Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Global TMT Virtual Conference 2020
28 slides from Shenandoah Telecommunications's conference presentation, December 2020
Slide 1: Shenandoah Telecommunications Company
NASDAQ: SHEN Shenandoah Telecommunications Company December 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, regarding our business strategy, our prospects and our financial position. These statements can be
Slide 3: History of successful innovation
History of successful innovation REVENUE BY SERVICE OFFERING DUAL CABLE/TELCO INCUMBENT SHENT EL 1.0 ( 1994) INCUMBENT CABLE COMMERCIAL FIBER TOW ERS FTTH (GLO FIBER) F I XE D W I R E L E S S ( B E A M ) 100% W IRELESS SHENT EL 4.0 ( ~2025) SHENT EL 2.0 ( 2007) 4% 4% 23% 10% 17% 61% 3% SHENT EL 3.0
Slide 4: Integrated Fiber, Cable and Fixed Wireless Broadband Network
Integrated Fiber, Cable and Fixed Wireless Broadband Network 4
Slide 5: Unique network platform with high growth potential
Unique network platform with high growth potential TARGET PO SIT IO N Greenfield fixed wireless Incumbent Greenfield fiber overbuilder MARKET broadband overbuilder DYNAMIC MARKET Higher density tier III / IV T YPE Various, but mostly rural Low density rural markets CO MPET IT IO N Incumbent cable op
Slide 6: Incumbent Cable metrics
Incumbent Cable metrics REVENUE GENERATING UNITS (RGUS IN THOUSANDS) DATA AVG REVENUE PER USER (ARPU) DATA PENETRATION DATA CHURN 6
Slide 7: Expanding competitive moat over DSL competition
Expanding competitive moat over DSL competition Recent investments and key initiatives… … have significantly improved customer experience while re-accelerating data subscriber trends NET W O RK INVEST M ENT S <25 Mbps 25 – 150 Mbps >150 Mbps $80m invested in $80 m cable network upgrade since 2017 17
Slide 8: Highly favorable competitive environment
Highly favorable competitive environment INCUM BENT CABLE FO O T PRINT DUAL - I N C UM BE NT FO O T PRINT Other None % OF INCUMBENT HOMES 33% 33% 17% 4% 4% 8% PASSED COMPETING TECHNOLGY DSL DSL DSL FTTH DSL N/A VOICE N/A DATA N/A VIDEO N/A COMPETITOR MAX MARKETED DATA 1
Slide 9: Glo Fiber metrics
Glo Fiber metrics REVENUE GENERATING UNITS (RGU) DATA AVERAGE REVENUE PER USER (ARPU) DATA PENETRATION DATA CHURN 9
Slide 10: Glo Fiber market update
Glo Fiber market update Passings Penetration Released to Target as of Sales Passings* Launch Date 9/30/2020 Harrisonburg VA 9,202 10,908 October 2019 16.4% Staunton VA 6,794 9,895 February 2020 10.9% Front Royal VA 3,546 4,933 March 2020 9.5% Winchester VA 2,805 9,801 March 2020 7.0% Salem VA 8,044
Slide 11: Beam extending broadband network reach
Beam extending broadband network reach HIG HLIG HT S ILLUST R AT IV E DEPLO Y M ENT Exclusively licensed mid-band spectrum – Deep 2.5/3.5 GHz spectrum holdings: between 30-90MHz per market Existing relationships — with tower owners and backhaul providers due to in-house wireless expertise Outd
Slide 12: Unique network platform with high growth potential
Unique network platform with high growth potential PASSINGS PASSING S 117,000 425,000 AND CAPEX BUILD CAPEX $950 $350 ( $ / PASSING ) per passing per passing METRICS CO NNECT CAPEX $600 - $700 $400 - $500 ( $ / SUB) per subscriber per subscriber T ERMINAL 36% 31% PENET RAT IO N CUST O MER KEY $125 $
Slide 13: High growth commercial fiber business
High growth commercial fiber business PRO DUCT O VERVIEW ( % O F CO M M ERCIAL FIBER REVENUE) ANN U AL REVENUE ( $m) • Ethernet • Wave 84% • DIA • Dark Fiber • SIP • Switched 10% • VoIP LD • Managed • Bulk-Video 6% Services • Other M RR BY CUST O M ER T Y PE MID- MAR KET / ENT ERPRISE FT T T 22% 37%
Slide 14: Broadband financial highlights
Broadband financial highlights IN M ILLIO NS REVENUE ADJUSTED OIBIDA & MARGIN % 2 2 38% 41% 36% 13Q20 YTD Annualized. See Appendix for reconciliation of Adjusted OIBDA to Operating Income. 14 2Results for 2019 and the annualized YTD 3Q20 period include $3M and $5M of net operating expenses, respecti
