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Item 1. Business

2025-02-20 compared with 2024-02-21 · 123 added, 156 removed, 254 unchanged (52% of the section changed)

Shenandoah Telecommunications Company and its subsidiaries (“Shentel”, “we”, “our”, “us”, or the “Company”), provide broadband services through its high speed, state-of-the-art fiber-optic and cable networks to customers in the Mid-Atlantic United States.

The Company’s services include:

broadband internet, video and voice;

fiber-optic Ethernet, wavelength and leasing;

and tower colocation leasing.

The Company owns an extensive regional network with approximately 9,900 route miles of fiber and 219 macro cellular towers.

high-speed Ethernet, dark fiber leasing;

and managed network services.

The Company owns an extensive regional network with approximately 16,800 route miles of fiber.

For more information, please visit www.shentel.com.

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.

Acquisition of Horizon Acquisition Parent LLC

On April 1, 2024 (the “Closing Date”), Shentel completed its previously announced acquisition of Horizon Acquisition Parent LLC, a Delaware limited liability company (“Horizon”), pursuant to the terms of an Agreement and Plan of Merger, dated October 24, 2023, by and among Shentel, Horizon, and the sellers set forth on the signature pages thereto (each, a “Seller” and collectively, the “Sellers”) and the other parties thereto (as amended by the First Amendment to Agreement and Plan of Merger, dated April 1, 2024, the “Merger Agreement”).

Subject to the terms and conditions of the Merger Agreement, on the Closing Date, Shentel acquired 100% of the outstanding equity interests of Horizon in exchange for (i) issuing 4,100,375 shares of Shentel’s common stock, no par value (“Common Stock”), to an investment fund managed by affiliates of GCM Grosvenor, which is one of the Sellers (the “Selling Shareholder”);

and (ii) paying $347 million which consisted of cash consideration to the other Sellers and certain third parties, including Horizon’s existing lenders to discharge debt, and payments for working capital adjustments and reimbursement of capital expenditures incurred by the Sellers, subject to post-closing adjustments.

The Selling Shareholder agreed to an investor rights agreement with the Company, pursuant to which, as long as the Selling Shareholder beneficially owns at least 5.0% of Shentel’s outstanding Common Stock, the Selling Shareholder has the right to nominate a director to Shentel’s Board and is subject to certain standstill provisions and voting covenants.

The Selling Shareholder is also subject to a one year lockup period for the shares of Common Stock received.

Prior to the acquisition, Horizon was 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 FTTH in tier 3 & 4 markets in Ohio.

The description of the Company’s business set forth below reflects the operations of the Company prior to the completion of the Horizon Transaction.

Most recently, Horizon pursued a strategy of investing in fiber to the home (“FTTH”) in tier 3 & 4 markets in Ohio.

The description of the Company’s business set forth below reflects the operations of the Company after the completion of the Horizon Transaction.

Sale of Shentel’s Tower Portfolio

On March 29, 2024, Shenandoah Mobile, LLC, a wholly-owned subsidiary of Shenandoah Telecommunications Company, completed the initial closing of its previously disclosed sale of substantially all of Shentel’s tower portfolio and operations (“Tower Portfolio”) to Vertical Bridge Holdco, LLC for $309.9 million (the “Tower Transaction”).

The Company received $305.8 million, net of certain transaction costs at the time of the initial closing.

At the initial close, the Company conveyed sites representing approximately 99.5% of the tower portfolio value.

The Company expects to convey certain remaining tower sites to Vertical Bridge by the end of March 2025 that will represent 99.9% of the tower portfolio value.

The Tower Transaction was completed pursuant to the terms of a Purchase and Sale Agreement, dated February 29, 2024, as amended by Amendment No.

1 to the Purchase and Sale Agreement, dated March 29, 2024.

The Tower Portfolio represented substantially all of the assets and operations in Shentel’s previously reported Tower Reporting Segment and the Tower Transaction represented a strategic shift in the Company’s business.

Consequently, the Tower Portfolio has been reclassified as a discontinued operation.

For all periods presented, the assets and liabilities that transferred in the Tower Transaction (the “disposal group”) are presented as held for sale in our consolidated balance sheets, and operating results and cash flows related to the Tower Portfolio were reflected as a discontinued operations in our consolidated statements of operations and consolidated statements of cash flows.

Description of Business

Broadband Reporting Segment

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

The Broadband segment also leases dark fiber and provides Ethernet and wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area under the brand name of Glo Fiber Business.

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

Shentel provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, Kentucky, Delaware, Ohio and Indiana via fiber optics under the brand name of Glo Fiber and hybrid fiber coaxial cable under the brand name of Shentel.

Shentel also leases dark fiber and provides Ethernet and

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wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area under the brand name of Glo Fiber Business.

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

These integrated networks are connected by approximately 16,800 route miles of fiber.

The Broadband segment served 235,298 Revenue Generating Units (“RGUs”) at December 31, 2023, representing an increase of 6.5%, from December 31, 2022.

Tower Reporting Segment

Our Tower segment owns 219 macro cellular towers and leases colocation space on the towers to wireless communications providers.

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

Broadband competition

As the incumbent cable provider passing approximately 216,000 homes and businesses, we compete directly against the incumbent local telephone companies that provide data and voice services over hybrid fiber and copper-based networks as well as broadband overbuilder providers that provide data, voice, and video services over hybrid coaxial cable or fiber optic networks.

