Shenandoah Telecommunications Company Reports Fourth Quarter And Full Year 2017 Results

EDINBURG, Va., March 15, 2018 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company ("Shentel") (NASDAQ:SHEN) announces financial and operating results for the three months and for the year ended December 31, 2017.

Consolidated Fourth Quarter 2017 Results

For the quarter ended December 31, 2017, the Company reported net income of $60.6 million, compared to a net loss of $0.2 million in the fourth quarter of 2016, representing an improvement of $60.8 million. This includes a one-time non-cash tax benefit of approximately $53.4 million in our net deferred tax liabilities as a result of the remeasurement of our deferred tax assets and liabilities to reflect the reduction in the U.S. corporate income tax rate from 35 percent to 21 percent.  The integration of nTelos' operations, the transition of its customers, and the upgrade of the network were completed ahead of schedule.

Total revenues were $151.6 million, compared with $155.6 million for the 2016 fourth quarter. Wireless service revenues decreased 3.0% as a result of lower average revenue per subscriber, partially offset by an increase in the number of subscribers. Cable revenues increased 7.7% due primarily to an increase in High Speed Data and voice Revenue Generating Units (RGUs), and new and existing customers selecting higher-speed data packages.  Wireline revenues increased 7.3% due to increases in fiber revenue.

Total operating expenses were $133.5 million in the fourth quarter of 2017 compared to $143.4 million in the prior year period, a decrease of $9.9 million or 6.9%.  Operating expenses in the fourth quarter of 2017 included $1.2 million of integration and acquisition costs associated with the nTelos acquisition and the exchange transaction with Sprint, compared to $6.4 million in the same quarter last year.

Operating income was $18.1 million representing an increase of $5.9 million compared with the fourth quarter of 2016.

Adjusted OIBDA (Operating Income Before Depreciation and Amortization) decreased 6.5% to $71.0 million in the fourth quarter of 2017 from $76.0 million in the fourth quarter of 2016 primarily due to a decline in Wireless revenues. Continuing OIBDA (Adjusted OIBDA less the benefit received from the waived Sprint management fee) decreased 7.4% to $62.0 million from $67.0 million.

Consolidated Full Year Results

For the year ended December 31, 2017, operating revenues were $612.0 million, an increase of $76.7 million or 14.3%, primarily due to the expansion of our wireless network and coverage area through our acquisition of nTelos and exchange transaction with Sprint that occurred during May 2016.  Operating income was $46.5 million, representing an increase of $24.0 million compared with 2016.

Adjusted OIBDA increased 14.1% to $280.9 million in 2017 from $246.1 million in 2016, primarily due to the expansion of our wireless network coverage area through our acquisition of nTelos and exchange transaction with Sprint that occurred during May 2016.  Continuing OIBDA increased 10.5% to $244.8 million from 2016.

Net cash provided by operating activities increased 38.0% to $222.9 million.

President and CEO Christopher E. French commented, "Our Company delivered profitable growth in 2017, highlighted by our completed transition of nTelos to the Sprint affiliate model and making great progress in many areas.  We accomplished the transition a full quarter ahead of schedule and below our cost expectations. The fourth quarter was our first full quarter of sales after completing the upgrade to 4G LTE in the former nTelos area.   At year end 2017 we have completed more than 60% of the planned expansion sites and believe we're well positioned to continue marketing our enhanced network to drive new customer growth."

Wireless

Fourth quarter wireless revenue decreased $6.3 million or 5.3%, primarily related to a reduction in average revenue per customer as our postpaid subscriber base continued the shift from higher revenue subsidized phone price plans to lower revenue price plans associated with leased and installment sale phones.

Shentel served 736,597 postpaid wireless subscribers at December 31, 2017, up 1.9% over December 31, 2016.  Fourth quarter postpaid churn was 2.0% for the total Company and 1.8% in the Legacy area (service area excluding the acquired nTelos area). The Company had net adds of 8,643 postpaid subscribers in the quarter, of which 2,895 were tablets and devices, with the Legacy area adding 3,838 net adds.  As of December 31, 2017, tablets and data devices were 7.9% of the postpaid base.

