UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	For the quarterly period ended	~~June 30, 2019~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	For the transition period from__________ to __________

Commission File No.: 000-09881

SHENANDOAH TELECOMMUNICATIONS COMPANY

(Exact name of registrant as specified in its charter)



Virginia		54-1162807
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

500 Shentel Way, Edinburg, Virginia 22824

(Address of principal executive offices) (Zip Code)

(540) 984-4141

(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:



Common Stock (No Par Value)	SHEN	NASDAQ Global Select Market	~~49,856,914~~49,842,000
(Title of Class)	(Trading Symbol)	(Name of Exchange on which Registered)	(The number of shares of the registrant's common stock outstanding on ~~July 31, 2019)~~April 24, 2020)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑☒

SHENANDOAH TELECOMMUNICATIONS COMPANY

INDEX



		Page Numbers
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of ~~Operations and~~ Comprehensive Income	4

	Unaudited Condensed Consolidated Statements of Shareholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2018

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3427

Item 4.	Controls and Procedures	3527

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors	3627

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3629

Item 6.	Exhibits	3730

	Signatures	3931

~~Index~~

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
	June 30, 2019		December 31, 2018		March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	98,091	$	85,086	$	120,232		$	101,651
Accounts receivable, net of allowance for doubtful accounts of $516 and $534, respectively	59,561		54,407
Accounts receivable, net of allowance for doubtful accounts of $410 and $533, respectively					61,526			63,541
Income taxes receivable	4,144		5,282		8,157			10,306
Inventory, net of allowances of $69 and $113, respectively	6,566		5,265
Inventory, net of allowances of $71 and $66, respectively					7,071			5,728
Prepaid expenses and other	53,786		60,162		60,923			60,527
Total current assets	222,148		210,202		257,909			241,753
Investments	11,563		10,788		12,011			12,388
Property, plant and equipment, net	695,725		701,359		695,920			701,514
Intangible assets, net	324,890		366,029		299,458			314,147
Goodwill	149,070		146,497		149,070			149,070
Operating lease right-of-use assets	369,715		—		382,973			392,589
Deferred charges and other assets	48,929		49,891		53,436			53,352
Total assets	$	1,822,040	$	1,484,766	$	1,850,777		$	1,864,813
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt, net of unamortized loan fees	$	27,939	$	20,618	$	31,672		$	31,650
Accounts payable	27,657		35,987		30,384			40,295
Advanced billings and customer deposits	7,914		7,919		8,414			8,358
Accrued compensation	6,817		9,452		5,787			10,075
Current operating lease liabilities	42,941		—		44,204			42,567
Accrued liabilities and other	14,513		14,563		19,183			14,391
Total current liabilities	127,781		88,539		139,644			147,336
Long-term debt, less current maturities, net of unamortized loan fees	719,067		749,624		680,531			688,464
Other long-term liabilities:
Deferred income taxes	128,582		127,453		137,674			137,567
Deferred lease	—		22,436
Asset retirement obligations	30,779		28,584		37,422			36,914
Retirement plan obligations	10,355		11,519
Benefit plan obligations					11,980			12,675
Noncurrent operating lease liabilities	327,868		—		343,723			352,439
Other liabilities	15,559		14,364		19,153			16,990
Total other long-term liabilities	513,143		204,356		549,952			556,585
Shareholders’ equity:
Common stock, no par value, authorized 96,000; 49,857 and 49,630 issued and outstanding at June 30, 2019 and December 31, 2018, respectively	—		—
Common stock, no par value, authorized 96,000; 49,842 and 49,671 issued and outstanding at March 31, 2020 and December 31, 2019, respectively					—			—
Additional paid in capital	47,138		47,456		43,158			42,110
Retained earnings	413,571		386,511		443,290			430,010
Accumulated other comprehensive income, net of taxes	1,340		8,280
Accumulated other comprehensive (loss) income, net of taxes					(5,798		)	308
Total shareholders’ equity	462,049		442,247		480,650			472,428
Total liabilities and shareholders’ equity	$	1,822,040	$	1,484,766	$	1,850,777		$	1,864,813

See accompanying notes to unaudited condensed consolidated financial statements.

~~Index~~


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES	SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES												SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME													UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)	(in thousands, except per share amounts)												(in thousands, except per share amounts)
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Operating revenue:	2019			2018			2019			2018
Revenue:													2020			2019
Service revenue and other	$	142,059		$	140,492		$	285,290		$	277,051		$	140,188		$	143,231
Equipment revenue	16,855			16,009			32,467			33,588			13,000			15,612
Total operating revenue	158,914			156,501			317,757			310,639
Total revenue													153,188			158,843
Operating expenses:
Cost of services	49,497			49,134			99,015			98,476			49,565			49,518
Cost of goods sold	15,874			15,166			30,511			30,971			12,671			14,637
Selling, general and administrative	27,170			29,915			55,892			58,665			30,991			28,722
Depreciation and amortization	42,353			41,117			83,532			84,604			36,911			41,179
Total operating expenses	134,894			135,332			268,950			272,716			130,138			134,056
Operating income	24,020			21,169			48,807			37,923			23,050			24,787
Other income (expense):
Interest expense	(7,522		)	(8,851		)	(15,476		)	(18,183		)	(6,211		)	(7,954		)
Other	1,176			839			2,463			1,828			733			1,287
Income before income taxes	17,674			13,157			35,794			21,568			17,572			18,120
Income tax expense	4,524			3,531			8,734			5,359			4,292			4,210
Net income	13,150			9,626			27,060			16,209			13,280			13,910
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate hedge, net of tax	(4,212		)	833			(6,940		)	3,895
Other comprehensive income:
Unrealized loss on interest rate hedge, net of tax													(6,106		)	(2,728		)
Comprehensive income	$	8,938		$	10,459		$	20,120		$	20,104		$	7,174		$	11,182

Net income per share, basic and diluted:
Basic net income per share	$	0.26		$	0.19		$	0.54		$	0.33		$	0.27		$	0.28
Diluted net income per share	$	0.26		$	0.19		$	0.54		$	0.32		$	0.27		$	0.28
Weighted average shares outstanding, basic	49,848			49,547			49,812			49,511			49,888			49,775
Weighted average shares outstanding, diluted	50,142			50,070			50,118			50,029			50,036			50,115

See accompanying notes to unaudited condensed consolidated financial statements.

~~Index~~

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except per share amounts)
Shares of Common Stock (no par value) Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total
Balance, March 31, 2019 49,844
$ 46,641
$ 400,421
$ 5,552
$ 452,614
Net income —
—
13,150
—
13,150
Other comprehensive loss, net of tax —
—
—
(4,212 ) (4,212 )
Stock based compensation 17
695
—
—
695
Stock options exercised 1
(94 ) —
—
(94 )
Common stock issued —
8
—
—
8
Shares retired for settlement of employee taxes upon issuance of vested equity awards (5 ) (112 ) —
—
(112 )
Balance, June 30, 2019 49,857
$ 47,138
$ 413,571
$ 1,340
$ 462,049

Shares of Common Stock (no par value) Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total
Balance, December 31, 2018 49,630
$ 47,456
$ 386,511
$ 8,280
$ 442,247
Net income —
—
27,060
—
27,060
Other comprehensive loss, net of tax —
—
—
(6,940 ) (6,940 )
Stock based compensation 184
2,497
—
—
2,497
Stock options exercised 29
81
—
—
81
Common stock issued —
16
—
—
16
Shares retired for settlement of employee taxes upon issuance of vested equity awards (62 ) (2,912 ) —
—
(2,912 )
Common stock issued to acquire non-controlling interest in nTelos 76
—
—
—
—
Balance, June 30, 2019 49,857
$ 47,138
$ 413,571
$ 1,340
$ 462,049

Shares of Common Stock (no par value) Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income Total
Balance, March 31, 2018 49,539
$ 45,075
$ 359,885
$ 11,292
$ 416,252
Net income —
—
9,626
—
9,626
Other comprehensive gain, net of tax —
—
—
833
833
Stock based compensation 28
1,370
—
—
1,370
Common stock issued —
5
—
—
5
Shares retired for settlement of employee taxes upon issuance of vested equity awards (9 ) (278 ) —
—
(278 )
Balance, June 30, 2018 49,558
$ 46,172
$ 369,511
$ 12,125
$ 427,808

Shares of Common Stock (no par value) Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income Total
Balance, December 31, 2017 49,328
$ 44,787
$ 297,205
$ 8,230
$ 350,222
Change in Accounting Principle - Adoption of ASU 2014-09 —
—
56,097
—
56,097
Net income —
—
16,209
—
16,209
Other comprehensive gain, net of tax —
—
—
3,895
3,895
Stock based compensation 205
3,407
—
—
3,407
Stock options exercised 15
104
—
—
104
Common stock issued —
10
—
—
10
Shares retired for settlement of employee taxes upon issuance of vested equity awards (66 ) (2,136 ) —
—
(2,136 )
Common stock issued to acquire non-controlling interest in nTelos 76
—
—
—
—
Balance, June 30, 2018 49,558
$ 46,172
$ 369,511
$ 12,125
$ 427,808

~~See accompanying notes to unaudited condensed consolidated financial statements.~~

~~Index~~

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
2019 2018
Cash flows from operating activities:
Net income $ 27,060
$ 16,209
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 72,737
71,637
Amortization 10,795
12,967
Accretion of asset retirement obligations 708
471
Bad debt expense 764
758
Stock based compensation expense, net of amount capitalized 2,307
3,407
Deferred income taxes 3,434
(8,004 )
Net gain from patronage and investments (2,081 ) (1,576 )
Amortization of long-term debt issuance costs 1,648
2,365
Changes in assets and liabilities:
Accounts receivable (4,561 ) (11,060 )
Inventory, net (1,301 ) (503 )
Current income taxes 1,138
16,722
Operating lease right-of-use assets 25,389
—
Waived management fee 19,320
18,606
Other assets (8,679 ) (968 )
Accounts payable 6,311
2,486
Lease liabilities (21,880 ) —
Deferred lease —
1,353
Other deferrals and accruals (3,477 ) 2,274
Net cash provided by operating activities 129,632
127,144

Cash flows from investing activities:
Capital expenditures (79,124 ) (62,322 )
Cash disbursed for acquisitions (10,000 ) (52,000 )
Proceeds from sale of assets 108
447
Other (3 ) (3 )
Net cash used in investing activities (89,019 ) (113,878 )

Cash flows from financing activities:
Principal payments on long-term debt (24,777 ) (24,250 )
Proceeds from revolving credit facility borrowings —
15,000
Principal payments on revolving credit facility —
(15,000 )
Proceeds from exercises of stock options 81
—
Taxes paid for equity award issuances (2,912 ) (2,032 )
Net cash used in financing activities (27,608 ) (26,282 )
Net increase (decrease) in cash and cash equivalents 13,005
(13,016 )
Cash and cash equivalents, beginning of period 85,086
78,585
Cash and cash equivalents, end of period $ 98,091
$ 65,569



SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
	Shares of Common Stock (no par value)		Additional Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2019	49,671		$	42,110		$	430,010	$	308		$	472,428
Net income	—		—			13,280		—			13,280
Other comprehensive loss, net of tax	—		—			—		(6,106		)	(6,106		)
Stock based compensation	137		2,985			—		—			2,985
Common stock issued	—		8			—		—			8
Shares retired for settlement of employee taxes upon issuance of vested equity awards	(42	)	(1,945		)	—		—			(1,945		)
Common stock issued to acquire non-controlling interest in nTelos	76		—			—		—			—
Balance, March 31, 2020	49,842		$	43,158		$	443,290	$	(5,798	)	$	480,650

	Shares of Common Stock (no par value)		Additional Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2018	49,630		$	47,456		$	388,496	$	8,280		$	444,232
Net income	—		—			13,910		—			13,910
Other comprehensive loss, net of tax	—		—			—		(2,728		)	(2,728		)
Stock based compensation	167		1,802			—		—			1,802
Stock options exercised	28		175			—		—			175
Common stock issued	—		8			—		—			8
Shares retired for settlement of employee taxes upon issuance of vested equity awards	(57	)	(2,800		)	—		—			(2,800		)
Common stock issued to acquire non-controlling interest in nTelos	76		—			—		—			—
Balance, March 31, 2019	49,844		$	46,641		$	402,406	$	5,552		$	454,599

See accompanying notes to unaudited condensed consolidated financial statements.

~~Index~~



SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	13,280		$	13,910
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	32,468			35,520
Amortization of intangible assets	4,868			5,659
Accretion of asset retirement obligations	404			350
Bad debt expense	205			367
Stock based compensation expense, net of amount capitalized	2,905			1,714
Deferred income taxes	2,135			(3,378		)
Gain from patronage and investments	(339		)	(1,140		)
Amortization of long-term debt issuance costs	674			963
Changes in assets and liabilities:
Accounts receivable	2,543			(3,127		)
Inventory, net	(1,343		)	(1,975		)
Current income taxes	2,149			7,588
Operating lease right-of-use assets	12,939			7,779
Waived management fee	9,798			9,628
Other assets	(3,489		)	(1,460		)
Accounts payable	(4,400		)	4,641
Lease liabilities	(10,402		)	(9,662		)
Other deferrals and accruals	(3,287		)	(5,714		)
Net cash provided by operating activities	61,108			61,663

Cash flows used in investing activities:
Capital expenditures	$	(32,299	)	(44,420		)
Cash disbursed for acquisitions	—			(10,000		)
Proceeds from sale of assets and other	274			45
Net cash used in investing activities	(32,025		)	(54,375		)

Cash flows used in financing activities:
Principal payments on long-term debt	$	(8,530	)	(19,889		)
Taxes paid for equity award issuances	(1,945		)	(2,698		)
Other	(27		)	72
Net cash used in financing activities	(10,502		)	(22,515		)
Net increase (decrease) in cash and cash equivalents	18,581			(15,227		)
Cash and cash equivalents, beginning of period	101,651			85,086
Cash and cash equivalents, end of period	$	120,232		$	69,859

See accompanying notes to unaudited condensed consolidated financial statements.

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation and Other Information

The ~~interim condensed~~accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of ~~Shenandoah Telecommunications Company and Subsidiaries (collectively, the “Company”) are unaudited. In the opinion of management, all~~Regulation S-X for interim financial information. All normal recurring adjustments considered necessary for a fair presentation ~~of the interim results~~ have been ~~reflected therein~~included. Certain disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States ~~("GAAP") for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited condensed~~(U.S. GAAP) have been omitted. These consolidated financial statements ~~may not include all of the information and notes required by GAAP for audited financial statements. The information contained herein~~ should be read in conjunction with the audited consolidated financial statements ~~included~~and notes contained in ~~the Company's~~our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The preparation of the unaudited interim consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingencies at the date of the unaudited interim consolidated financial statements. These estimates are inherently subject to judgment and actual results could differ.

T-Mobile Acquisition of Sprint

On April 1, 2020, T-Mobile US, Inc. (“T-Mobile”) announced the completion of its business combination with Sprint Corporation (“Sprint”) and subsequently delivered to the Company a notice of Network Technology Conversion, Brand Conversion and Combination Conversion (a “Conversion Notice”) pursuant to the terms of our affiliate agreement. The affiliate agreement provides for a 90-day period following receipt of the Conversion Notice for the parties to negotiate mutually agreeable terms and conditions under which the Company would continue as an affiliate of T-Mobile. The affiliate agreement further provides that, if T-Mobile and the Company have not negotiated a mutually acceptable agreement within the 90-day period, then T-Mobile would have a period of 60 days thereafter to exercise an option to purchase the assets of our Wireless operations for 90% of the "Entire Business Value," (as defined under our affiliate agreement). If T-Mobile does not exercise its purchase option, the Company would then have a 60-day period to exercise an option to purchase the legacy T-Mobile network and subscribers in our service area. If the Company does not exercise its purchase option, T-Mobile must sell or decommission its legacy network and customers in our service area. The outcome of these proceedings could significantly impact our business operations and financial statements.

COVID-19

On March 11, 2020, the World Health Organization classified the COVID-19 outbreak as a pandemic. While we do not operate in the densely populated urban markets that have been most-affected by the pandemic, our postpaid gross additions, equipment revenue, and cost of goods sold decreased as stay-at-home directives led to the temporary closure of approximately 40% of our Sprint-branded retail stores in mid-March.

Our wireless and broadband internet services are essential during a time of social distancing. Nonetheless, national unemployment rates increased markedly in April. Sprint also adopted the Keep Americans Connected pledge and T-Mobile chose to change subscriber collection policies following its April 1, 2020 acquisition of Sprint. It is reasonably possible that these risks and uncertainties could impact the collectability of our accounts receivable and revenue. It is also reasonably possible that they could impact the measurement of our wireless segment’s contract asset, which is reduced by an estimated refund obligation for amounts that T-Mobile is later unable to collect from its subscribers. We update that estimate based upon trends in our refund experience. To-date, our collection experience and expected credit losses have not been materially affected. We will continue to monitor the impacts of this unprecedented pandemic and will prospectively revise our estimates as appropriate.

We do not currently anticipate any material impairments of our long-lived assets or of our indefinite-lived intangible assets as a result of COVID-19.

Revision of Prior Period Financial Statements

In connection with the preparation of our unaudited condensed consolidated financial statements for the three months ended March 31, 2020, we determined that certain errors existed in our previously issued financial statements. Specifically:

Prepaid and other assets, as of December 31, 2019, were understated by $2.7 million, deferred tax liabilities were understated by $0.7 million, and retained earnings were understated by $2.0 million as the result of a failure to properly account for handsets that were utilized as demo phones in certain wireless retail stores within our area of operation. All of the impact to retained earnings is attributable to 2017 and prior years.

