Shenandoah Telecommunications Company Reports Fourth Quarter and Full Year 2019 Results

Nachrichtenquelle: globenewswire
26.02.2020, 22:15  |  104   |   |   

EDINBURG, Va., Feb. 26, 2020 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced fourth quarter and full year 2019 financial and operating results.

2019 Highlights

  • Earnings per share increased 18.3% to $1.10.
  • Consolidated normalized free cash flow grew 7.9% to a record $139.2 million.
  • Record Wireless postpaid gross and net additions of 235,953 and 49,018, respectively.
  • Broadband revenues, Adjusted OIBDA and Operating Income grew 5.9%, 4.9% and 2.2%, respectively, from 2018.
  • Completed upgrades to DOCSIS 3.1 in our cable markets enabling broadband speeds up to 1 Gbps and completed wireless network growth-related capital investments in recently acquired markets.
  • Launched Fiber to the Home ("FTTH") service branded Glo Fiber in Harrisonburg, Virginia.

"We are pleased with the progress we made in 2019 in executing our strategic plan.  Our recently completed investments in our cable and wireless networks have already begun to produce positive returns with our cable broadband penetration growing from 37.4% to 40.6% in 2019 and our Wireless business achieving a record year of postpaid gross and net additions," said President and CEO, Christopher E. French.  "In addition, we launched our new fiber edge-out strategy, Glo Fiber, and acquired valuable mid-band spectrum in our region for our planned fixed wireless broadband launch later this year. We expect these investments will drive long-term growth in our Broadband business for the next several years and we are well positioned financially and operationally to continue the positive momentum in 2020."

Shentel's fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Thursday, February 27, 2020. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.

Consolidated Full Year 2019 Results

  • Revenue grew $3.1 million, or 0.5%, year over year to $633.9 million in 2019 driven primarily by Broadband revenue growth of $10.8 million partially offset by Wireless revenue decline of $7.1 million. The Wireless segment recognized $12.0 million in lower travel revenue in 2019 compared to 2018 due to the ongoing dispute with Sprint over resetting the travel fee.

  • Adjusted OIBDA decreased $3.7 million to $260.9 million in 2019 from $264.6 million in 2018 due to the $12 million travel revenue decline in the Wireless segment partially offset by growth of $3.9 million in Broadband, $3.6 million in the core Wireless business, excluding the impact from travel, and $0.6 million in Towers.

  • Operating income increased 4.1% in 2019 to $97.0 million from $93.2 million in 2018.

  • Earnings per diluted share grew 18.3% to $1.10 from $0.93 per diluted share in 2018.

Wireless

  • Wireless revenue decreased $7.1 million in 2019 to $443.4 million compared with $450.5 million in 2018. The decrease was attributable to the aforementioned $12 million decline in travel revenue partially offset by $3.2 million increase in postpaid and prepaid revenue from approximately 6% growth in subscribers and $1.6 million increase in roaming and MVNO revenues.

  • Wireless operating expenses in 2019 were $354.8 million, compared with $362.5 million in 2018, a year over year decrease of $7.6 million, primarily due to a $9.3 million decline in depreciation and amortization expense as certain assets acquired from nTelos became fully depreciated, $4.3 million decline in line costs from lower backhaul rates, a $2.0 million decline in operational taxes, $1.8 million decline in advertising costs and $0.7 million decline in retail store rents, partially offset by a $10.5 million increase in tower rents from a combination of an increase of 107 cell sites and higher tower rents rates from 2018.

  • Wireless Adjusted OIBDA in 2019 was $204.7 million, compared with $213.1 million in 2018.

  • Wireless operating income in 2019 was $88.5 million, compared with $88.0 million in 2018.

Broadband

  • Broadband revenue grew $10.8 million or 5.9% to $193.9 million in 2019 compared with $183.1 million in 2018. The increase was primarily attributable to a $10.1 million or 8.2% growth in Residential and SMB revenue, $3.3 million or 13.4% growth in Fiber enterprise and wholesale revenue partially offset by $3.2 million or 12.3% decline in RLEC revenue.

