SEC Filing - Shenandoah Telecommunications Co

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UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to __________

Commission File No.: 000-09881

SHENANDOAH TELECOMMUNICATIONS COMPANY

(Exact name of registrant as specified in its charter)

VIRGINIA		54-1162807
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

500 Shentel Way, Edinburg, Virginia 22824

(Address of principal executive offices) (Zip Code)

(540) 984-4141

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares of the registrant’s common stock outstanding on April 24, 2014 was 24,096,146.

SHENANDOAH TELECOMMUNICATIONS COMPANY

INDEX

		Page
		Numbers

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets March 31, 2014 and December 31, 2013	3-4

	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2014 and 2013	5

	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2014 and the Year Ended December 31, 2013	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013	7-8

	Notes to Unaudited Condensed Consolidated Financial Statements	9-13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26

Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	29

	Signatures	30

	Exhibit Index	31

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

ASSETS	March 31, 2014		December 31, 2013

Current Assets
Cash and cash equivalents	$	53,681	$	38,316
Accounts receivable, net		25,538		25,824
Income taxes receivable		7,745		16,576
Materials and supplies		8,577		10,715
Prepaid expenses and other		5,626		5,580
Deferred income taxes		1,169		963
Total current assets		102,336		97,974

Investments, including $2,544 and $2,528 carried at fair value		9,463		9,332

Property, plant and equipment, net		405,729		408,963

Other Assets
Intangible assets, net		69,991		70,816
Deferred charges and other assets, net		9,076		9,921
Net other assets		79,067		80,737
Total assets	$	596,595	$	597,006

See accompanying notes to unaudited condensed consolidated financial statements.

(Continued)

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY	March 31, 2014		December 31, 2013

Current Liabilities
Current maturities of long-term debt	$	11,500	$	5,750
Accounts payable		5,727		12,604
Advanced billings and customer deposits		12,042		11,661
Accrued compensation		2,633		4,192
Accrued liabilities and other		9,242		9,787
Total current liabilities		41,144		43,994

Long-term debt, less current maturities		218,500		224,250

Other Long-Term Liabilities
Deferred income taxes		72,202		74,547
Deferred lease payable		6,393		6,156
Asset retirement obligations		6,611		6,485
Other liabilities		8,137		7,259
Total other liabilities		93,343		94,447

Commitments and Contingencies

Shareholders' Equity
Common stock		27,783		26,759
Accumulated other comprehensive income		2,247		2,594
Retained earnings		213,578		204,962
Total shareholders' equity		243,608		234,315

Total liabilities and shareholders' equity	$	596,595	$	597,006

See accompanying notes to unaudited condensed consolidated financial statements.

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2014			2013

Operating revenues	$	80,452		$	76,010

Operating expenses:
Cost of goods and services, exclusive of depreciation and amortization shown separately below		32,236			30,700
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		17,149			16,129
Depreciation and amortization		15,387			13,972
Total operating expenses		64,772			60,801
Operating income		15,680			15,209

Other income (expense):
Interest expense		(2,048	)		(2,152	)
Gain (loss) on investments, net		(18	)		148
Non-operating income, net		628			520
Income before income taxes		14,242			13,725

Income tax expense		5,626			5,374
Net income	$	8,616		$	8,351

Other comprehensive income:
Unrealized gain (loss) on interest rate hedge, net of tax		(347	)		532
Comprehensive income	$	8,269		$	8,883

Earnings per share:
Basic and diluted earnings per share	$	0.36		$	0.35

Weighted average shares outstanding, basic		24,059			23,973

Weighted average shares, diluted		24,221			24,032

See accompanying notes to unaudited condensed consolidated financial statements.

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands, except per share amounts)

	Shares			Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2012		23,962		$	24,688		$	184,023		$	(863	)	$	207,848

Net income		-			-			29,586			-			29,586
Other comprehensive income, net of tax		-			-			-			3,457			3,457
Dividends declared ($0.36 per share)		-			-			(8,647	)		-			(8,647	)
Dividends reinvested in common stock		20			475			-			-			475
Stock based compensation		-			1,938			-			-			1,938
Common stock issued through exercise of incentive stock options		66			1,186			-			-			1,186
Common stock issued for share awards		68			-			-			-			-
Common stock issued		1			10			-			-			10
Common stock repurchased		(77	)		(1,600	)		-			-			(1,600	)
Net excess tax benefit from stock options exercised		-			62			-			-			62

Balance, December 31, 2013		24,040		$	26,759		$	204,962		$	2,594		$	234,315

Net income		-			-			8,616			-			8,616
Other comprehensive loss, net of tax		-			-			-			(347	)		(347	)
Stock based compensation		-			1,147			-			-			1,147
Stock options exercised		50			1,110			-			-			1,110
Common stock issued for share awards		55			-			-			-			-
Common stock issued		1			2			-			-			2
Common stock repurchased		(50	)		(1,540	)		-			-			(1,540	)
Net excess tax benefit from stock options exercised		-			305			-			-			305
Balance, March 31, 2014		24,096		$	27,783		$	213,578		$	2,247		$	243,608

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended March 31,
	2014			2013

Cash Flows From Operating Activities
Net income	$	8,616			8,351
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		14,556			12,808
Amortization		831			1,164
Provision for bad debt		234			453
Stock based compensation expense		1,147			425
Excess tax benefits on stock awards		(305	)		(30	)
Deferred income taxes		(2,013	)		(1,394	)
Net (gain) loss on disposal of equipment		(425	)		100
Realized (gain) loss on disposal of investments		-			(3	)
Unrealized (gain) loss on investments		29			(93	)
Net gains from patronage and equity investments		(163	)		(171	)
Other		(12	)		696
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		52			230
Materials and supplies		2,138			2,603
Income taxes receivable		8,831			2,466
Increase (decrease) in:
Accounts payable		(384	)		(2,815	)
Deferred lease payable		237			318
Other prepaids, deferrals and accruals		(772	)		(2,399	)

Net cash provided by operating activities	$	32,597		$	22,709

Cash Flows from Investing Activities
Purchase and construction of property, plant, and equipment		(17,196	)		(26,024	)
Proceeds from sale of assets		-			25
Cash received from sales of equipment		84			128
Purchase of investment securities		-			(12	)
Proceeds from sale of investment securities		3			45

Net cash used in investing activities	$	(17,109	)	$	(25,838	)

(Continued)

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended March 31,
	2014			2013

Cash Flows From Financing Activities
Principal payments on long-term debt	$	-		$	(739	)
Excess tax benefits on stock awards		305			30
Repurchases of stock		(1,540	)		(155	)
Proceeds from sale of stock		1,112			2

Net cash used in financing activities	$	(123	)	$	(862	)

Net increase (decrease) in cash and cash equivalents	$	15,365		$	(3,991	)

Cash and cash equivalents:
Beginning		38,316			71,086
Ending	$	53,681		$	67,095

Supplemental Disclosures of Cash flow Information
Cash payments for:

Interest	$	1,954		$	2,171

Income taxes (refunded) paid, net	$	(1,192	)	$	4,302

During the first three months of 2013, the Company traded in certain PCS equipment and received credits of $3.2 million against the purchase price of new equipment.

At December 31, 2013, accounts payable included approximately $7.6 million associated with capital expenditures related to the Network Vision project. These payables were disbursed during the three months ended March 31, 2014.

See accompanying notes to unaudited condensed consolidated financial statements.

Index

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The interim condensed consolidated financial statements of Shenandoah Telecommunications Company and Subsidiaries (collectively, the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature. These statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The balance sheet information at December 31, 2013 was derived from the audited December 31, 2013 consolidated balance sheet. Operating revenues and income from operations for any interim period are not necessarily indicative of results that may be expected for the entire year.

2. Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

	March 31,		December 31,
	2014		2013
Plant in service	$	654,586	$	633,480
Plant under construction		13,136		23,181
		667,722		656,661
Less accumulated amortization and depreciation		261,993		247,698
Net property, plant and equipment	$	405,729	$	408,963

3. Earnings per share

Basic net income per share was computed on the weighted average number of shares outstanding. Diluted net income per share was computed under the treasury stock method, assuming the conversion as of the beginning of the period, for all dilutive stock options. Of 676 thousand and 725 thousand shares and options outstanding at March 31, 2014 and 2013, respectively, 96 thousand and 341 thousand were anti-dilutive, respectively. These shares and options have been excluded from the computations of diluted earnings per share for their respective period. There were no adjustments to net income for either period.

4. Investments Carried at Fair Value

Investments include $2.5 million of investments carried at fair value at both March 31, 2014 and December 31, 2013, consisting of equity, bond and money market mutual funds. These investments were acquired under a rabbi trust arrangement related to a non-qualified supplemental retirement plan maintained by the Company. During the three months ended March 31, 2014, the Company recognized $45 thousand in dividend and interest income from investments and recorded net unrealized losses of $29 thousand on these investments. Fair values for these investments held under the rabbi trust were determined by Level 1 quoted market prices for the underlying mutual funds.

5. Financial Instruments

Financial instruments on the consolidated balance sheets that approximate fair value include: cash and cash equivalents, receivables, investments carried at fair value, payables, accrued liabilities, interest rate swaps and variable rate long-term debt.