Property, plant and equipment, net, and deferred income tax liabilities as of December 31, 2019 were understated by $1.4 million and $0.4 million, respectively. Depreciation expense was overstated by $1.4 million for the year and quarter ended

December 31, 2019. Income tax expense and net income were understated by $0.4 million and $1.0 million, respectively, for the year and quarter ended December 31, 2019.

We evaluated these errors under the U.S. Securities and Exchange Commission's ("SEC's") authoritative guidance on materiality and the quantification of the effect of prior period misstatements on financial statements, and we have determined that the impact of these errors on our prior period consolidated financial statements is immaterial. However, since the correction of these errors in the first quarter of 2020 could have become material to our results of operations for the year ending December 31, 2020, we revised our prior period financial statements to correct these errors herein. For the year and quarter ended December 31, 2019, the correction of these errors resulted in a $0.02 increase in both basic and diluted earnings per share.

Adoption of New Accounting Principles

There have been no developments related to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company's unaudited condensed consolidated financial statements and note disclosures, from those disclosed in the Company's ~~2018~~2019 Annual Report on Form 10-K, that would be expected to impact the Company except for the following:

The Company adopted ASU No. ~~2018-02,~~2016-13, ~~Income Statement~~Financial Instruments - ~~Reporting Comprehensive Income (Topic 220),~~Credit Losses ("ASC 326"): Measurement of Credit Losses on Financial Instruments, as of January 1, ~~2019. The Company elected not~~2020 using the modified retrospective transition method. ASC 326 requires the application of a current expected credit loss (“CECL”) impairment model to ~~reclassify stranded income tax effects from accumulated other comprehensive income (OCI)~~financial assets measured at amortized cost including trade accounts receivable, net investments in leases, and certain off-balance-sheet credit exposures. Under the CECL model, lifetime expected credit losses on such financial assets are measured and recognized at each reporting date based on historical, current, and forecasted information. Furthermore, the CECL model requires financial assets with similar risk characteristics to ~~retained earnings and has implemented this election as its accounting policy as of January 1, 2019. The Company utilizes the portfolio approach as its policy~~be analyzed on a collective basis. There was no significant impact to ~~release the income tax effects from accumulated OCI as the entire portfolio is liquidated, sold, or extinguished.~~condensed consolidated financial statements upon adoption.

The Company adopted ASU No. ~~2016-02,~~2018-15, ~~Leases~~Intangibles - (“~~Topic 842~~Goodwill and Other - Internal-Use Software ("ASC 350"): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract,~~” or “the new lease standard”) on~~ as of January 1, ~~2019. Topic 842 replaces previous leasing guidance~~2020. ASC 350 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with ~~a comprehensive lease measurement~~the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Upon adoption of the standard, implementation costs were capitalized in the period incurred and ~~recognition standard and expanded disclosure requirements. Topic 842 requires lessees~~will be amortized over the term of the hosting arrangement. There was no significant impact to recognize most leases on their balance sheet as liabilities, with corresponding right-of-use, or ROU assets. The Company adopted the new lease standard utilizing the modified retrospective approach. As a result, comparable period information has not been retrospectively updated. The modified retrospective approach includes a package of optional practical expedients that we elected to apply. As a result, the Company did not reassess prior conclusions regarding lease identification, lease classification and initial direct costs under the new standard. In those circumstances where the Company is the lessee, we have elected to account for non-lease components associated with our leases (e.g., maintenance costs) and lease components as a single lease component for substantially all of our asset classes under Topic 842. condensed consolidated financial statements upon adoption.

~~Note 2~~. ~~Leases~~

The Company leases various cell sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments, such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company's incremental borrowing rate in order to measure the lease liability and ROU asset.

The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. Under the new lease standard, leases are remeasured upon the occurrence of certain events or modifications.

~~Adoption of the new lease standard did not materially impact the Company's consolidated net earnings, cash flows, liquidity, or loan covenants.~~

~~Index~~

~~The cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of the new lease standard were as follows:~~

(in thousands)
December 31, 2018 As Previously Reported
Effect of the Adoption of ASC Topic 842 (Leases)
January 1, 2019 As Adjusted
Assets
Prepaid expenses and other $ 60,162
$ (11,580 ) $ 48,582
Property, plant and equipment, net 701,359
1,789
703,148
Operating lease right-of-use assets —
369,344
369,344
Intangible assets, net 366,029
(13,828 ) 352,201
Liabilities
Current operating lease liabilities —
38,773
38,773
Accrued liabilities and other 14,563
(412 ) 14,151
Deferred Lease 22,436
(22,436 ) —
Noncurrent operating lease liabilities —
328,156
328,156
Other liabilities 14,364
1,644
16,008

In addition to recognizing the operating lease liabilities and right-of-use assets, Topic 842 also reclassified prepaid and deferred rent balances, off-market leases, and lease incentives into the right-of-use assets.

~~The following table shows the components of lease income and costs:~~

(in thousands) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Lease income from operating leases - fixed $ 2,042
$ 4,070

Operating lease expense 16,752
33,660

Amortization of finance lease assets 123
241
Interest on finance lease liabilities 23
45
Subtotal finance lease cost 146
286

Total lease expense $ 16,898
$ 33,946

~~Substantially all of the Company's sublease income from operating leases relates to fixed lease payments.~~

All operating lease expenses, including short-term and variable lease expenses, are split between cost of service and selling, general and administrative expense in the condensed consolidated statements of operations based on the use of the facility that the rent is being paid on. Operating lease expense includes variable lease payments and short-term lease expense, both of which are immaterial. Variable lease expenses represent payments that are dependent on a rate or index, or on usage of the asset.

~~The following table summarizes other information related to operating and finance leases:~~

(in thousands) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019

Operating cash flows used by leases $ 15,873
$ 30,544
Leased assets obtained in exchange for new operating lease liabilities 21,172
25,760

~~Index~~

~~The following table summarizes the lease terms and discount rates:~~



	June 30, 2019
~~Weighted-average remaining lease term~~ ~~(years)~~
~~Operating leases~~	8
~~Finance leases~~	16
~~Weighted-average discount rate~~
~~Operating leases~~	~~4.8~~	%
~~Finance leases~~	~~5.2~~	%

~~The following table summarizes the expected maturity of lease liabilities at June 30, 2019:~~

(in thousands) Operating Leases Finance Leases Total
2019 $ 27,397
$ 92
$ 27,489
2020 62,536
174
62,710
2021 61,151
174
61,325
2022 58,134
174
58,308
2023 54,491
174
54,665
2024 and thereafter 184,800
1,699
186,499
Total lease payments 448,509
2,487
450,996
Less: Interest 77,700
771
78,471
Present value of lease liabilities $ 370,809
$ 1,716
$ 372,525

The Company's finance lease liabilities are presented in the accrued liabilities and other and the other liabilities lines of the unaudited condensed consolidated balance sheets. The related finance lease assets are included in the property, plant and equipment line.

Our commitments under leases existing as of December 31, 2018 were approximately $55.1 million for the year ending December 31, 2019, $104.4 million in total for the years ending December 31, 2020 and 2021, $97.6 million in total for the years ending December 31, 2022 and 2023 and $168.5 million in total for years thereafter.

The Company is also the lessor on agreements to lease assets such as collocation space at cell sites and dedicated fiber-optic strands to third parties. These agreements were accounted for as operating leases both before and after adoption of the new lease standard. The new lease standard did not have a significant impact on the recognition of lease revenue associated with these agreements. The following table summarizes the total minimum rental receipts under lease agreements at June 30, 2019:

(in thousands) Operating Leases
2019 $ 3,635
2020 6,453
2021 4,377
2022 3,280
2023 1,653
2024 and thereafter 4,520
Total lease income $ 23,918

Note 32. Revenue from Contracts with Customers

The Company earns revenue primarily through the sale of its wireless service. Additional revenue is earned from the sale of wireless equipment; from business, residential and enterprise services which provide video, broadband, voice and data services; and from tower and other services. Refer to Note ~~14,~~13, Segment Reporting, for a ~~tabular~~ summary of our revenue streams, which are discussed further below.

Wireless Segment Revenue

~~Index~~

services provided after that date until a new prospective fee can be agreed. We have triggered the final dispute resolution option with Sprint which we expect will lead to a resolution for travel fee revenue in the second quarter of 2020.

Below is a summary of the Wireless ~~service~~

The Company earns revenue primarily through the sale of its wireless service by providing network access to Sprint under the affiliate agreement. Wireless service revenue is variable based on billed revenue to Sprint’s subscribers that originated in the Company's affiliate area, less applicable fees retained by Sprint.

The Company's revenue related to Sprint’s postpaid customers is the amount that Sprint bills its postpaid subscribers, reduced by customer credits, write-offs of receivables, and 8% management and 8.6% service fees. The Company is also charged for the costs of subsidized handsets sold through Sprint’s national channels as well as commissions paid by Sprint to third-party resellers in the Company's service territory.

The Company's revenue related to Sprint’s prepaid customers is the amount that Sprint bills its prepaid subscribers, reduced by costs to acquire and support the customers, based on national averages for Sprint’s prepaid programs, and a 6% management fee.

The Company considers Sprint, rather than Sprint's subscribers, to be the customer and the Company's performance obligation is to provide Sprint a series of continuous network access services within the Sprint Affiliate Area. The Company determined that reimbursements to Sprint including the cost of prepaid handsets and commissions, and postpaid commissions paid by Sprint to third-party resellers, represent consideration payable to a customer. These reimbursements are initially recorded as asegment's contract ~~asset and are subsequently recognized as a reduction of revenue over the expected benefit period between 21 and 53 months. Contract asset balances and activity for 2019 were as follows:~~asset:

(in millions) Three Months Ended
June 30, 2019 Six Months Ended
June 30, 2019
Beginning balance $ 70.4
$ 65.7
Contract payments 17.5
35.7
Contract amortization (14.1 ) (27.6 )
Ending balance $ 73.8
$ 73.8



	Three Months Ended March 31,
(in thousands)	2020			2019
Beginning Balance	$	84,663		$	65,674
Contract payments	18,245			18,151
Contract amortization against revenue	(16,710		)	(13,454		)
Ending Balance	$	86,198		$	70,371

Our Wireless ~~equipment~~

~~The Company also earns revenue through the sale of wireless equipment. The Company owns and operates Sprint-branded retail stores within the~~contract asset is reduced by an estimated obligation to refund amounts that Sprint ~~Affiliate Area~~is later unable to collect from which the Company sells equipment, primarily wireless handsets, and service to Sprint subscribers. The Company's equipment is predominantly sold to subscribers through Sprint's equipment financing plans. Under the equipment financing plans, Sprint purchases the equipment from the Company and resells the equipment to its subscribers. ~~The Company~~This refund obligation totaled $7.0 million at both March 31, 2020 and December 31, 2019.

Broadband Segment Revenue

Below is ~~the principal in these equipment financing transactions, as it controls and bears the risk of ownership~~a summary of the ~~inventory prior to sale, and accordingly, revenue and handset costs are recorded on a gross basis, and the corresponding cost of the equipment is recorded separately to cost of goods sold.~~

~~Business, residential and enterprise~~

The Company also earns revenue in the Cable and Wireline segments from the sale of business, residential, and enterprise services to customers where the performance obligations are to provide cable, broadband, and telephone network services, sell and lease equipment and wiring services, and lease fiber-optic cable. The Company's arrangements for residential services are generally composed of contracts that are cancellable at the customer’s discretion without penalty at any time. As there are multiple performance obligations in these arrangements, the Company recognizes revenue based on the standalone selling price of each distinct good or service. The Company generally recognizes this revenue over time as customers simultaneously receive and consume the benefits of the service, with the exception of equipment sales and home wiring which are recognized as revenue at a point in time when control transfers and when installation is complete, respectively.

~~Installation fees are allocated to services and are recognized ratably over the longer of the~~Broadband segment's capitalized contract term or the period the unrecognized portion of the fee remains material to the contract, typically 10 and 11 months for Cable and Wireline customers, respectively. Additionally, the Company incurs commission and installation costs related to in-house employees and third-party vendors which are capitalized and amortized over the expected benefit period which is approximately 44 months and 72 ~~months for Cable and Wireline, respectively.~~

~~Tower and Other~~

~~The Company also earns revenue from tower and other services. Tower revenue consists primarily of tower collocation space on cell towers owned by the Company accounted for under Topic 842,~~ ~~Leases.~~ ~~Other revenue includes network access-related charges for service provided to customers across the segments.~~

acquisition costs:



	Three Months Ended March 31,
(in thousands)	2020			2019
Beginning Balance	$	11,005		$	10,091
Contract payments	1,685			1,699
Contract amortization	(1,027		)	(1,381		)
Ending Balance	$	11,663		$	10,409

~~Index~~

Future performance obligations

On ~~June 30, 2019,~~March 31, 2020, the Company had approximately ~~$3.4~~$3.2 million allocated to unsatisfied performance obligations ~~which excludes contracts with original expected duration of one year or less. The following table summarizes the approximate amounts expected to~~that will be ~~recognized as revenue after June 30, 2019.~~

Amount Expected to be Recognized as Revenue:
(in millions)
2019 $ 0.4
2020 0.7
2021 0.7
2022 and thereafter 1.6
Total $ 3.4

~~Contract acquisition costs and costs to fulfill contracts~~

Capitalized contract costs represent contract fulfillment costs and contract acquisition costs which include commissions and installation costs in our Cable and Wireline segments. Capitalized contract costs are amortized on a straight-line basis over the average customer life. The Company elected to apply the practical expedient to expense contract acquisition costs when incurred, if the amortization period would be twelve months or less. The amortization of these costs is included in cost of services, and selling, general and administrative expenses. Amortized and capitalized costs for Cable and Wireline contracts were as follows:

(in millions) Three Months Ended
June 30, 2019 Six Months Ended
June 30, 2019
Beginning Balance $ 10.4
$ 10.1
Contract payments 1.5
3.2
Contract amortization (1.4 ) (2.8 )
Ending Balance $ 10.5
$ 10.5

~~Note 4~~. ~~Acquisitions~~

~~Big Sandy~~

On February 28, 2019, the Company completed its preliminary valuation for the acquisition of the assets of Big Sandy Broadband, Inc. ("Big Sandy") for $10 million and recorded $4.6 million of property, plant and equipment; $2.8 million of subscriber relationships; and $2.6 million of goodwill which is reported in the Cable segment and was accounted for as a business combination under ASC 805, ~~Business Combinations. The estimated remaining useful lives of the acquired property, plant and equipment were approximately 2.5 years to 12.5 years and the estimated useful lives for subscriber relationships were 7 years~~satisfied at the ~~time~~rate of the acquisition. Big Sandy was a provider of cable television, telephone and high speed internet services. Our preliminary allocation of the acquisition price is based on our preliminary estimate of fair value for each of the acquired assets and liabilities. These estimates may be revised during the one year measurement period provided by the authoritative guidance applicable to business combinations.approximately $0.8 million per year.

Note ~~5. Customer Concentration~~3. Investments

~~Significant Contractual Relationship~~

In 1999, the Company executed a Management Agreement (the “Agreement”) with Sprint whereby the Company committed to construct and operate a PCS network using CDMA air interface technology. The Agreement has been amended numerous times. Under the amended Agreement, the Company is the exclusive PCS Affiliate of Sprint providing wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz spectrum ranges in its territory across a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio. Effective February 1, 2018, the Company amended its Agreement with Sprint to expand its wireless service area to include certain areas in Kentucky, Pennsylvania, Virginia and West Virginia.

~~Index~~

As an exclusive PCS Affiliate of Sprint, the Company has the exclusive right to build, own and maintain its portion of Sprint’s nationwide PCS network, in the aforementioned areas, to Sprint’s specifications. The initial termInvestments consist of the Agreement extends through November 2029, with two successive 10-year renewal periods, unless terminated by either party under provisions outlined in the Agreement. Upon non-renewal by either party, the Company may cause Sprint to buy or Sprint may cause the Company to sell the business, at 90% of Entire Business Value ("EBV") as defined in the Agreement. EBV is defined as i) the fair market value of a going concern paid by a willing buyer to a willing seller; ii) valued as if the business will continue to utilize existing brands and operate under existing agreements; and, iii) valued as if Shentel has continued access to the spectrum. Determination of EBV is made by an independent appraisal process.

~~Note 6. Earnings Per Share ("EPS")~~

Basic EPS was computed by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS was computed under the treasury stock method by dividing net income by the sum of the weighted average number of shares of common stock outstanding and potentially dilutive securities outstanding during the period under the treasury stock method. Potentially dilutive securities include unvested equity awards that are expected to vest and shares that the Company is contractually obligated to issue in the future.