Shentel served 225,822 prepaid wireless subscribers at December 31, 2017, representing an increase of 9.3% compared with 2016. Total fourth quarter prepaid churn was 5.1% with 4.8% in the Legacy area.  The Company had net additions of 1,213 prepaid subscribers in the fourth quarter of 2017, with the Legacy area net additions of 1,191.

As previously reported, the prepaid subscriber migration was completed in late December 2016, and the outsourced prepaid billing arrangement was terminated. Shentel completed the migration of the postpaid subscribers in the nTelos service area and the upgrade of the network September 30, 2017.

Fourth quarter 2017 Adjusted OIBDA in Wireless was $56.6 million, a decrease of 11.0% from the fourth quarter of 2016.  Continuing OIBDA in Wireless was $47.6 million, down 12.9% from the fourth quarter of 2016.

Mr. French continued, "With the nTelos transition completed, we are focused on attracting new subscribers by effectively marketing the benefits of our improved network, extended coverage area and enhanced service offerings.  A few weeks ago, we announced that effective February 1, 2018 we have further expanded our Sprint relationship to add 1.1 million POPs in Lancaster County, Pennsylvania, central Virginia, southwest Virginia, southern West Virginia and eastern Kentucky, with the opportunity to add an additional 200,000 POPs in eastern Kentucky.  The expansion allows us to build networks that will improve coverage between our existing service areas and Sprint's metro networks, provide better and more reliable service for our customers and introduce significant opportunities for our continued growth."

Cable

Fourth quarter Cable revenue increased $2.2 million or 7.7% to $30.5 million, primarily due to growth in High Speed Data and Voice RGUs.  Operating expenses decreased 1.0% or $0.3 million in the fourth quarter of 2017. Operating income was $5.4 million compared with $3.0 million in the prior year, primarily due to the continued transformation of Cable from a video focus to broadband.  In the fourth quarter of 2017, the Company added 476 High Speed Data users and 136 voice users, and lost 766 video users.

Adjusted OIBDA in Cable for fourth quarter 2017 was $11.3 million, up 21.3% from $9.3 million in the fourth quarter of 2016.

"Our proven network delivers the high bandwidth and availability that enables us to meet and exceed consumer expectations for high speed service and dependably accessing voice, video or data applications.  The reliability of our state-of-the-art network is a competitive advantage as customers choose a new provider or evaluate upgrading their existing service," Mr. French stated.

Wireline

Revenue in Wireline increased 7.3% to $20.7 million in the fourth quarter of 2017, as compared to $19.3 million in the fourth quarter of 2016.  Fiber revenue for the fourth quarter of 2017 was $14.2 million, an increase of 9.7% from the same quarter last year, primarily as a result of new fiber contracts. Increases in broadband service revenue offset the loss of regulated voice service revenue.  Operating expenses increased 10.6% or $1.5 million to $15.3 million for fourth quarter 2017, primarily due to costs to support new fiber contracts.

Adjusted OIBDA in Wireline for fourth quarter 2017 was $8.8 million, as compared to $8.4 million in fourth quarter 2016.

Other Information

The Company declared and paid a cash dividend of $0.26 per share during the fourth quarter of 2017.  This was the 58th consecutive year of paying a dividend.

Capital expenditures were $37.1 million in the fourth quarter of 2017 compared to $70.4 million in the comparable 2016 period.

Capital Expenditures were $146.5 for the full year 2017, compared with $173.2 for 2016. Capital expenditures in 2017 primarily supported the expansion of our wireless network. Capital expenditures in 2016 primarily supported wireless network upgrades and capacity and coverage enhancements as a result of the nTelos acquisition, as well as retail store remodeling, cable segment extensions and investment in customer premises equipment, and expansion and upgrade of our fiber networks.

