What changed in this filing

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Item 1A. Risk Factors

2024-02-21 compared with 2023-02-22 · 103 added, 67 removed, 203 unchanged (46% of the section changed)

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

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 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 preference.

Further, if new competitors offers lower prices, we may need to offer more value to retain our customers driving lower revenue per subscriber.

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 FTTH and cable overbuilds, and approximately 17% of the passings in our incumbent cable business currently have a FTTH or cable competitor.

If competitive overbuilds increase in our incumbent cable service areas, more of our subscribers may select other providers’ offerings based on price, bandwidth speeds, capabilities or personal preference.

Further, if new competitors offer lower prices, we may need to offer more value to retain our customers driving lower revenue per subscriber.

Some 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.

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New competitors in our FTTH markets may lead to lower market share than anticipated and lead to lower returns on investments than originally planned.

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

Consumers are increasingly accessing video content from direct broadcast satellite providers and alternative sources, such as Internet-based “over the top” providers such as Netflix, YouTube TV, Hulu, Disney+, Amazon 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 video services.

Incumbent cable companies like us 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 broadband and video services.

In some areas, direct wireless providers have partnered with large incumbent cable and other telecommunications service providers to offer triple-play services and even quad-play bundles which include wireless plans.

If wireless providers or direct broadcast satellite providers collaborate with large wireline telecommunications service providers 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.

These developments have led to a loss of video subscribers due to “cord cutting” as customers adopt alternative sources of accessing video content.

We expect these trends to continue, which may lead to a decline in the demand, price and profitability of our video services.

The Company’s incumbent cable business faces competition from telephone providers (such as Frontier and Lumos), which have upgraded their networks in certain markets inside of our cable footprint, and FTTH and cable overbuilder providers.

Wireless providers are also entering the market for broadband.

In some areas, wireless providers have partnered with broadband providers to offer quad-play bundles which include broadband, voice, video and wireless.

Additionally, our hybrid fiber coaxial cable network will require upgrades in the future in order to meet expected demand from customers and to maintain network parity with potential FTTH competitors.

These upgrades will require significant capital and management oversight over the next five years.

If we are unable to complete these upgrades or more broadband competition evolves from quad play service offerings or overbuilding activity in our markets, our broadband revenues could be adversely affected in the future.

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

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

We have experienced reductions in the number of access lines and DSL subscriptions to date, and based on industry experience we anticipate that the long-term trend toward

declining subscriber counts will continue.

We have experienced reductions in the number of access lines

and DSL subscriptions to date, and based on industry experience we anticipate that the long-term trend toward declining subscriber counts may continue.

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

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As a result, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2026.

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 and, ultimately, our expansion strategy.

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

Furthermore, our business growth strategy requires us to leverage third party partners to assist with our planned construction and development of our FTTH networks in new markets.

These third party contractors are currently in high demand.

Delays in entering into pole attachment agreements, obtaining franchise agreements, obtaining construction permits, procuring needed contractors, materials or supplies at a reasonable cost, and conducting the construction itself could adversely impact our scheduled construction plans and, ultimately, our expansion strategy.

Furthermore, attaching the Company’s cables to utility poles governed by the pole attachment agreements requires significant coordination with the owners of the utility poles which may result in delays if the owners of the utility poles cannot dedicate sufficient resources to assist in the attachment process.

Similarly, Shentel must coordinate with local utility service providers when installing cables underground to ensure all current infrastructure, such as existing cabling or gas lines, is properly located.

Delays related to locate services may result in delays in Shentel’s overall expansion strategy.

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.

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Our systems depend on physical facilities, including transmission equipment and miles of fiber and cable.

Significant portions of those physical facilities occupy public rights-of-way and are subject to local ordinances and governmental regulations.

Significant portions of those physical facilities occupy land in the public rights-of-way and are subject to local ordinances and governmental regulations.

Other portions occupy private property under express or implied easements, and many miles of the cable are attached to utility poles governed by pole attachment agreements.

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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 Sprint network.

Shentel estimates revenue churn from T-Mobile is expected to be approximately $9 million.

T-Mobile has begun to decommission parts of their recently acquired Sprint network and disconnect backhaul circuits with us.

Shentel estimates the remaining revenue churn from T-Mobile to be approximately $1 million for the Broadband segment and $2 million for the Tower segment.

The churn from T-Mobile may be more than we estimated.

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

We may not be able to successfully compete with these larger competitors to attract new customers and key personnel and retain existing customers and key personnel.

As a result, we could experience lower revenues, higher sales and marketing expenses and lower earnings.

We may not be able to successfully compete with these larger competitors to attract new customers and key personnel and retain existing

customers and key personnel.

