SHENANDOAH TELECOMMUNICATIONS CO/VA/ 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer (the certifying officers) have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of December 31, 2023. Our certifying officers concluded that our disclosure controls and procedures were effective as of December 31, 2023. Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance as to the integrity and reliability of the published financial statements. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 framework). Based on its assessment, the Company’s management believes that, as of December 31, 2023, the Company’s internal control over financial reporting is effective based on those criteria. RSM US LLP, an independent registered public accounting firm, which audited the Company’s consolidated financial statements included in this Annual Report, has issued an attestation report on the Company’s internal control over financial reporting containing the disclosure required by this Item. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting . ITEM 9B. OTHER INFORMATION During the year ended December 31, 2023, none of our officers or directors adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408 of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 48 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE See “Executive Officers of the Registrant” in Part 1, Item 1 of this report for information about our executive officers, which is incorporated by reference in this Item 10. Other information required by this Item 10 is incorporated by reference to the Company’s definitive proxy statement for its 2024 Annual Meeting of Shareholders, referred to as the “2024 proxy statement,” which we will file with the SEC on or before 120 days after our 2023 fiscal year end, and which appears in the 2024 proxy statement under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance.” We have adopted a code of ethics applicable to our chief executive officer and all senior financial officers, who include our principal financial officer, principal accounting officer, and persons performing similar functions. The code of ethics, which is part of our Code of Business Conduct and Ethics, is available on our website at www.shentel.com . To the extent required by SEC rules, we intend to disclose any amendments to our code of conduct and ethics, and any waiver of a provision of the code with respect to the Company’s directors, principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, on our website referred to above within four business days following such amendment or waiver, or within any other period that may be required under SEC rules from time to time. ITEM 11. EXECUTIVE COMPENSATION Information required by this Item 11 is incorporated herein by reference to the 2024 proxy statement, including the information in the 2024 proxy statement appearing under the captions “Election of Directors-Director Compensation” and “Executive Compensation.” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required by Item 12 is incorporated herein by reference to the 2024 proxy statement appearing under the caption “Security Ownership.” The Company grants stock awards to its employees meeting certain eligibility requirements under its shareholder-approved Company Stock Incentive Plan, referred to as the 2014 Equity Incentive Plan. The 2014 Equity Incentive Plan authorizes grants of up to an additional 4.2 million shares over a ten-year period beginning in 2014. Outstanding awards and the number of shares available for future issuance as of December 31, 2023 were as follows: Number of securities to be issued upon exercise of outstanding options and RSUs Weighted average exercise price of outstanding options Number of securities remaining available for future issuance 2014 Equity Incentive Plan 1,122,171 $ — 1,521,963 ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information required by Item 13 is incorporated herein by reference to the 2024 proxy statement, including the information in the 2024 proxy statement appearing under the caption “Executive Compensation-Certain Relationships and Related Transactions.” ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information required by Item 14 is incorporated herein by reference to the 2024 proxy statement, including the information in the 2024 proxy statement appearing under the caption “Shareholder Ratification of Independent Registered Public Accounting Firm.” 49 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following is a list of documents filed as a part of this report: (1) Financial Statements (2) Financial Statement Schedule (3) Exhibits The exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index directly following the Financial Statements beginning on page F-1, within this Annual Report on Form 10-K. ITEM 16. FORM 10-K SUMMARY None. 50 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES Index to the Consolidated 2023 Financial Statements Page Reports of Independent Registered Public Accounting Firm as of and for the Year s Ended December 31, 202 3 and 2022 F- 2 Report of Independent Registered Public Accounting Firm for the Year Ended December 31, 2021 F- 5 Consolidated Financial Statements Consolidated Balance Shee ts as of December 31, 2023 and 2022 F- 6 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 F- 7 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021 F- 8 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 F- 9 Notes to Consolidated Financial Statements F- 10 Financial Statement Schedule Valuation and Qualifying Accounts F- 32 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors Shenandoah Telecommunications Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Shenandoah Telecommunications Company and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), shareholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes to the consolidated financial statements and Schedule II – Valuation and Qualifying Accounts (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 21, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Cable franchise rights impairment assessment As described in Notes 2 and 6 to the financial statements, the Company’s indefinite-lived cable franchise rights are $64.3 million as of December 31, 2023. The Company assesses its cable franchise rights for impairment annually on October 1, or more frequently whenever events or substantive changes in circumstances indicate that it is more likely than not that the carrying value of the cable franchise rights exceeds its estimated fair value. In connection with the annual evaluation, the Company first performs a qualitative assessment of whether it is more likely than not that the cable franchise rights are impaired. In the event impairment is more likely than not, the fair value of the cable franchise rights is estimated, and an impairment charge is recognized for any excess of the carrying value over fair value. On October 1, 2023, the Company performed a qualitative analysis and concluded there was no impairment. This analysis involved, among other things, evaluating changes in forecasted revenue, operating margins, capital expenditures, the discount rate, as well as assessing the sensitivity of the estimated fair value of the cable franchise rights, previously determined using an income approach, to these and other relevant changes to valuation inputs on a cumulative basis, which is inherently judgmental and complex. We identified the cable franchise rights impairment assessment as a critical audit matter because of the significant estimates and assumptions management used in the impairment analysis. Auditing management’s judgments used in the impairment assessment regarding forecasts of future revenue, operating margins and capital expenditures and the discount rate, as well as evaluating management’s assessment of the sensitivity of the estimated fair value to the cumulative change in these and other F-2 Table of Contents relevant valuation inputs, involved a high degree of auditor judgment and increased audit effort, including the use of our valuation specialist. Our audit procedures related to the Company’s cable franchise rights impairment assessment included the following, among others: • Obtaining an understanding of the relevant controls related to the Company’s cable franchise rights impairment analysis, and tested such controls for design and operating effectiveness, including controls over management’s review of the significant assumptions and the analysis described above; • Testing management’s process for performing the qualitative impairment assessment by (i) understanding management’s process for updating the forecasted revenue growth rates, operating margins, capital expenditures and estimated discount rate from previous forecasts and estimates, (ii) testing the completeness, accuracy, and relevance of the underlying data used in the updated forecast and discount rate, (iii) comparing these assumptions to historical results and to forecasted information included in external industry reports, and (iv) testing the accuracy of management’s assessment of sensitivity of the fair value of cable franchise rights to the cumulative change in relevant valuation inputs; and • Utilizing our valuation professionals to assist in evaluating the reasonableness of the discount rate. /s/ RSM US LLP We have served as the Company’s auditor since 2022. Boston, Massachusetts February 21, 2024 F-3 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors Shenandoah Telecommunications Company Opinion on the Internal Control Over Financial Reporting We have audited Shenandoah Telecommunications Company’s (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes to the consolidated financial statements and Schedule II – Valuation and Qualifying Accounts of the Company and our report dated February 21, 2024 expressed an unqualified opinion. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ RSM US LLP Boston, Massachusetts February 21, 2024 F-4 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Shenandoah Telecommunications Company: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of comprehensive income (loss), shareholders’ equity, and cash flows of Shenandoah Telecommunications Company and subsidiaries (the Company) for the year ended December 31, 2021, and the related notes and financial statement schedule II – Valuation and Qualifying Accounts (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ KPMG LLP We served as the Company’s auditor from 2001 to 2022. McLean, Virginia February 28, 2022 F-5 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2023 and 2022 (in thousands) 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 139,255 $ 44,061 Accounts receivable, net of allowance for credit losses of $ 886 and $ 776 , respectively 19,782 20,615 Income taxes receivable 4,691 29,755 Prepaid expenses and other 11,782 11,509 Current assets held for sale 561 22,622 Total current assets 176,071 128,562 Investments 13,198 12,971 Property, plant and equipment, net 879,499 687,553 Goodwill and intangible assets, net 81,123 81,515 Operating lease right-of-use assets 50,640 53,859 Deferred charges and other assets 13,698 13,259 Total assets $ 1,214,229 $ 977,719 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt, net of unamortized loan fees $ 7,095 $ 648 Accounts payable 53,546 49,173 Advanced billings and customer deposits 13,241 12,425 Accrued compensation 11,749 9,616 Current operating lease liabilities 3,081 2,829 Accrued liabilities and other 9,643 17,906 Current liabilities held for sale — 3,824 Total current liabilities 98,355 96,421 Long-term debt, less current maturities, net of unamortized loan fees 292,804 74,306 Other long-term liabilities: Deferred income taxes 88,147 84,600 Asset retirement obligations 10,069 9,932 Benefit plan obligations 3,943 3,758 Non-current operating lease liabilities 48,358 50,477 Other liabilities 19,883 20,218 Total other long-term liabilities 170,400 168,985 Commitments and contingencies (Note 14) Shareholders’ equity: Common stock, no par value, authorized 96,000 ; 50,272 and 50,110 issued and outstanding at December 31, 2023 and 2022, respectively — — Additional paid in capital 66,933 57,453 Retained earnings 584,069 580,554 Accumulated other comprehensive income, net of taxes 1,668 — Total shareholders’ equity 652,670 638,007 Total liabilities and shareholders’ equity $ 1,214,229 $ 977,719 See accompanying notes to consolidated financial statements. F-6 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Years Ended December 31, 2023, 2022 and 2021 (in thousands, except per share amounts) 2023 2022 2021 Service revenue and other $ 287,379 $ 267,371 $ 245,239 Operating expenses: Cost of services exclusive of depreciation and amortization 106,101 107,546 102,299 Selling, general and administrative 103,631 92,392 82,451 Restructuring expense — 1,251 1,727 Impairment expense 2,552 5,241 5,986 Depreciation and amortization 65,471 68,899 55,206 Total operating expenses 277,755 275,329 247,669 Operating income (loss) 9,624 ( 7,958 ) ( 2,430 ) Other income (expense): Other income (expense), net 1,387 ( 1,348 ) 8,665 Income (loss) from continuing operations before income taxes 11,011 ( 9,306 ) 6,235 Income tax expense (benefit) 2,973 ( 927 ) ( 1,694 ) Income (loss) from continuing operations 8,038 ( 8,379 ) 7,929 Discontinued operations: Income from discontinued operations, net of tax — — 94,667 Gain on the sale of discontinued operations, net of tax — — 896,235 Total income from discontinued operations, net of tax — — 990,902 Net income (loss) 8,038 ( 8,379 ) 998,831 Other comprehensive income (loss): Unrealized income on interest rate hedges, net of tax 1,668 — 4,706 Comprehensive income (loss) $ 9,706 $ ( 8,379 ) $ 1,003,537 Net income (loss) per share, basic and diluted: Basic - Income (loss) from continuing operations $ 0.16 $ ( 0.17 ) $ 0.16 Basic - Income from discontinued operations, net of tax — — 19.81 Basic net income (loss) per share $ 0.16 $ ( 0.17 ) $ 19.97 Diluted - Income (loss) from continuing operations $ 0.16 $ ( 0.17 ) $ 0.16 Diluted - Income from discontinued operations, net of tax — — 19.76 Diluted net income (loss) per share $ 0.16 $ ( 0.17 ) $ 19.92 Weighted average shares outstanding, basic 50,396 50,155 50,026 Weighted average shares outstanding, diluted 50,715 50,155 50,149 Cash dividends declared per share $ 0.09 $ 0.08 $ 18.82 See accompanying notes to consolidated financial statements. F-7 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY Years Ended December 31, 2023, 2022 and 2021 (in thousands) Shares of Common Stock (no par value) Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balance, December 31, 2020 49,868 $ 47,317 $ 534,440 $ ( 4,706 ) $ 577,051 Net income — — 998,831 — 998,831 Net gain on interest rate swaps, net of tax — — — 4,706 4,706 Dividends declared — — ( 940,347 ) — ( 940,347 ) Stock-based compensation 133 3,661 — — 3,661 Shares surrendered for settlement of employee taxes upon issuance of vested equity awards ( 36 ) ( 1,627 ) — — ( 1,627 ) Balance, December 31, 2021 49,965 49,351 592,924 — 642,275 Net loss — — ( 8,379 ) — ( 8,379 ) Dividends declared — — ( 3,991 ) — ( 3,991 ) Stock-based compensation 194 9,178 — — 9,178 Shares surrendered for settlement of employee taxes upon issuance of vested equity awards ( 49 ) ( 1,076 ) — — ( 1,076 ) Balance, December 31, 2022 50,110 57,453 580,554 — 638,007 Net income — — 8,038 — 8,038 Unrealized gain on interest rate swaps, net of tax — — — 1,668 1,668 Dividends declared — — ( 4,523 ) — ( 4,523 ) Stock-based compensation 231 10,823 — — 10,823 Common stock issued 2 44 — — 44 Shares surrendered for settlement of employee taxes upon issuance of vested equity awards ( 71 ) ( 1,387 ) — — ( 1,387 ) Balance, December 31, 2023 50,272 $ 66,933 $ 584,069 $ 1,668 $ 652,670 See accompanying notes to consolidated financial statements. F-8 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2023, 2022 and 2021 (in thousands) 2023 2022 2021 Cash flows from operating activities: Net income (loss) $ 8,038 $ ( 8,379 ) $ 998,831 Income from discontinued operations, net of tax — — 990,902 Income (loss) from continuing operations 8,038 ( 8,379 ) 7,929 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 64,981 68,175 54,389 Amortization of intangible assets 490 724 817 Accretion of asset retirement obligations 621 531 421 Provision for credit losses 2,898 1,972 1,028 Stock-based compensation expense, net of amount capitalized 10,033 8,528 3,408 Deferred income taxes 2,973 ( 1,414 ) 22,263 Impairment expense 2,552 5,241 5,986 Gain on sale of FCC spectrum licenses ( 1,328 ) — — Other, net ( 504 ) 427 2,208 Changes in assets and liabilities: Accounts receivable ( 189 ) ( 583 ) 163 Current income taxes 25,064 434 ( 25,149 ) Operating lease right-of-use assets 3,614 6,322 4,779 Other assets 5,043 ( 451 ) ( 7,005 ) Accounts payable ( 2,869 ) 19 2,976 Lease liabilities ( 3,098 ) ( 5,471 ) ( 4,333 ) Other deferrals and accruals ( 4,545 ) ( 1,180 ) ( 6,427 ) Net cash provided by operating activities - continuing operations 113,774 74,895 63,453 Net cash used in operating activities - discontinued operations — — ( 314,387 ) Net cash provided by (used in) operating activities 113,774 74,895 ( 250,934 ) Cash flows from investing activities: Capital expenditures ( 256,550 ) ( 189,609 ) ( 160,101 ) Government grants received 1,904 — — Proceeds from the sale of FCC spectrum licenses 17,300 — — Refund received for deposit on FCC spectrum leases — 3,996 — Proceeds from sale of assets and other 655 1,434 366 Net cash used in investing activities - continuing operations ( 236,691 ) ( 184,179 ) ( 159,735 ) Net cash provided by investing activities - discontinued operations — — 1,944,089 Net cash (used in) provided by investing activities ( 236,691 ) ( 184,179 ) 1,784,354 Cash flows from financing activities: Proceeds from credit facility borrowings 225,000 75,000 — Payments for debt issuance costs ( 300 ) — ( 841 ) Dividends paid, net of dividends reinvested ( 4,523 ) ( 3,991 ) ( 940,256 ) Taxes paid for equity award issuances ( 1,387 ) ( 1,076 ) ( 1,627 ) Payments for financing arrangements and other ( 679 ) ( 932 ) ( 1,193 ) Net cash provided by (used in) financing activities - continuing operations 218,111 69,001 ( 943,917 ) Net cash used in financing activities - discontinued operations — — ( 700,556 ) Net cash provided by (used in) financing activities 218,111 69,001 ( 1,644,473 ) Net increase (decrease) in cash and cash equivalents 95,194 ( 40,283 ) ( 111,053 ) Cash and cash equivalents, beginning of period 44,061 84,344 195,397 Cash and cash equivalents, end of period $ 139,255 $ 44,061 $ 84,344 See accompanying notes to consolidated financial statements. F-9 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Operations Shenandoah Telecommunications Company and its subsidiaries (collectively, “Shentel”, “we”, “our”, “us”, or the “Company”) provide broadband data, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic and hybrid fiber coaxial cable networks. We also lease dark fiber and provide 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 a fiber network. All of these operations are contained within our Broadband reporting segment. Our Tower segment owns 219 macro cellular towers and leases colocation space on those towers to wireless communications providers. See Note 15, Segment Reporting , for additional information. Pending Acquisition of Horizon Acquisition Parent LLC On October 24, 2023, Shentel entered into a definitive agreement to acquire 100 % of the equity interests in Horizon Acquisition Parent LLC (“Horizon”) for $ 385 million (the “Horizon Transaction”). Consideration will consist of $ 305 million in cash and $ 80 million of Shentel common stock. Horizon is a leading commercial fiber provider in Ohio and adjacent states serving national wireless providers, carriers, enterprises, and government, education and healthcare customers. Based in Chillicothe, Ohio, Horizon was founded in 1895 as the incumbent local exchange carrier in Ross County, Ohio and rapidly expanded its fiber network over the past 14 years. Most recently, Horizon has pursued a strategy of investing in Fiber-to-the-Home (“FTTH”) in tier 3 & 4 markets in Ohio. Financing • Shentel intends to fund the Horizon Transaction with a combination of existing cash resources, revolving credit facility capacity and an amended and upsized credit facility. The Company has received $ 275 million in financing commitments from CoBank, Bank of America, Citizens Bank, N.A., and Fifth Third Bank, N.A.. This financing is expected to close in conjunction with the Horizon Transaction. • GCM Grosvenor (“GCM”), a selling unit holder of Horizon, will exchange its equity interest in Horizon for 4.08 million shares of Shentel common stock with an aggregate value of $ 80 million based on a reference price of $ 19.60 resulting in GCM owning approximately 7 % of Shentel’s fully diluted common shares after the transaction is closed. • Shentel has entered into a 7 % Participating Exchangeable Perpetual Preferred Stock (“Preferred Stock”) investment agreement with Energy Capital Partners (“ECP”), an existing Shentel shareholder and long-time infrastructure investor, to provide $ 81 million of growth capital to fund the FTTH network expansion, the government grant projects and general corporate purposes. The dividend on the Preferred Stock can be paid in cash or in-kind at the option of the Company. The Preferred Stock can be exchanged for Shentel common stock at an exchange price of $ 24.50 , a 25 % premium to the reference price of $ 19.60 , under certain conditions as outlined in the investment agreement. This financing is expected to close in conjunction with the Horizon Transaction. The closing of the Horizon Transaction remains subject to certain regulatory approvals and other customary closing conditions and is expected to close in the first half of 2024. Note 2. Summary of Significant Accounting Policies Principles of consolidation: The accompanying consolidated financial statements include the accounts of Shenandoah Telecommunications Company and all of its wholly owned subsidiaries. All intercompany accounts and transactions for continuing operations have been eliminated in consolidation. Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States, requires us to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses and related disclosures. Due to the inherent uncertainty involved in making estimates, actual results to be reported in future periods could differ from our estimates. F-10 Table of Contents Revenue recognition: The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from contracts with customers (“ASC 606”). Our Broadband segment provides broadband data, video and voice services to residential, small and midsize businesses (“SMB”) and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic and hybrid fiber coaxial cable networks. The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as an RLEC. Transaction price is measured as the amount billed, which is generally determined by list prices for goods and services less discounts offered. We allocate the total transaction price in these transactions based upon the standalone selling price of each distinct good or service. We generally recognize these revenues over time as customers simultaneously receive and consume the benefits of the service, with the exception of equipment sales and home wiring, which are recognized as revenue at a point in time when control transfers and when installation is complete, respectively. A significant portion of the Company’s revenues are derived from customers who may cancel their subscriptions at any time without penalty. As such, the amount of deferred revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from the Company’s existing customers. 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 approximately one year . Additionally, the Company incurs commission expenses related to in-house and third-party vendors which are capitalized and amortized over the expected customer benefit period. Our Broadband segment also provides Ethernet and Wavelength fiber optic services to commercial fiber customers under capacity agreements, and the related revenue is recognized over time. In some cases, non-refundable upfront fees are charged for connecting commercial fiber customers to our fiber network. Those amounts are recognized ratably over the initial contract term. 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. Advertising costs: The Company expenses advertising costs and marketing production costs as incurred and includes such costs within selling, general and administrative expenses in the consolidated statements of operations. Advertising expense for the years ended December 31, 2023, 2022 and 2021 was $ 11.4 million, $ 6.8 million and $ 4.4 million, respectively. Fair value measurements: The Company measures certain assets and liabilities at fair value. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses the fair value hierarchy to evaluate inputs used in determining the fair value of its assets and liabilities. The three levels of inputs used to measure fair value are (i) observable inputs, such as quoted prices in active markets (level 1); (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (level 2); and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (level 3). The Company remeasures long-lived assets such as property, plant and equipment, intangible assets and goodwill at fair value when they are deemed to be impaired. The fair value of these assets is determined with valuation techniques using the best information available and may include quoted market prices, market comparables or discounted cash flow models. The carrying amounts reported in the Company’s consolidated financial statements for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short-term nature of these financial instruments. The carrying amount of the Company’s long-term debt, which have a floating interest rate, approximates fair value. The Company’s interest rate swaps are marked to market on a quarterly basis and are presented on the consolidated balance sheets at fair value. Cash and cash equivalents: Cash equivalents include all investments with an original maturity of three months or less. The Company places its temporary cash investments with high credit quality financial institutions. Generally, such investments are in excess of FDIC or SIPC insurance limits. F-11 Table of Contents Allowance for credit losses: Accounts receivable have been reduced by an allowance for amounts that may be uncollectible in the future. This estimated allowance is based primarily on the aging category, historical collection experience and management’s evaluation of the financial condition of the customer. The Company writes off accounts receivable balances deemed uncollectible against the allowance for credit losses generally when the account is turned over for collection to an outside collection agency. Investments: The Company investments measured at fair value primarily consist of supplemental executive retirement plan (“SERP”) investments in a rabbi trust as a source of funding for future payments under the plan. The SERP’s investments were designated as trading securities and will be liquidated and paid out to the participants six months after retirement. The benefit obligation to participants is always equal to the value of the SERP assets under ASC 710, Compensation . Changes to the investments’ fair value are presented in Other income, net, while the reciprocal changes in the liability representative of compensatory expense, are presented in selling, general and administrative expense in the Company’s consolidated statements of comprehensive income (loss). The Company’s investments measured at cost primarily consist of CoBank’s Class A common stock derived from the CoBank patronage program. The investment is recognized as the Company’s initial investment in CoBank plus subsequent patronage distributions received from CoBank. Property, plant and equipment: Property, plant and equipment is stated at cost less accumulated depreciation and amortization. The Company capitalizes all costs associated with the purchase, deployment and installation of property, plant and equipment, including interest costs and internal labor costs on major capital projects during the period of their construction. Shentel capitalized $ 5.4 million and $ 0.7 million of interest costs for the years ended December 31, 2023 and 2022, respectively. Maintenance expense is recognized as incurred when repairs are performed that do not extend the life of property, plant and equipment. Expenses for major renewals and improvements, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. Labor costs associated with customer installation activities at existing service locations are expensed as incurred under industry specific guidance. Leasehold improvements are amortized over the lesser of their useful lives or respective lease terms. Land is not depreciated. Refer to Note 5, Property, Plant and Equipment , for additional information. Indefinite-lived intangible assets: Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. Cable franchise rights provide us with the non-exclusive right to provide video services in a specified area. Spectrum licenses are issued by the Federal Communications Commission (“FCC”) and provide us with either an exclusive or priority access right to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communication services. While some cable franchises and spectrum licenses are issued for a fixed time (generally ten years and up to fifteen years , respectively), renewals have been granted routinely and at nominal costs. The Company believes it will be able to meet all requirements necessary to secure renewal of its cable franchise rights and spectrum licenses. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our cable franchises or spectrum licenses and, as a result, we account for cable franchise rights and spectrum licenses as indefinite-lived intangible assets. Indefinite-lived intangible assets are not amortized but rather, are subject to impairment testing annually, in the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is evaluated for impairment based on the identification of reporting units. Our reporting units align with our reportable segments. We evaluated goodwill in each of our reporting units for impairment on October 1, 2023 on the basis of qualitative factors. Our consideration of qualitative factors included but was not limited to macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances, after tax cash flows and market capitalization trends. We concluded that there were no indicators that a reporting unit impairment was more likely than not. We evaluated our cable franchise rights and spectrum licenses for impairment on October 1, 2023 utilizing a qualitative assessment. Our consideration of qualitative factors included but was not limited to macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances, after tax cash flows and market capitalization trends. We concluded that there were no indicators that an impairment of these indefinite-lived intangible assets was more likely than not. Long-lived assets: Finite-lived intangible assets, property, plant, and equipment, and other long-lived assets held for use are amortized or depreciated over their estimated useful lives, as summarized in the respective notes below. These assets are evaluated for impairment based on the identification of asset groups. Our asset groups align with our reportable segments. We evaluated our asset groups for impairment during the fourth quarter of 2023 and concluded that there were no indicators that an F-12 Table of Contents asset group impairment was more likely than not, with the exception of those described in Note 5, Property, Plant and Equipment. Asset retirement obligations: Certain of the Company’s lease agreements contain provisions requiring the Company to restore facilities or remove property in the event that the lease agreement is not renewed. The Company records an estimate for the cost to comply with these provisions based on what a willing third party would charge for the retirement activity on the date of recognizing the asset retirement obligation. Upon retirement of the related asset and performance of the asset retirement activities, the Company derecognizes the asset retirement obligation and records a gain or loss to reflect the difference between the Company’s estimate and the actual cost to retire the asset. Current ARO liabilities are recorded in accrued liabilities and other in the Company’s consolidated balance sheets and