GlobeNewswire Inc | Jul 30, 2020 06:00AM EDT

July 30, 2020

EDINBURG, Va., July 30, 2020 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (Shentel) (Nasdaq: SHEN) announced second quarter 2020 financial and operating results.

Second Quarter 2020 Highlights

-- Record quarter for Broadband data net additions of 6,000 -- Wireless prepaid gross and net additions grew 15.8% and 469.2%, respectively, over prior year period -- Sprint travel dispute favorably resolved with fee reset to $18.0 million per year for 2019 to 2021 -- Operating cash flow was $67.8 million consistent with prior year period -- Normalized free cash flow grew 38.5% to $46.1 million compared to the second quarter 2019, driven primarily by our Wireless segment

"We continue to manage through the changes created by COVID-19 and the Sprint/T-Mobile merger. Our broadband business had strong operating results driven by demand from stay-at-home and work-from-home initiatives, new offerings and complementary temporary increases in bandwidth speeds and data allowances," said President and CEO, Christopher E. French. "We have the most robust broadband network in our service areas, and it has continued to perform very well. Our wireless business began to rebound in the second quarter with strong prepaid growth and all of our COVID-19 related temporary retail store closures were able to re-open by the end of the quarter. We expect to return to pre-COVID postpaid sales levels when the economies in our markets fully re-open. Our wireless segment continues to generate strong and steady cash flow.

Shentel's second-quarter earnings conference call will be webcast at 8:00 a.m. ET on Thursday, July30, 2020. The webcast and related materials will be available on Shentels Investor Relations website at https://investor.shentel.com.

COVID-19 Update

Broadband

-- The stay-at-home directives by our governments spurred strong demand for broadband services during the second quarter 2020 resulting in record data net additions of 6,000 and the first quarter of positive video net additions since 2014. -- Approximately 700 COVID-19 related non-payment service disconnections were deferred during the quarter ending June 30, 2020. We resumed normal collection practices on July 1, 2020 and expect this will have minimal impact on bad debt expense in future periods.

Wireless

-- Our markets continued to be affected by the stay-at-home directives and the phased re-opening of local economies. We re-opened all the Sprint branded retail stores by the end of June that were temporarily closed in mid-March. Wireless postpaid gross additions and voluntary churn declined year over year approximately 28% and 23%, respectively, for the three months ended June 30, 2020 due to the store closures and lower store traffic from the stay-at-home directives. -- As a Sprint affiliate, our wireless segment participated in the Keep Americans Connected pledge and deferred an estimated 2,300 COVID-19 related non-payment service disconnections during the quarter ended June 30, 2020. While the majority of these subscribers have agreed to payment plans with Sprint, we recognized contra-revenue of $1.2 million during the second quarter of 2020, which effectively represents the pass-through of Sprints bad debt expense for these customers. Sprint resumed normal collection practices on July 1, 2020. -- During the second quarter of 2020, Sprint issued $1.4 million of credits to prepaid customers in our service territory to alleviate the impacts of COVID-19 and keep these customers connected. Issuance of these credits ceased on June 1, 2020. -- Expense for payroll paid to idled employees and as a premium for certain employees interfacing with the general public, totaled $1.1 million for the three months ended June 30, 2020 and was presented within the cost of service and selling, general, and administrative expense captions. -- With the stay-at-home directives continuing through the second quarter, we also reduced our wireless advertising spend for the three month period ended June 30, 2020 by $2.8 million from the comparable prior year period.

Sprint Travel Dispute

Our travel revenue dispute with Sprint was resolved through binding arbitration during June 2020. The arbitrators ruling reset the fee to $1.5 million per month through December 31, 2021. As a result, we recognized $21.0 million of travel revenue during the second quarter 2020 for service that we have provided since May 1, 2019. We recognized and collected $6.0 million in travel revenue in 2019 prior to Sprint ceasing payments in May 2019. Sprint paid the $21.0 million in July 2020.

