenses consist primarily of cost of services, selling, general and administrative, and depreciation and amortization expenses.

Other Income (Expense)

Our other income (expense) consists primarily of interest expense and other income.

Our other income primarily represents interest and dividends earned from our investments, including patronage income that is connected with our CoBank loan agreements.

Income Tax Expense

Income tax expense consists of federal and state income taxes in the United States.

Income from Discontinued Operations, net of tax

As discussed in the notes to our consolidated financial statements, the results of our Wireless operations are now presented as discontinued operations.

2020 Compared with 2019

On July 1, 2021, pursuant to the previously announced Asset Purchase Agreement (the “Purchase Agreement”), dated May 28, 2021, between Shentel and T-Mobile USA, Inc.

(“T-Mobile”), Shentel completed the sale to T-Mobile of its Wireless assets and operations for cash consideration of approximately $1.94 billion, inclusive of the approximately $60 million settlement of the waived management fees by Sprint Corporation, an indirect subsidiary of T-Mobile (“Sprint”), and net of certain transaction expenses (the “Transaction”).

The Company’s Wireless assets and operations were classified as discontinued operations after Sprint delivered notice to the Company exercising its option to purchase the Wireless assets and operations on August 26, 2020.

Due to the availability of grants awarded under various governmental initiatives, in support of rural fiber to the home ("FTTH") broadband network expansion projects, we ceased further expansion of our fixed wireless edge-out strategy.

As a result, in the fourth quarter of 2021, the Company incurred approximately $6.0 million of expenses for impairment of expansionary Beam construction assets.

The Company plans to continue to operate the existing Beam network and continue sales and marketing activities to attract new customers;

therefore, our remaining Beam assets and operations will continue to be classified as continuing operations.

Our historical results of operations have been retroactively revised to reflect the correction of an immaterial error related to the capitalization of certain customer installation costs for our Broadband segment.

These revisions ensure comparability across all periods reflected herein.

Refer to Note 1, Nature of Operations, found in our consolidated financial statements contained herein for additional information.

Results of Operations

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

The Company’s consolidated results from operations are summarized as follows:

6 unchanged sentences

Income before taxes 6,235 2.5 586 0.3 5,649 964.0

Income tax (benefit) expense (586) (0.3) 173 0.1 (759) (438.7)

Income tax benefit (1,694) (0.7) (990) (0.4) (704) (71.1)

Income from continuing operations 7,929 3.2 1,576 0.7 6,353 403.1

1 unchanged sentence

Net income $ 998,831 407.3 $ 125,673 56.9 873,158 694.8

Revenue increased approximately $13.9 million, or 6.7%, in 2020 compared with 2019, driven by 31.3% growth in the Tower and 5.4% growth in Broadband segments.

Revenue increased approximately $24.5 million, or 11.1%, in 2021 compared with 2020, driven by 11.6% growth in Broadband and 3.8% growth in the Tower segments.

Refer to the discussion of the results of operations for the Tower and Broadband segments, included within this annual report, for additional information.

Operating expenses

Operating expenses increased approximately $14.3 million, or 6.9%, in 2020 compared with 2019, driven by incremental Broadband operating expenses incurred to support the launch of our new fiber-to-the-home service, Glo Fiber, and new fixed wireless broadband service, Beam.

Income tax (benefit) expense

Income tax benefit of approximately $0.6 million declined approximately $0.8 million compared with 2019, primarily due to changes in excess tax benefits from stock based compensation and other discrete items.

Operating expenses increased approximately $24.3 million, or 10.9%, in 2021 compared with 2020, primarily driven by $7.4 million in incremental Broadband operating expenses incurred to support the continuing expansion of Glo Fiber, $1.7 million of restructuring expenses and $6.0 million of impairment expenses incurred primarily as a result of our decision to cease expansion of Beam, $6.4 million in depreciation from growth in our broadband networks, $5.8 million in Broadband maintenance due primarily to higher cable replacements costs, obsolete inventory charges and expensing of software development costs related to our current ERP system that will be replaced in 2022, partially offset by a decline in corporate expenses.

Other income, net

Other income, net increased $5.5 million primarily due to actuarial gains recognized for the Company's post-retirement benefit plans and transitional service agreement ("TSA") income realized in 2021.