noncurrent ARO liabilities are presented in the consolidated balance sheets as “Asset retirement obligations.” Benefit plan obligations: The Benefit Plan Obligations caption includes the following: ($ in thousands) December 31, 2023 December 31, 2022 Postretirement medical benefits plan $ 1,653 $ 1,869 Supplemental executive retirement plan 2,290 1,889 Total $ 3,943 $ 3,758 Prior to December 31, 2023, Shentel maintained a frozen defined benefit plan. Benefits under the plan vested after five years of plan service and were based on years of service and an average of the five highest consecutive years of compensation subject to certain reductions if the employee elects to receive the benefit prior to age 65 . This plan was amended on December 31, 2012, to freeze future benefit plan accruals for participants. On October 13, 2021, Shentel’s Board of Directors adopted a resolution to terminate its pension plan. The Company terminated the pension plan and all benefits were distributed in June 2023 through the combination of lump sum payments and the purchase of non-participating annuity contracts at the option of the pension plan participants. The Company made an additional $ 2.9 million contribution from its cash balance as a result of the settlement and recognized a settlement gain of $ 0.7 million in other income (expense) for the year ended December 31, 2023. As of December 31, 2022, the fair value of our pension plan assets were $ 21.3 million. These investments were held in mutual funds and were valued based on the net asset value per share. Our pension plan’s projected benefit obligation was $ 24.7 million, at December 31, 2022, determined using a discount rate of 4.90 %. The net benefit plan obligation for the pension plan, with a balance of approximately $ 3.4 million, is presented in accrued liabilities and other in the Company’s consolidated balance sheet at December 31, 2022. The postretirement medical benefits plan is a frozen, unfunded, defined benefit plan. The postretirement plan liability was discounted at 4.9 % and 5.0 % at December 31, 2023 and 2022, respectively. The SERP is a benefit plan that provides deferred compensation to certain employees. The Company holds investments in a rabbi trust as a source of funding for future payments under the plan. The SERP’s investments were designated as trading securities and will be liquidated and paid out to the participants upon retirement. The benefit obligation to participants is always equal to the value of the SERP assets under ASC 710 Compensation. Changes to the investments’ fair value are presented in Other income, net, while the reciprocal changes in the liability representative of compensatory expense, are presented in selling, general and administrative expense in the Company’s consolidated statements of comprehensive income (loss). Leases: The Company leases various telecommunications sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company’s incremental borrowing rate in order to measure the lease liability and right-of-use asset. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. Income taxes: The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated F-13 Table of Contents financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. In assessing the ability to realize deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generating future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years if available and tax planning strategies in making this assessment. Based upon the level of historical taxable income, projections for future taxable income over the periods for which the deferred tax assets are deductible, and the option to elect out of bonus depreciation on in-serviced fixed assets, the Company believes it more likely than not that the net deferred tax assets will be realized. The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on the tax return. Changes in the estimate are recorded in the period in which such determination is made. Stock-based compensation: The cost of employee services received in exchange for share-based awards classified as equity is measured using the estimated fair value of the award on the date of the grant, and the related expense is recorded over the recipient’s respective service period. The fair value for the Company’s restricted stock units (“RSUs”) are determined using the Company’s stock price and the fair value for the Company’s Relative Total Shareholder Return (“RTSR”) awards are determined using a Monte Carlo simulation. The Company records forfeitures for its RSUs and RTSRs as they occur. Certain of the Company’s share-based awards contain retirement clauses which state that awards will continue to vest without the requirement of continuous employment after a participant achieves certain service- and age-based requirements (“Retirement Eligibility”). The Company accelerates expense associated with eligible awards for employees who have achieved Retirement Eligibility on the later of the grant date or the date in which Retirement Eligibility is achieved. Government grants: Shentel receives grants from the U.S. Government and its agencies, as well as various state governments under various programs designed to fund telecommunications operations and broadband infrastructure expansion into rural or underserved areas. The grant programs are evaluated to determine if they represent grants related to revenue or capital expenditures. Grants for revenue and operating activities are recorded as other revenue in the Company’s consolidated statements of comprehensive income (loss) as the services are provided. Grants for capital expenditures are recorded as a reduction to the corresponding property, plant and equipment asset balance and are recognized through a reduction in depreciation expense over the life of the corresponding asset in the Company’s consolidated statements of operating income (loss). Government grants related to revenue and operations are classified as operating cash inflows and grants for capital expenditures are classified as investing cash inflows. The Company monitors government grants for requirements to ensure that conditions related to grants have been met and there is reasonable assurance that the Company will be able to retain the grant proceeds and to ensure that any contingencies that may arise from not meeting the conditions are appropriately recognized. See Note 13, Government Grants for additional information. Segments: The Company’s chief operating decision maker (“CODM”) regularly reviews the Company’s results to assess performance and allocates resources at the level of the Company’s two operating segments, Broadband and Tower. Given the differences in the characteristics of the Company’s operating segments, management has determined that the operating segments cannot be combined into one reportable segment. As such, the Company has two reportable segments, Broadband and Tower. New Accounting Standards In October 2023, the FASB issued ASU 2023-06, “ Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, ” (“ASU 2023-06”) which aligns the disclosure and presentation requirements of a variety of the FASB’s ASC Topics with the requirements described in the SEC’s Disclosure Update and Simplification Initiative. ASU 2023-06 will become effective for each amendment on the effective date of the SEC’s F-14 Table of Contents corresponding disclosure rule changes. The Company is currently assessing the impact of adopting ASU 2023-06 on the consolidated financial statements and related disclosures. In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, ” (“ASU 2023-07”). The amendments in ASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. These enhanced disclosures requirements also include, but are not limited to, the requirement to disclose other segment items by reportable segment, the title and the position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact of adopting ASU 2023-07 on the consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures, ” (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The Company is currently assessing the impact of adopting ASU 2023-09 on the consolidated financial statements and related disclosures. Note 3. Revenue from Contracts with Customers Contract Assets The Company’s contract assets primarily include commissions incurred to acquire contracts with customers. The Company incurs commission expenses related to in-house and third-party vendors which are capitalized and amortized over the expected customer benefit period which is approximately six years . The Company’s current contract assets are included in prepaid expenses and other and the Company’s non-current contract assets are included in deferred charges and other assets in its consolidated balance sheets. Amortization of capitalized commission expenses is recorded in selling, general and administrative expenses in the Company’s consolidated statements of comprehensive income (loss). The following tables present the activity of current and non-current contract assets: (in thousands) 2023 2022 Beginning Balance $ 8,646 $ 8,147 Commission payments 3,138 3,355 Contract asset amortization ( 3,151 ) ( 2,856 ) Ending Balance $ 8,633 $ 8,646 Contract Liabilities The Company’s contract liabilities include services that are billed in advance and recorded as deferred revenue, as well as installation fees that are charged upfront without transfer of commensurate goods or services to the customer. The Company’s current contract liabilities are included in advanced billings and customer deposits in its consolidated balance sheets and the Company’s non-current contract liabilities are included in other liabilities in its consolidated balance sheets. Shentel’s current contract liability balances were $ 10.0 million and $ 9.5 million as of December 31, 2023 and 2022, respectively. Shentel’s non-current contract liability balances were $ 1.0 million and $ 1.9 million as of December 31, 2023 and 2022, respectively. Shentel expects its current contract liability balances to be recognized as revenues during the twelve-month periods following the respective balance sheet dates and its non-current contract liability balances to be recognized as revenues after the twelve-month periods following the respective balance sheet dates. No customer accounted for more than 10% of revenue for the years ended December 31, 2023, 2022, and 2021 and no customer made up more than 10% of accounts receivable at December 31, 2023 and 2022. See Note 15, Segment Reporting , for a summary of the Company’s revenue streams. F-15 Table of Contents Note 4. Investments Investments consist of the following: (in thousands) December 31, 2023 December 31, 2022 SERP investments at fair value $ 2,290 $ 1,889 Cost method investments 10,675 10,749 Equity method investments 233 333 Total investments $ 13,198 $ 12,971 SERP investments at fair value: The fair value of the SERP investments