Shentel - Shenandoah Telecommunications Co.

02/26/2026 | Press release | Distributed by Public on 02/26/2026 06:12

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion and analysis may contain forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated by forward-looking statements as a result of many factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Annual Report on Form 10-K, including those set forth under "Part I. Cautionary Statement Regarding Forward-Looking Statements" and "Part I. Item 1A. Risk Factors".
Overview
Shenandoah Telecommunications Company ("Shentel", "we", "our", "us", or the "Company"), provides broadband services through its high speed, state-of-the-art fiber-optic and cable networks to customers in eight contiguous states in the eastern United States. The Company's services include: broadband internet, video and voice; high-speed Ethernet, dedicated internet access and dark fiber leasing; and managed network services. The Company owns an extensive regional network with approximately 19,000 route miles of fiber.
2025 Developments
Refinancing Activities
Shentel Issuer, a limited-purpose, bankruptcy remote indirect wholly-owned subsidiary of Shentel, closed its inaugural offering of $567.4 million aggregate principal amount of secured fiber network revenue term notes, consisting of $489.1 million 5.64% Series 2025-1, Class A-2 term notes (the "Class A-2 Notes") and $78.3 million 6.03% Series 2025-1, Class B term notes (the "Class B Notes"), each with an anticipated repayment date in December 2030. The Class A-2 Notes and Class B Notes are secured by certain fiber network assets and related customer contracts in the states of Virginia, Ohio, Pennsylvania, Indiana, Maryland and West Virginia.
As part of the same agreement governing the Class A-2 Notes and Class B Notes (the "ABS Indenture") and fiber network assets and related customer contracts that govern and secure the ABS Notes, Shentel Issuer entered into a revolving $175.0 million variable funding note facility (the "VFN") due December 2029 with a group of financial institutions. VFN advances will be subject to certain pro-forma leverage and debt service coverage ratios as defined in the ABS Indenture. The VFN will bear interest at term Secured Overnight Financing Rate ("SOFR") plus a margin of 1.75%. The Company had no borrowings under the VFN at Closing.
As part of the same ABS Indenture and fiber network assets and related customer contracts that govern and secure the ABS Notes, Shentel Issuer entered into a $25 million delay draw Liquidity Funding Note facility (the "LFN", together with the Class A-2 Notes, Class B notes, and the VFN, the "ABS Notes") with Bank of America. The LFN is subject to the same collateral and covenant framework, including pro-forma leverage and debt service coverage ratios as defined in the ABS Indenture. Shentel Issuer may draw on the LFN solely for the purpose of funding amounts due and payable for certain Priority of Payments as defined in the ABS Indenture and when restricted cash funds required by ABS Indenture are insufficient. The LFN will bear interest at the Prime Rate plus a spread of 3.0%. The Company had no borrowings under the LFN at Closing.
Concurrently, Shentel Broadband, a wholly-owned indirect subsidiary of the Company, entered into a new $175.0 million Revolving Credit Facility (the "RCF") due December 2030 with a group of financial institutions. The RCF is secured by substantially the cash flows and all of the assets and equity interests of its subsidiaries excluding Shentel Issuer; Shentel Guarantor LLC, a wholly-owned subsidiary of Shentel Broadband and parent of Shentel Issuer; Shentel Asset Entity I LLC, a wholly-owned subsidiary of Shentel Issuer; and Shentel Asset Entity II LLC, a wholly-owned subsidiary of Shentel Issuer. Borrowings under the RCF will bear interest at term SOFR plus a margin ranging from 2.50% to 3.00%. Shentel Broadband borrowed $75.0 million from the RCF at Closing.
Shentel and its non ABS Entities have no recourse of the loans of the ABS Entities. Likewise, the ABS Entities have no recourse of the loans of Shentel Broadband.
Shentel used a portion of the proceeds from the issuance of the ABS Notes and the RCF to repay the outstanding principal on the Company's existing debt. Refer to Note 10, Debtin Shentel's Consolidated 2025 Financial Statements for more information.
Management Transitions
On July 31, 2025, the Company announced that its Board of Directors appointed Edward H. "Ed" McKay, the Company's former Executive Vice President and Chief Operating Officer, as President and Chief Executive Officer ("CEO"), effective September 1, 2025. Christopher E. French, Shentel's previous President and CEO, stepped into the role of Executive Chairman of the Board of Directors and remains active in steering the Company's strategy while continuing to work closely with the senior leadership team and the Board of Directors.
