Shenandoah Telecommunications Company Reports Third Quarter 2016 Revenue Increased to $156.8 Million Due to Acquisition of nTelos

Operating Loss of $3.9 Million, Adjusted OIBDA of $73.7 Million and Continuing OIBDA of $64.2 Million

EDINBURG, Va., Nov. 07, 2016 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (NASDAQ:SHEN) announces financial and operating results for the three and nine months ended September 30, 2016.

Consolidated Third Quarter Results

For the quarter ended September 30, 2016, the Company reported total revenues of $156.8 million, an increase of 84.1% compared to $85.2 million for the 2015 third quarter.  All segments reported revenue increases, with the largest being due to the nTelos acquisition which was completed May 6, 2016.  The integration of nTelos’ operations and the transition of its assets and customers are progressing as expected, with Shentel currently ahead of its schedule on the migration of nTelos customers to the Sprint platform.

Wireless service revenues increased 132.3% as a result of increases in average postpaid and prepaid subscribers of 75% and 46%, respectively, and a reduction in postpaid fees retained by Sprint.  Cable segment revenues increased 12.9% due to a 6.8% increase in average Revenue Generating Units (RGUs), video price increases to offset increases in programming costs, and new and existing customers selecting higher-speed data packages.  Wireline segment revenues increased 8.4% due to higher fiber lease revenues, as well as higher internet service fees as customers upgraded their services.

Total operating expenses were $160.8 million in the third quarter of 2016 compared to $70.1 million in the prior year period.  Operating expenses in the third quarter of 2016 included $15.3 million of integration and acquisition costs associated with the nTelos acquisition, with $14.5 million in the Wireless segment and $0.8 million in the Other segment.  An additional $4.9 million of costs to operate and support the nTelos back office and billing functions until customers can migrate to Sprint platforms was included in cost of goods and services and selling, general and administrative expenses in the Wireless segment.

For the quarter ended September 30, 2016, the Company reported a net loss of $7.6 million, compared to net income of $8.0 million in the third quarter of 2015, primarily reflecting increased depreciation and amortization expenses and acquisition and integration costs incurred for its acquisition of nTelos.

Adjusted OIBDA (Operating Income Before Depreciation and Amortization) increased 100.4% to $73.7 million in the third quarter of 2016 from $36.8 million in the third quarter of 2015.  Continuing OIBDA (Adjusted OIBDA less the benefit received from the waived Sprint management fee over the next six years) increased 74.5% to $64.2 million.

President and CEO Christopher E. French commented, “Our third quarter results reflect our first full quarter including the assets and customers gained through our acquisition of nTelos.  In addition to the resulting increases in wireless, revenue and OIBDA also increased in our cable and wireline segments.  As we complete the operational changes related to blending our wireless operations, we are increasingly energized by the opportunities across all segments and our larger footprint and presence in the Mid-Atlantic region.  We are focused on leveraging the consistent coverage and high speed access of our state-of-the-art networks to serve our large and growing customer base.”

Wireless Segment

Third quarter wireless service revenues increased $63.2 million or 132.3%, primarily related to the addition of approximately 580,000 postpaid and prepaid customers from the nTelos acquisition.   Additionally, the segment benefited from a reduction in the postpaid fees retained by Sprint as part of the amended affiliate agreement.

During the third quarter of 2016, net postpaid subscribers increased by 1,222 as compared to 7,035 net postpaid subscriber additions in the third quarter of 2015, while net prepaid subscribers declined by 13,865 during third quarter 2016, compared to a decline of 327 in the third quarter of 2015.

Third quarter adjusted OIBDA in the Wireless segment was $62.5 million, an increase of 130% from the third quarter of 2015.  Continuing OIBDA in the Wireless segment was $53.0 million.

“The doubling of our wireless customer base and the addition of several new, complementary markets positions us well for continued growth.  During the quarter, we saw continued expenses related to the migration of certain nTelos customers to the Sprint billing platform.  Our upgraded networks are a competitive advantage and we continue to make progress bringing improved reliability and coverage in our acquired markets,” Mr. French stated.