Cash and cash equivalents as of December 31, 2017 were $78.6 million, compared to $36.2 million at December 31, 2016. Total outstanding debt at December 31, 2017 totaled $822.0 million, net of unamortized loan costs, compared to $829.3 million as of December 31, 2016.  At December 31, 2017, debt as a percent of total assets was 58%. The amount available to the Company through its revolver facility was $75.0 million.  The Company expects to utilize $15 million of the revolver facility capacity during the first quarter of 2018.

Effective February 1, 2018, we signed the Expansion Agreement with Sprint to expand our wireless service area to include certain areas in Kentucky, Pennsylvania, Tennessee, Virginia and West Virginia, (the "Expansion Area"), effectively  adding a population (POPs) of approximately 1.1 million in Lancaster County, PA, central Virginia, southwest Virginia, southern West Virginia, and eastern Kentucky. The agreement includes certain network build out requirements in the Expansion Area, and the ability to utilize Sprint's spectrum in the Expansion Area along with certain other amendments to the Affiliate Agreements. Pursuant to the Expansion Agreement, Sprint agreed to, among other things, transition the provision of network coverage in the Expansion Area from Sprint to us. The Expansion Agreement required us to make a one-time payment of $60.0 million to Sprint for the right to service the Expansion Area pursuant to the Affiliate Agreements plus an additional payment of up to $5.0 million for certain equipment at the Sprint cell sites in the Expansion Area for maximum potential consideration of $65.0 million. We also amended our affiliate agreements with Sprint to reflect the provisions of the Expansion Agreement. A post-closing reconciliation to validate Sprint subscribers in the Expansion Area identified 59,097 Sprint subscribers in the Expansion Area instead of the 66,822 originally identified, which resulted in an $8 million reduction in purchase price.

On February 16, 2018, the Company, entered into a Second Amendment to Credit Agreement (the "Second Amendment") with CoBank, ACB, as administrative agent of its Credit Agreement, described more fully in Note 13, Long-Term Debt, and the various financial institutions party thereto (the "Lenders"), which modifies the Credit Agreement by (i) reducing the interest rate paid by the Company by approximately 50 basis points with respect to certain loans made by the Lenders to the Company under the Credit Agreement, and (ii) allowing the Company to make charitable contributions to Shentel Foundation, a Virginia nonstock corporation, of up to $1.5 million in any fiscal year.

Conference Call and Webcast

The Company will host a conference call and simultaneous webcast Thursday, March 15, 2018, at 9:00 A.M. Eastern Time.

Teleconference Information:

March 15, 2018 9:00 A.M. (ET)  Dial in number: (888) 695-7639

Password:7073389 Audio webcast:  http://investor.shentel.com/ 

An audio replay of the call will be available approximately two hours after the call is complete, until March 29, 2018 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, West Virginia, and portions of Kentucky and Ohio.  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.

CONTACTS:Shenandoah Telecommunications, Inc.James F. WoodwardSenior Vice President, Finance and Chief Financial Officer540-984-5990 James.Woodward@emp.shentel.com 

OrJohn Nesbett/Jennifer BelodeauInstitutional Marketing Services (IMS)203-972-9200 jnesbett@institutionalms.com
 
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
               
Operating revenues $ 151,617     $ 155,572     $ 611,991     $ 535,288  
               
Operating expenses:              
Cost of goods and services 48,531     53,166     211,507     193,520  
Selling, general and administrative 40,564     37,062     165,937     133,325  
Acquisition, integration and migration expenses 1,157     6,432     11,030     42,232  
Depreciation and amortization 43,255     46,723     177,007     143,685  
Total operating expenses 133,507     143,383     565,481     512,762  
Operating income (loss) 18,110     12,189     46,510     22,526  
               
Other income (expense):              
Interest expense (9,925 )   (8,733 )   (38,237 )   (25,102 )
Gain (loss) on investments, net 168     35     564     271  
Non-operating income (loss), net 939     1,339     4,420     4,250  
Income (loss) before income taxes 9,292     4,830     13,257     1,945  
               