  • Broadband operating expenses increased approximately $9.9 million, or 7.0%, to $151.4 million in 2019, compared with 2018, primarily due to $2.9 million of operating expenses incurred in the launch of Glo Fiber, $3.0 million in higher depreciation and amortization expense, $1.6 million in increased cost of service due to the expansion of our network footprint and higher programming and retransmission fees, $1.5 million in payroll increases and $0.8 million in higher advertising and commissions.

  • Broadband Adjusted OIBDA in 2019 grew 4.9% to $83.8 million, compared with $79.9 million in 2018.

  • Broadband operating income in 2019 was $42.5 million, compared with $41.6 million in 2018.

Tower

  • Tower revenue in 2019 was $13.0 million, representing a year over year increase of 6.5% compared with $12.2 million in 2018. The increase was due to a 10.1% increase in tenants and a 2.5% increase in the lease rate.

  • Tower operating expenses in 2019 were $7.1 million, compared with $7.4 million for 2018. The decline was due to lower depreciation and amortization expense.

  • Tower Adjusted OIBDA grew 8.6% to $7.9 million, compared with $7.3 million in 2018.

  • Tower operating income in 2019 was $5.9 million, compared with $4.8 million in 2018.

Consolidated Fourth Quarter 2019 Results

  • Revenue in the fourth quarter of 2019 was $161.0 million compared with $161.5 million in the fourth quarter of 2018, as Broadband and Tower segments growth of $3.8 million and $0.7 million were offset by $4.5 million in lower Sprint travel revenue resulting from the ongoing dispute with Sprint over resetting the travel fee.

  • Adjusted OIBDA in the fourth quarter of 2019 was $63.5 million compared with $69.1 million in the fourth quarter of 2018 due to a decline in the Wireless segment.

  • Operating income in the fourth quarter of 2019 was $22.9 million compared with $27.0 million in the fourth quarter of 2018.

  • Net income in the fourth quarter of 2019 was $13.5 million or $0.27 per diluted share compared with net income of $14.9 million or $0.30 per diluted share in the fourth quarter of 2018.

Wireless

  • Shentel served 844,194 wireless postpaid subscribers at December 31, 2019, representing an increase of 6.2% compared with 795,176 subscribers as of December 31, 2018. Fourth quarter 2019 postpaid gross adds increased 31.8% to 71,830, net adds increased 115.6% to 20,777.  Postpaid phone net adds more than doubled to 8,654 and postpaid phone churn increased 12 basis points to 1.88% compared to fourth quarter 2018.  At December 31, 2019, phones represented 87.8% of the postpaid base.

  • Shentel served 274,012 wireless prepaid subscribers at December 31, 2019, representing an increase of 5.9% compared with 258,704 subscribers as of December 31, 2018. Fourth quarter 2019 prepaid gross adds, net adds and churn were consistent with the fourth quarter 2018.

  • Wireless revenue decreased $3.5 million, to $112.4 million for the fourth quarter of 2019 compared with the fourth quarter of 2018. Sprint travel revenue declined $4.5 million due to the continuing dispute over resetting the travel fee partially offset by $1.2 million of higher equipment revenue due to higher postpaid gross adds.

  • Wireless operating expenses in the fourth quarter of 2019 were $91.5 million compared to $90.9 million in the fourth quarter of 2018. The increase was due to $3.0 million in higher tower rents and maintenance due to an increase of 107 cell sites in our network, $1.6 million in higher equipment cost of goods sold due to higher gross adds offset by $0.8 million in lower property taxes, and $3.0 million in lower depreciation and amortization as certain assets acquired from nTelos became fully depreciated.

  • Wireless Adjusted OIBDA in the fourth quarter of 2019 was $48.7 million, compared with $55.7 million for the fourth quarter of 2018.

  • Wireless Operating Income in the fourth quarter of 2019 was $20.9 million, compared to $25.0 million for the fourth quarter of 2018.

Broadband

  • Total Revenue Generating Units ("RGUs") as of December 31, 2019 were 191,227, representing an increase of 1.5% which includes the addition of approximately 4,800 RGUs obtained through the Big Sandy acquisition and 177 RGUs from the late October launch of Glo Fiber.  Glo Fiber ended the year with approximately 1,723 homes passed representing 7.4% penetration.  Cable broadband penetration grew from 37.4% to 40.6% and broadband churn declined 19 basis points to 1.64%.