Consolidated Second Quarter 2020 Results

-- Revenue in the second quarter of 2020 was $169.5 million compared with $158.9 million in the second quarter of 2019, due to the growth of $8.6 million, $1.9 million and $0.1 million in the Wireless, Broadband and Tower segments, respectively. The Wireless growth was driven by the resolution of the travel dispute with Sprint. -- Adjusted OIBDA in the second quarter of 2020 increased $14.0 million to $80.9 million compared with $67.0 million in 2019 due primarily to the aforementioned travel revenue dispute resolution in the Wireless segment. -- Operating income increased 79.0% to $43.0 million in 2020 from $24.0 million in 2019, primarily due to the resolution of the travel revenue dispute in the Wireless segment. -- Earnings per diluted share grew 123.1% to $0.58 from $0.26 per diluted share in 2019.

Wireless

-- Shentel served 846,428 wireless postpaid subscribers at June 30, 2020, representing an increase of 4.3% compared with June 30, 2019.Second quarter 2020 postpaid gross adds were 37,832, as compared to 52,799 in the second quarter of 2019. Net adds were (1,343) as compared to 10,767 in the second quarter 2019. Postpaid churn was 1.55% as compared to 1.74% in the second quarter 2019. During the second quarter 2020, Sprint adopted the T-Mobile credit and collection policies for Sprint branded customers including those in the Shentel service area. Approximately 4,400 involuntary (non-payment) postpaid disconnects were accelerated into our second quarter subscriber results. Excluding this policy change, postpaid net additions and churn for the quarter would have been 3,021 and 1.37%, respectively. Wireless postpaid gross and net additions for the second quarter were adversely affected by COVID-19. -- Shentel served 289,449 wireless prepaid subscribers at June 30, 2020, representing an increase of 7.6% compared with June 30, 2019. Second quarter 2020 prepaid gross additions grew 15.8% to 39,083 from the second quarter 2019. Net additions were 10,353, as compared to 1,819 in the same period a year ago. Prepaid churn was 3.38%, an improvement over 3.97% for the prior year quarter. Prepaid gross and net additions were favorably impacted by the prepaid value proposition in a recessionary economy and COVID related retention credits. -- Wireless revenue increased approximately $8.6 million, or 7.8%, for the three months ended June 30, 2020 compared with the three months ended June 30, 2019. The growth was driven by a $19.5 million increase in travel revenue due to the resolution of the Sprint travel fee dispute, $1.5 million due to subscriber growth, $0.7 million in higher roaming and MVNO revenues partially offset by a $6.9 million decline in equipment revenue as retail stores were temporarily closed amidst the COVID-19 outbreak, $3.2 million in higher amortized customer contract costs, $1.4 million in COVID related prepaid customer retention credits and $1.2 million of COVID-19 related postpaid bad debt in connection with the Keep Americans Connected pledge. -- Wireless operating expenses in the second quarter of 2020 were $75.9 million compared to $90.2 million in the second quarter of 2019. The decrease was primarily attributable to a $8.0 million decline in depreciation and amortization as certain assets acquired from nTelos became fully utilized, a $6.3 million decline in cost of goods sold on lower volume of equipment sales and $2.8 million in lower advertising costs both driven by COVID-19 related slower economic activity, partially offset by $1.1 million in COVID-19 related payroll expense, $0.6 million of legal fees to support the Sprint dispute matter, $0.6 million in higher operating taxes due to a non-recurring benefit recognized in the second quarter 2019, higher cell site rent expense of $0.5 million related to our network expansion and $0.4 million in employee retention bonus accrual relating to the Sprint/T-Mobile merger. -- Wireless AdjustedOIBDA in the second quarter of 2020 was $67.7 million, compared with $52.4 million for the second quarter of 2019. -- Wireless operating income in the second quarter of 2020 was $43.9 million, compared to $20.9 million for the second quarter of 2019.