Income tax expense (benefit) (51,303 )   5,014     (53,133 )   2,840  
Net income (loss) $ 60,595     $ (184 )   $ 66,390     $ (895 )
               
Earnings (loss) per share:              
Basic $ 1.23     $     $ 1.35     $ (0.02 )
Diluted $ 1.21     $     $ 1.33     $ (0.02 )
Weighted average shares outstanding, basic 49,298     48,922     49,150     48,807  
Weighted average shares outstanding, diluted 50,043     48,922     50,026     48,807  

 
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2017 and 2016
(in thousands)
 
    2017   2016
         
Cash and cash equivalents   $ 78,585     $ 36,193  
Other current assets   94,310     125,272  
Total current assets   172,895     161,465  
         
Investments   11,472     10,276  
Property, plant and equipment, net   686,327     698,122  
Intangible assets, net   380,979     454,532  
Goodwill   146,497     145,256  
Deferred charges and other assets, net   13,690     14,756  
Total assets   $ 1,411,860     $ 1,484,407  
         
Total current liabilities   137,584     164,263  
Long-term debt, less current maturities   757,561     797,224  
Other liabilities   166,493     227,026  
Total shareholders' equity   350,222     295,894  
Total liabilities and shareholders' equity   $ 1,411,860     $ 1,484,407  
 

Non-GAAP Financial Measures

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 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; actuarial gains and losses on pension and other post-retirement benefit plans; and share-based compensation expense, and adjusted to include the benefit received from the waived management fee by Sprint over the next approximately five-year period. Continuing OIBDA is defined as Adjusted OIBDA, less the benefit received from the waived management fee by Sprint. Adjusted OIBDA and Continuing OIBDA should not be construed as an alternative to operating income as determined in accordance with GAAP as a measure of operating performance.

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 these measures facilitate comparisons of our operating performance from period to period and comparisons of our operating performance to that of our peers and 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 financial performance measures that supplement but do not replace the information reflected in our GAAP results.

The following table reconciles Adjusted OIBDA and Continuing OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure, for the three and twelve months ended December 31, 2017 and 2016:
 
Three Months EndedDecember 31, 2017 (in thousands)   Wireless   Cable   Wireline   Other   Consolidated
Operating income   $ 11,907     $ 5,386     $ 5,393     $ (4,576 )   $ 18,110  
Plus depreciation and amortization   33,922     5,898     3,293     $ 142     43,255  
Plus (gain) loss on asset sales   6     (128 )   53     90     21  
Plus share based compensation expense   233     146     63     88     530  
Plus the benefit received from the waived management fee (1)   8,988                 8,988  
Plus amortization of intangibles netted in rent expense   (645 )               (645 )
Plus temporary back office costs to support the billing operations through migration (2)   964                 964  
Less actuarial gains on pension plans               (1,391 )   (1,391 )
Plus integration and acquisition related expenses   1,187             (30 )   1,157  
Adjusted OIBDA   $ 56,562     11,302     8,802     (5,677 )   $ 70,989  
Less waived management fee   (8,988 )               (8,988 )
Continuing OIBDA   $ 47,574     $ 11,302     $ 8,802     $ (5,677 )   $ 62,001  

 
Three Months EndedDecember 31, 2016 (in thousands)   Wireless   Cable   Wireline   Other   Consolidated
Operating income   $ 5,337     $ 2,954     $ 5,454     $ (1,556 )   $ 12,189  
Plus depreciation and amortization   37,594     6,074     2,928     $ 127     46,723  
Plus (gain) loss on asset sales   (47 )   209     (67 )       95  
Plus share based compensation expense   251     83     63     54     451  
Plus the benefit received from the waived management fee (1)   8,983                 8,983  
Plus amortization of intangibles netted in rent expense   728                 728  
Plus temporary back office costs to support the billing operations through migration (2)   4,700             115     4,815  
Less actuarial gains on pension plans               (4,460 )   (4,460 )
Plus integration and acquisition related expenses   6,038             394     6,432  
Adjusted OIBDA   $ 63,584     9,320     8,378     (5,326 )   $ 75,956  
Less waived management fee   (8,983 )               (8,983 )
Continuing OIBDA   $ 54,601     $ 9,320     $ 8,378     $ (5,326 )   $ 66,973  