Cable Segment

Revenues in the Cable segment increased $3.1 million or 12.9% to $27.6 million, primarily due to 6.8% growth in average RGUs (the sum of voice, data, and video users), video rate increases implemented in January 2016 to pass through programming cost increases, new and existing customers selecting higher speed data access packages and growth in the number of higher speed data and phone customers.  Operating expenses increased 1.1% to $25.3 million in the third quarter of 2016. Third quarter operating income was $2.3 million compared to an operating loss of $0.6 million in the prior year.

Revenue generating units totaled 132,430 at September 30, 2016, an increase of 6.4% over September 30, 2015.

Adjusted OIBDA in the Cable segment for third quarter 2016 was $8.2 million, up 50.5% from $5.5 million in the third quarter of 2015.

Mr. French stated, “We are confident in the strength and performance of our Cable segment as customer expectations and demands increase related to the availability and capabilities of their cable service.  The performance of our state-of-the-art network has prompted many existing customers to upgrade their monthly subscription plans and attracted new customers seeking robust service selections.”

Wireline Segment

Revenue in the Wireline segment increased 8.4% to $18.7 million in the third quarter of 2016, as compared to $17.3 million in the third quarter of 2015.  Carrier access and fiber revenue for the quarter was $12.4 million, an increase of 13.8% from the same quarter last year, as a result of new fiber contracts.  Operating expenses increased 4.8% or $0.6 million to $13.9 million for third quarter 2016, primarily due to costs to support new fiber contracts.

Adjusted OIBDA in the Wireline segment for third quarter 2016 was $7.7 million, as compared to $7.5 million in third quarter 2015.

Other Information

Capital expenditures were $42.7 million in the third quarter of 2016 compared to $14.5 million in the comparable 2015 period. 

Cash and cash equivalents as of September 30, 2016 were $27.5 million, compared to $76.8 million at December 31, 2015. Total outstanding debt at September 30, 2016 totaled $809.6 million, net of unamortized loan costs, compared to $199.7 million as of December 31, 2015.  At September 30, 2016, debt as a percent of total assets was 56.5%. The amount available to the Company through its revolver facility was $75.0 million, and from the delayed draw term loan, $50.0 million.

“Our balance sheet remains strong, providing a secure foundation to drive the growth of our customer base, while also enabling us to continually improve our service offerings and capabilities.  The addition of the nTelos markets has significantly expanded our operations and we remain focused on adding new customers in new markets as we grow our position as one of the top six public wireless providers in the United States,” Mr. French concluded.

Conference Call and Webcast

The Company will host a conference call and simultaneous webcast today, Monday, November 7, 2016, at 8:30 A.M. Eastern Time.

Teleconference Information:

Monday, November 7, 2016 8:30 A.M. (ET)
Dial in number: 1-888-695-7639

Password: 10988671
Audio webcast: http://investor.shentel.com/

An audio replay of the call will be available approximately two hours after the call is complete, through November 14, 2016 by calling (855) 859-2056.

About Shenandoah Telecommunications

Shenandoah Telecommunications Company (Shentel) provides a broad range of diversified communications services through its high speed, state-of-the-art network to customers in the Mid-Atlantic United States.  The Company’s services include: wireless voice and data; cable video, internet and digital voice; fiber network and services; and regulated local and long distance telephone. Shentel is the exclusive personal communications service (“PCS”) Affiliate of Sprint in portions of Pennsylvania, Maryland, Virginia and West Virginia.  For more information, please visit www.shentel.com.  

This release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of unforeseen factors. A discussion of factors that may cause actual results to differ from management's projections, forecasts, estimates and expectations is available in the Company’s filings with the SEC. Those factors may include changes in general economic conditions, increases in costs, changes in regulation and other competitive factors.