Virginia Fiber Acquisition
In April 2025, the Company executed an Asset Purchase Agreement to acquire FTTH assets and operations of a fiber business based in Virginia for $5 million, including passings of approximately 1,500 homes and approximately 700 customers. The Company completed the acquisition on July 9, 2025.
H.R.1 - 119th Congress (2025-2026)
On July 4, 2025, H.R.1 was signed into law and includes numerous changes to existing tax law, including provisions providing current deductibility of certain property additions and limitations on interest deductions based on a tax EBITDA framework. These provisions are generally effective beginning in 2025, and we currently anticipate they will partially defer our income tax payments in future years. The legislation did not have a material impact on our consolidated financial statements for the year ended December 31, 2025.
Results of Operations
Year Ended December 31, 2025 Compared with the Year Ended December 31, 2024
The Company's consolidated results from operations are summarized as follows:
Year Ended December 31, Change
($ in thousands) 2025 % of Revenue 2024 % of Revenue $ %
External revenue
Residential & SMB - Incumbent Broadband Markets $ 169,668 47.4 % $ 174,795 53.3 % (5,127) (2.9) %
Residential & SMB - Glo Fiber Expansion Markets 82,558 23.1 % 57,872 17.6 % 24,686 42.7 %
Commercial Fiber 79,315 22.2 % 70,057 21.4 % 9,258 13.2 %
RLEC & Other 26,313 7.4 % 25,334 7.7 % 979 3.9 %
Total revenue 357,854 100.0 % 328,058 100.0 % 29,796 9.1 %
Operating expenses
Cost of services, exclusive of depreciation and amortization 130,118 36.4 % 128,112 39.1 % 2,006 1.6 %
Selling, general and administrative 118,187 33.0 % 115,193 35.1 % 2,994 2.6 %
Restructuring, integration and acquisition 1,173 0.3 % 14,509 4.4 % (13,336) (91.9) %
Depreciation and amortization 131,613 36.8 % 98,835 30.1 % 32,778 33.2 %
Total operating expenses 381,091 106.5 % 356,649 108.7 % 24,442 6.9 %
Operating loss (23,237) (6.5) % (28,591) (8.7) % 5,354 NMF
Other (expense) income:
Interest expense (25,374) (7.1) % (15,897) (4.8) % (9,477) 59.6 %
Other income, net 6,755 1.9 % 6,461 2.0 % 294 4.6 %
Loss from continuing operations before income taxes (41,856) (11.7) % (38,027) (11.6) % (3,829) 10.1 %
Income tax benefit (8,913) (2.5) % (9,670) (2.9) % 757 (7.8) %
Loss from continuing operations (32,943) (9.2) % (28,357) (8.6) % (4,586) 16.2 %
Income from discontinued operations, net of tax - - % 222,174 67.7 % (222,174) NMF
Net (loss) income (32,943) (9.2) % 193,817 59.1 % (226,760) NMF
Dividends on redeemable noncontrolling interest 6,449 1.8 % 3,429 1.0 % 3,020 88.1 %
Net (loss) income attributable to common shareholders $ (39,392) (11.0) % $ 190,388 58.0 % (229,780) NMF
Shentel acquired Horizon on April 1, 2024 and consequently, results for the year ended December 31, 2024 included nine months of Horizon revenue, whereas the comparable year ended December 31, 2025 included twelve months of Horizon revenue. Information about year over year variances noted below includes the results of the acquired Horizon markets during the first three months of 2025 and explanations of the remaining consolidated changes.
Shentel updated the presentation of certain Residential & SMB - Incumbent Broadband Market, Residential & SMB - Glo Fiber, Commercial Fiber and RLEC & Other revenues for the prior year to conform with changes in how management currently views these lines of business.
Residential & SMB - Incumbent Broadband Markets revenue
Revenue from residential and small and medium business ("SMB") customers in Incumbent Broadband Markets is primarily earned through the Company's provision of data, video and voice services over primarily HFC cable and to a lesser extent FTTH networks in incumbent markets.