As a result, we could experience lower revenues, higher sales and marketing expenses and lower earnings, which could have an adverse effect on our business and our results of operations.

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 and changes in the regulatory environment 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.

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

Climate change could disrupt our operations and our distribution networks, cause us to incur increased costs related to such events, or otherwise negatively affect our business.

Our distribution networks may be subject to weather-related events that could damage our networks and impact service delivery, such as downed transmission lines, flooded facilities, power outages, fuel shortages, network congestion, delay or failure, damaged or destroyed property and equipment, and work interruptions.

It is predicted that warming global temperatures will increase the frequency and severity of such weather-related events.

If 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.

Concern over climate change or other environmental, social and governance (ESG) matters may result in new or increased legal and regulatory requirements to reduce or mitigate the effects of climate change.

Further, climate change regulations may require us to alter our proposed business plans or increase our operating costs due to increased regulation or environmental considerations, and could adversely affect our business and reputation.

Our programming costs are subject to demands for increased payments.

Our programming costs continue to increase and our relative size limits our ability to negotiate more favorable terms, which may have an adverse effect on our business and our results of operations.

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

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

While we pass programming rate increases on to our video customers, we may experience higher churn and lower revenues.

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.

We may not benefit from our acquisition strategy.

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

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, various strains of coronavirus (“COVID-19”) have 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.

The future outbreak of another significant pandemic, like the COVID-19 pandemic, 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.

The COVID-19 pandemic 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 how further outbreaks of COVID-19 or other future pandemics will impact the Company, and there is no guarantee that efforts by Shentel, designed to address adverse impacts of COVID-19 or other pandemics, will be effective.

Although the Company has instituted a distributed-first work environment, further evolution of 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:

Although the Company has instituted a distributed-first work environment, the COVID-19 pandemic did, and 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;

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• 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.

Shentel has implemented policies and procedures designed to mitigate the risk of adverse impacts of a future pandemic on the Company’s operations, but we may still incur additional costs to ensure continuity of business operations caused by future pandemics, which could adversely affect its financial condition and results of operations.

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.

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 disaster recovery measures will be 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.

A disruption of our information technology infrastructure or overall operations, or the infrastructure or operations of certain vendors who provide information technology or overall operations services to us or our customers, could be caused by a natural disaster, energy or manufacturing failure, telecommunications system failure, ransomware attack, cybersecurity attack, 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 operations and information technology infrastructure, there can be no assurance that our security

efforts, business impact planning and disaster recovery measures will be 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.

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

Our earnings, margins and stock price may be adversely impacted by our current cost structure.

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.

We have begun to realign our expenses and to scale for our planned construction and development of our FTTH networks in new markets.

We anticipate that this initiative will take multiple years and will be enabled by certain of our information technology initiatives.

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

Our earnings, margins and stock price may be adversely impacted by our current cost structure as a result of our relative size.

Our sales, general and administrative (“SG&A”) costs, including corporate overhead, are a higher percentage of revenue than larger broadband companies due to a lack of relative scale.

Although our SG&A as a percentage of revenues has declined since the sale of our wireless segment partially enabled by certain of our information technology initiatives, we anticipate it will take multiple years of organic growth, merger and acquisitions to reduce our SG&A as a percentage of revenue to be comparable to our broadband peers.

If we cannot further grow our revenues at a faster pace than our expenses, our earnings and margins may 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.

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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.

Finally, our business growth strategy requires us to leverage third party partners to assist with our planned construction and development of our FTTH networks in new markets.

These third party contractors are currently in high demand.

Should the Company be unable to secure sufficient third party labor contracts or acquire at a reasonable cost, our growth strategy may be impacted.

Should those third-party suppliers be impacted by a shortage of 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.

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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.

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 achieve our operational, sales and financial goals impacting our financial results, financial condition and our stock price.

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 achieve our operational, sales and financial goals impacting 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.

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They may be able to create system disruptions, or cause shutdowns.

Threat actors may be able to develop and deploy viruses, worms, ransomware and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our systems causing operational damage that could impact our ability to serve customers and result in financial losses.

Threat actors may be able to develop and deploy viruses, worms, ransomware and other malicious software programs that attack our products or otherwise exploit security vulnerabilities of our systems causing operational damage that could impact our ability to serve customers and result in financial losses.

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.

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Notification to customers could also result in reputational damage which could result in loss of customers or future customers due to a lack of confidence in our ability to secure their data.

Climate change could disrupt our operations and our distribution networks, cause us to incur increased costs related to such events, or otherwise negatively affect our business.

It is predicted that warming global temperatures will increase the frequency and severity of such weather-related events.

If there are more weather-related events, and should such events impact the region covered by our networks more frequently or more severely than in the past, our revenues and expenses could be materially adversely impacted.