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

		September 30, 2016			December 31, 2015
Cash and cash equivalents		$	27,531		$	76,812
Other current assets			113,998			51,135
Total current assets			141,529			127,947
Investments			10,113			10,679
Building held for sale			4,950			-
Net property, plant and equipment			667,741			410,018
Intangible assets, net			458,401			66,993
Goodwill			145,413			10
Deferred charges and other assets, net			5,478			11,504
Total assets		$	1,433,625		$	627,151
Total current liabilities			135,464			60,729
Long-term debt, less current maturities			783,595			177,169
Total other liabilities			216,260			99,315
Total shareholders' equity			298,306			289,938
Total liabilities and shareholders' equity		$	1,433,625		$	627,151

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2016			2015				2016				2015
Operating revenues		$	156,836			$	85,212			$	379,716			$	255,202
Cost of goods and services			58,317				30,570				140,354				91,541
Selling, general, and administrative			40,369				18,306				96,263				55,024
Integration and acquisition expenses			15,272				2,129				35,801				3,153
Depreciation and amortization			46,807				19,118				96,961				53,119
Total operating expenses			160,765				70,123				369,379				202,837
Operating income (loss)			(3,929	)			15,089				10,337				52,365
Other income (expense):
Interest expense			(8,845	)			(1,808	)			(16,369	)			(5,663	)
Gain on investments, net			127				(211	)			237				(12	)
Non-operating income, net			1,400				391				2,910				1,265
Income (loss) before taxes			(11,247	)			13,461				(2,885	)			47,955
Income tax expense (benefit)			(3,651	)			5,465				(2,174	)			19,199
Net income (loss)		$	(7,596	)		$	7,996			$	(711	)		$	28,756
Earnings (loss) per share:
Basic		$	(0.16	)		$	0.17			$	(0.01	)		$	0.59
Diluted		$	(0.16	)		$	0.16			$	(0.01	)		$	0.59
Weighted average shares outstanding, basic			48,909				48,406				48,768				48,364
Weighted average shares outstanding, diluted			48,909				49,071				48,768				48,967

Non-GAAP Financial Measure

In managing our business and assessing our financial performance, management supplements the information provided by financial statement measures prepared in accordance with GAAP with adjusted OIBDA and continuing OIBDA, which are considered “non-GAAP financial measures” under SEC rules.

Adjusted OIBDA is defined by us as operating income (loss) before depreciation and amortization, adjusted to exclude the effects of:  certain non-recurring transactions; impairment of assets; gains and losses on asset sales; straight-line adjustments for the waived management fee; amortization of the affiliate expansion asset; and share-based compensation expense.  Adjusted OIBDA should not be construed as an alternative to operating income as determined in accordance with GAAP as a measure of operating performance.  Continuing OIBDA is defined by us as adjusted OIBDA, less the benefit received from the waived management fee by Sprint over the next approximate six years.

In a capital-intensive industry such as telecommunications, management believes that adjusted OIBDA and continuing OIBDA and the associated percentage margin calculations are meaningful measures of our operating performance.  We use adjusted OIBDA and continuing OIBDA as supplemental performance measures because management believes they facilitate comparisons of our operating performance from period to period and comparisons of our operating performance to that of other companies by excluding potential differences caused by the age and book depreciation of fixed assets (affecting relative depreciation expenses) as well as the other items described above for which additional adjustments were made.  In the future, management expects that the Company may again report adjusted OIBDA and continuing OIBDA excluding these items and may incur expenses similar to these excluded items.  Accordingly, the exclusion of these and other similar items from our non-GAAP presentation should not be interpreted as implying these items are non-recurring, infrequent or unusual.

While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the current period allocation of costs associated with long-lived assets acquired or constructed in prior periods, and accordingly may obscure underlying operating trends for some purposes.  By isolating the effects of these expenses and other items that vary from period to period without any correlation to our underlying performance, or that vary widely among similar companies, management believes adjusted OIBDA and continuing OIBDA facilitates internal comparisons of our historical operating performance, which are used by management for business planning purposes, and also facilitates comparisons of our performance relative to that of our competitors.  In addition, we believe that adjusted OIBDA and continuing OIBDA and similar measures are widely used by investors and financial analysts as measures of our financial performance over time, and to compare our financial performance with that of other companies in our industry.