Approximately 17% of our incumbent cable passings compete with a wireline broadband competitor.

In addition, we compete with fixed wireless broadband services and indirectly with wireless substitution as the bandwidth speeds from wireless providers have increased with network upgrades to 5 th generation technology.

Our Glo Fiber FTTH service passes approximately 234,000 homes and competes against the incumbent local telephone companies’ DSL and voice services via hybrid fiber and copper-based networks and the incumbent cable companies’ broadband service utilizing hybrid fiber-coaxial cable networks.

The Company served approximately 261,000 Revenue Generating Units (“RGUs”) at December 31, 2024.

As the incumbent broadband provider passing approximately 239,000 homes and businesses, we compete against incumbent local telephone companies that provide digital subscriber line (“DSL”), internet and voice services over hybrid fiber and copper-based networks as well as broadband overbuilder providers that offer data, voice, and video services over hybrid coaxial cable or fiber optic networks.

Approximately 28% of our incumbent broadband passings compete with a wireline broadband competitor, including 23% of our incumbent cable passings and 100% of our FTTH passings in our Ohio incumbent telephone market.

In addition, we compete with fixed wireless broadband services and indirectly with wireless substitution as the bandwidth speeds from wireless providers have increased with 5th generation network technology upgrades.

Our Glo Fiber FTTH service passes approximately 346,000 homes and businesses and competes against the incumbent local telephone companies’ DSL, internet and voice services via hybrid fiber and copper-based networks and the incumbent cable companies’ broadband, video and voice services utilizing hybrid fiber-coaxial cable networks.

Competition is also intense and growing in the market for video services.

Cable television systems are operated under non-exclusive franchises granted by local authorities, which may result in more than one operator providing video services in a particular market.

Incumbent cable television companies, which have historically provided video service, also face competition from direct broadcast satellite providers such as Dish and DirecTV and on-line video services, such as Netflix, YouTube TV, Hulu, Disney and Amazon.

Our ability to compete effectively with our competitors in video will depend, in part, on price, content cost and variety, service quality and the convenience of our service offerings.

A continuing trend toward consolidation, mergers, acquisitions and strategic alliances in the telecommunications industry could also increase the level of competition we face by further strengthening of our competitors.

Tower competition

We compete with other public tower companies, such as American Tower Co., Crown Castle International Corp., SBA Communications Corp., and private tower companies, private equity sponsored firms, carrier-affiliated tower companies, and owners of other alternative structures.

We believe that zoning approval of site location and capacity, price, and leasing terms have been, and will continue to be, significant competitive factors affecting owners, operators and managers of communications sites.

Our operations are subject to regulation by the Federal Communications Commission (“FCC”), the Virginia State Corporation Commission (“VSCC”), the West Virginia Public Service Commission, the Maryland Public Service Commission, the Pennsylvania Public Utility Commission, the Kentucky Public Service Commission and other federal, state, and local governmental agencies.

Incumbent cable television companies, which have historically provided video service, also face competition from direct broadcast satellite providers such as Dish and DirecTV and online video services, such as Netflix, YouTube TV, Hulu, Disney and Amazon.

Our ability to compete effectively with our competitors in video will depend, in part, on price, content cost and variety, service quality, access to content and the convenience of our service offerings.

A recent trend towards convergence of wireless and fiber broadband service offerings has started consolidation in the FTTH segment.

If this trend continues, mergers, acquisitions and strategic alliances with large wireless carriers could also increase the level of competition we face.

Our operations are subject to regulation by the Federal Communications Commission (“FCC”), the Virginia State Corporation Commission (“VSCC”), the West Virginia Public Service Commission, the Maryland Public Service Commission, the Pennsylvania Public Utility Commission, the Kentucky Public Service Commission, the Ohio Public Utilities Commission, the Delaware Public Service Commission and other federal, state, and local governmental agencies.

The laws governing these agencies, and the regulations and policies that they administer, are subject to constant review and revision, and some of these changes could have material impacts on our revenues and expenses.

Regulation of Broadband Internet and Cable Video Services

We provide broadband internet, video, voice and fiber services to residential and business customers in franchise areas covering portions of Virginia, West Virginia, Maryland, central Pennsylvania and eastern Kentucky.

The provision of cable service generally is subject to regulation by the FCC, and cable operators typically also must comply with the terms of the franchise agreement between the cable operator and the state or local franchising authority.

Some states, including Virginia and West Virginia, have enacted regulations and franchise provisions that also can affect certain aspects of a cable operator’s operations.

Some states, including Virginia and West Virginia, have enacted regulations and franchise provisions that also can affect certain aspects of a cable provider’s operations.

Our business may be significantly impacted by changes to the existing regulatory framework, whether caused by legislation or administrative or judicial actions.

The FCC originally classified broadband Internet access services, such as those we offer, as an information service, which by law exempts the service from traditional common carrier communications laws and regulations.

In 2015, the FCC determined that broadband Internet access services, such as those we offer, were a form of telecommunications service under the Communications Act of 1934, as amended (the “Communications Act”), and, on that basis, imposed rules (commonly referred to as “Net Neutrality” rules) banning service providers from blocking access to lawful content, restricting data rates for downloading lawful content, prohibiting the attachment of non-harmful devices, giving special transmission priority to affiliates and offering third parties the ability to pay for priority routing.

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and offering third parties the ability to pay for priority routing.

