Shenandoah Telecommunications Co

Good morning, everyone, and welcome to Shenandoah Telecommunications' first quarter 2024 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analysis for Shentel.

Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the first quarter 2024. Our results were announced in a press release distributed this morning and the presentation we'll be reviewing is included on the investor page at our website, www.chentel.com. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer, Ed McKay, Executive Vice President and Chief Operating Officer, and Jim Volk, Senior Vice President of Finance and CFO. After our prepared remarks, we will conduct a question and answer session. As always, let me refer you to slide two of the presentation, which contains our safe harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from the statements. Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. Your caution not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Chris. Go ahead, Chris.

Thanks, Kirk. We appreciate everyone joining this morning, and I hope everyone is well. I will start the call with an update on the recent transactions and our strategy execution. As listed on slide four, we announced and closed on the sale of our towers during the first quarter. The $310 million sales price represents a multiple of approximately 31 times 2023 tower segment adjusted EBITDA when considering the expected T-Mobile revenue churn we had previously disclosed. We're very pleased with the sale price, especially when considering the publicly traded tower companies are trading at multiples in the high teens. This transaction is a good example of the market value of our assets and businesses exceeding the implied value in our stock price. We also closed on $356 million in new financings on April 1st, including $275 million in incremental credit facility capacity and $81 million in preferred equity. We had strong interest from both lenders and financial sponsors during the financing processes, which reflects well on our track record, management team, and Fiber First strategy. These financings will provide growth capital to continue to invest into new Glow Fiber expansion markets. On April 1st, we closed on the acquisition of Horizon Telecom for $385 million, which included issuing 4.1 million common shares to a selling shareholder of Horizon. Horizon's fiber-rich network will open up new Glowfiber expansion markets in Ohio while doubling the size of our commercial fiber business. We recently announced our plans to expand the Glowfiber network to Greenfield, Hillsborough, Jackson, Johnstown, and Zanesville, Ohio. We're excited to welcome our new Ohio colleagues to Shentel, and I'm pleased to report that Glenn Lytle has joined the senior management team to lead commercial sales for the combined company. Glenn brings over 25 years of commercial fiber sales experience, including the last five years successfully growing the Horizon commercial fiber business. I'll now turn to slide five to give an update on our strategy execution and our Horizon integration efforts. Although we've only owned Horizon for about five weeks, we're off to a fast start with our integration efforts. We announced a brand change from Horizon to Glowfiber in mid-April and implemented a new Glowfiber rate card in Ohio. Similar to the plans we use in the Mid-Atlantic states, we focus on easy, straightforward pricing with no long-term contracts. We expect the new rate card will enhance customer additions and reduce churn. We also identified another $1 million in annual run rate expense synergy savings, increasing our target to $10.6 million. We began to implement plans to achieve these synergies in April, realizing about $4.8 million annualized, or about 45% of our target as we enter May. We expect to complete the integration and realize the full energy savings target by the end of the first half of 2025. In parallel with our sale, acquisition, and financing activities, we've reported a strong quarter of operating results in our mid-Atlantic markets. We added 5,000 Glow Fiber customers, setting a new quarterly record. We also constructed and released to sales almost 26,000 new Glow Fiber passings. With the 260,000 passings constructed in the Mid-Atlantic markets and 15,000 passings acquired as part of the Horizon merger, we now have 275,000 Glow Fiber expansion market passings, or 46% of our year-end 2026 target of 600,000. Moving to slide six, we now have over 15,000 route miles in our super regional fiber network spanning seven adjacent states. The combination with Horizon has been well received by our commercial customers. We now have 25 low fiber markets as reflected on slide seven. We have started engineering, permitting, and or construction in another eight markets, including the five new markets in Ohio. With the Horizon acquisition closed and most of the underwriting of new markets complete, we have good visibility into the future state of our Glow Fiber network and markets. The next 32 months will be focused on execution of our build and sales plan. With that, I'll now turn the call over to Jim to review the details of our financial results.