~~The following table indicates the computation of basic and diluted earnings per share:~~following:

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands, except per share amounts) 2019 2018 2019 2018
Calculation of net income per share:
Net income $ 13,150
$ 9,626
$ 27,060
$ 16,209
Basic weighted average shares outstanding 49,848
49,547
49,812
49,511
Basic net income per share $ 0.26
$ 0.19
$ 0.54
$ 0.33

Effect of stock options outstanding:
Basic weighted average shares outstanding 49,848
49,547
49,812
49,511
Effect from dilutive shares and options outstanding 294
523
306
518
Diluted weighted average shares outstanding 50,142
50,070
50,118
50,029
Diluted net income per share $ 0.26
$ 0.19
$ 0.54
$ 0.32



(in thousands)	March 31, 2020		December 31, 2019
SERP Investments at fair value	$	1,706	$	2,278
Cost method investments	9,739		9,497
Equity method investments	566		613
Total investments	$	12,011	$	12,388

SERP Investments at fair value: The ~~computation~~Supplemental Executive Retirement Plan (“SERP”) is a benefit plan that provides deferred compensation to certain employees. The Company holds the related investments in a rabbi trust as a source of ~~diluted EPS does not include certain unvested awards, on a weighted average basis, because their inclusion would have an anti-dilutive effect on EPS.~~funding for future payments under the plan. The ~~awards excluded because~~SERP’s investments were designated as trading securities and will be liquidated and paid out to the participants upon retirement. The benefit obligation to participants is always equal to the value of ~~their anti-dilutive effect were as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands) 2019 2018 2019 2018
Awards excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive 85
23
108
115

the SERP assets under ASC 710

~~Index~~

~~Note 7~~Compensation. ~~Investments~~Changes to the investments fair value are presented in Other income (expense), while the reciprocal changes in the liability are presented in selling, general and administrative expense.

~~Investments consist~~Cost Method Investments: Our investment in CoBank’s Class A common stock represented substantially all of our cost method investments with a balance of $9.0 million and $8.7 million at March 31, 2020 and December 31, 2019, respectively. We recognized approximately $1.0 million and $0.9 million of patronage income in Other income (expense) in the three months ended March 31, 2020 and 2019, respectively. Historically, approximately 75% of the ~~following:~~

(in thousands) June 30,
2019 December 31,
2018
Domestic equity funds $ 1,690
$ 1,409
International equity funds 417
370
Total investments carried at fair value 2,107
1,779

CoBank 8,147
7,705
Equity in other telecommunications partners 777
782
Total investments carried at cost 8,924
8,487

Other 532
522
Total equity method investments 532
522

Total investments $ 11,563
$ 10,788

patronage distributions were in cash and 25% in equity.

Equity Method Investments: At March 31, 2020, the Company had a 20.0% ownership interest in Valley Network Partnership (“ValleyNet”). The Company ~~determines classification~~and ValleyNet purchase capacity on one another’s fiber network. We recognized revenue of $0.2 million from providing service to ValleyNet during both of the three months ended March 31, 2020 and 2019. We recognized cost of service of $0.8 million and $0.7 million for ~~investments at~~ the ~~date individual investments are acquired. The appropriateness~~use of ~~such classification is periodically reassessed. The Company monitors~~ValleyNet’s network during both of the ~~value of all investments,~~three months ended March 31, 2020 and based on factors such as market conditions, financial information and industry conditions, the Company reflects impairments in values when warranted. The domestic and international equity funds are carried at their fair value as determined by using the net asset value expedient.2019, respectively.

Note 8. 4. Property, Plant and Equipment

Property, plant and equipment consisted of the following:


(in thousands)	Estimated Useful Lives	June 30, 2019		December 31, 2018
($ in thousands)						Estimated Useful Lives				March 31, 2020		December 31, 2019
Land		$	6,936	$	6,723					$	7,143	$	6,976
Buildings and structures	10 - 40 years	227,825		213,657		10	-	40	years	238,728		232,730
Cable and fiber	4 - 40 years	319,750		309,928		15	-	40	years	348,658		334,260
Equipment and software	2 - 17 years	813,393		791,401		3	-	20	years	870,089		867,898
Plant in service		1,367,904		1,321,709						1,464,618		1,441,864
Plant under construction		81,191		81,409						59,097		56,827
Total property, plant and equipment		1,449,095		1,403,118						1,523,715		1,498,691
Less: accumulated amortization and depreciation		753,370		701,759						827,795		797,177
Property, plant and equipment, net		$	695,725	$	701,359					$	695,920	$	701,514

Note 9. 5. Goodwill and ~~Other~~ Intangible Assets

~~Goodwill by segment consisted of the following:~~

(in thousands) June 30,
2019 December 31, 2018
Wireless $ 146,383
$ 146,383
Cable 2,677
104
Wireline 10
10
Total Goodwill $ 149,070
$ 146,497

There were no changes to goodwill during the three months ended March 31, 2020.

~~Index~~

~~Intangible~~Other intangible assets consisted of the following:


	June 30, 2019							December 31, 2018							March 31, 2020							December 31, 2019
(in thousands)	Gross Carrying Amount		Accumulated Amortization and Other			Net		Gross Carrying Amount		Accumulated Amortization and Other			Net		Gross Carrying Amount		Accumulated Amortization and Other			Net		Gross Carrying Amount		Accumulated Amortization and Other			Net
Non-amortizing intangibles:
Indefinite-lived intangibles:
Cable franchise rights	$	64,334	$	—		$	64,334	$	64,334	$	—		$	64,334	$	64,334	$	—		$	64,334	$	64,334	$	—		$	64,334
FCC spectrum licenses															13,839		—			13,839		13,839		—			13,839
Railroad crossing rights	141		—			141		141		—			141		141		—			141		141		—			141
Total non-amortizing intangibles	64,475		—			64,475		64,475		—			64,475
Total indefinite-lived intangibles															78,314		—			78,314		78,314		—			78,314

Finite-lived intangibles:	Finite-lived intangibles:
Sprint affiliate contract expansion - Wireless	455,305		(197,783		)	257,522		455,305		(167,830		)	287,475		455,305		(241,231		)	214,074		455,305		(226,712		)	228,593
Favorable leases - Wireless	—		—			—		15,743		(1,919		)	13,824
FCC spectrum licenses															4,659		(160		)	4,499		4,659		(97		)	4,562
Acquired subscribers - Cable	28,065		(25,399		)	2,666		25,265		(25,250		)	15		28,065		(25,700		)	2,365		28,065		(25,600		)	2,465
Other intangibles	463		(236		)	227		463		(223		)	240		463		(257		)	206		463		(250		)	213
Total finite-lived intangibles	483,833		(223,418		)	260,415		496,776		(195,222		)	301,554		488,492		(267,348		)	221,144		488,492		(252,659		)	235,833
Total intangible assets	$	548,308	$	(223,418	)	$	324,890	$	561,251	$	(195,222	)	$	366,029	$	566,806	$	(267,348	)	$	299,458	$	566,806	$	(252,659	)	$	314,147

We acquired Big Sandy Broadband, Inc. (“Big Sandy”) on February 28, 2019. The $10 million acquisition price was allocated as follows within our broadband segment: $4.6 million of property, plant and equipment; $2.8 million of subscriber relationships; and $2.6 million of goodwill.

In 2016, we acquired nTelos Holdings Corp. and immediately transferred certain of the acquired assets to Sprint in an interrelated nonmonetary exchange. In the exchange, we received a corresponding expansion of our Sprint Affiliate Area, future billings associated with Sprint subscribers already in that expanded area, and an increase in the price that Sprint would pay to buy our Wireless asset group in the event that either party chooses not to renew the affiliate agreement. Sprint also agreed to waive up to $4.2 million of our monthly management fee, not to exceed $255.6 million in total, over a multi-year period. We accounted for these collective rights as an affiliate contract expansion (“ACE”) intangible, which is amortized over the expected benefit period and is further reduced ~~by the amount of waived~~as management fees ~~received from Sprint which were $9.7~~are waived by Sprint. We realized management fee waivers of $9.8 million and ~~$19.3~~

$9.6 million ~~for~~ during the three ~~and six~~ months ended ~~June 30,~~ March 31, 2020 and 2019 ~~respectively. Since May 6, 2016,~~, respectively, and $147.0 million since the date of the ~~non-monetary exchange, waived management fees received from~~business combination.

During 2017 and 2018, we entered into purchase agreements with Sprint ~~have totaled $117.7~~to further expand our affiliate territory to include areas around Parkersburg, West Virginia, and Richmond, Virginia, respectively. The relevant portion of these payments were also capitalized as ACE intangible assets.

Amounts paid in connection with the acquisition of a business are presented as amortization expense in our income statement. Amounts paid to Sprint outside of a business combination are accounted for as consideration paid to a customer with amortization presented as a reduction of Service and other revenue in our unaudited condensed consolidated statements of comprehensive income.

Amortization of intangible assets was $4.9 million and ~~we expect to collect another $137.9~~$5.7 million ~~through 2022.~~ for the three months ended March 31, 2020 and 2019, respectively.

Note 106. Other Assets and Accrued Liabilities

Prepaid expenses and other, classified as current assets, included the following:



(in thousands)	March 31, 2020		December 31, 2019
Wireless contract asset	$	46,552	$	44,844
Broadband contract acquisition and fulfillment costs	4,029		4,898
Prepaid maintenance expenses	3,252		3,329
Interest rate swaps	—		1,382
Other	7,090		6,074
Prepaid expenses and other	$	60,923	$	60,527

Deferred charges and other assets, classified as long-term assets, included the following:



(in thousands)	March 31, 2020		December 31, 2019
Wireless contract asset	$	39,646	$	39,819
Broadband contract acquisition and fulfillment costs	7,634		6,107
Interest rate swaps	—		1,252
Prepaid expenses and other	6,156		6,174
Deferred charges and other assets	$	53,436	$	53,352

Accrued liabilities and other, classified as current liabilities, included the following:



(in thousands)	March 31, 2020		December 31, 2019
Sales and property taxes payable	$	5,259	$	3,789
Accrued programming costs	3,053		3,023
Interest rate swaps	2,731		—
Asset retirement obligations	137		148
Financing leases	97		94
FCC spectrum license obligations	28		105
Other current liabilities	7,878		7,232
Accrued liabilities and other	$	19,183	$	14,391

Other liabilities, classified as long-term liabilities, included the following:



(in thousands)	March 31, 2020		December 31, 2019
Noncurrent portion of deferred lease revenue	$	12,291	$	12,449
FCC spectrum license obligations	1,703		1,699
Noncurrent portion of financing leases	1,543		1,591
Interest rate swaps	2,769		—
Other	847		1,251
Other liabilities	$	19,153	$	16,990

Market expectations of the projected London Interbank Offering Rate (LIBOR) decreased significantly during the first quarter of 2020, which drove the fair value of our interest rate swaps to a liability. Refer to Note 9, Derivatives and Hedging for more information.

~~The Company uses derivative financial instruments to manage its exposure to~~

Note 7. Leases

At March 31, 2020, our operating leases had a weighted average remaining lease term of nine years and a weighted average discount rate of 4.3%. Our finance leases had a weighted average remaining lease term of fifteen years and a weighted average discount rate of 5.1%.

During the three months ended March 31, 2020 and 2019, we recognized $17.8 million and $16.9 million of operating lease expense, respectively. We recognized $0.1 million of interest ~~rate risk for its long-term variable-rate debt through interest rate swaps. The Company's interest rate swaps are all designated as cash flow hedges,~~ and ~~involve~~depreciation expense on finance leases during the ~~receipt~~three months ended March 31, 2020 and 2019. Operating lease expense is presented in cost of ~~variable-rate amounts from counterparties~~service or selling, general and administrative expense based on the use of the relevant facility. Variable lease payments and short-term lease expense were both immaterial. We remitted $15.5 million and $14.7 million of operating lease payments during the three months ended March 31, 2020 and 2019, respectively. We also obtained $3.3 million and $4.6 million of leased assets in exchange for new operating lease liabilities during the ~~Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.~~

~~The outstanding notional amounts of the cash flow hedge which is composed of interest rate swap contracts were $361.9 million~~three months ended March 31, 2020 and ~~$384.0 million as of June 30,~~ 2019, ~~and December 31, 2018,~~ respectively.

The following table ~~below presents~~summarizes the ~~fair value~~expected maturity of the Company’s derivative financial instruments as well as their classification in the condensed consolidated balance sheets. The fair value of these instruments was estimated using an income approach and observable market inputs (Level II):

lease liabilities at March 31, 2020:

(in thousands) June 30,
2019 December 31,
2018
Balance sheet location of derivative financial instruments:
Prepaid expenses and other $ 2,275
$ 4,930
Deferred charges and other assets, net 1,733
8,323
Total derivatives designated as hedging instruments $ 4,008
$ 13,253



(in thousands)	Operating Leases		Finance Leases		Total
2020	$	45,222	$	108	$	45,330
2021	66,042		174		66,216
2022	64,256		174		64,430
2023	60,770		174		60,944
2024	56,105		174		56,279
2025 and thereafter	191,726		1,532		193,258
Total lease payments	484,121		2,336		486,457
Less: Interest	96,194		696		96,890
Present value of lease liabilities	$	387,927	$	1,640	$	389,567

We recognized $2.1 million and $2.0 million of operating lease revenue during the three months ended March 31, 2020 and 2019, respectively, related to the cell site colocation space and dedicated fiber optic strands that we lease to our customers, which is included in Service and other revenue in the unaudited condensed consolidated statements of comprehensive income. Substantially all of our lease revenue relates to fixed lease payments.

Below is a summary of our minimum rental receipts under the lease agreements in place at March 31, 2020:



(in thousands)	Operating Leases
2020	$	5,527
2021	5,775
2022	4,742
2023	3,112
2024	1,915
2025 and thereafter	4,192
Total	$	25,263

Note 8. Long-Term Debt

Our syndicated Credit Agreement includes a $75 million, five-year undrawn revolving credit facility, as well as the following outstanding term loans:



(in thousands)	March 31, 2020		December 31, 2019
Term loan A-1	$	251,288	$	258,571
Term loan A-2	472,221		473,469
	723,509		732,040
Less: unamortized loan fees	11,306		11,926
Total debt, net of unamortized loan fees	$	712,203	$	720,114

Term Loan A-1 bears interest at one-month LIBOR plus a margin of 1.50%, while Term Loan A-2 bears interest at one-month LIBOR plus a margin of 1.75%. LIBOR resets monthly. Our cash payments for interest were $5.8 million and $7.2 million during the three months ended March 31, 2020 and 2019, respectively.

As shown below, as of March 31, 2020, the Company was in compliance with the financial covenants in its credit agreements.

~~Index~~

~~The table below summarizes changes in accumulated other comprehensive income (loss) by component:~~

Six Months Ended June 30, 2019
(in thousands) Gains (Losses) on
Cash Flow
Hedges Income Tax
(Expense)
Benefit Accumulated
Other
Comprehensive
Income (Loss), net of taxes
Balance as of December 31, 2018 $ 13,253
$ (4,973 ) $ 8,280
Net change in unrealized gain (loss) (6,771 ) 1,688
(5,083 )
Amounts reclassified from accumulated other comprehensive income to interest expense (2,474 ) 617
(1,857 )
Net current period other comprehensive income (loss) (9,245 ) 2,305
(6,940 )
Balance as of June 30, 2019 $ 4,008
$ (2,668 ) $ 1,340



	Actual		Covenant Requirement
Total leverage ratio	2.41		3.25	or Lower
Debt service coverage ratio	5.48		2.00	or Higher
Minimum liquidity balance (in millions)	$	195.0	$25.0	or Higher

Note ~~11. Other Assets~~9. Derivatives and ~~Accrued Liabilities~~Hedging

~~Prepaid expenses~~The Company's interest rate swaps are pay-fixed (1.16%), receive-variable (one month LIBOR) that hedged approximately 45.4% of outstanding debt with outstanding notional amounts totaling $328.7 and ~~other, classified~~$339.8 million March 31, 2020 and December 31, 2019, respectively.