Index

6. Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income

The Company’s objectives in using interest rate derivatives are to add stability to cash flows and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps (both those designated as cash flow hedges as well as those not designated as cash flow hedges) involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The Company entered into a pay-fixed, receive-variable interest rate swap of $63.3 million of notional principal in August 2010. This interest rate swap was not designated as a cash flow hedge. Changes in the fair value of interest rate swaps not designated as cash flow hedges are recorded in interest expense each reporting period. The change in fair value recorded in interest expense for the three months ended March 31, 2013 was a decrease of $104 thousand. This swap expired in July 2013.

The Company entered into a pay-fixed, receive-variable interest rate swap of $174.6 million of notional principal in September 2012. This interest rate swap was designated as a cash flow hedge. The total outstanding notional amount of cash flow hedges was $174.6 million as of March 31, 2014.

The effective portion of changes in the fair value of interest rate swaps designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company uses its derivatives to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings through interest expense. No hedge ineffectiveness was recognized during any of the periods presented.

Amounts reported in accumulated other comprehensive income related to the interest rate swap designated and that qualifies as a cash flow hedge are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2014, the Company estimates that $1.6 million will be reclassified as an increase to interest expense during the next twelve months due to the interest rate swap since the fixed interest rate paid on the hedge exceeds the variable interest rate on the debt.

The table below presents the fair value of the Company’s derivative financial instruments as well as its classification on the consolidated balance sheet as of March 31, 2014 and December 31, 2013 (in thousands; amounts in parentheses indicate debits):

	Derivatives
		Fair Value as of
	Balance Sheet	March 31,			December 31,
	Location	2014			2013

Derivatives designated as hedging instruments:
Interest rate swaps	Accrued liabilities and other	$	1,639		$	1,590
	Deferred charges and other assets net		(5,396	)		(5,926	)
Total derivatives designated as hedging instruments		$	(3,757	)	$	(4,336	)

The fair value of interest rate swaps is determined using a pricing model with inputs that are observable in the market (level 2 fair value inputs).

Index

The table below presents change in accumulated other comprehensive income by component for the three months ended March 31, 2014 (in thousands; amounts in parentheses indicate debits):

	Gains and (Losses) on Cash Flow Hedges			Income Taxes			Accumulated Other Comprehensive Income (Loss)

Balance as of December 31, 2013	$	4,336		$	(1,742	)	$	2,594
Other comprehensive income before reclassifications		(1,002	)		401			(601	)
Amounts reclassified from accumulated other comprehensive income (to interest expense)		423			(169	)		254
Net current period other comprehensive income		(579	)		232			(347	)
Balance as of March 31, 2014	$	3,757		$	(1,510	)	$	2,247

7. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision makers. The Company has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: (1) Wireless, (2) Cable, and (3) Wireline. A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company.

The Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers.

The Cable segment provides video, internet and voice services in Virginia, West Virginia and Maryland. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia.

The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland.

Effective for fiscal year 2014, our segment presentations were updated to reflect two changes. First, in late 2013, the Company restructured its management team to primarily align its organization with its operating segments (Wireless, Cable and Wireline), rather than on a functional basis (sales and marketing, operations and engineering). As part of this restructuring, the Company determined that the operations associated with its video product offered in Shenandoah County, Virginia, would be included in the Wireline segment. The video services offered in Shenandoah County share much of the network which the regulated telephone company uses to serve its customers. These services had previously been included in the Cable segment.

Second, primarily as a result of the restructuring described above, the Company’s allocations of certain shared general and administrative expenses were updated to reflect how our senior management team makes financial decisions and manages resources. Since the Vice Presidents managing the operating segments do not directly control these expenses, the Company has chosen to record these at the holding company. As a result, certain costs, including finance and accounting, executive management, legal, and human resources, are now recorded to the Other segment as corporate costs. In this way, segment performance presents a clearer picture of the trends in an individual segment’s profitability.

Index

The segment information provided below has been updated to reflect these presentation changes for all periods presented.

Three months ended March 31, 2014

(in thousands)

	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	47,232	$	17,424		$	5,100	$	-		$	-		$	69,756
Other		2,756		3,030			4,910		-			-			10,696
Total external revenues		49,988		20,454			10,010		-			-			80,452
Internal revenues		1,091		26			5,765		-			(6,882	)		-
Total operating revenues		51,079		20,480			15,775		-			(6,882	)		80,452

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		18,657		12,390			7,482		-			(6,293	)		32,236
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		8,432		4,646			1,244		3,416			(589	)		17,149
Depreciation and amortization		7,196		5,404			2,697		90			-			15,387
Total operating expenses		34,285		22,440			11,423		3,506			(6,882	)		64,772
Operating income (loss)	$	16,794	$	(1,960	)	$	4,352	$	(3,506	)	$	-		$	15,680

Three months ended March 31, 2013

(in thousands)

	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	44,065	$	16,163		$	5,117	$	-		$	-		$	65,345
Other		3,019		2,301			5,345		-			-			10,665
Total external revenues		47,084		18,464			10,462		-			-			76,010
Internal revenues		1,073		49			4,639		-			(5,761	)		-
Total operating revenues		48,157		18,513			15,101		-			(5,761	)		76,010

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		17,530		11,222			7,166		-			(5,218	)		30,700
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		7,887		4,425			1,361		2,999			(543	)		16,129
Depreciation and amortization		6,028		5,205			2,731		8			-			13,972
Total operating expenses		31,445		20,852			11,258		3,007			(5,761	)		60,801
Operating income (loss)	$	16,712	$	(2,339	)	$	3,843	$	(3,007	)		-		$	15,209

A reconciliation of the total of the reportable segments’ operating income to consolidated income from continuing operations before income taxes is as follows:

	Three Months Ended
	March 31,
	2014			2013
Total consolidated operating income	$	15,680		$	15,209
Interest expense		(2,048	)		(2,152	)
Non-operating income (expense), net		610			668
Income before income taxes	$	14,242		$	13,725

Index

The Company's assets by segment are as follows:

(in thousands)

	March 31,			December 31,
	2014			2013

Wireless	$	215,734		$	229,038
Cable		209,320			199,184
Wireline		87,777			92,455
Other		428,761			435,804
Combined totals		941,592			956,481
Inter-segment eliminations		(344,997	)		(359,475	)
Consolidated totals	$	596,595		$	597,006

8. Income Taxes

The Company files U.S. federal income tax returns and various state and local income tax returns. With few exceptions, years prior to 2010 are no longer subject to examination. The Company is under audit in the state of Maryland for the 2009, 2010 and 2011 tax years, and in the state of Pennsylvania for the 2009 tax year. No other state or federal income tax audits were in process as of March 31, 2014.

Index

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions as they relate to Shenandoah Telecommunications Company or its management are intended to identify these forward-looking statements. All statements regarding Shenandoah Telecommunications Company’s expected future financial position and operating results, business strategy, financing plans, forecasted trends relating to the markets in which Shenandoah Telecommunications Company operates and similar matters are forward-looking statements. We cannot assure you that the Company’s expectations expressed or implied in these forward-looking statements will turn out to be correct. The Company’s actual results could be materially different from its expectations because of various factors, including those discussed below and under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2013. The following management’s discussion and analysis should be read in conjunction with the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2013, including the financial statements and related notes included therein.

General

Overview. Shenandoah Telecommunications Company is a diversified telecommunications company providing both regulated and unregulated telecommunications services through its wholly owned subsidiaries. These subsidiaries provide wireless personal communications services (as a Sprint PCS Affiliate), local exchange telephone services, video, internet and data services, long distance, fiber optics facilities, and leased tower facilities. The Company has the following three reportable segments, which it operates and manages as strategic business units organized by lines of business:

The Cable segment provides video, internet and voice services in franchise areas in portions of Virginia, West Virginia and western Maryland, and leases fiber optic facilities throughout its service area. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia.

A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company.

Index

The segment information provided below has been updated to reflect these presentation changes for all periods presented.

Results of Operations

Three Months Ended March 31, 2014 Compared with the Three Months Ended March 31, 2013

Consolidated Results

The Company’s consolidated results from continuing operations for the first quarters of 2014 and 2013 are summarized as follows:

	Three Months Ended
(in thousands)	March 31,				Change
	2014		2013		$			%

Operating revenues	$	80,452	$	76,010	$	4,442			5.8
Operating expenses		64,772		60,801		3,971			6.5
Operating income		15,680		15,209		471			3.1

Interest expense		2,048		2,152		(104	)		(4.8	)
Other income (expense)		610		668		(58	)		(8.7	)
Income before taxes		14,242		13,725		517			3.8
Income tax expense		5,626		5,374		252			4.7
Net income	$	8,616	$	8,351	$	265			3.2

Operating revenues

For the three months ended March 31, 2014, operating revenues increased $4.4 million, or 5.8%. Wireless segment revenues increased $2.9 million compared to the first quarter of 2013. Net postpaid service revenues increased $1.2 million, driven by data fees and 4.3% year-over-year growth in average postpaid subscribers. Net prepaid service revenues grew $2.0 million, or 21.9%, due to improved product mix and 5.3% growth in average prepaid subscribers over 2013. Cable segment revenue grew $2.0 million, reflecting 5.8% growth in average subscriber counts and an increase in revenue per subscriber. Wireline segment revenue increased $0.7 million, including a $1.0 million increase in affiliate revenue, which is eliminated in consolidation.

