SHEN - Earnings call transcript Q1 2018 | Shenandoah Telecommunications Company

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Operator

Good morning, everyone and welcome to the Shenandoah Telecommunications First Quarter 2018 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Jennifer Belodeau of IMS and Investors Relations for Shentel.

Jennifer Belodeau

Good morning and thank you for joining us. The purpose of today’s call is to review Shentel’s results for the quarter ended March 31, 2018.

website in we’ll release on be page on announced and this our were at presentation the reviewing the results our distributed press morning, Investor Our www.shentel.com. is included replay Please note available today. the will be later of that made call audio an details the release call. forth announcing in set are this The press CFO. Officer; are President, With MacKenzie, President Vice our today our and Woodward, and Vice Christopher Operating Senior Jim us and on the Chief President Finance Executive and French, call Executive Earle Chief Officer; our conduct After we’ll remarks, question-and-answer session. prepared a

me a our always, results of this risks risk from may statements As remind Harbor various to the forward-looking differ presentation, refer filings, certain These that let factors in you cause uncertainties. disclaimer our Slide which and you’re review. actual conference you discussion Safe to detailed strongly SEC include encouraged to X call of may contains Shentel to our provides which materially subject the statements. and

provided the why now ahead, Go an financial are I’ll most also to and comparable These appendix measures. included filings. You’re by presentation. we that these cautioned update GAAP any not to over slide turn to in X Except forward-looking investors, to provide information in measures, today we statement. Details Slide in on reconciliations Chris we non-GAAP an these or are include Chris. to no law, as on including note publicly reconciliations measures, them today’s revise useful Also, use comments to on obligation statements. the forward-looking to call undertake effort our place undue our reliance now. required SEC

Christopher French

for you thank us. joining and morning Good

both and three well income, growth as two as by continued improvement our showed Our first operating results quarter momentum segments. of net in revenue in business as XXXX evidenced

transition we agreement of amended first to the expenses resulted we’ve in over X with we reduction of expanded model in our affiliate last With a a ahead mentioned territory our our affiliate wireless area. in quarter. million nTelos operating population in schedule, completed the which the the service of to significant Mid-Atlantic Sprint quarter, As in Sprint, include

have provider in We network our telecommunications of were adding packages and as in the leading markets Sprint/T-Mobile believe we of and extended the position focused pleased all upgraded us coverage a merger. area. the markets comprehensive agreement on hear our well to signed We for service complementary

there to that two believe We the challenger companies is merger and to stronger a AT&T long-held these Verizon. domination sense market have for makes and of to a needed in tremendous be order of

rural a to years have investing for successful the capital Sprint XX serve We growing been Sprint our base. affiliate mostly markets customer and

We to have continue and Sprint new as combined provided an company. tremendous of able be expect we affiliate to the value providing to benefit

gain whether the mutually beneficial will Of course, at there this approval. unknowns and the are regarding whether will many relationship. entity to And desire merger if new so, when point, continue our

resolved, focus for for our provide will outcome before exceptional be but its willreview meantime, our agreements continuing followed in a later. be process and wireless will and on be Our beneficial Shentel an shareholders. to these providing issues believe are any that Earle It months growing we business Sprint to We many the experience and process to customers. will be

came decreased that in and costs primarily integration million, acquisition, $XXX.X and quarter see to X.X% in amortization, the strong $X.X to included to first revenues the related operating Adjusted of $XX.X before were the improved net a in saw growth compared XXXX. our the On to quarter depreciation, X, year. of million income slightly in million OIBDA first $XX.X to quarter, Slide results. million. you’ll prior migration of to income significantly million operating elimination Moving first down $X.X first income to We the quarter or the

revenue including regarding results, XXX special expense a Virginia. ASC Included items adopting increased of the a XXXX one-time XXX(k) audit of in were quarter would recognition, XXXX of $X West impact assessment have and a employees, tax audit our couple from revenues related to the million. contribution first by Excluding our fees additional to

million. XXX, these was Excluding adjusted decrease caused call. also wireless Revenue walk changes in this postpaid through revenue presentation will our by lower items application Jim to average was to user, OIBDA of was $XX.X per but later you related primarily related ASC which

