UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the quarterly period ended September 30, 2009~~

For the quarterly period ended March 31, 2010

o¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to __________

Commission File No.: 000-09881

SHENANDOAH TELECOMMUNICATIONS COMPANY

(Exact name of registrant as specified in its charter)

VIRGINIA	54-1162807
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

500 Shentel Way, Edinburg, Virginia 22824

(Address of principal executive offices) (Zip Code)

(540) 984-4141

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes xþ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer xþ

Non-accelerated filer ¨

Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No xþ

The number of shares of the registrant’s common stock outstanding on ~~October~~April 23, ~~2009~~2010 was ~~23,640,510.~~

23,737,530.

______________________

~~SHENANDOAH~~SHENANDOAH TELECOMMUNICATIONS COMPANY

INDEX

			Page
			Numbers

PART I.		FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008~~2009		3-4

	Unaudited Condensed Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~		5

	Unaudited Condensed Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the ~~Nine~~Three Months Ended ~~September 30, 2009~~March 31, 2010 and the Year Ended December 31, ~~2008~~2009		6

	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~		7-8

	Notes to Unaudited Condensed Consolidated Financial Statements		~~9-14~~9-12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~15-27~~13-22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		2722

Item 4.	Controls and Procedures		2823

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors		2924

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2924

Item 6.	Exhibits		2924

	Signatures		3025

	Exhibit Index		3126

Index

SHENAND~~SHENANDOAH~~OAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

ASSETS	September 30, 2009		December 31, 2008		March 31, 2010		December 31, 2009

Current Assets
Cash and cash equivalents	$	14,918	$	5,240	$	18,198	$	12,054
Accounts receivable, net		15,621		16,131		16,734		15,058
Vendor credits receivable		178		5,232
Income taxes receivable		-		7,366		734		5,531
Materials and supplies		4,706		6,376		4,895		6,062
Prepaid expenses and other		2,663		2,283		3,209		2,504
Assets held for sale		10,870		28,310		10,676		10,810
Deferred income taxes		1,848		1,483		616		616
Total current assets		50,804		72,421		55,062		52,635

Investments, including $1,880 and $1,440 carried at fair value		8,666		8,388
Investments, including $2,085 and $1,990 carried at fair value						8,683		8,705

Property, Plant and Equipment
Plant in service		344,678		323,096		378,404		373,111
Plant under construction		22,647		5,076		12,557		9,116
		367,325		328,172		390,961		382,227
Less accumulated amortization and depreciation		172,447		151,695		187,513		179,925
Net property, plant and equipment		194,878		176,477		203,448		202,302

Other Assets
Intangible assets, net		2,711		3,163		2,310		2,417
Cost in excess of net assets of businesses acquired		4,547		4,547		4,418		4,418
Deferred charges and other assets, net		1,391		1,841		1,216		1,248
Net other assets		8,649		9,551		7,944		8,083
Total assets	$	262,997	$	266,837	$	275,137	$	271,725

See accompanying notes to unaudited condensed consolidated financial statements.

(Continued)

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY	September 30, 2009			December 31, 2008			March 31, 2010			December 31, 2009

Current Liabilities
Current maturities of long-term debt	$	6,357		$	4,399		$	5,588		$	4,561
Accounts payable		4,698			5,607			5,213			8,804
Advanced billings and customer deposits		6,343			5,151			6,542			6,349
Accrued compensation		1,414			2,584			1,181			1,003
Liabilities held for sale		1,092			1,013			890			858
Income taxes payable		6,209			-
Accrued liabilities and other		3,450			5,631			3,573			3,053
Total current liabilities		29,563			24,385			22,987			24,628

Long-term debt, less current maturities		22,718			36,960			26,248			28,399

Other Long-Term Liabilities
Deferred income taxes		22,435			29,505			29,095			29,649
Deferred lease payable		3,259			3,142			3,430			3,351
Asset retirement obligations								6,033			5,966
Other liabilities		8,881			6,533			4,133			4,060
Total other liabilities		34,575			39,180			42,691			43,026

Commitments and Contingencies

Shareholders’ Equity
Common stock		17,094			16,139			18,651			17,890
Retained earnings		161,540			152,706			166,984			160,230
Accumulated other comprehensive loss, net of tax		(2,493	)		(2,533	)		(2,424	)		(2,448	)
Total shareholders’ equity		176,141			166,312			183,211			175,672

Total liabilities and shareholders’ equity	$	262,997		$	266,837		$	275,137		$	271,725

See accompanying notes to unaudited condensed consolidated financial statements.

Index

SH~~SHENANDOAH~~ENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2009			2008			2009			2008			2010			2009


Operating revenues	$	40,115		$	37,408		$	120,356		$	107,304		$	41,518		$	40,102

Operating expenses:
Cost of goods and services, exclusive of depreciation and amortization shown separately below		13,703			10,712			39,452			31,394			13,918			12,693
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		7,692			7,724			22,569			21,052			7,773			7,543
Depreciation and amortization		8,151			6,484			24,116			19,304			8,327			7,854
Total operating expenses		29,546			24,920			86,137			71,750			30,018			28,090
Operating income		10,569			12,488			34,219			35,554			11,500			12,012

Other income (expense):
Interest expense		(193	)		(103	)		(1,128	)		(783	)		(310	)		(531	)
Gain (loss) on investments, net		201			(386	)		(203	)		(746	)		(67	)		(627	)
Non-operating income, net		95			153			449			638			87			167
Income from continuing operations before income taxes		10,672			12,152			33,337			34,663			11,210			11,021

Income tax expense		4,326			4,774			14,019			13,881			4,641			4,864
Net income from continuing operations		6,346			7,378			19,318			20,782			6,569			6,157
Loss from discontinued operations, net of tax benefits of $24, $429, $6,415 and $1,357, respectively		(39	)		(636	)		(10,484	)		(2,128	)
Net income	$	6,307		$	6,742		$	8,834		$	18,654
Earnings (loss) from discontinued operations, net of tax (expense) benefit of $(119) and $6,754, respectively														185			(10,369	)
Net income (loss)													$	6,754		$	(4,212	)

Basic and diluted income (loss) per share:

Net income from continuing operations	$	0.27		$	0.31		$	0.81		$	0.88		$	0.28		$	0.26
Loss from discontinued operations		-			(0.03	)		(0.44	)		(0.09	)
Net income	$	0.27		$	0.28		$	0.37		$	0.79
Net earnings (loss) from discontinued operations														0.01			(0.44	)
Net income (loss)													$	0.29		$	(0.18	)

Weighted average shares outstanding, basic		23,640			23,541			23,633			23,532			23,698			23,622

Weighted average shares, diluted		23,706			23,610			23,696			23,591			23,733			23,693

See accompanying notes to unaudited condensed consolidated financial statements.

Index

SHENAN~~SHENANDOAH~~DOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

	Shares		Common Stock		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total			Shares		Common Stock		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total

Balance, December 31, 2007, as previously reported		23,509	$	14,691	$	136,667		$	(1,739	)	$	149,619
Prior period adjustment (see note 3)		-		-		(1,036	)		-			(1,036	)
Balance, December 31, 2007, as adjusted		23,509	$	14,691	$	135,631		$	(1,739	)	$	148,583
Balance, December 31, 2008															23,605	$	16,139	$	152,706		$	(2,533	)	$	166,312
Comprehensive income:
Net income		-		-		24,145			-			24,145			-		-		15,092			-			15,092
Reclassification adjustment for unrealized loss from pension plans included in net income, net of tax		-		-		-			137			137			-		-		-			55			55
Net unrealized loss from pension plans, net of tax		-		-		-			(931	)		(931	)		-		-		-			30			30
Total comprehensive income												23,351													15,177
Dividends declared ($0.30 per share)		-		-		(7,070	)		-			(7,070	)
Dividends declared ($0.32 per share)															-		-		(7,568	)		-			(7,568	)
Dividends reinvested in common stock		24		550		-			-			550			32		560		-			-			560
Stock-based compensation		-		161		-			-			161			-		676		-			-			676
Conversion of liability classified awards to equity classified awards		-		65		-			-			65			-		85		-			-			85
Common stock issued through exercise of incentive stock options		72		597		-			-			597			44		367		-			-			367
Net excess tax benefit from stock options exercised		-		75		-			-			75			-		63		-			-			63

Balance, December 31, 2008		23,605	$	16,139	$	152,706		$	(2,533	)	$	166,312
Balance, December 31, 2009															23,681	$	17,890	$	160,230		$	(2,448	)	$	175,672
Comprehensive income:
Net income		-		-		8,834			-			8,834			-		-		6,754			-			6,754
Reclassification adjustment for unrealized loss from pension plans included in net income, net of tax		-		-		-			40			40			-		-		-			24			24
Total comprehensive income												8,874													6,778
Stock-based compensation		-		497		-			-			497			-		142		-			-			142
Conversion of liability classified awards to equity classified awards		-		85		-			-			85
Common stock issued through exercise of incentive stock options		35		310		-			-			310			56		549		-			-			549
Net excess tax benefit from stock options exercised		-		63		-			-			63			-		70		-			-			70

Balance, September 30, 2009		23,640	$	17,094	$	161,540		$	(2,493	)	$	176,141
Balance, March 31, 2010															23,737	$	18,651	$	166,984		$	(2,424	)	$	183,211

See accompanying notes to unaudited condensed consolidated financial statements.

