What changed in this filing

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Item 1A. Risk Factors

2025-02-20 compared with 2024-02-21 · 77 added, 105 removed, 201 unchanged (48% of the section changed)

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

The increasing demand for faster residential internet bandwidth driven by working and learning from home since the outbreak of COVID-19 has increased the availability of capital to fund FTTH and cable overbuilds, and approximately 17% of the passings in our incumbent cable business currently have a FTTH or cable competitor.

Approximately 28% of the passings in our incumbent broadband business currently have a FTTH or cable competitor, including 23% of our incumbent cable passings and 100% of our FTTH passings in our Ohio incumbent telephone market.

Wireless and satellite providers are also entering the market for broadband.

In some areas, wireless providers have partnered with broadband providers to offer a converged bundle of broadband and wireless.

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

Additionally, 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.

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

Some of our competitors possess greater resources, have greater brand recognition, have more extensive coverage areas, have access to spectrum or technologies not available to us, are able to offer bundled service offerings that we are not able to duplicate and offer more services than we do.

If significant numbers of our subscribers elect to move to competing providers, or if market saturation limits the rate of new subscriber additions, we may not be able to continue to grow our revenue.

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

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

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

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

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

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

If we are unable to complete these upgrades, we may lose customers to our competitors and our Incumbent Broadband revenues could be adversely affected in the future.

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

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

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

Wireless providers are also entering the market for broadband.

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

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

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

We have experienced reductions in the number of access lines and DSL subscriptions in our RLEC markets and we anticipate that the long-term trend may continue.

Further, competitors in our RLEC markets may receive support under the Connect America Fund, Rural Development Opportunity Fund, American Rescue Plant Act or Infrastructure Investment and Jobs Act to build broadband facilities to unserved homes that do not meet the minimum broadband speeds in some areas already served by our DSL networks.

As a result, new competitors may overbuild these markets and our RLEC revenue decline may accelerate.

The Company’s commercial fiber business faces intense competition from several local and national providers.

Most of our competitors possess greater resources, have greater brand recognition, have more extensive coverage areas, have access to technologies not available to us, are able to offer bundled service offerings that we are not able to duplicate and offer more services than we do.

If a significant numbers of our customers elect to move to competing providers, our Commercial Fiber revenues could be adversely affected.

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

We have experienced reductions in the number of access lines

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

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

If a significant number of our customers elect to move to competing providers, our Commercial Fiber revenues could be adversely affected.

Our future growth is primarily dependent upon our expansion strategy, which may or may not be successful.

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This expansion strategy includes our FTTH broadband service, which we offer under the Glo Fiber brand.

This brand is relatively new in the marketplace and the success of our strategy will depend on the degree to which we are able to successfully establish and continue to enhance this brand, which is not assured.

This strategy requires considerable management resources and capital investment and it is uncertain whether and when it will contribute to positive free cash flow and the degree to which we will otherwise achieve our strategic objectives, on a timely basis or at all.

The Glo Fiber brand, which is also used in our Commercial Fiber business, is relatively new in the marketplace and the success of our strategy will depend on the degree to which we are able to successfully establish and continue to enhance this brand, which is not assured.

The expansion strategy requires considerable management resources and capital investment and it is uncertain whether and when it will contribute to positive free cash flow and the degree to which we will otherwise achieve our strategic objectives, on a timely basis or at all.

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

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

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We may face resistance from competitors who are already in markets we wish to enter.

Incumbent telephone competitors may choose to overbuild their copper networks with fiber after we invest.

If our expectations regarding our ability to attract customers in these communities are not met, or if the capital requirements to complete the network investment or the time required to attract our expected level of customers are incorrect, our financial performance and returns on investment may be negatively impacted.

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Changes in governmental regulations or changes in these relationships could have a material adverse effect on our business and our results of operations.

We may incur more churn than estimated from our largest customer.

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

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

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

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

Further, we may not be able to replace the churn with new revenue from other carriers where our towers and fiber are located in a timely basis or at all leading to lower revenue and earnings.

Some of our competitors are larger than we are and possess greater resources than we do.

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

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

customers and key personnel.

In some instances, we compete against companies that have greater financial and personnel resources, greater brand name recognition, more extensive coverage areas, access to spectrum or technologies not available to us and long-established relationships with regulatory authorities and customers.

These additional resources may allow these competitors to offer bundled service offerings that we are not able to duplicate and offer more services than we do.

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

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

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

Additionally, as adoption of Artificial Intelligence (AI) technologies becomes a critical component of business, our pace of adoption for AI could impact our cost structure relative to peers.

Should we be slow or unsuccessful in leveraging AI appropriately, our margin position may be lower relative to peers.

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

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

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The COVID-19 pandemic negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets, and another pandemic in the future could have similar effects.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict how further outbreaks of COVID-19 or other future pandemics will impact the Company, and there is no guarantee that efforts by Shentel, designed to address adverse impacts of COVID-19 or other pandemics, will be effective.