customers price segment existing X.X% data and programming and increases Data revenues High RGUs, result speed an costs, higher packages. increase Units and in Cable to Our increases by a as or new offset Speed Voice video improved selecting of in Generating Revenue

wireline by the addition, XXXX. OIBDA first to Highlights network adjusted the reflecting impact sales. as ARPU. revenues increase lower see up In are quarter increased expected by on Slide fiber costs XX.X% of the million prepaid as customers strong postpaid quarter you’ll decreased the resolved $XX.X increased X, and and X.X% Wireless Wireless million In X.X% we compared for the complete of our $XX.X X% customers to operating to upgrades and our

$XX.X Voice data Moving X.X% increases to Cable video segment customers million RGUs, to to in our growth rate due new packages. and and existing implemented selecting January and in higher the increases new X. to Slide High-Speed primarily fast cost increased XX Revenue speed program Data and

the to for complimentary million fiber our in profiles $XX.X first prior million and Slide quarter tower OBIDA XX.X% adjusted X addition, compared In streams. revenue to year. lease $X.X the grew mobile

XXXX. increased XXX in to million million you towers can fiber revenue, $X generated X.X% our and of lease up in X.X% the $XX.X to compared from revenues lease quarter our OIBDA As see, first

to role. have is continues the to and person that find plan you critical able right we right to the optimistic This begin smooth to retire, we will find we’re this and be fill As transition. effort Earle's working know been person actively with a

our high-quality service brand and as provider gain recognition start our options. our of as customer choice market We position The for are expanded that network, service allowing with us Qualities position our networks, market well coverage reliable are very markets. our combined leadership Shentel with in our and market consistent in strengthening XXXX. recognition enhanced believe robust packages strong We our area pleased upgraded grow share. our continues and to to of

We’re the excited XXXX. as we us of ahead move opportunities about through

the to over turn our financial CFO results. Jim of review call our details Woodward, I’ll to the Now,

Jim Woodward

everyone. and Chris, good you, Thank morning

I review going results, I’m quarterly Before during the a Slide to on quarter. discuss developments begin significant few to XX the

agreement The some that previously I’ll on recorded income in The First, we we to review positive, Sprint impact adding statement, than changes as and did are Pennsylvania, Virginia, and million is adoption our expenses and amortize during expense. X.X later. on and net POPs share income the a period a less geography a West result, that defer we’re we $X.XX this footprint and XXX were now adopted ASC more in XX,XXX detail an of with Also, headlines adjusted have subscribers. some by wireless but OIBDA. a saw quarter, of XXX the the required one not expansion impact our as includes and Virginia impact of certain Kentucky, first areas

XX, XXX, believe change. amended Slide of the XX, the QX expense CoBank we our loan. through Finally, impact interest I’m reduce On of February consolidated million of the going of of and term the on shown walk results we’ve credit which we adoption and rate, $XX over the interest the our to to as save and components our approximately will we discussed earnings with agreement during call;

QX in of to right on QX adoption left the the including results column prior the is impact the reported last of of On the the XXX our and results XXX.

the statement mentioned, some changes and impact deferrable expenses. income on our geography XXX As with the I

change is who under revenue. is XXX, the subscribers So, let’s a review considered left changes result, those, goods – of customers. from and The column the of was acquisition sold. Under wireless net, growth Sprint. national Previously not classified the were prepaid are XXX, and expenses a revenue expense of do next customer in new an to considered equipment revenue. Sprint standard. reduction of and account subscribers. forward previously for resulting customer our going to a revenue represent equipment changes operating contra from the have under in cost right. we operating reimbursable The present the support working and customer, sold equipment amounts Amount expenses These goods contra and as our and represent expense column reclassification to presentation Sprint related the sales expense will as The be our SG&A to wireless cost recorded one in revenue a revenue,

