Conference Transcript - SHEN 2026-09-09

Mike Funk, Analyst — Bank of America

Thank you all for coming out. I'm Mike Funk from Bank of America. I lead the North American Telecom Data Center and Tower Research Team here at the bank. Really grateful to have Ed McKay from Shenandoah here again with us. So thank you, Ed, for coming out.

Edward H. "Ed" McKay, CEO

Glad to be here. Always good to be in the city. Certainly a little bit of a change of pace from the Shenandoah Valley of Virginia, but glad to be here. Thanks for the invitation.

Mike Funk, Analyst — Bank of America

Yeah, we love to have you. So thank you again for that. You know, I wanted to start really, you know, really high level in something that's, you know, I think of interest in topical for the entire telecom ecosystem. And, you know, that that SpaceX and Starlink and, you know, Starlink has already been in the market with broadband for, you know, for a while. They've been, you know, relatively successful. But with plans to launch the the V3 satellites, I think internally we're projecting something like 20,000 V3 by 2030. 30, their capacity is obviously going to expand materially, potentially allowing them to address a much larger market. Our research, we show the United States is about 20% rural, depending on the definition. And I believe that is the most natural addressable market for Sterling Broadband, given that it's a shared service. Now, I realize not all your markets are rural or fit that definition. But, you know, where you operate and where you build is more kind of semi-suburban rural relative to say a New York City or a Los Angeles. So very long intro to get to a short question, which is, you know, how do you think about the competitive threat? And how, if any way, does it change, you know, your plans or your strategy?

Edward H. "Ed" McKay, CEO

So today, we've seen minimal impact from Starlink. The only place where we've really seen any impact at all is in our very rural markets. When we look at our fiber-to-home markets, virtually no impact from Starlink, even in our incumbent cable markets that are more dense, very little impact. It's only these very rural areas where we've seen an impact. We believe we have a superior product. We can offer higher speeds, better latency, and we think customer service differentiates us as well. So we're certainly keeping an eye on that. In some of our rural markets, we have changed our pricing plans to make them more competitive. Right now, in our rural markets, customers can get twice the speed for a lower price than they can get with Starlink. So we have reacted. We've seen churn come down. Really, the peak churn we saw in these rural areas was in the first quarter. At that point in time, they were giving away free equipment, had heavily discounted promotional rates. Since then, we've seen the churn levels come down. Part of that is they stopped the free equipment promotion, but also I think our new rate plans have helped decrease churn as well.

Mike Funk, Analyst — Bank of America

And what do you find most compelling to customers? Is it price? Is it the speed difference? Is it emphasizing reliability? What resonates most with your customers if you're doing your internal market research?

Edward H. "Ed" McKay, CEO

In the rural areas, we have some challenging demographics. It's more about price there. When you look at our low fiber markets, which is now the vast majority of our passings, it's more about speed, low latency, reliable service. So we think there'll be less of an impact from satellite in those fiber to the home markets.

Mike Funk, Analyst — Bank of America

And then as you kind of, you know, move towards the end or you progress in the low fiber construction phase and I guess presumably greater focus on customer growth and cash generation, how do your operating priorities or focus change? Sure.

Edward H. "Ed" McKay, CEO

Well, we think we've built a very unique network. We've invested over $600 million building out our fiber-to-the-prem network. We first launched it in 2019, but now is the time to fill up that network. So we are focused on driving data penetration in those markets. Current penetration rates about 21% on average. We're projecting 37% penetration sort of midterm, five to seven years after we launch a market. So we believe we have significant upside from organic growth in the glow fiber markets. So driving penetration there is the biggest priority. We're also driving growth in our commercial fiber business. We now have almost 20,000 route miles of fiber stretching from Chicago all the way to the Washington, D.C. area. We're serving enterprise, mid-market customers. We're seeing growth in our wholesale and our carrier business as well. Also, we see an additional opportunity for data center connectivity in our markets. And then I'd say the third priority would be keeping our expenses under control and operating efficiently. As we're driving top-line revenue from the growth in low fiber and our commercial fiber business, our focus is on keeping our operating expenses constant so we can see some EBITDA margin expansion. So those are what I keep emphasizing with the team in the coming year.