  • Broadband revenue in the fourth quarter of 2019 grew $3.8 million or 8.2% to $49.8 million compared with $46.0 million in the fourth quarter of 2018, primarily driven by $2.8 million increase in Residential and SMB revenue and $1.1 million increase in Fiber enterprise and wholesale revenue.

  • Broadband operating expenses in the fourth quarter of 2019 were $40.5 million compared to $36.6 million in the fourth quarter of 2018. The increase was primarily due to $1.1 million of expenses incurred with the launch of Glo Fiber and a $2.1 million increase in depreciation expense due to the expansion of our network.

  • Broadband Adjusted OIBDA in the fourth quarter of 2019 grew 10.0% to $21.4 million, compared with $19.4 million for the fourth quarter of 2018.

  • Broadband Operating income in the fourth quarter of 2019 was $9.4 million, compared to $9.5 million in the fourth quarter of 2018.

Tower

  • Total towers and tenants were 225 and 404 as of December 31, 2019 as compared to 208 and 367, respectively, as of December 31, 2018.

  • Tower revenue in the fourth quarter of 2019 grew 22.2% to $3.8 million, compared with $3.1 million for the fourth quarter of 2018.

  • Tower operating expenses in the fourth quarter of 2019 were $1.3 million, compared with $2.1 million for the fourth quarter of 2018. The decline was due to lower depreciation and amortization expense.

  • Tower Adjusted OIBDA in the fourth quarter of 2019 grew 21.3% to $2.3 million, compared with $1.9 million for the fourth quarter of 2018.

  • Tower operating income in the fourth quarter of 2019 was $2.4 million, compared to $1.0 million for the fourth quarter of 2018.

Other Information

  • Capital expenditures were $138.8 million for the year ended December 31, 2019 compared with $136.6 million in 2018. The $2.2 million increase in capital expenditures due primarily to Broadband segment's $19.0 million investment in Glo Fiber and fixed wireless, partially offset by lower wireless and tower capital expenditures.

  • The Company declared and paid a cash dividend of $13.9 million, or $0.29 per share, in the fourth quarter 2019.

  • During the fourth quarter of 2019, we repurchased and retired 200,410 shares of our outstanding common stock in the open market purchases, pursuant to the previously-announced share repurchase program, for a total of $7.2 million. As of December 31, 2019, approximately $72.8 million remained available to repurchase shares under the share repurchase program.

  • Outstanding debt at December 31, 2019 totaled $720.1 million, net of unamortized loan costs, compared to $770.2 million as of December 31, 2018.  As of December 31, 2019, the Company had liquidity of approximately $176.7 million, including $75.0 million of revolving line of credit availability.

Free cash flow, normalized free cash flow and Adjusted OIBDA are non-GAAP financial measures that are not determined in accordance with US generally accepted accounting principles. Reconciliations of these non-GAAP financial measures are provided in this press release after the consolidated financial statements.

Conference Call and Webcast

Teleconference Information:

Date: February 27, 2020   
Time: 8:30 A.M. (ET)
Dial in number: 1-888-695-7639

Password: 2493817
 
Audio webcast: http://investor.shentel.com/

An audio replay of the call will be available approximately two hours after the call is complete, through March 26, 2020 by calling (855) 859-2056.

About Shenandoah Telecommunications

Shenandoah Telecommunications Company (Shentel) provides a broad range of diversified communications services through its high speed, state-of-the-art wireless, cable and fiber optic networks to customers in the Mid-Atlantic United States. The Company’s services include: wireless voice and data; broadband internet, video, and digital voice; fiber optic Ethernet, wavelength and leasing; telephone voice and digital subscriber line; and tower colocation leasing. Shentel 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, Kentucky, and Ohio. For more information, please visit www.shentel.com.