The fair value of these instruments was estimated using an income approach and observable market inputs. The hedge was determined to be highly effective and therefore all of the change in its fair value was recognized through Other comprehensive income. During the three months ended March 31, 2020 the fair market value decreased by $8.1 million due to a decline in the one month LIBOR. They were presented as ~~current assets, included the following:~~follows:

(in thousands) June 30,
2019 December 31, 2018
Prepaid rent $ —
$ 11,245
Prepaid maintenance expenses 3,499
3,981
Interest rate swaps 2,275
4,930
Contract asset 43,879
37,957
Other 4,133
2,049
Prepaid expenses and other $ 53,786
$ 60,162



(in thousands)	March 31, 2020		December 31, 2019
Balance sheet location of derivative financial instruments:
Prepaid expenses and other	$	—	$	1,382
Deferred charges and other assets, net	—		1,252
Accrued liabilities and other	2,731		—
Other liabilities	2,769		—
Total derivatives designated as hedging instruments	$	5,500	$	2,634

~~Deferred charges and~~The table below summarizes changes in accumulated other ~~assets, classified as long-term assets, included the following:~~comprehensive income (loss) by component:

(in thousands) June 30,
2019 December 31, 2018
Interest rate swaps $ 1,733
$ 8,323
Contract asset 40,438
37,848
Other 6,758
3,720
Deferred charges and other assets $ 48,929
$ 49,891



(in thousands)	Gains (Losses) on Cash Flow Hedges			Income Tax (Expense) Benefit			Accumulated Other Comprehensive Income (Loss), net of taxes
Balance as of December 31, 2019	$	2,634		$	(2,326	)	$	308
Net change in unrealized gain (loss)	(7,706		)	1,921			(5,785		)
Amounts reclassified from accumulated other comprehensive income (loss) to interest expense	(428		)	107			(321		)
Net current period other comprehensive income (loss)	(8,134		)	2,028			(6,106		)
Balance as of March 31, 2020	$	(5,500	)	$	(298	)	$	(5,798	)

~~Accrued liabilities and other, classified as current liabilities, included the following:~~

(in thousands) June 30,
2019 December 31, 2018
Sales and property taxes payable $ 5,171
$ 4,281
Asset retirement obligations 478
582
Accrued programming costs 3,021
2,886
Financing leases 88
—
Other current liabilities 5,755
6,814
Accrued liabilities and other $ 14,513
$ 14,563

~~Index~~

~~Other liabilities, classified as long-term liabilities, included the following:~~

(in thousands) June 30,
2019 December 31, 2018
Noncurrent portion of deferred lease revenue $ 12,327
$ 12,593
Noncurrent portion of financing leases 1,629
—
Other 1,603
1,771
Other liabilities $ 15,559
$ 14,364

Topic 842 requires the Company to include fixed payments for maintenance activities in its measurement of lease liabilities since the Company elected not to separate lease and non-lease components. Liabilities for the Company's financing leases were established with the adoption of Topic 842, as of January 1, 2019, to reflect the present value of fixed payments for maintenance activities. Refer to Note 2, ~~Leases, for additional information.~~

Note 1210. ~~Long-Term Debt~~

~~Total debt consisted of the following:~~

(in thousands) June 30,
2019 December 31, 2018
Term loan A-1 $ 274,919
$ 287,699
Term loan A-2 485,540
497,537
760,459
785,236
Less: unamortized loan fees 13,453
14,994
Total debt, net of unamortized loan fees $ 747,006
$ 770,242

Current maturities of long-term debt, net of current unamortized loan fees $ 27,939
$ 20,618
Long-term debt, less current maturities, net of unamortized loan fees $ 719,067
$ 749,624

As of June 30, 2019, the Company's indebtedness totaled approximately $747.0 million, net of unamortized loan fees of $13.5 million, with an annualized overall weighted average interest rate of approximately 3.79%. As of June 30, 2019, the Term Loan A-1 bears interest at one-month London Interbank Offered Rate ("LIBOR") plus a base rate of 1.75%, while the Term Loan A-2 bears interest at one-month LIBOR plus a base rate of 2.00%. LIBOR resets monthly.

The amended Term Loan A-1 requires quarterly principal repayments of $3.6 million, which began on December 31, 2018 and continue through September 30, 2019, increasing to $7.3 million quarterly from December 31, 2019 through September 30, 2022; then increasing to $10.9 million quarterly from December 31, 2022 through September 30, 2023, with the remaining balance due November 8, 2023. The amended Term Loan A-2 requires quarterly principal repayments of $1.2 million which began on December 31, 2018 and continue through September 30, 2025, with the remaining balance due November 8, 2025. In addition to its required quarterly repayments, the Company paid an additional $15.0 million in the first quarter of 2019 with no prepayment penalties.

~~The Company paid cash for interest, net of amounts capitalized, of $14.5 million and $16.9 million during the six months ended June 30, 2019 and 2018, respectively.~~

~~As shown below, as of June 30, 2019, the Company was in compliance with the covenants in its credit agreement.~~

Actual Covenant Requirement
Total leverage ratio 2.41
3.50 or Lower
Debt service coverage ratio 4.61
2.00 or Higher
Minimum liquidity balance (in millions) $ 172.9
$25.0 or Higher

~~Index~~

~~Note 13.~~ Income Taxes

The Company files U.S. federal income tax returns and various state income tax returns. The Company is not subject to any state or federal income tax audits as of ~~June 30, 2019.~~March 31, 2020. The Company's returns are generally open to examination from ~~2015~~2016 forward and the net operating losses acquired in the acquisition of nTelos are open to examination from 2002 forward.

The Company’s effective tax rate for the three months ended ~~June 30, 2019~~March 31, 2020 was approximately ~~25.6%~~24.4%, as compared with approximately ~~26.8%~~23.2% for the three months ended June 30, 2018. The Company’s effective tax rate for the six months ended June 30, 2019 was approximately 24.4%, which was consistent with approximately 24.8% for the six months ended June 30, 2018. The effective tax rate has fluctuated in recent periods due to share based compensation tax benefits that are recognized as incurred. The Company paid cash income taxes of $4.2 million in the six months ended June 30,March 31, 2019. The Company ~~received~~had 0 significant cash payments or refunds for income ~~tax refunds of $3.4 million in~~taxes during the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2020 and 2019.

Note 11. Stock Compensation

During the three months ended March 31, 2020, the Company granted approximately 70 thousand restricted stock units (RSUs) to employees and approximately 14 thousand RSUs to members of the board of directors, at a market price of $48.47 per award. Under the terms of the award agreements, the RSUs granted to employees vest in fourths on the anniversary date of the grants through 2024. The RSUs granted to the members of the board of directors vest fully on the first anniversary of the grant date. Additionally, approximately 40 thousand Relative Total Shareholder Return (“RTSR”) awards were granted to employees at a value of $56.32 per award. Pursuant to the terms of the RTSR awards, the Company’s stock performance over a three-year period, ending December 31, 2022, will be compared to a group of peer companies, and the actual number of shares to be issued will be determined based upon the performance of the Company’s stock as compared with that of the peer group. The actual number of shares to be issued ranges from 0 shares (if the Company’s stock performance is in the bottom 25% of the peer group) to 150% of the awards granted (if the Company’s stock performance is in the top 25% of the peer group). The Company's stock based compensation award vesting is subject to requirements relating to continued employment with the Company through the service or performance periods, and to special vesting provisions in case of a change of control, death, disability or retirement.

We utilize the treasury stock method to calculate the impact on diluted earnings per share that potentially dilutive stock-based compensation awards have. The following table indicates the computation of basic and diluted earnings per share:



	Three Months Ended March 31,
(in thousands, except per share amounts)	2020		2019
Calculation of net income per share:
Net income	$	13,280	$	13,910
Basic weighted average shares outstanding	49,888		49,775
Basic net income per share	$	0.27	$	0.28

Effect of stock-based compensation awards outstanding:
Basic weighted average shares outstanding	49,888		49,775
Effect from dilutive shares and options outstanding	148		340
Diluted weighted average shares outstanding	50,036		50,115
Diluted net income per share	$	0.27	$	0.28

There were fewer than 125 thousand anti-dilutive awards outstanding during the three months ended March 31, 2020 and 2019.

Note 12. Commitments and Contingencies

We are committed to make payments to satisfy our lease liabilities and long-term debt. The scheduled payments under those obligations are summarized in the respective notes above. We are also committed to make annual payments of approximately $108.0 thousand on our FCC spectrum license obligation through 2039.

The Company is subject to claims and legal actions that may arise in the ordinary course of business. The Company does not believe that any of these pending claims or legal actions are either probable or reasonably possible of a material loss.

Note 1413. Segment Reporting

The Company's reportable segments, which the Company operates and manages as strategic business units that are organized according to major product and service offerings, include: Wireless, Cable, Wireline and Other. Three Months Ended March 31, 2020:



(in thousands)	Wireless		Broadband		Tower		Corporate & Eliminations			Consolidated
External revenue
Postpaid	$	74,928	$	—	$	—	$	—		$	74,928
Prepaid	13,109		—		—		—			13,109
Tower lease	—		—		1,797		—			1,797
Cable, residential and SMB (1)	—		34,943		—		—			34,943
Fiber, enterprise and wholesale	—		5,488		—		—			5,488
Rural local exchange carrier	—		4,756		—		—			4,756
Travel, installation, and other	3,351		1,816		—		—			5,167
Service revenue and other	91,388		47,003		1,797		—			140,188
Equipment	12,750		250		—		—			13,000
Total external revenue	104,138		47,253		1,797		—			153,188
Revenue from other segments	—		2,533		1,933		(4,466		)	—
Total revenue	104,138		49,786		3,730		(4,466		)	153,188
Operating expenses
Cost of services	33,439		19,243		939		(4,056		)	49,565
Cost of goods sold	12,528		143		—		—			12,671
Selling, general and administrative	9,428		9,499		526		11,538			30,991
Depreciation and amortization	25,299		10,871		470		271			36,911
Total operating expenses	80,694		39,756		1,935		7,753			130,138
Operating income (loss)	$	23,444	$	10,030	$	1,795	$	(12,219	)	$	23,050

_______________________________________________________


(1)	SMB refers to Small and Medium Businesses.

Three Months Ended March 31, 2019:



(in thousands)	Wireless		Broadband		Tower		Corporate & Eliminations			Consolidated
External revenue
Postpaid	$	76,182	$	—	$	—	$	—		$	76,182
Prepaid	13,130		—		—		—			13,130
Tower lease	—		—		1,763		—			1,763
Cable, residential and SMB	—		32,426		—		—			32,426
Fiber, enterprise and wholesale	—		4,828		—		—			4,828
Rural local exchange carrier	—		5,238		—		—			5,238
Travel, installation, and other	8,018		1,646		—		—			9,664
Service revenue and other	97,330		44,138		1,763		—			143,231
Equipment	15,291		321		—		—			15,612
Total external revenue	112,621		44,459		1,763		—			158,843
Revenue from other segments	—		2,422		1,270		(3,692		)	—
Total revenue	112,621		46,881		3,033		(3,692		)	158,843
Operating expenses
Cost of services	32,532		19,061		946		(3,021		)	49,518
Cost of goods sold	14,427		211		—		(1		)	14,637
Selling, general and administrative	11,079		7,569		283		9,791			28,722
Depreciation and amortization	30,370		9,991		680		138			41,179
Total operating expenses	88,408		36,832		1,909		6,907			134,056
Operating income (loss)	$	24,213	$	10,049	$	1,124	$	(10,599	)	$	24,787

A ~~general description~~reconciliation of the ~~products and services offered and~~total of the ~~customers served by each of these segments~~reportable segments’ operating income to consolidated income before taxes is as follows:

Wireless provides digital wireless service as a Sprint PCS Affiliate to a portion of a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio. In these areas, we are the exclusive provider of Sprint-branded wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz spectrum bands.



	Three Months Ended March 31,
(in thousands)	2020			2019
Total consolidated operating income	$	23,050		$	24,787
Interest expense	(6,211		)	(7,954		)
Other	733			1,287
Income before income taxes	$	17,572		$	18,120

Cable provides video, broadband and voice services in franchise areas in portions of Virginia, West Virginia, western Maryland, and eastern Kentucky, and leases fiber optic facilities throughout its service area. It does not include video, broadband and voice services provided to customers in Shenandoah County, Virginia.

Wireline provides regulated and unregulated voice services, video, broadband, long distance access services, and leases fiber optic facilities throughout portions of Virginia, West Virginia, Maryland and Pennsylvania.

~~Other operations are represented by Shenandoah Telecommunications Company, the parent holding company that provides investing and management services to its subsidiaries.~~

~~Three Months Ended June 30, 2019~~

(in thousands) Wireless Cable Wireline Other Eliminations Consolidated
External revenue
Service revenue $ 94,350
$ 30,716
$ 5,558
$ —
$ —
$ 130,624
Equipment revenue 16,548
255
52
—
—
16,855
Tower revenue 1,654
—
—
—
—
1,654
Other revenue 318
2,238
7,225
—
—
9,781
Total external revenue 112,870
33,209
12,835
—
—
158,914
Internal revenue 1,270
1,481
6,692
—
(9,443 ) —
Total operating revenue 114,140
34,690
19,527
—
(9,443 ) 158,914
Operating expenses
Cost of services 33,563
15,701
8,979
—
(8,746 ) 49,497
Cost of goods sold 15,742
112
19
—
1
15,874
Selling, general and administrative 10,592
5,536
1,988
9,752
(698 ) 27,170
Depreciation and amortization 32,219
6,555
3,447
132
—
42,353
Total operating expenses 92,116
27,904
14,433
9,884
(9,443 ) 134,894
Operating income (loss) $ 22,024
$ 6,786
$ 5,094
$ (9,884 ) $ —
$ 24,020

~~Index~~

~~Three Months Ended June 30, 2018~~

(in thousands) Wireless Cable Wireline Other Eliminations Consolidated
External revenue
Service revenue $ 95,690
$ 28,748
$ 5,301
$ —
$ —
$ 129,739
Equipment revenue 15,819
144
46
—
—
16,009
Tower revenue 1,636
—
—
—
—
1,636
Other revenue 364
2,122
6,631
—
—
9,117
Total external revenue 113,509
31,014
11,978
—
—
156,501
Internal revenue 1,244
1,097
7,134
—
(9,475 ) —
Total operating revenue 114,753
32,111
19,112
—
(9,475 ) 156,501
Operating expenses
Cost of services 33,488
15,125
9,373
12
(8,864 ) 49,134
Cost of goods sold 15,082
63
20
1
—
�� 15,166
Selling, general and administrative 12,367
4,661
1,686
11,812
(611 ) 29,915
Depreciation and amortization 31,565
6,179
3,240
133
—
41,117
Total operating expenses 92,502
26,028
14,319
11,958
(9,475 ) 135,332
Operating income (loss) $ 22,251
$ 6,083
$ 4,793
$ (11,958 ) $ —
$ 21,169

~~Six Months Ended June 30, 2019~~

(in thousands) Wireless Cable Wireline Other Eliminations Consolidated
External revenue
Service revenue $ 191,425
$ 60,421
$ 11,043
$ —
$ —
$ 262,889
Equipment revenue 31,839
525
103
—
—
32,467
Tower revenue 3,325
—
—
—
—
3,325
Other revenue 665
4,503
13,908
—
—
19,076
Total external revenue 227,254
65,449
25,054
—
—
317,757
Internal revenue 2,540
2,950
13,382
—
(18,872 ) —
Total operating revenue 229,794
68,399
38,436
—
(18,872 ) 317,757
Operating expenses
Cost of services 67,041
31,348
18,130
—
(17,504 ) 99,015
Cost of goods sold 30,169
287
55
—
—
30,511
Selling, general and administrative 21,954
11,262
3,831
20,213
(1,368 ) 55,892
Depreciation and amortization 63,269
13,013
6,980
270
—
83,532
Total operating expenses 182,433
55,910
28,996
20,483
(18,872 ) 268,950
Operating income (loss) $ 47,361
$ 12,489
$ 9,440
$ (20,483 ) $ —
$ 48,807

~~Index~~

~~Six Months Ended June 30, 2018~~

(in thousands) Wireless Cable Wireline Other Eliminations Consolidated
External revenue
Service revenue $ 187,855
$ 57,219
$ 10,609
$ —
$ —
$ 255,683
Equipment revenue 33,193
303
92
—
—
33,588
Tower revenue 3,294

3,294
Other revenue 732
4,172
13,170
—
—
18,074
Total external revenue 225,074
61,694
23,871
—
—
310,639
Internal revenue 2,483
2,128
14,948
—
(19,559 ) —
Total operating revenue 227,557
63,822
38,819
—
(19,559 ) 310,639
Operating expenses
Cost of services 67,238
30,281
19,175
12
(18,230 ) 98,476
Cost of goods sold 30,809
119
42
1
—
30,971
Selling, general and administrative 24,502
9,609
3,403
22,480
(1,329 ) 58,665
Depreciation and amortization 65,490
12,203
6,634
277
—
84,604
Total operating expenses 188,039
52,212
29,254
22,770
(19,559 ) 272,716
Operating income (loss) $ 39,518
$ 11,610
$ 9,565
$ (22,770 ) $ —
$ 37,923

~~Note 15. Subsequent Events~~

During the second quarter of 2019, the Company agreed to purchase certain indefinite-lived FCC spectrum licenses and to assume the leases for certain other FCC spectrum licenses covering portions of Virginia and West Virginia. We plan to use these licenses in our Cable segment to provide fixed wireless broadband coverage. The Company agreed to pay $17.0 million at close of these agreements and approximately $4.0 million over the remaining lease terms of approximately 20 years. On July 9, 2019, we closed on the purchase of the indefinite-lived licenses and remitted $13.8 million to the seller. Assumption of the leased licenses is expected to close at various dates during the third quarter of 2019, following customary regulatory approvals.

~~Index~~


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

This 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. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “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 and operating results, business strategy, financing plans, forecasted trends relating to the markets in which Shenandoah Telecommunications Company operates and similar matters, including information concerning our response to COVID-19, 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 those discussed below~~that may include natural disasters, pandemics and ~~under~~outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, natural disasters, changes in general economic conditions, increases in costs, changes in regulation and other competitive factors. Updates to the ~~caption “Risk~~Risk Factors described in “Item 1A-Risk Factors” as provided in ~~the Company’s~~our Annual Report on Form 10-K for ~~its fiscal~~the year ended December 31, ~~2018.~~ 2019, may be found below in Part II, under the heading “Item 1A-Risk Factors.

The following management’s discussion and analysis should be read in conjunction with the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, ~~2018,~~2019, including the consolidated financial statements and related notes included therein.

Overview

Shenandoah Telecommunications Company ~~(Shentel) provides~~(“Shentel”, “we”, “our”, “us”, or the “Company”), is a ~~broad~~provider of a comprehensive range of ~~diversified~~wireless and broadband communications products and services ~~through its high speed, state-of-the-art network to customers~~ in the Mid-Atlantic portion of the United States. ~~The Company’s services include: wireless voice~~Management’s Discussion and ~~data; cable video, internet and digital voice; fiber network and services; and regulated local and long distance telephone. Shentel~~Analysis is ~~the exclusive personal communications service (“PCS”) Affiliate of Sprint in~~ ~~a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio. For more information, please visit www.shentel.com.~~

~~2019 Developments~~

~~Big Sandy Broadband, Inc. Acquisition:~~On February 28, 2019, the Company acquired the assets of Big Sandy Broadband, Inc., ("Big Sandy”), a provider of cable television, telephone and high speed internet services in eastern Kentucky. The Company's investment will allow the Cable segmentorganized around our reporting segments. Refer to ~~expand its footprint into the adjacent markets of eastern Kentucky. See~~ Note 413, ~~Acquisitions~~Segment Reporting, in our unaudited condensed consolidated financial statements for additional information.