Broadband

-- Total Revenue Generating Units ("RGUs") as of June 30, 2020 were 199,667, representing an increase of 4.7% from June 30, 2019, driven by a record quarter for incumbent cable and Glo Fiber data net additions of 5,150 and 878, respectively, for the second quarter 2020. Incumbent cable broadband penetration grew from 38.5% to 44.1% and churn declined 83 basis points to 1.32%. Glo Fiber added over 7,800 homes passed and ended the quarter with approximately 13,000 homes passed and 10.1% broadband penetration. Video net additions were approximately 100 in the second quarter driven by 1.36% churn. -- Broadband revenue in the second quarter of 2020 increased $1.6 million or 3.3% to $50.1 million compared with $48.6 million in the second quarter of 2019, primarily driven by a $2.2 million increase in Cable Residential and SMB revenue and $0.9 million increase in Fiber, enterprise and wholesale revenue partially offset by $1.2 million decrease in RLEC revenues. -- Broadband operating expenses in the second quarter of 2020 were $41.4 million compared to $36.7 million in the second quarter of 2019. The increase was primarily due to $3.3 million in higher payroll and benefit expense due to a combination of Glo Fiber and fixed wireless start-up staffing, supplemental COVID-19 compensation expense for customer interfacing employees, an increase in benefit plans and higher incentive accrual from strong operating results and $1.2 million increase in depreciation and amortization expense due to the expansion of our network. -- Broadband Adjusted OIBDA in the second quarter of 2020 decreased 8.5% to $20.0 million, compared with $21.9 million for the second quarter of 2019 due primarily to the dilution of start-up costs from Glo Fiber and fixed wireless. -- Broadband Operating income in the second quarter of 2020 was $8.8 million, compared to $11.9 million in the second quarter of 2019.

Tower

-- Total macro towers, small cells and tenants were 220, 8 and 413 as of June 30, 2020 as compared to 217, zero and 377, respectively, as of June 30, 2019. -- Tower revenue in the second quarter of 2020 grew 41.0% to $4.3 million, compared with $3.0 million for the second quarter of 2019. This increase was due to a 9.5% increase in tenants and an 20.8% increase in the average lease rate driven by amendments to the intercompany leases. -- Tower operating expenses in both the second quarter of 2020 and 2019 were approximately $2.0 million. -- Tower AdjustedOIBDA in the second quarter of 2020 grew 46.1% to $2.7 million, compared with $1.9 million for the second quarter of 2019. -- Tower operating income in the second quarter of 2020 was $2.2 million, compared to $1.1 million for the second quarter of 2019.

Other Information

-- Capital expenditures were $66.6 million for the six months ended June 30, 2020 compared with $79.1 million in the comparable 2019 period. The $12.5 million decrease in capital expenditures was primarily due to a $30.1 million decline in Wireless as the nTelos and Parkersburg network expansions were completed in the first half of 2019 and Richmond Sliver territory expansion projects have been postponed as we await further clarity on the impact of ongoing negotiations with the new T-Mobile. The decline in Wireless spending was partially offset by $19.5 million in higher spending in Broadband driven primarily by our Glo Fiber market expansion. -- Outstanding debt at June 30, 2020 totaled $704.3 million, net of unamortized loan costs, compared to $720.1 million as of December31, 2019. As of June 30, 2020, the Company had liquidity of approximately$218.7 million, including$75.0 millionof revolving line of credit availability. -- On April 1, 2020, T-Mobile publicly announced the completion of its business combination with 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 Companys affiliate agreement with Sprint. As described in more detail in the Companys 2019 Annual Report on Form 10-K, our Wireless segment has been an affiliate of Sprint since 1999. The 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, expired on June 30, 2020. 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 and determined pursuant to the appraisal process under the affiliate agreement); this period will expire on August 31, 2020. 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. -- Our Sprint affiliate agreement required T-Mobile to comply with certain restrictive operating requirements during the 90 day period following their Conversion Notice which ended on June 30, 2020. T-Mobile publicly announced on July 22, 2020 its intention to begin integration of the brands, rate plans, sales and network on August 2, 2020. Although the impact to Sprint customers in our affiliate area is uncertain at this point in time, the integration plans are likely to adversely affect our Wireless segment operating and financial results in future periods.