Mike Funk, Analyst — Bank of America

And I want to come back to the expense side, then even the data center connectivity market opportunity. But I want to stay focused on glow fiber here for a second. So if you think about the return on investment, right, for fiber, and I think generally ballpark people say kind of greater than 20 percent penetration is what you want to get to to get to an adequate return. You're targeting 37 percent. But the other factors are obviously going to be price and then churn. So based on what you know now and your projections, where do you expect your return to go over time on the investment you've made? And what are the levers or variables that you're watching most closely for any risk to that return target?

Edward H. "Ed" McKay, CEO

So when we build our business case for a Glow Fiber market, we have a 15% IRR threshold. That's an unlevered IRR. So we're well on our way to hitting that target with our penetration curve. So we monitor our growth curve carefully. Since we launched in 2019, we have a predictable growth curve that our cohorts typically follow. That's been very predictable. From an ARPU standpoint, our ARPU has been very resilient. We've averaged between $76 and $77. dollars. The key there is we've had customers going upstream as far as speeds. 80 percent of our customers now are taking speeds of one gig or higher, and that includes about 19 percent at two gig and another five percent at five gig. So the customers are going upstream. We've had tremendous success at the middle to high end of the market. And because of that, we believe that ARPU will continue to be resilient.

Mike Funk, Analyst — Bank of America

And on the disconnect that you see, you mentioned Sterling earlier and, you know, some of the discounting the free equipment. But what are you seeing from fixed wireless in terms of percentage of disconnects? I would say minimal impact from fixed wireless. In our markets, you know, there are some terrain challenges.

Edward H. "Ed" McKay, CEO

We used to be a wireless operator in our market. I can tell you from experience, it is tough to operate fixed wireless, particularly with mid-band spectrum, when you have large trees, heavy foliage, rolling terrain with hills and mountains. So I think we've been impacted less by fixed wireless than some of our larger piers that may be more in the Midwest with flat ground or in larger cities with MDUs where you can send a fixed wireless signal directly into a large building.

Mike Funk, Analyst — Bank of America

Okay, so you feel good about trajectory for the rest of the year then with your net additions, given the competitive pullback you saw from Starlink, some of your own plan pricing changes in market?

Edward H. "Ed" McKay, CEO

We feel very good as far as our net addition trajectory. We had a record quarter for net additions in Glow Fiber last quarter, so we're feeling very good about our ability to hit our penetration targets.

Mike Funk, Analyst — Bank of America

It may be your better position than some of your peers that have been doing overbuilds or greenfield builds with fiber, but there has been a lot of talk about consolidation amongst fiber operators. What is your view on the need for consolidation amongst some of the emerging fiber operators? Do you think that happens? And if not, what do you think the path is for the industry?

Edward H. "Ed" McKay, CEO

Yeah, I think we're going to see more and more consolidation. I think that has already started, and we see that as a potential opportunity for us. There are some fiber-to-the-home providers within our region that we think maybe have not had the success that we've had with Glow Fiber. There could be an opportunity for an acquisition down the road for us to possibly roll up some of these other providers.

Mike Funk, Analyst — Bank of America

And how do you evaluate valuation? I know some evaluate just in a simple cost to pass, right? Well, they'll do a cost per home pass, and if that's less than their cost to build, then that's an attractive valuation for them. How do you think about valuation of targets?

Edward H. "Ed" McKay, CEO

Well, you know, some of it depends on, when you look at the additional opportunity, depends on the density of the market and that cost to pass. And this is important to demographics. We've noticed in, you know, lower income areas, it's a challenge, you know, getting as high a penetration rate. But when we build our models, we assume different penetration rates depending on the market. For example, a higher-income market, we may have a target penetration rate in the low 40% range. Lower-income markets, it may be in the low 30% range. In those higher-end markets, it costs more to pass. You have larger lots, primarily underground utilities. In the lower-income areas, smaller lots, primarily aerial facilities. And the cost to put the drop into the customer's house is typically lower because it's a shorter drop. So we can get the same returns in a higher income area with higher cost to pass as compared to a lower income area with lower cost to pass.