Residential & SMB - Incumbent Broadband Markets revenue decreased $5.1 million, or 2.9%. Shentel recognized $1.7 million of revenues earned in the acquired Horizon markets in the first quarter of 2025. The remaining decrease of $6.8 million was primarily due to lower video revenues from a 14.5% decline in video revenue generating units ("RGUs"), lower USF revenues and a 1.6% decline in data average revenue per unit ("ARPU").
Residential & SMB - Glo Fiber Expansion Markets revenue
Revenue from residential and SMB customers in Glo Fiber Expansion Markets is primarily earned through the Company's provision of data, video and voice services over FTTH networks in new greenfield expansion markets.
Residential & SMB - Glo Fiber Expansion Markets revenue increased $24.7 million, or 42.7%. Shentel recognized $0.7 million of revenues earned in the acquired Horizon markets in the first quarter of 2025. The remaining increase of $24.0 million was primarily due to 42.0% year-over-year growth in data RGUs and 16.3% year-over-year growth in video RGUs associated with the Company's investment in expanded geographies for Glo Fiber.
Commercial Fiber revenue
Shentel's Commercial Fiber revenue is primarily earned through the Company's provision of high-speed Ethernet, dedicated internet access, wavelength services, dark fiber leasing and managed services over fiber optic networks to commercial customers.
Commercial Fiber revenue increased $9.3 million, or 13.2%. Shentel recognized $9.9 million of revenues earned in the acquired Horizon markets in the first quarter of 2025. The remaining decrease of $0.6 million was primarily due to non-cash deferred revenue adjustments for a carrier customer and early termination fees earned in the prior year.
RLEC & Other revenue
Shentel's RLEC & Other revenue is primarily earned through the Company's provision of voice and DSL telephone services over copper networks, primarily in Shenandoah County, Virginia and Ross County, Ohio. Shentel also earns governmental support revenue through the federal USF.
RLEC & Other revenue increased $1.0 million, or 3.9%. Shentel recognized $2.9 million of revenues earned in the acquired Horizon markets in the first quarter of 2025. The remaining decrease of $1.9 million was primarily due to lower data service line ("DSL") revenue from a 19.8% decline of DSL RGUs, partially due to customers migrating to our broadband data service in the recently constructed passings supported by government grants.
Cost of services
Cost of services primarily consist of costs to acquire and deliver video programming, internal labor to maintain our network and service our customers, third party network maintenance, and line expenses.
Cost of services increased $2.0 million, or 1.6%. Shentel incurred $7.6 million of costs incurred in the acquired Horizon markets in the first quarter of 2025. The remaining decrease of $5.6 million was primarily due to decreases in network payroll and line costs driven by synergy savings and decreased programming expenses associated with the declines in video RGUs.
Selling, general and administrative
Selling, general and administrative expenses consist of employee compensation, advertising, software maintenance, stock-based compensation, and operating taxes.
Selling, general and administrative expense increased $3.0 million, or 2.6%. Shentel incurred $3.2 million of selling, general and administrative costs incurred in the acquired Horizon markets in the first quarter of 2025. The remaining decrease of $0.2 million was primarily due to decreases in employee compensation, professional fees driven by synergy savings and lower bad debt, partially offset by increases in operating taxes and advertising costs.
Restructuring, integration and acquisition
Integration and acquisition expense decreased $13.3 million, or 91.9%. Restructuring, integration and acquisition expense in 2024 related primarily to expenses incurred to effect the Horizon transaction and integration expenses incurred during the post-acquisition period.
Depreciation and amortization
Depreciation and amortization increased $32.8 million, or 33.2%. Shentel incurred $9.2 million of depreciation and amortization related to the tangible and intangible assets acquired in the Horizon Transaction in the first quarter of 2025. The remaining increase of $23.6 million was due to the Company's expansion of its Glo Fiber network and a $7.4 million write-off of inventory assets no longer expected to be used.
Interest expense
Interest expense increased by $9.5 million, or 59.6% primarily due to an increase in the Company's outstanding debt.
Other income, net
Other income, net increased by $0.3 million, or 4.6% primarily due to a favorable settlement of the Horizon acquisition related escrow claim and a reclassification of unrecognized gains on interest rate swaps accumulated in other comprehensive income to the Company's consolidated statements of operations with the termination of the hedging program. These gains were partially offset by higher interest income earned in the prior year.