Thank you, Chris, and good morning, everyone.

Before I provide commentary on our financial results, Please note that we have altered our financial reporting triggered by the plan to sell our tower portfolio in the first quarter. The tower segment is now reported under discontinued operations in our statement of comprehensive income and statement of cash flow. The tower assets are recorded as held for sale on our balance sheet. These changes are reflected for the current and prior periods in our earnings release in Form 10-K. Under the new organizational and reporting structure, the company has one reportable segment in continuing operations going forward. And now moving to slide nine for our financial results for the first quarter. Revenue grew 3.1% to $69.3 million in the first quarter of 2024, driven by continued strong residential and SMD revenue growth of $4.7 million, or 9.1%, partially offset by the expected decline million, or 19.8% in commercial revenue. The residential SMB revenue increase was driven by growth in global fiber markets revenue of 73.1% due to a 62.3% increase in broadband data RGUs and a 9.7% increase in data RQ. Commercial revenue declined due to the expected decline in T-Mobile revenue. As reported throughout 2023, T-Mobile disconnected backhaul circuits as part of the decommissioning of the former Sprint network. The revenue decline reflects a full period of these disconnects and a significant reduction in related early termination fees. We still expect about $7 million in lower T-Mobile revenue in 2024 and for the commercial revenue to return to mid to high single-digit growth rates starting in 2025, as previously disclosed. Adjusted EBITDA of $19.3 million was relatively flat in the first quarter as compared to the first quarter of 2023. Revenue growth was offset by higher expenses associated with expanding our Glow Fiber line of business, higher programming fees for our video product, and bad debt due to general macro economic conditions. I'd now like to update you on our liquidity position following the Verizon and related financing transactions, which we closed on April 1st. As reflected on slide 10, we raised $81 million in a new preferred equity financing and used the proceeds, along with cash on hand, primarily from the tower sale, to complete the acquisition of Horizon Telcom. In summary, we traded a slow-growth infrastructure asset for a digital fiber asset with higher growth potential, which fits nicely with our fiber-first strategy. Our pro-former liquidity position on April 1st is $484 million, including about $110 million in cash, $225 million in available delayed draw term loans, and $150 million in available revolver capacity. We are well-positioned to fund our business plan to grow our globe fiber expansion market cap into $600,000 by the end of 2026. Moving to slide 11, our pro-former outstanding net debt as of April 1st, is $190 million. On a similar note, after adjusting fully diluted common shares at $51 million, for the additional $4.1 million common shares issued to a rollover shareholder of Horizon as part of the acquisition, and the as-converted equivalent common shares of the preferred equity, pro forma April 1st fully diluted common shares are now $58.4 million. As a reminder, the exchange price for converting the preferred equity to common shares is $24.50. Before turning the call over to Ed, I will provide our expectations for 2024 Horizon financial contributions and some key operating metrics on slide 12. We expect Horizon to generate $50 to $54 million in revenue and $12 to $16 million in adjusted EBITDA for the nine months of April to December 2024. Capital expenditures for the nine-month ownership period in 2024 are expected to range from $30 million to $39 million. Most of the commercial fiber CapEx is success-based, relating to installing service for a portion of the $609,000 contracted monthly recurring revenue backlog. As Chris noted earlier, we announced five new Glow fiber expansion markets in Ohio. The Glow fiber CapEx in Ohio will be a combination of initial engineering permitting for these new markets, constructing a few thousand more passings in existing Ohio markets, and success-based CapEx to connect customers. Horizon currently passes 15,000 homes and businesses with fiber in three greenfield markets and 14,000 passings in the RLF market. And now I'll turn the call over to Ed.