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

CONTACTS:
Shenandoah Telecommunications Company
Jim Volk
Senior Vice President - Chief Financial Officer
540-984-5168
Jim.Volk@emp.shentel.com
Or
John Nesbett/Jennifer Belodeau
IMS Investor Relations
203-972-9200
jnesbett@institutionalms.com


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

  Quarter Ended December 31,   Year Ended December 31,
  2019   2018   2019   2018
Revenue:              
Service revenue and other $ 140,941     $ 142,637     $ 565,063     $ 562,456  
Equipment revenue 20,056     18,847     68,843     68,398  
Total revenue 160,997     161,484     633,906     630,854  
Operating expenses:              
Cost of services 49,574     47,660     198,753     194,022  
Cost of goods sold 19,578     17,952     65,914     63,959  
Selling, general and administrative 29,470     27,105     112,540     113,222  
Depreciation and amortization 39,495     41,773     159,653     166,405  
Total operating expenses 138,117     134,490     536,860     537,608  
Operating income 22,880     26,994     97,046     93,246  
Other income (expense):              
Interest expense (6,487 )   (7,663 )   (29,468 )   (34,847 )
Other (101 )   831     3,461     3,713  
Income before income taxes 16,292     20,162     71,039     62,112  
Income tax expense 2,771     5,310     16,104     15,517  
Net income $ 13,521     $ 14,852     $ 54,935     $ 46,595  
               
Net income per share, basic and diluted:              
Basic net income per share $ 0.27     $ 0.31     $ 1.10     $ 0.94  
Diluted net income per share $ 0.27     $ 0.30     $ 1.10     $ 0.93  
Weighted average shares outstanding, basic 49,762     49,587     49,811     49,542  
Weighted average shares outstanding, diluted 50,067     50,112     50,101     50,063  


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

  December 31,
 2019
  December 31,
 2018
       
Cash and cash equivalents $ 101,651     $ 85,086  
Other current assets 137,380     125,116  
Total current assets 239,031     210,202  
       
Investments 12,388     10,788  
Property, plant and equipment, net 700,114     701,359  
Intangible assets, net 314,147     366,029  
Goodwill 149,070     146,497  
Operating lease right-of-use assets 392,589      
Deferred charges and other assets, net 53,352     49,891  
Total assets $ 1,860,691     $ 1,484,766  
       
Total current liabilities 147,336     $ 88,539  
Long-term debt, less current maturities 688,464     749,624  
Other liabilities 555,469     204,356  
Total shareholders’ equity 469,422     442,247  
Total liabilities and shareholders’ equity $ 1,860,691     $ 1,484,766  


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)


  Year Ended December 31,
  2019   2018
Cash flows from operating activities:      
Net income $ 54,935     $ 46,595  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation 139,543     142,111  
Amortization of intangible assets 20,535     24,294  
Accretion of asset retirement obligations 1,478     1,045  
Bad debt expense 1,743     1,983  
Stock based compensation expense, net of amount capitalized 3,817     4,959  
Deferred income taxes 11,644     6,208  
Other adjustments (1,489 )   553  
Changes in assets and liabilities 26,939     37,899  
Net cash provided by operating activities $ 259,145     $ 265,647  
       
Cash flows from investing activities:      
Capital expenditures (138,792 )   (136,641 )
Cash disbursed for acquisitions (10,000 )   (52,000 )
Cash disbursed for FCC spectrum licenses (16,742 )    
Proceeds from sale of assets and other 200     841  
Net cash used in investing activities $ (165,334 )   $ (187,800 )
       
Cash flows from financing activities:      
Principal payments on long-term debt (53,197 )   (51,264 )
Dividends paid, net of dividends reinvested (13,943 )   (12,866 )
Repurchase of common stock (7,231 )    
Proceeds from revolving credit facility borrowings     15,000  
Principal payments on revolving credit facility     (15,000 )
Taxes paid for equity award issuances (2,911 )   (3,245 )
Payments for debt issuance costs     (3,971 )
Proceeds from exercise of stock options 36      
Net cash used in financing activities $ (77,246 )   $ (71,346 )
Net increase in cash and cash equivalents 16,565     $ 6,501  
Cash and cash equivalents, beginning of period 85,086     78,585  
Cash and cash equivalents, end of period $ 101,651     $ 85,086  


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.