Income tax benefit

Income tax benefit of approximately $1.7 million increased approximately $0.7 million compared with 2020, primarily due to a $5.0 million of non-cash tax benefits derived from the revaluation of our deferred tax liabilities driven by the change in our estimated state tax rate that was triggered by the disposition of our Wireless assets and operations and a change in West Virginia tax regulations, partially offset by a $1.6 million reclassification of income taxes from other comprehensive income as a result of terminating our interest rate swaps, a $1.1 million reduction in excess tax benefits from share based compensation and other and $1.6 million as a result of changes in taxable income.

Income from discontinued operations, net of tax

Income from discontinued operations, net of tax, increased $70.5 million, or 131.7%.

The increase was primarily driven by a $48.5 million decline in depreciation and amortization primarily as a result of ceasing depreciation and amortization of assets held for sale during the third quarter of 2020, $25.3 million increase in wireless service revenue driven by our travel revenue settlement with Sprint, a $12.1 million decline in cost of services due to ceasing amortization on our right of use assets under operating leases during the third quarter of 2020, an $8.8 million decline in interest expense driven by lower interest rates on our term loans, partially offset by $27.5 million of higher income tax.

Our Broadband segment provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, and Kentucky, via hybrid fiber coaxial cable under the brand name of Shentel, fiber optics under the brand name of Glo Fiber and fixed wireless network under the brand name of Beam.

Income from discontinued operations, net of tax, increased $0.9 billion, or 698.5%.

The increase was primarily due to the completion of the disposition of our Wireless assets and operations for proceeds of approximately $1.9 billion resulting in a gain of $1.2 billion, net of approximately $0.3 billion of income tax expense.

The Broadband segment also leases dark fiber and provides Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area.

The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a Rural Local Exchange Carrier (“RLEC”).

These integrated networks are connected by an approximately 6,800 fiber route mile network.

This fiber optic network also supports our Wireless segment operations, which are currently classified as discontinued operations, and these intercompany transactions are reported at their market value.

These integrated networks are connected by over 7,400 fiber route mile network.

The following table indicates selected operating statistics of Broadband:

10 unchanged sentences

Glo Fiber 11,377 4,158 126

Beam 1,475 99 —

Video 49,945 52,817 53,673

38 unchanged sentences

Selling, general, and administrative 47,840 21.0 39,472 19.3 8,368 21.2

Restructuring expense 202 0.1 — — 202 —

Impairment expense 5,986 2.6 — — 5,986 —

Depreciation and amortization 47,937 21.0 41,076 20.1 6,861 16.7

2 unchanged sentences

Residential & SMB revenue

Residential & SMB revenue increased approximately $12.7 million, or 8.9%, during 2020 primarily driven by 22.3% growth in broadband RGUs and penetration improvement.

Residential & SMB revenue increased approximately $22.5 million, or 14.5%, during 2021 primarily driven by launching services in new markets resulting in 15.9% growth in broadband RGUs.

Commercial Fiber revenue

Commercial Fiber revenue increased approximately $2.3 million, or 7.7%, during 2020 due primarily to an increase in new enterprise and backhaul recurring revenue of $3.9 million partially offset by a decline in amortized upfront fee revenue of $1.6 million.

Commercial Fiber revenue increased approximately $2.2 million, or 6.6%, during 2021 due primarily to $1.0 million of growth in circuit connections, $0.7 million non-recurring amortized revenue reduction in 2020 and $0.5 million in non-recurring dark fiber sales-type leases in 2021.

RLEC & Other revenue

RLEC & Other revenue decreased approximately $4.7 million, or 22.0%, compared with 2019 due primarily to a decline in residential DSL subscribers, lower governmental support, and lower intercompany phone service.

We expect RLEC revenue to decline at a slower rate in future periods as subscribers migrate to broadband data services.

RLEC & Other revenue decreased approximately $1.0 million, or 5.7%, compared with 2020 due primarily to a decline in residential DSL subscribers, lower switched access revenue, and lower intercompany phone service.

We expect RLEC revenue to continue to decline in future periods as subscribers migrate to faster speed data services provided by our dual-incumbent cable franchise in Shenandoah County, Virginia.

Cost of services

Cost of services increased approximately $4.2 million, or 5.3%, compared with 2019, primarily driven by higher compensation expense due to the combination of Glo Fiber and Beam start-up expenses, higher incentive accrual from strong operating results, COVID supplemental pay for customer interfacing employees and enhanced benefit plans.

Cost of services increased approximately $12.4 million, or 14.6%, compared with 2020, primarily driven by $5.8 million increase in maintenance due primarily to higher cable replacements costs, obsolete network asset charges and expensing of software development costs related to our current ERP system, $3.6 million in higher compensation costs to support the expansion of Glo Fiber and Beam, and $1.7 million in higher programming fees.