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: July30, 2020 Time: 8:00 A.M. (ET)Dial in number: 1-888-695-7639

Password: 1246368

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

An audio replay of the call will be available approximately two hours after the call is complete, through August29, 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 Companys 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 Companys filings with the SEC. Those factors may include natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, 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.comOr John Nesbett/Jennifer Belodeau IMS Investor Relations 203-972-9200 jnesbett@institutionalms.com

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

Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019Revenue: Service revenue $ 159,720 $ 142,059 $ 299,908 $ 285,290 and otherEquipment revenue 9,806 16,855 22,806 32,467 Total revenue 169,526 158,914 322,714 317,757 Operating expenses:Cost of services 50,640 49,497 100,205 99,015 Cost of goods sold 9,658 15,874 22,329 30,511 Selling, general 31,394 27,170 62,385 55,892 and administrativeDepreciation and 34,832 42,353 71,743 83,532 amortizationTotal operating 126,524 134,894 256,662 268,950 expensesOperating income 43,002 24,020 66,052 48,807 Other income (expense):Interest expense (5,044 ) (7,522 ) (11,255 ) (15,476 )Other 1,573 1,176 2,306 2,463 Income before 39,531 17,674 57,103 35,794 income taxesIncome tax expense 10,284 4,524 14,576 8,734 Net income $ 29,247 $ 13,150 $ 42,527 $ 27,060 Net income pershare, basic and diluted:Basic net income $ 0.59 $ 0.26 $ 0.85 $ 0.54 per shareDiluted net income $ 0.58 $ 0.26 $ 0.85 $ 0.54 per shareWeighted averageshares 49,902 49,848 49,878 49,812 outstanding, basicWeighted averageshares 50,082 50,142 50,039 50,118 outstanding,diluted

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

June 30, December 31, 2020 2019 Cash and cash equivalents $ 143,712 $ 101,651 Other current assets 155,821 140,102 Total current assets 299,533 241,753 Investments 12,661 12,388 Property, plant and equipment, net 703,012 701,514 Intangible assets, net 285,081 314,147 Goodwill 149,070 149,070 Operating lease right-of-use assets 376,912 392,589 Deferred charges and other assets, net 54,311 53,352 Total assets $ 1,880,580 $ 1,864,813 Total current liabilities 145,327 $ 147,336 Long-term debt, less current maturities 672,601 688,464 Other liabilities 551,195 556,585 Total shareholders? equity 511,457 472,428 Total liabilities and shareholders? equity $ 1,880,580 $ 1,864,813

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

Six Months Ended June 30, 2020 2019Cash flows from operating activities: Net income $ 42,527 $ 27,060 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation 63,258 72,737 Amortization of intangible assets 9,336 10,795 Bad debt expense 436 764 Stock based compensation expense, net of amount 4,520 2,307 capitalizedDeferred income taxes 8,714 3,434 Other adjustments 1,923 275 Changes in assets and liabilities (1,775 ) 12,260 Net cash provided by operating activities 128,939 129,632 Cash flows from investing activities: Capital expenditures (66,626 ) (79,124 )Cash disbursed for acquisitions ? (10,000 )Proceeds from sale of assets and other 286 105 Net cash used in investing activities (67,540 ) (89,019 ) Cash flows from financing activities: Principal payments on long-term debt (17,061 ) (24,777 )Taxes paid for equity award issuances (2,182 ) (2,912 )Proceeds from exercise of stock options (95 ) 81 Net cash used in financing activities (19,338 ) (27,608 )Net increase (decrease) in cash and cash equivalents 42,061 13,005 Cash and cash equivalents, beginning of period 101,651 85,086 Cash and cash equivalents, end of period $ 143,712 $ 98,091

Non-GAAP Financial MeasuresAdjusted 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:

Three MonthsEnded June 30, 2020(in Wireless Broadband Tower Corporate & Consolidatedthousands) EliminationsOperating $ 43,872 $ 8,767 $ 2,229 $ (11,866 ) $ 43,002 incomeDepreciation 19,545 11,078 477 (310 ) 30,790 Amortizationof 4,301 167 ? ? 4,468 intangibleassetsOIBDA 67,718 20,012 2,706 (12,176 ) 78,260 Share-basedcompensation ? ? ? 1,615 1,615 expenseDealadvisory ? ? ? 1,060 1,060 feesAdjusted $ 67,718 $ 20,012 $ 2,706 $ (9,501 ) $ 80,935 OIBDA