Mike Funk, Analyst — Bank of America

Because of higher penetration in the higher income area, you can presume and maybe even lower churn rates as well or lower moves or lower churn, higher penetration and likelihood to go up to a higher to a higher speed. Absolutely. Higher speed. And I always I always wonder about that. We do sell out of market marketing for higher speed fiber tiers. And I know my own fiber usage. I know kind of the average fiber usage. I know what an HD stream takes and it all comes in well below those multi gig type of services you're talking about. So what what is what is the use case that is being sold to consumers for the higher end tiers? And, you know, what are you seeing from the consumers that do trade up in terms of trading back down after having that service for a while?

Edward H. "Ed" McKay, CEO

We see very few trade back down once they've had the higher-end service. And a lot of Internet traffic is bursty. The higher speeds get you the data more quickly, especially with upstream data now, remote work. We do think there is advantage, but to your point, if you're just streaming video, you don't need all that speed. But some of it, customers in these higher-end areas, they want to have the fastest speeds.

Mike Funk, Analyst — Bank of America

Yeah, why not?

Edward H. "Ed" McKay, CEO

A bit of bragging rights for the gigabits at plus speeds.

Mike Funk, Analyst — Bank of America

Got a Ferrari in the garage, right? Well, can only drive 60. I want to go back to the OPEX comment that you made earlier. So, you know, I hear from a lot of my companies about the kind of the challenge of keeping cost under control. Right. Whether it's on on the building side, it's hard to find skilled labor or, you know, even the white color workers as well. We're seeing we're seeing wage inflation. So how are you controlling costs, and how do you plan to continue to control costs to drive higher operating leverage?

Edward H. "Ed" McKay, CEO

So a couple things. Earlier in the year, we announced a reduction in force, about a 10% reduction in our workforce. Part of that was due to winding down our glow fiber construction at the end of this year. So we're going to start to see the benefits of that starting in 2027. We also have several AI initiatives to improve our customer service and tech support call handle times. We're seeing positive results with those initiatives. We have another AI-powered initiative to reduce our truck rolls, to proactively detect problems in the network so we can solve that problem before we have to send a truck out to the customer's home.

Mike Funk, Analyst — Bank of America

And can you remind me, have you said publicly what your margin expansion target is for the next 12 months or 24 months?

Edward H. "Ed" McKay, CEO

So, 300, 400 basis points annually, we believe we have some significant upside on our margin expansion.

Mike Funk, Analyst — Bank of America

And then you also mentioned, I want to come back to it, the data center connectivity business. And you're not the only one. Other operators, including Verizon now, have leaned into data center connectivity. So, how large is the market opportunity? And then I have also heard from some people that the bidding process is kind of a lot more competitive for data center connectivity, meaning people are underwriting lower returns, right? So, we have to address those two things, the size of the market and then returns you're underwriting.

Edward H. "Ed" McKay, CEO

So, we're in a bit of a unique position, you know, with our fiber assets in Ohio and our fiber assets in Virginia. You know, there's significant, you know, hyperscaler data activity from Columbus down into southern Ohio. We already have fiber network in place. There's significant activity in Virginia where we already have fiber network in place. So we think the sweet spot for us is providing that fiber access, you know, quickly. And we can do that with a capital light approach, taking advantage of our existing fiber and conduit, building fiber to the endpoints of the data center as opposed to having to build the entire route from scratch. I don't want to get into specifics on the potential dollar amount, but we have signed a master service agreement with one of the large hyperscalers. The next step with that would be service orders. Now, from the time we sign that service order to the time we see revenue and EBITDA, it's still probably about 12 to 18 months because we do need to build the fiber to the data center, the endpoints, and also the data centers are still under construction in most cases. So we expect we can start to see an impact in the, you know, 2020, early 2028 timeframe from a revenue standpoint. But you'll see that the impact closer as far as our new sales bookings. We report that on a quarterly basis. And I would say there's an opportunity for material increase in those new sales bookings with some of the opportunities we have in the pipeline.