Thank you, Jim, and good morning. I'll start on slide 14 with an update on our fiber construction method. In the first quarter, we continued the growth of our predominantly fiber network, ending the quarter with 55% of our total broadband passing served by state-of-the-art 10-gig XGS PON fiber-to-the-home networks. We added over 26,000 new fiber passings in the first quarter, and our construction pace was 47% faster than the first quarter of 2023. We are very pleased with the progress toward our goal of over 100,000 additional fiber passings in 2024. We now have approximately 260,000 glow fiber passings and our total number of approved glow fiber passings reached 565,000 at the end of the first quarter. Combined with 15,000 existing greenfield fiber passings in former horizon markets and our recently announced expansion to 40,000 additional homes in Ohio, we now have enough passings in our construction pipeline to reach our goal of 600,000 total glow fiber passings by 2026. In addition, we plan to construct approximately 23,000 fiber passings as part of government grant projects, and 3,500 were complete at the end of the first quarter. As we continue to ramp up glow fiber construction, we had a record quarter for customer growth as shown on slide 15. We added over 5,000 new glow fiber customers in the first quarter and reached a total of almost 47,000, up 62% year over year. Our total number of data, video, and voice revenue generating units has reached approximately 57,000, up 56% year over year. Our sales team continued to outpace our construction team, and we grew broadband data penetration from 17.4% a year ago to 18% at the end of the first quarter, while adding almost 95,000 new passings during the same period. Our broadband data average revenue per user increased almost 10% year over year due to a combination of rate adjustments, additional equipment revenue, and customers selecting higher speed tiers. For the quarter, 50% of our new residential subscribers adopted speed tiers of one gig or higher, including approximately 3% that took speeds of two gig or higher. We continue to focus on providing the fastest speeds, most reliable network, and outstanding local customer service, and our churn remained extremely low at 0.86% for the quarter. On slide 16, we highlight our data penetration rates as our markets mature and our continuing progress increasing penetration rates across all our cohorts. First year after launching the Glow Fiber market, we typically see penetration rates over 18%. And after three years, data penetration rates typically exceed 30%. Ultimately, we expect to reach average terminal penetration rates of about 38% five to six years after launching service in a new area. Our most mature neighborhoods launched in late 2019 have already exceeded this goal. Let's shift to our first quarter operating results for our cable markets on slide 17. Broadband data subscribers decreased slightly year-over-year to 109,000, and broadband data churn increased to 1.67%, driven primarily by competition from cable and fiber overbuilders in some markets. Our data penetration decreased to 50.3%, driven by the decrease in subscribers and the addition of over 4,000 passings in the past year, primarily in government-subsidized areas. Our total revenue generating units decreased by about 4.5% year over year, as we continue to see declines in video service and residential voice service due to cord cutting. Competition has increased, but unlike some of our larger cable peers, our markets are predominantly rural, with a cable or fiber competitor offering service to less than 20% of our passings. Despite competitive pressure in portions of some markets, broadband data ARPU increased by 2.4% year-over-year to $85, offsetting most of the decrease in revenue from fewer RGUs. I'll also add that we believe Shentel has limited exposure to the ACP program relative to some of our larger cable peers. Less than 4% of our total broadband data customers subscribe to ACP-supported plans, and over 75 percent of them were customers prior to enrolling in the ACP program. Moving to slide 18, we highlight our broadband commercial fiber business. In the first quarter, we booked new sales totaling $110,000 in monthly revenue, up almost 4 percent year over year. Our new installed monthly revenue for the first quarter was $66,000, and we finished the quarter with an installation backlog of approximately $165,000 in monthly revenue. We expect the majority of this backlog to be installed in the second quarter. Monthly churn and compression decreased significantly year over year to 1% for the first quarter of 2024. T-Mobile has now completed the vast majority of backhaul disconnects associated with the Sprint network rationalization. As Jim mentioned, although these disconnects will temporarily slow revenue and earnings growth in 2024, we expect our commercial fiber business to return to historical growth rates in 2025 and beyond. Our 2023 capital spending and guidance for 2024 are reflected on slide 19. Total capital investments for the first quarter totaled $70 million, roughly in line with our capital spending in the first quarter of 2023. Our glow fiber and government subsidized investments were on plan for the first quarter, and we are on pace to finish 2024 within our previous guidance range of $260 to $290 million. Thank you very much, and operator, we're now ready for questions.