The Net Neutrality rules also imposed a transparency requirement, i.e., an obligation to disclose all material terms and conditions of our service to consumers.

In 2017, the FCC adopted an order repudiating its treatment of broadband as a telecommunications service, reclassifying broadband as an information service, and eliminating the 2015 Net Neutrality rules other than the transparency requirement, which the FCC eased in significant ways.

The FCC also ruled that state regulators may not impose obligations similar to federal obligations that the FCC removed.

In 2019, the U.S.

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

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

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

In this decision, the FCC reclassified broadband internet access service as an unregulated information service,

thus eliminating all federal regulatory “network neutrality” obligations beyond requiring broadband providers to accurately disclose network management practices, performance, and commercial terms of service.

These issues may be revisited by the FCC in the current or future administrations.

At the same time, several states (including California, but not states in which we operate) have adopted state obligations replacing the Internet access (“Net Neutrality” type) obligations that the FCC removed, and we expect that additional states will consider the imposition of new regulations on Internet services like those that we offer.

For example, New York adopted legislation that would have required Internet service providers to offer a discounted Internet service to qualifying low-income consumers, but a federal district judge enjoined enforcement as likely to be deemed rate regulation of Internet service that would be preempted by federal law.

The Net Neutrality rules have been a matter of debate and have been revoked and reinstated throughout the years since their inception.

In the first half of 2024, Net Neutrality rules were officially reinstated following a FCC vote to define internet service providers as a telecommunication service.

This decision was challenged in court, resulting in a temporary injunction against the application of Net Neutrality rules.

The United States Court of Appeals for the Sixth Circuit issued its final decision in January 2025, ruling that classifying internet service providers as a telecommunication service was inconsistent with the Telecommunications Act of 1996 effectively banning the FCC from enforcing Net Neutrality rules.

Several states have proposed or adopted state obligations replacing the Internet access (“Net Neutrality” type) obligations that the FCC removed, and we expect that additional states will consider the imposition of new regulations on Internet services like those that we offer.

Other state laws and regulations may be adopted in the future, and have been proposed in states in which we operate, but will likely be subject to legal challenges.

California’s legislation has been challenged in court.

We cannot predict how any such state legislation and court challenges will be resolved.

California enacted legislation which has been challenged in court, and we cannot predict how any other state legislation and court challenges will be resolved.

Various governmental jurisdictions are also considering additional regulations in these and other areas, such as privacy, pricing, service and product quality, imposition of local franchise fees on Internet-related revenue and taxation.

The adoption of new Internet regulations or the adaptation of existing laws to the Internet, including potential liability for the infringing activities of Internet subscribers, could adversely affect our business.

Moreover, irrespective of these cases, and as demonstrated by the FCC’s inconsistent positions over time, it is possible that the FCC might further revise its approach to broadband Internet access in the future, or that Congress might enact legislation affecting the rules applicable to the service.

In October 2023, the FCC adopted a Notice of Proposed Rulemaking that proposes to reclassify broadband internet service as a telecommunications service and reinstate Net Neutrality rules.

Moreover, irrespective of these cases, and as demonstrated by the FCC’s changing approach with Net Neutrality rules over time, it is possible that the FCC might further revise its approach to broadband Internet access in the future, or that Congress might enact legislation affecting the rules applicable to the service.

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

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The adoption of new Internet regulations or policies could adversely affect our business.

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

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

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

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

Federal and state governments have launched numerous programs to provide subsidies for the construction of high-speed broadband facilities to homes that do not have access to broadband service of 25 Mbps for downloads and 3 Mbps for uploads, including federal funding from the American Rescue Plan Act, the Coronavirus Aid, Relief, and Economic Security Act and the FCC’s Rural Digital Opportunities Fund, and state programs such as the Virginia Telecommunications Initiative (“VATI”), Maryland Network Infrastructure Grant Program and West Virginia Broadband Development Fund.

On January 30, 2020, the FCC adopted an order approving the Rural Digital Opportunity Fund to disburse $20.4 billion over the course of 10 years to subsidize the deployment of networks for the provision of high-speed broadband internet access and voice services in unserved areas via a reverse auction, some of which may be directed to competitive providers in some of the states in which we operate.

Federal and state governments have launched numerous programs to provide subsidies for the construction of high-speed broadband facilities to homes that do not have access to broadband service (currently defined by the FCC) including federal funding from the American Rescue Plan Act, the Coronavirus Aid, Relief, and Economic Security Act and the FCC’s Rural Digital Opportunities Fund, and state programs such as the Virginia Telecommunications Initiative (“VATI”), Maryland Network Infrastructure Grant Program and West Virginia Broadband Development Fund.

In January 2020, the FCC adopted an order approving the Rural Digital Opportunity Fund to disburse $20.4 billion over the course of 10 years to subsidize the deployment of networks for the provision of high-speed broadband internet access and voice services in unserved areas via a reverse auction, some of which may be directed to competitive providers in some of the states in which we operate.

We prevailed as a winning bidder in the auction for certain areas with a grant of $0.9 million to serve approximately 900 unserved homes.

The Company began fulfilling its obligation during 2023 and expects to complete that process by the end of 2025.

In 2021, Congress passed the American Rescue Plan Act to subsidize the deployment of high-speed broadband internet access in unserved areas.

We were awarded approximately $85.8 million in grants to serve approximately 25,000 unserved homes in the states of Virginia, West Virginia and Maryland.