Operating expenses

Total operating expenses were $64.8 million in the first quarter of 2014 compared to $60.8 million in the prior year period. Cost of goods sold increased $1.5 million, including an increase of $0.8 million in maintenance costs and $0.6 million in network costs. Selling, general and administrative expenses increased $1.0 million, primarily due to advertising and commissions costs to add new customers. Depreciation and amortization expense increased $1.4 million, primarily due to completion of the Network Vision upgrade project.

Index

Interest and other income (expense)

Interest expense declined $0.1 million from the prior year period. During the first quarter of 2013, the company recorded $0.1 million of interest expense charges to reflect changes in the fair value of an interest rate swap not designated as cash flow hedge. The swap expired in July 2013, and no such charges were recorded during the first quarter of 2014.

Income tax expense

The Company’s effective tax rate increased from 39.2% in the quarter ended March 31, 2013 to 39.5% in the 2014 quarter.

Net income

For the three months ended March 31, 2014, net income increased $0.3 million, or 3.2%, primarily reflecting growth in subscriber counts and revenue per subscriber in both the wireless and cable segments.

Wireless

The Company’s Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, through Shenandoah Personal Communications, LLC (“PCS”), a Sprint PCS Affiliate. This segment also leases land on which it builds Company-owned cell towers, which it leases to affiliated and non-affiliated wireless service providers, throughout the same four-state area described above, through Shenandoah Mobile, LLC (“Mobile”).

PCS receives revenues from Sprint for postpaid and prepaid subscribers that obtain service in PCS’s network coverage area. PCS relies on Sprint to provide timely, accurate and complete information to record the appropriate revenue for each financial period. Through July 31, 2013, postpaid revenues received from Sprint were recorded net of certain fees totaling 20% of net postpaid billed revenue retained by Sprint. These fees included an 8% management fee and a 12% net service fee. Effective August 1, 2013, the net service fee increased to 14%. The management fee remained unchanged at 8%. Sprint also retains a 6% management fee on prepaid revenues.

The following tables show selected operating statistics of the Wireless segment as of the dates shown:

	March 31,		December 31,		March 31,		December 31,
	2014		2013		2013		2012

Retail PCS Subscribers - Postpaid		275,025		273,721		263,957		262,892
Retail PCS Subscribers - Prepaid		138,537		137,047		134,404		128,177
PCS Market POPS (000) (1)		2,402		2,397		2,390		2,390
PCS Covered POPS (000) (1)		2,072		2,067		2,058		2,057
CDMA Base Stations (sites)		526		526		521		516
Towers		153		153		151		150
Non-affiliate cell site leases (2)		206		217		218		216

Index

	Three Months Ended
	March 31,
	2014			2013

Gross PCS Subscriber Additions - Postpaid		15,585			15,824
Net PCS Subscriber Additions - Postpaid		1,304			1,065
Gross PCS Subscriber Additions - Prepaid		19,172			21,422
Net PCS Subscriber Additions - Prepaid		1,490			6,227
PCS Average Monthly Retail Churn % - Postpaid (3)		1.73	%		1.87	%
PCS Average Monthly Retail Churn % - Prepaid (3)		4.27	%		3.87	%

POPS refers to the estimated population of a given geographic area and is based on information purchased from third party sources. Market POPS are those within a market area which the Company is authorized to serve under its Sprint PCS affiliate agreements, and Covered POPS are those covered by the Company’s network.

The decrease from December 31, 2013 to March 31, 2014 is a result of expected termination of Sprint iDEN leases associated with the former Nextel network. The Company expects its remaining 14 iDEN leases to terminate during the second quarter of 2014.

PCS Average Monthly Retail Churn is the average of the monthly subscriber turnover, or churn, calculations for the period.

Three Months Ended March 31, 2014 Compared with the Three Months Ended March 31, 2013

	Three Months Ended
	March 31,					Change
(in thousands)	2014		2013		$				%
Segment operating revenues
Wireless service revenue	$	47,232	$	44,065		$	3,167			7.2
Tower lease revenue		2,565		2,562			3			0.1
Equipment revenue		1,197		1,331			(134	)		(10.1	)
Other revenue		85		199			(114	)		(57.3	)
Total segment operating revenues		51,079		48,157			2,922			6.1
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		18,657		17,530			1,127			6.4
Selling, general, and administrative, exclusive of depreciation and amortization shown separately below		8,432		7,887			545			6.9
Depreciation and amortization		7,196		6,028			1,168			19.4
Total segment operating expenses		34,285		31,445			2,840			9.0
Segment operating income	$	16,794	$	16,712		$	82			0.5

Operating revenues

Wireless service revenue increased $3.2 million, or 7.2%, for the three months ended March 31, 2014, compared to the comparable 2013 period. Net postpaid service revenues increased $1.2 million, driven by data fees and 4.3% year-over-year growth in average postpaid subscribers. As stated above, the net service fee increased from 12% of net billed revenues to 14% on August 1, 2013, reducing net postpaid service revenue by $0.9 million, approximately $0.3 million per month. Net prepaid service revenues grew $2.0 million, or 21.9%, due to improved product mix and 5.3% growth in average prepaid subscribers over 2013.

Index

Cost of goods and services

Cost of goods and services increased $1.1 million, or 6.4%, in 2014 from the first quarter of 2013. Postpaid handset costs increased $1.3 million, driven primarily by higher average cost per handset sold. Prepaid handset subsidies decreased $0.6 million on lower volume of handsets sold. Network costs increased $0.7 million, primarily due to increases in rent and backhaul costs associated with the Network Vision project. Maintenance expense grew $0.4 million due to increases in maintenance contracts that support the upgraded wireless network. These increases were largely offset by a one-time $0.4 million gain related to disposal costs for the Network Vision project and by lower costs to maintain prepaid subscribers.

Selling, general and administrative

Selling, general and administrative costs increased $0.5 million, or 6.9%, in the first quarter of 2014 from the comparable 2013 period. Advertising costs grew $0.4 million as the Company increased marketing of the 4G network that was completed in the fourth quarter of 2013. Commission costs grew $0.4 million as growth in sales of higher-tier rate plans resulted in higher commission rates. Costs to add new prepaid subscribers decreased $0.2 million due to lower volume of gross additions in the current year.

Depreciation and amortization

Depreciation and amortization increased $1.2 million, or 19.4%, in the first quarter of 2014 over the comparable 2013 period. The growth is a result of timing differences in the accelerated depreciation of 3G assets in 2013.

Sprint Framily Plan

The Company began selling Sprint’s “Framily” postpaid service plan in April 2014. Compared to other Sprint plans, the Framily plan offers consumers lower monthly recurring service charges and it eliminates the handset subsidy. Although subsidized handset plans will continue to be offered, management expects that sales of the Framily plan will result in changes in Service revenue, Equipment revenue and Cost of goods sold beginning in the second quarter 2014. The amount of the changes will depend on the number of consumers that select the Framily plan instead of the subsidized handset plans.

Cable

As discussed at the beginning of Management’s Discussion and Analysis, the following operating statistics of the Cable segment have been updated to reflect presentation changes for all periods presented.

Index

	March 31,			December 31,			March 31,			December 31,
	2014			2013			2013			2012
Homes Passed (1)		170,711			170,470			169,035			168,475
Customer Relationships (2)
Video customers		51,153			51,197			53,017			52,676
Non-video customers		19,517			18,341			16,220			15,709
Total customer relationships		70,670			69,538			69,237			68,385
Video
Customers (3)		52,725			53,076			54,624			54,840
Penetration (4)		30.9	%		31.1	%		32.3	%		32.6	%
Digital video penetration (5)		57.5	%		49.2	%		39.6	%		39.5	%
High-speed Internet
Available Homes (6)		168,573			168,255			164,789			163,273
Customers (3)		48,068			45,776			42,435			40,981
Penetration (4)		28.5	%		27.2	%		25.8	%		25.1	%
Voice
Available Homes (6)		163,582			163,282			157,409			154,552
Customers (3)		15,799			14,988			12,795			12,262
Penetration (4)		9.7	%		9.2	%		8.1	%		8.0	%
Total Revenue Generating Units (7)		116,592			113,840			109,854			108,083
Fiber Route Miles		2,461			2,446			2,116			2,077
Total Fiber Miles (8)		70,332			69,715			40,686			39,418

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.

Customer relationships represent the number of customers who receive at least one of our services.

Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer. Where services are provided on a bulk basis, such as to hotels and some multi-dwelling units, the revenue charged to the customer is divided by the rate for comparable service in the local market to determine the number of customer equivalents included in the customer counts shown above.

Penetration is calculated by dividing the number of customers by the number of homes passed or available homes, as appropriate.

Digital video penetration is calculated by dividing the number of digital video customers by total video customers. Digital video customers 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 customer.

Homes and businesses are considered available (“available homes”) if we can connect them to our distribution system without further extending the transmission lines and if we offer the service in that area.

Revenue generating units are the sum of video, voice and high-speed internet customers.

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. Fiber counts were recalculated after a fiber audit and deployment of enhanced mapping software in the fourth quarter of 2013.

