Shentel is hot on the trail of its fiber broadband expansion. This year, the service provider expects to pass about 235,000 locations with fiber.
However, this build has its challenges. The recent uptick in broadband deployment activity is causing delays in getting permits from other utilities for rights of way on aerial poles and locating underground utility lines.
During its third-quarter earnings call, Ed McKay, EVP and COO, told investors that while it expects delays to continue, the telco will continue to extend service to many locations.
“I think we will continue to see some short-term challenges,” he said. “But even with this, we're projecting roughly a 25% increase in fiber passings between 2022 and 2023. We think we can continue to scale, particularly as we ramp up construction in some additional markets.”
Shentel has been finding ways to mitigate the utility locator and permitting process for poles and locating facilities by paying overtime or overtime for the locators located underground, for example.
McKay said Shentel is “also working, in some cases, to do what's called self-remedy where we can adjust the other telecommunication facilities on the poles.”
Fiber customer growth
As Shentel ramps up Glo Fiber construction, it continues to see strong customer growth. Glo Fiber data customers increased 77% year-over-year, ending the quarter with over 37,000. The telco added over 16,000 broadband data customers in the past year; our penetration rate climbed to 18.5% in the third quarter, up from 16.1% a year ago.
Shentel’s total number of data, video, and voice revenue-generating units has reached 46,000, up approximately 68% year-over-year. Broadband ARPU also rose 5.8% year-over-year and $77 for the quarter. At the end of the third quarter, about 11% of Shentel’s Glo Fiber customers subscribed to video service and approximately 12% to voice service.
During the quarter, 47% of Shentel’s new residential subscribers adopted speed tiers of 1 Gbps or higher, including approximately 4% that took speed tiers of 2 Gbps or higher. Glo TV Video Service is now available to over 99% of the homes that Shentel passes.
McKay said the ARPU increase “was driven by additional equipment revenue and customers selecting higher speed tiers.”
Expanding fiber passings
Shentel continued to make progress in expanding Glo Fiber to customers during the third quarter, adding nearly 20,000 new Glo Fiber passings. It increased passings 55% year-over-year and crossed the 200,000 mark.
Broadband revenue grew $5.1 million or 8.1% to $67.4 million. Glo Fiber revenue was the primary catalyst in Shentel’s portfolio, raising $4.4 million or 90% from the prior year with strong customer growth and a 5.8% increase in data subscriber ARPU. Cable Market revenues, excluding the impact of its discontinued Beam broadband wireless service, grew $300,000 or 0.7% due primarily to a 1% growth in data subscriber ARPU.
During the quarter, Shentel added 4,500 Glo Fiber data subscribers and has grown the Glo Fiber customer base by 77% over the past year. Like the high growth in broadband passing, Shentel has increased total broadband data subscribers by 78% since the third quarter of 2019.
As of the end of the quarter, the service provider saw that its Glo Fiber passings reached the size of its cable market passings.
Chris French, CEO of Shentel, told investors that it expects further growth in the fourth quarter and after it completes its recently announced acquisition of Horizon Telecom.
“As we approach our fourth quarter of launching our first Glo Fiber market in November, we will have doubled the size of our broadband business in terms of passing,” he said. “With the Horizon Telcom acquisition expected to close in 2024 and accelerated construction anticipated across all of our markets, we expect to double the broadband passings again by the end of 2026.”
French added that “our track record over the past four years provides confidence for us to grow our broadband data subscriber base at similar growth rates in the next 3 to 4 years as we expand our Glo Fiber network.”
New market expansions
While Shentel saw progress with Glo Fiber subscriber growth and subscribers, the telco continues to expand its reach into new markets.
Its expanded integrated broadband network now consists of over 9,300 route miles of fiber.
In the third quarter, Shentel launched two new Glo Fiber markets in Hanover County, Virginia, and Greencastle, Pennsylvania, and it now offers Glo Fiber multi-gigabit service in 21 markets, with engineering and construction underway in four additional markets.
Additionally, Shentel added five new franchise agreements in the third quarter to bring Glo Fiber to over 40,000 additional homes and businesses, including the city of Lancaster and other boroughs and townships adjacent to its existing markets in Pennsylvania.
McKay said the total number of approved Glo Fiber passings has grown to 519,000, with 70 franchise agreements in 23 markets across five states.
Additionally, Shentel has been successfully pursuing government broadband grant funding. In the third quarter, Shentel was awarded $2.6 million in grants to bring broadband to approximately 1,000 additional unserved homes adjacent to its cable systems in West Virginia. Shentel added over 20,000 new fiber passings during the third quarter, bringing its total to over 203,000, including about 1,000 that are part of government-subsidized projects.
“We've now been awarded approximately $90 million in grants that will enable us to extend broadband to over 28,000 unserved locations, primarily through fiber-to-the-home technology,” McKay said.
But the company is not resting on its laurels.
McKay said it has a large inventory of other locations where it plans to build fiber. “Our construction backlog remains very robust with 340,000 incremental passings approved for construction,” he said.