Income tax benefit
The Company recognized $8.9 million of income tax benefit for 2025, compared with $9.7 million for 2024 due to higher excess tax benefits derived from vesting of restricted stock in 2025 compared to 2024.
Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023
The Company's consolidated results from operations are summarized as follows:
Year Ended December 31, Change
($ in thousands) 2024 % of Revenue 2023 % of Revenue $ %
External revenue
Residential & SMB - Incumbent Broadband Markets $ 174,795 53.3 % $ 174,710 64.9 % 85 - %
Residential & SMB - Glo Fiber Expansion Markets 57,872 17.6 % 35,103 13.0 % 22,769 64.9 %
Commercial Fiber 70,057 21.4 % 44,301 16.5 % 25,756 58.1 %
RLEC & Other 25,334 7.7 % 15,017 5.6 % 10,317 68.7 %
Total revenue 328,058 100.0 % 269,131 100.0 % 58,927 21.9 %
Operating expenses
Cost of services, exclusive of depreciation and amortization 128,112 39.1 % 100,850 37.5 % 27,262 27.0 %
Selling, general and administrative 115,193 35.1 % 99,304 36.9 % 15,889 16.0 %
Restructuring, integration and acquisition 14,509 4.4 % 2,915 1.1 % 11,594 397.7 %
Depreciation and amortization 98,835 30.1 % 65,920 24.5 % 32,915 49.9 %
Total operating expenses 356,649 108.7 % 268,989 99.9 % 87,660 32.6 %
Operating (loss) income (28,591) (8.7) % 142 0.1 % (28,733) NMF
Other income (expense):
Interest expense (15,897) (4.8) % (4,212) (1.6) % (11,685) 277.4 %
Other income, net 6,461 2.0 % 5,587 2.1 % 874 15.6 %
(Loss) income from continuing operations before income taxes (38,027) (11.6) % 1,517 0.6 % (39,544) NMF
Income tax (benefit) expense (9,670) (2.9) % 501 0.2 % (10,171) NMF
(Loss) income from continuing operations (28,357) (8.6) % 1,016 0.4 % (29,373) NMF
Income from discontinued operations, net of tax 222,174 67.7 % 7,022 2.6 % 215,152 NMF
Net income $ 193,817 59.1 % $ 8,038 3.0 % 185,779 NMF
Net income attributable to redeemable noncontrolling interest 3,429 1.0 % - - % 3,429 NMF
Net income attributable to common shareholders $ 190,388 58.0 % $ 8,038 3.0 % 182,350 NMF
Shentel updated the presentation of certain Residential & SMB - Incumbent Broadband Market, Residential & SMB - Glo Fiber, Commercial Fiber and RLEC & Other revenues for the prior year to conform with changes in how management currently views these lines of business.
Residential & SMB - Incumbent Broadband Markets revenue
Residential & SMB - Incumbent Broadband Markets revenue decreased by $0.1 million. Shentel recognized $5.2 million of revenues earned in the newly acquired Horizon markets. The remaining decrease of $5.3 million was primarily due to lower video revenue from a 15.3% decline in video RGUs and lower voice revenue from a 21.5% decline in voice ARPU.
Residential & SMB - Glo Fiber Expansion Markets revenue
Residential & SMB - Glo Fiber Expansion Markets revenue increased by $22.8 million, or 64.9%. Shentel realized a $21.4 million increase in legacy Shentel markets and recognized $1.4 million of revenues earned in the newly acquired Horizon markets. The increase in legacy Shentel markets revenue was primarily due to 50.9% year-over-year growth in data RGUs associated with the Company's investment in expanded geographies for Glo Fiber and a 7.3% increase in data ARPU.
Commercial Fiber revenue
Commercial Fiber revenue increased by $25.8 million, or 58.1%. Shentel recognized $31.3 million of revenues earned in the newly acquired Horizon markets. The remaining decrease of $5.6 million was primarily due to the previously disclosed T-Mobile backhaul revenue churn associated with the decommissioning of the former Sprint network.
RLEC & Other revenue
RLEC & Other revenue increased by $10.3 million, or 68.7%, primarily due to $9.9 million of revenues earned in the newly acquired Horizon markets and an increase in governmental support revenue.