In March 2021, Congress passed the American Rescue Plan Act to subsidize the deployment of high-speed broadband internet access in unserved areas.

We have been awarded approximately $122.2 million in grants to serve approximately 27,200 unserved homes in the states of Virginia, Maryland, West Virginia and Ohio.

The grants will be paid to the Company as certain milestones are completed.

The Company began fulfilling its obligation in during 2023 and expects to complete that process by the end of 2026.

In November 2021, Congress passed the Infrastructure Investment and Jobs Act that will provide an additional $42.5 billion to states to fund broadband construction and adoption programs that prioritize the expansion of high-speed broadband to unserved homes across the country.

With the influx of government grants now available to subsidize broadband FTTH construction to unserved areas, we ceased our Beam fixed wireless network, operations and services in 2022 as it was not designed to compete against the faster broadband services offered by fiber networks.

We incurred $12.4 million in impairment, accelerated depreciation and restructuring charges in 2022 as a result.

The Company began fulfilling its obligation in 2023 and expects to complete the majority of its obligations under these programs by the end of 2026.

In November 2021, Congress passed the Infrastructure Investment and Jobs Act (“IIJA”) that will provide an additional $42.5 billion for the Broadband Equity, Access, and Deployment (“BEAD”) Program to fund broadband construction and adoption programs that prioritize the expansion of high-speed broadband to unserved homes across the country.

The Company has not been awarded any grants under the BEAD Program.

The IIJA also included $1 billion for the Enabling Middle Mile Broadband Infrastructure Program for the construction, improvement or acquisition of middle mile infrastructure.

As part of this program, the Company has been awarded approximately $27.5 million in grants to construct and upgrade middle mile networks in Ohio and expect to complete the majority of its obligations by the end of 2027.

Pricing and Packaging .

Our video and broadband internet services are not subject to rate regulation.

In December 2020, these services became subject to a federal law requiring itemization of certain charges in notices and invoices to customers, and we must also comply with generally-applicable marketing and advertising requirements.

Congress and the FCC from time to time have considered imposing new pricing, packaging and consumer protection restrictions on cable operators.

We cannot predict whether or when any such new marketing restrictions may be imposed on us or what effect they would have on our ability to provide cable service.

Our video and broadband internet services are not subject to rate regulation in the states that we operate.

These services are subject to federal laws requiring itemization of certain charges in notices and invoices to customers, and we must also comply with generally-applicable marketing and advertising requirements.

Congress and the FCC from time to time have considered imposing packaging and consumer protection restrictions on cable operators.

We cannot predict

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whether or when any such new marketing restrictions may be imposed on us or what effect they would have on our ability to provide cable service.

In May 2021, the FCC introduced the temporary Emergency Broadband Benefit (“EBB”) program to help qualifying disadvantaged households pay for Internet service.

The EBB program provided a subsidy of up to $50 per month toward Internet service to the service provider for most eligible low-income households that elect the benefit and demonstrate their qualification.

Congress extended this benefit through the new Affordable Connectivity Program (“ACP”) that in 2022 replaced EBB with a $30 subsidy for service provided to most of the same consumers.

The ACP ended in 2024.

As a result of the ACP’s cessation, the Company’s eligible subscribers may not be able to afford broadband service, which could reduce our revenues.

Must-Carry/Retransmission Consent.

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Federal law imposes a 5% cap on franchise fees.

In 2019, the FCC clarified that the value of in-kind contribution requirements set forth in cable franchises (such as channel capacity set aside for public, educational and governmental (“PEG”) use or free cable service to public buildings) is subject to the statutory cap on franchise fees, and it reaffirmed that state and local authorities are barred from imposing franchise fees on cable systems providing non-cable services such as Internet services.

Those rules were upheld by a federal court in 2021, but the court limited the amount of the in-kind franchise fee contribution credit to the operator’s marginal costs rather than its market valuation.

The FCC has clarified that the value of in-kind contribution requirements set forth in cable franchises (such as channel capacity set aside for public, educational and governmental (“PEG”) use or free cable service to public buildings) is subject to the statutory cap on franchise fees, and it reaffirmed that state and local authorities are barred from imposing franchise fees on cable systems providing non-cable services such as Internet services.

Those rules were upheld by a federal court, but the court limited the amount of the in-kind franchise fee contribution credit to the operator’s marginal costs rather than its market valuation.

Pole Attachments.

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The FCC rules do not directly affect pole attachment rates in states that self-regulate (rather than allow the FCC to regulate) pole rates, but many of those states have substantially the same rate for cable and telecommunications attachments.

Kentucky, Pennsylvania and West Virginia, three states in which we operate, self-regulate IO pole attachments, but do so using essentially the same rate formula and other pole attachment rules as the FCC.

Delaware, Kentucky, Ohio, Pennsylvania and West Virginia, five states in which we operate, self-regulate IO pole attachments, but do so using essentially the same rate formula and other pole attachment rules as the FCC.

The FCC pole attachment rules also do not govern government or cooperatively owned utilities.

States, however, are free to regulate such utilities and some do.

Of the states in which Shentel operates, Virginia and Kentucky currently regulate cooperatively owned pole attachments.

States, however, are free to

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regulate such utilities and some do.

Of the states in which Shentel operates, Virginia, Kentucky, Ohio and Delaware currently regulate cooperatively owned pole attachments.

In addition, the FCC has interpreted another federal law governing state and local regulation of public rights of way to impose cost-based limitations on what government entities may charge for pole attachments.