Index

SHENANDOAH ~~TELECOMMUNICATIONS~~ TELECOMMUNICATIO NSCOMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended September 30,						Three Months Ended March 31,
	2009			2008			2010			2009

Cash Flows From Operating Activities
Net income	$	8,834		$	18,654
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	6,754		$	(4,212	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairment on assets held for sale		17,545			-			-			17,545
Depreciation		23,666			22,318			8,218			7,715
Amortization		450			454			109			127
Provision for bad debt								177			112
Stock based compensation expense		475			84			142			116
Excess tax benefits on stock option exercises		(63	)		(54	)		(70	)		(58	)
Deferred income taxes		(7,463	)		1,265			(501	)		(6,806	)
Loss on disposal of assets		734			256
Realized losses on investments carried at fair value		188			94
Unrealized (gains) losses on investments carried at fair value		(515	)		398
Net loss on disposal of equipment								145			257
Realized loss on disposal of investments								150			181
Unrealized (gains) losses on investments								(197	)		(96	)
Net (gain) loss from patronage and equity investments		395			275			78			485
Other		2,300			(3,735	)		189			516
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		685			(3,810	)		(1,803	)		2,007
Materials and supplies		1,694			(386	)		1,167			665
Income taxes receivable								4,797			4,953
Increase (decrease) in:
Accounts payable		(915	)		1,589			(3,526	)		186
Deferred lease payable		114			210			78			185
Other prepaids, deferrals and accruals		11,384			(6,400	)		82			(2,642	)

Net cash provided by operating activities	$	59,508		$	31,212		$	15,989		$	21,236

Cash Flows From Investing Activities
Purchase and construction of plant and equipment	$	(37,648	)	$	(38,900	)
Purchase and construction of property, plant and equipment							$	(9,570	)	$	(9,077	)
Proceeds from sale of equipment		75			210			240			57
Purchase of investment securities		(360	)		(342	)		(43	)		(41	)
Proceeds from investment activities		14			633

Proceeds from sale of investment securities								34			3

Net cash used in investing activities	$	(37,919	)	$	(38,399	)	$	(9,339	)	$	(9,058	)

(Continued)

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended March 31,
	2010			2009

Cash Flows From Financing Activities
Principal payments on long-term debt	$	(1,125	)	$	(1,085	)
Amounts borrowed under debt agreements		-			2,000
Excess tax benefits on stock option exercises		70			58
Proceeds from exercise of incentive stock options		549			262

Net cash provided by (used in) financing activities	$	(506	)	$	1,235

Net increase in cash and cash equivalents	$	6,144		$	13,413

Cash and cash equivalents:
Beginning		12,054			5,240
Ending	$	18,198		$	18,653

Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	382		$	511

Income taxes	$	427		$	103

Nine Months Ended
September 30,

2009 2008

Cash Flows From Financing Activities
Principal payments on long-term debt $ (14,284 ) $ (3,172 )
Amounts borrowed under debt agreements 2,000 -
Excess tax benefits on stock option exercises 63 54
Proceeds from exercise of incentive stock options 310 378

Net cash used in financing activities $ (11,911 ) $ (2,740 )

Net increase (decrease) in cash and cash equivalents $ 9,678 $ (9,927 )

Cash and cash equivalents:
Beginning 5,240 17,245
Ending $ 14,918 $ 7,318

Supplemental Disclosures of Cash Flow Information
Cash payments for: ��

Interest $ 1,437 $ 1,181

Income taxes $ 1,596 $ 7,853

During the ~~nine~~three months ended ~~September 30,~~March 31, 2010 and 2009, the Company utilized ~~$5,054~~$75 and $2,051, respectively, of vendor credits receivable to reduce cash paid for acquisitions of property, plant and equipment.

See accompanying notes to unaudited condensed consolidated financial statements.

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. The interim condensed consolidated financial statements of Shenandoah Telecommunications Company and Subsidiaries (collectively, the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature. These statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2008.~~2009. The balance sheet information at December 31, ~~2008~~2009 was derived from the audited December 31, ~~2008~~2009 consolidated balance sheet.

2. Operating revenues and income from operations for any interim period are not necessarily indicative of results that may be expected for the entire year.

3. During the second quarter of 2009, the Company determined that it had understated its asset retirement obligations relating to co-located cell sites beginning with the year ended December 31, 2003. As a result, the Company has corrected its consolidated balance sheet as of December 31, 2008 and its consolidated income statements for the three months and nine months ended September 30, 2008, included in this report.

The cumulative effect of this correction, net of tax effects, is a reduction of retained earnings of $1,036,000 as of the beginning of fiscal year 2008 and a decrease to net income from continuing operations and net income of $66,000 and $195,000 for the three and nine months ended September 30, 2008, respectively.

~~The corrections do not affect historical net cash flows from operating, investing or financing activities.~~

Following is a summary of the effects of these changes on the Company’s consolidated balance sheet as of December 31, 2008, as well as the effects of these changes on the Company’s consolidated statements of income for the three months and nine months ended September 30, 2008; and the effects of these changes on the consolidated statement of shareholders’ equity and comprehensive income for the year ended December 31, 2008:

Consolidated Statements of Income

As Previously Reported
Adjustments

As Adjusted

(in thousands)
Three months ended September 30, 2008
Cost of goods and services $ 10,662 $ 50 $ 10,712
Depreciation and amortization 6,424 60 6,484
Total operating expenses 24,810 110 24,920
Operating income 12,598 (110 ) 12,488
Income from continuing operations before income taxes 12,262 (110 ) 12,152
Income tax expense 4,818 (44 ) 4,774
Net income from continuing operations 7,444 (66 ) 7,378
Net income 6,808 (66 ) 6,742

Nine months ended September 30, 2008
Cost of goods and services $ 31,244 $ 150 $ 31,394
Depreciation and amortization 19,127 177 19,304
Total operating expenses 71,423 327 71,750
Operating income 35,881 (327 ) 35,554
Income from continuing operations before income taxes 34,990 (327 ) 34,663
Income tax expense 14,013 (132 ) 13,881
Net income from continuing operations 20,977 (195 ) 20,782
Net income 18,849 (195 ) 18,654

~~Index~~

Consolidated Balance Sheet

As Previously Reported
Adjustments

As Adjusted

(in thousands)
December 31, 2008
Plant in service $ 321,044 $ 2,052 $ 323,096
Accumulated amortization and depreciation 150,499 1,196 151,695
Net property, plant and equipment 175,621 856 176,477
Total assets 265,981 856 266,837
Deferred income taxes 30,401 (896 ) 29,505
Other liabilities 3,485 3,048 6,533
Total other liabilities 37,028 2,152 39,180
Retained earnings 154,002 (1,296 ) 152,706
Total shareholders’ equity 167,608 (1,296 ) 166,312
Total liabilities and shareholders’ equity 265,981 856 266,837

Consolidated Statement of Shareholders’ Equity and Comprehensive Income

As Previously Reported
Adjustments

As Adjusted

(in thousands)
As of December 31, 2007
Retained earnings $ 136,667 $ (1,036 ) $ 135,631
Total stockholders’ equity 149,619 (1,036 ) 148,583

4. In September 2008, the Company announced its intention to sell its Converged Services operation, and the related assets and liabilities were reclassified as held for sale in the consolidated balance sheet and the historical operating results were reclassified as discontinued operations. Depreciation and amortization on long-lived assets was also discontinued.

The Company began an auction process with respect to the sale of the Converged Services assets in the fourth quarter of 2008. The Company determined, both at September 30, 2008 and December 31, 2008, based on its analysis of similar transactions, comparable values for other companies in the industry, and the broad range of values indicated by potential buyers during the early stages of the auction process, that no write-down of the carrying value of the net assets held for sale was required.

~~Subsequently, in~~In connection with the preparation of the Company’s first quarter 2009 financial statements, ~~based upon changes in the marketplace for this type of asset and further developments in the auction process,~~ the Company determined that the fair value of Converged Services had declined from earlier estimates. Accordingly, the Company recorded an impairment loss of $17.5 million ($10.7 million, net of taxes) to reduce the carrying value of these assets to their estimated fair value less cost to sell as of March 31, 2009. At ~~September 30, 2009,~~March 31, 2010, negotiations to complete the sale continue, and there has been no change in the estimated fair value of the assets.

Assets and liabilities held for sale consisted of the following:

September 30, 2009 December 31, 2008
Assets held for sale:
Property, plant and equipment, net $ 7,506 $ 15,414
Goodwill - 6,539
Intangible assets, net 915 1,931
Deferred charges 1,628 3,384
Other assets 821 1,042
$ 10,870 $ 28,310
Liabilities:
Other liabilities $ 1,092 $ 1,013

	March 31, 2010		December 31, 2009
Assets held for sale:
Property, plant and equipment, net	$	7,380	$	7,484
Intangible assets, net		868		868
Deferred charges		1,610		1,628
Other assets		818		830
	$	10,676	$	10,810
Liabilities:
Other liabilities	$	890	$	858

~~Index~~

Discontinued operations included the following amounts of operating revenue and income (loss) before income taxes:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2009			2008			2009			2008			2010		2009
Operating revenues	$	3,123		$	3,387		$	10,033		$	9,005		$	3,447	$	3,623
Loss before income taxes	$	(63	)	$	(1,065	)	$	(16,899	)	$	(3,485	)
Earnings (loss) before income taxes													$	304	$	(17,123	)

5.4. Basic net income (loss) per share was computed on the weighted average number of shares outstanding. Diluted net income (loss) per share was computed under the treasury stock method, assuming the conversion as of the beginning of the period for all dilutive stock options. During 2007, the Company issued approximately 68,000 performance share units that are “contingently issuable shares” under the treasury stock method. Based upon the Company’s stock price during the thirty day periods prior to ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ these shares did not meet the threshold to be considered dilutive shares, and were excluded from the respective diluted net income per share computations. At ~~September 30, 2009,~~March 31, 2010, approximately 56,000 performance share units were outstanding, while at ~~September 30, 2008,~~March 31, 2009, approximately ~~59,000~~62,000 performance share units were outstanding. During February 2009, the Company issued options to purchase approximately 169,000 shares at an exercise price of $25.26 per share, and during both 2007 and 2008, the Company issued options to purchase 30,000 shares at exercise prices of $20.50 and $22.76, respectively. Based upon the average daily closing price of the Company’s common stock as reported on the NASDAQ Stock Market for the three months ended March 31, 2010, all of these options were anti-dilutive and were excluded from the dilutive net income (loss) per share calculation for the three months ~~and nine~~ended March 31, 2010. For the three months ended ~~September 30, 2009.~~March 31, 2009, the options issued in February 2009 were anti-dilutive, and were excluded from the diluted net income (loss) per share calculation for that period. There were no adjustments to net ~~income.~~income (loss) for either period.

Index

6.5. Investments include ~~$1.9~~$2.1 million and ~~$1.4~~$2.0 million of investments carried at fair value as of ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008,~~2009, respectively, consisting of equity, bond and money market mutual funds. These investments were acquired under a rabbi trust arrangement related to a non-qualified supplemental retirement plan maintained by the Company. During the three months ended ~~September 30, 2009,~~March 31, 2010, the Company contributed ~~$28~~$40 thousand to the trust, recognized no$11 thousand in net losses on dispositions of investments, recognized $8$7 thousand in dividend and interest income from investments, and recognized net unrealized gains of $209 thousand on these investments. During the nine months ended September 30, 2009, the Company contributed $92 thousand to the trust, recognized net losses on dispositions of investments of $188 thousand, recognized $27 thousand in dividend and interest income from investments, and recognized net unrealized gains of $509$59 thousand on these investments. Fair values for these investments held under the rabbi trust were determined by Level 1 quoted market prices for the underlying mutual ~~funds.~~fund s.