Selling, general and administrative

Selling, general and administrative expense increased $5.9 million or 17.7% compared with 2019 primarily due to increases in compensation expense of $3.4 million, primarily as a result of Glo Fiber and Beam fixed wireless start-up costs, higher benefit plan and incentive accruals from strong operating results and $2.8 million of higher software and professional fees.

Selling, general and administrative expense increased $8.4 million or 21.2% compared with 2020 primarily due to $3.8 million in higher compensation and advertising costs to support the expansion of Glo Fiber and Beam, a $2.4 million increase in software development and service fees as we upgrade our operating support, customer relationship and enterprise resource systems and a $1.7 million increase in property taxes, facility expense and other costs.

Restructuring expense

Restructuring expense was primarily due to severance related expenses from the sale of Wireless assets and operations.

During the fourth quarter, we ceased further expansion of our fixed wireless edge-out strategy.

As a result, in the fourth quarter of 2021, the Company incurred approximately $6.0 million of expenses for impairment of expansionary Beam construction assets.

Depreciation and amortization

Depreciation and amortization increased $2.5 million or 6.5%, compared with 2019, primarily as a result of our network expansion and the deployment of infrastructure necessary to support new fiber-to-the-home service, Glo Fiber, and fixed wireless solution, Beam.

Our Tower segment owns cell towers and leases colocation space on the towers to wireless communications providers, including our Wireless segment that is currently classified as a discontinued operation.

Depreciation and amortization increased $6.9 million or 16.7%, compared with 2020, primarily as a result of our network expansion and the deployment of infrastructure necessary to support our new fiber-to-the-home service, Glo Fiber.

Our Tower segment owns cell towers and leases colocation space on the towers to wireless communications providers.

Substantially all of our owned towers are built on ground that we lease from the respective landlords.

The colocation space that is leased to our discontinued Wireless operations is priced at our estimate of fair market value.

The following table indicates selected operating statistics of the Tower segment:

13 unchanged sentences

Revenue increased approximately $0.6 million, or 3.8%, in 2021 compared with 2020.

This increase was due to a 5.7% increase in tenants and a 23.4% increase in average revenue per tenant driven by amendments to intercompany leases.

Revenue derived from our wireless operations was approximately $9.7 million and $6.0 million in 2020 and 2019, respectively.

This increase was due to a 13.6% increase in tenants and was partially offset by a 3.2% decline in average revenue per tenant.

Operating expenses

Operating expenses increased approximately $1.5 million compared to the prior year period, due primarily to increases in ground lease rent expense and professional services.

2019 Compared with 2018

Results of Operations

Operating expenses increased approximately $0.5 million compared to the prior year period, due primarily to increases in ground lease rent expense, and expansion of our tower network team resulting in higher payroll costs, partially offset by a decrease in professional services.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

The Company’s consolidated results from operations are summarized as follows:

10 unchanged sentences

Net income $ 125,673 56.9 $ 55,500 26.8 70,173 126.4

Revenue increased approximately $14.2 million, or 7.4%, in 2019 compared with 2018, driven primarily by Broadband data penetration and subscriber growth.

Refer to the discussion of the results of operations for the Broadband segment, included within this annual report, for additional information.

Revenue increased approximately $13.9 million, or 6.7%, in 2020 compared with 2019, driven by 31.3% growth in the Tower and 5.4% growth in Broadband segments.

Refer to the discussion of the results of operations for the Tower and Broadband segments, included within this annual report, for additional information.

Operating expenses

Operating expenses increased approximately $11.9 million, or 6.1%, in 2019 compared with 2018.

The increase was primarily due to incremental operating expenses incurred to support the growth of our Broadband segment including the launch of new fiber-to-the-home service, Glo Fiber, as well as maintenance costs to support our larger network.

Other income decreased approximately $0.4 million, or 11.4%, in 2019 compared with 2018.

The decrease was primarily due to changes in the value of our investments and pension obligation.

Income tax expense (benefit)

Income tax expense increased approximately $1.5 million, compared with 2018, primarily driven by the increase in our income before taxes and changes in excess tax benefits from stock based compensation and other discrete items

Operating expenses increased approximately $15.2 million, or 7.3%, in 2020 compared with 2019, driven by incremental Broadband operating expenses incurred to support the launch of our new fiber-to-the-home service, Glo Fiber, and fixed wireless broadband service, Beam.