In 2018, the FCC adopted rules to permit a “one-touch” make-ready process for poles subject to its jurisdiction.

The “one touch” make-ready rules allow new attachers to alter certain components of existing attachments for “simple make-ready” (i.e.

“One touch” make-ready rules exist which allow new attachers to alter certain components of existing attachments for “simple make-ready” (i.e.

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

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Many states and local authorities have considered legislative or other actions that would impose additional restrictions on our ability to collect, use and disclose certain information.

California’s Consumer Privacy Act (“CCPA”) and associated regulations, which became effective in 2020, and the California Privacy Rights Act, which amended the CCPA and became effective in January 2023, under certain circumstances regulate the collection, use, retention, sale and disclosure of the personal information of California consumers, grants California consumers certain rights to, among other things, access, correct and delete data about them in certain circumstances, and authorizes enforcement actions by the California Attorney General, the new California Privacy Protection Agency, and certain limited private class actions.

Compliance with the CCPA may increase the cost of providing our services to customers who may be residents in California and increase our litigation exposure.

In 2020, Virginia enacted a new consumer privacy law.

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Shentel’s operations continue to be in compliance with the law as of December 31, 2024.

In 2021, Colorado enacted the Colorado Privacy Act, modeled largely after its predecessor in Virginia and in part after the CCPA, which went into effect on July 1, 2023.

We expect federal and state efforts to regulate online privacy, data security and cybersecurity to continue in 2025.

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We cannot predict if or when additional changes will be made to the current FCC accessibility rules, or whether and how such changes will affect us.

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Voice over Internet Protocol “VoIP” Services .

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Although similar to telephone service in some ways, our VoIP service arrangement utilizes different technology and is subject to many of the same rules and regulations applicable to traditional telephone service.

The FCC order adopted on October 27, 2011 established rules governing intercarrier compensation payments for the origination and termination of telephone traffic between carriers and VoIP providers.

In May 2014, the United States Court of Appeals for the Tenth Circuit upheld the FCC order reducing intercarrier compensation payments.

The rules have substantially decreased intercarrier compensation payments we may have otherwise received over a multi-year period.

The decreases over the multi-year transition have affected both the amounts that we pay to telecommunications carriers and the amounts that we receive from other carriers.

The schedule and magnitude of these decreases, however, has varied depending on the nature of the carriers and the telephone traffic at issue.

These changes have had a negative impact on our revenues for voice services at particular times over this multi-year period.

Further regulatory changes are being considered that could impact our VoIP service.

Regulatory changes are being considered that could impact our VoIP service.

The FCC and state regulatory authorities have considered, for example, whether certain common carrier regulations traditionally applied to incumbent local exchange carriers (including RLECs) should be modified or reduced, and the extent to which common carrier requirements should be extended to VoIP providers.

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We cannot predict whether the FCC will impose additional obligations on our VoIP services in the future.

Our VoIP telephone services are also subject to certain state and local regulatory fees such as E911 fees and contributions to state universal service funds.

Although we believe that VoIP telephone services should otherwise be governed only by federal regulation, some states have attempted to subject cable VoIP services to state level regulation.

In March 2007, a federal appeals court affirmed the FCC’s decision concerning federal regulation of certain VoIP services, but declined to specifically find that VoIP service provided by cable companies, such as we provide, should be regulated only at the federal level.

As a result, certain states, including West Virginia, began proceedings to subject cable VoIP services to state-level regulation.

Although the West Virginia proceeding concluded without any new state-level regulation, it is difficult to predict whether it, or other state regulators, will continue to attempt to regulate our VoIP service.

Some other state attempts to regulate VoIP have been blocked by federal courts on the basis of the FCC’s preemption of certain state regulations or on the basis that VoIP services are information services, but as with Internet services, there is uncertainty as to the extent to which courts will preempt state regulation in the future.

We have registered with, or obtained certificates or authorizations from, the FCC and the state regulatory authorities in those states in which we offer competitive voice services in order to ensure the continuity of our services and to maintain needed network interconnection arrangements.

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Other Issues.

Our ability to provide video service may be affected by a wide range of additional regulatory and related issues, including FCC regulations pertaining to licensing of systems and facilities, set-top boxes, equipment compatibility, program exclusivity blackouts, commercial leased access of video channels by unaffiliated third parties, advertising, maintenance of online public files, accessibility to persons with disabilities, emergency alerts, equal employment opportunity, privacy, consumer protection, and technical standards.

Our ability to provide our services may be affected by a wide range of additional regulatory and related issues, including FCC regulations pertaining to licensing of systems and facilities, set-top boxes, equipment compatibility, program exclusivity blackouts, commercial leased access of video channels by unaffiliated third parties, advertising, maintenance of online public files, accessibility to persons with disabilities, emergency alerts, equal employment opportunity, privacy, consumer protection, and technical standards.

Further, the FCC recently adopted a plan to reallocate for other purposes certain spectrum currently used by satellite providers to deliver video programming to individual cable systems, which could be disruptive to the satellite video delivery platform we rely upon to provide our video services.

We cannot predict the nature and pace of these and other developments or the effect they may have on our operations.

Regulation of Shenandoah Telephone Company (“Shenandoah Telephone”)

Regulation of Telephone Services

State Regulation .

Shenandoah Telephone Company is a RLEC serving Shenandoah County, Virginia and portions of the Virginia counties of Rockingham, Frederick, and Augusta.