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

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

Year Ended December 31, 2019                    
(in thousands)   Wireless   Broadband   Tower   Corporate   Consolidated
Operating income   $ 88,541     $ 42,521     $ 5,899     $ (39,915 )   $ 97,046  
Depreciation   96,094     40,831     2,025     593     139,543  
Amortization of intangible assets   20,062     473             20,535  
OIBDA   204,697     83,825     7,924     (39,322 )   257,124  
Share-based compensation expense               3,817     3,817  
Adjusted OIBDA   $ 204,697     $ 83,825     $ 7,924     $ (35,505 )   $ 260,941  


Year Ended December 31, 2018                    
(in thousands)   Wireless   Broadband   Tower   Corporate   Consolidated
Operating income   $ 88,004     $ 41,620     $ 4,843     $ (41,221 )   $ 93,246  
Depreciation   100,950     38,140     2,454     567     142,111  
Amortization of intangible assets   24,117     177             24,294  
OIBDA   213,071     79,937     7,297     (40,654 )   259,651  
Share-based compensation expense               4,959     4,959  
Adjusted OIBDA   $ 213,071     $ 79,937     $ 7,297     $ (35,695 )   $ 264,610  


Quarter ended December 31, 2019                    
(in thousands)   Wireless   Broadband   Tower   Corporate   Consolidated
Operating income   $ 20,908     $ 9,371     $ 2,439     $ (9,838 )   $ 22,880  
Depreciation   23,110     11,842     (113 )   201     35,040  
Amortization of intangible assets   4,714     166             4,880  
OIBDA   48,732     21,379     2,326     (9,637 )   62,800  
Share-based compensation expense               659     659  
Adjusted OIBDA   $ 48,732     $ 21,379     $ 2,326     $ (8,978 )   $ 63,459  


Quarter Ended December 31, 2018                    
(in thousands)   Wireless   Broadband   Tower   Corporate   Consolidated
Operating income   $ 24,957     $ 9,487     $ 1,023     $ (8,473 )   $ 26,994  
Depreciation   25,154     9,898     894     163     36,109  
Amortization of intangible assets   5,620     44             5,664  
OIBDA   55,731     19,429     1,917     (8,310 )   68,767  
Share-based compensation expense               381     381  
Adjusted OIBDA   $ 55,731     $ 19,429     $ 1,917     $ (7,929 )   $ 69,148  


Segment Results

Year ended December 31, 2019
(in thousands)
Wireless   Broadband   Tower   Corporate & Eliminations   Consolidated
External revenue                  
Postpaid $ 302,031     $     $         $ 302,031  
Prepaid 53,540                 53,540  
Tower lease         6,964         6,964  
Cable, residential and SMB     134,187             134,187  
Fiber, enterprise and wholesale     20,187             20,187  
Rural local exchange carrier     21,074             21,074  
Travel, installation, and other 20,160     6,920             27,080  
Service revenue and other 375,731     182,368     6,964         565,063  
Equipment 67,659     1,184             68,843  
Total external 443,390     183,552     6,964         633,906  
Revenue from other segments     10,392     6,020     (16,412 )    
Total revenue 443,390     193,944     12,984     (16,412 )   633,906  
Operating expenses                  
Cost of services 131,745     76,674     3,894     (13,560 )   198,753  
Cost of goods sold 65,148     766             65,914  
Selling, general and administrative 42,225     32,679     1,166     36,470     112,540  
Depreciation and amortization 115,731     41,304     2,025     593     159,653  
Total operating expenses 354,849     151,423     7,085     23,503     536,860  
Operating income (loss) $ 88,541     $ 42,521     $ 5,899     $ (39,915 )   $ 97,046  
                                       


Year ended December 31, 2018
(in thousands)
Wireless   Broadband   Tower   Corporate & Eliminations   Consolidated
External revenue                  
Postpaid $ 300,775     $     $     $     $ 300,775  
Prepaid 51,602                 51,602  
Tower lease         7,180         7,180  
Cable, residential and SMB     124,072             124,072  
Fiber, enterprise and wholesale     18,218             18,218  
Rural local exchange carrier     23,485             23,485  
Travel, installation, and other 30,572     6,552             37,124  
Service revenue and other 382,949     172,327     7,180         562,456  
Equipment 67,510     888             68,398  
Total external 450,459     173,215     7,180         630,854  
Revenue from other segments     9,905     5,016     (14,921 )    
Total revenue 450,459     183,120     12,196     (14,921 )   630,854  
Operating expenses                  
Cost of services 127,045     75,066     4,121     (12,210 )   194,022  
Cost of goods sold 63,583     376             63,959  
Selling, general and administrative 46,760     27,741     778     37,943     113,222  
Depreciation and amortization 125,067     38,317     2,454     567     166,405  
Total operating expenses 362,455     141,500     7,353     26,300     537,608  
Operating income (loss) $ 88,004     $ 41,620     $ 4,843     $ (41,221 )   $ 93,246  
                   