Three MonthsEnded June 30, 2019(in Wireless Broadband Tower Corporate & Consolidatedthousands) EliminationsOperating $ 20,928 $ 11,880 $ 1,096 $ (9,884 ) $ 24,020 incomeDepreciation 26,447 9,882 756 132 37,217 Amortizationof 5,016 120 ? ? 5,136 intangibleassetsOIBDA 52,391 21,882 1,852 (9,752 ) 66,373 Share-basedcompensation ? ? ? 593 593 expenseAdjusted $ 52,391 $ 21,882 $ 1,852 $ (9,159 ) $ 66,966 OIBDA

Six MonthsEnded June 30, 2020(in Wireless Broadband Tower Corporate & Consolidatedthousands) EliminationsOperating $ 67,316 $ 18,797 $ 4,024 $ (24,085 ) $ 66,052 incomeDepreciation 40,555 21,795 947 (39 ) 63,258 Amortizationof 9,015 321 ? ? 9,336 intangibleassetsOIBDA 116,886 40,913 4,971 (24,124 ) 138,646 Share-basedcompensation ? ? ? 4,520 4,520 expenseDealadvisory ? ? ? 1,970 1,970 feesAdjusted $ 116,886 $ 40,913 $ 4,971 $ (17,634 ) $ 145,136 OIBDA

Six MonthsEnded June 30, 2019(in Wireless Broadband Tower Corporate & Consolidatedthousands) EliminationsOperating $ 45,141 $ 21,929 $ 2,220 $ (20,483 ) $ 48,807 incomeDepreciation 51,199 19,832 1,436 270 72,737 Amortizationof 10,634 161 ? ? 10,795 intangibleassetsOIBDA 106,974 41,922 3,656 (20,213 ) 132,339 Share-basedcompensation ? ? ? 2,307 2,307 expenseAdjusted $ 106,974 $ 41,922 $ 3,656 $ (17,906 ) $ 134,646 OIBDA

Segment Results

Three Months Ended June 30, 2020:

(in thousands) Wireless Broadband Tower Corporate & Consolidated EliminationsExternal revenuePostpaid $ 73,269 $ ? $ ? $ ? $ 73,269 Prepaid 12,432 ? ? ? 12,432 Tower lease ? ? 1,829 ? 1,829 Cable,residential ? 35,829 ? ? 35,829 and SMB (1)Fiber,enterprise and ? 5,663 ? ? 5,663 wholesaleRural localexchange ? 4,602 ? ? 4,602 carrierTravel,installation, 24,438 1,658 ? ? 26,096 and otherServicerevenue and 110,139 47,752 1,829 ? 159,720 otherEquipment 9,610 196 ? ? 9,806 Total external 119,749 47,948 1,829 ? 169,526 revenueRevenue from ? 2,185 2,430 (4,615 ) ? other segmentsTotal revenue 119,749 50,133 4,259 (4,615 ) 169,526 Operating expensesCost of 33,237 20,640 1,315 (4,552 ) 50,640 servicesCost of goods 9,437 221 ? ? 9,658 soldSelling,general and 9,783 9,260 238 12,113 31,394 administrativeDepreciationand 23,420 11,245 477 (310 ) 34,832 amortizationTotaloperating 75,877 41,366 2,030 7,251 126,524 expensesOperating $ 43,872 $ 8,767 $ 2,229 $ (11,866 ) $ 43,002 income (loss)

____________________________(1) SMB refers to Small and Medium Businesses.

Three Months Ended June 30, 2019:

(in thousands) Wireless Broadband Tower Corporate & Consolidated EliminationsExternal revenuePostpaid $ 75,997 $ ? $ ? $ ? $ 75,997 Prepaid 13,603 ? ? ? 13,603 Tower lease ? ? 1,751 ? 1,751 Cable,residential ? 33,581 ? ? 33,581 and SMBFiber,enterprise and ? 4,921 ? ? 4,921 wholesaleRural localexchange ? 5,581 ? ? 5,581 carrierTravel,installation, 4,971 1,654 ? ? 6,625 and otherServicerevenue and 94,571 45,737 1,751 ? 142,059 otherEquipment 16,548 307 ? ? 16,855 Total external 111,119 46,044 1,751 ? 158,914 revenueRevenue from ? 2,507 1,270 (3,777 ) ? other segmentsTotal revenue 111,119 48,551 3,021 (3,777 ) 158,914 Operating expensesCost of 32,668 19,014 895 (3,080 ) 49,497 servicesCost of goods 15,742 131 ? 1 15,874 soldSelling,general and 10,318 7,524 274 9,054 27,170 administrativeDepreciationand 31,463 10,002 756 132 42,353 amortizationTotaloperating 90,191 36,671 1,925 6,107 134,894 expensesOperating $ 20,928 $ 11,880 $ 1,096 $ (9,884 ) $ 24,020 income (loss)

Six Months Ended June 30, 2020:

(in thousands) Wireless Broadband Tower Corporate & Consolidated EliminationsExternal revenuePostpaid $ 148,197 $ ? $ ? $ ? $ 148,197 Prepaid 25,541 ? ? ? 25,541 Tower lease ? ? 3,626 ? 3,626 Cable,residential ? 70,772 ? ? 70,772 and SMBFiber,enterprise and ? 11,151 ? ? 11,151 wholesaleRural localexchange ? 9,358 ? ? 9,358 carrierTravel,installation, 27,789 3,474 ? ? 31,263 and otherServicerevenue and 201,527 94,755 3,626 ? 299,908 otherEquipment 22,360 446 ? ? 22,806 Total external 223,887 95,201 3,626 ? 322,714 revenueRevenue from ? 4,718 4,363 (9,081 ) ? other segmentsTotal revenue 223,887 99,919 7,989 (9,081 ) 322,714 Operating expensesCost of 66,676 39,883 2,254 (8,608 ) 100,205 servicesCost of goods 21,965 364 ? ? 22,329 soldSelling,general and 19,211 18,759 764 23,651 62,385 administrativeDepreciationand 48,719 22,116 947 (39 ) 71,743 amortizationTotaloperating 156,571 81,122 3,965 15,004 256,662 expensesOperating $ 67,316 $ 18,797 $ 4,024 $ (24,085 ) $ 66,052 income (loss)

Six Months Ended June 30, 2019:

(in thousands) Wireless Broadband Tower Corporate & Consolidated EliminationsExternal revenuePostpaid $ 152,179 $ ? $ ? $ ? $ 152,179 Prepaid 26,733 ? ? ? 26,733 Tower lease ? ? 3,514 ? 3,514 Cable,residential ? 66,007 ? ? 66,007 and SMBFiber,enterprise and ? 9,749 ? ? 9,749 wholesaleRural localexchange ? 10,819 ? ? 10,819 carrierTravel,installation, 12,989 3,300 ? ? 16,289 and otherServicerevenue and 191,901 89,875 3,514 ? 285,290 otherEquipment 31,839 628 ? ? 32,467 Total external 223,740 90,503 3,514 ? 317,757 revenueRevenue from ? 4,929 2,540 (7,469 ) ? other segmentsTotal revenue 223,740 95,432 6,054 (7,469 ) 317,757 Operating expensesCost of 65,200 38,075 1,841 (6,101 ) 99,015 servicesCost of goods 30,169 342 ? ? 30,511 soldSelling,general and 21,397 15,093 557 18,845 55,892 administrativeDepreciationand 61,833 19,993 1,436 270 83,532 amortizationTotaloperating 178,599 73,503 3,834 13,014 268,950 expensesOperating $ 45,141 $ 21,929 $ 2,220 $ (20,483 ) $ 48,807 income (loss)