Shenandoah Telephone’s rates for local exchange service, intrastate toll service and intrastate access charges are subject to the approval of the VSCC.

The VSCC also establishes and oversees implementation of certain provisions of the federal and state telecommunications laws, including interconnection requirements, promotion of competition, and consumer protection standards.

The VSCC also regulates rates, service areas, service standards, accounting methods, affiliated transactions and certain other financial transactions.

Pursuant to the FCC’s October 27, 2011 order adopting comprehensive reforms to the federal intercarrier compensation and universal service policies and rules (as discussed above and further below), the FCC preempted state regulatory commissions’ jurisdiction over all terminating access charges, including intrastate terminating access charges, which historically have been within the states’ jurisdiction.

However, the FCC vested in the states the obligation to monitor the tariffing of intrastate rate reductions for a transition period, to oversee interconnection negotiations and arbitrations, and to determine the network edge, subject to FCC guidance, for purposes of the new “bill-and-keep” framework.

A federal appeals court has affirmed the decision.

The outcome of those further challenges could modify or delay the effectiveness of the FCC’s rule changes.

In 2017 the FCC initiated a further proceeding to consider whether additional changes to interconnection obligations are needed, including how and where companies interconnect their networks with the networks of other providers.

Although we are unable to predict the ultimate effect that the FCC’s order will have on the state regulatory landscape or our operations, the rules may decrease or eliminate revenue sources or otherwise limit our ability to recover the full value of our network assets.

Shenandoah Telephone Company (“Shenandoah Telephone”) is a RLEC serving Shenandoah County, Virginia and portions of the Virginia counties of Rockingham, Frederick, and Augusta.

The Chillicothe Telephone Company (“Chillicothe Telephone”) is a RLEC serving Ross County, Ohio.

Shenandoah Telephone’s rates for local exchange service, intrastate toll service and intrastate access charges are subject to the review and approval of the VSCC.

The VSCC also oversees implementation of certain provisions of the federal and state telecommunications laws, including interconnection requirements, promotion of competition, and consumer protection standards.

The VSCC also regulates certain rates, service areas, service standards, accounting methods, affiliated transactions and certain other financial transactions.

Further, Shenandoah Telephone is subject to certain obligations as the carrier of last resort in its service area, which has the effect of imposing greater operational costs and potential regulatory risks.

Chillicothe Telephone’s rates are subject to the approval of the Ohio Public Utilities Commission (“PUC”) in certain circumstances.

Further, Chillicothe Telephone is subject to certain obligations as the carrier of last resort in its service area, which has the effect of imposing greater operational costs and potential regulatory risks.

Interconnection.

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Disputes regarding intercarrier compensation can be brought in a number of forums (depending on the nature and jurisdiction of the dispute) including state public utility commissions (“PUCs”), the FCC, and the courts.

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

Regulation of Intercarrier Compensation.

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We cannot predict whether, when and to what extent such refunds may be due.

On October 27, 2011, the FCC adopted a number of broad changes to the intercarrier compensation rules governing the interstate access rates charged by small-to-mid-sized RLECs such as Shenandoah Telephone that have had a

material impact on our revenues.

For example, the FCC adopted a national “bill-and-keep” framework, which will result in substantial reductions in the access charges paid by long distance carriers and other interconnecting carriers, possibly to zero, accompanied by increases to the subscriber line charges paid by business and residential end users.

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

The VSCC has jurisdiction over local telephone companies’ intrastate intercarrier compensation rates, and has indicated in the past that it might open a generic proceeding on the rates charged for intrastate access, although the scope and likelihood of such a proceeding is unclear in light of the FCC’s overhaul of the intercarrier compensation rules (discussed above), which affect states’ jurisdiction over intrastate access charges.

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Universal Service Fund (“USF”).

Shenandoah Telephone receives disbursements from the federal USF.

In October 2011, the FCC adopted comprehensive changes to the universal service program.

Some of the FCC’s reforms impact the rules that govern disbursements from the USF to RLECs such as Shenandoah Telephone, and to other providers.

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

Shenandoah Telephone and Chillicothe Telephone receive disbursements from the federal USF.

The Universal Service Administrative Company (“USAC”) administers the USF program under the FCC.

On July 24, 2024, the U.S.

Court of Appeals for the Fifth Circuit ruled that the current funding mechanism for the Universal Service Fund is an unconstitutional tax that violates the U.S.

Constitution.

That opinion is now on appeal to the U.S.

Supreme Court which is expected to render a decision in the current term.

The Company is not able to predict if or when additional changes will be made to the USF, or whether and how such changes would affect the extent of our total federal universal service assessments, the amounts we receive, or our ability to recover costs associated with the USF.

If the Universal Service Administrative Company (“USAC”) were required to account for the USF program in accordance with generally accepted accounting principles for federal agencies under the Anti-Deficiency Act (the “ADA”), it could cause delays in USF payments to fund recipients and significantly increase the amount of USF contribution payments charged to wireline and wireless consumers.

On January 14, 2024 the company informed the FCC of the fact that Shenandoah Telephone Company did not meet its final Connect America Fund (“CAF”) broadband loop support (“BLS”) buildout milestone obligations as of a December 31, 2023 deadline and requested an extension, which was granted.

Over the course of 2024, the company accelerated its final buildout efforts, and as of July 15, 2024 the company informed the FCC that it satisfied its obligations to deploy 25/3 Mbps service to the remaining unserved locations, thereby satisfying its obligations under the program.