                     
Year Ended December 31, 2017 (in thousands)   Wireless   Cable   Wireline   Other   Consolidated
Operating income   $ 34,139     $ 15,846     $ 20,965     $ (24,440 )   $ 46,510  
Plus depreciation and amortization   139,610     23,968     12,829     600     177,007  
Plus (gain) loss on asset sales   214     (243 )   79     68     118  
Plus share based compensation expense   1,579     916     384     701     3,580  
Plus the benefit received from the waived management fee (1)   36,056                 36,056  
Plus amortization of intangibles netted in rent expense   1,528                 1,528  
Plus temporary back office costs to support the billing operations through migration (2)   6,459             1     6,460  
Less actuarial gains on pension plans               (1,387 )   (1,387 )
Plus integration and acquisition related expenses   10,793             237     11,030  
Adjusted OIBDA   230,378     40,487     34,257     (24,220 )   280,902  
Less waived management fee   (36,056 )               (36,056 )
Continuing OIBDA   $ 194,322     $ 40,487     $ 34,257     $ (24,220 )   $ 244,846  

                     
Year Ended December 31, 2016 (in thousands)   Wireless   Cable   Wireline   Other   Consolidated
Operating income   $ 26,241     $ 6,997     $ 20,524     $ (31,236 )   $ 22,526  
Plus depreciation and amortization   107,621     23,908     11,717     439     143,685  
Plus (gain) loss on asset sales   (131 )   156     (27 )   (47 )   (49 )
Plus share based compensation expense   1,309     756     347     609     3,021  
Plus the benefit received from the waived management fee (1)   24,596                 24,596  
Plus amortization of intangibles netted in rent expense   728                 728  
Plus temporary back office costs to support the billing operations through migration (2)   13,843                 13,843  
Less actuarial gains on pension plans               (4,460 )   (4,460 )
Plus integration and acquisition related expenses   25,927             16,305     42,232  
Adjusted OIBDA   200,134     31,817     32,561     (18,390 )   246,122  
Less waived management fee   (24,596 )               (24,596 )
Continuing OIBDA   $ 175,538     $ 31,817     $ 32,561     $ (18,390 )   $ 221,526  

_______________________________________________________

1)   Under our amended affiliate agreement, Sprint agreed to waive the Management Fees charged on both postpaid and prepaid revenues, up to $4.2 million per month, until the total amount waived reaches approximately $255.6 million, which is expected to occur in 2022.2)   Once former nTelos customers migrate to the Sprint back office, 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.

Operating Results
                     
Three Months Ended December 31, 2017                    
(in thousands) Wireless   Cable   Wireline   Other   Eliminations   Consolidated Totals
External revenues                      
Service revenues $ 106,468     $ 27,109     $ 5,087     $     $     $ 138,664  
Other 3,813     2,295     6,845             12,953  
Total external revenues 110,281     29,404     11,932             151,617  
Internal revenues 1,241     1,093     8,740         (11,074 )    
Total operating revenues 111,522     30,497     20,672         (11,074 )   151,617  
                       
Operating expenses                      
Costs of goods and services 34,450     14,297     10,127     39     (10,382 )   48,531  
Selling, general and administrative 30,056     4,916     1,859     4,425     (692 )   40,564  
Acquisition, integration and migration expenses 1,187             (30 )       1,157  
Depreciation and amortization 33,922     5,898     3,293     142         43,255  
Total operating expenses 99,615     25,111     15,279     4,576     (11,074 )   133,507  
Operating income (loss) $ 11,907     $ 5,386     $ 5,393     $ (4,576 )   $     $ 18,110  