Cost of services
Cost of services increased by $27.3 million, or 27.0%. Shentel incurred $25.3 million of costs incurred in the newly acquired Horizon markets. The remaining increase of $2.0 million was primarily due to network maintenance costs for Glo Fiber market expansion.
Selling, general and administrative
Selling, general and administrative expense increased by $15.9 million, or 16.0%. Shentel incurred $11.7 million of selling, general and administrative costs incurred in the newly acquired Horizon markets. The remaining increase of $4.2 million was primarily due to higher advertising costs and sales headcount associated with the Company's expansion of Shentel's Glo Fiber network.
Restructuring, integration and acquisition
Integration and acquisition expense increased by $11.6 million primarily due to non-recurring Horizon acquisition-related costs related to banking, legal, insurance and software expenses.
Depreciation and amortization
Depreciation and amortization increased by $32.9 million, or 49.9%. Shentel incurred $25.5 million of depreciation and amortization related to the tangible and intangible assets acquired in the Horizon Transaction. The remaining increase of $9.6 million was primarily due to legacy Shentel's expansion of its Glo Fiber network. Shentel also recognized $2.2 million less in impairment charges in 2024 compared to 2023.
Interest expense
Interest expense increased by $11.7 million, or 277.4%, primarily due to a higher outstanding debt balance during 2024 as compared to 2023.
Other income, net
Other income, net increased by $0.9 million, or 15.6%, primarily due to other income incurred in the newly acquired Horizon markets.
Income tax (benefit) expense
The Company recognized $9.7 million of income tax benefit for 2024, compared with $0.5 million of income tax expense for 2023. The income tax benefit was driven by higher pre-tax loss from continuing operations during 2024.
Additional Information
Shentel provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, Kentucky, Delaware, Ohio and Indiana, via fiber optic and HFC cable networks. We also lease dark fiber and provide Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. Shentel's Broadband business also provides voice and DSL telephone services as a RLEC to customers in Shenandoah County and portions of adjacent counties in Virginia, and in Ross County and portions of adjacent counties in Ohio. These integrated networks are connected by 19,067 route miles of fiber.
The following table indicates selected operating statistics. Shentel updated the presentation of certain revenues and voice RGUs in the prior year to conform with changes in how management views these lines of business. This reclassification resulted in updated ARPU and voice RGUs for the prior period.
December 31,
2025 		December 31,
2024 		December 31,
2023
Homes and businesses passed (1)
Incumbent Broadband Markets 252,224 239,041 215,763
Glo Fiber Expansion Markets 426,820 346,299 233,872
Total homes and businesses passed 679,044 585,340 449,635
Residential & SMB RGUs:
Incumbent Broadband Markets 111,962 111,325 109,679
Glo Fiber Expansion Markets 87,985 65,140 41,710
Broadband Data 199,947 176,465 151,389
Video 35,818 40,023 43,152
Voice 26,693 25,528 24,097
Total Residential & SMB RGUs (excludes RLEC)
262,458 242,016 218,638
Residential & SMB Penetration (2)
Incumbent Broadband Markets 44.4 % 46.6 % 50.8 %
Glo Fiber Expansion Markets 20.6 % 18.8 % 17.8 %
Broadband Data 29.4 % 30.1 % 33.7 %
Video 5.3 % 6.8 % 9.6 %
Voice 4.2 % 4.5 % 5.6 %
Residential & SMB ARPU (3)
Incumbent Broadband Markets $ 82.67 $ 83.68 $ 81.85
Glo Fiber Expansion Markets $ 77.05 $ 76.63 $ 72.36
Broadband Data $ 80.39 $ 81.40 $ 79.64
Video $ 125.21 $ 116.37 $ 105.61
Voice $ 32.80 $ 34.25 $ 35.17
Fiber route miles 19,067 16,830 9,875
Total fiber miles (4) 1,996,620 1,858,081 861,980
_______________________________________________________
(1)Homes and businesses are considered passed ("passings") if we can connect them to our network without further extending the distribution system. Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services.
(2)Penetration is calculated by dividing the number of RGUs by the number of passings or available homes, as appropriate.
(3)Average Revenue Per RGU calculation = (Residential & SMB Revenue) / average RGUs / 12 months.