Income tax (benefit) expense

Income tax benefit of approximately $1.0 million declined approximately $1.0 million compared with 2019, primarily due to changes in excess tax benefits from stock based compensation and other discrete items.

Income from discontinued operations, net of tax

Income from discontinued operations, net of tax, increased $9.1 million, or 20.3% in 2019 as compared to 2018.

The increase was driven by a $10.5 million decline in depreciation expense as certain assets acquired in 2016 became fully depreciated, a decline of $5.6 million in interest expense from lower borrowing rates, service revenue growth of $4.9 million, lower income tax expense of $1.3 million due to changes in taxable income;

partially offset by a $12.0 million decline in travel revenue and an increase of $2.2 million in operating expense to facilitate subscriber and network growth.

Income from discontinued operations, net of tax, increased $70.5 million, or 131.7%.

Broadband results from operations are summarized as follows:

13 unchanged sentences

Residential & SMB revenue

Residential & SMB revenue increased approximately $11.6 million, or 8.8%, during 2019 primarily driven by data revenue growth of $7.6 million from an increase in broadband data penetration, video revenue growth of $1.0 million from an increase in ARPU due to a pass through of higher programming costs, voice revenue growth of $0.9 million from growth in SMB voice RGUs, and lower promotional discounts of $1.3 million, partially offset by a decrease in video RGUs.

Residential & SMB revenue increased approximately $12.7 million, or 8.9%, during 2020 primarily driven by 22.3% growth in broadband RGUs and penetration improvement.

Commercial Fiber revenue

Enterprise revenue increased approximately $0.7 million, or 2.5%, during 2019 from a combination of 425 new enterprise connections and backhaul revenue growth driven by the Wireless fiber-to-the-tower initiative.

RLEC & Other revenue

RLEC & Other revenue decreased approximately $1.5 million, or 6.5%, compared with 2018, primarily due to a decline in residential DSL subscribers and lower intercompany phone service.

We expect RLEC revenue to decline at a slower rate in future periods as subscribers migrate to broadband data services.

Cost of services

Cost of services increased approximately $2.5 million, or 3.3%, in 2019 compared with 2018, primarily due to $1.1 million of maintenance costs to support our larger network, a $0.6 million increase in programming and retransmission costs, and $0.4 million of cost goods sold on higher volume, consistent with the increase in equipment revenue, and a $0.5 million in compensation costs.

Cost of services increased approximately $5.0 million, or 6.3%, compared with 2019, primarily driven by higher compensation expense due to the combination of Glo Fiber and Beam start-up expenses, higher incentive accrual from strong operating results driven by growth in our customer base, and COVID supplemental pay for customer interfacing employees.

Selling, general and administrative

Selling, general and administrative expense increased $5.4 million or 19.4% compared with 2018 primarily due to $2.5 million of expenses incurred in the launch of Glo Fiber, $1.5 million in payroll increases and $0.8 million in higher advertising.

Depreciation and amortization

Depreciation and amortization increased $2.6 million or 7.2%, compared with 2018, primarily due to the expansion of our broadband network footprint.

Tower results from operations are summarized as follows:

5 unchanged sentences

Revenue increased approximately $4.1 million, or 31.3%, in 2020 compared with 2019.

This increase was due to 10.1% increase in tenants and 2.5% increase in the lease rate.

This increase was due to a 5.7% increase in tenants and a 23.4% increase in average revenue per tenant driven by amendments to intercompany leases.

Revenue derived from our wireless operations was approximately $14.0 million and $10.0 million in 2020 and 2019, respectively.

Operating expenses

Operating expenses were comparable with the prior year.

Operating expenses increased approximately $1.5 million compared to the prior year period, due primarily to increases in ground lease rent expense and professional services.

Financial Condition, Liquidity and Capital Resources

Sources and Uses of Cash:

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations, proceeds available under our revolving line of credit, and proceeds from dispositions.

As of December 31, 2020 our cash and cash equivalents totaled $195.4 million and the availability under our revolving line of credit was $75.0 million, for total available liquidity of $270.4 million.

Operating activities from continuing operations generated approximately $53.4 million in 2020, representing an increase of $11.0 million compared with 2019, driven by Broadband subscriber growth.

Operating activities from discontinued operations generated $249.5 million as compared to $216.8 million in 2019 driven by a $24.0 million increase due to the resolution of our travel revenue dispute with Sprint and $7.5 million lower advertising expense.