had both deferred adoption cost the column installation income segment, not were can consumer As The is not impact an In The required items see customer, expected expense. on is not the subsidies, impact small our a have operating adjusted of net impact the income. and were handset commissions, impact on in on illustration an – does the was last changes. you the to standard the amounts Under impact column only costs previously and life period and net of a primary defer geographic XXX the financial changes OIBDA. by some and illustrated Slide summary, the wireless impact these do or as The of recorded XXX material right. new does next of XX of these on as results. are

for with we well table, financing included of reduction were of this revenue. in payable see of for booked device and to device costs commissions, thus under Sprint, the presented international goods lease ongoing additionally As revenue the and customer equipment reduction provide expenses, Commissions million quarter but for of Historically, and sales a were of XXX of customers Sprint’s an our recorded incurred for the the revenue the of wireless sale expenses a cost costs their reported can as you service as also channels, equipment programs. $XX SG&A of result $XX.X for million prepaid in devices to on equipment our adoption a previously to corresponding reimbursement netted costs to first costs. territory, and operating sold

were at we changes Slide net in and XXXX. first Okay, look quarter compared $XXX.X the to share Revenues our revenues million million in the XXXX On operating income. for quarterly XX, of our results. $XXX.X let’s

prepaid speed driven revenues. impact revenues Excluding the data XXX, of service $X by increased million high and

operating $X $X.X consolidated million, expenses costs network impact quarter by higher decrease on expenses by $X The million a million by is $X driven operating of COGS higher the nearly absence acquisition of acquisition million. $X by excluding cost of million the prepaid nTelos and of expenses, million. million First of decreased one-time $X.X XXX, offset of decreased $X

years’ We recorded operating to in first of or $X.X $X.XX of or quarter $X.XX $XX.X the or million XXXX. $X.X increased over income net share compared million per share Our the quarter. income per XX% a prior million

continuing XXX, OIBDA, of compared in impact million $XXX,XXX XXXX $XX higher the is XX%, XX, includes margin one-time fees The which XXXX, waived $X.XX. for $X.X million $X $X including Sprint representing was QX the appealing. in than decline to fee. Excluding adjusted share million was million of which audit per Move OIBDA tax QX on of are impact plan and anticipated an expenses adjusted a to special OIBDA the Slide of adjusted XXX(k) OIBDA million includes management from Slide earnings also we $XX assessment West XX Virginia, the contribution,

when of a waive month until Sprint management the and to a divestitures measure nTelos, million. waive the the continuing prepaid As X% $XXX to ensure fees. we management are committed fees the to the total aware postpaid reaches X% million reminder, up fee We acquired impacted provide OIBDA waive $X.X

drivers of OIBDA OIBDA. We of nTelos provided QX XXXX. by these in and Adjusted the decline habits quarter-over-quarter The requires speeds expenses was On sales in prepaid by Slide OIBDA. XX, quarter million OIBDA the expect driven contributing Cable as revenue on tax impact in bridge OIBDA. decline OIBDA million XXXX $X $X Also customers in from in over QX XXXX. results the revenue Offsetting adjusted of changing is Sprint. a segment. national the to greater base costs OIBDA XX, the data declines revenues waive XXXX and more the in wireless other assessment. increases adjusted XX, an network our video, including increase XXXX result consumption. the high-speed our consume On declined in drivers data in of we costs adjusted a from a of revenues OIBDA. a revenues. between and and The Internet grew first and OIBDA which left Slide they with cable better decrease acquisition changes To in high Wireless Slide property the to QX On change a and increases $X was management bridge primarily higher as of prepaid understand absence higher as million and related device fee speed data reflect

of our Turning of of debt Barring debt capital covenant and as million well $XXX to inside leverage on our any metrics X.XX leverage we debt and to XXXX, Slide ratio times, outstanding was acquisitions, significant XX, had XX, expect our X.XX. March we decline. of our levels

Tax result not do rate investments, a cash, the and Act, in expect income on pay depreciation of accelerated As any we federal, or the XXXX state tax capital our taxes lower to XXXX.