Although Shenandoah Telephone Company satisfied its obligations within a twelve month grace period granted by the FCC, the company could face increased regulatory scrutiny or penalties in the future.

If USAC were required to account for the USF program in accordance with generally accepted accounting principles for federal agencies under the Anti-Deficiency Act (the “ADA”), it could cause delays in USF payments to fund recipients and significantly increase the amount of USF contribution payments charged to wireline and wireless consumers.

Each year since 2004, Congress has adopted short-term exemptions for the USAC from the ADA.

Congress has from time to time considered adopting a longer term exemption for the USAC from the ADA, but we cannot predict whether any such exemption will be adopted or the effect it may have on the Company.

In 2012, the FCC released an order making substantial changes to the rules and regulations governing the federal USF Lifeline Program, which provides discounted telephone services to low income consumers.

The order imposes greater recordkeeping and reporting obligations, and generally subjects providers of Lifeline-supported services to greater oversight.

In 2016, the FCC released a second substantial Lifeline order that amended the program to provide support for broadband services and phase out support for voice services.

Included among the new rules was a requirement that any eligible telecommunications carrier (“ETC”) which offered broadband service, on its own or through an affiliate, must also offer Lifeline-supported broadband service.

Under current FCC regulations, any eligible telecommunications carrier (“ETC”) which offers broadband service, on its own or through an affiliate, must also offer Lifeline-supported broadband service.

Due to this requirement, our Company began offering Lifeline-supported broadband in areas where it operates as an ETC.

In 2017, the FCC released a Lifeline order that included clarifications to the 2016 Lifeline order and proposed reforms aimed at improving program integrity.

In 2017, the FCC released a Lifeline order that clarifies these regulations and proposed reforms aimed at improving program integrity.

As a result of our Company providing Lifeline-supported services, we are subject to increased reporting and recordkeeping requirements, and could be subject to increased regulatory oversight, investigations or audits.

In May 2021, the FCC introduced the temporary Emergency Broadband Benefit (“EBB”) program to help qualifying disadvantaged households pay for Internet service.

Congress extended this benefit through the new Affordable Connectivity Program (“ACP”) that in 2022 replaced EBB with a $30 subsidy for service provided to most of the same consumers.

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

If ACP ends, the Company’s eligible subscribers may not be able to afford broadband service which could reduce our revenues.

These programs are beneficial to participating service providers by increasing the number of customers who can afford and pay for Internet services.

At the same time, participation entails some risk because subsidies will not be received if the customer switches to another provider or if the service provider does not fulfill all program requirements.

Non-participation would make it more difficult to compete as effectively for business from low-income consumers.

The FCC, USAC and other authorities have conducted, and in the future are expected to continue to conduct, more extensive audits of USF support recipients, as well as other heightened oversight activities.

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Other Regulatory Obligations.

Shenandoah Telephone is subject to requirements relating to CPNI, CALEA implementation, interconnection, access to rights of way, number portability, number pooling, accessibility of telecommunications for those with disabilities, robocalls mitigation and protection for consumer privacy.

Shenandoah Telephone and Chillicothe Telephone are subject to requirements relating to the use and safeguard of customer proprietary network information, law enforcement access, interconnection, access to rights of way, number portability, number pooling, accessibility of telecommunications for those with disabilities, payment of various regulatory fees, robocall mitigation and protection of national security.

The FCC and other authorities continue to consider policies to encourage nationwide advanced broadband infrastructure development.

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Our long distance rates are not subject to FCC regulation, but we are required to offer long distance service through a subsidiary other than Shenandoah Telephone, to disclose our long distance rates on a website, to maintain geographically averaged rates, to pay contributions to the USF and make other mandatory payments based on our long-distance revenues, and to comply with other filing and regulatory requirements, including enhanced recordkeeping and quarterly reporting obligations and being subject to greater oversight.

In November 2013, the FCC issued an order imposing greater recordkeeping and reporting obligations on certain long distance providers delivering calls to rural areas.

The order imposes greater recordkeeping and quarterly reporting obligations on such providers, and generally subjects such providers to greater oversight.

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Regulation of Our Other Services

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If for some reason a licensee cannot meet these safe harbor requirements, it can file a detailed renewal showing based on the actual service provided by the station.

Construction and Operation of Tower Facilities.

The construction of new towers, and in some cases the modification of existing towers, may be subject to environmental review pursuant to the National Environmental Policy Act of 1969 (“NEPA”), which requires federal agencies to evaluate the environmental impacts of their decisions under some circumstances.

FCC regulations implementing NEPA place responsibility on each applicant to investigate any potential environmental effects of a proposed operation, including health effects relating to radio frequency emissions, and impacts on endangered species such as certain migratory birds, and to disclose any significant effects on the environment to the agency prior to commencing construction.

In the event that the FCC determines that a proposed tower would have a significant environmental impact, the FCC would require preparation of an environmental impact statement, which would be subject to public comment.

In addition, tower construction is subject to regulations including the National Historic Preservation Act.

Compliance with FAA, environmental or historic preservation requirements could significantly delay or prevent the registration or construction of a particular tower or make tower construction more costly.

On July 15, 2016, Congress enacted new tower marking requirements for certain towers located in rural areas, which may increase our

operational costs.