                     
Three Months Ended December 31, 2016                    
(in thousands) Wireless   Cable   Wireline   Other   Eliminations   Consolidated Totals
External revenues                      
Service revenues $ 109,716     $ 25,615     $ 4,919     $     $     $ 140,250  
Other 6,903     2,128     6,291             15,322  
Total external revenues 116,619     27,743     11,210             155,572  
Internal revenues 1,203     578     8,062         (9,843 )    
Total operating revenues 117,822     28,321     19,272         (9,843 )   155,572  
                       
Operating expenses                      
Costs of goods and services 38,221     14,717     9,367         (9,139 )   53,166  
Selling, general and administrative 30,632     4,576     1,523     1,035     704     37,062  
Acquisition, integration and migration expenses 6,038             394         6,432  
Depreciation and amortization 37,594     6,074     2,928     127         46,723  
Total operating expenses 112,485     25,367     13,818     1,556     (9,843 )   143,383  
Operating income (loss) $ 5,337     $ 2,954     $ 5,454     $ (1,556 )   $     $ 12,189  

                     
Year Ended December 31, 2017                    
(in thousands) Wireless   Cable   Wireline   Other   Eliminations   Consolidated Totals
External revenues                      
Service revenues $ 431,184     $ 107,338     $ 20,388     $     $     $ 558,910  
Other 18,945     8,579     25,557             53,081  
Total external revenues 450,129     115,917     45,945             611,991  
Internal revenues 4,949     3,245     33,308         (41,502 )    
Total operating revenues 455,078     119,162     79,253         (41,502 )   611,991  
                       
Operating expenses                      
Costs of goods and services 152,279     59,349     38,536     39     (38,696 )   211,507  
Selling, general and administrative 118,257     19,999     6,923     23,564     (2,806 )   165,937  
Acquisition, integration and migration expenses 10,793             237         11,030  
Depreciation and amortization 139,610     23,968     12,829     600         177,007  
Total operating expenses 420,939     103,316     58,288     24,440     (41,502 )   565,481  
Operating income (loss) $ 34,139     $ 15,846     $ 20,965     $ (24,440 )   $     $ 46,510  

                     
Year Ended December 31, 2016                    
(in thousands) Wireless   Cable   Wireline   Other   Eliminations   Consolidated Totals
External revenues                      
Service revenues $ 359,769     $ 99,070     $ 19,646     $     $     $ 478,485  
Other 24,364     7,927     24,512             56,803  
Total external revenues 384,133     106,997     44,158             535,288  
Internal revenues 4,620     1,737     30,816         (37,173 )    
Total operating revenues 388,753     108,734     74,974         (37,173 )   535,288  
                       
Operating expenses                      
Costs of goods and services 133,113     58,581     36,259         (34,433 )   193,520  
Selling, general and administrative 95,851     19,248     6,474     14,492     (2,740 )   133,325  
Acquisition, integration and migration expenses 25,927             16,305         42,232  
Depreciation and amortization 107,621     23,908     11,717     439         143,685  
Total operating expenses 362,512     101,737     54,450     31,236     (37,173 )   512,762  
Operating income (loss) $ 26,241     $ 6,997     $ 20,524     $ (31,236 )   $     $ 22,526  
                                               

Wireless Service Revenues
         
    Three Months Ended December 31,   Change
(in thousands)   2017   2016   $   %
Wireless Service Revenues                
Postpaid net billings (1)   $ 91,513     $ 96,252     $ (4,739 )   (4.9 )
Management fee   (7,392 )   (7,629 )   237     (3.1 )
Net service fee   (7,899 )   (6,967 )   (932 )   13.4  
    76,222     81,656     (5,434 )   (6.7 )
                 