2020 Developments

~~Fiber~~T-Mobile business combination with Sprint: On April 1, 2020, T-Mobile US, Inc. (“T-Mobile”) announced the completion of its business combination with Sprint Corporation (“Sprint”) and subsequently delivered to the ~~Home (FTTH):~~Company a notice of Network Technology Conversion, Brand Conversion and Combination Conversion (a “Conversion Notice”) pursuant to the terms of the Company’s affiliate agreement with Sprint. As described in more detail in the Company’s 2019 Annual Report on Form 10-K, our Wireless segment has been an affiliate of Sprint since 1995.

The affiliate agreement provides for a 90-day period following receipt of the Conversion Notice for the parties to negotiate mutually agreeable terms and conditions under which the Company would continue as an affiliate of T-Mobile. The affiliate agreement further provides that, if T-Mobile and the Company have not negotiated a mutually acceptable agreement within the 90-day period, then T-Mobile would have a period of 60 days thereafter to exercise an option to purchase the assets of our Wireless operations for 90% of the “Entire Business Value” (as defined under our affiliate agreement). If T-Mobile does not exercise its purchase option, the Company would then have a 60-day period to exercise an option to purchase the legacy T-Mobile network and subscribers in our service area. If the Company does not exercise its purchase option, T-Mobile must sell or decommission its legacy network and customers in our service area.

COVID-19: We have been closely monitoring the latest developments around the outbreak of a new strain of coronavirus ("COVID-19") and its impact globally. As we focus on our community and do our part to stop COVID-19 from spreading, we have taken the following actions to keep families and businesses safe and connected virtually:

In our Broadband segment, we expanded our service offerings by temporarily increasing the minimum speed and data allowance of ~~June 30, 2019,~~our broadband service to 50 Mbps and by 250 GB, respectively, each at no additional charge, and introducing a new $25 per month prepaid internet service.

In our Wireless segment, we have supported Sprint’s adoption of the Keep Americans Connected pledge while temporarily closing approximately 40% of the Sprint branded retail locations in our service area to comply with federal and state mandates.

We have implemented alternative working arrangements where practicable to keep our employees safe and maintained our geographically redundant equipment, diverse fiber facilities and monitoring services to support maximum uptime of all our essential networks and services.

While these actions did not have a material impact on our first quarter operating results nor do we expect them to impact our long-term growth prospects, we do expect them to temporarily dislocate our wireless operating momentum until the economies in the markets that we serve re-open.

For example, changing macroeconomic factors could impact the collectability of accounts receivable and revenue in our Broadband segment, and macroeconomic factors and the Keep Americans Connected pledge could impact our recognition of wireless service revenue in our Wireless segment in future periods. In addition, the measurement of our contract asset, which is reduced by our estimated obligation to refund amounts that Sprint or T-Mobile are later unable to collect from subscribers, could be impacted by macroeconomic factors, the Keep Americans Connected pledge, or any change to credit or collection policies that T-Mobile might make after its April 1, 2020 acquisition of Sprint.

As we focus on our community and do our part to stop COVID-19 from spreading, we will continue to evaluate the impact of COVID-19 on our business and operations, including the effect of related state, local and federal government guidelines. The virus and related macroeconomic factors may impact the demand for our products and services, the ways in which our customers use our products and services and our suppliers’ and vendors’ ability to provide products and services to us. Some of these factors could increase the demand for our products and services, while others could decrease demand or make it more difficult for us to serve our customers. Due to the uncertainty surrounding the magnitude and duration of COVID-19, we are inunable at this time to predict the ~~initial stage~~impact of ~~deploying~~COVID-19 on our new FTTH product, in our Cable segment, which leverages our existing robust fiber network and commercial customer base to target certain residential areas in three initial markets within our wireless service territory. We incurred $0.8 million and $1.0 millionfinancial condition, results of FTTH expenses in the three and six months ending June 30, 2019, respectively. We expect to continue to incur expenses related to the initiation of FTTH in the select markets, in advance of generating revenue from this new product.

operations or cash flow.

~~Index~~

Results of Operations

Three Months Ended ~~June 30, 2019~~March 31, 2020 Compared with the Three Months Ended ~~June 30, 2018~~March 31, 2019

The ~~Company's~~Company’s consolidated results from operations are summarized as follows:


	Three Months Ended June 30,										Change				Three Months Ended March 31,										Change
($ in thousands)	2019			% of Revenue		2018			% of Revenue		$		%		2020			% of Revenue		2019			% of Revenue		$		%
Operating revenue	$	158,914		100.0	%	$	156,501		100.0	%	2,413		1.5	%
Revenue															$	153,188		100.0		$	158,843		100.0		(5,655	)	(3.6	)
Operating expenses	134,894			84.9	%	135,332			86.5	%	(438	)	(0.3	)%	130,138			85.0		134,056			84.4		(3,918	)	(2.9	)
Operating income	24,020			15.1	%	21,169			13.5	%	2,851		13.5	%	23,050			15.0		24,787			15.6		(1,737	)	(7.0	)

Interest expense	(7,522		)	(4.7	)%	(8,851		)	(5.7	)%	(1,329	)	(15.0	)%	(6,211		)	(4.1	)	(7,954		)	(5.0	)	(1,743	)	(21.9	)
Other income, net	1,176			0.7	%	839			0.5	%	337		40.2	%
Other income															733			0.5		1,287			0.8		(554	)	(43.0	)
Income before taxes	17,674			11.1	%	13,157			8.4	%	4,517		34.3	%	17,572			11.5		18,120			11.4		(548	)	(3.0	)
Income tax expense	4,524			2.8	%	3,531			2.3	%	993		28.1	%	4,292			2.8		4,210			2.7		82		1.9
Net income	$	13,150		8.3	%	$	9,626		6.2	%	3,524		36.6	%	$	13,280		8.7		$	13,910		8.8		(630	)	(4.5	)

~~Operating revenue~~Revenue

~~During~~Revenue decreased approximately $5.7 million, or 3.6%, during the three months ended ~~June 30, 2019, operating revenue increased approximately $2.4 million, or 1.5%,~~March 31, 2020 compared with the three months ended ~~June 30, 2018, driven by growth in the Cable and Wireline segments.~~

~~Operating expenses~~

~~During the three months ended June 30,~~March 31, 2019, ~~operating expenses decreased approximately $0.4 million, or 0.3%, compared with the three months ended June 30, 2018. The decrease was~~ primarily due to a decline of $8.5 million in ~~selling, general and administrative expenses in our~~the Wireless ~~and Other segments.~~

~~Interest expense~~

During the three months ended June 30, 2019, interest expense decreased approximately $1.3 million, or 15.0%, compared with the three months ended June 30, 2018. The decrease in interest expense was primarily attributable to the 2018 amendments to the Credit Facility Agreement that reduced the applicable base interest rate by 75 basis points, and scheduled reductions of principal,segment, partially offset by growth of $2.9 million and $0.7 million in the ~~effect~~Broadband and Tower segments, respectively. The Wireless segment recognized $4.5 million in lower travel revenue in the first quarter of ~~increases in LIBOR.~~

~~Other income, net~~

~~During the three months ended June 30, 2019, other income, net increased approximately $0.3 million, or 40.2%,~~2020 compared ~~with the three months ended June 30, 2018. The increase in other income, net was primarily attributable~~ to the ~~growth in~~first quarter of 2019 due to the ~~value~~ongoing dispute with Sprint over resetting of ~~our investments.~~

~~Income tax expense~~

~~During~~ the three months ended June 30, 2019, income tax expense increased approximately $1.0 million, or 28.1%, compared with the three months ended June 30, 2018. The increase was consistent with the growth in our income before taxes.

~~Our effective tax rate for the three months ended June 30, 2019 was approximately 25.6%, as compared with approximately 26.8% for the three months ended June 30, 2018.~~

~~Index~~

~~Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018~~

~~The Company's consolidated results from operations are summarized as follows:~~

Six Months Ended
June 30, Change
($ in thousands) 2019 % of Revenue 2018 % of Revenue $ %
Operating revenue $ 317,757
100.0 % $ 310,639
100.0 % 7,118
2.3 %
Operating expenses 268,950
84.6 % 272,716
87.8 % (3,766 ) (1.4 )%
Operating income 48,807
15.4 % 37,923
12.2 % 10,884
28.7 %

Interest expense (15,476 ) (4.9 )% (18,183 ) (5.9 )% (2,707 ) 14.9 %
Other income, net 2,463
0.8 % 1,828
0.6 % 635
34.7 %
Income before taxes 35,794
11.3 % 21,568
6.9 % 14,226
66.0 %
Income tax expense 8,734
2.7 % 5,359
1.7 % 3,375
63.0 %
Net income $ 27,060
8.5 % $ 16,209
5.2 % 10,851
66.9 %

~~Operating revenue~~

During the six months ended June 30, 2019, operating revenue increased approximately $7.1 million, or 2.3%, compared with the six months ended June 30, 2018, driven by subscriber growth in the Wireless and Cable segments.travel fee. Refer to the discussion of the results of operations for the Wireless, Broadband and ~~Cable~~Tower segments, included within this quarterly report, for additional information.

Operating expenses

~~During the six months ended June 30, 2019, operating~~Operating expenses decreased approximately ~~$3.8~~$3.9 million, or ~~1.4%~~2.9%, during the three months ended March 31, 2020 compared with the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The decrease was primarily due to a ~~$2.2 million~~ decline in Wireless operating expenses driven by depreciation and amortization expense ~~primarily~~as certain assets acquired from nTelos became fully depreciated and lower ~~amortization expense on our affiliate contract expansion rights, which is recognized on an accelerated method that declines over time,~~cost of goods sold and ~~a $2.8 million decline in~~ selling, general and administrative expenses ~~driven~~related to temporary retail store closures. This decrease was partially offset by an increase in Broadband operating expenses incurred for the ~~Wireless and Other segments.~~launch of our new fiber-to-the-home service, Glo Fiber.

Interest expense

~~During the six months ended June 30, 2019, interest~~Interest expense decreased approximately ~~$2.7~~$1.7 million, or ~~14.9%~~21.9%, during the three months ended March 31, 2020 compared with the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The decrease in interest expense was primarily attributable to the ~~2018 amendments to the Credit Facility Agreement that reduced~~reduction of the applicable base interest rate by 7525 basis points and principal ~~repayments.~~repayments on our Credit Facility term loans, combined with the effect of year-over-year declines in LIBOR.

Other income ~~net~~

~~During the six months ended June 30, 2019, other~~Other income ~~net increased~~decreased approximately $0.6 million, or ~~34.7%~~43.0%, during the three months ended March 31, 2020 compared with the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The ~~increase in other income, net~~decrease was primarily ~~attributable~~due to ~~growth~~a decline in the value of our ~~investments.~~

~~Income tax expense~~

~~During~~investments that are used to fund our obligation under the six months ended June 30, 2019, income tax expense increased approximately $3.4 million, or 63.0%, compared with the six months ended June 30, 2018. The increase was consistent with the growth in our income before taxes.

~~Our effective tax rate for the six months ended June 30, 2019 was approximately 24.4%, which was consistent with approximately 24.8% for six months ended June 30, 2018.~~

~~Index~~

supplemental executive retirement plan.

Wireless

Wireless earns postpaid, prepaid and wholesale revenues from Sprint for their subscribers that use our Wireless network service in our Wireless network coverage area. The Company's wireless revenue is variable based on billed revenues to Sprint's subscribers in our Affiliate Area less applicable fees retained by Sprint. Sprint retains an 8% Management Fee and an 8.6% Net Service Fee on postpaid revenues and a 6% Management Fee on prepaid wireless revenues. For postpaid, the Company is also charged for the costs of subsidized handsets sold through Sprint's national channels as well as commissions paid by Sprint to third-party dealers in our Sprint Affiliate Area. Sprint also charges the Company separately to acquire and support prepaid customers. These charges are calculated based on Sprint's national averages for its prepaid programs, and are billed per user or per gross additional customer, as appropriate.

The following tables indicate selected operating statistics of Wireless, including Sprint subscribers:

June 30,
2019 (4) June 30,
2018 (4)
Retail PCS subscribers - postpaid 811,719
780,658
Retail PCS subscribers - prepaid 269,039
252,054
PCS market POPS (000) (1) 7,227
7,023
PCS covered POPS (000) (1) 6,285
5,908
CDMA base stations (sites) 1,910
1,770
Towers owned 217
193
Cell site leases 200
192



	March 31, 2020		March 31, 2019
Postpaid:
Retail PCS total subscribers	847,771		800,952
Retail PCS phone subscribers	738,410		722,830
Retail PCS connected device subscribers	109,361		78,122
Gross PCS total subscriber additions	51,991		50,847
Gross PCS phone additions	36,734		37,786
Gross PCS connected device additions	15,257		13,061
Net PCS total subscriber additions	3,577		5,776
Net PCS phone additions (losses)	(2,311	)	105
Net PCS connected device additions	5,888		5,671
PCS monthly retail total churn %	1.91	%	1.89	%
PCS monthly phone churn %	1.76	%	1.74	%
PCS monthly connected device churn %	2.97	%	3.35	%
Prepaid:
Retail PCS subscribers	279,096		267,220
Gross PCS subscriber additions	39,074		40,979
Net PCS subscriber additions	5,084		8,516
PCS monthly retail churn %	4.13	%	4.14	%

PCS market POPS (000) (1)	7,227		7,023
PCS covered POP (000) (1)	6,325		6,261
Macro base stations (cell sites)	1,966		1,874

_______________________________________________________

Three Months Ended
June 30, Six Months Ended
June 30,
2019 2018 2019 (4) 2018 (4)
Gross PCS subscriber additions - postpaid 52,799
44,629
103,646
87,706
Net PCS subscriber additions - postpaid (2) 10,767
5,797
16,543
44,061
Gross PCS subscriber additions - prepaid 33,753
33,840
74,732
73,951
Net PCS subscriber additions - prepaid (3) 1,819
1,863
10,335
26,232
PCS average monthly retail churn % - postpaid 1.74 % 1.67 % 1.81 % 1.78 %
PCS average monthly retail churn % - prepaid 3.97 % 4.25 % 4.06 % 4.32 %


(1)	"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 ~~agreement,~~agreements, and Covered POPS are those covered by our network. The data source for POPS is U.S. census data.


~~(2)~~	~~For the six months ended June 30, 2018 Net PCS subscriber additions - postpaid were 5,718 excluding the acquisition of the expansion area on February 1, 2018.~~


~~(3)~~	~~For the six months ended June 30, 2018 Net PCS subscriber additions - prepaid were 10,541 excluding the acquisition of the expansion area on February 1, 2018.~~


~~(4)~~	~~Beginning February 1, 2018 includes Richmond Expansion Area except for gross PCS subscriber additions.~~

~~The subscriber statistics above, excluding gross additions, include the Richmond Expansion Area~~Wireless results from operations are summarized as follows:



		February 1, 2018
		~~Expansion Area~~
~~PCS subscribers - postpaid~~		~~38,343~~
~~PCS subscribers - prepaid~~		~~15,691~~
~~Acquired PCS market POPS (000)~~		~~1,082~~
~~Acquired PCS covered POPS (000)~~		~~602~~
~~Acquired CDMA base stations (sites)~~		~~105~~



	Three Months Ended March 31,											Change
($ in thousands)	2020			% of Revenue			2019			% of Revenue		$		%
Wireless revenue:
Gross postpaid billings	$	103,096		99.0			$	101,869		90.5		1,227		1.2	%
Allocated bad debt	(5,013		)	(4.8	)		(4,393		)	(3.9	)	620		14.1	%
Amortization of contract asset and other	(6,838		)	(6.6	)		(5,188		)	(4.6	)	1,650		31.8	%
Sprint management fee and net service fee	(16,317		)	(15.7	)		(16,106		)	(14.3	)	211		1.3	%
Total postpaid service revenue	74,928			72.0			76,182			67.6		(1,254	)	(1.6	)%
Gross prepaid billings	30,936			29.7			29,533			26.2		1,403		4.8	%
Amortization of contract asset and other	(15,892		)	(15.3	)		(14,537		)	(12.9	)	1,355		9.3	%
Sprint management fee	(1,935		)	(1.9	)		(1,866		)	(1.7	)	69		3.7	%
Total prepaid service revenue	13,109			12.6			13,130			11.7		(21	)	(0.2	)%
Travel and other	3,351			3.2			8,018			7.1		(4,667	)	(58.2	)%
Wireless service revenue and other	91,388			87.8			97,330			86.4		(5,942	)	(6.1	)%
Equipment revenue	12,750			12.2			15,291			13.6		(2,541	)	(16.6	)%
Total wireless revenue	104,138			100.0			112,621			100.0		(8,483	)	(7.5	)%
Wireless operating expenses:
Cost of services	33,439			32.1			32,532			28.9		907		2.8	%
Cost of goods sold	12,528			12.0			14,427			12.8		(1,899	)	(13.2	)%
Selling, general and administrative	9,428			9.1		��	11,079			9.8		(1,651	)	(14.9	)%
Depreciation and amortization	25,299			24.3			30,370			27.0		(5,071	)	(16.7	)%
Total wireless operating expenses	80,694			77.5			88,408			78.5		(7,714	)	(8.7	)%
Wireless operating income	$	23,444		22.5			$	24,213		21.5		(769	)	(3.2	)%

~~Index~~

~~Three Months Ended June 30, 2019 Compared with the Three Months Ended June 30, 2018~~

Three Months Ended
June 30, Change
($ in thousands) 2019 % of Revenue 2018 % of Revenue $ %
Wireless operating revenue
Wireless service revenue $ 94,350
82.7 % $ 95,690
83.4 % (1,340 ) (1.4 )%
Tower lease revenue 2,921
2.6 % 2,878
2.5 % 43
1.5 %
Equipment revenue 16,548
14.5 % 15,819
13.8 % 729
4.6 %
Other revenue 321
0.2 % 366
0.3 % (45 ) (12.3 )%
Total Wireless operating revenue 114,140
100.0 % 114,753
100.0 % (613 ) (0.5 )%
Wireless operating expenses
Cost of services 33,563
29.4 % 33,488
29.2 % 75
0.2 %
Cost of goods sold 15,742
13.8 % 15,082
13.1 % 660
4.4 %
Selling, general and administrative 10,592
9.3 % 12,367
10.8 % (1,775 ) (14.4 )%
Depreciation and amortization 32,219
28.2 % 31,565
27.5 % 654
2.1 %
Total Wireless operating expenses 92,116
80.7 % 92,502
80.6 % (386 ) (0.4 )%
Wireless operating income $ 22,024
19.3 % $ 22,251
19.4 % (227 ) (1.0 )%

~~Operating~~ Revenue

Under our affiliate agreement with Sprint, we have historically earned and recognized monthly revenue of $1.5 million for providing service to Sprint customers who pass through our network ~~area ("Travel Revenue").~~area. While we continue to provide these services to Sprint, the agreed upon payments were suspended by Sprint on April 30, 2019. Accordingly, we have ceased recognizing revenue for the services provided after that date until a new prospective fee can be agreed. We have triggered the final dispute resolution option with Sprint and expect ~~to resolve~~resolution during the ~~new travel fees in the third~~second quarter ~~2019.~~of 2020.

