Shentel to use wireless sale proceeds for special dividend

 Shenandoah
Shentel has been providing wireless service to portions of a six-state area, including Virginia.(Pixabay)

Shenandoah Telecommunications Company (Shentel) is exiting the wireless business that it entered as an affiliate of Sprint back in 1995, but that doesn’t mean it’s getting out of wireless entirely.

The company holds licenses in the 2.5 and 3.5 GHz bands that it’s using for its Beam fixed wireless service. The 2.5 GHz holdings are connected to Broadband Radio Service (BRS) licenses and Educational Broadband Service (EBS) leases, and the 3.5 GHz is what it acquired in the Citizens Broadband Radio Services (CBRS) auction last year. In total, Shentel’s spectrum covers more than 5 million PoPs for an average spectrum depth of 39 MHz.

The transaction with T-Mobile does not include spectrum licenses, as Shentel used the spectrum owned by Sprint in 850 MHz, 1.9 GHz and 2.5 GHz bands, according to Shentel CFO Jim Volk.

Earlier this week, Shentel announced the appraisal process related to the sale of its wireless assets to T-Mobile ended with the purchase price determined to be $1.95 billion in cash, subject to customary purchase price adjustments. On Wednesday, Shentel announced that the $1.5 billion it expects to get after taxes will be used for a special dividend of $18.75 per share to Shentel shareholders, among other things.

Shentel expects to pay the special dividend in the second quarter 2021 after the close of the wireless transaction, subject to the approval of Shentel’s board. As for the “other” items for the proceeds, it plans to repay about $702 million in outstanding loans and use some of it for potential strategic acquisitions.

RELATED: T-Mobile to buy Shentel wireless assets for $1.95B

During a call with Wall Street analysts, Shentel President and CEO Chris French said they’re proud of the wireless business they developed and grew over the past 25 years, and now that business will provide a solid base for T-Mobile in the region. Shentel had about 1.1 million customers as of the end of June 2020.  

Shentel operates cable and wireline segments as well as wireless. The wireless part of the business has been providing wireless service to portions of a six-state area covering all of West Virginia, the western region of Virginia, central Pennsylvania, central Maryland and parts of Ohio and Kentucky under the Sprint brand. It also owns cell towers on leased land and leases space on the towers to other service providers.

According to Wave7 Research’s most recent checks, Shentel was still using the Sprint brand in stores even though T-Mobile switched to one universal brand in August. Another affiliate of Sprint, operating as Swiftel in South Dakota and parts of Iowa, also continued using the Sprint brand. T-Mobile last month announced an agreement to buy Swiftel’s assets from Brookings Municipal Utilities (BMU) in Brookings, South Dakota. 

The Swiftel deal is expected to close in the first quarter of 2021 and the Shentel transaction is projected to close in the second quarter of 2021.

RELATED: Shentel details the elements of its fixed wireless access service

Once out of the retail wireless business, Shentel plans to focus on its regional broadband communications, investing in its Glo fiber and Beam fixed wireless technologies. Management explained that Shentel didn’t plan on participating in the C-band auction, which is structured different from the CBRS auction and ended up exceeding pretty much all expectations when it came to the final gross proceeds of more than $80 billion.