Shentel to sell cell towers portfolio for $310.3M

Shenandoah Telecommunications (Shentel) has entered into an agreement to sell its portfolio of cellular towers and associated operations to Vertical Bridge Holdco for $310.3 million in cash, the Edinburg-based company announced Friday, a move that appears to largely transition Shentel out of the last remnants of its cellular phone business. Vertical Bridge is the nation’s largest private owner of communications towers.

“The proceeds from the sale of our tower business will provide Shentel with additional growth capital to support the planned expansion of our Glo Fiber line of business to approximately 600,000 homes and business passings by the end of 2026,” Shentel President and CEO Christopher E. French said in a statement. “With the expected closing of this transaction and the previously announced $356 million of committed financings supporting our pending acquisition of Horizon Telcom, we believe our capital structure is well balanced and will provide future financial flexibility.”

Shentel announced its plans to acquire Horizon Telcom for $385 million in October 2023.

The Shentel Tower Portfolio consists of 226 tower portfolio sites, including 218 macro cellular towers and eight small cell sites. Shentel will keep one macro cellular tower that is not included in the sale. T-Mobile USA was the primary customer for Shentel’s cell towers. Shentel previously sold other components of its cellular phone business to T-Mobile USA, selling its wireless assets and operations for $1.94 billion in a deal that closed July 1, 2021. 

“We are pleased to add these purpose-built broadband telephony towers to our growing portfolio,” Vertical Bridge President and CEO Ron Bizick said in a statement. “The towers are high-quality assets with available capacity for additional tenants and are located in difficult areas to build new towers due to zoning restrictions and terrain challenges. The geographic concentration of the portfolio offers a unique opportunity for future deployment of existing and new technologies.”

Shentel isn’t the only U.S. telecommunications company selling its cell towers. In August 2023, Chicago-based Telephone and Data Systems and United States Cellular announced each was initiating “a process to explore strategic alternatives for UScellular.” At the end of the second quarter of 2023, TDS owned 83% of UScellular. As of Dec. 31, 2023, UScellular owned 4,373 towers.

Shentel has been focused on growing its Glo Fiber business, an optical fiber home and business broadband service, within and outside of Virginia. In January, the company launched the service in initial neighborhoods in Spring Garden Township, Pennsylvania, expecting to complete construction by the end of the year and serve more than 4,500 homes and businesses in the area. Also in January, Shentel announced it would deploy Glo Fiber in Springettsbury Township, Pennsylvania, with construction slated to begin in 2025.

In February, the company announced it would deploy Glo Fiber in Kingsmill in Williamsburg, with construction expected to begin in the third quarter of 2024. Shentel also announced in February a colocation agreement with CoreSite to provide Glo Fiber Business service in Washington, D.C.

Shentel expects a March closing for the towers deal with Boca Raton, Florida-based Vertical Bridge, which will pay the $310.3 million on the initial closing date. “Subsequent closings will occur as closing conditions are met for any remaining sites,” according to a news release.

Shentel expects to pay up to $10 million in 2024 income taxes as a result of the gain on the sale after net operating loss carryforwards. The tower portfolio generated $18.6 million in revenue, $9.5 million of operating income and $11.6 million of adjusted EBITDA in 2023.

Shentel provides broadband services to customers in Virginia, Maryland, West Virginia, Kentucky and Pennsylvania. The company owns a regional network with about 9,900 route miles of fiber. As of summer 2023, Shentel had 649 employees in Virginia out of a total workforce of 845.

Vertical Bridge REIT is a private owner and operator of communications infrastructure and locations. Its portfolio has more than 500,000 sites, including towers, rooftops, billboards, utility attachments, convenience stores and other locations that support wireless network deployments, spread across all 50 states and Puerto Rico.