However, statutory changes adopted by Congress in the 2018 FAA Reauthorization Act may ameliorate or mitigate some of those costs.

In some jurisdictions, local laws or regulations may impose similar requirements.

Tower Facilities Siting.

States and localities are authorized to engage in forms of regulation, including zoning and land-use regulation, which may affect our ability to select and modify sites for wireless tower facilities.

States and localities may not engage in forms of regulation that effectively prohibit the provision of wireless services, discriminate among functionally equivalent services or regulate the placement, construction or operation of wireless tower facilities on the basis of the environmental effects of radio frequency emissions.

Courts and the FCC are routinely asked to review whether state and local zoning and land-use actions should be preempted by federal law, and the FCC also is routinely asked to consider other issues affecting wireless facilities siting in other proceedings.

We cannot predict the outcome of these proceedings or the effect they may have on us.

Human Capital Management

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Our Chief Human Resources Officer (“CHRO”) is responsible for developing and executing the Company’s human capital management strategy in alignment with the business.

This includes the attraction, acquisition, development, retention and engagement of talent to deliver on the Company’s strategy, the design of employee compensation and benefits programs and oversight of our diversity and inclusion efforts.

This includes the attraction, acquisition, development, retention and engagement of talent to deliver on the Company’s strategy and the design of employee compensation and benefits programs.

Our CHRO continuously evaluates, modifies and enhances our internal processes and technologies to increase employee engagement, productivity and effectiveness.

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We have achieved this level of success through our deliberate creation and management of both regional and corporate safety committees.

Our commitment to safety has also allowed us to achieve a 2023 OSHA Incident Rate of approximately 1.2, compared to the national utilities industry benchmark of 1.7.

Compensation and Benefits

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• Focus both individual and organizational effort around strategy execution, accountability and Company core values for achieving key business outcomes;

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• Emphasize individual performance-based differentiation linked to corporate and shareholder values.

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We also provide eligible employees the ability to participate in a 401(k) Plan which has competitive Company contributions, as well as generous health and welfare benefits, paid time off, employee assistance programs, and educational assistance, among many others.

Diversity and Inclusion

We believe that a diverse workforce is critical to our success.

Our efforts have been focused in three areas:

inspiring innovation through an inclusive and diverse culture;

expanding our efforts to recruit, hire and retain experienced, diverse talent;

and identifying strategic initiatives to accelerate our inclusion and diversity programs.

Training and Talent Management

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We leverage our training and talent management efforts to ensure we have ready-now successors identified as the Company continues to grow and evolve.

Our Board of Directors regularly reviews management development and management succession planning with our CEO, with more in-depth reviews of management development and succession planning designed to maximize the pool of internal candidates who can assume top management positions regularly conducted by the Compensation Committee.

Employee Engagement

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We will continue to poll our employees, as appropriate, and build action plans to address feedback shared by our team members.

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Information About Our Executive Officers

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Tormey Vice President and Chief Human Resources Officer 51 July 2019

Romps Vice President and Chief Accounting Officer 56 July 2021

Senior Vice President Engineering and Operations 51 July 2021

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Dara Leslie Senior Vice President Sales & Marketing 57 June 2022

Senior Vice President Commercial Sales

49 April 2024

French is President and Chief Executive Officer for Shentel.

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Prior to her time at CFA Institute, Mrs.

a number of different roles over 16 years with M&T Bank in Buffalo, NY, including Group Vice President, Technology Business Services, Vice President of Retail Operations and Assistant Vice President, Web Product Owner.

She received her Bachelor of Arts degree from Vassar College and her Masters of Business Administration from the University of Rochester.

Cheng held a number of different roles over 16 years with M&T Bank in Buffalo, NY, including Group Vice President, Technology Business Services, Vice President of Retail Operations and Assistant Vice President, Web Product Owner.

She received her Bachelor of Arts degree from Vassar College and her Masters of Business

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Administration from the University of Rochester.

Additionally, Mrs.

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She holds a Bachelor of Science in Psychology from Florida State University and a Master of Arts in Industrial Organizational Psychology from the University of New Haven.

Romps is Vice President and Chief Accounting Officer for Shentel and is responsible for all accounting, financial reporting, internal controls, SEC, Sarbanes-Oxley and income tax compliance.

Romps joined the Company in July 2021 and has 30 years of progressive accounting and finance experience, including six years as Chief Accounting Officer of Continental Building Products, a publicly-traded building materials company, eight years with AT&T (formerly SBC Communications and Ameritech) and four years with Ernst & Young.

Romps is a certified public accountant and earned a B.A.

in Accounting from Michigan State University and MBA from the Kellogg Graduate School of Management at Northwestern University.

Mason is Senior Vice President Engineering and Operations at Shentel and is responsible for leading our network strategy, engineering, construction and operations functions.

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Leslie has a master’s degree from Old Dominion University and a bachelor’s degree from the University of North Carolina at Greensboro.

Lytle is Senior Vice President Commercial Sales for Shentel.

He joined Shentel in March 2024 and has over 25 years of telecommunications experience.

Lytle most recently served as Chief Revenue Officer at Horizon.

Prior to Horizon, Mr.

Lytle served as Vice President of Sales at Segra, where he was responsible for developing and growing the enterprise business, and he has also held a senior leadership role at Comcast.

Lytle earned a bachelor’s degree from Baldwin Wallace University.

Websites and Additional Information

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In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding the Company.

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

What changed 10-K

Item 1. Business