are based on unadjusted quoted prices in active markets and are classified as Level 1 of the fair value hierarchy. Cost method investments : Our investment in CoBank’s Class A common stock, derived from the CoBank patronage program, represented substantially all of our cost method investments with a balance of $ 10.1 million and $ 10.0 million at December 31, 2023 and 2022, respectively. We recognized approximately $ 0.5 million, $ 0.1 million and $ 2.0 million of patronage income in other income (expense) in 2023, 2022 and 2021, respectively. The Company expects that approximately 88 % of the patronage distributions will be collected in cash and 12 % in equity in 2024. Equity method investments: At December 31, 2022, the Company had a 20.0 % ownership interest in Valley Network Partnership (“ValleyNet”). During 2023, ValleyNet ceased operations and was dissolved. In April 2023, Shentel received a payment of $ 0.1 million, representing Shentel’s remaining capital in the partnership, and the investment balance was derecognized from Shentel’s consolidated balance sheets. Prior to the commencement of dissolution proceedings, the Company and ValleyNet purchased capacity on one another’s fiber network, through related party transactions. F-16 Table of Contents Note 5. Property, Plant and Equipment Property, plant and equipment consist of the following: ($ in thousands) Estimated Useful Lives December 31, 2023 December 31, 2022 Land $ 3,692 $ 3,722 Land improvements 10 years 4,448 3,483 Buildings and structures 10 - 45 years 95,436 93,461 Cable and fiber 15 - 30 years 799,612 593,771 Equipment and software 4 - 8 years 337,808 317,347 Plant in service 1,240,996 1,011,784 Plant under construction 145,710 144,534 Total property, plant and equipment 1,386,706 1,156,318 Less: accumulated depreciation and amortization ( 507,207 ) ( 468,765 ) Property, plant and equipment, net $ 879,499 $ 687,553 Property, plant and equipment, net increased due primarily to capital expenditures in the Broadband segment driven by our Glo Fiber market expansion. The Company’s accounts payable as of December 31, 2023 and 2022 included amounts associated with capital expenditures of approximately $ 51.1 million and $ 43.8 million, respectively. Depreciation and amortization expense was $ 65.0 million, $ 68.2 million, and $ 54.4 million for the years ended December 31, 2023, 2022, and 2021, respectively. During year ended December 31, 2023, the Company disposed of fully depreciated property, plant and equipment assets, which reduced plant in service by approximately $ 26.0 million, with a corresponding offset to accumulated depreciation and amortization. The majority of disposals related to Beam assets as a result of the cessation of Beam assets described in the following paragraph. In the fourth quarter of 2021, due to the availability of grants awarded under various governmental initiatives in support of rural FTTH broadband network expansion projects, we decided to cease further expansion of our Beam branded fixed wireless edge-out strategy, which is offered under our Broadband segment. During the second quarter of 2022, the Company permanently ceased operating 20 of our 55 Beam fixed wireless sites. Consequently, Shentel recorded an impairment charge of $ 4.1 million. The Company ceased its remaining Beam operations in the fourth quarter of 2022 and accelerated depreciation for remaining Beam network assets, which were expected to have limited use through 2023. Shentel recorded $ 7.4 million in accelerated depreciation during the year ended December 31, 2022 and impaired the remaining $ 1.5 million of Beam property, plant and equipment assets during the year ended December 31, 2023. Shentel also recorded $ 1.3 million in restructuring costs related to severance and other exit costs associated with the cessation of Beam operations during the year ended December 31, 2022. No restructuring costs related to Beam were recorded during the year ended December 31, 2023. F-17 Table of Contents Note 6. Goodwill and Intangible Assets The Company’s goodwill and intangible assets consist of the following: December 31, 2023 December 31, 2022 (in thousands) Gross Carrying Amount Accumulated Amortization and Other Net Gross Carrying Amount Accumulated Amortization and Other Net Goodwill - Broadband $ 3,244 $ — $ 3,244 $ 3,244 $ — $ 3,244 Indefinite-lived intangibles: Cable franchise rights $ 64,334 $ — $ 64,334 $ 64,334 $ — $ 64,334 FCC spectrum licenses 12,122 — 12,122 12,122 — 12,122 Railroad crossing rights 217 — 217 141 — 141 Total indefinite-lived intangibles 76,673 — 76,673 76,597 — 76,597 Finite-lived intangibles: Subscriber relationships 28,425 ( 27,370 ) 1,055 28,425 ( 26,910 ) 1,515 Other intangibles 510 ( 359 ) 151 488 ( 329 ) 159 Total finite-lived intangibles 28,935 ( 27,729 ) 1,206 28,913 ( 27,239 ) 1,674 Total goodwill and intangible assets $ 108,852 $ ( 27,729 ) $ 81,123 $ 108,754 $ ( 27,239 ) $ 81,515 Amortization expense was $ 0.5 million, $ 0.7 million and $ 0.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. On August 23, 2022, the Company entered into a definitive asset purchase agreement (the “Spectrum Purchase Agreement”) with a wireless carrier pursuant to which the Company agreed to sell certain FCC spectrum licenses and leases utilized in the Company’s Beam branded fixed wireless service for total consideration of approximately $ 21.1 million, composed of $ 17.3 million cash and approximately $ 3.8 million of liabilities to be assumed by the wireless carrier (the “Spectrum Transaction”). As a result of the expected sale, the Company concluded that the FCC spectrum licenses met the held for sale criteria. Accordingly, $ 13.8 million of indefinite-lived licenses and $ 5.9 million of finite-lived licenses are presented as held for sale, along with the corresponding $ 3.8 million of operating lease liabilities related to the finite-lived licenses, as of December 31, 2022. Upon the closing of the Spectrum Transaction on July 6, 2023, the respective balances were derecognized, resulting in a gain of $ 1.3 million recorded in other income (expense) . The Company evaluated these events and determined that the Spectrum Transaction does not represent a strategic shift in the Company’s business. Our finite-lived intangible assets are amortized over the following estimated useful lives: Estimated Useful Life Subscriber relationships 3 - 10 years Other intangibles 15 - 20 years F-18 Table of Contents The following table summarizes expected amortization of intangible assets at December 31, 2023: (in thousands) Amortization of Intangible Assets 2024 $ 492 2025 486 2026 105 2027 67 2028 19 Thereafter 37 Total $ 1,206 Note 7. Other Assets and Accrued Liabilities Prepaid expenses and other, classified as current assets, included the following: (in thousands) December 31, 2023 December 31, 2022 Prepaid maintenance expenses $ 5,157 $ 7,444 Broadband contract acquisition costs 2,675 2,809 Interest rate swaps 1,443 — Other 2,507 1,256 Prepaid expenses and other $ 11,782 $ 11,509 Deferred charges and other assets, classified as long-term assets, included the following: (in thousands) December 31, 2023 December 31, 2022 Broadband contract acquisition costs $ 5,958 $ 5,837 Interest rate swaps 798 — Prepaid expenses and other 6,942 7,422 Deferred charges and other assets $ 13,698 $ 13,259 F-19 Table of Contents Accrued liabilities and other, classified as current liabilities, included the following: (in thousands) December 31, 2023 December 31, 2022 Accrued programming costs $ 3,209 $ 3,306 Pension plan — 3,341 Other current liabilities 6,434 11,259 Accrued liabilities and other $ 9,643 $ 17,906 Other liabilities, classified as long-term liabilities, included the following: (in thousands) December 31, 2023 December 31, 2022 Noncurrent portion of deferred lease revenue $ 18,194 $ 18,679 Noncurrent portion of financing leases 1,395 1,500 Other 294 39 Other liabilities $ 19,883 $ 20,218 Restructuring Activities During 2021, as a result of the sale of our Wireless assets and operations, we implemented a restructuring plan whereby certain employees were notified of their pending dismissal under the workforce reduction program. We made $ 1.7 million and $ 2.1 million in severance payments for the years ended December 31, 2022 and 2021, respectively. For the year ended December 31, 2021, we recognized expenses of $ 1.7 million and $ 2.2 million, presented in continuing and discontinued operations, respectively. No restructuring expenses were incurred during the year ended December 31, 2023. Asset Retirement Obligations: Below is a summary of our current and non-current asset retirement obligations: Years Ended December 31, (in thousands) 2023 2022 2021 Balance at beginning of year $ 11,368 $ 9,824 $ 5,113 Additional asset retirement obligations recorded and changes to prior estimates ( 111 ) 1,198 4,290 Liabilities settled ( 1,000 ) ( 185 ) — Accretion expense 621 531 421 Balance at end of year $ 10,878 $ 11,368 $ 9,824 Note 8. Leases The Company leases various broadband network and telecommunications sites, fiber optic cable routes, warehouses, retail stores and office facilities for use in our business. The components of lease costs were as follows: F-20 Table of Contents Classification Years Ended December 31, (in thousands) 2023 2022 2021 Finance lease cost Amortization of leased assets Depreciation $ 477 $ 477 $ 498 Interest on lease liabilities Interest expense 78 83 95 Operating lease cost Operating expense 1 6,982 7,570 7,063 Lease cost $ 7,537 $ 8,130 $ 7,656 _________________________________________ (1) Operating lease expense is presented in cost of service or selling, general and administrative expense based on the use of the relevant facility. The following table summarizes the expected maturity of lease liabilities at December 31, 2023: (in thousands) Operating Leases Finance Leases Total 2024 $ 5,626 $ 178 $ 5,804 2025 5,555 180 5,735 2026 4,702 153 4,855 2027 3,874 155 4,029 2028 3,539 158 3,697 2029 and thereafter 61,732 1,201 62,933 Total lease payments 85,028 2,025 87,053 Less: interest ( 33,589 ) ( 526 ) ( 34,115 ) Present value of lease liabilities $ 51,439 $ 1,499 $ 52,938 December 31, 2023 December 31, 2022 Operating leases Weighted average remaining lease term (years) 19.2 19.8 Weighted average discount rate 4.9 % 4.5 % Finance leases Weighted average remaining lease term (years) 12.3 13.1 Weighted average discount rate 5.2 % 5.2 % Years Ended December 31, (in thousands) 2023 2022 2021 Cash paid for operating lease liabilities $ 6,379 $ 6,116 $ 5,643 Operating lease right-of-use assets obtained in exchange for new lease liabilities (includes new leases or modifications of existing leases) $ 2,037 $ 2,527 $ 11,140 The Company recognized $ 18.5 million, $ 18.4 million and $ 11.1 million of operating lease revenue for the years ended December 31, 2023, 2022 and 2021, respectively, related to the cell site