Index

Three Months Ended March 31, 2014 Compared with the Three Months Ended March 31, 2013

	Three Months Ended
(in thousands)	March 31,						Change
	2014			2013			$		%

Segment operating revenues
Cable service revenue	$	17,424		$	16,163		$	1,261		7.8
Equipment and other revenue		3,056			2,350			706		30.0
Total segment operating revenues		20,480			18,513			1,967		10.6

Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		12,390			11,222			1,168		10.4
Selling, general, and administrative, exclusive of depreciation and amortization shown separately below		4,646			4,425			221		5.0
Depreciation and amortization		5,404			5,205			199		3.8
Total segment operating expenses		22,440			20,852			1,588		7.6
Segment operating loss	$	(1,960	)	$	(2,339	)	$	379		16.2

Operating revenues

Cable segment service revenue increased $1.3 million, or 7.8%, due to a 5.8% increase in average revenue generating units, a video rate increase in January 2014, and customers selecting higher-priced digital TV services and higher-speed data access packages.

Growth in equipment and other revenue was driven by an increase in customer premise equipment rents due to fewer discounts on digital access devices and increased rates on DVR boxes.

Operating expenses

Cable segment cost of goods and services increased $1.2 million, or 10.4%, in the first quarter of 2014 over the comparable 2013 period. Cable programming costs increased $0.5 million as the impact of rising rates per subscriber outpaced declining video subscriber counts. Staffing costs increased $0.5 million due to incremental costs for health care claims and stock compensation. Maintenance costs increased $0.3 million due to costs to support network growth.

Selling, general and administrative expenses grew $0.2 million against the prior year quarter as a $0.2 million reduction in current period commissions expense was more than offset by increases in costs related to customer service and administrative functions.

The increase in depreciation and amortization expense consists of $0.5 million of higher depreciation expense on assets placed in service, offset by lower amortization on the customer base intangible asset recorded when the cable markets were acquired. The amortization of this asset declines on the anniversary of the acquisitions.

Wireline

The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video services in portions Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland.

As previously mentioned, the numbers below have been updated to reflect presentation changes for all periods presented. The following table shows selected operating statistics of the Wireline segment as of the dates shown.

Index

	March 31,		December 31,		March 31,		December 31,
	2014		2013		2013		2012
Telephone Access Lines		21,955		22,106		22,279		22,342
Long Distance Subscribers		9,773		9,851		10,116		10,157
Video Customers		6,222		6,342		6,633		6,719
DSL Subscribers		12,714		12,632		12,709		12,611
Fiber Route Miles		1,454		1,452		1,428		1,420
Total Fiber Miles (1)		85,327		85,135		84,365		84,107

Three Months Ended March 31, 2014 Compared with the Three Months Ended March 31, 2013

	Three Months Ended
(in thousands)	March 31,				Change
	2014		2013		$			%

Segment operating revenues
Wireline service revenue	$	5,585	$	5,463	$	122			2.2
Access revenue		2,928		3,248		(320	)		(9.9	)
Facilities lease revenue		6,443		5,148		1,295			25.2
Equipment revenue		11		9		2			22.2
Other revenue		808		1,233		(425	)		(34.5	)
Total segment operating revenues		15,775		15,101		674			4.5

Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		7,482		7,166		316			4.4
Selling, general, and administrative, exclusive of depreciation and amortization shown separately below		1,244		1,361		(117	)		(8.6	)
Depreciation and amortization		2,697		2,731		(34	)		(1.2	)
Total segment operating expenses		11,423		11,258		165			1.5
Segment operating income	$	4,352	$	3,843	$	509			13.2

Operating revenues

Total operating revenues in the quarter ended March 31, 2014 increased $0.7 million against the comparable 2013 period. Increases in service revenue resulted primarily from contracts to lease fiber facilities and to provide the higher capacity backhaul required to support internet access to third parties. Facilities lease revenue increased $1.0 million due primarily to affiliate billings associated with Network Vision upgrades on the Wireless segment. An additional $0.3 million of facilities lease growth was generated by new service contracts with third parties. The decrease in Access revenue is the result of 2013 changes in certain intrastate access charges. Other revenue decreased $0.4 million due to the conclusion of billings for transition services to buyers of Converged Services’ properties (coupled with a corresponding decrease in costs of goods and services mentioned below).

Operating expenses

Operating expenses overall increased $0.2 million in the quarter ended March 31, 2014, compared to the 2013 quarter. The increase in costs of goods and services resulted from the $0.6 million increase in costs to provide services to affiliates and to other customers, related to the increases in revenue shown above. This increase was partially offset by a $0.3 million decrease in cost of goods and services related to transition services for Converged Services properties.

Index

Non-GAAP Financial Measure

In managing our business and assessing our financial performance, management supplements the information provided by financial statement measures prepared in accordance with GAAP with adjusted OIBDA, which is considered a “non-GAAP financial measure” under SEC rules.

Adjusted OIBDA is defined by us as operating income (loss) before depreciation and amortization, adjusted to exclude the effects of: certain non-recurring transactions; impairment of assets; gains and losses on asset sales; and share-based compensation expense. Adjusted OIBDA should not be construed as an alternative to operating income as determined in accordance with GAAP as a measure of operating performance.

In a capital-intensive industry such as telecommunications, management believes that adjusted OIBDA and the associated percentage margin calculations are meaningful measures of our operating performance. We use adjusted OIBDA as a supplemental performance measure because management believes it facilitates comparisons of our operating performance from period to period and comparisons of our operating performance to that of other companies by excluding potential differences caused by the age and book depreciation of fixed assets (affecting relative depreciation expenses) as well as the other items described above for which additional adjustments were made. In the future, management expects that the Company may again report adjusted OIBDA excluding these items and may incur expenses similar to these excluded items. Accordingly, the exclusion of these and other similar items from our non-GAAP presentation should not be interpreted as implying these items are non-recurring, infrequent or unusual.

While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the current period allocation of costs associated with long-lived assets acquired or constructed in prior periods, and accordingly may obscure underlying operating trends for some purposes. By isolating the effects of these expenses and other items that vary from period to period without any correlation to our underlying performance, or that vary widely among similar companies, management believes adjusted OIBDA facilitates internal comparisons of our historical operating performance, which are used by management for business planning purposes, and also facilitates comparisons of our performance relative to that of our competitors. In addition, we believe that adjusted OIBDA and similar measures are widely used by investors and financial analysts as measures of our financial performance over time, and to compare our financial performance with that of other companies in our industry.

Adjusted OIBDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. These limitations include the following:

it does not reflect capital expenditures;

many of the assets being depreciated and amortized will have to be replaced in the future and adjusted OIBDA does not reflect cash requirements for such replacements;

it does not reflect costs associated with share-based awards exchanged for employee services;

it does not reflect interest expense necessary to service interest or principal payments on indebtedness;

it does not reflect gains, losses or dividends on investments;

it does not reflect expenses incurred for the payment of income taxes; and

other companies, including companies in our industry, may calculate adjusted OIBDA differently than we do, limiting its usefulness as a comparative measure.

In light of these limitations, management considers adjusted OIBDA as a financial performance measure that supplements but does not replace the information reflected in our GAAP results.

The following table shows adjusted OIBDA for the three months ended March 31, 2014 and 2013. As previously mentioned, the numbers below have been updated to reflect presentation changes for all periods presented.

	Three Months Ended
(in thousands)	March 31,
	2014		2013

Adjusted OIBDA	$	31,729	$	29,635

Index

The following table reconciles adjusted OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure, for the three months ended March 31, 2014 and 2013:

Consolidated:
(in thousands)	Three Months Ended
	March 31,
	2014			2013

Operating income	$	15,680		$	15,209
Plus depreciation and amortization		15,387			13,972
Plus (gain) loss on asset sales		(366	)		82
Plus share based compensation expense		1,028			372
Adjusted OIBDA	$	31,729		$	29,635

The following tables reconcile adjusted OIBDA to operating income by major segment for the three months ended March 31, 2014 and 2013:

Wireless Segment:
(in thousands)	Three Months Ended
	March 31,
	2014			2013

Operating income	$	16,794		$	16,712
Plus depreciation and amortization		7,196			6,028
Plus (gain) loss on asset sales		(352	)		90
Plus share based compensation expense		216			108
Adjusted OIBDA	$	23,854		$	22,938

Cable Segment:
(in thousands)	Three Months Ended
	March 31,
	2014			2013

Operating loss	$	(1,960	)	$	(2,339	)
Plus depreciation and amortization		5,404			5,205
Plus gain on asset sales		(23	)		(19	)
Plus share based compensation expense		396			162
Adjusted OIBDA	$	3,817		$	3,009

Index

Wireline Segment:
(in thousands)	Three Months Ended
	March 31,
	2014		2013

Operating income	$	4,352	$	3,843
Plus depreciation and amortization		2,697		2,731
Plus loss on asset sales		9		12
Plus share based compensation expense		175		78
Adjusted OIBDA	$	7,233	$	6,664

Liquidity and Capital Resources

The Company has four principal sources of funds available to meet the financing needs of its operations, capital projects, debt service, investments and potential dividends. These sources include cash flows from operations, existing balances of cash and cash equivalents, the liquidation of investments and borrowings. Management routinely considers the alternatives available to determine what mix of sources are best suited for the long-term benefit of the Company.

Sources and Uses of Cash. The Company generated $32.6 million of net cash from operations in the first three months of 2014, compared to $22.7 million in the first three months of 2013. Cash provided by changes in net assets and liabilities increased $9.7 million, driven by cash paid for taxes in 2013 and net tax refunds in 2014. Net income, adjusted for non-cash items such as depreciation, amortization, deferred income taxes and provisions for bad debt provided an additional $0.2 million of growth in net cash provided by operations compared to the prior year period.