Further, climate change regulations

may require us to alter our proposed business plans or increase our operating costs due to increased regulation or environmental considerations, and could adversely affect our business and reputation.

Risks Relating to the Horizon Transaction

Failure to complete the Horizon Transaction could negatively impact our stock price.

Our ability to complete the Horizon Transaction is subject to risks and uncertainties, including, but not limited to, the risks that we may be unable to obtain the governmental and regulatory approvals required to consummate the Horizon Transaction, or required governmental and regulatory approvals may delay the Horizon Transaction or result in the imposition of conditions that are not favorable to us or that could cause the parties to abandon the Horizon Transaction.

Furthermore, we have incurred approximately $3 million in transaction costs and will continue to incur transaction costs relating to the Horizon Transaction, including legal, accounting, financial advisory, regulatory and other expenses.

In general, these expenses are payable regardless of whether the Horizon Transaction is completed successfully.

In addition, we could face litigation in the event the Horizon Transaction is not consummated, which could subject us to significant liability for damages and result in the incurrence of substantial additional legal fees.

The current market price of our common stock may reflect an assumption that the Horizon Transaction will be consummated, and failure to complete the Horizon Transaction could result in a decline in our stock price.

If completed, the Horizon Transaction may not achieve the intended benefits or may disrupt our current plans and operations.

If we are not able to integrate the business and assets of Horizon in an efficient and effective manner, the anticipated benefits and cost savings may not be realized fully, or at all, or may take longer to realize than expected, and the financial results of our operations may be affected materially and adversely.

An inability to realize the full extent of the anticipated benefits of the Horizon Transaction and the other transactions contemplated by the Horizon Transaction, as well as any delays encountered in the integration process, could have an adverse effect upon our revenues, level of expenses and operating results, which may adversely affect the value of our common stock following the completion of the Horizon Transaction.

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized.

Actual growth and cost synergies from the Horizon Transaction, if achieved, may be lower than what we expect and may take longer to achieve than anticipated.

If we are not able to adequately address integration challenges, we may be unable to successfully integrate the business and assets of Horizon or to realize the anticipated benefits of the Horizon Transaction.

The integration of the business and assets of Horizon will require significant time and focus from our management following the completion of the Horizon Transaction, and may divert attention from our day-to-day operations and our other businesses.

Additionally, consummation of the Horizon Transaction could disrupt current plans and operations, which could delay the achievement of our strategic objectives.

We may be unable to retain our and/or Horizon’s customers, key management personnel and other key employees successfully after the Horizon Transaction is completed, which could materially and adversely affect the future business and operations of the combined company.

The success of the Horizon Transaction will depend in part on our ability to retain customers and retain, motivate and recruit key executives and employees.

It is also possible that key employees currently employed by Horizon and by us may decide to terminate their employment with Horizon or with us, as applicable, while the Horizon Transaction is pending or with us after the Horizon Transaction is consummated.

If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, our business activities may be adversely affected and management’s attention may be diverted from successfully integrating the business and assets of Horizon to hiring suitable replacements, all of which may cause our business to suffer.

In addition, we and Horizon may not be able to locate suitable replacements for any key employees who leave either company, or offer employment to potential replacements on reasonable terms.

Impacts from loss of personnel or issues related to integration or operations during integration activities could result in a loss of customers.

The financial performance of Horizon may be less than historical results, adversely affecting the future financial condition, results of operations and cash flows of the combined company.

The growth of Horizon’s commercial fiber business is dependent on its ability to install service for the contracted customer sales backlog.

Delays in securing pole attachment agreements, permits or completing fiber construction could slow the installation of service and revenue growth.

Financial results could be less than historical performance and adversely affect the combined company financial condition, results of operations and cash flows after closing.

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.

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.

Our operations are subject to varying degrees of regulation by the FCC, the FTC, 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.

Changes to the FCC's Universal Service Fund framework may adversely our Broadband revenue.

Changes to the FCC’s Universal Service Fund framework may adversely impact our Broadband revenue, which may have a material adverse effect on our financial performance and our results of operations.

The FCC’s USF provides regulatory support to rural local exchange carriers to promote universal service and to eligible schools and libraries through the e-rate program to obtain subsidized internet access and telecommunication services.

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Any reduction in the USF from these lawsuits, or other means, could negatively impact the regulatory support revenue received by the Company’s RLEC business and the ability for schools and libraries to pay the Company for internet access and telecommunication services.

The discontinuation of the FCC’s ACP may adversely impact our Broadband revenue, which may have an adverse effect on our financial performance and our results of operations.

The FCC’s ACP provides a $30 subsidy toward internet service for eligible households.

ACP is expected to end in April 2024 unless Congress passes legislation to increase the funding to support this program.