Adjusted OIBDA and continuing OIBDA have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.  These limitations include the following:

• they do not reflect capital expenditures;
• many of the assets being depreciated and amortized will have to be replaced in the future and adjusted OIBDA and continuing OIBDA do not reflect cash requirements for such replacements;
• they do not reflect costs associated with share-based awards exchanged for employee services;
• they do not reflect interest expense necessary to service interest or principal payments on indebtedness;
• they do not reflect gains, losses or dividends on investments;
• they do not reflect expenses incurred for the payment of income taxes; and
• other companies, including companies in our industry, may calculate adjusted OIBDA and continuing OIBDA differently than we do, limiting its usefulness as a comparative measure.

In light of these limitations, management considers adjusted OIBDA and continuing OIBDA as a financial performance measure that supplements but does not replace the information reflected in our GAAP results.

The following table shows adjusted OIBDA for the three and nine months ended September 30, 2016 and 2015:

		Three Months Ended							Nine Months Ended
(in thousands)		September 30,							September 30,
		2016			2015				2016				2015
Adjusted OIBDA		$	73,746			$	36,804			$	170,166			$	110,759
Continuing OIBDA		$	64,228			$	36,804			$	154,554			$	110,759

The following table reconciles adjusted OIBDA and continuing OIBDA to operating income (loss), which we consider to be the most directly comparable GAAP financial measure, for the three and nine months ended September 30, 2016 and 2015:

Consolidated:
(in thousands)		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2016			2015				2016				2015
Operating income (loss)		$	(3,929	)		$	15,089			$	10,337			$	52,365
Plus depreciation and amortization			46,807				19,113				96,961				53,119
Plus (gain) loss on asset sales			(81	)			(1	)			(144	)			229
Plus share based compensation expense			496				469				2,570				1,893
Plus temporary back office costs to support the billing operations through migration (1)			4,948				-				8,071				-
Plus integration and acquisition related expenses (1)			15,272				2,129				35,801				3,153
Plus straight line adjustment to reduce management fee waiver (2)			4,640				-				7,687				-
Plus amortization of intangible netted in revenue (3)			5,593				-				8,883				-
Adjusted OIBDA		$	73,746			$	36,804			$	170,166			$	110,759
Less waived management fee (2)			(9,518	)			-				(15,612	)			-
Continuing OIBDA		$	64,228			$	36,804			$	154,554			$	110,759

The following tables reconcile adjusted OIBDA and continuing OIBDA to operating income by major segment for the three and nine months ended September 30, 2016 and 2015:

Wireless Segment:					Three Months Ended														Nine Months Ended
(in thousands)					September 30,														September 30,
					2016								2015						2016							2015
Operating income					$	(5,407					)		$	17,393					$	20,905						$	56,101
Plus depreciation and amortization						38,038								9,644						70,026							26,089
Plus loss on asset sales						(45					)			40						(84				)			73
Plus share based compensation expense						246								109						1,058							441
Plus temporary back office costs to support the billing operations through migration (1)						4,945								-						8,067							-
Plus integration and acquisition related expenses(1)						14,499								-						19,889							-
Plus straight line adjustment to reduce management fee waiver (2)						4,640								-						7,687							-
Plus amortization of intangible netted in revenue (3)						5,593								-						8,883							-
Adjusted OIBDA					$	62,509							$	27,186					$	136,431						$	82,704
Less waived management fee (2)						(9,518					)			-						(15,612				)			-
Continuing OIBDA					$	52,991							$	27,186					$	120,819						$	82,704

Cable Segment:
(in thousands)		Three Months Ended									Nine Months Ended
		September 30,									September 30,
		2016			2015						2016			2015
Operating income (loss)		$	2,282			$	(603		)		$	4,043			$	(1,706	)
Plus depreciation and amortization			5,860				5,948					17,834				17,286
Plus (gain) on asset sales			(19	)			(39		)			(53	)			12
Plus share based compensation expense			108				164					673				665
Adjusted OIBDA and Continuing OIBDA		$	8,231			$	5,470				$	22,497			$	16,257