Mike Funk, Analyst — Bank of America

And the structure of the contract. So, you know, some companies are structuring them where they receive, you know, cash up front for the build. And then obviously recognize that, you know, it's deferred revenue over time, right, flows through, but it's not a cash impact as it flows through a life of contract. Others obviously would pay for the bill themselves, and then you're charging more on a recurring basis for the service. How are you structuring your contracts with the hyperscalers?

Edward H. "Ed" McKay, CEO

We would see a mix of that. We would likely see a non-recurring charge up front to cover, for example, our connection from our existing fiber into the data center and then an ongoing revenue stream as well. Okay.

Mike Funk, Analyst — Bank of America

And you mentioned Ohio earlier, headlines recently about SSB Energy playing to build a large multi-gigawatt facility in southwestern Ohio, the Pike facility. is that would that be an opportunity for you or something you'd be in discussions with if thinking geographically I think pretty close to some of your Ohio assets yeah southern Ohio we have existing fiber assets in place so I think the the the data center opportunity there is certainly somewhere where we believe we can play and it's going back to you know to the to the globe fiber markets. How should we think about the ramp from the 21% to the 37% penetration? I know you mentioned kind of record net ad quarter and the most recent quarter, but is that going to be relatively linear or should we think about that being a lumpier trajectory from the 21% to the 37%?

Edward H. "Ed" McKay, CEO

So when we launch a cohort, we typically have 15% penetration after the first year. After three years, that jumps to 25% plus. And then after that, it's a gradual increase. to that 37%. Some of our older cohorts launched back in 2019-20, and they're now at 40-plus percent penetration. And some of it depends on the mix of your residential versus commercial passings in those cohorts. The business passings tend to ramp more slowly. Sometimes they're under contract, so it takes a little while to get that. But from a return standpoint, in a business area, we can actually get similar returns with a lower penetration because our ARPU for the business customers is double the ARPU for our residential customers.

Mike Funk, Analyst — Bank of America

And can we just talk some metrics here for a minute? We've kind of talked about some of the pieces here, you know, the net ads. You talked about trading up to higher speed tiers. So can we talk about the components of revenue growth and how you're thinking about revenue growth, whether it's, you know, net ads, ARPU expansion from higher tiers or, you know, other factors like expanded markets and data center connectivity? And then maybe take us from, you know, from that growth rate down to how you're thinking about EBITDA growth and even growth in free cash flow.

Edward H. "Ed" McKay, CEO

So in Glowfiber, we're a share taker right now. So the primary growth there is coming from net ads. As far as, you know, ARPU and pricing, we haven't increased our price for Glow Fiber since we launched service. Now, we have given customers, you know, higher speed and more value for the same price. But as long as we're taking share, we're likely to keep that pricing, you know, consistent with what we have today. I think over time, you know, we have, you know, additional pricing power. I think we have a superior product, you know, from a speed standpoint, from a latency standpoint. I think we also have a spirit product from a customer service standpoint. And then on the commercial side, most of our growth there is success-based growth. And when we sign a new contract, we're building to the customers. We believe we have significant opportunity there. We have over 90,000 locations that are near net within a quarter mile of our fiber. And we only serve about 6,000 of those locations today. So we think there's significant upside of taking advantage of our existing fiber network and those near net network opportunities. So I think those are the big drivers of revenue growth. And I mentioned earlier, we're focused on keeping our operating expenses constant, and that's going to drive the higher EBITDA and EBITDA margin expansion.

Mike Funk, Analyst — Bank of America

And then I guess beyond EBITDA, how are you thinking about CapEx?

