SHENANDOAH TELECOMMUNICATIONS CO/VA/ (SHEN)

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will,” “should,” “could” or “plan” and similar expressions as they relate to Shenandoah Telecommunications Company or its management are intended to identify these forward-looking statements. All statements regarding Shenandoah Telecommunications Company’s expected future financial position, operating results and cash flows, business strategy, financing plans, forecasted trends relating to the markets in which Shenandoah Telecommunications Company operates and similar matters are forward-looking statements. We cannot assure you that the Company’s expectations expressed or implied in these forward-looking statements will turn out to be correct. The Company’s actual results could be materially different from its expectations because of various factors, including, but not limited to, those discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2025 (“2025 Form 10-K”). The forward-looking statements included in this Form 10-Q are made only as of the date of the statement. We undertake no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events, except as required by law.

The following management’s discussion and analysis should be read in conjunction with the Company’s 2025 Form 10-K, including the consolidated financial statements and related notes included therein.

Overview

Shenandoah Telecommunications Company (“Shentel”, “we”, “our”, “us”, or the “Company”) is a provider of a comprehensive range of broadband communication services in eight contiguous states in the eastern United States.

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Results of Operations

Three Months Ended June 30, 2026 Compared with the Three Months Ended June 30, 2025

The Company’s unaudited condensed consolidated results from operations are summarized as follows:

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 by $2.6 million, or 6.0%. The decrease was primarily due to lower video and data revenue. Video revenue declined due to a 14.1% decrease in video RGUs as customers switched to streaming video services. Data revenue declined due to a 2.6% decline in data ARPU, driven in part by our rate card in markets where we face a fixed broadband competitor and in part due to our recently implemented rate card in lower demographic markets experiencing softer demand.

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 by $6.5 million, or 32.8%. The increase was primarily due to a 32.1% increase in data RGUs driven by the Company’s increase in penetration rates and increase in passings.

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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 by $1.9 million, or 9.8%. The increase was due to a combination of recurring revenue in the enterprise and carrier verticals, a non-cash sales-type lease of customer equipment and a negative non-cash deferred revenue adjustment for one of our national wireless carrier customers in the second quarter of 2025.

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 decreased by $0.9 million, or 14.7%. The decrease was primarily due to the decrease in DSL RGUs and to a lesser extent a decrease in government support revenue.

Cost of services, exclusive of depreciation and amortization

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 by $0.1 million, or 0.2%. The increase was primarily due to increased fleet maintenance and fuel expenses.

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 by $1.3 million, or 4.3%. The increase was primarily due to higher operating and property taxes, higher advertising to support RGU growth and higher software maintenance expenses.

Restructuring, integration and acquisition

Restructuring, integration and acquisition expense decreased by $0.1 million, or 35.0%, primarily due to fees incurred in the prior year to amend debt terms.

Depreciation and amortization

Depreciation and amortization decreased by $4.5 million, or 12.8%. The decrease was primarily due to a $4.2 million write-off in the prior year related to inventory assets that were no longer planned to be used.

Interest expense

Interest expense increased by $3.7 million, or 61.5%. The increase was primarily due to an increase in the Company’s outstanding debt as well as less capitalized interest due to less plant under construction than in prior year.

Other income, net

Other income, net decreased by $2.5 million, or 84.3%. The decrease was primarily due to a favorable settlement of the Horizon acquisition related escrow claim in the prior year that did not recur in 2026, as well as lower patronage income.

Income tax benefit

Income tax benefit decreased by $0.5 million, or 16.6%. The decrease was primarily due to lower pre-tax loss than in the prior year.

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Six Months Ended June 30, 2026 Compared with the Six Months Ended June 30, 2025

The Company’s unaudited condensed consolidated results from operations are summarized as follows:

Residential & SMB - Incumbent Broadband Markets revenue

Residential & SMB - Incumbent Broadband Markets revenue decreased by $4.8 million, or 5.5%. The decrease was primarily due to lower video and data revenue. Video revenue declined due to a 14.3% decrease in video RGUs as custo

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ITEM 7.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, Debt in Shentel’s Consolidated 2025 Financial Statements for more information.

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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.

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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:

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.

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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

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