7.6. Financial instruments on the consolidated balance sheets that approximate fair value include: cash and cash equivalents, receivables, investments carried at fair value, payables, accrued liabilities, and long-term debt. Due to the relatively short time frame to maturity of the Company’s fixed rate debt, fair value approximates its carrying value.

8.7. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision makers. ~~During 2009, the Company restructured its business segments to reflect changes in the Company’s corporate direction and strategy in response to changes in the economic environment and other factors.~~ The Company has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: (1) Wireless, (2) Wireline, and (3) Cable TV. ~~The~~A fourth segment, Other, ~~column~~ primarily includes Shenandoah Telecommunications Company, the parent holding company as well as certain general and administrative costs historically charged to Converged Services that cannot be allocated to discontinued operations. ~~Prior period comparative information has been restated to conform to the current structure.~~

The Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate of Sprint Nextel. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers.

The Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long distance access services throughout Shenandoah County and portions of northwestern Augusta County, Virginia, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland.

The Cable TV segment provides cable television services in Shenandoah County, Virginia, and ~~beginning December 1, 2008,~~ in various franchise areas in West Virginia and Alleghany County, Virginia.

Index

Selected financial data for each segment is as follows:

Three months ended March 31, 2010

(In thousands)

	Wireless			Wireline			Cable TV			Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	26,527		$	3,377		$	3,535		$	-		$	-		$	33,439
Other		2,960			4,742			377			-			-			8,079
Total external revenues		29,487			8,119			3,912			-			-			41,518
Internal revenues		746			3,261			10			-			(4,017	)		-
Total operating revenues		30,233			11,380			3,922			-			(4,017	)		41,518

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		9,878			4,163			3,328			67			(3,518	)		13,918
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		4,103			1,832			1,525			812			(499	)		7,773
Depreciation and amortization		5,239			1,925			1,090			73			-			8,327
Total operating expenses		19,220			7,920			5,943			952			(4,017	)		30,018
Operating income (loss)		11,013			3,460			(2,021	)		(952	)		-			11,500

Interest expense		(53	)		(58	)		(72	)		(468	)		341			(310	)
Non-operating income (expense)		46			18			10			287			(341	)		20
Income (loss) from continuing operations before income taxes		11,006			3,420			(2,083	)		(1,133	)		-			11,210
Income taxes		(4,534	)		(1,301	)		793			401			-			(4,641	)
Net income (loss) from continuing operations	$	6,472		$	2,119		$	(1,290	)	$	(732	)	$	-		$	6,569

Three months ended March 31, 2009

(In thousands)

	Wireless			Wireline			Cable TV			Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	25,360		$	3,265		$	3,606		$	-		$	-		$	32,231
Other		2,822			4,819			230			-			-			7,871
Total external revenues		28,182			8,084			3,836			-			-			40,102
Internal revenues		622			3,069			8			-			(3,699	)		-
Total operating revenues		28,804			11,153			3,844			-			(3,699	)		40,102

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		9,036			4,006			2,836			53			(3,238	)		12,693
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		4,167			1,670			1,182			985			(461	)		7,543
Depreciation and amortization		4,872			2,152			745			85			-			7,854
Total operating expenses		18,075			7,828			4,763			1,123			(3,699	)		28,090
Operating income (loss)		10,729			3,325			(919	)		(1,123	)		-			12,012

Interest expense		(112	)		(64	)		(38	)		(617	)		300			(531	)
Non-operating income (expense)		(22	)		(20	)		(13	)		(105	)		(300	)		(460	)
Income (loss) from continuing operations before income taxes		10,595			3,241			(970	)		(1,845	)		-			11,021
Income taxes		(4,398	)		(1,229	)		368			395			-			(4,864	)
Net income (loss) from continuing operations	$	6,197		$	2,012		$	(602	)	$	(1,450	)	$	-		$	6,157

Index

~~Selected financial data for each segment is as follows:~~

~~Three months ended September 30, 2009~~

~~(In thousands)~~

Wireless Wireline Cable TV Other Eliminations
Consolidated
Totals

External revenues
Service revenues $ 25,287 $ 3,340 $ 3,526 $ - $ - $ 32,153
Access charges - 2,078 - - - 2,078
Facilities and tower lease 1,135 1,860 - - - 2,995
Equipment 1,046 24 41 - - 1,111
Other 543 945 290 - - 1,778
Total external revenues 28,011 8,247 3,857 - - 40,115
Internal revenues 679 3,440 8 - (4,127 ) -
Total operating revenues 28,690 11,687 3,865 - (4,127 ) 40,115

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below 9,594 4,346 3,285 84 (3,606 ) 13,703
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 4,123 1,934 1,309 847 (521 ) 7,692
Depreciation and amortization 5,178 1,999 895 79 - 8,151
Total operating expenses 18,895 8,279 5,489 1,010 (4,127 ) 29,546
Operating income (loss) 9,795 3,408 (1,624 ) (1,010 ) - 10,569

Non-operating income (expense) 111 100 35 450 (400 ) 296
Interest expense (64 ) (68 ) (74 ) (387 ) 400 (193 )
Income (loss) from continuing operations before income taxes 9,842 3,440 (1,663 ) (947 ) - 10,672
Income taxes (4,030 ) (1,286 ) 630 360 - (4,326 )
Net income (loss) from continuing operations $ 5,812 $ 2,154 $ (1,033 ) $ (587 ) $ - $ 6,346

~~Three months ended September 30, 2008~~

~~(In thousands)~~

Wireless Wireline Cable TV Other Eliminations
Consolidated
Totals

External revenues
Service revenues $ 24,240 $ 3,249 $ 1,187 $ - $ - $ 28,676
Access charges - 2,968 - - - 2,968
Facilities and tower lease 1,017 1,576 - - - 2,593
Equipment 1,409 433 19 - - 1,861
Other 254 943 113 - - 1,310
Total external revenues 26,920 9,169 1,319 - - 37,408
Internal revenues 606 2,789 8 - (3,403 ) -
Total operating revenues 27,526 11,958 1,327 - (3,403 ) 37,408

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below 8,583 4,082 902 98 (2,953 ) 10,712
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 4,557 1,883 383 1,351 (450 ) 7,724
Depreciation and amortization 4,259 1,887 265 73 - 6,484
Total operating expenses 17,399 7,852 1,550 1,522 (3,403 ) 24,920
Operating income (loss) 10,127 4,106 (223 ) (1,522 ) - 12,488

Non-operating income (expense) 129 29 (15 ) 375 (751 ) (233 )
Interest expense (85 ) (114 ) (67 ) (588 ) 751 (103 )
Income (loss) from continuing operations before income taxes 10,171 4,021 (305 ) (1,735 ) - 12,152
Income taxes (4,230 ) (1,516 ) 115 857 - (4,774 )
Net income (loss) from continuing operations $ 5,941 $ 2,505 $ (190 ) $ (878 ) $ - $ 7,378

~~Index~~

~~Nine months ended September 30, 2009~~

~~(In thousands)~~

Wireless Wireline Cable TV Other Eliminations
Consolidated
Totals

External Revenues
Service revenues $ 76,348 $ 9,928 $ 10,682 $ - $ - $ 96,958
Access charges - 6,695 - - - 6,695
Facilities and tower lease 3,322 4,630 - - - 7,952
Equipment 3,485 111 76 - - 3,672
Other 1,451 2,880 748 - - 5,079
Total external revenues 84,606 24,244 11,506 - - 120,356
Internal Revenues 1,948 9,568 24 - (11,540 ) -
Total operating revenues 86,554 33,812 11,530 - (11,540 ) 120,356

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below 27,534 12,563 9,211 235 (10,091 ) 39,452
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 12,237 5,374 3,766 2,641 (1,449 ) 22,569
Depreciation and amortization 15,021 6,334 2,513 248 - 24,116
Total operating expenses 54,792 24,271 15,490 3,124 (11,540 ) 86,137
Operating income (loss) 31,762 9,541 (3,960 ) (3,124 ) - 34,219

Non-operating income (expense) 179 202 55 834 (1,024 ) 246 ��
Interest expense (231 ) (192 ) (166 ) (1,563 ) 1,024 (1,128 )
Income (loss) from continuing operations before income taxes 31,710 9,551 (4,071 ) (3,853 ) - 33,337
Income taxes (13,095 ) (3,596 ) 1,547 1,125 - (14,019 )
Net income (loss) from continuing operations $ 18,615 $ 5,955 $ (2,524 ) $ (2,728 ) $ - $ 19,318

~~Nine months ended September 30, 2008~~

~~(In thousands)~~

Wireless Wireline Cable TV Other Eliminations
Consolidated
Totals

External Revenues
Service revenues $ 67,802 $ 9,789 $ 3,591 $ - $ - $ 81,182
Access charges - 7,780 - - - 7,780
Facilities and tower lease 3,010 4,882 - - - 7,892
Equipment 4,221 574 50 - - 4,845
Other 2,437 2,853 315 - - 5,605
Total external revenues 77,470 25,878 3,956 - - 107,304
Internal Revenues 1,804 8,623 24 - (10,451 ) -
Total operating revenues 79,274 34,501 3,980 - (10,451 ) 107,304

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below 25,731 11,723 2,745 307 (9,112 ) 31,394
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 12,826 5,568 1,031 2,966 (1,339 ) 21,052
Depreciation and amortization 12,802 5,498 784 220 - 19,304
Total operating expenses 51,359 22,789 4,560 3,493 (10,451 ) 71,750
Operating income (loss) 27,915 11,712 (580 ) (3,493 ) - 35,554

Non-operating income (expense) 375 95 (18 ) 1,352 (1,912 ) (108 )
Interest expense (286 ) (340 ) (198 ) (1,871 ) 1,912 (783 )
Income (loss) from continuing operations before income taxes 28,004 11,467 (796 ) (4,012 ) - 34,663
Income taxes (11,599 ) (4,357 ) 302 1,773 - (13,881 )
Net income (loss) from continuing operations $ 16,405 $ 7,110 $ (494 ) $ (2,239 ) $ - $ 20,782

~~Index~~

The Company’s assets by segment are as follows:

(In thousands)

	March 31, 2010			December 31, 2009

Wireless	$	123,103		$	146,228
Wireline		74,445			80,668
Cable TV		44,514			20,240
Other (includes assets held for sale)		209,944			172,069
Combined totals		452,006			419,205
Inter-segment eliminations		(176,869	)		(147,480	)
Consolidated totals	$	275,137		$	271,725

September 30,
2009

December 31,
2008

Wireless $ 132,283 $ 121,453
Wireline 76,267 67,884
Cable TV 17,705 19,065
Other (includes assets held for sale) 183,952 196,932
Combined totals 410,207 405,334
Inter-segment eliminations (147,210 ) (138,497 )
Consolidated totals $ 262,997 $ 266,837

9.8. The Company files U.S. federal income tax returns and various state and local income tax returns. With few exceptions, years prior to 2005 are no longer subject to examination. No state or federal income tax audits were in process as of ~~September 30, 2009.~~March 31, 2010.