Although the Company has instituted a distributed-first work environment, the COVID-19 pandemic did, and a future pandemic could, have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

• additional disruptions or delays in our operations or network performance, as well as network maintenance and construction, testing, supervisory and customer support activities, and inventory and supply procurement;

• increases in operating costs, inventory shortages and/or a decrease in productivity related to travel bans, employee illness or quarantine and social distancing efforts, which could include delays in our ability to install broadband services at customer locations or require our vendors and contractors to incur additional costs that may be passed on to us;

• a deterioration in our ability to operate in affected areas or delays in the supply of products or services to us from vendors that are needed for our efficient operations or growth objectives;

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

• inability to obtain needed contract labor due to illness, quarantine or increased hospitalizations;

• increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us, our customers or other third parties as a result of employees or third-party vendors’ employees working remotely;

• a decrease in the ability of our counterparties to meet their obligations to us in full, or at all;

• a general reduction in business and economic activity may severely impact our customers and may cause them to be unable to pay for services provided;

• the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption and/or impact the ability for us to manage and implement the planned build out and expansion of our network.

Given the ongoing

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and dynamic nature of the circumstances, it is difficult to predict how future pandemics will impact the Company, and there is no guarantee that efforts by Shentel, designed to address adverse impacts of future pandemics, will be effective.

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

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

Although we make significant efforts to maintain the security and integrity of the Company’s operations and information technology infrastructure, there can be no assurance that our security

efforts, business impact planning and disaster recovery measures will be effective or that attempted security breaches or catastrophic disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests.

Although we make significant efforts to maintain the security and integrity of the Company’s operations and information technology infrastructure, there can be no assurance that our security efforts, business impact planning and disaster recovery measures will be effective or that attempted security breaches or catastrophic disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests.

Portions of our information technology infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.

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

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

We anticipate it will take multiple years of growth to reduce our SG&A as a percentage of revenue to be comparable to our broadband peers.

If we cannot further grow our revenues at a faster pace than our expenses, our earnings and margins may be lower than our peers which may affect the value of our stock price.

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

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

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

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

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

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

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

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

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

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

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

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

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Our historical operational and financial results have depended, and our future results will depend, upon the retention and continued performance of our management team, as well as the attraction and retention of relevant key roles across our organization.

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

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

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

The loss of the

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

Moreover, an inability to retain sufficient qualified personnel throughout our organization or to attract new personnel as we grow our business could adversely affect our ability to achieve our operational, sales and financial goals impacting our financial results, financial condition and our stock price.

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

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

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

Further, climate change regulations

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

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

Risks Relating to the Horizon Transaction

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

If we are not able to finalize integration of Horizon’s business and assets in an efficient and effective manner, the anticipated benefits and cost savings may not be realized fully or may take longer to realize than expected, and the financial results of our operations and the value of our common stock may be adversely affected.

For example, we may experience unforeseen operating difficulties that require significant financial and managerial resources that would otherwise be available for the ongoing development of our existing operations, attrition of key personnel from Horizon, and other unexpected costs or charges.

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

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

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

Service Level Agreements (“SLAs”) with Horizon’s largest customers may cause material fluctuations in the combined companies’ financial results.

32% of Horizon’s revenues are with the national wireless service providers who have carrier grade SLAs for network reliability and mean time to restore outages.

If Horizon, and their network vendors providing off-network backhaul circuits to certain cellular towers, do not meet the SLAs, contractual monetary penalties may be incurred which would have an adverse effect on revenues and profitability.

Network investments may be required to remediate the issues.

Risks Related to Regulation and Legislation

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

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

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

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

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

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

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

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However, as broadband service is increasingly viewed as an essential service, governments could adopt new laws or regulations related to the prices we charge for our services that could adversely impact our existing business model, revenues, earnings and the value of our and cable industry stock prices.

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

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

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

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

The timing of receipt of government grant payments may adversely affect our liquidity and ability to complete our performance obligations.

The timing of receipt of or an altogether lack of government grant payments may adversely affect our liquidity and ability to complete our performance obligations.

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

Additionally, recent uncertainty related to future U.S.

government budget, operations and spending decisions could result in disruptions of governmental operations and payments from federal agencies.

Such disruptions could also impact municipalities’ ability to fund grant payments.

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

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

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

In partnership with counties in the respective states, Shentel has been awarded grants through various broadband infrastructure grant programs in Virginia, Maryland, West Virginia and Ohio.

As of December 31, 2024, the Company has been awarded grants totaling approximately $149.8 million.

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

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

In the event the Company does not fulfill its commitment to extend its existing broadband network within the time frame allotted, the performance of the broadband network is inadequate, the Company is considered insolvent or the Company fails to meets its funding requirements of the grant projects, the Company may be declared in default of the grant contract.

As the recipient of these grants, the Company has committed to expand its broadband network and improve broadband services to approximately 27,200 unserved homes in the states of Virginia, Maryland, West Virginia and Ohio and upgrade our middle mile network in Ohio within a specified period, as agreed to by the Company and each municipality.