Prepaid net billings (2)   26,128     23,928     2,200     9.2  
Sprint management fee   (1,568 )   (1,436 )   (132 )   9.2  
    24,560     22,492     2,068     9.2  
                 
Travel and other revenues (2)   5,686     5,568     118     2.1  
Total Service Revenues   $ 106,468     $ 109,716     $ (3,248 )   (3.0 )

         
    Twelve Months Ended December 31,   Change
(in thousands)   2017   2016   $   %
Wireless Service Revenues                
Postpaid net billings (1)   $ 372,237     $ 314,579     $ 57,658     18.3  
Management fee   (29,857 )   (25,543 )   (4,314 )   16.9  
Net service fee   (30,751 )   (22,953 )   (7,798 )   34.0  
    311,629     266,083     45,546     17.1  
                 
Prepaid net billings (2)   103,161     80,056     23,105     28.9  
Sprint management fee   (6,189 )   (4,960 )   (1,229 )   24.8  
    96,972     75,096     21,876     29.1  
                 
Travel and other revenues (2)   22,583     18,590     3,993     21.5  
Total Service Revenues   $ 431,184     $ 359,769     $ 71,415     19.9  

_______________________________________________________

1)     Postpaid net billings are defined under the terms of the affiliate contract with Sprint to be the gross billings to customers within our wireless network coverage area less billing credits and adjustments and allocated write-offs of uncollectible accounts.2)     The Company is no longer including Lifeline subscribers to be consistent with Sprint. The above table reflects the reclassification of the related Assurance Wireless prepaid revenue from Prepaid gross billings to travel and other revenues for both years shown.

Supplemental Information

Subscriber Statistics

The following tables indicate selected operating statistics of the Wireless, including Sprint subscribers as of the dates shown:
  December 31, 2017 (4)   December 31, 2016 (3)   December 31, 2015
Retail PCS Subscribers - Postpaid 736,597     722,562     312,512  
Retail PCS Subscribers - Prepaid (1) 225,822     206,672     129,855  
PCS Market POPS (000) (2) 5,942     5,536     2,433  
PCS Covered POPS (000) (2) 5,272     4,807     2,224  
CDMA Base Stations (sites) 1,623     1,467     552  
Towers Owned 192     196     158  
Non-affiliate Cell Site Leases 192     202     202  

_______________________________________________________
  1. Prepaid subscribers reported in the December 2016 and subsequent periods include the impact of a change how long an inactive customer is included in the customer counts. This policy change effectively reduced prepaid customers by approximately 24 thousand. As of September 2017, the Company is no longer including Lifeline subscribers to be consistent with Sprint's policy. Historical customer counts have been adjusted accordingly.
  2. "POPS" refers to the estimated population of a given geographic area.  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. As of December 31, 2017, the data source for POPS is U.S. census data. Historical periods previously referred to other third party population data and have been recast to refer to U.S. census data.
  3. December 31, 2016 includes nTelos.
  4. December 31, 2017 includes Parkersburg.
         
    Three Months Ended December 31,   Year Ended December 31,
    2017 (4)   2016 (3)   2017 (4)   2016 (3) (5)
Gross PCS Subscriber Additions - Postpaid   51,442     47,988     173,871     132,593  
Net PCS Subscriber Additions - Postpaid   8,643     3,777     14,035     5,085  
PCS Average Monthly Retail Churn % - Postpaid (1)   1.95 %   2.10 %   2.04 %   1.84 %
Gross PCS Subscriber Additions - Prepaid (2)   35,208     36,651     151,926     102,352  
Net PCS Subscriber Additions (Losses) - Prepaid (2)   1,213     (39,652 )   19,150     (58,643 )
PCS Average Monthly Retail Churn % - Prepaid (2)   5.05 %   6.27 %   5.07 %   6.72 %

_______________________________________________________
  1. PCS Average Monthly Retail Churn - Postpaid is the average of the monthly subscriber turnover, calculated for the period.
  2. Prepaid subscribers reported in the December 2016 and subsequent periods include the impact of a change in policy as to how long an inactive customer is included in the customer counts. This policy change, implemented in December 2016, effectively reduced prepaid customers by approximately 24 thousand. As of September 2017, the Company is no longer including Lifeline subscribers to be consistent with Sprint's policy. Historical customer counts have been adjusted accordingly.
  3. December 31, 2016 includes nTelos.
  4. December 31, 2017 includes Parkersburg.
  5. 2016 Net addition figures exclude the impact of the nTelos acquisition.