turn the over Earle. I’ll Now presentation to

Earle MacKenzie

To Pennsylvania. and Lancaster Jim expand with service are XX made X.X orange almost The earlier on POPs, areas covers in point County, in about up picked million X, February slide good expansion. morning. Thanks, that Jim and Sprint, shows shown in new the the we that area is expansion half

network post-paid Washington three western up is critical and the expansion and X improving from of end for the quarter, next The marked are metro and were in These year-end. the tablets As no the percent down X% and network of spent gaps filling our customers. we’ve base $XX March part map shared XX% as have years. Slide previously, of still the the new February between coverage of base and phone the customers hash postpaid or from Philadelphia, we on upgrade. from the quarter, total the that are our on in over in are XX% XXX,XXX of fill customers XX, potential we areas the X,XXX,XXX area we percent from and network XX, the At subsidized and for million including spend requirement. picked the Richmond. of Shown data customers Eight a their will our upgraded plans Sprint of XXX,XXX area the on were non-phone to Sprint areas of devices. had at Seven million prepaid expanding acquire XX% phones $XX

received don’t to service, the know see XXXX. customer free too our the year-end XX, We XX, Slide XX change they’ll early on March off. sticky March it’s so if of of shows XXXX be, will how XX to growth came so at We a continue from XXXX, that Apple base it’s watches. of watches one know to wireless days turn components

expansions. customers as We net added XXX result nearly had XX,XXX the see You prepaid. two gained XX,XXX postpaid a of the and

thousands activity XX September this expected. the XX-month As for up when quarter migration compared adds you we that didn’t in We XXXX new Galaxy the and XXXX finished of net migrate postpaid to The and customers XXXX to at releases. recall, we XX, to saw lighter the create didn’t prospects the was activity got previously we the gross of rates similar nTelos the the XXXX. but during XXXX XXXX, activity first lost shows Samsung We Slide gross QX customers was period. but of and had had related good we than new light. This iPhone. in into conversion what phone store, good

of continued X.XX%, $XX.XX entirely churn quarter net Postpaid quarter legacy ARPU less churn adjustments XX and than Postpaid X.XX adds, first but the X.XX% quarter Slide our for in XXXX. X was non-phone the We Phone port-out have gain of was to lower a was was some loss phones XXX expectation, - non-smartphones. in our the quarter therefore made at port-in for to and watches, churn was We the ratio with for on of was promotions. with in of line XX. Churn loss devices showed for the a with X.X%. a and us Interesting loss Apple at net X%. non-phone our the non-recurring had up was net churn led giving gross versus in area to by included improve continue net core phones. positive the

Moving quarter the to we terrific year. adds from last have Slide XX, and quarter prepaid XX,XXX gross of net a X,XXX with adds X% of same up

area throughout entire and Boost our primary Our stores for The quarter this service of made the local advertising. net were customers. Boost was in expansion we Boost gain investment improvement reason the

postpaid base. prepaid prepaid. was prudent the customer a total cost comfortable of percentage becoming to the with narrowing make push Sprint along Sprint larger between our When Boost wholesale we’re ARPU prepaid wholesale the didn’t off rate and buying very the nTelos, of it With structure, with for

seeing been port those prepaid lot areas. phone in we’re numbers is An trend that prepaid So, a of their porting entire interesting those that’s postpaid potential are customers the largest our do for across that service area group customers. T-Mobile

our during significant churn offering a a great down, on adds. primarily Looking is quarter. you at one-month the prepaid to see ARPU promotion net impact Prepaid quarter Slide slightly had is free XX, Sprint Boost that this down due which

I’d cable, from you got wireless key on distribution. Two to to our great plans and some moment success stores our a components important with about we to the move news information I for of network. network like some great new in Before for take share RootMetrics recent are and