Wireless ~~operating~~ revenue decreased ~~slightly to $114.1~~approximately $8.5 million, or 8%, for the three months ended June 30, 2019, compared with $114.8 million for the three months ended June 30, 2018. Travel Revenue declined $3.0 million from second quarter 2018 due to the suspension by Sprint of Travel Revenue payments in April 2019 and the cessation of recognizing Travel Revenue until the parties finalize travel fees. The Travel Revenue decline was substantially offset by increases in subscriber service revenue of $0.9 million, in equipment revenue of $0.7 million, and in roaming revenue of $0.5 million.

~~The table below provides additional detail for Wireless service revenue.~~

Three Months Ended
June 30, Change
($ in thousands) 2019 2018 $ %
Wireless service revenue:
Postpaid billings (1) $ 97,779
$ 96,127
1,652
1.7 %
Amortization of deferred contract and other costs (5,636 ) (4,615 ) (1,021 ) (22.1 )%
Sprint management fee (7,781 ) (7,803 ) 22
0.3 %
Net service fee (8,365 ) (8,303 ) (62 ) (0.7 )%
Total postpaid service revenue 75,997
75,406
591
0.8 %
Prepaid billings 30,328
27,915
2,413
8.6 %
Amortization of deferred contract and other costs (14,814 ) (12,876 ) (1,938 ) (15.1 )%
Sprint management fee (1,911 ) (1,754 ) (157 ) (9.0 )%
Total prepaid service revenue 13,603
13,285
318
2.4 %
Travel and other revenue 4,750
6,999
(2,249 ) (32.1 )%
Total service revenue $ 94,350
$ 95,690
(1,340 ) (1.4 )%


~~(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.

~~Index~~

~~The increase in postpaid service revenue during the three months ended June 30, 2019, was primarily attributable to the addition of 31,061 postpaid PCS retail subscribers.~~

~~The increase in prepaid service revenue during the three months ended June 30, 2019, was primarily attributable to the addition 16,985 prepaid PCS retail subscribers.~~

~~Cost of services~~

~~During the three months ended June 30, 2019, cost of services increased approximately $0.1 million or 0.2%,~~March 31, 2020 compared with the three months ended ~~June 30, 2018~~March 31, 2019. The decrease was primarily attributable to the aforementioned $4.5 million decline in travel revenue, a $2.5 million decline in equipment revenue as retail stores closed amidst the COVID-19 outbreak, $3.0 million in higher amortized customer contract costs partially offset by a $1.7 million increase in postpaid and prepaid revenue from growth in subscribers.

Cost of services

Cost of services increased approximately $0.9 million, or 3%, for the three months ended March 31, 2020 compared with the three months ended March 31, 2019, primarily due to ~~lower backhaul circuit costs.~~higher cell site rent expense related to our network expansion.

Cost of goods sold

~~During~~Cost of goods sold decreased approximately $1.9 million, or 13%, for the three months ended ~~June 30, 2019, cost of goods sold increased approximately $0.7 million, or 4.4%,~~March 31, 2020 compared with the three months ended ~~June 30, 2018. Higher cost of goods sold reflect an increase in sales~~March 31, 2019 due to ~~a larger percentage~~lower volume of ~~activations originating from Shentel-owned~~equipment sales driven by temporary closure of certain retail stores.

Selling, general and administrative

~~During~~Selling, general and administrative expense decreased approximately $1.7 million, or 15%, for the three months ended ~~June 30, 2019, selling, general and administrative costs decreased approximately $1.8 million, or 14.4%,~~March 31, 2020 compared with the three months ended ~~June 30, 2018~~March 31, 2019 primarily due to ~~reductions in transactional~~lower advertising expense of approximately $1.0 million, and a $0.8 million sales and use tax ~~expenses.~~settlement gain.

Depreciation and amortization

~~During~~Depreciation and amortization decreased approximately $5.1 million, or 17%, for the three months ended ~~June 30, 2019, depreciation and amortization increased approximately $0.7 million, or 2.1%,~~March 31, 2020 compared with the three months ended ~~June 30, 2018~~March 31, 2019. Depreciation expense declined $4.6 million as certain assets acquired from nTelos in 2016 became fully depreciated. Amortization expense also declined primarily ~~from the continued deployment of property, plant and equipment necessary to support the expansion~~as a result of our ~~wireless service territory.~~

~~Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018~~

Six Months Ended
June 30, Change
($ in thousands) 2019 % of Revenue 2018 % of Revenue $ %
Wireless operating revenue
Wireless service revenue $ 191,425
83.3 % $ 187,855
82.6 % 3,570
1.9 %
Tower lease revenue 5,860
2.6 % 5,774
2.5 % 86
1.5 %
Equipment revenue 31,839
13.9 % 33,193
14.6 % (1,354 ) (4.1 )%
Other revenue 670
0.2 % 735
0.3 % (65 ) (8.8 )%
Total Wireless operating revenue 229,794
100.0 % 227,557
100.0 % 2,237
1.0 %
Wireless operating expenses
Cost of services 67,041
29.2 % 67,238
29.5 % (197 ) (0.3 )%
Cost of goods sold 30,169
13.1 % 30,809
13.5 % (640 ) (2.1 )%
Selling, general and administrative 21,954
9.6 % 24,502
10.8 % (2,548 ) (10.4 )%
Depreciation and amortization 63,269
27.5 % 65,490
28.8 % (2,221 ) (3.4 )%
Total Wireless operating expenses 182,433
79.4 % 188,039
82.6 % (5,606 ) (3.0 )%
Wireless operating income $ 47,361
20.6 % $ 39,518
17.4 % 7,843
19.8 %

~~Operating Revenue~~

~~Under our affiliate agreement with~~ Sprint we have historically earned and recognized monthly revenue of $1.5 million for providing service to Sprint customers who pass through our network area. While we continue to provide these services to Sprint, the agreed upon fee was suspended on April 30, 2019. Accordingly, we have ceased recognizing revenue for the services provided after that date until a new prospective fee can be agreed.

During the six months ended June 30, 2019, operating revenue increased approximately $2.2 million, or 1.0%, compared with the six months ended June 30, 2018. This increase in operating revenue was driven by a 4.0% increase in postpaid subscribers and a 6.7% increase in prepaid PCS subscribers, and was partially offset by a reduction in travel and other revenue. Refer to the detailed Wireless service revenue chart provided below for additional information.

~~Index~~

~~The table below provides additional detail for Wireless service revenue.~~

Six Months Ended
June 30, Change
($ in thousands) 2019 2018 $ %
Wireless service revenue:
Postpaid billings (1) $ 195,255
$ 189,417
5,838
3.1 %
Amortization of deferred contract and other costs (10,824 ) (9,080 ) (1,744 ) 19.2 %
Sprint management fee (15,543 ) (15,203 ) (340 ) 2.2 %
Net service fee (16,709 ) (16,258 ) (451 ) 2.8 %
Total postpaid service revenue 152,179
148,876
3,303
2.2 %
Prepaid billings 59,861
54,256
5,605
10.3 %
Amortization of deferred contract and other costs (29,351 ) (25,664 ) (3,687 ) 14.4 %
Sprint management fee (3,777 ) (3,403 ) (374 ) 11.0 %
Total prepaid service revenue 26,733
25,189
1,544
6.1 %
Travel and other revenue 12,513
13,790
(1,277 ) (9.3 )%
Total service revenue $ 191,425
$ 187,855
3,570
1.9 %


~~(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.

~~The increase in postpaid service revenue during the six months ended June 30, 2019, was primarily attributable to the addition of 31,061 postpaid PCS retail subscribers.~~

~~The increase in prepaid service revenue during the six months ended June 30, 2019, was primarily attributable to the addition of 16,985 prepaid PCS retail subscribers.~~

~~Cost of services~~

During the six months ended June 30, 2019, cost of services decreased approximately $0.2 million or 0.3%, compared with the six months ended June 30, 2018 primarily from a $3.3 million reduction in backhaul circuit costs, partially offset by a $2.5 million increase in net rent expense driven by the addition of new cell sites.

~~Cost of goods sold~~

During the six months ended June 30, 2019, cost of goods sold decreased approximately $0.6 million, or 2.1%, compared with the six months ended June 30, 2018. Lower cost of goods sold reflects a reduction in sales in Shentel-owned stores.

~~Selling, general and administrative~~

During the six months ended June 30, 2019, selling, general and administrative costs decreased approximately $2.5 million, or 10.4%, compared with the six months ended June 30, 2018 primarily due to reductions in transactional tax expenses.

~~Depreciation and amortization~~

During the six months ended June 30, 2019, depreciation and amortization decreased approximately $2.2 million, or 3.4%, compared with the six months ended June 30, 2018 primarily from lower amortization expense on our affiliate contract expansion ~~rights,~~asset which ~~is recognized on~~amortizes under an accelerated method that declines over time.

~~Index~~

Broadband

~~Cable~~Our Broadband segment provides broadband, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, and Kentucky, via fiber optic and hybrid fiber coaxial (“HFC”) cable. The Broadband segment also leases dark fiber and provides Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. The Broadband segment also provides voice and digital subscriber line (“DSL”) telephone services to customers in Virginia’s Shenandoah County as a Rural Local Exchange Carrier (“RLEC”). These integrated networks are connected by an approximately 6,300 fiber route mile network. This fiber optic network also supports our Wireless segment operations and these intercompany transactions are reported at their market value.

The following table indicates selected operating statistics of ~~Cable:~~Broadband:

June 30,
2019 June 30,
2018
Homes passed (1) 189,762
185,016
Customer relationships (2)
Video users 40,497
42,483
Non-video customers 43,024
35,773
Total customer relationships 83,521
78,256
Video
Customers (3) 42,874
44,800
Penetration (4) 22.6 % 24.2 %
Digital video penetration (5) 90.3 % 76.9 %
Broadband
Users (3) 71,893
65,466
Penetration (4) 37.9 % 35.4 %
Voice
Users (3) 23,805
22,882
Penetration (4) 12.5 % 12.4 %
Total revenue generating units (6) 138,572
133,148
Fiber route miles 3,657
3,426
Total fiber miles (7) 143,762
133,702
Average revenue generating units 138,016
132,287



	March 31, 2020		March 31, 2019
Broadband homes passed (1) (2)	212,129		206,113
Broadband customer relationships (3)	103,287		95,933

Video:
RGUs	53,067		59,202
Penetration (4)	25.0	%	28.7	%
Digital video penetration (5)	94.3	%	85.7	%
Broadband:
RGUs	86,667		78,867
Penetration (4)	40.9	%	38.3	%
Voice:
RGUs	31,836		30,737
Penetration (4)	16.3	%	16.2	%
Total Cable and Glo Fiber RGUs	171,570		168,806

RLEC homes passed	25,848		25,798
RLEC customer relationships (3)	10,111		11,101
RLEC RGUs:
Data RLEC	7,947		8,744
Penetration (4)	30.7	%	33.9	%
Voice RLEC	14,137		15,262
Penetration (4)	54.7	%	59.2	%
Total RLEC RGUs	22,084		24,006

Total RGUs	193,654		192,812

Fiber route miles	6,273		5,799
Total fiber miles (6)	334,802		303,511


(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. Homes passed have access to video, broadband and voice services.


(2)	Includes approximately 16,600 RLEC homes passed where we are the dual incumbent telephone and cable provider.


(3)	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 for video, broadband, or voice services, 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.


(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)	~~Revenue generating units are the sum of video, voice and broadband users.~~


~~(7)~~	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.

~~Index~~

~~Three Months Ended June 30, 2019 Compared with the Three Months Ended June 30, 2018~~Broadband results from operations are summarized as follows:

Three Months Ended
June 30, Change
($ in thousands) 2019 % of Revenue 2018 % of Revenue $ %
Cable operating revenue
Service revenue $ 30,716
88.5 % $ 28,748
89.5 % 1,968
6.8 %
Equipment revenue 255
0.7 % 144
0.4 % 111
77.1 %
Other revenue 3,719
10.8 % 3,219
10.1 % 500
15.5 %
Total Cable operating revenue 34,690
100.0 % 32,111
100.0 % 2,579
8.0 %
Cable operating expenses
Cost of services 15,701
45.3 % 15,125
47.1 % 576
3.8 %
Cost of goods sold 112
0.3 % 63
0.2 % 49
77.8 %
Selling, general and administrative 5,536
16.0 % 4,661
14.5 % 875
18.8 %
Depreciation and amortization 6,555
18.8 % 6,179
19.3 % 376
6.1 %
Total Cable operating expenses 27,904
80.4 % 26,028
81.1 % 1,876
7.2 %
Cable operating income $ 6,786
19.6 % $ 6,083
18.9 % 703
11.6 %



	Three Months Ended March 31,							Change
($ in thousands)	2020		% of Revenue	2019		% of Revenue		$		%
Broadband revenue
Cable, residential and SMB	$	34,943	70.2	$	32,426	69.2		2,517		7.8
Fiber, enterprise and wholesale	7,645		15.4	6,563		14.0		1,082		16.5
Rural local exchange carrier	5,132		10.3	5,681		12.1		(549	)	(9.7	)
Equipment and other	2,066		4.1	2,211		4.7		(145	)	(6.6	)
Total broadband revenue	49,786		100.0	46,881		100.0	%	2,905		6.2
Broadband operating expenses
Cost of services	19,243		38.7	19,061		40.7		182		1.0
Cost of goods sold	143		0.3	211		0.5		(68	)	(32.2	)
Selling, general, and administrative	9,499		19.1	7,569		16.1		1,930		25.5
Depreciation and amortization	10,871		21.8	9,991		21.3		880		8.8
Total broadband operating expenses	39,756		79.9	36,832		78.6		2,924		7.9
Broadband operating income	$	10,030	20.1	$	10,049	21.4		(19	)	(0.2	)

~~Service~~Cable, residential and small and medium business (SMB) revenue

~~During~~Cable, residential and SMB revenue increased during the three months ended ~~June 30, 2019, service~~March 31, 2020 approximately $2.5 million, or 7.8%, primarily driven by broadband subscriber growth.

Fiber, enterprise and wholesale revenue

Fiber, enterprise and wholesale revenue increased during the three months ended March 31, 2020 approximately ~~$2.0~~$1.1 million, or ~~6.8%~~16.5%, due primarily to an increase in new enterprise and backhaul connections.

Rural local exchange carrier (RLEC) revenue

RLEC revenue decreased approximately $0.5 million, or 9.7%, compared with the three months ended ~~June 30, 2018. The increase was primarily attributable~~March 31, 2019 due to a ~~full quarter of Big Sandy results, increases~~decline in ~~broadband~~residential data subscribers and ~~higher average~~switched access revenue ~~per customer ("ARPU") related to broadband customers upgrading to higher-speed data access packages and increases in video rates.~~from other carriers.

~~Other revenue~~Cost of services

~~Other revenue is mainly comprised~~Cost of ~~fiber~~ services were comparable with three months ended March 31, 2019.

Cost of goods sold

Cost of goods sold were comparable with three months ended March 31, 2019.

Selling, general and ~~installation services. During~~administrative

Selling, general and administrative expense increased $1.9 million or 25% compared with the three months ended ~~June 30,~~March 31, 2019, ~~other revenue~~primarily due to $1.3 million of expenses incurred to support Glo Fiber in four markets and a $0.3 million increase in advertising expenses.

