Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Merger or Acquisition (October 2023)
20 slides from Shenandoah Telecommunications's merger presentation, Oct 25, 2023
Slide 1: Horizon Telcom Acquisition
Horizon Telcom Acquisition October 25, 2023
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: Chris French, President and CEO
Chris French President and CEO 3
Slide 4: Transformative Transaction
Transformative Transaction Accelerates our Fiber First strategy • Doubles the size of our commercial fiber business • Creates new beachhead for Glo Fiber expansion Expected to increase most key metrics by ~ 25% Combined company long-term growth rates expected to be among the leaders for public
Slide 5: Combination Creates Leading Super-Regional Network
Combination Creates Leading Super-Regional Network Shentel 5
Slide 6: Shentel + Horizon = Win Together
Shentel + Horizon = Win Together • Similar history and strategies • Investing in state-of-the-art communication services in rural markets • Providing outstanding local customer service • Complementary core competencies • Shentel: residential focus and proven FTTH expansion platform • Horizon: advanc
Slide 7: Jim Volk, SVP of Finance and CFO
Jim Volk SVP of Finance and CFO 7
Slide 8: Transaction Summary and Key Metrics
Transaction Summary and Key Metrics Shentel to acquire Horizon Telcom for a purchase price of $385 million • $305 million payable in cash • $80 million in common shares to be issued to one of Horizon’s equityholders Transaction Transaction multiples (purchase price less tax assets): Overview • 12.9x
Slide 9: Pro-forma Financial Highlights
Pro-forma Financial Highlights 2022 Revenue (in millions) 2022 Adjusted EBITDA1 (in millions) Tower Shentel Broadband Horizon Tower Synergy 2 RLEC & Other Broadband Commercial Fiber $105 Residential & SMB - Glo Fiber Markets $10 $333 Residential & SMB - Cable Markets $19 $12 $39 $76 $268 $19 $19 $12
Slide 10: Business Mix
Business Mix Standalone Shentel Pro-forma Shentel Standalone CombinedCo 31% 25% 75% 69% FTTH FTTH Passings (2026E) DOCSIS 686k DOCSIS 860k Includes increase of 50k Shentel FTTH passings above previously provided guidance, enabled as part of Standalone new financing CombinedCo 48% 53% 47% 52% 5% 5% F
Slide 11: Ed McKay, EVP and COO
XG a Ed McKay EVP and COO
Slide 12: Horizon Overview
Horizon Overview1 Chart Title MRR by customer segment2Chart Title Route miles by geography 7% 8% 18% 42% 6% 18% $3.9m 7,171 13% 63% 24% Mobile Wireless Carrier Enterprise Southeast Ohio Columbus and Dayton Government and Education Healthcare Indianapolis Other Key Metrics 1,100+ ~4.5 Years $218m 0.4
Slide 13: Combined Company Commercial Fiber Key Metrics
Combined Company Commercial Fiber Key Metrics Shentel Horizon Fiber route miles1 Fiber strand miles1 16,253 1,705,853 7,171 938,680 + 80% + 120% 9,082 9,082 767,173 767,173 MRR + MAR (thousands)2 Backlog MRR + MAR (thousands)2 $7,238 $694 $3,890 + 120% $541 + 350% $3,348 $3,348 $153 $153 Notes 2. MR
Slide 14: Horizon FTTH Markets Consistent With Glo Strategy
Horizon FTTH Markets Consistent With Glo Strategy Government Pro-forma Company + subsidized + = High density tier III / IV and Market type High density tier III / IV Unserved High density tier III / IV unserved Target market Homes Passed: 183k 0 18k 201k dynamics Current 500k 8k 100k 608k 2026 Targe
Slide 15: Incumbent Broadband Markets
Incumbent Broadband Markets Government Pro-forma Company + subsidized + = (Incumbent cable) (Incumbent fiber overbuild) Market type Mostly rural Unserved Mostly rural Mostly rural and unserved Target market Homes Passed: 212k1 1k 14k2 227k3 dynamics Current 214k 24k 14k 252k 2026 Target >75% low-spe
Slide 16: Q&A
AXSHENTEL Q&A 16
Slide 17: Appendix
Appendix SHENTEL
Slide 18: Pro-forma Capital Structure
Pro-forma Capital Structure Pro-forma credit facility New preferred equity Tranche Detail Term Detail 7% per annum payable in cash or in-kind (PIK) at Term Loan A-1 $150 million due June 2026 Dividend rate Shentel’s option Subject to increase if investor’s Independent Director Dividend rate not seat
Slide 19: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures that are not determined in accordance with U.S. generally accepted accounting principles. These financial performance measures are not indicative of cash provided or used by operating activities
Slide 20: Adjusted EBITDA 2022 Results
Adjusted EBITDA 2022 Results Year Ended December 31, 2022 Shentel Plus: Pro-forma ($ in thousands) consolidated Horizon 1 combined Net income (loss) from continuing operations ($8,379) ($12,038) ($20,417) Depreciation and amortization 68,899 14,293 83,192 Impairment expense 5,241 - 5,241 Interest an
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