(4)Total fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.
Financial Condition, Liquidity and Capital Resources
Sources and Uses of Cash: Shentel's principal sources of liquidity are our cash and cash equivalents, restricted cash, cash generated from operations, government grants and capacity under the Company's VFN and RCF.
In 2021, Congress passed the American Rescue Plan Act and the Infrastructure Investment and Jobs Act to subsidize the deployment of high-speed broadband internet access in unserved areas. We have been awarded approximately $151.2 million in grants to serve approximately 26,900 unserved homes in the states of Virginia, Ohio, Maryland and West Virginia and to upgrade the capacity of the Ohio middle mile network. The grants will be paid to the Company as certain milestones are completed. As of December 31, 2025, the Company had received a total of $101.6 million in cash receipts and had $49.6 million in grants available. The Company has constructed broadband service to approximately 20,000 previously unserved homes and expects to fulfill the majority of its obligations under these programs by 2026.
As of December 31, 2025, the Company's total available liquidity was $234.9 million, consisting of (i) cash and cash equivalents totaling $27.3 million; (ii) restricted cash as required by the ABS indenture totaling $20.9 million (iii) $92.8 million of availability under the Shentel Broadband's RCF; (iv) $44.3 million under Shentel Issuer's VFN; and (v) an aggregate of $49.6 million remaining reimbursements available under government grants, which reimbursements are subject to fulfilling the terms of the underlying agreements. In addition, the Company has $130.7 million of VFN commitments that are not available to draw as of December 31, 2025. The available capacity of the VFN will increase based on the secured fiber network revenue growth from the ABS Entities multiplied by (i) a margin as defined in the ABS Indenture and (ii) 6.25x multiple.
Net cash provided by operating activities from continuing operations was approximately $103.3 million in 2025, representing an increase of $33.9 million compared with 2024, primarily driven by increases in revenue and changes in working capital.
Net cash used in investing activities from continuing operations was approximately $294.7 million in 2025, representing an decrease of $350.6 million compared with 2024, primarily driven by a $342.4 million decrease in cash disbursed for acquisitions, a $43.3 million increase in cash receipts from government grant programs and a $6.5 million receipt from a business acquisition escrow, partially offset by a $39.8 million increase in capital expenditures driven by government-subsidized network expansion projects in previously unserved areas of Incumbent Broadband Markets.
Net cash provided by financing activities from continuing operations was approximately $195.6 million in 2025, representing an increase of $11.7 million compared with 2024, primarily driven by an increase of $691.7 million in borrowings under various debt facilities, partially offset by an increase of $585.9 million in principal payments on long-term debt, a decrease of $79.4 million in cash inflows from issuance of redeemable noncontrolling interests and an increase of $14.1 million in payments for debt issuance and amendment costs.
Indebtedness: As of December 31, 2025, the Company's net indebtedness was $628.2 million, including $642.4 million in outstanding ABS Notes and the RCF, net of unamortized loan fees of $14.2 million. The borrowed Class A-2 Notes and the Class B Notes incur interest at 5.64% and 6.03%, respectively. The borrowed RCF bears interest at a variable rate determined by one-month term SOFR, plus a margin based on net leverage. The weighted-average interest rate was 5.75% for the ABS Notes and RCF at December 31, 2025.
Shentel's ABS Notes, which include Class A-2 Notes and Class B Notes, have outstanding balances of $489.1 million and $78.3 million, respectively. Shentel's RCF has an outstanding balance of $75.0 million. The ABS Notes have a contractually stated anticipated repayment date ("ARD") of December 2030 with the exception of the VFN described below. Shentel has not made any borrowings under its VFN or LFN as of December 31, 2025. In the event borrowings are made in the future, the initial anticipated repayment date for the VFN is December 2029 which may be extended, at the option of Shentel, to the December 2030, subject to the satisfaction of certain conditions. Amounts borrowed under the LFN do not have an anticipated repayment date. The legal final maturity date of each class of the ABS Notes is in December 2055. If Shentel has not repaid or refinanced any Series 2025-1 Notes prior to the relevant ARD, additional interest will accrue on outstanding principal. Shentel Broadband's RCF matures on December 5, 2030. No principal payments on Shentel Broadband's RCF are required prior to the final maturity date.