Depreciation and amortization

Depreciation and amortization increased ~~approximately $0.5~~$0.9 million or ~~15.5%~~9%, compared with the three months ended ~~June 30, 2018~~March 31, 2019, primarily ~~attributable~~as a result of our network expansion and the introduction of fiber to ~~expansion of~~ the ~~Company's fiber network and increased demand for fiber services.~~home service under our brand, Glo Fiber.

Tower

~~Operating expenses~~

~~During the three months ended June 30, 2019, operating expenses increased approximately $1.9 million, or 7.2%, compared with the three months ended June 30, 2018 primarily due~~Our Tower segment owns 226 cell towers and leases colocation space on those towers to ~~professional fees associated with starting~~ our FTTH product offering and higher repair and maintenance expense associated with maintaining our growing network. We expect to continue to incur expenses related to the initiation of FTTH in select markets, in advance of generating revenue from this new product.

~~Index~~

~~Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018~~

Six Months Ended
June 30, Change
($ in thousands) 2019 % of Revenue 2018 % of Revenue $ %
Cable operating revenue
Service revenue $ 60,421
88.3 % $ 57,219
89.7 % 3,202
5.6 %
Equipment revenue 525
0.8 % 303
0.5 % 222
73.3 %
Other revenue 7,453
10.9 % 6,300
9.8 % 1,153
18.3 %
Total Cable operating revenue 68,399
100.0 % 63,822
100.0 % 4,577
7.2 %
Cable operating expenses
Cost of services 31,348
45.8 % 30,281
47.4 % 1,067
3.5 %
Cost of goods sold 287
0.4 % 119
0.2 % 168
141.2 %
Selling, general and administrative 11,262
16.5 % 9,609
15.1 % 1,653
17.2 %
Depreciation and amortization 13,013
19.0 % 12,203
19.1 % 810
6.6 %
Total Cable operating expenses 55,910
81.7 % 52,212
81.8 % 3,698
7.1 %
Cable operating income $ 12,489
18.3 % $ 11,610
18.2 % 879
7.6 %

~~Service revenue~~

During the six months ended June 30, 2019, service revenue increased approximately $3.2 million, or 5.6%, compared with the six months ended June 30, 2018. The increase in service revenue was primarily attributable to the addition of 5,265 customer relationships, of which approximately 2,000 were acquired from Big Sandy,Wireless segment, as well as ~~broadband customers upgrade~~ to ~~higher-speed data access packages and increases in video rates.~~other wireless communications providers. Substantially all of our owned towers are built on ground that we lease from the respective landlords. The colocation space that we lease to our Wireless segment is priced at our estimate of fair market value, which updates from time to time based upon our observation of the market.

~~Other revenue~~

Other revenue is mainly comprised of fiber services and installation services. During the six months ended June 30, 2019, other revenue increased approximately $1.2 million, or 18.3%, compared with the six months ended June 30, 2018 primarily attributable to expansion of the Company's fiber network and increased demand for fiber services.

~~Operating expenses~~

During the six months ended June 30, 2019, operating expenses increased approximately $3.7 million, or 7.1%, compared with the six months ended June 30, 2018 primarily due to professional fees associated with starting our FTTH product offering and higher repair and maintenance expense associated with maintaining our growing network. We expect to continue to incur expenses related to the initiation of FTTH in select markets, in advance of generating revenue from this new product.

~~Index~~

~~Wireline~~

The following table ~~includes~~indicates selected operating statistics of the ~~Wireline operations:~~Tower segment:

June 30,
2019 June 30,
2018
Long distance subscribers 9,461
8,930
Video customers (1) 4,520
4,850
Broadband customers 14,643
14,694
Fiber route miles 2,176
2,099
Total fiber miles (2) 163,363
157,008


(1)	~~Wireline’s video service passes approximately 16,500 homes.~~


~~(2)~~	~~Fiber miles are measured by taking the number~~Includes 203 and 175 intercompany tenants for our Wireless segment as of ~~fiber strands in a cable~~March 31, 2020 and ~~multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.~~2019, respectively.

~~Three Months Ended June 30, 2019 Compared with the Three Months Ended June 30, 2018~~Tower results from operations are summarized as follows:

Three Months Ended
June 30, Change
($ in thousands) 2019 % of Revenue 2018 % of Revenue $ %
Wireline operating revenue
Service revenue $ 5,955
30.5 % $ 5,725
30.0 % 230
4.0 %
Carrier access and fiber revenue 12,835
65.7 % 12,468
65.2 % 367
2.9 %
Equipment revenue 52
0.3 % 46
0.2 % 6
13.0 %
Other revenue 685
3.5 % 873
4.6 % (188 ) (21.5 )%
Total Wireline operating revenue 19,527
100.0 % 19,112
100.0 % 415
2.2 %
Wireline operating expenses
Cost of services 8,979
46.0 % 9,373
49.0 % (394 ) (4.2 )%
Costs of goods sold 19
0.1 % 20
0.1 % (1 ) (5.0 )%
Selling, general and administrative 1,988
10.2 % 1,686
8.8 % 302
17.9 %
Depreciation and amortization 3,447
17.6 % 3,240
17.0 % 207
6.4 %
Total Wireline operating expenses 14,433
73.9 % 14,319
74.9 % 114
0.8 %
Wireline operating income $ 5,094
26.1 % $ 4,793
25.1 % 301
6.3 %



	Three Months Ended March 31,						Change
($ in thousands)	2020		% of Revenue	2019		% of Revenue	$	%
Tower revenue	$	3,730	100.0	$	3,033	100.0	697	23.0
Tower operating expenses	1,935		51.9	1,909		62.9	26	1.4
Tower operating income	$	1,795	48.1	$	1,124	37.1	671	59.7

~~Operating revenue~~Revenue

~~During~~Revenue increased approximately $0.7 million, or 23%, during the three months ended ~~June 30, 2019, total operating revenue increased approximately $0.4 million~~March 31, 2020 compared with the three months ended ~~June 30, 2018. The~~March 31, 2019. This increase was due to a 10.9% increase in ~~operating revenue was primarily attributable to~~tenants and an 11.4% increase in the ~~timing of receiving regulatory support funds.~~lease rate.

Operating expenses

~~During the three months ended June 30, 2019, total operating~~Operating expenses were comparable ~~to the three months ended June 30, 2018.~~

~~Index~~

~~Six Months Ended June 30, 2019 Compared~~ with the ~~Six Months Ended June 30, 2018~~

Six Months Ended
June 30, Change
($ in thousands) 2019 % of Revenue 2018 % of Revenue $ %
Wireline operating revenue
Service revenue $ 11,808
30.7 % $ 11,615
29.9 % 193
1.7 %
Carrier access and fiber revenue 25,164
65.5 % 25,322
65.2 % (158 ) (0.6 )%
Equipment revenue 103
0.3 % 92
0.2 % 11
12.0 %
Other revenue 1,361
3.5 % 1,790
4.7 % (429 ) (24.0 )%
Total Wireline operating revenue 38,436
100.0 % 38,819
100.0 % (383 ) (1.0 )%
Wireline operating expenses
Cost of services 18,130
47.2 % 19,175
49.4 % (1,045 ) (5.4 )%
Costs of goods sold 55
0.1 % 42
0.1 % 13
31.0 %
Selling, general and administrative 3,831
10.0 % 3,403
8.8 % 428
12.6 %
Depreciation and amortization 6,980
18.1 % 6,634
17.1 % 346
5.2 %
Total Wireline operating expenses 28,996
75.4 % 29,254
75.4 % (258 ) (0.9 )%
Wireline operating income $ 9,440
24.6 % $ 9,565
24.6 % (125 ) (1.3 )%

~~Operating revenue~~

~~During the six months ended June 30, 2019, total operating revenue was consistent with the six months ended June 30, 2018.~~

~~Operating expenses~~

~~During the six months ended June 30, 2019, total operating expenses were consistent with the six months ended June 30, 2018.~~prior year quarter.

Non-GAAP Financial Measures

Adjusted OIBDA

Adjusted OIBDA represents Operating income before depreciation, amortization of intangible assets, stock-based compensation and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.

Adjusted OIBDA is a non-GAAP financial measure that we use to evaluate our operating performance in comparison to our competitors. Management believes that analysts and investors use Adjusted OIBDA as a supplemental measure of operating performance to facilitate comparisons with other telecommunications companies. This measure isolates and evaluates operating performance by excluding the cost of financing (e.g., interest expense), as well as the non-cash depreciation and amortization of past capital investments, non-cash share-based compensation expense, and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.

~~During Q2 2019, we modified our definition of~~ Adjusted OIBDA to exclude the benefit received from the waived management fee and non-cash amortization of deferred contract costs, as well as certain other immaterial items. This change enhances the comparability of our non-GAAP performance measure with similar performance measures reported by comparable companies in our industry. We have applied this change consistently to all comparable periods presented below.

~~Adjusted OBIDA~~ has limitations as an analytical tool and should not be considered in isolation or as a substitute for operating income, ~~from operations,~~ net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).

~~Index~~

The following tables reconcile Adjusted OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure:

Three Months Ended June 30, 2019
(in thousands) Wireless Cable Wireline Other Consolidated
Operating income $ 22,024
$ 6,786
$ 5,094
$ (9,884 ) $ 24,020
Depreciation and amortization 32,219
6,555
3,447
132
42,353
OIBDA 54,243
13,341
8,541
(9,752 ) 66,373
Share-based compensation expense —
—
—
593
593
Adjusted OIBDA $ 54,243
$ 13,341
$ 8,541
$ (9,159 ) $ 66,966

Additionally, we realized cash savings of $9.7 million during the period from the waiver of Sprint's Management Fee. These cash savings are accounted for as a reduction of the affiliate contract enhancement asset, which was recognized in conjunction with the 2016 nTelos acquisition. The remaining waived management fee balance at June 30, 2019 was $137.9 million, which we expect to realize through 2022.



Three Months Ended March 31, 2020
(in thousands)	Wireless		Broadband		Tower		Corporate & Eliminations			Consolidated
Operating income	$	23,444	$	10,030	$	1,795	$	(12,219	)	$	23,050
Depreciation	21,010		10,717		470		271			32,468
Amortization of intangible assets	4,714		154		—		—			4,868
OIBDA	49,168		20,901		2,265		(11,948		)	60,386
Share-based compensation expense	—		—		—		2,905			2,905
Non-recurring deal advisory fees	—		—		—		910			910
Adjusted OIBDA	$	49,168	$	20,901	$	2,265	$	(8,133	)	$	64,201



Three Months Ended March 31, 2019
(in thousands)	Wireless		Broadband		Tower		Corporate & Eliminations			Consolidated
Operating income	$	24,213	$	10,049	$	1,124	$	(10,599	)	$	24,787
Depreciation	24,752		9,950		680		138			35,520
Amortization of intangible assets	5,618		41		—		—			5,659
OIBDA	54,583		20,040		1,804		(10,461		)	65,966
Share-based compensation expense	—		—		—		1,714			1,714
Adjusted OIBDA	$	54,583	$	20,040	$	1,804	$	(8,747	)	$	67,680

Three Months Ended June 30, 2018
(in thousands) Wireless Cable Wireline Other Consolidated
Operating income $ 22,251
$ 6,083
$ 4,793
$ (11,958 ) $ 21,169
Depreciation and amortization 31,565
6,179
3,240
133
41,117
OIBDA 53,816
12,262
8,033
(11,825 ) 62,286
Share-based compensation expense —
—
—
1,370
1,370
Adjusted OIBDA $ 53,816
$ 12,262
$ 8,033
$ (10,455 ) $ 63,656

~~Additionally, we realized cash savings of $9.6 million during the period from the waiver of Sprint's Management Fee, as discussed above.~~

Six Months Ended June 30, 2019
(in thousands) Wireless Cable Wireline Other Consolidated
Operating income $ 47,361
$ 12,489
$ 9,440
$ (20,483 ) $ 48,807
Depreciation and amortization 63,269
13,013
6,980
270
83,532
OIBDA 110,630
25,502
16,420
(20,213 ) 132,339
Share-based compensation expense —
—
—
2,307
2,307
Adjusted OIBDA $ 110,630
$ 25,502
$ 16,420
$ (17,906 ) $ 134,646

~~Additionally, we realized cash savings of $19.3 million during the period from the waiver of Sprint's Management Fee, as discussed above.~~

Six Months Ended June 30, 2018
(in thousands) Wireless Cable Wireline Other Consolidated
Operating income $ 39,518
$ 11,610
$ 9,565
$ (22,770 ) $ 37,923
Depreciation and amortization 65,490
12,203
6,634
277
84,604
OIBDA 105,008
23,813
16,199
(22,493 ) 122,527
Share-based compensation expense —
—
—
3,407
3,407
Adjusted OIBDA $ 105,008
$ 23,813
$ 16,199
$ (19,086 ) $ 125,934

~~Additionally, we realized cash savings of $18.6 million during the period from the waiver of Sprint's Management Fee, as discussed above.~~

~~Index~~

Financial Condition, Liquidity and Capital Resources

~~As of June 30, 2019 our Cash and cash equivalents totaled $98.1 million and the availability under our revolving line of credit was $75.0 million, for a total available liquidity of $173.1 million.~~

Sources and Uses of ~~Cash~~Cash: .

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations, and proceeds available under our Credit Facility.

As of March 31, 2020 our cash and cash equivalents totaled $120.2 million and the availability under our revolving line of credit was $75.0 million, for total available liquidity of $195.2 million.

The Company generated approximately ~~$129.6~~$61.1 million of net cash from operations induring the ~~first six~~three months ~~of 2019, representing an increase of $2.5 million or 2.0%, compared~~ended March 31, 2020, consistent with the ~~first six~~three months ~~of 2018, driven by:~~

~~a $10.9 million increase in net income, and was partially offset by~~

~~$7.6 million increase in net cash outflows from income taxes, and~~

~~$0.8 million as the result of a change in working capital.~~ended March 31, 2019.

Net cash used in investing activities decreased ~~$24.9~~$22.4 million ~~or 21.8%, for~~during the ~~six~~three months ended ~~June 30, 2019. Cash used in investing activities for~~March 31, 2020, compared with the ~~six~~three months ended ~~June 30,~~March 31, 2019 ~~was primarily for:~~due to the following:

$~~79.1~~10.0 million ~~for capital expenditures primarily driven by capacity upgrades and network expansion across our Wireless and Cable segments; and~~

~~investments~~decline in ~~our wireless, cable and fiber networks, other infrastructure investments, made on a recurring basis.~~acquisitions. In ~~2018, we acquired~~2019, the ~~Sprint Territory Expansion Area for $52.0 million and in 2019 we~~Company acquired Big Sandy Broadband, Inc. for $10.0 million.

$12.1 million ~~which was integrated into~~decrease in capital expenditures due primarily to a $17.0 million decline in Wireless segment as the Ntelos and Parkersburg network expansions were completed in the first half of 2019 partially offset by $5.0 million in higher spending in Broadband segment driven by our ~~Cable segment.~~

~~We expect our investments in our networks and infrastructure to expand in support of our continued growth.~~Glo Fiber market expansion.

Net cash used in financing activities ~~increased $1.3~~decreased $12.0 million, or ~~5.0%~~53.4%, ~~for~~during the ~~six~~three months ended ~~June 30, 2019. The use of cash for the six months ended June 30, 2019, was~~March 31, 2020 primarily ~~from increased~~driven by:

$11.4 million decrease in principal ~~payments~~repayments on our ~~long-term debt.~~term loans, and

$0.8 million decrease in payments for taxes related to share-based compensation vesting events.

Indebtedness: As of March 31, 2020, the Company’s indebtedness totaled approximately $712.2 million, net of unamortized loan fees of $11.3 million, with an annualized overall weighted average interest rate of approximately 3.2%. Refer to Note 8, Long-Term Debt for information about the Company's Credit Facility and financial covenants.

Borrowing ~~Capacity.~~Capacity: As of ~~June 30, 2019,~~March 31, 2020, the Company’s outstanding debt principal, under the Credit Facility, totaled ~~$760.5~~$723.5 million, with an estimated annualized effective interest rate of ~~3.79%~~3.2% after considering the impact of the interest rate swap contracts and unamortized loan costs.

As of ~~June 30, 2019, the Company was~~March 31, 2020, we were in compliance with the financial covenants in ~~its~~our Credit Facility agreement.

We ~~believe that~~expect our cash on hand, available funds under our revolving credit facility, and our cash flow from operations ~~and borrowings expected~~will be sufficient to ~~be available under our existing credit facilities will provide sufficient cash to enable us to fund planned capital expenditures, make scheduled principal and interest payments,~~ meet our ~~other cash requirements and maintain compliance with the terms of our financing agreements~~anticipated liquidity needs for ~~at least~~business operations for the next twelve months. There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our credit ~~facilities.~~facility. Thereafter, capital expenditures will likely be required to continue planned capital upgrades to the ~~acquired~~ wireless ~~network~~and broadband networks and provide increased capacity to meet ~~our~~ expected growth in demand for our products and services. The actual amount and timing of our future capital requirements may differ materially from our estimate depending on the demand for our products and services, including the outcome of a potential amendment of our wireless affiliate agreement with T-Mobile, new market developments and expansion opportunities.