Net cash used in investing activities for continuing operations increased $44.4 million in 2020, compared with 2019 due to the following:

• $53.4 million increase in capital expenditures due primarily to higher spending in the Broadband segment primarily driven by our Glo Fiber market expansion.

• $8.1 million decline in acquisitions.

• Net cash used in investing activities for discontinued operations decreased $54.2 million to $17.5 million during 2020, due to completion of the nTelos and Parkersburg network expansions in the first half of 2019 and postponement of Richmond Sliver territory expansion projects in contemplation of the pending sale of our Wireless operations.

Net cash used in financing activities for continuing operations during 2020 decreased approximately $4.6 million compared with 2019, driven by a $7.2 million decline in share repurchases, partially offset by a $2.5 million increase in dividends paid as our annual dividend increased from $0.29 per share in 2019 to $0.34 per share in 2020.

Net cash used in financing activities for discontinued operations during 2020 decreased $19.1 million primarily due to lower principal payments on our term loans.

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations, and proceeds available under our Credit Agreement.

As of December 31, 2021 our cash and cash equivalents totaled $84.3 million and the availability under our delayed draw term loans and revolving line of credit was $400.0 million, for total available liquidity of $484.3 million.

Operating activities from continuing operations generated approximately $63.5 million in 2021, representing an increase of $10.1 million compared with 2020, driven by higher income from continuing operations offset by changes in working capital.

Operating activities from discontinued operations resulted in a cash outflow of $314.4 million as compared to cash inflows of $249.5 million in 2020 due primarily to approximately $434 million of income tax payments paid on the gain from the 2021 disposition of our Wireless assets and operations and due to the fact that the Wireless business was generating cash flow for the Company for a full year in 2020, compared to only six months in 2021.

Net cash used in investing activities for continuing operations increased $21.6 million in 2021, compared with 2020, primarily due to $39.7 million increase in capital expenditures for our Broadband segment to enable our Glo Fiber and Beam market expansions, and partially offset by a $16.1 million decline in payments made for spectrum licenses.

Proceeds received from the July 1, 2021, disposition of our Wireless assets and operations ("the transaction") or, net cash provided by investing activities for discontinued operations, were approximately $1.9 billion.

The Company used the after-tax proceeds from the sale of our Wireless assets and operations to:

• Repay and terminate approximately $684 million of outstanding term loans under our "Prior Credit Agreement", and associated interest rate swap liabilities, concurrent with the closing of the disposition;

• Issue a special dividend of $18.75 per share to Company shareholders, or approximately $937 million in the aggregate (the "Special Dividend").

• Pay approximately $434 million in income taxes on the transaction in December 2021.

The transaction was accounted for as an asset sale for income tax purposes.

Cash proceeds from the sale were required to be used to immediately repay our outstanding indebtedness;

all principal payments on our debt were therefore presented as cash used to finance our discontinued operations.

Net cash used in financing activities from continuing operations increased approximately $0.9 billion primarily due to the payment of the Special Dividend following the Wireless sale.

Net cash used in financing activities for discontinued operations increased $0.7 billion to due repayment of debt under our Prior Credit Agreement in 2021.

Indebtedness :

As of December 31, 2020, the Company’s indebtedness totaled approximately $698 million, with an annualized overall weighted average interest rate of approximately 2.3%.

As of December 31, 2020, we were in compliance with the financial covenants in our Credit Facility agreement.

Disposition of Wireless :

Shentel currently expects that the after-tax proceeds from the sale of Shentel Wireless will be approximately $1.5 billion.

The transaction will be accounted for as an asset sale for income tax purposes.

Cash proceeds from the sale are required to be used to immediately repay our outstanding indebtedness.

Principal payments on our debt are thus presented as cash used to finance our discontinued operations.

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

• Repay and terminate approximately $702 million of outstanding term loans under our credit agreement, and associated interest rate swap liabilities, concurrent with the closing of the disposition;

• Issue a Special Dividend of $18.75 per share to Shentel’s shareholders;

• Provide adequate liquidity for growth and potential strategic acquisitions;

• Provide liquidity for general corporate purposes.

The Company expects to pay the Special Dividend in the second quarter 2021 after the close of the Shentel Wireless transaction, subject to the approval of Shentel’s Board of Directors.

Following the disposition of Wireless and concurrent repayment of our outstanding term loans, we expect to secure a new credit facility, to assist in funding our strategic initiatives and future growth.

We expect our cash on hand, proceeds received from dispositions, and cash flow from continuing operations will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months.

There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to raise additional financing to support the Company's planned capital expenditures.