XXXX, and a and XX, September XXX the postpaid the stores XX% and branded of of of year-end, have Boost XXX third As Sprint to quarter XX% XXXX. XXX stores. stores, Boost from branded expect had By we branded we respectively stores XXX end increase a

year. in tied consider is of winners that coverage you West call West late AT&T had exciting We Another performance results had one Sprint for this the our ranking exciting Wheeling AT&T development from the serve network Virginia, until and where was for to This a were when West won’t texting. expansion, we for and consists area. RootMetrics Prior we for for the of of expansion and informed half their performance, they the RootMetrics reliability overall XXXX. state our number It outright for that network the state. first Virginia the Virginia. dominant finish entire network upgrade second very achieved all got we except

our building would Western to separate there approach did if We network, have too. with RootMetrics to the one Virginia, assume similar rank number for testing that we

increase pass on and We we the Internet expected transformation customers. we than X,XXX X,XXX for on XX, to broadband, have higher users, speed customers high-speed all had Moving price. XX-meg January XX a XXX video and video our Cable XX for of users. a we XXX losses those we meg increase Slide gave and the added considering the eliminated did fewer our and speed residential higher we option role users programming similar were XX, continuing costs. of the lost XX-meg net a February, to price to users. RGUs, large XXX-meg In at the voice did XX-meg our role in

Now, XXX-meg users, were base given the price. about our represent former XXX-meg which speeds of X% XXX-meg at

another As price each you’ve and increase of to a penetration the Slide programming some on shows data and customer our including offset to XXX high of video view XX slide been video. our voice customers. in speed XX-meg we were have per the improvement by imagining, in upgrading with very users. and the X,XXX is of No passed continued costs. happy month speed homes service, driven broadband users every in their revenue January below average internet increases the to changes in RGU expected had made we as XXX shown decrease a higher prior by and

past on of XX stats access to X.X% in the line Slide loss slowing XX wireline Our only a months. shows

customers with remaining to continue add broadband service We constant. revenues

are in few cable use the to revenue footprint, we’ll voice for going next and and XX. network only. years, cable footprint on shown Slide in modem Fiber we’re migrate cable our of all our DSL copper the customers sales our Over lease

the very of had to see first total April strong lease CapEx lower XXXX is XXXX. quarter changed weeks sales non-affiliated have for the few in our sales amount in a XXXX. year-end did for revenues. slide, growth continue affiliated just exceed It expect fiber a both We hasn’t last but XXXX, call shown ago. on and fiber My We and slide from XX to

how I Sprint/T-Mobile conclude, impact a merger There’s Shentel. Before the let of me events. will summarize waterfall

to the not First, try to Shentel to agrees file injunction merger. an block

must If Shentel not T-Mobile closing XXX decide buy our just want formula wireless towers they the have days, a that to the in of option of XX network T-Mobile service choose and wireless days to of handsome and remain the Not subsidiary, at deal, all million we approved then do our fiber If within the finance network. at will their the the the purchase, New a as purchase we decides the our customers, will that acquire by an two of and will New merger buy cost determined should the New the have they up business, shareholders asset our If affiliate or of the wireless for the New if T-Mobile there’s buy and T-Mobile our wireless network buy Shentel to Assuming merger area to gets the our decide POPs of customers next network value. five finance the XX% T-Mobile X then the upon T-Mobile value business, to the return. business. If can’t the very for to overlaps not they T-Mobile provide the to to customers capital off not years. Shentel, years. Shentel turn

As said we’re we’ll focused a time this to business. not going the at of Jim. lot call to but on turn our back spend now continue I’ll point, to running speculating, stay Chris

Jim Woodward

ready and – we’re you for we are ready for Thank operator, questions.

Operator

to go Prentiss Raymond James. will of We Ric Instructions] [Operator

Ric Prentiss

okay? me hear you Can

Jim Woodward

Yeah.

Earle MacKenzie

Yes.

Ric Prentiss

is towers something of couple and or was about and a that the we that tax? on the of curious on items; that. related The appreciate XXX(k) one-time what kind to annually the happening color think tax it of it, contribution first, Hey, property Okay. assessment, questions. exactly should were is we was that property

Earle MacKenzie

was unexpected So, towers was location reverse that’s surprise, it we’re healing it. an why to order property related of taxes kind and it whether

will just be and with from, are occasionally the for especially assessment on come where not We’re looking surprise a businesses. localities up came sure revenue but some we – it states

Jim Woodward

in expect believe, a to that’s the I – helping employees that I for they the course thing. event. That that past, think thank just the be the was the put annual it But, but infrequent. grow In was don’t I XXX(k) an not plan, business. in, and couple don’t something Shentel of had done somewhere hard it's a one-time maybe our last way years, rare no of over the to has work to very

