Shentel closes fourth quarter strong
Edinburg-based Shenandoah Telecommunications Company, commonly known as Shentel, saw an across the board rise in subscription rates in 2014, according to its latest quarterly report.
The fourth quarter report saw year-end postpaid cell phone service subscriptions, which are done in partnership with Sprint, rise from 273,721 at the end of 2013 to 287,867 at the end of 2014, a 5.1 percent increase. The company added 14,146 customers to its plans during 2014, a 30.6 percent rise over the 10,829 added in 2013.
The yearly average churn rate, or amount of subscribers discontinuing Shentel’s services, amounted to 1.76 percent. In the fourth quarter, the net addition of postpaid subscribers was 4,891, down from 6,054 in 2013 and the churn rate was 1.92 percent, higher than the 1.69 percent churn rate in 2013.
Adele Skolits, vice president of finance for Shentel, said the reason for the increase in postpaid subscriptions was the availability of 4G services throughout the company’s coverage area.
“There are not very many rural cell phone carriers who can say they provide 4G service,” Skolits said. “We also have a sales team who delivers support to our customers at our retail stores and helps us retain our customer base.”
Skolits added, “I think Sprint’s advertising campaigns about cutting cell phone bills in half, particularly for digital usage of the phone, has had an impact on increasing our customer base, as well as the popularity of the iPhone.”
Prepaid cell phone services saw a 5.9 percent increase during 2014, with subscriptions rising from 137,047 to 145,162. The number of subscriptions added over the year decreased slightly from 8,870 in 2013 to 8,115 in 2014. The churn rate for the year was 4 percent.
During the fourth quarter, the net addition of prepaid subscribers was 5,036, up from 4,378 during 2013. The churn rate for the fourth quarter was 4.02 percent, up from the 2013 churn rate of 3.65 percent.
Skolits said the prepaid plans offered by Shentel fall into three categories, the government supported “Lifeline” program for low-income residents, Virgin Mobile and Boost. While losing any customer is not beneficial for the company, Skolits said, prepaid subscriptions have shifted from the Lifeline plans to the more expensive and revenue-generating Virgin Mobile and Boost plans.
“From a business perspective, the kinds of customers we have with the Virgin Mobile and Boost are higher valued, so we are pleased with the shift in our customer base,” Skolits said.
Prepaid plans also have an “inherently higher” churn rate, Skolits said.
“Because there’s no contract, a lot of the customers using prepaid plans are generally not creditworthy, tend to live from hand to mouth and are much more likely to let their plans lapse,” Skolits said.
Also affecting the prepaid market is higher enforcement of reducing fraud with the Lifeline program, Skolits said.
“The government only allows one Lifeline phone per household and they’ve been really cracking down on people who are defrauding the system,” Skolits said.
Cable and high speed Internet are measured according to revenue generating units, called RGUs. For high-speed Internet, Shentel saw its RGUs rise from 45,776 to 51,359 during 2014. In terms of cable, there was a decrease from 53,076 at the beginning of 2014 to 52,095. The total RGUs for the company were 121,716 up from 113,840 at the close of 2013.
Skolits said there are multiple factors leading to the decline in cable rates, such as the exclusivity of NFL Sunday Ticket for satellite subscribers and higher overhead for cable.
“The content providers, such as Disney, ESPN and Discovery Channel, are making 60 percent of every dollar we take in on revenue and that’s an increase from 50 percent a few years ago,” Skolits said.
Skolits said high speed Internet is quickly becoming the premium product for Shentel and will soon outpace cable subscriptions. She said overall, she and the company are pleased with last year’s performance.
Contact staff writer Henry Culvyhouse at 540-465-5137 ext. 184, or email@example.com