Indebtedness. As of March 31, 2014, the Company’s indebtedness totaled $230.0 million, with an annualized overall weighted average interest rate of approximately 3.40% after considering the impact of the swap contract. Patronage credits provided by the lender reduce the effective cost of our debt by approximately 69 basis points to an effective rate of approximately 2.71%. The Company has $50 million available under the Revolving Facility, and the right to borrow up to $100 million under one or more Incremental Term Loan facilities, subject to certain restrictions. The Revolving Facility and Incremental Term Loan Facility are both subject to the terms of the Restated and Amended Credit Agreement entered into in September 2012.

The Company is bound by certain financial covenants under its Credit Agreement. Noncompliance with any one or more of the debt covenants may have an adverse effect on our financial condition or liquidity in the event such noncompliance cannot be cured or should we be unable to obtain a waiver from the lenders. As of March 31, 2014, the Company was in compliance with all debt covenants, and ratios at March 31, 2014 were as follows:

	Actual	Covenant Requirement at March 31, 2014
Total Leverage Ratio	1.87	3.00 or Lower
Debt Service Coverage Ratio	11.70	2.50 or Higher
Equity to Assets Ratio	40.8%	32.5% or Higher

In accordance with the Credit Agreement, the total leverage and debt service coverage ratios noted above are based on the twelve months ended March 31, 2014. In addition to the covenants above, the Company is required to supply the lender with quarterly financial statements and other reports as defined by the Credit Agreement. The Company was in compliance with all reporting requirements at March 31, 2014.

The Company has no off-balance sheet arrangements (other than operating leases) and has not entered into any transactions involving unconsolidated, limited purpose entities or commodity contracts.

Index

Capital Commitments. Capital expenditures budgeted for 2014 total $74 million. Approximately $18 million of this will be spent to maintain current networks and an additional $18 million will be spent on capacity, in wireless and cable, primarily to keep up with the growing demand for broadband. The budget contemplates $22 million for network expansion. These expenditures are to build new cell sites, additional fiber routes, fiber to tower sites and to expand the cable network footprint. The budget includes $16 million of success-based spending that will only be spent if there are new revenues to support the expenditures. This would include building a fiber extension to connect a new customer or premise equipment for a new cable customer. Approximately $17 million of the $74 million budget for 2014 are projects that were delayed from 2013.

For the first three months of 2014, the Company spent $17.2 million on capital projects, compared to $26.0 million in the comparable 2013 period. Spending related to Wireless projects accounted for $9.7 million in the first three months of 2014, primarily for continued network expansion and upgrades to 800 megahertz voice service. Cable capital spending of $4.6 million related to network expansion and upgrades to support new customers and services. Wireline capital projects cost $1.7 million, driven primarily by fiber builds and switching/routing capability. Other projects totaled $1.2 million, largely related to information technology projects.

The Company believes that cash on hand, cash flow from operations and borrowings expected to be available under the Company’s existing credit facilities will provide sufficient cash to enable the Company to fund planned capital expenditures, make scheduled principal and interest payments, meet its other cash requirements and maintain compliance with the terms of its financing agreements for at least the next twelve months. Thereafter, capital expenditures will likely continue to be required to provide increased capacity to meet the Company’s expected growth in demand for its products and services. The actual amount and timing of the Company’s future capital requirements may differ materially from the Company’s estimate depending on the demand for its products and new market developments and opportunities.

The Company’s cash flows from operations could be adversely affected by events outside the Company’s control, including, without limitation, changes in overall economic conditions, regulatory requirements, changes in technologies, demand for its products, availability of labor resources and capital, changes in the Company’s relationship with Sprint, and other conditions. The Wireless segment’s operations are dependent upon Sprint’s ability to execute certain functions such as billing, customer care, and collections; the subsidiary’s ability to develop and implement successful marketing programs and new products and services; and the subsidiary’s ability to effectively and economically manage other operating activities under the Company's agreements with Sprint. The Company's ability to attract and maintain a sufficient customer base, particularly in the acquired cable markets, is also critical to its ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect the Company’s results.

Recently Issued Accounting Standards

There were no recently issued accounting standards, not adopted by the Company as of March 31, 2014, that are expected to have a material impact on the Company’s results of operations or financial condition.

Index

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s market risks relate primarily to changes in interest rates on instruments held for other than trading purposes. The Company’s interest rate risk generally involves three components. The first component is outstanding debt with variable rates. As of March 31, 2014, the Company had $230.0 million of variable rate debt outstanding, bearing interest at a rate of 2.67% as determined on a monthly basis. An increase in market interest rates of 1.00% would add approximately $2.3 million to annual interest expense, excluding the effect of the interest rate swap. In 2012, the Company entered into a swap agreement that covers notional principal equal to approximately 76% of the outstanding variable rate debt through maturity in 2019, requiring the Company to pay a fixed rate of 1.13% and receive a variable rate based on one month LIBOR, to manage a portion of its interest rate risk. The 2012 swap currently adds approximately $1.6 million to annual interest expense, based on the spread between the fixed rate and the variable rate currently in effect on our debt.

The second component of interest rate risk consists of temporary excess cash, which can be invested in various short-term investment vehicles such as overnight repurchase agreements and Treasury bills with a maturity of less than 90 days. The cash is currently invested in a combination of a commercial checking account that has limited interest rate risk, and three money market mutual funds that contain a total investment of $20 million. Management continues to evaluate the most beneficial use of these funds.

The third component of interest rate risk is marked increases in interest rates that may adversely affect the rate at which the Company may borrow funds for growth in the future. If the Company should borrow additional funds under any Incremental Term Loan Facility to fund its capital investment needs, repayment provisions would be agreed to at the time of each draw under the Incremental Term Loan Facility. If the interest rate margin on any draw exceeds by more than 0.25% the applicable interest rate margin on the Term Loan A Facility, the applicable interest rate margin on the Term Loan A Facility shall be increased to equal the interest rate margin on the Incremental Term Loan Facility. If interest rates increase generally, or if the rate applied under the Company’s Incremental Term Loan Facility causes the Company’s outstanding debt to be repriced, the Company’s future interest costs could increase.

Management views market risk as having a potentially significant impact on the Company's results of operations, as future results could be adversely affected if interest rates were to increase significantly for an extended period, or if the Company’s need for additional external financing resulted in increases to the interest rates applied to all of its new and existing debt. As of March 31, 2014, the Company has $55.4 million of variable rate debt with no interest rate protection. The Company’s investments in publicly traded stock and bond mutual funds under the rabbi trust, which are subject to market risks and could experience significant swings in market values, are offset by corresponding changes in the liabilities owed to participants in the Executive Supplemental Retirement Plan. General economic conditions affected by regulatory changes, competition or other external influences may pose a higher risk to the Company’s overall results.

As of March 31, 2014, the Company has $6.9 million of cost and equity method investments. Approximately $4.2 million consists of illiquid required investments related to business, regulatory or lending arrangements necessary to access services. An additional $0.3 million consists of investments in telephone-related business consortiums. The remaining $2.4 million is invested in privately held companies through an investment with a portfolio manager. Most of the companies are in an early stage of development and significant increases in interest rates could have an adverse impact on their results, ability to raise capital and viability. The Company’s market risk is limited to the funds previously invested.

Index

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our President and Chief Executive Officer, who is the principal executive officer, and the Vice President - Finance and Chief Financial Officer, who is the principal financial officer, conducted an evaluation of our disclosure controls and procedures, as defined by Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on criteria established in Internal Control – Integrated Framework (1992), issued by the Committee of Sponsoring Organizations of the Treadway Commission, the Company's principal executive officer and its principal financial officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2014.

Changes in Internal Control Over Financial Reporting

During the first quarter of 2014, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Other Matters Relating to Internal Control Over Financial Reporting

Under the Company’s agreements with Sprint, Sprint provides the Company with billing, collections, customer care, certain network operations and other back-office services for the PCS operation. As a result, Sprint remits to the Company approximately 59% of the Company’s total operating revenues. Due to this relationship, the Company necessarily relies on Sprint to provide accurate, timely and sufficient data and information to properly record the Company’s revenues and accounts receivable, which underlie a substantial portion of the Company’s periodic financial statements and other financial disclosures.

Information provided by Sprint includes reports regarding the subscriber accounts receivable in the Company’s markets. Sprint provides the Company with monthly accounts receivable, billing and cash receipts information on a market level, rather than a subscriber level. The Company reviews these various reports to identify discrepancies or errors. Under the Company’s agreements with Sprint, the Company is entitled to only a portion of the receipts, net of items such as taxes, government surcharges, certain allocable write-offs and the 22.0% of revenue retained by Sprint. Because of the Company’s reliance on Sprint for financial information, the Company must depend on Sprint to design adequate internal controls with respect to the processes established to provide this data and information to the Company and Sprint’s other Sprint PCS affiliate network partners. To address this issue, Sprint engages an independent registered public accounting firm to perform a periodic evaluation of these controls and to provide a “Report on Controls Placed in Operation and Tests of Operating Effectiveness” under guidance provided in Statements on Standards for Attestation Engagements No. 16 (“SSAE 16”). The report is provided to the Company on an annual basis and covers a nine-month period. The most recent report covered the period from January 1, 2013 to September 30, 2013. The most recent report indicated there were no material issues which would adversely affect the information used to support the recording of the revenues provided by Sprint related to the Company’s relationship with them.

Index

PART II.

OTHER INFORMATION

ITEM 1A.