Edward H. "Ed" McKay, CEO

So as we wind down our build at the end of this year, we're going to substantially complete our glow fiber builds, substantially complete the government grant projects we've been working on. Our cash, you know, our CapEx is going to decline significantly. So with the CapEx declining, with our revenue increasing, with our operating expenses remaining constant, the goal is, you know, free cash flow positive starting in 2027. Another area that's helped us there, we completed a refinancing last year. We have ABS in place for our fiber networks now. So that helped us significantly from a cost of capital standpoint, and that's going to contribute to the free cash flow as well.

Mike Funk, Analyst — Bank of America

And of the enterprise locations, I think it's at a quarter mile, I think, right? What is the cost to connect each of those locations?

Edward H. "Ed" McKay, CEO

It varies a little bit. But, you know, typically there's near-net opportunities, you know, $5,000 to connect them. If it's on our Glow Fiber network, it's much less. It's maybe $1,000 to connect them. Now, we do do success-based builds as well that are outside of those near-net opportunities. And we build a model there with a, you know, target IRR. And, again, we're targeting 15% plus unlevered IRR. We don't typically do speculative builds, so we typically need to get an anchor customer before we will build. Sometimes we'll take a lower return on that initial customer if there's additional opportunity along the routes.

Mike Funk, Analyst — Bank of America

Okay. And I asked earlier about a competitive threat from Leo for residential. Yesterday, I think it was yesterday, AT&T announced an agreement with Amazon Leo for commercial or business broadband. Right. So how do you think about, you know, Leo as a competitive threat or even affecting your builds, given, say, $5,000 worth of connection, affecting your business decision connectivity?

Edward H. "Ed" McKay, CEO

I think in many cases, these businesses are still going to want fiber. Now, they may have an alternate for a wireless connection, but I think with the speed reliability, I think there's still going to be a demand for fiber for these enterprise customers.

Mike Funk, Analyst — Bank of America

And then we talked a little bit about consolidation earlier, and you have expanded your footprint over the years. I mean, Ohio was an expansion market, correct? So how should we and investors think about the qualities of markets as you think about potential expansion? enemy is kind of that Midwest area? Is that the right geographic region or are you willing to look more broadly? How should we think about the criteria?

Edward H. "Ed" McKay, CEO

Well, we're operating in eight states now. We've launched the Glow Fiber Service in six states. If we were to expand further, we would want to be geographically adjacent. We've built our network so that we can connect it together So we do have some operating efficiencies within the region. I think other fiber-to-the-home providers have just built wherever they could get an agreement with the municipality. They're scattered all over the place. We've made a conscious effort to keep things more dense where we could have efficiencies with our field operations and we could connect these markets to our own fiber backbone for efficiencies as well. Okay.

Mike Funk, Analyst — Bank of America

And are there other size constraints we should think about for consolidation or something too small or too large? And then I guess the third part of that would be on the too large side, how should we think about leverage and how much leverage you're comfortable with and how you would think about finance in any acquisitions?

Edward H. "Ed" McKay, CEO

So from a size perspective, if it's a smaller pure play fiber provider that we could easily integrate and it's adjacent to one of our markets, we would do that all day long. If we were going to jump, let's say, to another adjacent state where we don't currently operate, we would want something likely larger, 100,000 type passings for that. And as far as, you know, leverage, I think the fact that we have an ABS in place, you know, could help us with a potential acquisition if we could bring those fiber passings into our existing ABS.

Mike Funk, Analyst — Bank of America

Okay. And presuming that you don't pursue, you know, large-scale acquisition and you obviously march towards free cash flow positive in 27, how do you intend to use that cash?

Edward H. "Ed" McKay, CEO

I would say at this point, no definite decisions. I think at the top of the list, we have a preferred pick. We would likely move that to cash as an initial step. But I think we would also, we do think there's some acquisition opportunities, so we want to keep some dry powder for that.

Mike Funk, Analyst — Bank of America

Okay. And then you mentioned your capital or CapEx coming down. I think you're seeing falling below 30%. And in 2027, is that correct? Is that the correct target metric that you had? That's right.

