Shenandoah Telecommunications Company, known as Shentel, announced Monday that it is “implementing a workforce reduction” as the company’s pending sale of its wireless assets and certain liabilities to T-Mobile looms.
The organizational restructuring plan is expected to impact approximately 340 employees, or 30%, of the company’s workforce, across the Edinburg-based company’s six-state Mid-Atlantic service area, according to a news release.
Shentel Vice President and Chief Human Resources Officer Heather Banks was able to provide approximate counts of employees in local areas who were notified that their current position would be impacted, which includes 29 Shenandoah County residents, 22 in Frederick County and Winchester combined and two in Warren County.
“We anticipate these numbers will end up being lower as individuals are able to transfer into other roles we are actively seeking to fill within Shentel’s other businesses or because they are able to join T-Mobile,” Banks said.
Shentel will have approximately 860 employees following the restructuring to support its Broadband and Tower segments.
Shentel has said that about 90% of the reductions are employees who support wireless operations and who will not automatically transfer to T-Mobile as part of the transaction.
Most of the employees impacted by the workforce reduction will leave the company in 2021, following the closing of the pending Shentel Wireless sale and any required transition services, Shentel said.
“We announced to our employees (Monday) the necessary plans to begin to reduce the size of our workforce for the anticipated divestiture of our wireless assets and operations,” Shentel President and CEO Christopher E. French, states in the release. “Although this change was anticipated, its impact will cause disruption and uncertainty for the affected employees and their families. We are coordinating with T-Mobile to assist in transitioning as many of the affected employees as possible to T-Mobile following closing of the transaction.”
French went on to say that Shentel is “proactively providing career transition services” to those impacted, whether they are hired by T-Mobile or not. Shentel will also provide severance pay and benefits, inclusive of the new American Rescue Plan Act COBRA subsidy requirements to impacted employees not hired by T-Mobile.
Further, Shentel plans to provide a one-time 401(k) contribution as well as a one-time “cash bonus” to all eligible impacted employees.
The closing of the Shentel Wireless sale is expected to occur in early third quarter 2021 subject to execution of the definitive asset purchase agreement, customary closing conditions and required regulatory approvals.
Additionally, Shentel will incur termination expenses that will be settled in cash, with approximately $1.7 million related to continuing operations and approximately $4.5 million related to discontinued operations, the company said.
Shentel said it expects to incur a majority of these costs during the third quarter of 2021. The workforce reduction is expected to decrease the Company’s annualized run-rate operating expenses for continuing operations by approximately $4 million.
Shentel and T-Mobile came to an agreement on the sale price of the wireless assets earlier this year, agreeing on a price of $1.95 billion.
The purchase price was based on a calculation of 90% of “entire business value” and is inclusive of the unrealized Sprint-waived management fee. Shentel and T-Mobile had previously agreed that the determination of “entire business value” through the just-completed appraisal process is final and binding.
The actual valued price of Shentel’s wireless assets was $2.10 billion.
Shentel previously said it expected that the after-tax proceeds from the sale of Shentel Wireless will be approximately $1.5 billion. The transaction will be accounted for as an asset sale for income tax purposes.
Shentel also previously said it expects to use the proceeds — plus $195 million of on-hand cash — to repay approximately $702 million of outstanding term loans and swap liabilities and terminate the respective agreements; issue a special dividend of $18.75 per share to Shentel’s shareholders, which would total around $940 million; provide adequate liquidity for growth and potential strategic acquisitions; and provide liquidity for general corporate purposes, among other things.
“Our strategy moving forward has been focused on growth of our broadband business in our cable markets and with the launch of our Glo Fiber and Beam Fixed Wireless services,” Banks said.
Banks said that focus on broadband has been evident in recent investor presentations as well as recent earnings reports.