Risk Factors

As previously discussed, our actual results could differ materially from our forward-looking statements. Except as described below, there have been no material changes in the risk factors from those described in Part 1, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The Company maintains a dividend reinvestment plan (the “DRIP”) for the benefit of its shareholders. When shareholders remove shares from the DRIP, the Company issues a certificate for whole shares, pays out cash for any fractional shares, and cancels the fractional shares purchased. In conjunction with exercises of stock options and distributions of vested share awards, the Company periodically repurchases shares from recipients to cover some of the exercise price of the options being exercised or taxes payable associated with the distribution of shares. The following table provides information about the Company’s repurchases of shares during the three months ended March 31, 2014:

	Number of Shares Purchased		Average Price Paid per Share
January 1 to January 31		2	$	24.56
February 1 to February 28		16,228	$	26.15
March 1 to March 31		33,610	$	33.21

Total		49,840	$	30.91

Index

ITEM 6.

Exhibits

(a)	The following exhibits are filed with this Quarterly Report on Form 10-Q:

10.43*

First Amendment dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders.

10.44*

Joinder Agreement dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders.

10.45*

Addendum XVI dated as of December 9, 2013, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC.

10.46*

Addendum XVII dated as of April 11, 2014, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC.

10.47*

2014 Stock Incentive Plan.

31.1*

Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*

Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32*	Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.

(101)

Formatted in XBRL (Extensible Business Reporting Language)

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SHENANDOAH TELECOMMUNICATIONS COMPANY

(Registrant)

/s/Adele M. Skolits

Adele M. Skolits

Vice President - Finance and Chief Financial Officer

Date: May 2, 2014

Index

EXHIBIT INDEX

Exhibit No.	Exhibit

10.43*	First Amendment dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders.

10.44*	Joinder Agreement dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders.

10.45*	Addendum XVI dated as of December 9, 2013 to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC

10.46*	Addendum XVII dated as of April 11, 2014, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC.

10.47*	2014 Stock Incentive Plan.

31.1*	Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*	Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32*	Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. 1350.

(101)	Formatted in XBRL (Extensible Business Reporting Language)

	101.INS	XBRL Instance Document

	101.SCH	XBRL Taxonomy Extension Schema Document

	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB	XBRL Taxonomy Extension Label Linkbase Document

	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

Exhibit 10.43

EXECUTION VERSION

FIRST AMENDMENT AGREEMENT

This FIRST AMENDMENT AGREEMENT (this “Agreement”) is made and entered into as of January 30, 2014 and effective as of January 1, 2014, by and among SHENANDOAH TELECOMMUNICATIONS COMPANY, a Virginia corporation (“Borrower”), each of the subsidiaries of Borrower identified as guarantors on the signature pages hereto (individually, a “Guarantor” and, collectively, the “Guarantors”; and together with Borrower, individually a “Loan Party” and, collectively, the “Loan Parties”), COBANK, ACB, as Administrative Agent (“Administrative Agent”), and each of the financial institutions executing this Agreement and identified as a Lender on the signature pages hereto (the “Lenders”).

RECITALS

WHEREAS, Borrower, the Guarantors and the Lenders have entered into that certain Amended and Restated Credit Agreement, dated as of September 14, 2012 (as amended, modified, supplemented, extended or restated from time to time, the “Credit Agreement”); and

WHEREAS, the Lenders have agreed to certain modifications to the Credit Agreement as more fully described herein.

NOW, THEREFORE, in consideration of the foregoing and the agreements set forth in this Agreement, each of Borrower, the Guarantors and the Lenders party hereto hereby agrees as follows:

SECTION 1. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

SECTION 2. Amendments. In reliance on the representations and warranties of Borrower and the Guarantors contained in this Agreement and in connection with Borrower’s request therefor, and subject to the effectiveness of this Agreement as described below,

(A) Subsection 2.13 of the Credit Agreement is hereby amended by replacing each reference therein to “Hedge Agreements” with “Related Secured Hedge Agreements”.

(B) Subsection 3.4(G) of the Credit Agreement is hereby amended by adding to the end of such Subsection 3.4(G) “permitted pursuant to Subsection 3.14”.

(C) Subsection 3.14 of the Credit Agreement is hereby amended by amending and restating such Subsection 3.14 in its entirety as follows:

First Amendment Agreement/Shenandoah Telecommunications Company

3.14 Hedge Agreements. The Loan Parties will not, and will not permit their respective Subsidiaries to, engage in, guaranty or grant a security interest to secure any speculative transactions or any transaction involving a Hedge Agreement except for Hedge Agreements entered into (i) as required by Subsection 2.13 or (ii) in the ordinary course of business solely for hedging (rather than speculative) purposes to provide protection to the Borrower or any other Loan Party against fluctuations in interest rates or currency exchange rates; provided however, that (X) no Loan Party or Subsidiary of any Loan Party shall enter into or incur any Hedge Agreement that constitutes or gives rise to a Swap Obligation, contingent or otherwise, if at the time it enters into or incurs such Swap Obligation it does not constitute an “eligible contract participant” as defined in the Commodity Exchange Act, and (Y) no Loan Party or Subsidiary of any Loan Party shall guaranty or grant a security interest to secure any Swap Obligation if at the time of such guaranty or grant it does not constitute an “eligible contract participant” as defined in the Commodity Exchange Act.

(D) Section 5 of the Credit Agreement is hereby amended by adding to such Section the following Subsection 5.22:

5.22 Qualified ECP Guarantor Status. The Borrower is, and will be, a Qualified ECP Guarantor on the date hereof and on each date it enters into a Hedge Agreement in accordance with the terms hereof.

(E) Subsection 6.1(C) of the Credit Agreement is hereby amended by adding to Subsection 6.1(C) a cross reference to Subsection 9.23 of the Credit Agreement.

(F) Subsection 6.9 of the Credit Agreement is hereby amended by adding to the end of Subsection 6.9 the following sentence:

Notwithstanding the foregoing, amounts received from any Loan Party shall not be applied to Secured Obligations that comprise Excluded Swap Obligations of such Loan Party (it being understood that in the event that any amount is applied to Secured Obligations other than Excluded Swap Obligations as a result of this sentence, the Administrative Agent shall make such adjustments as it determines in its sole discretion are appropriate to distributions pursuant to Related Secured Hedge Agreements from amounts received from “eligible contract participants” under the Commodity Exchange Act or any regulations promulgated thereunder to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to Secured Obligations pursuant to Related Secured Hedge Agreements by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Secured Obligations Related Secured Hedge Agreements).

(G) Section 9 of the Credit Agreement is hereby amended by adding to such Section the following Subsection 9.23:

First Amendment Agreement/Shenandoah Telecommunications Company

9.23 Keepwell. In addition to and not in derogation of any other obligation of any Loan Party under this Agreement or any other Loan Document, each Loan Party constituting a Qualified ECP Guarantor hereby jointly and severally absolutely and irrevocably undertakes to provide and guarantees such funds or other support to each other Loan Party as may be needed by such Loan Party from time to time to honor all of its obligations under any Loan Document including obligations with respect to Swap Obligations that would, in the absence of the agreement in this Section 9.23, otherwise constitute Excluded Swap Obligations as to such other Loan Party (but in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.23 or otherwise under this Agreement or any other Loan Document, as it relates to such other Loan Parties, voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The guarantees, obligations and undertakings of the Loan Parties constituting Qualified ECP Guarantors under this Section 9.23 shall remain in full force and effect until all obligations under any Loan Document have been indefeasibly paid and performed in full and all Commitments have expired or been terminated. The Loan Parties intend that this Section 9.23 constitute, and this Section 9.23 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of the Commodity Exchange Act

(H) The definitions of “Hedge Agreement”, “Material Accounts”, “Obligations”, and “Secured Obligations” in Subsection 10.1 of the Credit Agreement are hereby amended and restated in their entirety as set forth below:

“Hedge Agreement” means (i) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (ii) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement.

“Material Accounts” means (A) all deposit, securities or other investment accounts in the name of the Loan Parties and their respective Subsidiaries (other than Excluded Subsidiaries) at Branch Banking and Trust Company (or such other financial institution with which Borrower maintains its primary banking relationship) and (B) all other deposit, securities or other investment accounts in the name of the Loan Parties and their respective Subsidiaries (other than Excluded Subsidiaries), in each case, to the extent the average daily or interdaily balance of such accounts for the most recently completed six calendar months exceeds $1,000,000 individually or $2,500,000 in the aggregate.

First Amendment Agreement/Shenandoah Telecommunications Company

“Obligations” means all obligations, liabilities and Indebtedness of every nature of Borrower and all other Loan Parties under the Loan Documents from time to time owed to Administrative Agent, any Lender or any Indemnitee, including, the principal amount of all debts, claims and Indebtedness, accrued and unpaid interest and all indemnities, fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now or from time to time hereafter owing, due or payable, or any combination thereof, whether before or after the filing of a proceeding under the Bankruptcy Code or any Other Debtor Relief Law (whether or not allowed in such proceeding) by or against any Loan Party or any of its respective Subsidiaries; provided however, Excluded Swap Obligations of any Loan Party shall in any event be excluded from “Obligations” owing by such Loan Party.

“Secured Obligation” means (i) the Obligations and (ii) all obligations of Borrower or any other Loan Party under any Secured Hedge Agreement; provided however, Excluded Swap Obligations of any Loan Party shall in any event be excluded from “Secured Obligations” owing by such Loan Party.