colocation space and dedicated fiber optic strands that we lease to our customers, which is included in service revenue and other in the consolidated statements of comprehensive income (loss). Substantially all of our lease revenue relates to fixed lease payments. Below is a summary of our contractual minimum rental receipts expected under the lease agreements in place at December 31, 2023: F-21 Table of Contents (in thousands) Operating Leases 2024 $ 16,508 2025 15,574 2026 12,517 2027 11,022 2028 9,529 2029 and thereafter 16,275 Total $ 81,425 Note 9. Debt On May 17, 2023, Shentel entered into Amendment No. 1 to Credit Agreement (the “Amendment”) to its existing 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, the “Credit Agreement”), which contains (i) a $ 100 million, five-year undrawn revolving credit facility (the “Revolver”), (ii) a $ 150 million five-year delayed draw amortizing term loan (“Term Loan A-1”) and (iii) a $ 150 million seven-year delayed draw amortizing term loan (“Term Loan A-2” and collectively with Term Loan A-1, the “Term Loans”). The following loans were outstanding under the Credit Agreement: (in thousands) December 31, 2023 December 31, 2022 Term loan A-1 $ 150,000 $ 37,500 Term loan A-2 150,000 37,500 Total debt 300,000 75,000 Less: unamortized loan fees ( 101 ) ( 46 ) Total debt, net of unamortized loan fees $ 299,899 $ 74,954 The Amendment extended the period during which the Company could borrow under the Term Loans from July 1, 2023 to December 31, 2023. The Amendment also extended the date on which the Term Loans must begin to be repaid in quarterly principal installments from September 30, 2023 to March 31, 2024. In addition, the Amendment amended the Credit Agreement to update the benchmark interest rate from the one-month term London Inter-Bank Offered Rate (“LIBOR”) to a rate based on the one-month term Secured Overnight Financing Rate (“SOFR”), added a 10 bps credit spread adjustment for loans that bear interest based on Term SOFR and made certain other conforming changes. All other material terms and conditions of the Credit Agreement were unchanged. Management evaluated the amendment and concluded that the amendment was a modification of the existing Credit Agreement and, therefore, modification accounting was applied. Both Term Loan A-1 and Term Loan A-2 bore interest at one-month LIBOR plus a margin of 1.60 % until May 2023 and now bears interest at one-month term SOFR plus a margin of 1.60 %. The margin of 1.60 % is variable and determined by the Company’s net leverage ratio. Interest is paid monthly. The interest rate was 6.95 % and 5.89 % at December 31, 2023 and December 31, 2022, respectively. Our cash payments for interest were $ 8.4 million, $ 0.6 million and $ 10.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. Interest paid in 2021 was incurred and paid under a prior credit agreement which was repaid in connection with the sale of the Wireless business in 2021. See Note 16, Discontinued Operations , for details concerning the sale of the Wireless business. Shentel is charged commitment fees on unutilized portions of its Revolver and Term Loans. The Company recorded $ 0.5 million, $ 0.7 million and $ 0.5 million related to these fees for the year ended December 31, 2023, 2022 and 2021, respectively, which are included in other (expense) income, net in the consolidated statements of comprehensive income (loss). The Credit Agreement includes various covenants, including total net leverage ratio and debt service coverage ratio financial covenants. Shentel’s Term Loans require quarterly payments based on a percentage of the outstanding balance. Based on the outstanding balance as of December 31, 2023, Term Loan A-1 requires quarterly principal repayments of $ 0.9 million from March 31, 2024 through June 30, 2024; then increasing to $ 1.9 million quarterly from September 30, 2024 through March 31, 2026, with the remaining balance due June 30, 2026. Based on the outstanding balance as of December 31, 2023, Term Loan A-2 requires quarterly principal repayments of $ 0.4 million through March 31, 2028, with the remaining balance due June 30, 2028. F-22 Table of Contents The following table summarizes the expected payments of Shentel’s outstanding borrowings as of December 31, 2023: (in thousands) Amount 2024 $ 7,125 2025 9,000 2026 138,375 2027 1,500 2028 144,000 Total $ 300,000 Shentel has not made any borrowings under its Revolver as of December 31, 2023. In the event borrowings are made in the future, the entire outstanding principal amount borrowed is due June 30, 2026. The Credit Agreement is fully secured by a pledge and unconditional guarantee from the Company and all of its subsidiaries, except Shenandoah Telephone Company. This provides the lenders a security interest in substantially all of the assets of the Company. Note 10. Derivatives and Hedging During the second quarter of 2023, Shentel entered into pay fixed ( 2.90 %), receive variable (one-month term SOFR) interest rate swaps totaling $ 150.0 million of notional principal (the “Swaps”). The Swaps contain monthly payment terms beginning in May 2024, which extend through their maturity dates in June 2026. The Swaps are designated as cash flow hedges, representing 50 % of the Company’s expected outstanding debt. The Company uses the Swaps to manage its exposure to interest rate risk for its long-term variable-rate Term Loans. The table below presents the fair value of the Swaps as well as their classification in the consolidated balance sheets. The fair value of these instruments was estimated using an income approach and observable market inputs (Level 2): (in thousands) December 31, 2023 Balance sheet line items containing derivative financial instruments: Prepaid expenses and other $ 1,443 Deferred charges and other assets 798 Total fair value of derivatives designated as hedging instruments $ 2,241 The Swaps were determined to be highly effective hedges and therefore all change in the fair value of the Swaps was recognized in other comprehensive income. The Company recognized $ 1.7 million of unrealized gains net of deferred taxes totaling $ 0.6 million for 2023. Since the Company did not have outstanding interest rate swaps in the prior year period, there were no gains or losses recorded for 2022. Shentel expects to begin reclassifying amounts related to the Swaps from accumulated other comprehensive income to interest expense in May 2024, when the payment periods of the Swaps begin. The Company previously held interest rate swaps that were designated as cash flow hedges related to variable-rate long-term debt that were settled in connection with the sale the Company’s Wireless assets and operations described in Note 16, Discontinued Operations. Similar to the Company’s current Swaps, these interest rate swaps were used to manage its exposure to interest rate risk. These interest rate swaps were determined to be highly effective hedges their through the settlement dates in 2021. Upon settlement in 2021, the Company reclassified the remaining balance from accumulated other comprehensive income to the Company’s consolidated statements of comprehensive income (loss), resulting in a net gain on interest rate swaps of $ 4.7 million. F-23 Table of Contents Note 11. Income Taxes The Company files a consolidated U.S. federal income tax return and various state income tax returns. The provision for the federal and state income taxes attributable to income (loss) consists of the following components: Years Ended December 31, (in thousands) 2023 2022 2021 Current expense (benefit) Federal taxes $ — $ 673 $ ( 21,392 ) State taxes ( 170 ) ( 186 ) ( 2,565 ) Total current provision ( 170 ) 487 ( 23,957 ) Deferred expense (benefit) Federal taxes 3,851 ( 1,119 ) 25,518 State taxes ( 708 ) ( 295 ) ( 3,255 ) Total deferred expense (benefit) 3,143 ( 1,414 ) 22,263 Income tax expense (benefit) $ 2,973 $ ( 927 ) $ ( 1,694 ) Effective tax rate 27.0 % 10.0 % ( 27.2 ) % A reconciliation of income tax expense (benefit) determined by applying the federal and state tax rates to income before income taxes is as follows: Years Ended December 31, (in thousands) 2023 2022 2021 Expected tax expense (benefit) at federal statutory $ 2,312 $ ( 1,954 ) $ 1,310 State income tax expense (benefit), net of federal tax effect 657 ( 410 ) 438 Revaluation of deferred tax liabilities ( 1,373 ) — ( 5,206 ) Stranded tax effects reclassified from other comprehensive income — — 1,620 Excess tax deficiency from share-based compensation and other expense, net 854 818 144 Valuation allowance 523 619 — Income tax expense (benefit) $ 2,973 $ ( 927 ) $ ( 1,694 ) The change in effective tax rate between 2023 and 2022 was primarily a result of higher pre-tax income in 2023. The Company received $ 25.6 million in cash refunds for income taxes for the year ended December 31, 2023. The Company’s cash payments for income taxes were $ 0.1 million, $ 0.1 million, and $ 11.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. F-24 Table of Contents Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply in the year of reversal or settlement and arise from temporary differences between the US GAAP and tax bases of the following assets and liabilities: (in thousands) December 31, 2023 December 31, 2022 Deferred tax assets: Net operating loss carry-forwards $ 59,814 $ 28,398 Leases 14,208 14,809 Asset retirement obligations 2,827 2,972 Benefit plan obligations 1,017 978 Accruals and stock-based compensation 4,075 3,087 Other 7,441 5,767 Total gross deferred tax assets 89,382 56,011 Less valuation allowance ( 523 ) ( 619 ) Net deferred tax assets 88,859 55,392 Deferred tax liabilities: Property, plant and equipment 146,302 109,852 Leases 13,616 14,541 Intangible assets 13,837 12,867 Prepaid assets and other 3,251 2,732 Total gross deferred tax liabilities 177,006 139,992 Net deferred tax liabilities $ 88,147 $ 84,600 The Company has a deferred tax asset of $ 59.8 million related to federal and various state net operating losses. As of December 31, 2023, the Company had approximately $ 261.8 million of federal net operating losses, including approximately $ 236.9 million of federal net operating losses generated after 2017. Federal net operating losses generated prior to 2018 expire through 2027. The Company also had approximately $ 97.2 million of state net operating losses, which can be carried forward indefinitely. The Company’s income tax expense (benefit) for the years ended December 31, 2023 and 2022 included tax expense of $ 0.5 million and $ 0.6 million, respectively, for the valuation allowance on deferred tax assets related to federal net operating losses expected to expire unused. The Company recorded no valuation allowances prior to December 31, 2022. As of December 31, 2023 and 2022, the Company had no unrecognized tax benefits. The Company’s returns are generally open to examination from 2020 forward and the