In 1937, Tom Wetzel’s grandmother paid $10 for a share of Farmers Mutual Telephone System in order to get phone service to her home in Virginia.
“My grandfather was quite upset she’d spent that kind of money during the Depression. He always told her she shouldn’t buy stock unless it had hair on it because he was a farmer,” Wetzel jokes.
Today, that one original share of what is now Shentel would have split and grown to be worth nearly a half million dollars. Like most of those initial buys, Wetzel’s family’s share has been split up and passed down over multiple generations, adapting with the times—much like Shentel. It began as a phone company serving the northern Shenandoah Valley of Virginia, but grew over 115 years to offer wireless, wireline and broadband service to customers in Virginia, West Virginia, Maryland, Pennsylvania and Kentucky.
“I give my father all the credit for the recognition of needing to be more than just a local phone company,” says president/ CEO Chris French of his father Warren French, who managed the company from 1954 until his retirement in 1988. Diversifying was important to offset expected losses and declines in the basic telephone business. In the 1980s, Shentel began offering cable, but it didn’t take a huge plunge into the industry until its 2008 purchase of cable systems from Rapid Communications.
It quickly made a name for itself as an innovator in the space, bringing fiber to communities, spending tens of millions on upgrades and offering fast broadband to rural communities. It’s much riskier to innovate when your footprint doesn’t include high-density population areas, but that hasn’t frightened Shentel away. It has a history of making bold moves, becoming the first company in the state of Virginia to offer cellular service to a rural area. In the 1990s, it became the first to offer dial-up Internet in the northern part of the Shenandoah Valley of Virginia. “We’ve always tried to find ways of providing services to our customers that you could get in the major metropolitan area, but weren’t always available in rural America,” says evp/COO Earle MacKenzie.
While Comcast and Charter are dipping a toe in wireless, Shentel has a deep background in it. Last year, it completed a $640 million acquisition of nTelos, making it the sixth largest public wireless company in the US. Shentel essentially doubled its wireless business overnight and boosted the number of employees from 700 to about 1,200. And it’s fit neatly with the cable business. “We’ve been able to leverage those fiber assets that were initially put in place to serve cable and be a middle mile for cable properties. Now we use that same fiber for backhaul of our wireless business,” MacKenzie explains.
That ability to sell services back and forth to one another significantly improves the bottom line, says Tom Whitaker, svp of cable. For its fiscal 1Q, the cable segment service revenue climbed 8.5% to $26.5mln, primarily due to 2.2 percent growth in average RGUs.
Shentel’s also looked to transfer ideas from one segment of its business to another. Take prepaid broadband. It’s common to have prepaid wireless, but not so much on the wireline side. With a limited number of retail stores, Whitaker racked his brain trying to come up with a way to make it work. Selling prepaid through Walmart wouldn’t work, with the chain store sometimes an hour drive or more for some Shentel communities. Whitaker and team did some research and ended up linking up with InComm’s Cashtie service, which lets consumers scan a barcode on their bills and make payments at the far more ubiquitous Dollar General stores. Last year, Shentel took more than 8,000 payments at 121 Dollar General stores, generating over a million dollars’ worth of service revenue. “I’d like to say it’s innovative, but it’s all about creating relationships and networking,” he said. “We figured out a way to have a relationship with a vendor to provide this great new service with incredible payment convenience.”
Relationship building has been in Shentel’s DNA since it sold those $10 shares in its earliest year. It’s headquartered in a town of just 700 people, with customers also management’s neighbors. “I always remind all of our folks… performance comes first,” Whitaker says. “We have been focusing on providing great service since the day we got into the cable business. We stay way ahead. We don’t have a saturated node in our system.”
– Amy Maclean