Slide 15: Tower financial highlights
Tower financial highlights REVENUE ADJUSTED OIBDA & MARGIN % MACRO TOWERS TENANTS 13Q20 YTD annualized. See Appendix for reconciliation of Adjusted OIBDA to Operating Income. 15
Slide 16: Consolidated financial highlights
Consolidated financial highlights IN M ILLIO NS REVENUE CONSOLIDATED ADJUSTED OIBDA CAPEX SPENDING ADJUSTED OIBDA – CAPEX 13Q20 represents 3rd quarter 2020 YTD results annualized. See Appendix for reconciliation of Adjusted OIBDA to Operating Income. 16
Slide 17: Sprint/T-Mobile merger update
Sprint/T-Mobile merger update 4/1/2020 Sprint / T-Mobile merger closed Network Technology, Brand, and Combination Conversion Notice received 8/26/2020 T-Mobile exercised their option to purchase the assets and operations of our PCS ----business for 90% of Entire Business Value 11/3/2020 Agre
Slide 18: Total debt & liquidity; potential use of wireless proceeds
TOTAL DEBT & LIQUIDITY (IN MILLIONS) AS OF 9/30/20 POTENTIAL USE OF WIRELESS PROCEEDS Repay debt Pay income taxes Return value to shareholders – Special dividend – Share re-purchase program 2.61x Effective Interest Leverage Ratio Rate of 2.33% Fund acquisitions 18
Slide 19: Unique opportunity to invest in rural broadband with significant growth potential
Unique opportunity to invest in rural broadband with significant growth potential LEADING REG IO NAL RESIDENT IAL/S M B BRO ADBAND PRO VIDER CO NT INUED O PERAT ING MO MENT UM IN CO RE RESIDENT IAL / SMB MARKET S HIG HLY FAVO RABLE CO MPET IT VE ENVIRO NME NT AT T RACT IVE G REENFIELD G RO W TH INIT
Slide 20: Q&A
AQSHENTEL Q&A
Slide 21: Appendix
AQSHENTEL Appendix
Slide 22: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures that are not determined in accordance with US generally accepted accounting principles. These financial performance measures are not indicative of cash provided or used by operating activities an
Slide 23: 2017 Adjusted OIBDA by Segment
2017 Adjusted OIBDA by Segment Twelve Months Ended December 31, 2017 Corporate & (in thousands) Broadband Tower Eliminations Consolidated Operating income $ 37,628 $ 6,168 $ (34,459) $ 9,337 Depreciation and amortization 33,995 1,837 6,813 42,645 OIBDA 71,623 8,005 (27,646) 51,982 Share-based compen
Slide 24: 2018 Adjusted OIBDA by Segment
2018 Adjusted OIBDA by Segment Twelve Months Ended December 31, 2018 Corporate & (in thousands) Broadband Tower Eliminations Consolidated Operating income $ 41,512 $ 5,400 $ (51,569) $ (4,657) Depreciation 35,816 2,406 5,992 44,214 Amortization 176 176 OIBDA 77,504 7,806 (45,577) 39,733 Share-based
Slide 25: 2019 Adjusted OIBDA by Segment
2019 Adjusted OIBDA by Segment Twelve Months Ended December 31, 2019 Corporate & (in thousands) Broadband Tower Eliminations Consolidated Operating income $ 42,598 $ 6,295 $ (49,590) $ (697) Depreciation 38,094 1,976 6,243 46,313 Amortization 472 472 OIBDA 81,164 8,271 (43,347) 46,088 Share-based co
Slide 26: Annualized 3Q20 YTD Adjusted OIBDA by Segment
Annualized 3Q20 YTD Adjusted OIBDA by Segment Nine Months Ended September 30, 2020 Corporate & (in thousands) Broadband Tower Eliminations Consolidated Operating income $ 29,650 $ 6,444 $ (38,855) $ (2,761) Depreciation 29,960 1,414 4,148 35,522 Amortization 488 — — 488 OIBDA 60,098 7,858 (34,707) 3
Slide 27: Adjusted OIBDA - CapEx
Adjusted OIBDA - CapEx Annualized ($ in thousands) 2017 2018 2019 3Q20 YTD Adjusted OIBDA $54,220 $44,478 $49,455 $55,409 Less: Capital Expenditures* (64,000) (56,600) (48,210) (55,000) Adjusted OIBDA less incumbent CapEx (9,780) (12,122) 1,245 (409) Glo Fiber & Beam Capital Expenditures - - (18,838
Slide 28: Broadband Average Revenue per User (ARPU)
Broadband Average Revenue per User (ARPU) Incumbent Cable 2017 2018 2019 3Q20 Data Residential & SMB Revenue ($000’s) $55,490 $68,019 $75,593 $21,770 Average Revenue Generating Units 63,492 71,643 79,993 93,440 Average Revenue per User (ARPU) $72.83 $79.12 $78.75 $77.66 Glo Fiber 4Q19 1Q20 2Q20 3Q20
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