Wireline Segment:
(in thousands)		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2016			2015				2016				2015
Operating income		$	4,792			$	3,974			$	15,070			$	11,769
Plus depreciation and amortization			2,822				3,404				8,789				9,411
Plus loss on asset sales			-				(2	)			40				132
Plus share based compensation expense			49				84				284				330
Adjusted OIBDA and Continuing OIBDA		$	7,663			$	7,460			$	24,183			$	21,642

(1) Integration and acquisition costs consist of severance accruals for short-term nTelos personnel to be separated as integration activities wind down, transaction related expenses, device costs to support the transition to Sprint billing platforms, and other transition costs to support the migration to Sprint back-office functions.  Once former nTelos customers migrate to the Sprint backoffice, the Company incurs certain postpaid fees retained by Sprint and prepaid costs passed to us by Sprint that would offset a portion of these savings.  For the three and nine months ended September 30, 2016, these offsets were estimated at $1.3 million and $3.1 million, respectively.
(2) As part of the Company’s amended affiliate agreement, Sprint agreed to waive the management fee, which is historically presented as a contra-revenue by the Company, for a period of approximately six years.  The impact of Sprint’s waiver of the management fee over the approximate six-year period is reflected as an increase in revenue, offset by the non-cash adjustment to recognize this impact on a straight-line basis over the contract term of approximately 14 years.
(3) Pursuant to the intangible asset exchange with Sprint, the Company recognized an intangible asset for the affiliate contract expansion received.  Consistent with the presentation of related service fees charged by Sprint, the Company recognizes the amortization of this intangible as a contra-revenue over the contract term of approximately 14 years.

Supplemental Information

Subscriber Statistics

The following tables show selected operating statistics of the Wireless segment as of the dates shown:

		Sept. 30,		December 31,		Sept. 30,		December 31,
		2016		2015		2015		2014
Retail PCS Subscribers – Postpaid		718,785		312,512		303,527		287,867
Retail PCS Subscribers - Prepaid		275,446		142,840		145,104		145,162
PCS Market POPS (000) (1)		5,536		2,433		2,421		2,415
PCS Covered POPS (000) (1)		4,715		2,224		2,213		2,207
CDMA Base Stations (sites)		1,425		552		548		537
Towers Owned		181		158		154		154
Non-affiliate cell site leases		186		202		203		198

The changes from December 31, 2015 to September 30, 2016 shown above include the following amounts acquired in the nTelos acquisition and exchange with Sprint on May 6, 2016:

Acquired PCS Subscribers – Postpaid		404,444
Acquired PCS Subscribers – Prepaid		154,944
Acquired PCS Market POPS (000) (1)		3,099
Acquired PCS Covered POPS (000) (1)		2,298
Acquired CDMA Base Stations (sites) (2)		868
Towers		20
Non-affiliate Cell Site Leases		10

		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2016			2015				2016			2015
Gross PCS Subscriber Additions - Postpaid			41,563				19,638			85,104				54,477
Net PCS Subscriber Additions  – Postpaid			1,222				7,035			1,829				15,660
Gross PCS Subscriber Additions – Prepaid			35,202				20,228			83,786				63,806
Net PCS Subscriber Additions (Losses) - Prepaid			(13,865	)			(327	)		(22,338	)			(58	)
PCS Average Monthly Retail Churn % - Postpaid (3)			2.01	%			1.40	%		1.71	%			1.47	%
PCS Average Monthly Retail Churn % - Prepaid (3)			5.43	%			4.72	%		5.06	%			4.85	%

1) POPS refers to the estimated population of a given geographic area and is based on information purchased from third party sources.  Market POPS are those within a market area which we are authorized to serve under our Sprint PCS affiliate agreements, and Covered POPS are those covered by our network.
2) Net of approximately 160 overlap cell sites we intend to shut down in coming months.
3) PCS Average Monthly Retail Churn is the average of the monthly subscriber turnover, or churn, calculations for the period.