Ric Prentiss

coming industry. have in operational a kind And any was both guys. of a and opening phone some and Has Great. did up customers new I gross Earlier of long the you negative seeing understand the ad any the the for seeing that it, within help bit since the they're that? bit question. to now from I been postpaid, cable adds a into base there competition, about last light quarter from migrated then think stores, night space, it time you they It’s affect there remember had in is could little talked of any impact what been Sprint net that any their and you prepaid mentioned, us pool reported help and you're little

Christopher French

I’ll start I re-ask one, miss questions; answering your if it.

Ric Prentiss

Okay.

Christopher French

there First from less is real identify no. question on, our customers on activity. did impact we porting thousand can shift a the that answer footprint, actually is Within any than see any cable, our we from

So, we hasn't that's customer a less impact began. is us as taking us any from really Comcast cable there than although, have in area, they of from customers X,XXX lot a there they’re been really since any – as meaningful our and far not seen

terribly we the got. expected had good relatively that that once so from in it, what is for did have effect and especially to the than a still and really what saw are speaking, gross not store. activity we the don't who iPhone a X, And folks than real building The impact coming got now our not there on in the held shifted I quarter – to we in As but our and could very – But, really we little fourth impact nTelos that between far Galaxy the we see the the issue. some prepaid we quarter, expected brand compared as has not But, we higher door disappointing as what introduction since some that saw we’re nTelos first of for sure that maybe some, down both area. primary was there footprint We of selling a measure postpaid, measured really more again really was into in still the really this and see the much but the unlimited, but us. would wasn’t weekend, think legacy surprising I’m it and I quarter. shift adds people seeing Verizon that down past, area, enough in the swings, we of

area we have in gross adds in very quite any just there. the gross seeing the deterioration We good in adds pickup see We We're not didn't the legacy. nTelos that anticipated.

Ric Prentiss

to change Any the the both getting Sprint with or doors the the just open advertising campaign is really and it branded Boost?

Christopher French

service have from for areas there to going not now years you who for I it all those people been advertising now actually in nTelos/Sprint, Well, have think we “gee area neighborhood”. it, about a service say so are hearing years many sudden are have in our if there and wireless nTelos where XX, XX there's of whiz, and no my been

starting things the doors quarter, but we're really advertising very, and are hangers marketing happy and and we do third in So, it let people for continuing we've Sprint. expanding know And now years, the word provided yard to you the we're and that good in that maybe sales. we're to to the had where initial we're two success areas one gone coverage customers, out make other good and change from areas to coverage carriers there national years using door localized quarter, have actually we've actually first option now hearing that very like into we some you've second focusing, to get have where started been the our or there signs been the an stories to

it's So, even is we're optimistic takes time to a there. It's just change when coming. that long reality very perception it

Ric Prentiss

also you And focus that how the me, a Makes Sprint’s that they desire because you, increase desire to resolve could One thing understand last sense. it they turf just delay to might assign and might months that many, Sprint on get can't is many to mentioned your and T-Mobile. Chris, it. to obviously, question for be be little quicker but

an thinking given maybe So, the Sprint with update of ability to what the replicate particularly the just on table. expansions merger you're on the some about wanted turf

Earle MacKenzie

is still and continue us a to relationship unique Ric, is Sprint. I’ll is conversations one think There that win-win, most expansions expand. truly where of we've done, take is this. This Earle, I'll take a those parties who to interest both question kind for I'm has two it to of since of the This kind I testament that. is that on a the with

going although a everybody Sprint on it was their short discussions, we a chance agree kind obviously some we have the period that You to But, and catch a least there's that I either. about were talking And any and coverage time both probably prudent in Kansas in think give of where that for Seattle. of know, pause lot middle the we've City, beyond doesn’t breath. been areas you or from look taking of T-Mobile when to at areas

for have to there So, opportunity once I think to discussions, these is continue to an an expand. opportunity us continue I think that we

