Shenandoah Telecommunications’ net income dropped 15% year-over-year to $6.8 million on revenue 11% higher at $40.1 million, the company reported last week.
A growing PCS subscriber base–up 9% year-to-year–average billing per PCS subscriber and the contribution of newly acquired cable operations drove revenue and operating expenses higher, according to management. 2Q09 operating expenses increased more than 25%, to $28.5 million due to costs associated with Shentel’s new cable operations, expansion and upgrade of its PCS and fiber networks, as well as depreciation.
“Our continuing operations delivered solid performance in the second quarter of 2009, despite a difficult economic environment and increases in operating expenses due to cable system upgrades and PCS and fiber network expansion,” president and CEO Christopher E. French said of the company’s 2Q09 performance.
“We believe these improvements in our networks will position us to lead the industry when economic conditions improve. We completed the upgrade of the cable network we acquired in Alleghany County, Virginia, and we continued to make outstanding progress with the integration of EVDO into our PCS network, improvements in PCS network coverage, and the upgrade of the cable networks we acquired in West Virginia.”
2Q09 Operating Highlights
- Total retail wireless customers reached 216,067 — an 8% y/y increase–with the addition of 3,013 subscribers
- EVDO high-speed data services now available to 94% of customers covered
- PCS customer churn came in at 2.07% as compared to 1.74% for 2Q ’08
- Added 13 cell and 41 EVDO sites, bringing the latter to 278 covering 94% of covered POPs
- Telephone access lines totaled 24,046, down 163 from year-end 2008
- 25,260 total cable TV subscribers, 17,000 higher y/y due to 2Q acquisitions in West Virginia and Allegheny County, Virginia
2Q09 Financial Highlights
- Wireless operating income flat at $11.2 million
- Wireline operating income of $2.8 million, a $0.6 million dollar decrease.
- Wireline revenue down $0.1 million due primarily to short-term increase in facilities revenue
- Cable revenue and expense increased $2.5 million and $3.7 million, respectively, primarily due to 2Q acquisitions
- Capex increased to $16.4 million from $10.4 million a year ago due to upgrades of acquired cable networks and expansion of PCS network coverage and footprint.