net operating losses acquired from nTelos are open to examination from 2004 forward. The Company is currently involved in one state income tax audit and no federal income tax audits as of December 31, 2023. Note 12. Stock Compensation, Earnings per Share, and Dividends The Company’s 2014 Equity Incentive Plan (the “2014 Plan”) allows for the grant of equity based incentive compensation to all employees. The 2014 Plan authorized grants of up to an additional 4,200,000 shares over a ten-year period beginning in 2014. As of December 31, 2023, approximately 1,521,963 shares remained available for future issuance under the 2014 Plan. The 2014 Plan expired on February 18, 2024 and the Company’s Board of Directors approved the resolution to adopt the 2024 Equity Incentive Plan (the “2024 Plan”) on February 13, 2024. The Board of Directors has recommend the plan to be presented to the shareholders of the Company at the April 30, 2024 Annual Shareholder Meeting to vote for the approval of the 2024 Plan. The 2024 Plan will authorize grants of up to an additional 3,000,000 shares over a ten-year period beginning no sooner than the effective date of March 1, 2024. Under the 2014 Plan and the 2024 Plan, grants may take the form of stock awards, awards of options to acquire stock, stock appreciation rights and other forms of equity based compensation; both options to acquire stock and stock awards were granted. As of December 31, 2023, the only forms of stock awards outstanding are RSUs and RTSRs. The Company granted approximately 385,000 RSUs at a weighted average grant price of $ 19.05 to employees and directors during the year ended December 31, 2023. Approximately 200,000 RSUs with a weighted average grant price of $ 25.01 vested and 9,000 RSUs with a weighted average grant price of $ 21.67 were forfeited during the year ended December 31, 2023. The F-25 Table of Contents total fair value of RSUs vested was $ 5.0 million during the year ended December 31, 2023. Approximately 825,000 RSUs with a weighted average grant price of $ 21.16 remained outstanding as of December 31, 2023. The Company granted approximately 134,000 RTSRs at a weighted average grant price of $ 23.64 to employees during the year ended December 31, 2023. Approximately 30,000 RTSRs with a weighted average grant price of $ 36.27 vested and no RTSRs were forfeited during the year ended December 31, 2023. The total fair value of RTSRs vested was $ 1.1 million during the year ended December 31, 2023. Approximately 293,000 RTSRs with a weighted average grant price of $ 25.80 remained outstanding as of December 31, 2023. As described above, the amount of RTSRs issued are adjusted on the vesting date. The vested amounts above exclude the vesting date adjustment and issuance of RTSRs based on actual performance, which totaled approximately 13,000 RTSRs, resulting in lower shares issued upon vesting of the RTSRs than originally granted. The Company’s RSUs generally have service conditions only or performance and service conditions with vesting periods ranging from one year for directors to five years for employees. RTSR awards vest approximately three years from the grant date. The performance condition applied to the RTSR awards is based upon the Company’s stock performance compared to a group of peer companies. The actual number of shares to be issued can range from 0 % to 150 % of the awards granted. Stock-based compensation expense was as follows: Years Ended December 31, (in thousands) 2023 2022 2021 Stock compensation expense $ 10,823 $ 9,142 $ 3,552 Capitalized stock compensation ( 790 ) ( 614 ) ( 144 ) Stock compensation expense, net $ 10,033 $ 8,528 $ 3,408 As of December 31, 2023, there was $ 8.4 million of total unrecognized compensation cost related to non-vested incentive awards which is expected to be recognized over weighted average period of 2.1 years. We utilize the treasury stock method to calculate the impact on diluted earnings per share that potentially dilutive stock-based compensation awards have. The following table indicates the computation of basic and diluted earnings per share: Years Ended December 31, (in thousands, except per share amounts) 2023 2022 2021 Calculation of net income (loss) per share: Income (loss) from continuing operations $ 8,038 $ ( 8,379 ) $ 7,929 Income from discontinued operations, net of tax — — 990,902 Net income (loss) $ 8,038 $ ( 8,379 ) $ 998,831 Basic weighted average shares outstanding 50,396 50,155 50,026 Basic net income (loss) per share - continuing operations $ 0.16 $ ( 0.17 ) $ 0.16 Basic net income per share - discontinued operations — — 19.81 Basic net income (loss) per share $ 0.16 $ ( 0.17 ) $ 19.97 Effect of stock-based compensation awards outstanding: Basic weighted average shares outstanding 50,396 50,155 50,026 Effect from dilutive shares and options outstanding 319 — 123 Diluted weighted average shares outstanding 50,715 50,155 50,149 Diluted net income (loss) per share - continuing operations $ 0.16 $ ( 0.17 ) $ 0.16 Diluted net income per share - discontinued operations — — 19.76 Diluted net income (loss) per share $ 0.16 $ ( 0.17 ) $ 19.92 There were approximately 117,000 and 259,000 anti-dilutive awards outstanding for the years ended December 31, 2023 and 2021, respectively. There were approximately 365,000 potentially dilutive equity awards for the year ended December 31, 2022; however, these securities were excluded from the calculation of diluted weighted average shares outstanding due to the fact that they were anti-dilutive as a result of the Company’s net loss for the year ended December 31, 2022. F-26 Table of Contents The Company paid a special dividend of $ 18.75 per share on August 2, 2021 (the “Special Dividend”). The total amount paid pursuant to the Special Dividend to Shentel shareholders, including amounts reinvested in the Company’s stock via the Company’s Dividend Reinvestment Plan, was approximately $ 937 million. Note 13. Government Grants In 2021, Shentel commenced negotiations with various governmental entities to receive awards under broadband infrastructure grant programs to strategically expand the Company’s broadband network in order to provide broadband services to unserved residences in the partnering counties in Virginia, Maryland and West Virginia. Throughout 2021, 2022 and 2023, in partnership with counties in the respective states, Shentel has been awarded grants under the Virginia Telecommunication Initiative (“VATI”) and the Rural Digital Opportunity Fund (“RDOF”) in Virginia, the Connect Maryland Network Infrastructure Grant Program (“Connect MD”) in Maryland, and the Major Broadband Projects Strategies (“MBPS”) and Line Extension Advancement and Development (“LEAD”) programs in West Virginia. The following table summarizes the awards under each program: (in thousands) Awards VATI $ 60,872 RDOF 887 Connect MD 19,609 MBPS 3,560 LEAD 823 Total $ 85,751 To receive such grant distributions, the Company entered into agreements with each partnering county in Virginia, Maryland and West Virginia. These agreements outline certain build-out milestones. The network is required to meet certain performance conditions to ensure that minimum download and upload speeds are able to be provided to the unserved residences. As discussed in Note 2, Summary of Significant Accounting Policies , government assistance that is used to fund capital expenditures is recorded as a reduction to property, plant and equipment. Given the primary purpose of the programs listed above is to fund build-out of the Company’s broadband network, amounts recognized under these programs are recorded as a reduction to the related property, plant and equipment and cash receipts are presented as cash flows from investing activities in the Company’s consolidated statements of cash flows. The Company recognizes grant receivables at the time it becomes probable that the Company will be eligible to receive the grant, which is estimated to correspond with the date when specified build-out milestones are achieved. As a result of these programs, the Company received $ 1.9 million in cash reimbursements during the year ended December 31, 2023 and has recorded approximately $ 1.9 million in accounts receivable as of December 31, 2023. The Company did not recognize any amounts under these programs during the years ended December 31, 2022 and 2021 or as of December 31, 2022. Note 14. Commitments and Contingencies We are committed to make payments to satisfy our lease liabilities. The scheduled payments under those obligations are summarized in Note 8, Leases . We also have outstanding unconditional purchase commitments to procure programming, marketing services and IT software licenses through 2026. For the years ended December 31, 2023, 2022 and 2021 we paid $ 4.6 million, $ 5.2 million and $ 3.4 million, respectively, for the programming, marketing and IT software license purchase commitments. The Company is obligated to make the following future minimum payments under the non-cancelable terms of these commitments as of December 31, 2023: (in thousands) Purchase Commitments 2024 $ 3,894 2025 3,161 2026 1,778 2027 814 Total $ 9,647 F-27 Table of Contents The Company is subject to claims and legal actions that may arise in the ordinary course of business. The Company does not believe that any of these pending claims or legal actions are either probable or reasonably possible of a material loss. Note 15. Segment Reporting Shentel has presented Residential & SMB - Cable Markets and Residential & SMB - Glo Fiber Markets separately for 2023. These revenues were previously reported in one line under the description “Residential & SMB”. Shentel has amended the presentation for 2022 and 2021. The divestiture of our Wireless operations on July 1, 2021 represented a strategic shift in the Company’s business, which therefore qualified the segment as a discontinued operation. As a result, for all periods presented, the operating results and cash flows related to the Wireless segment were reflected as a discontinued operation in our consolidated statements of comprehensive income (loss) and the consolidated statements of cash flows. The tables below reflect the results of operations of the Company’s reportable segments in continuing operations, consistent with internal reporting used by the Company. Intercompany revenue is primarily derived from services provided to the discontinued operation, for periods prior to the divestiture. Year ended December 31, 2023: (in thousands) Broadband Tower Corporate & Eliminations Consolidated External revenue Residential & SMB - Cable Markets $ 176,879 $ — $ — $ 176,879 Residential & SMB - Glo Fiber Markets 35,103 — — 35,103 Commercial Fiber 42,132 — — 42,132 RLEC & Other 14,791 — — 14,791 Tower lease — 18,474 — 18,474 Service revenue and other 268,905 18,474 — 287,379 Intercompany revenue and other 348 161 ( 509 ) — Total revenue 269,253 18,635 ( 509 ) 