Ric Prentiss

guys. Great. Thanks for taking the question

Operator

you. Thank

next comes Amy of line in question Our Yong Macquarie. from

please. question Your

Amy Yong

little their merger. is obviously one strategic looks It guess I profitability. following more focus, Sprint like a two bit actually focus up T-Mobile/Sprint the they’re on morning. questions, shifting on Good

slightly area impact should expect goes what the process, Sprint, the they're the more think talk is, impact the merger be early, I one to new February? the of on as don't seeing just or guess. of operational going an standpoint is singed but continues kind you're about you second question your to your expanded know in Sprint churn and the calling And in it's operations, Earle you the kind this I through from about Can if as we that of it if Kentucky you’ve I could for Thanks. side elevated. approval operational business how talk too to some my

Christopher French

that said of while, important some been ARPU. revenue promised. for quite been is important actually health Okay. far when are running churn on lot for as, that were a of on and the Well, see planning them thing as up that encouraging Sprint accounts way there they have the very do that has contra believe to they for they is is old Sprint as today. us the But, for of to will and back in promotions it's that's that taking there they promotions pulling through And announced We've pick that are basically out yes promotions to business believe on a those to that they the start understand away. And the have when actually start improvement revenue. that that beyond are all long-term promotions forefront the we

if average churn. but that impact see significant than promotions minor any a revenue phone, even cost on do second churn our start that quality of get a average So, we nothing expect amount increased revenue the we that's second – do phone on our so impact – because if They'll take up. the that pulling running to any our be is the network don't more impacting some, the of will BOGO happy they We that the through phone the and to to you of believe ARPU. back

they continue been that So, we will spite in hope with that actually and of the through supportive very have merger. of

As it's at focus going and day to we're by network, to not that point through get absolutely an that critical it's in local far continue speed our XXXX, the with it's the to sidetracked it's full for that we're whether whether act continuing our merger that. opening kind constructing earlier, not about this advertising. think us said whether that I as ahead. had employees have happening, thinking plan stores, you is of investment making for as to We in to every going continue know follow to, to continue we to as we're We're continuing day operations, place

a you So, have of see Pennsylvania. that pretty it's can areas, When been little look job the our the that's able tell to at improve that in kind I place good plan. you where early put are Sprint building But, been county. of new County, half the have of overnight. expanded the impact to the see resources almost one significant to to we're part stores the had dealers those done the impact, supporting eastern But, seeing of the any really some Lancaster area has in we service service we us part in deficiency next of productivity the that and eastern – areas in area. some western from is that a we

of a Sprint the And And feeding getting outer providing more us. on for also because push so, of out these improved more combination focusing see therefore, just think have than lot going able to not provide I but year, past see first a to Really, care we’ll and going advertise lot support think it's to not but of until that edition that’s was I in upgraded, customers only we’re do that are the to much network trying money in these a network the out competitive. and markets for until new dealers outer we’ll Sprint, next we markets those to even stores. really of and a not spend not productivity we’re

Operator

your that answer question? Does

Amy Yong

Thank Yes. you.

Operator

Thank you.

from line of Financials. Our BWS next Hamed the question Khorsand comes from

Your question please.

Hamed Khorsand

Hi.

to far is to So OpEx increase expanded sounds or Is first off, going initially? it traction new much to. really be I what expecting the what increase as you were with just getting as more the as like customers ask concerned not the than you and with are the implied you’re tried want markets changes haven’t OpEx or these

Earle MacKenzie

from $X,XXX, customers for lead is EBITDA mean were Earle. month numbers acquired the I lease, for would but we’ve about always cover the enough of given running a We’ve neutral it. after those the costs costs the actually we up much no. site collecting backhaul, think OIBDA somewhat and of The a to electricity, that, customers, us it before. lag of this pay for or per revenue somewhat those be operating tower the $X,XXX for towers. Hamed, the is really basically there I was that new the Bringing when the said network, we they maintenance were to answer enough that

in and the areas, nTelos then expansion in have in year and next both the adding beginning started to to $X,XXX customers. we’ll able a incurring where start sites, lead cell up bring and area month We lag, $X,XXX, be we’ll will the this have year of there will this be

those it near-term, marketing to in and you that’s basically transformation that start a reason past the would you decrease of operating these although costs that costs the we nTelos of would customers. have so our the least increased get we see cost in in by and the why were we’ve built the replaced And from be the at adding able network one-time until then said would

invest of the think really This about then – whether the years, is up as has which you’ve big where cable it’s the front. got kind in business it to have pattern really really and make was you business, it our harvest, So, to for many been investment it nTelos. whether

the able You’re those to the CapEx to build for you’re to cover incur customer shareholders. costs then OpEx, going able to and some the and create and base be value

