T-Mobile plans to exercise a two-decades-old agreement that gives it the option to purchase the wireless assets of Shentel, also known as Shenandoah Telecommunications Company, a publicly-held rural wireless and wireline provider that serves rural areas of Virginia and several other states.

Shentel is disputing the appraised price that T-Mobile has proposed. The T-Mobile Shentel agreement is one that T-Mobile inherited when it acquired Sprint earlier this year.

Shentel and Sprint have had an uncommon arrangement through which Shentel operates a wireless network that has been used by Sprint – now owned by T-Mobile — in parts of rural Virginia, West Virginia, Kentucky, Ohio and Pennsylvania. According to a T-Mobile Form 8-K filing, the area served is home to about 1.1 million subscribers. Shentel has been the “exclusive provider of Sprint PCS’s wireless mobility communications network” in the service area, the filing states.

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The option to purchase Shentel wireless assets dates back to a 1999 management agreement made between Sprint and Shentel giving Sprint the option to purchase the assets based on an appraisal process detailed in the agreement, according to the T-Mobile 8-K filing.

T-Mobile Shentel Dispute
The T-Mobile filing notes that Shentel and T-Mobile have been in discussions regarding the appraisal framework and have not been able to agree on certain terms, driving Shentel to deliver a “notice of dispute” about the appraisal framework to T-Mobile on August 24. Issuance of that notice triggers a 60-day dispute resolution process, also included in the 1999 management agreement.

If the T-Mobile Shentel dispute isn’t resolved within 60 days, “either party may pursue other remedies, as permitted by the management agreement,” T-Mobile states.

Wireless is a key business for Shentel, which logged $43.8 million in wireless operating income for the second quarter of 2020, compared to $8.7 million for the company’s broadband business and $2.2 million for its tower business.

Shentel has made a substantial investment in the wireless network over the years. In early 2018, for example, the company pledged to spend approximately $56 million over the next three years to expand and improve coverage.

A release about that noted that Shentel was authorized to serve over 7 million POPs in the mid-Atlantic area as a Sprint PCS affiliate, a number that is considerably higher than the 1.1 million potential customers served by the Shentel-built network.

The T-Mobile 8-K filing doesn’t detail what T-Mobile wireless opportunities might remain for Shentel after the wireless asset sale is completed.

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