287,379 Operating expenses Cost of services 100,841 5,625 ( 365 ) 106,101 Selling, general and administrative 62,834 1,412 39,385 103,631 Impairment expense 2,552 — — 2,552 Depreciation and amortization 61,897 2,103 1,471 65,471 Total operating expenses 228,124 9,140 40,491 277,755 Operating income (loss) $ 41,129 $ 9,495 $ ( 41,000 ) $ 9,624 Capital expenditures $ 254,929 $ 1,480 $ 141 $ 256,550 F-28 Table of Contents Year ended December 31, 2022: (in thousands) Broadband Tower Corporate & Eliminations Consolidated External revenue Residential & SMB - Cable Markets $ 175,681 $ — $ — $ 175,681 Residential & SMB - Glo Fiber Markets 18,293 — — 18,293 Commercial Fiber 38,821 — — 38,821 RLEC & Other 16,035 — — 16,035 Tower lease — 18,541 — 18,541 Service revenue and other 248,830 18,541 — 267,371 Intercompany revenue and other 185 378 ( 563 ) — Total revenue 249,015 18,919 ( 563 ) 267,371 Operating expenses Cost of services 102,267 5,712 ( 433 ) 107,546 Selling, general and administrative 56,776 1,279 34,337 92,392 Restructuring expense 849 — 402 1,251 Impairment expense 5,241 — — 5,241 Depreciation and amortization 63,175 2,416 3,308 68,899 Total operating expenses 228,308 9,407 37,614 275,329 Operating income (loss) $ 20,707 $ 9,512 $ ( 38,177 ) $ ( 7,958 ) Capital expenditures $ 188,729 $ 620 $ 260 $ 189,609 Year ended December 31, 2021: (in thousands) Broadband Tower Corporate & Eliminations Consolidated External revenue Residential & SMB - Cable Markets $ 169,183 $ — $ — $ 169,183 Residential & SMB - Glo Fiber Markets 8,347 — — 8,347 Commercial Fiber 30,842 — — 30,842 RLEC & Other 15,249 — — 15,249 Tower lease — 12,393 — 12,393 Service revenue and other 223,621 12,393 — 236,014 Revenue for service provided to the discontinued Wireless operations 4,459 5,311 ( 545 ) 9,225 Total revenue 228,080 17,704 ( 545 ) 245,239 Operating expenses Cost of services 97,283 5,438 ( 422 ) 102,299 Selling, general and administrative 47,840 1,197 33,414 82,451 Restructuring expense 202 — 1,525 1,727 Impairment expense 5,986 — — 5,986 Depreciation and amortization 47,937 2,053 5,216 55,206 Total operating expenses 199,248 8,688 39,733 247,669 Operating income (loss) $ 28,832 $ 9,016 $ ( 40,278 ) $ ( 2,430 ) Capital expenditures $ 156,131 $ 977 $ 2,993 $ 160,101 F-29 Table of Contents A reconciliation of the total of the reportable segments’ operating income (loss) to consolidated income (loss) from continuing operations before income taxes is as follows: Years Ended December 31, (in thousands) 2023 2022 2021 Total consolidated operating income (loss) $ 9,624 $ ( 7,958 ) $ ( 2,430 ) Other income (expense), net 1,387 ( 1,348 ) 8,665 Income (loss) from continuing operations before income taxes $ 11,011 $ ( 9,306 ) $ 6,235 The Company’s CODM does not currently review total assets by segment since the assets are centrally managed and some of the assets are shared by the segments As a result, total assets by reportable segment have not been presented. F-30 Table of Contents Note 16. Discontinued Operations On July 1, 2021, pursuant to the Asset Purchase Agreement (the “Purchase Agreement”), dated May 28, 2021, between Shentel and 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, and net of certain transaction expenses (the “Transaction”). The assets and liabilities that transferred in the Transaction (the “disposal group”) were presented as held for sale within our historical consolidated balance sheets, and discontinued operations within our historical consolidated statements of comprehensive income (loss) . Income from discontinued operations, net of tax in the consolidated statements of comprehensive income (loss) consist of the following for December 31, 2021: (in thousands) Revenue: 2021 Service revenue and other $ 201,076 Equipment revenue 12,253 Total revenue 213,329 Operating expenses: Cost of services 38,144 Cost of goods sold 11,964 Selling, general and administrative 17,514 Severance expense 465 Depreciation and amortization — Total operating expenses 68,087 Operating income 145,242 Other (expense) income: Debt extinguishment ( 11,032 ) Interest expense and other, net ( 9,178 ) Gain on sale of disposition of Wireless assets and operations 1,227,531 Income before income taxes 1,352,563 Income tax expense 361,661 Income from discontinued operations, net of tax $ 990,902 There was no material income from discontinued operations for the years ended December 31, 2023 and 2022. F-31 Table of Contents Schedule II Valuation and Qualifying Accounts Changes in the Company’s allowance for credit losses for accounts receivable for the years ended December 31, 2023, 2022 and 2021 are summarized below: (in thousands) Balance at Beginning of Year Recoveries added to allowance Provision for Credit Losses Write-offs Balance at End of Year Year Ended December 31, 2023 Allowance for credit losses $ 776 $ 424 $ 2,898 $ ( 3,212 ) $ 886 Year Ended December 31, 2022 Allowance for credit losses $ 352 $ 414 $ 1,972 $ ( 1,962 ) $ 776 Year Ended December 31, 2021 Allowance for credit losses $ 614 $ 530 $ 1,028 $ ( 1,820 ) $ 352 F-32 Table of Contents Exhibits Index Exhibit Number Exhibit Description 2.1 Asset Purchase Agreement, dated May 28, 2021, between Shenandoah Telecommunications Company and T-Mobile USA, Inc. (incorporated by reference from Exhibit 2.1 to the Company ’ s Current Report on Form 8-K filed on June 1, 2021). 2.2 Agreement and Plan of Merger, dated October 24, 2023, by and among Shenandoah Telecommunications Company, Fox Merger Sub I Inc., Fox Merger Sub II LLC, Horizon Acquisition Parent LLC, Novacap TMT V, L.P. and the Sellers set forth on the signature pages thereto ( inc orporated by reference from Exh ibit 2.1 to the Company ’ s Current Report on Form 8-K filed on October 26 , 2023 ). 2.3 Investment Agreement, dated October 24, 2023, by and among Shenandoah Telecommunications Company, Shentel Broadband Holding Inc., ECP Fiber Holdings, LP and, solely for the limited purposes specified therein, Hill City Holdings, LP (incorporated by reference from Exhibit 2. 2 to the Company’s Current Report on Form 8-K filed on October 26, 2023). 3.1 Amended and Restated Articles of Incorporation of Shenandoah Telecommunications Company, effective August 31, 2019 (incorporated by reference from E xhibit 3.2 to the Company ’ s Quarterly Report on Form 10-Q filed on September 30, 2019 ) . 3.2 Amended and Restated Bylaws of Shenandoah Telecommunications Company, effective October 25, 2022 (incorporated by reference from E xhibit 3.1 to the Company ’ s Current Report on Form 8-K filed on October 27, 2022 ) . *4.1 Description of the Company ’ s Common Stock Registered Under Section 12 of the Exchange Act of 1934. 4.2 Shenandoah Telecommunications Company Dividend Reinvestment Plan (incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-3D (No. 333-74297). 10.1 Credit Agreement, dated July 1, 2021, by and among Shenandoah Telecommunications Company, certain of its subsidiaries as guarantors, CoBank ACB, as administrative agent, and the other lenders party thereto (incorporated by reference from Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on July 1, 2021). *10.2 Amendment No. 1 to Credit Agreement, dated May 17, 2023, among Shenandoah Telecommunications Company, certain of its subsidiaries, CoBank ACB, as administrative agent, and the other lenders party thereto. 10.3 Consent and Amendment No. 2 to Credit Agreement, dated October 24, 2023, by and among Shenandoah Telecommunications Company, certain of its subsidiaries, CoBank ACB, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 26, 2023). 10.4 Commitment Letter, dated October 24, 2023, by and among Shenandoah Telecommunications Company, certain of its subsidiaries, CoBank ACB, Citizens Bank, N.A., Bank of America, N.A. and Fifth Third Bank, National Association. (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 26, 2023). 10.5 Supplemental Executive Retirement Plan as amended and restated (incorporated by referen ce from Exhibit 10.14 to the Company’s Current Report on Form 8-K filed on March 23, 2007 ) . 10.6 2014 Equity Incentive Plan (incorporated by reference from Appendix A to the Company’s Definitive Proxy Statement filed on March 13, 2014 (No. 333-196990) ) . 10.7 Form of Stock Option Awards for Executives under the 2014 Equity Incentive Plan. 10.8 Form of Restricted Stock Unit Award for Executives under the 2014 Equity Incentive Plan (incorporated by reference from Exhibit 10. 5 to the Company’s Annual Report on Form 10-K filed on February 2 2, 2023 ) . F-33 Table of Contents 10.9 Form of RTSR Performance Share Unit Award for Executives under the 2014 Equity Incentive Plan (incorporated by reference from Exhibit 10 . 6 to the Company’s Annual Report on Form 10-K filed on February 22, 2023 ). 10.10 Form of Strategic Retention Performance Share Unit Award (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 23, 2022). 10.11 Form of Severance Agreement (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 11, 2020). *21 List of Subsidiaries. *23.1 Consent of RSM US LLP, Independent Registered Public Accounting Firm. *23.2 Consent of KPMG LLP, Independent Registered Public Accounting Firm. *31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. *31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. *31.3 Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. **32 Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350. *97.1 S henandoah T elecommunications C omp any I ncentive A ward R ecoupment P olic y. (101) Formatted in XBRL (Extensible Business Reporting Language) 101.INS XBRL Instance Document - the instance document does not appear in the interactive data filing because its XBRL tags are embedded within the Inline XBRL document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith ** This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act. Table of Contents SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHENANDOAH TELECOMMUNICATIONS COMPANY February 21, 2024 /S/ CHRISTOPHER E. FRENCH Christopher E. French, President & Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/CHRISTOPHER E. FRENCH President & Chief Executive Officer, February 21, 2024 Director (Principal Executive Officer) Christopher E. French /s/JAMES J. VOLK Senior Vice President – Chief Financial Officer February 21, 2024 (Principal Financial Officer) James J. Volk /s/DENNIS A. ROMPS Vice President - Chief Accounting Officer February 21, 2024 (Principal Accounting Officer) Dennis A. Romps /s/THOMAS A. BECKETT Director February 21, 2024 Thomas A. Beckett /s/TRACY FITZSIMMONS Director February 21, 2024 Tracy Fitzsimmons /s/JOHN W. FLORA Director February 21, 2024 John W. Flora /s/ RICHARD L. KOONTZ, JR. Director February 21, 2024 Richard L. Koontz, Jr. /s/KENNETH L. QUAGLIO Director February 21, 2024 Kenneth L. Quaglio /s/LEIGH ANN SCHULTZ Director February 21, 2024 Leigh Ann Schultz /s/VICTOR C. BARNES Director February 21, 2024 Victor C. Barnes F-35