Supplemental Information

Wireless Operating Statistics

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

June 30, June 30, 2020 2019Retail PCS total subscribers - postpaid 846,428 811,719 Retail PCS phone subscribers 735,028 726,899 Retail PCS connected device subscribers 111,400 84,820 Retail PCS subscribers - prepaid 289,449 269,039 PCS market POPS (000) (1) 7,227 7,227 PCS covered POP (000) (1) 6,379 6,285 Macro base stations (cell sites) 1,968 1,910

Three Months Ended Six Months Ended June 30, June 30,Postpaid: 2020 2019 2020 2019Gross PCS total subscriber 37,832 52,799 89,823 103,646 additionsGross PCS phone additions 26,567 39,948 63,301 77,734 Gross PCS connected device 11,265 12,851 26,522 25,912 additionsNet PCS total subscriber (1,343 ) 10,767 2,234 16,543 (losses) additions (2)Net PCS phone (losses) (3,967 ) 4,069 (6,278 ) 3,444 additionsNet PCS connected device 2,624 6,698 8,512 13,099 additionsPCS monthly retail total 1.55 % 1.74 % 1.73 % 1.81 %churn % (2)PCS monthly phone churn % 1.38 % 1.62 % 1.57 % 1.68 %PCS monthly connected 2.63 % 2.88 % 2.80 % 3.09 %device churn %Prepaid: Gross PCS subscriber 39,083 33,753 78,157 74,732 additionsNet PCS subscriber 10,353 1,819 15,437 10,335 additionsPCS monthly retail churn % 3.38 % 3.97 % 3.76 % 4.06 %

______________________________(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.(2) Includes an estimated 4,364 involuntary (nonpayment) postpaid disconnects were accelerated into our second quarter subscriber results due to a change in Sprint collection policy. Excluding this policy change, postpaid net additions for the three and six months ending June 30, 2020 would have been 3,021 and 6,598, respectively, and churn would have been 1.37% and 1.64%, respectively.

Broadband Operating Statistics

June 30, June 30, 2020 2019Broadband homes passed (1) (2) 220,442 206,262 Incumbent Cable 207,269 206,262 Glo Fiber 13,173 ? Broadband customer relationships (3) 101,816 88,860 Video: RGUs 53,153 57,215 Penetration (4) 24.1 % 27.7 %Digital video penetration (5) 94.3 % 90.3 %Broadband: RGUs 92,695 79,507 Incumbent Cable 91,364 79,507 Glo Fiber 1,331 ? Penetration (4) 42.0 % 38.5 %Incumbent Cable penetration (4) 44.1 % 38.5 %Glo Fiber penetration (4) 10.1 % ? %Voice: RGUs 32,252 30,754 Penetration (4) 16.5 % 16.2 %Total Cable and Glo Fiber RGUs 178,100 167,476 RLEC homes passed 25,852 25,814 RLEC customer relationships (3) 12,587 13,528 RLEC RGUs: Data RLEC 7,755 8,424 Penetration (4) 30.0 % 32.6 %Voice RLEC 13,812 14,873 Penetration (4) 53.4 % 57.6 %Total RLEC RGUs 21,567 23,297 Total RGUs 199,667 190,773 Fiber route miles 6,478 5,833 Total fiber miles (6) 346,969 307,125

_______________________________(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.(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

June 30, June 30, 2020 2019Macro towers owned 220 217 Small cell sites 8.0 ? Tenants (1) 413 377 Average tenants per tower 1.8 1.7

______________________________(1) Includes 206 and 177 intercompany tenants for our Wireless segment as of June 30, 2020 and 2019, respectively.

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

Three Months Ended Six Months Ended June 30, June 30,(in thousands) 2020 2019 2020 2019Net cash provided by operating $ 67,831 $ 67,969 $ 128,939 $ 129,632 activitiesLess: Capital expenditures (1) (21,767 ) (34,704 ) (46,871 ) (79,124 )Normalized free cash flow 46,064 33,265 82,068 50,508 Glo Fiber and Beam capital (12,560 ) ? (19,755 ) ? expendituresFree cash flow $ 33,504 $ 33,265 $ 62,313 $ 50,508

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

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 Beam 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.