Edward H. "Ed" McKay, CEO

You know, 25 to 30%. When you look at our glow fiber, you know, capital intensity, it's going to be about 25% in 2027. That will come down over time. It's still elevated because we have a significant number of homes where we're connecting fiber to that home for the first time. Doing the drop. That's right. Doing the drop, installing the optical equipment. As we get more homes wired with a drop, that capital intensity comes down. When you look at our commercial fiber business, that's more like 30% in 2027. But again, that's all success-based. As we get more scale to that business, I think that capital intensity comes down as well. And then in our incumbent business, it's about 25% in 2027 is what we're projecting as well. We have some elevated spending there also. One reason is we've built almost 25,000 government grant passings to previously unserved areas that's uh with fiber so these are uh rural areas long drops so we're still hooking up a lot of those drops for the first time so we have elevated capex there also in our incumbent business we're in the process of uh you know a video service migration we're moving from traditional linear video over to ip streaming video it gives our customers you know better service more channels network dvr better guide but the real reason we're doing that is to free up capacity on the network so that we can offer higher data speeds to our customers. So that conversion will be wrapped up in 2027. Once that's complete, we'll see that capital intensity come down in the incumbent business as well.

Mike Funk, Analyst — Bank of America

Okay. And can you remind me if any of the areas where you operate or adjacent to where you operate are the BED eligible areas or areas that will be addressed by the BED program?

Edward H. "Ed" McKay, CEO

There are. We took a hard look at that. We did receive some bead funding in Ohio, in our legacy local telephone company territory, but that's a very small build for us. We did not think it was worthwhile to pursue bead in many of our other markets. And another reason for that is we received American Rescue Plan Act funds to build out a lot of the unserved areas around our incumbent markets. So that gave us the passings we wanted. There wasn't a whole lot left that wasn't covered by that that was bead eligible. So we're not going to be a big bead player.

Mike Funk, Analyst — Bank of America

What was it about the program that wasn't attractive to you?

Edward H. "Ed" McKay, CEO

Certainly a lot more strings attached to bead than there were to the ARPA. And again, there really wasn't that much left. And when we looked at where we were investing capital with our Glow Fiber construction, there we passed 80, 90 homes per mile of fiber we built. If you look out in these bead-eligible areas, you'd be passing less than 10 homes per mile. So it just was a lot of effort for not a lot of incremental passings, and that's why we decided to pass for the most part.

Mike Funk, Analyst — Bank of America

Okay. That makes sense. I want to go back to the capital intensity for a second because to me, and I understand you're ending a major build, so capital intensity is going to be higher. But even the target next year or two, at least to my eye, seems relatively high versus a more traditional telecom company. So where can that go over time? Can you get into the mid-teens over time? Is that a target longer term we should be thinking about?

Edward H. "Ed" McKay, CEO

Yeah, we do get the capital density down in that range over time. Again, as we connect more drops, particularly in Glow Fiber, that comes down significantly.

Mike Funk, Analyst — Bank of America

Okay. And then the cost per drop, you mentioned a lot of the kind of spending right now is actually on doing the drop or kind of the final connection into the home. It's relatively labor intensive. It's more equipment related as well. You know, I am hearing a lot about, obviously, you know, the labor cost pressure I mentioned earlier, but then also equipment pressure, right? Whether, you know, it's fiber or other equipment that might be in the home. So, what are you seeing on the cost per drop?

Edward H. "Ed" McKay, CEO

So, all in to connect a new customer between $750 and $850.

Mike Funk, Analyst — Bank of America

And that's for the drop?

Edward H. "Ed" McKay, CEO

That's for the drop and the labor and the equipment that goes in the home. But the drop itself, $250, $350, depending on whether it's aerial or underground.

Mike Funk, Analyst — Bank of America

Okay. Okay. And has that been relatively stable over time, or have you been seeing any change in the cost?

Edward H. "Ed" McKay, CEO

We've seen the drop cost relatively stable over time. We've not seen a big increase there.

Mike Funk, Analyst — Bank of America

Okay. And then, I guess, how can those costs change as we move forward? Because obviously, once you connect a home, when you have churn, that CPGA, the cost per gross out of the customer acquisition, is going to go down. So how does that change over time?