~~10.~~9. On ~~October 20, 2009, the Company~~’~~s Board of Directors declared a cash dividend of $0.32 per share, payable December 1, 2009 to shareholders of record as of November 10, 2009.~~

~~On November 2, 2009,~~April 16, 2010, the Company ~~closed~~announced that it had signed an asset purchase agreement to purchase the cable operations of JetBroadband Holdings, LLC (“JetBB”) for $148 million in cash, subject to certain adjustments. The acquired cable operations offer video, high speed Internet and voice services representing approximately 66,500 revenue generating units in southern Virginia and southern West Virginia. The acquired networks pass approximately 114,000 homes. The Company anticipates closing on the ~~purchase~~acquisition in 90 to 120 days, following receipt of customers and assets of the North River Telephone Cooperative, serving the Mt. Solon, Virginia, area; the purchase price was approximately $0.6 million. The Company has not completed its assessment of the fair values of the assets acquired. With this acquisition, the Company added approximately 1,000 telephone access lines. The Company has committed to spend $1.8 million through 2010 to upgrade and integrate North River’s network and provide high-speed broadband services to its customers.

The Company has evaluated subsequent events for potential recognition and/or disclosure through November 5, 2009, the date the consolidated financial statements included in this Quarterly Report on Form 10-Q were issued.regulatory approvals.

1412

Index

ITEM~~ITEM~~ 2.

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

This management’s discussion and analysis includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions as they relate to Shenandoah Telecommunications Company or its management are intended to identify these forward-looking statements. All statements regarding Shenandoah Telecommunications Company’s expected future financial position and operating results, business strategy, financing plans, forecasted trends relating to the markets in which Shenandoah Telecommunications Company ~~operates~~operate s and similar matters are forward-looking statements. We cannot assure you that the Company’s expectations expressed or implied in these forward-looking statements will turn out to be correct. The Company’s actual results could be materially different from its expectations because of various factors, including those discussed below and under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, ~~2008.~~2009. The following management’s discussion and analysis should be read in conjunction with the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, ~~2008,~~2009, including the financial statements and related notes included therein.

General

Overview. Shenandoah Telecommunications Company is a diversified telecommunications company providing both regulated and unregulated telecommunications services through its wholly owned subsidiaries. These subsidiaries provide ~~local exchange telephone services and~~ wireless personal communications services (as a Sprint PCS Affiliate of Sprint Nextel), and local exchange telephone services, as well as cable television, video, Internet and data services, long distance, sale of telecommunications equipment, fiber optics facilities, ~~paging~~ and leased tower facilities. The Company has the following three reporting segments, which it operates and manages as strategic business units organized by lines of business:

The Wireless ~~which~~segment provides digital wireless ~~personal communications services, or PCS,~~service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate of Sprint ~~Nextel, through Shenandoah Personal Communications Company,~~Nextel. This segment also owns cell site towers built on leased land, and ~~tower facilities for personal communications services, leased~~leases space on these towers to both ~~affiliated~~affiliates and non-affiliated ~~entities through Shenandoah Mobile Company~~;

service providers.

The Wireline ~~which involves the provision of~~segment provides regulated and ~~non-regulated telephone~~unregulated voice services, ~~Internet~~dial-up and DSL internet access, and ~~leased~~long-distance access services throughout Shenandoah County and portions of northwestern Augusta County, Virginia, and leases fiber optic facilities, ~~primarily through~~throughout the northern Shenandoah ~~Telephone Company, ShenTel Service Company,~~Valley of Virginia, northern Virginia and ~~Shenandoah Network Company, respectively, and long-distance and CLEC services through Shenandoah Long Distance Company, ShenTel Communications Company and Shentel Converged Services~~adjacent areas along the Interstate 81 corridor, including portions of West Virginia ~~Inc.;~~ and Maryland.

The Cable TV ~~which involves the provision of~~segment provides cable television services ~~through Shenandoah Cable Television Company~~ in Shenandoah County, Virginia, and since December 1, 2008, in various franchise areas in West Virginia and Alleghany County, ~~Virginia and various locales throughout West Virginia, through Shentel Cable Company.~~Virginia.

~~The~~A fourth segment, Other, ~~category~~primarily includes ~~the provision of investments and management services to its subsidiaries, through~~ Shenandoah Telecommunications ~~Company.~~Company, the parent holding company, as well as certain general and administrative costs historically charged to Converged Services that cannot be allocated to discontinued operations.

In September 2008, the Company announced its intention to sell its Converged Services operation, and the related assets and liabilities were reclassified as held for sale in the consolidated balance sheet and the historical operating results were reclassified as discontinued operations. Depreciation and amortization on long-lived assets was discontinued.

1513

Index

On April 16, 2010, the Company announced that it had signed an asset purchase agreement to purchase the cable operations of JetBB for $148 million in cash, subject to certain adjustments. The acquired cable operations offer video, high speed Internet and voice services representing approximately 66,500 revenue generating units in southern Virginia and southern West Virginia. The acquired networks pass approximately 114,000 homes. The Company anticipates closing on the acquisition in 90 to 120 days, following receipt of regulatory approvals. The Company expects that JetBB’s operating results will be included in the Company’s Cable Television segment following the purchase, significantly impacting that segment’s operating revenues and expenses. The Company further anti cipates that various fees and other expenses associated with the acquisition will impact the Company’s operating expenses through the date of the acquisition.

Index

Additional Information About the Company’s Business

The following table shows selected operating statistics of the Company for the three months ending on, or as of, the dates shown:

	Sept. 30, 2009			Dec. 31, 2008			Sept. 30, 2008			Dec. 31, 2007			March 31,			Dec. 31,			March 31,			Dec. 31,
													2010			2009			2009			2008

Wireless Segment
Retail PCS Subscribers		219,353			211,462			205,777			187,303			224,526			222,818			213,054			211,462
PCS Market POPS (000) (1)		2,324			2,310			2,308			2,297			2,353			2,327			2,310			2,310
PCS Covered POPS (000) (1)		1,988			1,931			1,898			1,814			2,059			2,033			1,963			1,931
PCS Average Monthly Retail Churn % (2)		2.17	%		1.87	%		1.85	%		2.32	%		1.91	%		1.99	%		2.15	%		1.87	%
CDMA Base Stations (sites)		448			411			378			346			481			476			419			411
EVDO-enabled sites		306			211			134			52			340			334			237			211
EVDO Covered POPS (000) (1)		1,874			1,663			1,292			624			1,968			1,940			1,717			1,663
Towers (100 foot and over)		113			103			103			101
Towers (under 100 foot)		19			15			15			14
Towers (3)														141			138			118			116

Wireline Segment
Telephone Access Lines		23,547			24,042			24,193			24,536			24,241			24,358			23,865			24,042
Total Switched Access Minutes (000)		81,986			90,460			93,813			92,331			80,488			81,260			86,577			90,460
Originating Switched Access Minutes (000)		22,770			25,425			26,203			26,128			23,556			22,572			25,297			25,425
Long Distance Subscribers		10,821			10,842			10,884			10,689			10,896			10,851			10,730			10,842
Long Distance Calls (000) (3)		7,136			7,981			8,086			7,944
Total Fiber Miles – Wireline		49,175			46,733			39,528			35,872
Fiber Route Miles – Wireline		784			756			680			647
Long Distance Calls (000) (4)														7,453			7,200			7,810			7,981
Total Fiber Miles														64,014			58,705			50,593			50,593
Fiber Route Miles														1,570			1,558			1,109			1,109
DSL Subscribers		10,549			9,918			9,754			8,136			11,477			10,985			10,157			9,918
Dial-up Internet Subscribers		3,787			4,866			5,347			7,547			2,979			3,359			4,578			4,866
Cable Television Subscribers (4)		24,117			24,933			8,142			8,303

Cable Television Segment
Video
Homes Passed (5)														56,268			56,268			64,365			64,365
Customers (6)														23,211			22,773			24,794			24,933
Penetration (7)														41.3	%		40.5	%		38.5	%		38.7	%
High-speed Internet
Available Homes (8)														27,522			25,748			19,405			19,405
Customers														2,780			2,083			1,198			1,128
Penetration														10.1	%		8.1	%		6.2	%		5.8	%
Voice
Available Homes														6,355			-			-			-
Customers														37			-			-			-
Penetration														0.6	%		n/a			n/a			n/a

Employees (full time equivalents)		454			445			401			411			456			456			436			445

POPS refers to the estimated population of a given geographic area and is based on information purchased from third party sources. Market POPS are those within a market area which the Company is authorized to serve under its Sprint PCS affiliate agreements, and Covered POPS are those covered by the network’s service area.

PCS Average Monthly Retail Churn is the average of the three monthly subscriber turnover, or churn, calculations for the period.

The Company owns two towers that are not used to provide wireless voice services and are not included in these totals.

Index

Originated by customers of the Company’s Telephone subsidiary.

4)5)

~~The increase at~~Homes and businesses are considered passed (“homes passed”) if we can connect them to our distribution system without further extending the transmission lines. Homes passed is an estimate based upon the best available information. In December ~~31, 2008 is primarily a result of~~2009, the ~~acquisition of cable~~Company sold several small systems covering approximately 8,100 video homes passed, 840 high-speed internet available homes, approximately 1,700 video customers ~~from Rapid Communications, LLC, on December 1, 2008.~~and less than 100 high-speed internet customers.

Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer.

Penetration is calculated by dividing the number of customers by the number of homes passed or available homes, as appropriate.