Our cash flows from operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, regulatory requirements, changes in technologies, demand for our products and services, availability of labor resources and capital, changes in our relationship with Sprint, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions. The Wireless segment’s operations are dependent upon ~~Sprint’s~~T-Mobile’s ability to execute certain functions such as billing, customer care, and collections; our ability to develop and implement successful marketing programs and new products and services; and our ability to effectively and economically manage other operating activities under our agreements with Sprint. Our ability to attract and maintain a sufficient customer base, particularly in our ~~cable~~Broadband markets, is also critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results.

~~Index~~

Critical Accounting Policies

~~Critical accounting policies are those policies that affect our more significant judgments and estimates used in~~There have been no material changes to the ~~preparation of our unaudited condensed consolidated financial statements. For a more detailed discussion of our~~ critical accounting policies ~~please refer to~~as previously disclosed in Part II, Item 8 of our ~~2018~~Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2019.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s market risks relate primarily to changes in interest rates. The Company’s interest rate risk generally involves two components. The first component is outstanding debt with variable rates. As of ~~June 30, 2019,~~March 31, 2020, the Company had ~~$760.5~~$723.5 million of gross variable rate debt outstanding, bearing interest at a weighted average rate of ~~3.79% as determined on a quarterly basis.~~3.2%. An increase in market interest rates of 1.00% would add approximately ~~$7.5~~$7.1 million to annual interest expense, excluding the effect of ~~the~~our interest rate ~~swap.~~swaps. The swaps cover notional principal equal to $328.7 million, or approximately ~~50% or $361.9 million~~45.4% as of ~~June 30, 2019 of the outstanding variable rate debt through maturity in 2023.~~March 31, 2020. The Company is required to pay a combined fixed rate of approximately 1.16% and receive a variable rate based on one month LIBOR ~~(2.44% for June 2019)~~(1.60% at March 31, 2020), to manage a portion of its interest rate risk. Changes in the net interest paid or received under the swaps would offset ~~approximately 50%~~a corresponding portion of the change in interest expense on the variable rate debt outstanding. ~~The swap agreements currently reduce annual interest expense by approximately $2.3 million, based on the spread between the fixed rate and the variable rate currently in effect on our debt.~~

~~Index~~


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our President and Chief Executive Officer, who is the Principal Executive Officer, ~~and~~ the Senior Vice President - Finance and Chief Financial Officer, who is the Principal Financial Officer, and the Vice President and Chief Accounting Officer, who is the Principal Accounting Officer, conducted an evaluation of our disclosure controls and procedures, (as defined by Rule 13a-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Quarterly report on Form 10-Q.

As disclosed in our Annual Report on Form 10-K for our fiscal year ended December 31, ~~2018,~~2019, we identified material weaknesses in internal control over financial reporting. The material weaknesses will not be considered remediated until the applicable enhanced controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. As remediation has not yet been completed, our President and Chief Executive Officer, ~~and~~ our Senior Vice President - Finance and Chief Financial Officer, and our Vice President - Chief Accounting Officer, have concluded that our disclosure controls and procedures continued to be ineffective as of ~~June 30, 2019.~~March 31, 2020.

In light of the material weaknesses, management performed additional analysis and other procedures to ensure that our unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP).

Notwithstanding the material weaknesses, management has concluded that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Changes in Internal Control ~~Over~~over Financial Reporting

~~There have been no changes in~~As part of the Company’s continued remediation efforts, during the period ended March 31, 2020 the Company hired several experienced accounting professionals to further strengthen its technical accounting and internal control over financial reporting ~~(as defined~~capabilities. Aside from these actions and the ongoing execution of Management's Remediation Plan, there were no changes in ~~Rules 13a-15(f) and 15d-15(f) of~~our internal control over financial reporting during the ~~Exchange Act) as of June 30, 2019,~~most recently completed fiscal quarter that ~~have~~ materially affected or are reasonably likely to materially affect ~~the Company’s~~our internal control over financial reporting.

~~Remediation Efforts~~

Management is continuing to implement the material weakness remediation plans as disclosed in our Annual Report on Form 10-K for our fiscal year ended December 31, 2018. We believe that these actions and the improvements we expect to achieve will effectively remediate the material weaknesses. However, these material weaknesses will not be considered remediated until the enhanced controls operate for a sufficient period of time and management has concluded that these controls are operating effectively.PART II

~~Index~~


~~PART II.~~	~~OTHER INFORMATION~~


ITEM 1A.	~~Risk Factors~~RISK FACTORS

We discuss in our Annual Report on Form 10-K various risks that may materially affect our business. We use this section to update this discussion to reflect material developments since our Form 10-K was filed. As of ~~June 30,~~March 31, 2020, except as described below, there have been no significant changes to the Risk Factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019.

Risks Related to the Business Combination between T-Mobile and Sprint could cause significant volatility in the trading and value of the Company’s common stock

As previously disclosed, on April 1, 2020, T-Mobile US, Inc. (“T-Mobile”) announced the completion of its business combination with Sprint Corporation (“Sprint”) and subsequently delivered to the Company a notice of Network Technology Conversion, Brand Conversion and Combination Conversion (a “Conversion Notice”) pursuant to the terms of the Company’s affiliate agreement with Sprint.

Delivery of the Conversion Notice initiated the process set forth in the affiliate agreement to determine the nature of the Company’s relationship with the combined entity (“New T-Mobile”). The affiliate agreement provides for a 90-day period following receipt of the Conversion Notice for the parties to negotiate mutually agreeable terms and conditions under which the Company would continue as an affiliate of New T-Mobile. The affiliate agreement further provides that, if New T-Mobile and the Company have not negotiated a mutually acceptable agreement within the 90-day period, then New T-Mobile would have a period of 60 days thereafter to exercise an option to purchase the assets of our Wireless operations for 90% of the “Entire Business Value” (as defined under our affiliate agreement). If New T-Mobile does not exercise its purchase option, the Company would then have a 60-day period to exercise an option to purchase the legacy T-Mobile network and subscribers in our service area. If the Company does not exercise its purchase option, New T-Mobile must sell or decommission its legacy network and customers in our service area.

As previously disclosed, the Company’s management has been in discussions with New T-Mobile regarding the future of the Company’s Wireless operations; however, there can be no assurance as to the outcome of these discussions, including, without limitation, the terms or conditions under which the Company could continue as an affiliate of New T-Mobile or the terms of any purchase of the legacy T-Mobile subscriber and network assets in our service area or the terms to finance such an asset purchase, the timing or terms of any sale of the assets of the Company’s Wireless operations to New T-Mobile (including the value received by the Company pursuant to a negotiated transaction or as a result of the appraisal process under the affiliate agreement), or the use of proceeds from any such sale transaction or the post-closing composition or capital structure of the Company’s remaining operations and business following any such sale transaction. The pending discussions and any ensuring transaction with the New T-Mobile could cause significant volatility in the trading and value of the Company’s common stock.

The affiliate agreement also provides that 90 days following delivery of the Conversion Notice, New T-Mobile may effect a Technology Conversion, Brand Conversion and Combination Conversion (each as defined in the affiliate agreement), following which New T-Mobile is permitted to take certain competitive and other actions that could directly or indirectly adversely affect the Company’s Wireless business and operations.

Uncertainty about the Company’s relationship with New T-Mobile, particularly the effects on customers, distributors, and employees could have a material effect on the Company. These uncertainties may impair our ability to attract and retain customers for our Wireless segment, and retain and motivate key personnel during the pendency of the discussions with New T-Mobile, as existing and prospective employees may experience uncertainty about their future roles with New T-Mobile. Additionally, these uncertainties could cause our third party distributors and dealers to seek to change, cancel or fail to renew existing business relationships with us. Competitors may also target our existing customers by highlighting potential uncertainties and integration difficulties that may result from the uncertainties at this time.

In addition, management and financial resources have been diverted and will continue to be diverted toward the negotiations with New T-Mobile regarding the future of the Company’s Wireless operations. We have incurred, and expect to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with these negotiations and related planning. These costs could adversely affect our financial condition and results of operations prior to the determination of the future of our Wireless operations.

Risks Related to Our Business

The COVID-19 pandemic, and the future outbreak of other highly infectious or contagious diseases, could disrupt the operation on our business resulting in adverse impacts to our financial condition, results of operations, and cash flow.

Since being reported in December 2019 in China, an outbreak of a new strain of coronavirus (“COVID-19”) has spread globally, including to every state in the United States. In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States declared a national emergency. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption of financial markets, and another pandemic in the future could have similar effects. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of COVID-19 on the Company, and there is no guarantee that efforts by Shentel, designed to address adverse impacts of the Coronavirus, will be effective.

Governments in the markets that we operate have mandated residents to stay at home and have temporarily closed businesses that are not considered essential. Although our businesses are considered essential, the Company has ~~not identified any~~temporarily closed approximately 40% of its Sprint branded retail stores as a result of the COVID-19 pandemic, which will adversely affect postpaid subscriber gross additions in the Wireless segment. In addition, the current COVID-19 pandemic, or a future pandemic, could have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

additional disruptions or delays in our operations or network performance, as well as network maintenance and construction, testing, supervisory and customer support activities, and inventory and supply procurement;

increases in operating costs, inventory shortages and/or a decrease in productivity related to travel bans and social distancing efforts, which could include delays in our ability to install broadband services at customer locations or require our vendors and contractors to incur additional costs that may be passed onto us;

a deterioration in our ability to operate in affected areas or delays in the supply of products or services to us from vendors that are needed ~~updates~~for our efficient operations;

a decrease in the ability of our counterparties to meet their obligations to us in full, or at all;

a general reduction in business and economic activity may severely impact our customers and may cause them to be unable to pay for services provided; and

the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption.

Shentel has implemented policies and procedures designed to mitigate the risk ~~factors included in our most recent Form 10-K.~~of adverse impacts of the COVID-19 pandemic, or a future pandemic, on the Company’s operations, but it may incur additional costs to ensure continuity of business operations caused by COVID-19, or other future pandemics, which could adversely affect its financial condition and results of operations. However, the extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact.


ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds from Registered Securities

None.

Purchases of Equity Securities by the Issuer or Affiliated Purchasers

The following table provides information about shares repurchased during the first quarter ended March 31, 2020, to settle employee tax withholding related to the vesting of stock ~~awards~~awards. There have been no repurchases of shares during the ~~three~~ months ~~endedJune 30, 2019:~~

of January, February and March 2020 through the share repurchase program.

Number of Shares
Surrendered Average Price
Paid per Share
April 1 to April 30 402
$ 41.50
May 1 to May 31 1,864
42.62
June 1 to June 30 3,104
38.18
Total 5,370
$ 39.97



($ in thousands, except per share amounts)	Number of Shares Surrendered	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value that May Yet be Purchased under the Plans or Programs
January 1 to January 31	—	N/A		—	$	72,765
February 1 to February 29	42,398	$	45.87	—	$	72,765
March 1 to March 31	14	$	46.79	—	$	72,765
Total	42,412			—	$	72,765

~~Index~~


ITEM 6.	Exhibits Index


~~(a)~~	~~The following exhibits are filed with this Quarterly Report on Form 10-Q:~~



~~3.1~~	~~Amended and Restated Bylaws of Shenandoah Telecommunications Company, as amended effective April 16, 2019~~

31.1*	~~Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.~~

31.2*	~~Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.~~

31.3*	~~Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.~~

32**	~~Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.~~

~~(101)~~	~~Formatted in XBRL (Extensible Business Reporting Language)~~

	~~101.INS~~	~~XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document~~

	~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~

	~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

	~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

	~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~

	~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~

* Filed herewith


**	This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act.

~~Index~~

~~EXHIBIT INDEX~~



Exhibit No.	Exhibit

~~3.1~~	~~Amended and Restated Bylaws of Shenandoah Telecommunications Company, as amended effective April 16, 2019~~

31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.3*	Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32**	Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.

(101)	Formatted in XBRL (Extensible Business Reporting Language)

	101.INS	XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

	101.SCH	XBRL Taxonomy Extension Schema Document

	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB	XBRL Taxonomy Extension Label Linkbase Document

	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith


**	This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act.

~~Index~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	SHENANDOAH TELECOMMUNICATIONS COMPANY



	/s/James J. Volk
	James J. Volk
	Senior Vice President - Chief Financial Officer (Principal Financial Officer)
	Date: ~~August 6, 2019~~April 30, 2020

3931



(in thousands)	December 31, 2018 As Previously Reported		Effect of the Adoption of ASC Topic 842 (Leases)			January 1, 2019 As Adjusted
Assets
Prepaid expenses and other	$	60,162	$	(11,580	)	$	48,582
Property, plant and equipment, net	701,359		1,789			703,148
Operating lease right-of-use assets	—		369,344			369,344
Intangible assets, net	366,029		(13,828		)	352,201
Liabilities
Current operating lease liabilities	—		38,773			38,773
Accrued liabilities and other	14,563		(412		)	14,151
Deferred Lease	22,436		(22,436		)	—
Noncurrent operating lease liabilities	—		328,156			328,156
Other liabilities	14,364		1,644			16,008



(in thousands)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Lease income from operating leases - fixed	$	2,042	$	4,070

Operating lease expense	16,752		33,660

Amortization of finance lease assets	123		241
Interest on finance lease liabilities	23		45
Subtotal finance lease cost	146		286

Total lease expense	$	16,898	$	33,946



(in millions)	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Beginning balance	$	70.4		$	65.7
Contract payments	17.5			35.7
Contract amortization	(14.1		)	(27.6		)
Ending balance	$	73.8		$	73.8



(in thousands)	June 30, 2019		December 31, 2018
Domestic equity funds	$	1,690	$	1,409
International equity funds	417		370
Total investments carried at fair value	2,107		1,779

CoBank	8,147		7,705
Equity in other telecommunications partners	777		782
Total investments carried at cost	8,924		8,487

Other	532		522
Total equity method investments	532		522

Total investments	$	11,563	$	10,788



(in thousands)	Wireless		Cable		Wireline		Other			Eliminations			Consolidated
External revenue
Service revenue	$	94,350	$	30,716	$	5,558	$	—		$	—		$	130,624
Equipment revenue	16,548		255		52		—			—			16,855
Tower revenue	1,654		—		—		—			—			1,654
Other revenue	318		2,238		7,225		—			—			9,781
Total external revenue	112,870		33,209		12,835		—			—			158,914
Internal revenue	1,270		1,481		6,692		—			(9,443		)	—
Total operating revenue	114,140		34,690		19,527		—			(9,443		)	158,914
Operating expenses
Cost of services	33,563		15,701		8,979		—			(8,746		)	49,497
Cost of goods sold	15,742		112		19		—			1			15,874
Selling, general and administrative	10,592		5,536		1,988		9,752			(698		)	27,170
Depreciation and amortization	32,219		6,555		3,447		132			—			42,353
Total operating expenses	92,116		27,904		14,433		9,884			(9,443		)	134,894
Operating income (loss)	$	22,024	$	6,786	$	5,094	$	(9,884	)	$	—		$	24,020



	June 30, 2019 (4)	June 30, 2018 (4)
Retail PCS subscribers - postpaid	811,719	780,658
Retail PCS subscribers - prepaid	269,039	252,054
PCS market POPS (000) (1)	7,227	7,023
PCS covered POPS (000) (1)	6,285	5,908
CDMA base stations (sites)	1,910	1,770
Towers owned	217	193
Cell site leases	200	192



	June 30, 2019		June 30, 2018
Homes passed (1)	189,762		185,016
Customer relationships (2)
Video users	40,497		42,483
Non-video customers	43,024		35,773
Total customer relationships	83,521		78,256
Video
Customers (3)	42,874		44,800
Penetration (4)	22.6	%	24.2	%
Digital video penetration (5)	90.3	%	76.9	%
Broadband
Users (3)	71,893		65,466
Penetration (4)	37.9	%	35.4	%
Voice
Users (3)	23,805		22,882
Penetration (4)	12.5	%	12.4	%
Total revenue generating units (6)	138,572		133,148
Fiber route miles	3,657		3,426
Total fiber miles (7)	143,762		133,702
Average revenue generating units	138,016		132,287



	June 30, 2019	June 30, 2018
Long distance subscribers	9,461	8,930
Video customers (1)	4,520	4,850
Broadband customers	14,643	14,694
Fiber route miles	2,176	2,099
Total fiber miles (2)	163,363	157,008



Three Months Ended June 30, 2018
(in thousands)	Wireless		Cable		Wireline		Other			Consolidated
Operating income	$	22,251	$	6,083	$	4,793	$	(11,958	)	$	21,169
Depreciation and amortization	31,565		6,179		3,240		133			41,117
OIBDA	53,816		12,262		8,033		(11,825		)	62,286
Share-based compensation expense	—		—		—		1,370			1,370
Adjusted OIBDA	$	53,816	$	12,262	$	8,033	$	(10,455	)	$	63,656



Six Months Ended June 30, 2018
(in thousands)	Wireless		Cable		Wireline		Other			Consolidated
Operating income	$	39,518	$	11,610	$	9,565	$	(22,770	)	$	37,923
Depreciation and amortization	65,490		12,203		6,634		277			84,604
OIBDA	105,008		23,813		16,199		(22,493		)	122,527
Share-based compensation expense	—		—		—		3,407			3,407
Adjusted OIBDA	$	105,008	$	23,813	$	16,199	$	(19,086	)	$	125,934



	Number of Shares Surrendered	Average Price Paid per Share
April 1 to April 30	402	$	41.50
May 1 to May 31	1,864	42.62
June 1 to June 30	3,104	38.18
Total	5,370	$	39.97

March 31,
2020

March 31,
2019

Towers owned

Tenants (1)

Average tenants per tower