Quarter ended December 31, 2019
(in thousands)
Wireless   Broadband   Tower   Corporate & Eliminations   Consolidated
External revenue                  
Postpaid $ 75,623     $     $         $ 75,623  
Prepaid 13,115                 13,115  
Tower lease         1,598         1,598  
Cable, residential and SMB     34,484             34,484  
Fiber, enterprise and wholesale     5,276             5,276  
Rural local exchange carrier     5,175             5,175  
Travel, installation, and other 3,779     1,891             5,670  
Service revenue and other 92,517     46,826     1,598         140,941  
Equipment 19,845     211             20,056  
Total external 112,362     47,037     1,598         160,997  
Revenue from other segments     2,795     2,190     (4,985 )    
Total revenue 112,362     49,832     3,788     (4,985 )   160,997  
Operating expenses                  
Cost of services 33,452     19,271     1,102     (4,251 )   49,574  
Cost of goods sold 19,408     170             19,578  
Selling, general and administrative 11,195     9,012     360     8,903     29,470  
Depreciation and amortization 27,399     12,008     (113 )   201     39,495  
Total operating expenses 91,454     40,461     1,349     4,853     138,117  
Operating income (loss) $ 20,908     $ 9,371     $ 2,439     $ (9,838 )   $ 22,880  
                                       


Quarter ended December 31, 2018
(in thousands)
Wireless   Broadband   Tower   Corporate & Eliminations   Consolidated
External revenue                  
Postpaid $ 75,970     $     $     $     $ 75,970  
Prepaid 13,341                 13,341  
Tower lease         1,830         1,830  
Cable, residential and SMB     31,676             31,676  
Fiber, enterprise and wholesale     4,589             4,589  
Rural local exchange carrier     5,528             5,528  
Travel, installation, and other 7,937     1,766             9,703  
Service revenue and other 97,248     43,559     1,830         142,637  
Equipment 18,651     196             18,847  
Total external 115,899     43,755     1,830         161,484  
Revenue from other segments     2,302     1,270     (3,572 )    
Total revenue 115,899     46,057     3,100     (3,572 )   161,484  
Operating expenses                  
Cost of services 30,555     18,891     1,119     (2,905 )   47,660  
Cost of goods sold 17,833     119             17,952  
Selling, general and administrative 11,780     7,618     64     7,643     27,105  
Depreciation and amortization 30,774     9,942     894     163     41,773  
Total operating expenses 90,942     36,570     2,077     4,901     134,490  
Operating income (loss) $ 24,957     $ 9,487     $ 1,023     $ (8,473 )   $ 26,994  


Supplemental Information

Wireless Operating Statistics

The following tables indicate selected operating statistics of Wireless, including Sprint subscribers, as of the dates shown:

    December 31,
 2019
  December 31,
 2018 (2)
Retail PCS total subscribers - postpaid   844,194     795,176  
Retail PCS phone subscribers   740,958     723,455  
Retail PCS connected device subscribers   103,236     71,721  
Retail PCS subscribers - prepaid   274,012     258,704  
PCS market POPS (000) (1)   7,227     7,023  
PCS covered POP (000) (1)   6,324     6,109  
Macro base stations (cell sites)   1,960     1,853  


    Three Months Ended
December 31,
  Twelve Months Ended
December 31,
Postpaid:   2019   2018   2019   2018 (2)
Gross PCS total subscriber additions   71,830     54,517     235,953     190,334  
Gross PCS phone additions   50,188     42,114     174,237     156,601  
Gross PCS connected device additions   21,642     12,403     61,716     33,733  
Net PCS total subscriber additions   20,777     9,639     49,018     20,236  
Net PCS phone additions   8,654     4,179     19,846     12,310  
Net PCS connected device additions   12,123     5,460     29,172     7,926  
PCS monthly retail total churn %   2.05 %   1.90 %   1.92 %   1.82 %
PCS monthly phone churn %   1.88 %   1.76 %   1.77 %   1.69 %
PCS monthly connected device churn %   3.30 %   3.40 %   3.21 %   3.35 %
Prepaid:                
Gross PCS subscriber additions   39,352     38,225     152,098     150,662  
Net PCS subscriber additions   2,461     3,242     15,308     17,191  
PCS monthly retail churn %   4.52 %   4.56 %   4.26 %   4.45 %