Homes and businesses are considered available (“available homes”) if we can connect them to our co-axial distribution system without further upgrading the transmission lines and if we offer the service in that area. Homes passed in Shenandoah County are excluded from available homes as we do not offer high-speed internet or voice services over our co-axial distribution network in this market.

~~Index~~

Results of Operations

Three Months Ended ~~September 30, 2009~~March 31, 2010 Compared with the Three Months Ended ~~September 30, 2008~~March 31, 2009

Consolidated Results

The Company’s consolidated results from continuing operations for the ~~third~~first quarter of ~~2009~~2010 and ~~2008~~2009 are summarized as follows:

(in thousands)	Three Months Ended September 30,					Change					Three Months Ended March 31,						Change
	2009		2008			$			%		2010			2009			$			%

Operating revenues	$	40,115	$	37,408		$	2,707		7.2		$	41,518		$	40,102		$	1,416		3.5
Operating expenses		29,546		24,920			4,626		18.6			30,018			28,090			1,928		6.9
Operating income		10,569		12,488			(1,919	)	(15.4	)		11,500			12,012			(512	)	(4.3	)

Other income (expense)		103		(336	)		439		130.7			(290	)		(991	)		701		70.7
Income tax expense		4,326		4,774			(448	)	(9.4	)		4,641			4,864			(223	)	(4.6	)
Net income from continuing operations	$	6,346	$	7,378		$	(1,032	)	(14.0	)	$	6,569		$	6,157		$	412		6.7

Operating revenues

For the three months ended ~~September 30, 2009,~~March 31, 2010, operating ~~revenue~~revenues increased ~~$2.7~~$1.4 million, or ~~7.2%~~3.5%, primarily due to increased ~~service~~ revenue in the Wireless ~~segment and the additional revenue from the Shentel Cable acquisition in late 2008. For the quarter ended September 30, 2009,~~segment. Wireless ~~operating~~service revenues increased $1.2 million, or ~~4.2%~~4.6%, while ~~Cable TV segment operating~~tower lease revenues increased ~~$2.5~~$0.2 million. ~~All other Company revenues decreased by $1.0 million, compared to the three months ended September 30, 2008.~~

Operating expenses

For the ~~quarter~~three months ended ~~September 30, 2009,~~March 31, 2010, operating expenses increased ~~$4.6~~$1.9 million, or ~~18.6%~~6.9%, compared to the ~~2008~~2009 period. The incremental costs of the Shentel Cable operations accounted for ~~$3.9~~$1.1 million of the year over year increase. ~~Capital improvements~~Costs related to the ~~Company’s fiber optic~~expansion of the wireless network and ~~to provide expanded wireless coverage and additional services, specifically EVDO high speed~~the provision of high-speed wireless internet data access ~~availability,~~services added ~~$1.0~~$0.6 million ofin incremental site rent, power and backhaul costs, and $0.4 million in additional depreciation toexpense. All other operating expenses ~~while other costs~~decreased $0.2 million in the ~~Wireless segment increased $0.5 million.~~ first quarter of 2010, compared to the first quarter of 2009.

Index

Other income (expense)

The ~~Company expensed approximately~~reduced expense reflects improvements in the marketplace for many of the Company’s investments, which improved by $0.5 million, ~~of one-time professional fees during the third quarter of 2008.~~and lower interest expense, down $0.2 million on lower outstanding balances.

Income tax expense

The Company’s effective tax rate on income from continuing operations ~~increased~~decreased from ~~39.3%~~44.1% in the ~~third quarter of 2008 to 40.5% in the third~~first quarter of 2009 ~~due~~ to ~~changes~~41.4% in the ~~allocation~~first quarter of ~~taxable income~~2010 due primarily to ~~higher tax states.~~non-recurring adjustments recognized in the 2009 period.

Net income from continuing operations

For the three months ended ~~September 30, 2009,~~March 31, 2010, net income from continuing operations ~~decreased $1.0~~increased $0.4 million, as improvements in investment returns and lower taxes offset the incremental operating ~~expenses increased faster than operating revenues,~~losses from the acquired cable operations, as described above.

~~Index~~

Wireless

The Company’s Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, through Shenandoah PCS Company (“PCS”), a Sprint PCS Affiliate of Sprint Nextel. This segment also leases land on which it builds Company-owned cell towers, which it leases to affiliated and non-affiliated wireless service providers, throughout the same four-state area described above, through Shenandoah Mobile Company (“Mobile”).

PCS receives revenues from Sprint Nextel for subscribers that obtain service in PCS’s network coverage area. PCS relies on Sprint Nextel to provide timely, accurate and complete information to record the appropriate revenue for each financial period. Revenues received from Sprint Nextel are recorded net of fees totaling 16.8% of net billed revenue, as defined, retained by Sprint Nextel.

PCS had ~~448~~481 PCS base stations in service at ~~September 30, 2009,~~March 31, 2010, compared to ~~378~~419 base stations in service at ~~September 30, 2008.~~March 31, 2009. As of ~~September 30, 2009,~~March 31, 2010, PCS had ~~306~~340 EVDO-enabled sites, up from ~~134~~237 EVDO-enabled sites operating as of ~~September 30, 2008,~~March 31, 2009, covering ~~94%~~95% of our currently covered population. ~~Approximately 25 additional~~Fewer base stations ~~and 30 additional EVDO-enabled sites~~ are ~~expected~~planned to be added ~~by year end~~or upgraded with EVDO capability in 2010 compared to 2009.

The Company’s average PCS retail customer turnover, or churn rate, was ~~2.17%~~1.91% in the ~~third~~first quarter of ~~2009,~~2010, compared to ~~1.85%~~2.15% in the ~~third~~first quarter of ~~2008.~~2009. As of ~~September 30, 2009,~~March 31, 2010, the Company had ~~219,353~~224,526 retail PCS subscribers compared to ~~205,777~~213,054 subscribers at ~~September 30, 2008.~~March 31, 2009. The PCS operation added ~~3,286~~1,708 net retail subscribers in the ~~third~~first quarter of ~~2009~~2010 compared to ~~5,380~~1,592 net retail subscribers added in the ~~third~~first quarter of ~~2008.~~2009.

Mobile owned ~~130~~141 towers at ~~September 30, 2009,~~March 31, 2010, up from ~~116~~118 at ~~September 30, 2008. Mobile expects to complete 10 or more new towers during the remainder of~~March 31, 2009. At ~~September 30, 2009,~~March 31, 2010, Mobile had ~~192~~200 leases for non-affiliate cell sites, and ~~127~~138 affiliate leases, compared to ~~176~~183 non-affiliate and ~~112~~115 affiliate leases as of ~~September 30, 2008.~~March 31, 2009.

Index

(in thousands)	Three Months Ended September 30,				Change						Three Months Ended March 31,				Change
	2009		2008		$			%			2010		2009		$			%

Segment operating revenues
Wireless service revenue	$	25,287	$	24,240	$	1,047			4.3		$	26,527	$	25,360	$	1,167		4.6
Tower lease revenue		1,813		1,623		190			11.7			1,948		1,700		248		14.6
Equipment revenue		1,046		1,409		(363	)		(25.8	)		1,218		1,270		(52	)	(4.1	)
Other revenue		544		254		290			114.2			540		474		66		13.9
Total segment operating revenues		28,690		27,526		1,164			4.2			30,233		28,804		1,429		5.0
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		9,594		8,583		1,011			11.8			9,878		9,036		842		9.3
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		4,123		4,557		(434	)		(9.5	)		4,103		4,167		(64	)	(1.5	)
Depreciation and amortization		5,178		4,259		919			21.6			5,239		4,872		367		7.5
Total segment operating expenses		18,895		17,399		1,496			8.6			19,220		18,075		1,145		6.3
Segment operating income	$	9,795	$	10,127	$	(332	)		(3.3	)	$	11,013	$	10,729	$	284		2.6

Operating revenues

Wireless service revenue increased ~~$1.0~~$1.2 million, or ~~4.3%~~4.6%, for the three months ended ~~September 30, 2009,~~March 31, 2010, compared to the comparable ~~2008~~2009 period. Average subscribers increased ~~7.0%~~5.4% in the current quarter compared to the ~~2008 third~~2009 first quarter. Billing rates have declined due to all-inclusive plans, which reduce revenue from higher usage customers, and to increased use of adding second phones, such as to a family plan, at lower revenue than the primary phone. Total credits against gross billed revenue, including fees retained by Sprint Nextel and bad debt write-offs, were essentially unchanged from the ~~third~~first quarter of ~~2008.~~2009. Fees retained by Sprint Nextel increased by $0.2 million, or 4.5%, while bad debt write-offs declined by $0.3 million, or 16.6%.

The increase in tower lease revenue resulted primarily from additional cell site leases.

~~Index~~

The decrease in equipment revenue consists of $0.2 million in lower handset revenue due to fewer handsets sold, and $0.2 million less commission revenue due to fewer sales of phones that operate on the iDEN network, for which the Company is paid a commission for each phone sold.

~~Other revenue~~In March, 2010, PCS signed Addendum X to the Sprint PCS Management Agreement that allows PCS to sell 3G/4G datacards in ~~2008 reflected a reduction~~our territory, with the expectation that PCS will be able to sell 3G/4G handsets when they become available later in 2010. At this time, 4G services are only available in portions of ~~$0.2 million to prior accruals for Universal Service Fund fees from Sprint Nextel.~~the Harrisburg and York, Pennsylvania, areas of the Company’s PCS territory.

Cost of goods and services

Cost of goods and services increased ~~$1.0~~$0.8 million, or ~~11.8%~~9.3%, in ~~2009~~2010 from the ~~third~~first quarter of ~~2008.~~2009. Costs of the expanded network coverage and roll-out of EVDO coverage resulted in a ~~$1.2~~$0.6 million increase in network costs including rent for additional tower and co-location sites, power and backhaul line costs.

Network costs are expected to continue to increase ~~in future periods~~for the remainder of 2010 as a result of the full-year impact of additional EVDO sites ~~are~~ brought on-line ~~and as new towers and base stations are added to expand our network coverage and capacity.~~

~~Selling, general and administrative~~

~~Selling, general and administrative expenses decreased $0.4 million in 2009 from the third quarter of 2008 due approximately equally to a decrease in commissions and operating taxes.~~during 2009.