Thank you, and as a reminder, to ask a question, simply press star 11 to get in the queue. One moment while we compile the Q&A roster. Our first question comes from Hamid Khorasan with VWS Financial. Please proceed.

Hey, good morning. So first off, I just want to ask you about the ads you had with Glowfiber. Is that... method of just being in more markets, or is that because you're gaining momentum with the markets you've already been established in?

Good morning. This is Ed. So it's a combination of both there. Not only do we have additional new passings as we ramp up construction, but we're continuing to grow our penetration rates in those more mature markets. So it's definitely a combination of the two, and we accelerated our net ads year over year as well.

And do these customers that you're adding, do they have a prior broadband service provider, or are they brand new to the service?

I would say the majority of our ads are switching from one of the big cable providers.

And lastly, with Horizon, with the revenue that they're generating, is there any growth possibilities this year, or are you more looking as to a 25 potential?

Yeah, I can jump in there, Ahmed.

The revenue has grown low single-digit rates the last two years. They have a very sizable backlog, as we noted on the slide. They have $609,000 of monthly revenue under contracted sales contracts that are awaiting installation. We're trying to accelerate that installation pace. It's gone a little slower than what we had expected so far, but our new leadership team is involved there, and we expect that we'll pick up as a couple quarters pass, and we should see some meaningful improvements by the time we get into 2025. Okay.

Thank you.

All right. Thanks, Ahmed. Thank you. And this concludes the Q&A session for today. I will pass it back to Jim Bulk for final comments.

Yes, thanks everyone for joining us this morning. We look forward to updating you on our progress on our Fiber First strategy and the Horizon integration in future periods. Have a great day. Thank you.

And this concludes our conference. You may now disconnect. you Thank you. Bye. Bye. Good morning, everyone, and welcome to Shenandoah Telecommunications' first quarter 2024 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analysis for Shentel.

Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the first quarter 2024. Our results were announced in a press release distributed this morning. and the presentation we'll be reviewing is included on the investor page at our website, www.chentel.com. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer, Ed McKay, Executive Vice President and Chief Operating Officer, and Jim Volk, Senior Vice President of Finance and CFO. After our prepared remarks, we will conduct a question and answer session. As always, let me refer you to slide two of the presentation, which contains our safe harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from the statements. Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. Your caution not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Chris. Go ahead, Chris.