Shentel and its non ABS Entities have no recourse of the loans of the ABS Entities. Likewise, the ABS Entities have no recourse of the loans of Shentel Broadband.
Refer to Note 10, Debt in the Company's 2025 Consolidated Financial Statements for information about the Company's outstanding debt.
As of December 31, 2025, the Company was in compliance with the financial covenants related to our outstanding debt.
We expect our cash on hand, restricted cash, cash flows from continuing operations, availability of funds from our RCF and VFN agreements and government grants will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months. There can be no assurance that we will continue to generate cash flows at or above current levels.
During the year ended December 31, 2025, our capital expenditures of $358.9 million, net of government grants of $62.5 million, exceeded our net cash provided by operating activities from continuing operations by $193.1 million, and we expect our capital expenditures, net of government grants received, to exceed the net cash flows provided by continuing operations through 2026, as we expand our Glo Fiber broadband network.
The actual amount and timing of our future capital requirements may differ materially from our estimates depending on the demand for our products and services, new market developments and expansion opportunities.
Our cash flows from operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and other adverse public health developments, such as COVID-19, and other conditions. Our ability to attract and maintain a sufficient customer base, particularly in our Broadband markets, is critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results.
During 2025, Shentel formed Shentel Guarantor LLC, Shentel Issuer LLC, Shentel Asset Entity I LLC and Shentel Asset Entity II LLC (collectively, the "ABS Entities"), each a bankruptcy-remote subsidiary of the Company. The ABS Entities were formed as part of a securitization transaction, pursuant to which certain of the Company's fiber network assets and related customer contracts primarily in Virginia, Ohio, Pennsylvania, Indiana, Maryland and West Virginia were contributed to Shentel Asset Entity I LLC and Shentel Asset Entity II LLC (collectively, the "ABS Asset Entities"). As of December 31, 2025, all of the Company's commercial fiber network assets and approximately 302,000 Glo Fiber passings were contributed to the ABS Asset Entities. The cash flow from these contributed assets are used to service the obligations under Shentel's ABS Notes.
Our RCF requires consolidated financial statements of restricted subsidiaries under the RCF (the "Non-ABS Entities" or the "Restricted Subsidiaries") and unrestricted subsidiaries (the "ABS Entities" or the "Unrestricted Subsidiaries"). Below is the consolidating balance sheet as of December 31, 2025 and the consolidating statement of operations for the year ended December 31, 2025. The ABS Entities consolidating statement of operations reflects the activity from December 5, 2025 (date of refinancing) through December 31, 2025.
As of December 31, 2025
(in thousands) Unrestricted Subsidiaries (ABS Entities) Restricted Subsidiaries (Non-ABS Entities) Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 27,259 $ - $ 27,259
Restricted cash and cash equivalents 20,945 - - 20,945
Accounts receivable 12,580 31,880 (12,963) 31,497
Prepaid expenses and other 5,344 14,803 (2,405) 17,742
Total current assets 38,869 73,942 (15,368) 97,443
Investments - 392,737 (376,227) 16,510
Property, plant and equipment, net 793,874 807,735 - 1,601,609
Goodwill and intangible assets, net 8,234 148,657 - 156,891
Operating lease right-of-use assets 10,199 9,458 - 19,657
Deferred charges and other assets 129,635 7,794 (118,777) 18,652
Total assets $ 980,811 $ 1,440,323 $ (510,372) $ 1,910,762
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,561 $ 66,757 $ (12,963) $ 61,355
Advanced billings and customer deposits 8,953 10,361 (2,405) 16,909
Accrued compensation - 13,334 - 13,334
Accrued liabilities and other 3,894 14,116 (1,112) 16,898
Total current liabilities 20,408 104,568 (16,480) 108,496
Long-term debt, less current maturities, net of unamortized loan fees 554,288 73,949 - 628,237
Other long-term liabilities:
Deferred income taxes - 157,618 - 157,618
Other liabilities 33,628 131,159 (117,665) 47,122
Total other long-term liabilities 33,628 288,777 (117,665) 204,740
Temporary equity:
Redeemable noncontrolling interest - 88,506 - 88,506
Shareholders' equity:
Total shareholders' equity 372,487 884,523 (376,227) 880,783
Total liabilities, temporary equity and shareholders' equity $ 980,811 $ 1,440,323 $ (510,372) $ 1,910,762
Year Ended December 31, 2025
(in thousands) Unrestricted Subsidiaries Restricted Subsidiaries Eliminations Consolidated
Service revenue and other $ 11,986 $ 350,335 $ (4,467) $ 357,854
Operating expenses:
Cost of services exclusive of depreciation and amortization 5,474 127,406 (2,762) 130,118
Selling, general and administrative 2,059 117,833 (1,705) 118,187
Restructuring, integration and acquisition - 1,173 - 1,173
Depreciation and amortization 5,772 125,841 - 131,613
Total operating expenses 13,305 372,253 (4,467) 381,091
Operating (loss) income (1,319) (21,918) - (23,237)
Other (expense) income:
Interest expense (2,453) (22,921) - (25,374)
Other income, net 32 6,723 - 6,755
(Loss) income from continuing operations before income taxes (3,740) (38,116) - (41,856)
Income tax (benefit) expense - (8,913) - (8,913)
Net loss (3,740) (29,203) - (32,943)
Critical Accounting Estimates
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, as well as related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting estimates, which we discuss further below.