During the three and nine months ended September 30, 2016, 2,880 and 4,410 former nTelos prepaid subscribers switched to postpaid subscribers as they migrated to the Sprint back-office platforms during the three and nine months ended September 30, 2016, respectively.

The following table shows selected operating statistics of the Cable segment as of the dates shown:

			Sept. 30,			December 31,				Sept. 30,			December 31,
			2016			2015				2015			2014
Homes Passed (1)			184,698			172,538				172,388			171,589
Customer Relationships (2)
Video customers			48,924			48,184				48,421			49,247
Non-video customers			28,469			24,550				23,816			22,051
Total customer relationships			77,393			72,734				72,237			71,298
Video
Customers (3)			51,379			50,215				50,839			52,095
Penetration (4)			27.8	%		29.1	%			29.5	%		30.4	%
Digital video penetration (5)			76.3	%		77.9	%			75.2	%		65.9	%
High-speed Internet
Available Homes (6)			183,814			172,538				172,388			171,589
Customers (3)			59,852			55,131				53,960			50,686
Penetration (4)			32.6	%		32.0	%			31.3	%		29.5	%
Voice
Available Homes (6)			181,077			169,801				169,651			168,852
Customers (3)			21,199			20,166				19,723			18,262
Penetration (4)			11.7	%		11.9	%			11.6	%		10.8	%
Total Revenue Generating Units (7)			132,430			125,512				124,522			121,043
Fiber Route Miles			3,124			2,844				2,842			2,834
Total Fiber Miles (8)			84,945			76,949				75,021			72,694
Average Revenue Generating Units			131,707			124,054				123,282			117,744

1) Homes and businesses are considered passed (“homes passed”) if we can connect them to our distribution system without further extending the transmission lines.  Homes passed is an estimate based upon the best available information. 
2) Customer relationships represent the number of customers who receive at least one of our services.
3) Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer.  Where services are provided on a bulk basis, such as to hotels and some multi-dwelling units, the revenue charged to the customer is divided by the rate for comparable service in the local market to determine the number of customer equivalents included in the customer counts shown above.  During the first quarter of 2016, we modified the way we count subscribers when a commercial customer upgrades its internet service via a fiber contract. We retroactively applied the new count methodology to prior periods, and applied similar logic to certain bulk customers; the net result was reductions in internet subscriber counts of 559, 660 and 673 subscribers to December 31, 2015, September 30, 2015 and December 31, 2014 totals, respectively.
4) Penetration is calculated by dividing the number of customers by the number of homes passed or available homes, as appropriate.
5) Digital video penetration is calculated by dividing the number of digital video customers by total video customers.  Digital video customers are video customers who receive any level of video service via digital transmission.  A dwelling with one or more digital set-top boxes or digital adapters counts as one digital video customer.
6) Homes and businesses are considered available (“available homes”) if we can connect them to our distribution system without further extending the transmission lines and if we offer the service in that area.
7) Revenue generating units are the sum of video, voice and high-speed internet customers.
8) 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.

On January 1, 2016, the Company acquired the assets of Colane Cable Company.  With the acquisition, the Company acquired 3,299 video customers, 1,405 high-speed internet customers, and 302 voice customers.  The customers are included in the September 30, 2016 totals shown above.

The following table shows selected operating statistics of the Wireline segment as of the dates shown:

		Sept. 30,	Dec. 31,		Sept. 30,	Dec. 31,
		2016	2015		2015	2014
Telephone Access Lines (1)		18,737	20,252		21,598	21,612
Long Distance Subscribers		9,186	9,476		9,651	9,571
Video Customers (2)		5,285	5,356		5,375	5,692
DSL Subscribers (3)		14,195	13,890		13,323	13,094
Fiber Route Miles		1,916	1,736		1,625	1,556
Total Fiber Miles (4)		133,903	123,891		107,432	99,387

1) Effective October 1, 2015, we launched cable modem services on our cable plant, and eliminated the requirement that a customer have a telephone access line to purchase DSL service. 
2) The Wireline segment’s video service passes approximately 16,000 homes.
3) September 2016 and December 2015 totals include 911 and 420 customers, respectively, served via the coaxial cable network.  During first quarter 2016, we modified the way we count subscribers when a commercial customer upgrades its internet service via a fiber contract. We retroactively applied the new count methodology to prior periods and the net result was increases in internet subscriber counts of 804, 489 and 352 subscribers to December 31, 2015, September 30, 2015 and December 31, 2014 totals, respectively.
4) 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. Fiber counts were revised following a review of fiber records in the first quarter of 2015.

Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker.  The Company has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: (1) Wireless, (2) Cable, and (3) Wireline.   A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company.

The Wireless segment has historically provided digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate.  With the recent acquisition of nTelos, the Company’s wireless service area expanded to include south-central and western Virginia, West Virginia, and small portions of Kentucky and Ohio. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers.

The Cable segment provides video, internet and voice services in Virginia, West Virginia and Maryland, and leases fiber optic facilities throughout southern Virginia and West Virginia. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia.

The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video and cable modem services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor through West Virginia, Maryland and portions of central and southern Pennsylvania.

Three months ended September 30, 2016
(in thousands)
		Wireless				Cable			Wireline			Other				Eliminations				Consolidated Totals
External revenues
Service revenues		$	111,001			$	24,948		$	4,948		$	-			$	-			$	140,897
Other			7,978				2,031			5,930			-				-				15,939
Total external revenues			118,979				26,979			10,878			-				-				156,836
Internal revenues			1,140				587			7,854			-				(9,581	)			-
Total operating revenues			120,119				27,566			18,732			-				(9,581	)			156,836
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below			43,097				14,654			9,442			-				(8,876	)			58,317
Selling, general and administrative, exclusive of depreciation and amortization shown separately below			29,892				4,770			1,676			4,736				(705	)			40,369
Integration and acquisition expenses			14,499				-			-			773				-				15,272
Depreciation and amortization			38,038				5,860			2,822			87				-				46,807
Total operating expenses			125,526				25,284			13,940			5,596				(9,581	)			160,765
Operating income (loss)		$	(5,407	)		$	2,282		$	4,792		$	(5,596	)		$	-			$	(3,929	)

Three months ended September 30, 2015
(in thousands)
		Wireless			Cable				Wireline				Other				Eliminations				Consolidated Totals
External revenues
Service revenues		$	47,793		$	22,284			$	4,904			$	-			$	-			$	74,981
Other			2,734			1,882				5,615				-				-				10,231
Total external revenues			50,527			24,166				10,519				-				-				85,212
Internal revenues			1,109			251				6,759				-				(8,119	)			-
Total operating revenues			51,636			24,417				17,278				-				(8,119	)			85,212
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below			15,572			14,124				8,212				-				(7,338	)			30,570
Selling, general and administrative, exclusive of depreciation and amortization shown separately below			9,027			4,948				1,688				3,424				(781	)			18,306
Integration and acquisition expenses			-			-				-				2,129				-				2,129
Depreciation and amortization			9,644			5,948				3,404				122				-				19,118
Total operating expenses			34,243			25,020				13,304				5,675				(8,119	)			70,123
Operating income (loss)		$	17,393		$	(603	)		$	3,974			$	(5,675	)		$	-			$	15,089