Thanks, Kurt. We appreciate everyone joining this morning, and I hope everyone is well. I will start the call with an update on the recent transactions and our strategy execution. As listed on slide four, we announced and closed on the sale of our towers during the first quarter. The $310 million sales price represents a multiple of approximately 31 times 2023 tower segment adjusted EBITDA when considering the expected T-Mobile revenue churn we had previously disclosed. We're very pleased with the sale price, especially when considering The publicly traded tower companies are trading at multiples in the high teens. This transaction is a good example of the market value of our assets and businesses exceeding the implied value in our stock price. We also closed on $356 million in new financings on April 1st, including $275 million in incremental credit facility capacity and $81 million in preferred equity. had strong interest from both lenders and financial sponsors during the financing processes which reflects well on our track record management team and fiber first strategy these financings will provide growth capital to continue to invest into new glow fiber expansion markets on april 1st we closed on the acquisition of horizon telecom for 385 million which included issuing 4.1 million common shares to a selling shareholder of Horizon. Horizon's fiber-rich network will open up new Glowfiber expansion markets in Ohio while doubling the size of our commercial fiber business. We recently announced our plans to expand the Glowfiber network to Greenfield, Hillsborough, Jackson, Johnstown, and Zanesville, Ohio. We're excited to welcome our new Ohio colleagues to Shentel, and I'm pleased to report that Glenn Lytle has joined the senior management team to lead commercial sales for the combined company. Glenn brings over 25 years of commercial fiber sales experience, including the last five years successfully growing the Horizon commercial fiber business. I'll now turn to slide five to give an update on our strategy execution and our Horizon integration efforts. Although we've only owned Horizon for about five weeks, we're off to a fast start with our integration efforts. We announced a brand change from Horizon to Glowfiber in mid-April and implemented a new Glowfiber rate card in Ohio. Similar to the plans we use in the Mid-Atlantic states, we focus on easy, straightforward pricing with no long-term contracts. We expect the new rate card will enhance customer additions and reduce churn. We also identified another $1 million in annual run rate expense synergy savings, increasing our target to $10.6 million. We began to implement plans to achieve these synergies in April, realizing about $4.8 million annualized, or about 45% of our target as we enter May. We expect to complete the integration and realize the full energy savings target by the end of the first half of 2025. In parallel with our sale, acquisition, and financing activities, we've reported a strong quarter of operating results in our mid-Atlantic markets. We added 5,000 Glow Fiber customers, setting a new quarterly record. We also constructed and released to sales almost 26,000 new Glow Fiber passings. With the 260,000 passings constructed in the Mid-Atlantic markets and 15,000 passings acquired as part of the Horizon merger, we now have 275,000 Glow Fiber expansion market passings, or 46% of our year-end 2026 target of 600,000. Moving to slide six, we now have over 15,000 route miles in our super regional fiber network spanning seven adjacent states. The combination with Horizon has been well received by our commercial customers. We now have 25 low fiber markets as reflected on slide seven. We have started engineering, permitting, and or construction in another eight markets, including the five new markets in Ohio. With the Horizon acquisition closed and most of the underwriting of new markets complete, we have good visibility into the future state of our Glow Fiber network and markets. The next 32 months will be focused on execution of our build and sales plan. With that, I'll now turn the call over to Jim to review the details of our financial results.

Thank you, Chris, and good morning, everyone.

Before I provide commentary on our financial results, Please note that we have altered our financial reporting triggered by the plan to sell our tower portfolio in the first quarter. The tower segment is now reported under discontinued operations in our statement of comprehensive income and statement of cash flow. The tower assets are recorded as held for sale on our balance sheet. These changes are reflected for the current and prior periods in our earnings release in Form 10-K. Under the new organizational and reporting structure, the company has one reportable segment in continuing operations going forward. And now moving to slide nine for our financial results for the first quarter. Revenue grew 3.1% to $69.3 million in the first quarter of 2024, driven by continued strong residential and SMD revenue growth of $4.7 million, or 9.1%, partially offset by the expected decline or 19.8% in commercial revenue. The residential SMB revenue increase was driven by growth in global fiber markets revenue of 73.1% due to a 62.3% increase in broadband data RGU's and a 9.7% increase in data RCO's. Commercial revenue declined due to the expected decline in T-Mobile revenue. As reported throughout 2023, T-Mobile disconnected backhaul circuits as part of the decommissioning of the former Sprint network. The revenue decline reflects a full period of these disconnects and a significant reduction in related early termination fees. We still expect about $7 million in lower T-Mobile revenue in 2024 and for the commercial revenue to return to mid to high single-digit growth rates starting in 2025, as previously disclosed. Adjusted EBITDA of $19.3 million was relatively flat in the first quarter as compared to the first quarter of 2023. Revenue growth was offset by higher expenses associated with expanding our global fiber line of business, higher programming fees for our video product, and bad debt due to general macro economic conditions. I'd now like to update you on our liquidity position following the Verizon and related financing transactions, which we closed on April 1st. As reflected on slide 10, we raised $81 million in a new preferred equity financing and used the proceeds, along with cash on hand, primarily from the tower sale, to complete the acquisition of Horizon Telcom. In summary, we traded a slow-growth infrastructure asset for a digital fiber asset with higher growth potential, which fits nicely with our fiber-first strategy. Our pro-former liquidity position on April 1st is $484 million, including about $110 million in cash, $225 million in available delayed draw term loans, and $150 million in available revolver capacity. We are well positioned to fund our business plan to grow our globe fiber expansion market cap to $600,000 by the end of 2026. Moving to slide 11, our pro-former outstanding net debt as of April 1st, is $190 million. On a similar note, after adjusting fully diluted common shares of $51 million, for the additional $4.1 million common shares issued to a rollover shareholder of Horizon as part of the acquisition, and the ads converted equivalent common shares of the preferred equity, pro forma April 1st fully diluted common shares are now $58.4 million. As a reminder, the exchange price for converting the preferred equity to common shares is $24.50. Before turning the call over to Ed, I will provide our expectations for 2024 Horizon financial contributions and some key operating metrics on slide 12. We expect Horizon to generate $50 to $54 million in revenue and $12 to $16 million in adjusted EBITDA for the nine months of April to December 2024. Capital expenditures for the nine-month ownership period in 2024 are expected to range from $30 million to $39 million. Most of the commercial Fiber CapEx is success-based, relating to installing service for a portion of the $609,000 contracted monthly recurring revenue backlog. As Chris noted earlier, we announced five new Glow Fiber expansion markets in Ohio. The Glow Fiber CapEx in Ohio will be a combination of initial engineering permitting for these new markets, constructing a few thousand more passings in existing Ohio markets, and success-based CapEx to connect customers. Horizon currently passes 15,000 homes and businesses with fiber in three greenfield markets and 14,000 passings in the RLF market. And now I'll turn the call over to Ed.