Hamed Khorsand

you And from Okay. go between are standpoint, video the losses much the bundle other TV. the of just my versus How you’re coming question I that as quarter now? on subscriber percentage side the much into – the and from then mean we cable incurring, solo for How was mix that second solo bundle? is is

Jim Woodward

over the and they’re top your the only and/or the are us satellite leaving of get things us. video, for broadband answer over they’re anything leave losing phone the customers first buying with or experience video. pipe video even or we’re to that bigger one they’re the to question, top either broadband a these but or going providers. two either not their in they But, going They’re order if doing To

of So, provide broadband we other in services, not best a really do and phone. because we are provide best we the because for the seeing loss experience it, value

the to take sense doesn’t So, it customer really for make their video.

you’re way to video we is of why pay you buy expected think than you losses price. fewer Hamed, our is I had The broadband us, seeing from need it think bundling effect. about retail the the because reason you

we $XX that first one other You off buy services service. take from us,

If second off a us, off total we you the and or buy three $XX for take $XX from of $XX. services service

So, thinking of their video, even going to reduce they’re rid with getting discount. their about somebody’s

a it total of single never third cases are and really a going these time, part held a the been we’ve looked though that they’ve customers up to very their about that’s on bill are doesn’t losing long are reason at had going of to customers And very, their virtually, customers, have so, customer even I probably that customers from their discount portion you think actually video gone price is who because them their XX,XXX has video those of when be other I then for why service per make me. the at to give that here for you way. number, go have all see be customers, I we’ve and because out we approximate With right an of it other attractive probably would be in good front than customers of to going us an of average to have I’m more the only. RGUs XX,XXX broadband say, to But, one place of of or the voice X.X, broadband service X.X. customers our out don’t

by change the that with was believe If that the realistically patterns, you high we goal me a but get our had several above ago, asked happened to just focus see going profitability X.x ratio years And get. continued from in ourselves it’s question customer versus broadband is two, this as in good this video on to the video. you for as what’s can and

Hamed Khorsand

a homes is almost has standpoint. nothing question passed gone basically, last an number to increase my of And from

to just So, is or can��t costs all and you it any about really plans any further really go because further it’s than not just expand this?

Jim Woodward

some going right actually to dollars Well, X,XXX homes. in X,XXX year’s capital to this got do actually additional we construction an have We now to additional budget that. pass

business. the we’re makes profitability are seeing financial to continue today we’ll were than that when edge-outs broadband at of ago it look are several willing money sense. pass we years because these more our home, to high spend Actually, So, a in we to

that several we viable areas of markets our list at. back look years now not were on some ago, financially So, put to have

for coming sense no thing up CAF reverse it summer, that get there within now makes overall that areas. us go this build looking and to areas to funds from where today II later is provide some at additional The into is is we’re other some to we evaluating government footprint, potentially broadband, auction our to going where right broadband various is where there funds and the that provide the government out are auction

bottom the but any. opportunities, that been positioned for is looking just line hasn’t constantly We’re

We certainly us, sense make them. this for will point, any we the continue lot a at for there go to those just activity M&A after and there But, cable. been will look in that are area for of if hasn’t

Hamed Khorsand

you. thank Okay,

Jim Woodward

welcome. You’re

Operator

does the today’s this conclude program. session And you. of question-and-answer Thank

Jim Woodward

to good look So, us day. thank joining you keeping and forward for we for call our progress. you our everyone a on Have updated

Shenandoah Telecommunications (SHEN) 3 May 182018 Q1 Earnings call transcript