Valuation and Impairment Testing of Goodwill and Cable Franchise Rights
Goodwill
Goodwill results from business combinations and represents the excess amount of the consideration paid over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. As discussed in Note 2, Summary of Significant Accounting Policies, Shentel has only one reporting unit. Shentel's total goodwill balance increased $0.5 million in the year ended December 31, 2025 as a result of the Virginia Fiber Acquisition discussed above.
Shentel tests goodwill for impairment at least annually or more frequently whenever events or substantive changes in circumstances indicate that the assets might be impaired. The impairment test is performed at the reporting unit level by analyzing quantitative or qualitative factors, or both. When performing a quantitative assessment, we estimate the fair value of our reporting unit primarily based on a discounted cash flow analysis that involves significant judgment, including market participant estimates of future cash flows expected to be generated by the business, estimate of a terminal growth rate and the selection of a discount rate. When performing this analysis, we also consider the reconciliation of the Company's market capitalization to the reporting unit value and consideration of an appropriate control premium. When performing a qualitative assessment, we assess whether events and circumstances indicate that it is more likely than not (that is, a likelihood of more than 50%) that an impairment exists. Events and circumstances considered include the impact of macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances, after tax cash flows, and market capitalization trends.
We evaluated goodwill for impairment on October 1, 2025 on the basis of the quantitative factors described above. Based on this assessment, we concluded that the fair value of our reporting unit was higher than its carrying value.
Cable franchise rights
Cable franchise rights represent the value attributable to agreements with local franchising authorities, which allows access to homes and businesses via public rights of way. Shentel's cable franchise rights were primarily acquired through business
combinations. Cable franchise rights have an indefinite life; therefore, no amortization is recorded for these assets. Costs incurred in negotiating and renewing cable franchise rights are expensed as incurred.
Shentel tests its cable franchise rights for impairment at least annually, or more frequently whenever events or substantive changes in circumstances indicate that the assets might be impaired. The impairment test is performed by analyzing quantitative or qualitative factors, or both. When performing a quantitative evaluation, we estimate the fair values of our cable franchise rights primarily based on a greenfield model, a method under the income approach, which reflected the expected discounted cash flows of a notional start-up business with no assets other than the cable franchise rights being valued. The greenfield model involves significant judgment, including the estimate of revenue growth, the amount and timing of capital expenditures, EBITDA margins, terminal growth rates and the discount rate utilized. When performing a qualitative assessment, we assess whether events and circumstances indicate that it is more likely than not (that is, a likelihood of more than 50%) that an impairment exists. Events and circumstances considered include the impact of macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances, after tax cash flows, and market capitalization trends.
Shentel evaluated cable franchise rights and spectrum licenses for impairment on October 1, 2025 using a quantitative assessment. As a result of this assessment, management concluded that the estimated fair value of the cable franchise rights exceeded the carrying value. As such, no impairment charge was recognized during the period.
Recently Issued Accounting Standards
Recently issued accounting standards and their expected impact, if any, are discussed in Note 2, Summary of Significant Accounting Policiesin our consolidated financial statements.
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