Thank you, Jim, and good morning. I'll start on slide 14 with an update on our fiber construction metrics. In the first quarter, we continued the growth of our predominantly fiber network, ending the quarter with 55% of our total broadband passing served by state of the art 10 gig XGS pond fiber to the home networks. We added over 26,000 new fiber passings in the first quarter, and our construction pace was 47% faster than the first quarter of 2023. We are very pleased with the progress toward our goal of over 100,000 additional fiber passings in 2024. We now have approximately 260,000 glow fiber passings and our total number of approved glow fiber passings reached 565,000 at the end of the first quarter. Combined with 15,000 existing greenfield fiber passings in former horizon markets and our recently announced expansion to 40,000 additional homes in Ohio, we now have enough passings in our construction pipeline to reach our goal of 600,000 total glow fiber passings by 2026. In addition, we plan to construct approximately 23,000 fiber passings as part of government grant projects, and 3,500 were complete at the end of the first quarter. As we continue to ramp up Glowfiber construction, we had a record quarter for customer growth as shown on slide 15. We added over 5,000 new Glowfiber customers in the first quarter and reached a total of almost 47,000, up 62% year over year. A total number of data, video, and voice revenue generating units has reached approximately 57,000, up 56% year over year. Our sales team continued to outpace our construction team, and we grew broadband data penetration from 17.4% a year ago to 18% at the end of the first quarter, while adding almost 95,000 new passings during the same period. Our broadband data average revenue per user increased almost 10% year over year due to a combination of rate adjustments, additional equipment revenue, and customers selecting higher speed tiers. For the quarter, 50% of our new residential subscribers adopted speed tiers of one gig or higher, including approximately 3% that took speeds of two gig or higher. We continue to focus on providing the fastest speeds, most reliable network, and outstanding local customer service, and our churn remained extremely low at 0.86% for the quarter. On slide 16, we highlight our data penetration rates as our markets mature and our continuing progress increasing penetration rates across all our cohorts. First year after launching the Glow Fiber market, we typically see penetration rates over 18%. And after three years, data penetration rates typically exceed 30%. Ultimately, we expect to reach average terminal penetration rates of about 38% five to six years after launching service in a new area. Our most mature neighborhoods launched in late 2019 have already exceeded this goal. Let's shift to our first quarter operating results for our cable markets on slide 17. Broadband data subscribers decreased slightly year-over-year to 109,000, and broadband data churn increased to 1.67 percent, driven primarily by competition from cable and fiber overbuilders in some markets. Our data penetration decreased to 50.3 percent, driven by the decrease in subscribers and the addition of over 4,000 passings in the past year, primarily in government-subsidized areas. Our total revenue generating units decreased by about 4.5% year over year, as we continue to see declines in video service and residential voice service due to cord cutting. Competition has increased, but unlike some of our larger cable peers, our markets are predominantly rural, with a cable or fiber competitor offering service to less than 20% of our passings. Despite competitive pressure in portions of some markets, broadband data ARPU increased by 2.4% year-over-year to $85, offsetting most of the decrease in revenue from fewer RGUs. I'll also add that we believe Shentel has limited exposure to the ACP program relative to some of our larger cable peers. Less than 4% of our total broadband data customers subscribe to ACP-supported plans, and over 75% of them were customers prior to enrolling in the ACP program. Moving to slide 18, we highlight our broadband commercial fiber business. In the first quarter, we booked new sales totaling $110,000 in monthly revenue, up almost 4% year-over-year. Our new installed monthly revenue for the first quarter was $66,000, and we finished the quarter with an installation backlog of approximately $165,000 in monthly revenue. We expect the majority of this backlog to be installed in the second quarter. Monthly churn and compression decreased significantly year over year to 1% for the first quarter of 2024. T-Mobile has now completed the vast majority of backhaul disconnects associated with the Sprint network rationalization. As Jim mentioned, although these disconnects will temporarily slow revenue and earnings growth in 2024, we expect our commercial fiber business to return to historical growth rates in 2025 and beyond. Our 2023 capital spending and guidance for 2024 are reflected on slide 19. Total capital investments for the first quarter totaled $70 million, roughly in line with our capital spending in the first quarter of 2023. Our glow fiber and government subsidized investments were on plan for the first quarter, and we are on pace to finish 2024 within our previous guidance range of $260 to $290 million. Thank you very much, and operator, we're now ready for questions.