___________________________

(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 agreements, and Covered POPS are those covered by our network. The data source for POPS is U.S. census data. Historical periods previously referred to other third party population data and have been recast to refer to U.S. census data.
(2) Acquired the Richmond Expansion Area on February 1, 2018 with market POPs of 1,082,000 and covered POPs of 602,000. 2018 net adds results exclude 38,343 postpaid and 15,691 prepaid subscribers acquired.

Broadband Operating Statistics

    December 31,
2019
  December 31,
2018
 
Broadband homes passed (1)   208,298     201,633    
Broadband customer relationships (2)   100,890     95,328    
           
Video:          
RGUs (3)   53,673     58,672    
Penetration (4)   25.8 %   29.1 %  
Digital video penetration (5)   95.0 %   78.8 %  
Broadband:          
RGUs (3)   84,045     75,389    
Penetration (4)   40.3 %   37.4 %  
Voice:          
RGUs (3)   31,380     29,474    
Penetration (4)   16.2 %   15.9 %  
Total Cable and Glo Fiber RGUs   169,098     163,535    
           
RLEC homes passed   25,846     26,782    
RLEC customer relationships (2)   10,306     11,226    
RLEC RGUs:          
Data RLEC   7,797     9,104    
Penetration (4)   30.2 %   34.0 %  
Voice RLEC   14,332     15,698    
Penetration (4)   55.5 %   58.6 %  
Total RLEC RGUs   22,129     24,802    
           
Total RGUs   191,227     188,337    
           
Fiber route miles   6,139     5,641    
Total fiber miles (6)   320,444     300,200    

___________________________

(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) Customer relationships represent the number of billed customers who receive at least one of our services.
(3) As of September 30, 2019, the Company revised its methodology for counting RGUs associated with hotels, multiple dwelling units ("MDUs") and certain commercial customers.  We now count each dwelling or unit of service as a separate RGU.  Prior year information has been recast to reflect our revised methodology.  Previously we counted RGUs on an equivalent basis consistent with carriage fee practices.
(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) 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.

Tower Operating Statistics

    December 31,
2019
  December 31,
2018
Towers owned   225     208  
Tenants (1)   404     367  
Average tenants per tower   1.8     1.8  

___________________________

(1) Includes 201 and 174 intercompany tenants for our Wireless segment as of December 31, 2019 and 2018, respectively.


Reconciliation of Non-GAAP Measures Normalized Free Cash Flow and Free Cash Flow

    Three Months Ended
December 31,
  Twelve Months Ended
December 31,
(in thousands)   2019   2018   2019   2018
Net cash provided by operating activities   $ 65,686     $ 76,847     $ 259,145     $ 265,647  
Less: Capital expenditures (1)   (22,988 )   (44,332 )   (119,954 )   (136,641  
Normalized free cash flow   42,698     32,515     139,191     129,006  
Glo Fiber and Fixed Wireless capital expenditures   (8,766 )       (18,838 )    
Free cash flow   $ 33,932     $ 32,515     $ 120,353     $ 129,006  

(1) Excludes capital expenditures for the development of Glo Fiber and Fixed Wireless.

Free cash flow and normalized free cash flow are non-GAAP financial measures that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Free cash flow is calculated by subtracting capital expenditures from net cash provided by operating activities.  Normalized free cash flow is calculated by subtracting capital expenditures, excluding spending on the development of Glo Fiber and Fixed Wireless services, from net cash provided by operating activities.  We believe they are more conservative measures of our cash flow since purchases of fixed assets are necessary for ongoing operations and expansion. Free cash flow and normalized free cash flow are utilized by our management, investors and analysts to evaluate cash available that may be used to pay scheduled principal payments on our debt obligations and provide further investment in the business.

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