(I) Subsection 10.1 of the Credit Agreement is hereby amended to add the following definitions:

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Excluded Swap Obligation” means, with respect to any Loan Party providing a guaranty of or granting a security interest to secure any Swap Obligation of another Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Subsection 9.23 and any other “keepwell, support or other agreements” for the benefit of such Loan Party) at the time the guaranty of or grant of such security interest by such Loan Party becomes effective with respect to such related Swap Obligation. For the avoidance of doubt, if a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or grant of security interest is or becomes illegal.

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party (a) that has total assets exceeding $10,000,000 at the time of such Swap Obligation or any guaranty of or any granting of a security interest to secure obligations under such Swap Obligation becomes effective or (b) that otherwise constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another Person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

First Amendment Agreement/Shenandoah Telecommunications Company

“Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

SECTION 3. This Agreement shall not constitute a novation of the Credit Agreement or any other Loan Document. Except as expressly provided in this Agreement, the execution and delivery of this Agreement does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of, the Loan Documents, and the Loan Documents shall remain in full force and effect.

SECTION 4. Each of the Loan Parties hereby represents and warrants to the Lenders as follows:

(A) Such Loan Party has the right and power, and has taken all necessary action to authorize it, to execute, deliver and perform this Agreement in accordance with its terms. This Agreement has been duly executed and delivered by such Loan Party and is a legal, valid and binding obligation of it, enforceable against it in accordance with its terms.

(B) The execution, delivery and performance of this Agreement in accordance with its terms do not and will not, by the passage of time, the giving of notice or otherwise,

(1) require any Governmental Approval or violate any Applicable Law relating to such Loan Party;

(2) conflict with, result in a breach of or constitute a default under the organizational documents of such Loan Party, any material provision of any indenture, agreement or other instrument to which it is a party or by which it or any of its properties may be bound or any Governmental Approval relating to it; or

(3) result in or require the creation or imposition of any Lien (except as permitted by the Loan Documents) upon or with respect to any property now owned or hereafter acquired by such Loan Party.

(C) The representations and warranties of such Loan Party set forth in the Loan Documents are true and correct as of the date hereof as if made on the date hereof.

(D) No Event of Default under the Loan Documents has occurred and is continuing as of this date.

SECTION 5. Borrower hereby confirms and agrees that (a) each Security Document is and shall continue to be in full force and effect, and (b) the obligations secured by each such document include any and all obligations of the Loan Parties to the Secured Parties under the Credit Agreement.

First Amendment Agreement/Shenandoah Telecommunications Company

SECTION 6. Each of the Guarantors hereby confirms and agrees that (a) its guarantee contained in the Credit Agreement and each Security Document to which it is a party is and shall continue to be in full force and effect, and (b) the obligations guaranteed or secured by each such applicable document include any and all obligations of the Loan Parties to the Secured Parties under the Credit Agreement.

SECTION 7. This Agreement shall be effective only upon receipt by the Administrative Agent of an execution counterpart hereto signed by Borrower, each Guarantor, and each Lender.

SECTION 8. Borrower agrees to pay to the Administrative Agent, on demand, all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, including, without limitation, the reasonable fees and expenses of counsel retained by the Administrative Agent, in connection with the negotiation, preparation, execution and delivery of this Agreement and all other instruments and documents contemplated hereby.

SECTION 9. This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and shall be binding upon all parties and their respective permitted successors and assigns, and all of which taken together shall constitute one and the same agreement.

SECTION 10. This Agreement shall be governed by and shall be construed and enforced in accordance with all provisions of the Credit Agreement, including the governing law provisions thereof.

[Signatures Follow on Next Page.]

First Amendment Agreement/Shenandoah Telecommunications Company

Witness the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.

	SHENANDOAH TELECOMMUNICATIONS COMPANY, as Borrower

	By:	/s/
	Name:	Christopher E. French
	Title:	President

	SHENANDOAH CABLE TELEVISION LLC,
	SHENTEL CABLE OF SHENANDOAH COUNTY, LLC,
	SHENANDOAH PERSONAL COMMUNICATIONS, LLC,
	SHENANDOAH MOBILE, LLC,
	SHENTEL COMMUNICATIONS, LLC,
	SHENTEL MANAGEMENT COMPANY,
	each as a Guarantor

	By:	/s/
	Name:	Christopher E. French
	Title:	President

[Signatures continued on following page]

First Amendment Agreement/Shenandoah Telecommunications Company

[Signatures continued from previous page]

	COBANK, ACB, as Administrative Agent and a Lender

	By:	/s/
		Gloria Hancock
		Vice President

[Signatures continued on following page]

First Amendment Agreement/Shenandoah Telecommunications Company

[Signatures continued from previous page]

	AgFirst Farm Credit Bank, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	John W. Burnside, Jr.
	Title:	Vice President

	Farm Credit Bank of Texas, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Nicholas King
	Title:	Vice President

	Farm Credit Services of America, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Ben Fogle
	Title:	Vice President

[Signatures continued on following page]

First Amendment Agreement/Shenandoah Telecommunications Company

[Signatures continued from previous page]

	Farm Credit Mid-America, FLCA, fka Farm Credit Services of Mid-America, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Ralph Bowman
	Title:	Vice President Capital Markets

	United FCS, FLCA d/b/a FCS Commercial Finance Group, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Jeremy Voigts
	Title:	Vice President

	GreenStone Farm Credit Services, ACA/FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Jeff Pavlik
	Title:	Vice President

[Signatures continued on following page]

First Amendment Agreement/Shenandoah Telecommunications Company

[Signatures continued from previous page]

	1^st Farm Credit Services, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Dale A. Richardson
	Title:	Vice President, Capital Markets Group

	MidAtlantic Farm Credit FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	William J. Rutta
	Title:	Vice President

	AgStar Financial Services, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Troy Mostaert
	Title:	VP Capital Markets

[Signatures continued on following page]

First Amendment Agreement/Shenandoah Telecommunications Company

[Signatures continued from previous page]

	AgChoice Farm Credit, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Mark F. Kerstetter
	Title:	Vice President

	Frontier Farm Credit, ACA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Stuart R. Hays
	Title:	Vice President

	Northwest Farm Credit Services, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Mark Westfall
	Title:	Vice President

[Signatures continued on following page]

First Amendment Agreement/Shenandoah Telecommunications Company

[Signatures continued from previous page]

	Farm Credit West, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Ben Madonna
	Title:	Vice President

	Badgerland Financial, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Terry A. McMahon
	Title:	Chief Credit Officer

	American Ag Credit, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement

	By:	/s/
	Name:	Edwin A. Adams, Jr.
	Title:	Vice President

Exhibit 10.44

EXECUTION VERSION

JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this “Joinder”), dated as of January 30, 2014 and effective as of January 1, 2014, is among SHENTEL CABLE OF SHENANDOAH COUNTY, LLC, a Virginia limited liability company (“New Subsidiary”), SHENANDOAH TELECOMMUNICATIONS COMPANY, a Virginia corporation (“Borrower”), the Guarantors under the Credit Agreement (as hereinafter defined), the Grantors under the Pledge and Security Agreement (as defined in the Credit Agreement), and CoBANK, ACB, as Administrative Agent (“Administrative Agent”) under that certain Amended and Restated Credit Agreement, dated as of September 14, 2012, among Borrower, the Guarantors party thereto, Administrative Agent, CoBank, ACB, as a Lender, and such other Lenders as may from time to time become a party thereto (as amended, modified, extended or restated from time to time, the “Credit Agreement”). All of the defined terms in the Credit Agreement are incorporated herein by reference.

Borrower is required by Subsection 2.12 of the Credit Agreement to cause New Subsidiary to become a “Guarantor” and a “Loan Party” thereunder and to become a “Guarantor” and a “Grantor” under the Pledge and Security Agreement. New Subsidiary will obtain benefits as a result of the continued extension of credit to Borrower under the Credit Agreement, which benefits are hereby acknowledged, and, accordingly, desires to execute and deliver this Joinder. Therefore, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the Lenders to continue to extend credit to Borrower under the Credit Agreement, New Subsidiary, Borrower, each existing Guarantor, each existing Grantor and Administrative Agent, for the benefit of the Secured Parties, hereby agree as follows:

New Subsidiary and Administrative Agent, on behalf of itself and the Lenders, hereby acknowledge, agree and confirm that, by New Subsidiary’s execution of this Joinder, New Subsidiary will be deemed to be a party to the Credit Agreement and a “Guarantor” and a “Loan Party” for all purposes of the Credit Agreement, including, Subsection 9.20 thereof, and the other Loan Documents, and shall have all of the obligations and rights of a Guarantor and a Loan Party thereunder as if it had executed the Credit Agreement and the other Loan Documents. New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Loan Documents, including, (i) all of the representations and warranties of a Loan Party set forth in Section 5 of the Credit Agreement, (ii) all of the affirmative and negative covenants set forth in Sections 2, 3 and 4 of the Credit Agreement, and (iii) the right of set off set forth in Subsection 6.7 of the Credit Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, New Subsidiary hereby jointly and severally, together with the other Guarantors, unconditionally and irrevocably guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, by acceleration or otherwise, of any and all Secured Obligations strictly in accordance with the terms thereof, on order, or demand, and that in the case of any extension of time of payment or renewal of any of the Secured Obligations of Borrower, the same will be promptly paid in full when due in accordance with the terms of such extension or renewal, all as provided in the Credit Agreement, including, Subsection 9.20 of the Credit Agreement.