Thank you, and as a reminder, to ask a question, simply press star 1-1 to get in the queue. One moment while we compile the Q&A roster. Our first question comes from Hamid Khorasan with VWS Financial. Please proceed.

Hey, good morning. So, first off, I just want to ask you about the ads you had with Glowfiber. Is that... method of just being in more markets, or is that because you're gaining momentum with the markets you've already been established in?

Good morning. This is Ed. So it's a combination of both there. Not only do we have additional new passings as we ramp up construction, but we're continuing to grow our penetration rates in those more mature markets. So it's definitely a combination of the two. And we accelerated our net ads year over year as well.

And do these customers that you're adding, do they have a prior broadband service provider, or are they brand new to the service?

I would say the majority of our ads are switching from one of the big cable providers.

And lastly, with Horizon, with the revenue that they're generating, is there any growth possibilities this year, or are you more looking as to a 25 potential?

Yeah, I can jump in there, Ahmed.

The revenue has grown low single-digit rates the last two years. They have a very sizable backlog, as we noted on the slide. They have $609,000 of monthly revenue under contracted sales contracts that are awaiting installation. We're trying to accelerate that installation pace. It's gone a little slower than what we had expected so far, but our new leadership team is involved there, and we expect that we'll pick up as a couple quarters pass, and we should see some meaningful improvements by the time we get into 2025. Okay.

Thank you.

All right. Thanks, Ahmed. Thank you. And this concludes the Q&A session for today. I will pass it back to Jim Bulk for final comments.

Yes, thanks everyone for joining us this morning. We look forward to updating you on our progress on our Fiber First strategy and the Horizon integration in future periods. Have a great day. Thank you.

And this concludes our conference. You may now disconnect.