Depreciation and amortization

Depreciation and amortization increased ~~$0.9~~$0.4 million in 2010 over the 2009 ~~over 2008,~~first quarter, due to capital projects for EVDO capability and new towers and cell sites placed in service ~~beginning in 2008 and into early~~during 2009. Depreciation is expected to continue to increase for the remainder of 2010 as a result of the full-year impact of additional towers, cell sites, ~~are~~and EVDO capability brought ~~on-line.~~on-line during 2009.

1918

Index

Wireline

The Wireline segment is comprised of several subsidiaries providing telecommunications services. Through these subsidiaries, this segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long distance access services throughout Shenandoah County and, since November 1, 2009, in portions of northwestern Augusta County, Virginia, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland.

(in thousands)	Three Months Ended September 30,				Change						Three Months Ended March 31,				Change
	2009		2008		$			%			2010		2009		$			%

Segment operating revenues
Service revenue	$	3,594	$	3,403	$	191			5.6		$	3,618	$	3,448	$	170		4.9
Access revenue		2,766		3,581		(815	)		(22.8	)		3,204		3,015		189		6.3
Facilities lease revenue		3,991		3,222		769			23.9			3,363		3,341		22		0.7
Equipment revenue		24		433		(409	)		(94.5	)		19		34		(15	)	(44.1	)
Other revenue		1,312		1,319		(7	)		(0.5	)		1,176		1,315		(139	)	(10.6	)
Total segment operating revenues		11,687		11,958		(271	)		(2.3	)		11,380		11,153		227		2.0
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		4,346		4,082		264			6.5			4,163		4,006		157		3.9
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		1,934		1,883		51			2.7			1,832		1,670		162		9.7
Depreciation and amortization		1,999		1,887		112			5.9			1,925		2,152		(227	)	(10.5	)
Total segment operating expenses		8,279		7,852		427			5.4			7,920		7,828		92		1.2
Segment operating income	$	3,408	$	4,106	$	(698	)		(17.0	)	$	3,460	$	3,325	$	135		4.1

Operating revenues

Operating revenues ~~decreased $0.3~~increased $0.2 million overall in the ~~third~~first quarter of 2010 from the first quarter of 2009, ~~from the third quarter of 2008,~~ principally due to $0.4 million in revenue from the North River subscribers acquired in late 2009, offset by a ~~one-time sale of equipment recorded~~decrease in ~~the 2008 period. Access~~directory advertising revenue ~~declined due to declining minutes of use, while facilities lease revenue increased due to new and revised contracts with third parties.~~included in other revenue.

~~Cost~~Operating expenses

Operating expenses overall increased $0.1 million, or 1.2%, as small increases in various cost of goods and ~~services~~

~~Cost~~selling general and administrative expenses, none individually significant, were largely offset by a reduction in depreciation expense. The decrease in depreciation expense primarily resulted from circuit equipment that reached the end of its depreciable life in 2009, while the Company also extended the service lives of certain equipment relating to DSL service in late 2009, from 60 to 84 months. Incremental expenses directly attributable to North River operations totaled $0.1 million, primarily in cost of goods and ~~services increased $0.3 million, due primarily to increased line costs associated with facilities lease revenues.~~services.

2019

Index

Cable Television

The Cable TV segment provides analog, digital and high-definition television signals under franchise agreements within Shenandoah County, Virginia, and since their acquisition on December 1, 2008, in various locales in West Virginia and in Alleghany County, Virginia. As of ~~September 30, 2009,~~March 31, 2010, it served ~~24,117 customers,~~26,028 RGUs, up from ~~8,142 subscribers~~24,794 RGUs served as of ~~September 30, 2008. Essentially all of the increase resulted from the acquisition of cable assets and customers from Rapid Communications, LLC, completed December 1, 2008.~~March 31, 2009. Since the acquisition, the Company has been working to upgrade ~~a number of~~ the acquired systems, and has completed upgrades into 68% of the ~~Alleghany County, Virginia, market during the second quarter~~homes passed as of ~~2009, and during the third quarter, in the Franklin and Petersburg, West Virginia markets.~~March 31, 2010, up from 64% at December 31, 2009. The Company introduced expanded service offerings in the ~~Alleghany County market late in~~upgraded markets over the second ~~quarter~~half of 2009, and expects ~~additional expansion as markets~~to complete upgrades early in ~~West Virginia are upgraded through~~the third quarter of 2010. The Company introduced voice service in several upgraded markets just as the first quarter of 2010 ended, and expects to ~~spend approximately $23 million on these upgrades through 2010; spending through September 30, 2009 totaled approximately $10 million.~~continue rolling out voice service to additional markets in the second and third quarters of 2010.

(in thousands)
Three Months Ended
September 30,
Change
2009 2008 $ %

Segment operating revenues
Service revenue $ 3,526 $ 1,187 $ 2,339 197.1
Equipment and other revenue 339 140 199 142.1
Total segment operating revenues 3,865 1,327 2,538 191.3

Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below 3,285 902 2,383 264.2
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 1,309 383 926 241.8
Depreciation and amortization 895 265 630 237.7
Total segment operating expenses 5,489 1,550 3,939 254.1
Segment operating loss $ (1,624 ) $ (223 ) $ (1,401 ) n/m
The Company anticipates closing on the acquisition of cable operations from JetBB during the third quarter of 2010. Following the acquisition, these operations and the resulting revenues and expenses associated with them will be included in the Cable Television segment, and are expected to be significant relative to the historical Cable Television segment operating results.

(in thousands)	Three Months Ended March 31,						Change
	2010			2009			$			%

Segment operating revenues
Service revenue	$	3,535		$	3,606		$	(71	)		(2.0	)
Equipment and other revenue		387			238			149			62.6
Total segment operating revenues		3,922			3,844			78			2.0

Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		3,328			2,836			492			17.3
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		1,525			1,182			343			29.0
Depreciation and amortization		1,090			745			345			46.3
Total segment operating expenses		5,943			4,763			1,180			24.8
Segment operating loss	$	(2,021	)	$	(919	)	$	(1,102	)		(119.9	)

Operating revenues and expenses

The ~~newly acquired~~ cable operations acquired in 2008 generated ~~$1.3~~$1.1 million of the change in segment operating loss shown above as the Company ~~rebuilds~~rebuilt the networks in order to launch new ~~services~~

~~Index~~

~~Nine Months Ended September 30, 2009 Compared with the Nine Months Ended September 30, 2008~~

~~Consolidated Results~~

~~The Company’s consolidated results from continuing operations for the nine months ended September 30, 2009 and 2008, respectively, are summarized as follows:~~

(in thousands)
Nine Months Ended
September 30,
Change
2009 2008 $ %

Operating revenues $ 120,356 $ 107,304 $ 13,052 12.2
Operating expenses 86,137 71,750 14,387 20.1
Operating income 34,219 35,554 (1,335 ) (3.8 )
Other income (expense) (882 ) (891 ) 9 1.0
Income tax expense 14,019 13,881 138 1.0
Net income from continuing operations $ 19,318 $ 20,782 $ (1,464 ) (7.0 )

services. Operating revenues

For the nine months ended September 30, 2009, operating revenue increased $13.1 million, or 12.2%, primarily due to increased service revenue in the Wireless segment and the additional revenue from the Shentel Cable acquisition in late 2008. For the 2009 period, Wireless operating revenues increased $7.3 million, or 9.2%, while the incremental Shentel Cable revenues in the Cable TV segment totaled $6.9 million for 2009. All other Company revenues decreased by $1.1 million, compared to the nine months ended September 30, 2008.

~~Operating expenses~~

~~For the nine months ended September 30, 2009, operating expenses increased $14.4 million, or 20.1%, compared to the 2008 period. The incremental costs~~ of the Shentel Cable operations accounted for $9.4 million of the year over year increase. Additional depreciation expense of $3.3 million on improvements to the Company’s fiber optic network and to support expanded wireless coverage and additional services, specifically EVDO high speed wireless internet data access availability, and the associated additional $1.7 million of operating costs for rent and power, accounted for the remainder of the increase in operating expenses.

~~Income tax expense~~

~~The Company’s effective tax rate on income from continuing~~these acquired cable operations increased ~~from 40.0% in~~by $38 thousand. During the ~~first nine months of 2008 to 42.1% in the first nine months of 2009 primarily due to revisions to certain tax estimates recorded in the first~~fourth quarter of 2009, ~~and~~ the ~~allocation of taxable income to higher tax states.~~

~~Net income from continuing operations~~

For the nine months ended September 30, 2009, net income from continuing operations decreased $1.5 million, due primarily to operating losses in the Cable TV segment subsequent to the Shentel Cable acquisition in December 2008, and lower operating income in the Wireline segment, partially offset by increased operating income in the Wireless segment.

~~Index~~

~~Wireless~~

(in thousands)
Nine Months Ended
September 30,
Change
2009 2008 $ %

Segment operating revenues
Wireless service revenue $ 76,348 $ 67,802 $ 8,546 12.6
Tower lease revenue 5,268 4,812 456 9.5
Equipment revenue 3,485 4,221 (736 ) (17.4 )
Other revenue 1,453 2,439 (986 ) (40.4 )
Total segment operating revenues 86,554 79,274 7,280 9.2
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below 27,534 25,731 1,803 7.0
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 12,237 12,826 (589 ) (4.6 )
Depreciation and amortization 15,021 12,802 2,219 17.3
Total segment operating expenses 54,792 51,359 3,433 6.7
Segment operating income $ 31,762 $ 27,915 $ 3,847 13.8

~~Operating revenues~~

~~Wireless service~~Company sold several small systems that included approximately 1,754 revenue increased $8.5 million, or 12.6%, for the nine months ended September 30, 2009, compared to the comparable 2008 period. Average subscribers increased 8.9% in the first half of 2009 compared to the 2008 first half, while subscribers upgrading to higher revenue plans also added to revenue growth during the first half of the year. Total credits against gross billed revenue decreased 1.1% to $11.1 million, while bad debt write-offs declined 15.7% to $5.2 million, compared to the first nine months of 2008.

~~The increase in tower lease revenue resulted primarily from additional cell site leases to non-affiliates.~~

~~The decrease in equipment revenue consists of $0.3~~generating units, representing approximately $0.2 million in lower handset revenue due to fewer handsets sold, and $0.4 million less commission revenue due to fewer sales of phones that operate on the iDEN network, for which the Company is paid a commission for each phone sold.

The decrease in other revenue reflects a one-time pass through of approximately $0.9 million of Universal Service Fund fees from Sprint Nextel in the second quarter of 2008, combined with subsequent declines in recurring Universal Service Fund fees.