If ACP ends, the Company’s eligible subscribers may not be able to afford broadband service, which could reduce our revenues in our Broadband segment if we are not able to retain subscribers that are currently dependent on the ACP subsidy.

A decrease in subscribers and lower revenue in our Broadband segment may have an adverse effect on our financial performance and our results of operations.

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

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

Our industry is subject to 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.

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Although the Company has executed contracts with several municipalities to reimburse a portion of the costs to construct broadband networks to unserved homes, delays in receipt of the grant payments may adversely affect the Company’s liquidity and our ability to complete our performance obligations.

If we do not receive such grant payments on the expected timeline or at all, we may default on certain financial obligations, which would have an adverse effect on our business and results of operations.

The Company may fail to complete its performance obligations in regard to government grant awards and incur liquidated damages and/or create an event of default that could allow the municipality to cancel the grant.

In 2022, the Company was awarded grants totaling approximately $71 million and entered into contracts with the Virginia Department of Housing and Community Development (DHCD) Virginia Telecommunication Initiative (VATI), Department of Housing and Community Development Office of Statewide Broadband Maryland Infrastructure grant and West Virginia Department of Economic Development Office of Broadband grant.

Most of the grants administered by the above state agencies are funded through the American Rescue Plan Act.

Throughout 2021, 2022 and 2023, in partnership with counties in the respective states, Shentel has been awarded grants under the VATI and the Rural Digital Opportunity Fund in Virginia, the Connect Maryland Network Infrastructure Grant Program in Maryland, and the Major Broadband Projects Strategies and Line Extension Advancement and Development programs in West Virginia.

As of December 31, 2023, the Company has been awarded grants totaling approximately $85.8 million.

Most of the grants awarded under the above programs are funded through the American Rescue Plan Act.

As the recipient of these grants, the Company has committed to expand its broadband network and improve broadband services to approximately 25,000 unserved homes in the states of Virginia, Maryland and West Virginia within a specified period, as agreed to by the Company and each municipality.

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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.

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.

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.

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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 2026 as we invest in our network and subscriber growth and expansion initiatives.

As of December 31, 2022, we had borrowed $75 million in delayed draw term loans under our 2021 credit agreement which contains:

(i) a $100 million, five-year undrawn revolving credit facility, (ii) a $150 million five-year delayed draw amortizing term loan, and (iii) a $150 million seven-year delayed draw amortizing term loan.

As of December 31, 2023, we had borrowed $300 million in delayed draw term loans under our Credit Agreement, dated as of July 1, 2021, with various financial institutions party thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders, as amended by Amendment No.

1 to the Credit Agreement, dated as of May 17, 2023 (collectively, the “Credit Agreement”), which contains:

(i) a $100 million, five-year undrawn revolving credit facility, (ii) a fully drawn $150 million five-year delayed draw amortizing term loan, and (iii) a fully drawn $150 million seven-year delayed draw amortizing term loan.

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.

We may not be able to generate sufficient cash flows

from operations to raise additional capital in amounts necessary for us to repay our outstanding 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, 2023, we had $300 million of total indebtedness.

We expect to borrow the remaining $225 million available under our delayed draw term loans by June 2023 to fund planned capital expenditures aimed at our network and subscriber growth and expansion initiatives.

Our level of indebtedness could have important adverse consequences.

For example, it may:

• increase our vulnerability to general adverse economic and industry conditions, including rising interest rates, because as of December 31, 2022, all of our borrowings were, and may continue to be, subject to variable rates of interest;

• increase our vulnerability to general adverse economic and industry conditions, including rising interest rates;

• 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;

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Failure to comply with financial and operating covenants or make scheduled payments under our Credit Agreement may restrict our ability to borrow and could accelerate repayment of outstanding debt.

Under the credit agreement for our delayed draw term loans, we are required to comply with specified financial and operating covenants in addition to making scheduled payments, which may limit our ability to borrow additional funds to alleviate liquidity constraints and limit our flexibility in planning for, or reacting to, changes in our business

and the industry in which we operate and otherwise limit our ability to operate our business as we otherwise might operate it.

Under the Credit Agreement for our delayed draw term loans, we are required to comply with specified financial and operating covenants in addition to making scheduled payments, which may limit our ability to borrow additional funds to alleviate liquidity constraints and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and otherwise limit our ability to operate our business as we otherwise might operate it.

Our failure to comply with any of these covenants or to meet any payment obligations under the credit agreement could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and unpaid fees, becoming immediately due and payable.

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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, high interest rates, high inflation or high unemployment rates could depress consumer spending, increase our expenses 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.

In addition, any 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, results of operations and cash flows.

We become involved in legal proceedings from time to time.

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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 regulatory fees.

USF contributions and regulatory fees.

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

3 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.

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