The operating statistics shown above include the following:
  April 6, 2017   May 6, 2016
  Parkersburg Expansion Area (3)   nTelos Area (4)
PCS Subscribers - Postpaid (1) 19,067     404,965  
PCS Subscribers - Prepaid (1) 5,962     154,944  
Acquired PCS Market POPS (000) 511     3,099  
Acquired PCS Covered POPS (000) 244     2,298  
Acquired CDMA Base Stations (sites) (2)     868  
Towers     20  
Non-affiliate Cell Site Leases     10  

_______________________________________________________
  1. Represents Sprint's subscribers, including prepaid Lifeline, as of the acquisition date in the acquired territory.
  2. As of December 31, 2017 we have shut down 107 overlap sites associated with the nTelos area.
  3. Acquired on April 6, 2017
  4. Acquired on May 6, 2016

The following table indicates selected operating statistics for Cable as of the dates shown:
    December 31, 2017   December 31, 2016   December 31, 2015
Homes Passed (1)   184,910     184,710     172,538  
Customer Relationships (2)            
Video users   44,269     48,512     48,184  
Non-video customers   33,559     28,854     24,550  
Total customer relationships   77,828     77,366     72,734  
Video            
Users (3)   46,613     50,618     50,215  
Penetration (4)   25.2 %   27.4 %   29.1 %
Digital video penetration (5)   76.2 %   77.4 %   77.9 %
High-speed Internet                  
Available Homes (6)   184,910     183,826     172,538  
Users (3)   63,918     60,495     55,131  
Penetration (4)   34.6 %   32.9 %   32.0 %
Voice                  
Available Homes (6)   182,379     181,089     169,801  
Users (3)   22,555     21,352     20,166  
Penetration (4)   12.4 %   11.8 %   11.9 %
Total Revenue Generating Units (7)   133,086     132,465     125,512  
Fiber Route Miles   3,356     3,137     2,844  
Total Fiber Miles (8)   122,011     92,615     76,949  
Average Revenue Generating Units   132,759     131,218     124,054  

_______________________________________________________

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 billed 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 a reduction in internet subscriber counts of 559 subscribers at December 31, 2015.

 4)    Penetration is calculated by dividing the number of users by the number of homes passed or available homes, as appropriate.

 5)    Digital video penetration is calculated by dividing the number of digital video users by total video users.  Digital video users 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 user.

 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 users.

 8)    Total 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.

The following table shows selected operating statistics for Wireline as of the dates shown:
    December 31, 2017   December 31, 2016   December 31, 2015
Telephone Access Lines (1)   17,933     18,443     20,252  
Long Distance Subscribers   9,078     9,149     9,476  
Video Customers (2)   5,019     5,264     5,356  
DSL and Cable Modem Subscribers (3)   14,665     14,314     13,890  
Fiber Route Miles   2,073     1,971     1,736  
Total Fiber Miles (4)   154,165     142,230     123,891  

_______________________________________________________

 1)    Effective October 1, 2015, we launched cable modem services on our cable plant, and ceased the requirement that a customer have a telephone access line to purchase internet service.

 2)    Wireline's video service passes approximately 16,500 homes.

 3)    December 2017, 2016 and December 2015 totals include 2,105, 1,072 and 420 customers, respectively, served via the coaxial cable network.  During 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 an increase in internet subscriber counts of 804 subscribers to December 31, 2015.

 4)    Total 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.

 

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