~~Cost of goods and services~~quarterly revenue.

Cost of goods and services increased ~~$1.8 million in the 2009 period compared~~due to ~~2008. Costs of the expanded network coverage and roll-out of EVDO coverage resulted in a $3.1 million increase in network~~programming costs, and a $0.4 million increase in maintenance costs. Network costs include rent for additional tower and co-location sites, and power and backhaul line costs. Customer retention costs (including the costs of ~~handsets used~~repairs in un-upgraded markets, and service and install costs for ~~upgrades~~new and ~~warranty and insurance replacements) decreased $1.9 million from 2008, principally due to changes in warranty programs since June of 2008.~~upgraded services individually below capitalization thresholds.

~~Network~~Selling, general and administrative expenses included costs related to marketing programs for new service rollouts and commissions on door-to-door sales efforts to sign up new customers in upgraded markets.

Depreciation expense increased as a result of network and head-end upgrades placed in service in late 2009.

Operating expenses are expected to continue ~~to increase~~at elevated levels until all networks are upgraded by the third quarter of 2010, and for a period of time thereafter while marketing efforts continue in future periods as additional EVDO sites are brought on-line, and as new towers and base stations are added to expand our network coverage and capacity. The rate of increase should begin to moderate in 2010 as future expansion efforts will primarily be success-based in order to address capacity requirements.recently upgraded markets.

2320

Index

~~Depreciation and amortization~~

Depreciation and amortization increased approximately $2.2 million in 2009 over 2008, due to capital projects for EVDO capability and new cell sites placed in service since 2007. Depreciation is expected to continue to increase as additional sites are brought on-line, though the rate of increase should begin to slow in 2010.

~~Wireline~~

(in thousands)
Nine Months Ended
September 30,
Change
2009 2008 $ %

Segment operating revenues
Service revenue $ 10,566 $ 10,258 $ 308 3.0
Access revenue 8,576 9,512 (936 ) (9.8 )
Facilities lease revenue 10,583 10,182 401 3.9
Equipment revenue 111 574 (463 ) (80.7 )
Other revenue 3,976 3,975 1 0.0
Total segment operating revenues 33,812 34,501 (689 ) (2.0 )
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below 12,563 11,723 840 7.2
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 5,374 5,568 (194 ) (3.5 )
Depreciation and amortization 6,334 5,498 836 15.2
Total segment operating expenses 24,271 22,789 1,482 6.5
Segment operating income $ 9,541 $ 11,712 $ (2,171 ) (18.5 )

~~Operating revenues~~

Access revenue decreased $0.9 million, or 9.8%, for the nine months ended September 30, 2009, from the 2008 nine-month period, due to declining minutes of use. Minutes of use have declined approximately 10% in 2009 from 2008 levels. For 2008, equipment revenue included one large non-recurring sale of equipment.

~~Cost of goods and services~~

Cost of goods and services increased $0.8 million, due to increased line costs in support of higher facilities lease revenue ($0.3 million); equipment disposals and inventory write-offs of obsolete inventory ($0.2 million); and costs associated with the equipment sale described above ($0.4 million).

~~Depreciation and amortization~~

Depreciation and amortization expense increased $0.8 million, due to capital projects placed in service in 2008 relating to fiber related upgrades and redundancy projects, and improvements to our DSL plant to increase customer connection speeds.

~~Index~~

~~Cable Television~~

(in thousands)
Nine Months Ended
September 30,
Change
2009 2008 $ %

Segment operating revenues
Service revenue $ 10,682 $ 3,591 $ 7,091 197.5
Equipment and other revenue 848 389 459 118.0
Total segment operating revenues 11,530 3,980 7,550 189.7

Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below 9,211 2,745 6,466 235.6
Selling, general and administrative, exclusive of depreciation and amortization shown separately below 3,766 1,031 2,735 265.3
Depreciation and amortization 2,513 784 1,729 220.5
Total segment operating expenses 15,490 4,560 10,930 239.7
Segment operating loss $ (3,960 ) $ (580 ) $ (3,380 ) n/m

~~Operating revenues and expenses~~

~~The increases in operating revenues and expenses shown above primarily reflect the impact of the acquisition from Rapid Communications, LLC, in December 2008.~~ The newly acquired cable operations generated $3.0 million of the operating loss for the nine months ended September 30, 2009, while the Company rebuilds the acquired networks in order to launch new services. However, operating results in the legacy Shenandoah County Cable TV unit have also declined $0.4 million, due approximately equally to declining revenue, increases in programming costs, and increased expenditures for system maintenance.

~~Index~~

Liquidity and Capital Resources

The Company has four principal sources of funds available to meet the financing needs of its operations, capital projects, debt service, investments and potential dividends. These sources include cash flows from operations, existing balances of cash and cash equivalents, the liquidation of investments and borrowings. Management routinely considers the alternatives available to determine what mix of sources are best suited for the long-term benefit of the Company.

Sources and Uses of Cash. The Company generated ~~$59.5~~$16.0 million of net cash from operations in the first ~~nine~~three months of ~~2009,~~2010, compared to ~~$31.2~~$21.2 million in the first ~~nine~~three months of ~~2008.~~2009. Net income (adjusted for the non-cash impairment charge on assets held for sale, net of tax effects) and ~~the utilization~~a difference in timing of ~~the year end 2008 tax receivable to offset 2009 estimated tax payments,~~one weekly payment from Sprint generated ~~most of~~ the increase. ~~The income tax receivable at December 31, 2008, resulted from tax savings from bonus depreciation on capital spending for equipment placed in service during late 2008.~~

Indebtedness. As of ~~September 30, 2009,~~March 31, 2010, the Company’s indebtedness totaled ~~$29.1~~$31.8 million, with an annualized overall weighted average interest rate of approximately ~~5.13%~~4.60%. The balance included ~~$14.7~~$19.7 million at a variable rate of 2.85% that resets weekly, with the balance at a variety of fixed rates ranging from 6.67% to 8.05%. As of ~~September 30, 2009,~~March 31, 2010, the Company was in compliance with the covenants in its credit agreements.

The Company has the ability to borrow approximately ~~$9.2~~$8.4 million as of ~~September 30, 2009,~~March 31, 2010, under a revolving reducing credit facility established in 2004. No balances are currently outstanding on this facility.

The Company entered into a $52 million delayed draw term loan in October, 2008, which was modified to ~~fund capital expenditures,~~extend the ~~Rapid Communications acquisition,~~draw period, and ~~other corporate purposes. The Company borrowed $2 million under this facility during~~shorten the ~~first quarter of 2009 and repaid $11 million during the second quarter.~~re-payment period, in late 2009. The Company has ~~$37.3~~$32.3 million available on this facility as of ~~September 30, 2009,~~March 31, 2010, and it may make draws against this facility through December 31, ~~2009.~~2010. Repayments under this facility begin on March 31, ~~2010,~~2011, in 2420 equal quarterly installments based upon the outstanding balance as of December 31, ~~2009.~~2010.

The Company has no off-balance sheet arrangements (other than operating leases) and has not entered into any transactions involving unconsolidated, limited purpose entities or commodity contracts.

The Company is in the process of finalizing the terms of a debt facility to provide funding for the JetBB acquisition, repayment of most of the Company’s existing outstanding debt, and to provide funds to support planned capital spending and other corporate needs. Based upon the current terms under discussion, the Company anticipates having significantly higher outstanding debt balances following the acquisition, with more restrictive debt covenants and higher annual principal repayment obligations. The Company currently expects that these balances will bear a variable rate of interest initially.

Capital Commitments. Capital expenditures originally budgeted for ~~2009, as adjusted,~~2010 for existing operations total approximately ~~$62~~$41 million, a decrease of approximately ~~$11~~$12 million from ~~initial estimates and down $2 million from the most recent projection. Half of the decrease reflects delays in spending into 2010. Expected spending~~total capital expenditures for the ~~remainder~~full year of the year includes approximately $10 million in our Wireless segment for PCS base stations and towers to expand our network coverage and capacity (principally in Pennsylvania), new EVDO sites to provide EVDO service over more of our network, and additional switch capacity to handle the additional growth. The Wireline segment expects to spend approximately $6 million for telephone network operations and fiber projects and to add capacity and redundancy to our fiber networks in Virginia, Maryland and West Virginia, and the Cable segment expects to spend approximately $8 million, principally in the new markets acquired from Rapid Communications.2009. Capital spending for 2010 ~~is currently expected to be substantially lower than that budgeted for 2009, and~~ will be more evenly spread amongst our three major ~~segments.~~segments at approximately $12 million to $13 million in each segment. Capital spending may shift amongst these priorities as opportunities arise, and the Company is prepared to ~~reduce~~adjust spending in areas if market conditions change. Following the closing on the acquisition of cable operations from JetBB, the Company anticipates increased capital spending to upgrade portions of the JetBB network, particularly related to headends and electronics associated with the cable plant. The Company’s initial plans reflect an incremental $11 million in JetBB-related capital spending in 2010. This estimate is subject to change depending on the timing of the close.

For the ~~2009 nine~~2010 three month period, the Company spent ~~$37.6~~$9.6 million on capital projects, compared to ~~$38.9~~$9.1 million in the comparable ~~2008~~2009 period. Spending related to Wireless projects accounted for ~~$15.7~~$2.2 million in the first ~~nine~~three months of ~~2009,~~2010 for new and existing sites, while Wireline projects accounted for ~~$6.4~~$2.7 million across a variety of projects, Cable TV for ~~$11.1~~$3.9 million for plant and headend upgrades and additional set top boxes, and other projects ~~$4.4 million. The Company expects the pace of spending~~totaling $0.8 million, largely related to ~~begin slowing in coming quarters, initially in the Wireless segment and then in the Cable TV segment.~~information technology projects.

The Company believes that cash on hand, cash flow from operations and borrowings expected to be available under the Company’s existing and in-process credit facilities will provide sufficient cash to enable the Company to fund ~~its~~the JetBB acquisition and planned capital expenditures, make scheduled principal and interest payments, meet its other cash requirements and maintain compliance with the terms of its financing agreements for at least the next 12 months. Thereafter, capital expenditures will likely continue to be required to provide increased capacity to meet the Company’s expected growth in demand for its products and ~~services.~~services and complete planned upgrades to the JetBB networks. The actual amount and timing of the Company’s future capital requirements may differ materially from the Company’s estimate ~~depending~~dependin g on the demand for its products and new market developments and opportunities. The Company currently expects that it will fund its future capital expenditures primarily with cash on hand, from operations and from ~~operations,~~availability under the debt facility under negotiation, although there are events outside the control of the Company that could have an adverse impact on cash flows from operations.