Edward H. "Ed" McKay, CEO

Really, at that point, all we're replacing would be Wi-Fi equipment in the home. So the cost would be, you know, 35, 40 percent of what it was originally just to replace the, potentially replace the Wi-Fi equipment. As we're installing the optical equipment in the home now, we're attaching it to the wall, leaving it in the house.

Mike Funk, Analyst — Bank of America

Yep. And that'd be the ONT, I guess?

Edward H. "Ed" McKay, CEO

The ONT, correct.

Mike Funk, Analyst — Bank of America

Okay, perfect.

Edward H. "Ed" McKay, CEO

And as far as equipment costs, you know, we've not seen an increase there. In fact, we've been able to keep our equipment costs steady. We've been going through an RFP process right now for our equipment in the customer, customer-prem equipment. So we're not going to – we don't believe we're going to be seeing an increase there in the near future.

Mike Funk, Analyst — Bank of America

And can you remind me, where are you sourcing the equipment, the ONT and other equipment?

Edward H. "Ed" McKay, CEO

So the ONT, we use, you know, Calyx and Nokia.

Mike Funk, Analyst — Bank of America

For the Wi-Fi equipment in the home, we use Calix and Eero currently. And you already mentioned, you know, some of the balance sheet and some of the cleanup or the things you've addressed there. What's left to do in the next 12 or 24 months?

Edward H. "Ed" McKay, CEO

Really, the next, you know, 12 or 24 months, it's all about, you know, driving penetration in the low fiber markets and growing the commercial fiber business. In our incumbent business, it's about maintaining our customer base and our ARPU. We don't expect to grow that incumbent business, but Glow Fiber and Commercial Fiber are the real growth engines.

Mike Funk, Analyst — Bank of America

Those are levers for growth and then presumably keeping the ARPU relatively flat to hopefully some upward trajectory to ARPU as well, correct?

Edward H. "Ed" McKay, CEO

Correct. Right. And, you know, just this this past quarter, our fiber businesses started generating more revenue than our incumbent business. So we're going to continue to see that that grow, you know, more and more of our revenue, more and more of our EBITDA is going to be driven by fiber as opposed to the incumbent business.

Mike Funk, Analyst — Bank of America

OK, I'm going to open the audience for questions here and one. And I'll ask one more than there are microphones to go around as well. if anyone has any questions. So for Glow Fiber, you said you're finishing your build this year for Glow Fiber? That's correct.

Edward H. "Ed" McKay, CEO

By the end of the year, we expect to have 510,000-plus Glow Fiber passes.

Mike Funk, Analyst — Bank of America

And who are the major competitors in those markets that you're seeing? Mostly cable companies still you're taking market share? Primarily the big cable guys.

Edward H. "Ed" McKay, CEO

We have very little fiber competition in our Glow Fiber market. 87, 88% of our Glow Fiber passings do not have a fiber competitor. The only wired competitor is one of the big cable companies.

Mike Funk, Analyst — Bank of America

And so in your markets, I think the FCC broadband report said that like 75% of our markets have three or more broadband options. So in the markets where you compete, how many broadband options exist?

Edward H. "Ed" McKay, CEO

As far as in low fiber, as far as wired broadband options, it's typically two. It's you and cable. Us and cable, yes. And that's because we've targeted smaller markets. So we targeted smaller markets where there was less competition. And what we've seen as we've built out fiber in these markets, we've never seen another fiber overbuilder come into our market. And we've seen a relatively small number of fiber upgrades by the local telephone company as well.

Mike Funk, Analyst — Bank of America

Yeah. And you see that continue to share gains from cable, you know, over time, marching towards that 37 percent.

Edward H. "Ed" McKay, CEO

Yes. And the majority of our gross ads are coming from from cable.

Mike Funk, Analyst — Bank of America

OK. I think we have time for one or two questions, if we have any from the audience. OK. I don't I don't see any hands. Great. We can go to wrap it up there. Thank you so much. I appreciate it. I appreciate it. Thanks for coming out. Thank you.