New Subsidiary and Administrative Agent, on behalf of itself and the Lenders, hereby acknowledge, agree and confirm that, by its execution of this Joinder, New Subsidiary will be deemed to be a party to the Pledge and Security Agreement and a “Guarantor” and a “Grantor” for all purposes of the Pledge and Security Agreement and the other Loan Documents, and shall have all the obligations and rights of a Guarantor and a Grantor thereunder as if it had executed the Pledge and Security Agreement. New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Pledge and Security Agreement, including, all of the representations and warranties and all of the negative and affirmative covenants set forth in the Pledge and Security Agreement. Without limiting the generality of the foregoing terms of this paragraph 2, New Subsidiary hereby grants to Administrative Agent, for the benefit of the Secured Parties, a continuing security interest in its Collateral, all on the terms and subject to the conditions set forth in the Pledge and Security Agreement.

New Subsidiary acknowledges and confirms that it has received a copy of the Credit Agreement and the schedules and exhibits thereto and the Pledge and Security Agreement and the annexes and exhibits thereto. Each of the parties hereto acknowledges and agrees that the information on the schedules to the Credit Agreement and annexes to the Pledge and Security Agreement are hereby amended to provide the information shown on the attached Schedule A.

Except to the extent excluded pursuant to Section 2.3 of the Pledge and Security Agreement, each of the parties hereto acknowledges and confirms that the Equity Interests described in the Annex A to the attached Schedule A are part of the Equity Interests within the meaning of the Pledge and Security Agreement and are part of the Collateral and secure all of the Secured Obligations as provided in the Pledge and Security Agreement.

Each of Borrower, the existing Guarantors, and the existing Grantors confirms that all of its obligations under the Credit Agreement, the Pledge and Security Agreement, and the other Loan Documents are, and upon the New Subsidiary becoming a Guarantor and Grantor, shall continue to be, in full force and effect. The parties hereto confirm and agree that immediately upon the New Subsidiary becoming a Guarantor and Grantor the term “Obligations” and “Secured Obligations”, as used in the Credit Agreement, the Pledge and Security Agreement and the other Loan Documents, shall include all obligations of the New Subsidiary under the Credit Agreement, the Pledge and Security Agreement and under each other Loan Document.

Each of Borrower, New Subsidiary, the existing Guarantors and the existing Grantors agree that at any time and from time to time, upon the written request of Administrative Agent, they will execute and deliver such further documents and do such further acts and things as Administrative Agent may reasonably request in order to effect the purposes of this Joinder.

This Joinder may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract.

This Joinder shall be governed by and shall be construed in accordance with the internal laws of the State of Colorado, without regard to conflicts of law principles that require or permit application of the laws of any other state or jurisdiction.

This Joinder shall be governed by and shall be construed and enforced in accordance with all provisions of the Credit Agreement.

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IN WITNESS WHEREOF, each of Borrower, New Subsidiary, the existing Guarantors, the existing Grantors and Administrative Agent, for the benefit of Administrative Agent and the other Secured Parties, has caused this Joinder to be duly executed by its authorized officer as of the day and year first above written.

	SHENANDOAH TELECOMMUNICATIONS COMPANY, as Borrower and a Grantor

	By:	/s/
		Name: Christopher E. French
		Title: President

	SHENTEL CABLE OF SHENANDOAH COUNTY, LLC, as the New Subsidiary

	By:	/s/
		Name: Christopher E. French
		Title: President

	SHENANDOAH CABLE TELEVISION, LLC,
	SHENANDOAH PERSONAL COMMUNICATIONS, LLC,
	SHENANDOAH MOBILE, LLC,
	SHENTEL MANAGEMENT COMPANY,
	SHENTEL COMMUNICATIONS, LLC, as existing Guarantors and existing Grantors

	By:	/s/
		Name: Christopher E. French
		Title: President

	COBANK, ACB,
	as Administrative Agent

	By:	/s/
		Name: Gloria Hancock
		Title: Vice President

Exhibit 10.45

ADDENDUM XVI

SPRINT PCS MANAGEMENT AGREEMENT

Manager: Shenandoah Personal Communications, LLC

Service Area: Altoona, PA #12

Hagerstown, MD-Chambersburg, PA-Martinsburg, WV #179

Harrisburg, PA #181

Harrisonburg, VA #183

Washington, DC (Jefferson County, WV only) #471

Winchester, VA #479

York-Hanover, PA #483

This Addendum XVI dated as of December 9, 2013, contains certain additional and supplemental terms and provisions to that certain Sprint PCS Management Agreement entered into as of November 5, 1999, by the same parties as this Addendum (or their predecessors in interest), which Management Agreement was initially amended by Addenda I-XV (as so amended, the "Management Agreement"). The terms and provisions of this Addendum control, supersede and amend any conflicting terms and provisions contained in the Management Agreement. Except for express modifications made in this Addendum, the Management Agreement continues in full force and effect.

Capitalized terms used and not otherwise defined in this Addendum have the meanings ascribed to them in the Management Agreement. Section and Exhibit references are to Sections and Exhibits of the Management Agreement unless otherwise noted.

This Addendum is effective on the date written above (the "Effective Date"). On the Effective Date, the Management Agreement is modified as follows:

I. Spectrum Availability in the Altoona, PA BTA. The Parties acknowledge that Sprint PCS has entered into a spectrum swap transaction with an unrelated third party in which Sprint PCS will transfer certain spectrum in the Altoona, PA BTA and receive in return certain alternative spectrum in the Altoona, PA BTA (the "Spectrum Swap"). The Spectrum Swap will not result in a net change to the amount of spectrum made available to Manager but will result in adjustment of the specific frequency ranges made available for Manager's use in the Altoona, PA BTA under this Agreement. Sprint PCS will notify Manager of the date the Spectrum Swap has been completed and received all necessary approvals (the "Spectrum Swap Effective Date"). The Spectrum Swap Effective Date is expected to occur in the first or second quarter of 2014. Following the Effective Date, but beginning no sooner than Jan.1, 2014, Sprint PCS will cause the re-tuning of Manager's equipment to the new frequencies. All costs and expenses charged by Sprint's vendor in connection with re-tuning of Manager's equipment shall be borne by Sprint and paid by Sprint directly to the vendor. Immediately upon the Spectrum Swap Effective Date: (i) the 1860-1865 MHz on the uplink and 1940-1945 MHz on the downlink spectrum ranges in the Altoona, PA BTA will no longer be available to Manager; and (ii) the following spectrum ranges will become available for use by Manager in the Altoona, PA Service Area with respect to CDMA and LTE: 1905-1910 MHz on the uplink and 1985-1990 MHz on the downlink.

2. Exclusivity. Upon the Spectrum Swap Effective Date, Section 2.3(a) of the Management Agreement is amended to read as follows:

2.3 Exclusivity

(a)

Subject only to the exceptions set forth in Section 2.3(d) Manager will be the only person or entity that is a manager, operator or provider of wireless mobility services for Sprint PCS and its Related Parties in the Service Area in the: (i) 1850-1865 MHz and 1870-1885 MHz spectrum ranges on the uplink and 1930-1945 and 1950-1965 MHz spectrum ranges on the downlink with respect to CDMA and LTE in the applicable Shentel Territory; provided, however, that with respect to the Altoona, PA BTA only, the applicable spectrum ranges for purposes of this Section 2.3(a)(i) are 1850-1860 MHz, 1870-1885MHz and 1905-1910 MHz spectrum ranges on the uplink and 1930-1940 and 1950-1965 and 1985-1990 MHz spectrum ranges on the downlink; (ii) the 1900 MHz PCS G-Block Spectrum Range. with respect to CDMA and LTE, effective upon the Network Vision Completion Date; and (iii) the former iDEN Block in the 800 MHz Spectrum Range (with respect to CDMA and LTE products and services only), subject to the limitations set forth below in this Section 2.3(a) and upon receipt of written approval from Sprint PCS. The amount of spectrum in the 800 MHz Spectrum Range made available to Manager by Sprint PCS may vary between BTAs based on re-banding schedules, conflicts with local incumbents, conflicts with residual iDEN usage, regulatory approvals, and other factors. Sprint PCS will notify Manager in writing of specific spectrum availability in each BTA as determined by Sprint PCS in its sole discretion as of the Network Vision Completion Date, and thereafter as additional portions of the 800 MHz Spectrum Range become available. Manager agrees to comply with all FCC rules related to interference mitigation during its management of spectrum in the 800 MHz Spectrum Range. The rights to manage, operate and provide wireless mobility services utilizing the spectrum ranges set forth in (i) - (iii) in the preceding sentence are collectively referred to as the "Exclusive Rights." Neither Sprint PCS nor any of its Related Parties will permit any other person or entity to manage, operate or provide wireless mobility services in violation of the Exclusive Rights for Sprint PCS and/or its Related Parties in the Service Area, except that Sprint PCS may enter into roaming arrangements with other parties. For purposes of this Section 2.3, "mobility" means the capability to sustain a continuous session (voice or data) throughout a broad geographic area by transferring the session from cell site to cell site as the mobile device moves within the geographic area. For purposes of clarification, Wi-Fi is not a wireless mobility service unless such service can be transferred from cell site to cell site.

3. Manager and Sprint PCS' Representations. Manager and Sprint PCS each represents and warrants that its