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These events include, but are not limited to: changes in overall economic conditions, regulatory requirements, changes in technologies, availability of labor resources and capital, changes in the Company’s relationship with Sprint Nextel, and other conditions. The Wireless segment’s operations are dependent upon Sprint Nextel’s ability to execute certain functions such as billing, customer care, and collections; the subsidiary’s ability to develop and implement successful marketing programs and new products and services; and the subsidiary’s ability to effectively and economically manage other operating activities under the Company's agreements with Sprint Nextel. The Company's ability to attract and maintain a sufficient customer base is also critical to its ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect the Company’s results.

Recently Issued Accounting Standards

There were no recently issued accounting standards, not adopted by the Company as of ~~September 30, 2009,~~March 31, 2010, that are expected to have a material impact on the Company’s results of operations or financial condition.

ITEM~~ITEM~~ 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s market risks relate primarily to changes in interest rates on instruments held for other than trading purposes. The Company’s interest rate risk generally involves three components. The first component is outstanding debt with variable rates. As of ~~September 30, 2009,~~March 31, 2010, the Company had ~~$14.7~~$19.7 million of variable rate debt outstanding, bearing interest at a rate of 2.85% as determined by CoBank on a weekly basis. An increase in market interest rates of 1.00% would add approximately ~~$147~~$197 thousand to annual interest expense; if and when fully drawn, a 1.00% increase in market interest rates would add $520 thousand to annual interest expense. The remaining approximately ~~$14.4~~$11.9 million of the Company’s outstanding debt has fixed rates through maturity. Due to the ~~relatively~~re latively short time frame to maturity of this fixed rate debt, market value approximates carrying value of the fixed rate debt.

The second component of interest rate risk consists of temporary excess cash, which can be invested in various short-term investment vehicles such as overnight repurchase agreements and Treasury bills with a maturity of less than 90 days. The cash is currently invested in an institutional cash management fund that has limited interest rate risk. Management continues to evaluate the most beneficial use of these funds.

The third component of interest rate risk is marked increases in interest rates that may adversely affect the rate at which the Company may borrow funds for growth in the future. Management does not believe that this risk is currently significant because the Company’s existing sources, and its commitments for future sources, of liquidity are adequate to provide cash for operations, payment of debt, funding of the purchase price of the anticipated Jet acquisition and near-term capital projects.

Management does not view market risk as having a significant impact on the Company's results of operations, although future results could be adversely affected if interest rates were to increase significantly for an extended period and the Company were to require additional external financing. The Company’s investments in publicly traded stock and bond mutual funds under the rabbi trust, which are subject to market risks and could experience significant swings in market values, are offset by corresponding changes in the liabilities owed to participants in the Executive Supplemental Retirement Plan. General economic conditions affected by regulatory changes, competition or other external influences may pose a higher risk to the Company’s overall results.

As of ~~September 30, 2009,~~March 31, 2010, the Company has ~~$6.8~~$6.6 million of cost and equity method investments. Approximately $3.7 million was invested in privately held companies directly or through investments with portfolio managers. Most of the companies are in an early stage of development and significant increases in interest rates could have an adverse impact on their results, ability to raise capital and viability. The Company’s market risk is limited to the funds previously invested and an additional ~~$0.2~~$0.3 million committed under contracts the Company has signed with portfolio managers.

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ITEM~~ITEM~~ 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our President and Chief Executive Officer, who is the principal executive officer, and the Vice President - Finance and Chief Financial Officer, who is the principal financial officer, conducted an evaluation of our disclosure controls and procedures, as defined by Rule 13a-15(e) under the Securities Exchange Act of 1934. The Company's principal executive officer and its principal financial officer concluded that the Company's disclosure controls and procedures were effective as of ~~September 30, 2009.~~March 31, 2010.

Changes in Internal Control Over Financial Reporting

During the ~~third~~first quarter of ~~2009,~~2010, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Other Matters Relating to Internal Control Over Financial Reporting

Under the Company’s agreements with Sprint Nextel, Sprint Nextel provides the Company with billing, collections, customer care, certain network operations and other back office services for the PCS operation. As a result, Sprint Nextel remits to the Company approximately ~~63%~~64% of the Company’s total operating revenues. Due to this relationship, the Company necessarily relies on Sprint Nextel to provide accurate, timely and sufficient data and information to properly record the Company’s revenues, and accounts receivable, which underlie a substantial portion of the Company’s periodic financial statements and other financial disclosures.

Information provided by Sprint Nextel includes reports regarding the subscriber accounts receivable in the Company’s markets. Sprint Nextel provides the Company with monthly accounts receivable, billing and cash receipts information on a market level, rather than a subscriber level. The Company reviews these various reports to identify discrepancies or errors. Under the Company’s agreements with Sprint Nextel, the Company is entitled to only a portion of the receipts, net of items such as taxes, government surcharges, certain allocable write-offs and the 16.8% of revenue retained by Sprint Nextel. Because of the Company’s reliance on Sprint Nextel for financial information, the Company must depend on Sprint Nextel to design adequate internal controls with respect to the ~~processes~~process es established to provide this data and information to the Company and Sprint Nextel’s other Sprint PCS affiliate network partners. To address this issue, Sprint Nextel engages an independent registered public accounting firm to perform a periodic evaluation of these controls and to provide a “Report on Controls Placed in Operation and Tests of Operating Effectiveness for Affiliates” under guidance provided in Statement of Auditing Standards No. 70 (“SAS 70 reports”). The report is provided to the Company on an annual basis and covers a nine-month period. The most recent report covers the period from January 1, ~~2008~~2009 to September 30, ~~2008.~~2009. The most recent report indicated there were no material issues which would adversely affect the information used to support the recording of the revenues provided by Sprint Nextel related to the Company’s relationship with them.

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PART II.

OTHER INFORMATION

ITEM 1A.

Risk Factors

As previously discussed, our actual results could differ materially from our forward looking statements. There have been no material changes in the risk factors from those described in Part 1, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2008.~~2009.

ITEM~~ITEM~~ 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The Company maintains a dividend reinvestment plan (the “DRIP”) for the benefit of its shareholders. When shareholders remove shares from the DRIP, the Company issues a certificate for whole shares, pays out cash for any fractional shares, and cancels the fractional shares purchased. In conjunction with exercises of stock options, the Company periodically repurchases shares from recipients to cover some of the exercise price of the options being exercised. The following table provides information about the Company’s repurchases of ~~fractional~~ shares during the three months ended ~~September 30, 2009:~~March 31, 2010:

	Number of Shares Purchased		Average Price Paid per Share
January 1 to January 31		1	$	18.09
February 1 to February 28		835	$	17.97
March 1 to March 31		1,983	$	18.86

Total		2,819	$	18.60

Number of Shares
Purchased
Average Price Paid per Share
July 1 to July 31 - $ 20.08
August 1 to August 31 - -
September 1 to September 30 - $ 17.37

Total 1 $ 18.66

ITEM~~ITEM~~ 6.

Exhibits

(a) The following exhibits are filed with this Quarterly Report on Form 10-Q:

10.43

Asset Purchase Agreement dated as of April 16, 2010, between JetBroadband VA, LLC, Helicon Cable Communications, LLC, JetBroadband WV, LLC, JetBroadband Holdings, LLC, Helicon Cable Holdings, LLC, Shentel Cable Company and Shenandoah Telecommunications Company, filed as Exhibit 10.43 to the Company’s Current Report on Form 8-K, dated April 16, 2010.

10.44

Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company.

31.1	Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2	Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32	Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.

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SIGNAT~~SIGNATURES~~URES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		SHENANDOAH TELECOMMUNICATIONS COMPANY
		(Registrant)


	/s/Adele M. Skolits
		Adele M. Skolits
	Vice President - Finance and Chief Financial Officer
		Date: ~~November 5, 2009~~May 7, 2010

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EXH~~EXHIBIT~~IBIT INDEX

Exhibit No.

Exhibit

10.43

10.44

	31.1	Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

	31.2	Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. 1350.

3126

Consolidated Statements of Income

	As Previously Reported		Adjustments			As Adjusted
	(in thousands)
Three months ended September 30, 2008
Cost of goods and services	$	10,662	$	50		$	10,712
Depreciation and amortization		6,424		60			6,484
Total operating expenses		24,810		110			24,920
Operating income		12,598		(110	)		12,488
Income from continuing operations before income taxes		12,262		(110	)		12,152
Income tax expense		4,818		(44	)		4,774
Net income from continuing operations		7,444		(66	)		7,378
Net income		6,808		(66	)		6,742

Nine months ended September 30, 2008
Cost of goods and services	$	31,244	$	150		$	31,394
Depreciation and amortization		19,127		177			19,304
Total operating expenses		71,423		327			71,750
Operating income		35,881		(327	)		35,554
Income from continuing operations before income taxes		34,990		(327	)		34,663
Income tax expense		14,013		(132	)		13,881
Net income from continuing operations		20,977		(195	)		20,782
Net income		18,849		(195	)		18,654

Consolidated Balance Sheet

	As Previously Reported		Adjustments			As Adjusted
	(in thousands)
December 31, 2008
Plant in service	$	321,044	$	2,052		$	323,096
Accumulated amortization and depreciation		150,499		1,196			151,695
Net property, plant and equipment		175,621		856			176,477
Total assets		265,981		856			266,837
Deferred income taxes		30,401		(896	)		29,505
Other liabilities		3,485		3,048			6,533
Total other liabilities		37,028		2,152			39,180
Retained earnings		154,002		(1,296	)		152,706
Total shareholders’ equity		167,608		(1,296	)		166,312
Total liabilities and shareholders’ equity		265,981		856			266,837

	September 30, 2009		December 31, 2008
Assets held for sale:
Property, plant and equipment, net	$	7,506	$	15,414
Goodwill		-		6,539
Intangible assets, net		915		1,931
Deferred charges		1,628		3,384
Other assets		821		1,042
	$	10,870	$	28,310
Liabilities:
Other liabilities	$	1,092	$	1,013

	Number of Shares Purchased		Average Price Paid per Share
July 1 to July 31		-	$	20.08
August 1 to August 31		-		-
September 1 to September 30		-	$	17.37

Total		1	$	18.66