Nine months ended September 30, 2016
(in thousands)
		Wireless			Cable			Wireline				Other			Eliminations				Consolidated Totals
External revenues
Service revenues		$	250,053		$	73,455			$	14,727		$	-			$	-			$	338,235
Other			17,461			5,799				18,221			-				-				41,481
Total external revenues			267,514			79,254				32,948			-				-				379,716
Internal revenues			3,417			1,159				22,754			-				(27,330	)			-
Total operating revenues			270,931			80,413				55,702			-				(27,330	)			379,716
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below			94,892			43,864				26,892			-				(25,294	)			140,354
Selling, general and administrative, exclusive of depreciation and amortization shown separately below			65,219			14,672				4,951			13,457				(2,036	)			96,263
Integration and acquisition expenses			19,889			-				-			15,912								35,801
Depreciation and amortization			70,026			17,834				8,789			312				-				96,961
Total operating expenses			250,026			76,370				40,632			29,681				(27,330	)			369,379
Operating income (loss)		$	20,905		$	4,043			$	15,070		$	(29,681	)		$	-			$	10,337
Nine months ended September 30, 2015
(in thousands)
		Wireless			Cable			Wireline				Other			Eliminations				Consolidated Totals
External revenues
Service revenues		$	144,917		$	65,802			$	14,543		$	-			$	-			$	225,262
Other			8,611			5,495				15,834			-				-				29,940
Total external revenues			153,528			71,297				30,377			-				-				255,202
Internal revenues			3,319			585				18,950			-				(22,854	)			-
Total operating revenues			156,847			71,882				49,327			-				(22,854	)			255,202
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below			47,661			41,378				23,224			-				(20,722	)			91,541
Selling, general and administrative, exclusive of depreciation and amortization shown separately below			26,996			14,924				4,923			10,313				(2,132	)			55,024
Integration and acquisition expenses			-			-				-			3,153								3,153
Depreciation and amortization			26,089			17,286				9,411			333				-				53,119
Total operating expenses			100,746			73,588				37,558			13,799				(22,854	)			202,837
Operating income (loss)		$	56,101		$	(1,706	)		$	11,769		$	(13,799	)		$	-			$	52,365

Wireless Service Revenues

(in thousands)		Three Months Ended
		September 30,								Change
Service Revenues		2016				2015				$				%
Postpaid net billings		$	97,470			$	45,864			$	51,606			112.5
Sprint fees
Management fee			(7,919	)			(3,687	)			(4,232	)		114.8
Net Service fee			(6,745	)			(6,453	)			(292	)		(4.5	)
Waiver of management fee			7,996				-				7,996			NM
			(6,668	)			(10,140	)			3,472			(34.2	)
Prepaid net billings
Gross billings			25,156				12,760				12,396			97.1
Sprint management fee			(1,521	)			(766	)			(755	)		NM
Waiver of management fee			1,521				-				1,521			NM
			25,156				11,994				13,162			109.7
Travel and other revenues			5,276				75				5,201			NM
Accounting adjustments
Amortization of expanded contract			(5,593	)			-				(5,593	)		NM
Straight-line adjustment - management fee  waiver			(4,640	)			-				(4,640	)		NM
			(10,233	)			-				(10,233	)		NM
Total Service Revenues		$	111,001			$	47,793			$	63,208			132.3

(in thousands)
		Nine Months Ended September 30,								Change
Service Revenues		2016				2015				$				%
Postpaid net billings		$	218,327			$	139,342			$	78,985				56.7
Sprint fees
Management fee			(17,914	)			(11,124	)			(6,790	)			61.0
Net Service fee			(15,986	)			(19,468	)			3,482				(17.9	)
Waiver of management fee			13,126				-				13,126				NM
			(20,774	)			(30,592	)			9,818				(32.1	)
Prepaid net billings
Gross billings			58,744				38,255				20,489				53.6
Sprint management fee			(3,524	)			(2,305	)			(1,219	)			NM
Waiver of management fee			1,486				-				2,486				NM
			57,706				35,950				21,756				60.5
Travel and other revenues			11,364				217				11,147				NM
Accounting adjustments
Amortization of expanded contract			(8,883	)			-				(8,883	)			NM
Straight-line adjustment - management fee waiver			(7,687	)			-				(7,687	)			NM
			(16,570	)			-				(16,570	)			NM
Total Service Revenues		$	250,053			$	144,917			$	105,136				72.5

CONTACTS: 
                    
                    Shenandoah Telecommunications, Inc.
                    Adele Skolits 
                    CFO and VP of Finance
                    540-984-5161
                    Adele.skolits@emp.shentel.com
                    
                    Or 
                    
                    John Nesbett/Jennifer Belodeau
                    Institutional Marketing Services (IMS)
                    203-972-9200
                    jnesbett@institutionalms.com