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If the default is not cured in a timely manner, the grant contract could be terminated, grant reimbursements maybe withheld by the municipalities and the Company may be required to repay grant monies previously received, as well as additional penalties and liquidated damages.

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

If this occurs, we could be required to make

significant capital expenditures to increase network capacity in order to avoid service disruptions, service degradation or slower transmission speeds for our customers.

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

Alternatively, we could choose to implement network management practices to reduce the network capacity available to bandwidth-intensive activities during certain times in market areas experiencing congestion, which could negatively affect our ability to retain and attract customers in affected markets.

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

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 and, on that basis, imposed 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.

The 2015 rules also imposed a “transparency” requirement, i.e., an obligation to disclose all material terms and conditions of our service to consumers.

In December 2017, the FCC adopted an order repudiating its prior (2015) treatment of broadband as a “telecommunications service,” reclassifying broadband as an “information service,” and eliminating the rules it had imposed at that time (other than a transparency/disclosure-requirement, which it eased in significant ways).

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

Various parties have challenged this ruling in court, and, we cannot predict how any such court challenges will be resolved.

Moreover, it is possible that the FCC might further revise its approach to broadband Internet access, or that Congress might enact legislation affecting the rules applicable to the service.

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 re-classified 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.

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

Most recently, a ruling in January 2025 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.

If this ruling is appealed and reversed, it may have an adverse impact on our operations.

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

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As discussed in the Risks Related to our Business section above, we expect our capital expenditures to exceed the cash flow provided from continuing operations through 2026 as we invest in our network and subscriber growth and expansion initiatives.

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

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

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

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

We may not be able to generate sufficient cash flows

from operations to raise additional capital in amounts necessary for us to repay our outstanding indebtedness when such indebtedness becomes due and to meet our other cash needs.

As of December 31, 2024, we had borrowed $418.0 million in term loans under our Credit Agreement, dated as of July 1, 2021 (as amended by (i) Amendment No.

1 to Credit Agreement, dated as of May 17, 2023, (ii) Consent and Amendment No.

2 to Credit Agreement, dated as of October 24, 2023, and (iii) Amendment No.

3, dated as of April 1, 2024, the “Credit Agreement”), with various financial institutions party thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders, which contains (i) a $150 million available revolving credit facility due June 2026 (the “Revolver”), (ii) a $150 million delayed draw amortizing term loan due July 1, 2026 (“Term Loan A-1”), (iii) a $150 million delayed draw amortizing term loan due July 1, 2028 (“Term Loan A-2”), and (iv) a $225 million delayed draw amortizing term loan due July 2028 (“Term Loan A-3” and collectively with Term Loan A-1 and Term Loan A-2, the “Term Loans”).

If we are unable to refinance our June 2026 maturities on terms acceptable to us, secure additional capital on terms acceptable to us or our costs to expand our networks are greater than we anticipate, we may not have sufficient capital to complete our expansion plans and may have to curtail our expansion plans.

We may not be able to generate sufficient cash flows from operations to raise additional capital in amounts necessary for us to repay our outstanding indebtedness when such indebtedness becomes due and to meet our other cash needs.

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Our level of indebtedness could adversely affect our financial health and ability to compete.

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

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

Under the Credit Agreement, we are required to comply with specified financial and operating covenants in addition to making scheduled payments.

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

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Our business may be impacted by new or changing tax laws or regulations and actions by federal, state and/or local agencies, or how judicial authorities apply tax laws.

In connection with the products and services we sell, we calculate, collect and remit various federal, state and local taxes, surcharges and regulatory fees to numerous federal, state and local governmental authorities, including federal

USF contributions and regulatory fees.

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

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In many cases, the application of tax laws is uncertain and subject to differing interpretations, especially when evaluated against new technologies and telecommunications services, such as broadband internet access and cloud related services.

In the event that we have incorrectly calculated, assessed or remitted amounts that were due to governmental authorities, we could be subject to additional taxes, fines, penalties or other adverse actions, which could materially impact our business, financial condition and operating results.

Table of Conten t s

financial condition and operating results.

In the event that federal, state and/or local municipalities were to significantly increase taxes on our network, operations or services, or seek to impose new taxes, it could have a material adverse effect on our business, financial condition, operating results or ability to do business.

A material impairment in the carrying value of acquired goodwill or other intangible assets could negatively affect our results of operations.

A portion of our assets are goodwill and other intangible assets, the majority of which are not amortized but are reviewed for impairment at least annually and more often if indicators of impairment exist.

If the carrying value of these assets exceeds the current estimated fair value, the asset is considered impaired, and this would result in a noncash charge to earnings, which could be material.

Events and conditions that could result in impairment include a sustained drop in the market price of our common stock, increased competition or loss of market share, obsolescence, deterioration in macroeconomic conditions, or declining financial performance in comparison to projected results.

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

What changed 10-K

Item 1A. Risk Factors