We expect our capital expenditures to exceed the cash flow provided from continuing operations through 2023, as we expand our Glo Fiber and Beam broadband services into new markets.

The actual amount and timing of our future capital requirements may differ materially from our estimate depending on the demand for our products and services, the outcome of the sale of our discontinued wireless operations to T-Mobile, new market developments and expansion opportunities.

Our proceeds from dispositions and cash flows from continuing operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, regulatory requirements, changes in technologies, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions.

On July 1, 2021, we entered into a Credit Agreement (the “Credit Agreement”) with various financial institutions party thereto.

The Credit Agreement provides for the following three credit facilities (collectively, the “Facilities”), in an aggregate amount equal to $400 million:

(i) a $100 million five-year revolving credit facility (the “Revolver”), (ii) a $150 million five-year delayed draw amortizing term loan (the “Term Loan A-1”) and (iii) a $150 million seven-year delayed draw amortizing term loan (the “Term Loan A-2” and, together with the Term Loan A-1, the “Term Loans”).

The Credit Agreement includes a provision under which the Company may request that additional term loans be made to it in an amount not to exceed the sum of (1) the greater of (a) $75 million and (b) 100% of Consolidated EBITDA (as defined in the Credit Agreement), calculated on a pro forma basis in accordance with the Credit Agreement, plus (2) an additional unlimited amount subject to a maximum Total Net Leverage Ratio (as defined in the Credit Agreement) of 4.00:1.00, calculated on a pro forma basis in accordance with the Credit Agreement, subject to the receipt of commitments from one or more lenders for any such additional term loans and other customary conditions.

The availability of the Facilities to the Company is subject to the satisfaction or waiver of certain customary conditions set forth in the Credit Agreement.

The Company may use the proceeds from the Revolver and the Term Loans to finance capital expenditures, provide working capital, and for other general corporate purposes, including but not limited to, funding any underfunded amounts of the nTelos pension plan to enable its termination, of the Company and its subsidiaries.

If drawn on, the Term Loans are required to be repaid in quarterly principal installments commencing on September 30, 2023, with the unpaid balance of the Term Loans due at maturity, as set forth in the Credit Agreement.

We have not made any borrowings under the Credit Agreement as of this date.

We expect to start drawing against the Credit Agreement in first quarter of 2022, with additional borrowings occurring as needed to fund the Company's future capital expenditures.

We expect to draw $300 million against the Credit Agreement by June 2023.

We expect our cash on hand, cash flow from continuing operations, and availability of funds from our Credit Agreement, will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months.

We expect our capital expenditures to exceed the cash flow provided from continuing operations through 2025, as we shift our focus to expand our broadband network to support the launch of Glo Fiber to our newly targeted markets covering over 450,000 homes passed.

The actual amount and timing of our future capital requirements may differ materially from our estimates depending on the demand for our products and services, new market developments and expansion opportunities.

Our cash flows from continuing operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions.

Our ability to attract and maintain a sufficient customer base, particularly in our Broadband markets, is critical to our ability to maintain a positive cash flow from operations.

16 unchanged sentences

Installation fees, charged upfront without transfer of commensurate goods or services to the customer, are allocated to services and are recognized ratably over the longer of the contract term or the period in which the unrecognized fee remains material to the contract, which we estimate to be about one year.

Additionally, the Company incurs commission and installation costs related to in-house and third-party vendors which are capitalized and amortized over the expected weighted average customer life which is approximately five years.

Additionally, the Company incurs commission costs which are capitalized and amortized over the expected weighted average customer life which is approximately six years.

Our Broadband segment also provides Ethernet and Wavelength fiber optic services to enterprise and carrier customers under capacity agreements, and the related revenue is recognized over time.

1 unchanged sentence

Those amounts are recognized ratably over the longer of the contract term or the period in which the unrecognized fee remains material to the respective contract.

The Broadband segment also leases dedicated fiber optic strands to customers as part of “dark fiber” agreements, which are accounted for as leases under ASC 842 Leases .

Our Tower segment leases space on owned cell towers to our Wireless and Broadband segments, and to other wireless carriers.

The Broadband segment also leases dedicated fiber optic strands to customers as part of “dark fiber” agreements, which are accounted for as leases under ASC 842 Leases ("ASC 842").

Our Tower segment leases space on owned cell towers to our Broadband segment, and to other wireless carriers.

Revenue from these leases is accounted for under ASC 842.

2 unchanged sentences

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 7. Management’s Discussion and Analysis