Shenandoah Telecommunications shareholders will receive a special cash dividend of $18.75 for every share of the telecom company they own on Aug. 2, about one month after the company completed the sale of wireless assets to T-Mobile.
T-Mobile bought Sprint in April 2020 for $26 billion and as part of that deal had an option to purchase Shentel’s wireless assets after an appraisal process. Shentel, which had been a Sprint affiliate since 1999, conducted the appraisal in 2020 that placed the value of the assets at $2.1 billion. After a series of negotiations, T-Mobile and Shentel agreed upon the $1.95 billion price.
At the time Shentel said it would use the proceeds of the sale -- about $1.5 billion after taxes -- plus $195 million of cash on hand to pay down about $702 million in debt and issue the dividend to shareholders. In a letter to shareholders on July 6, Shentel president and CEO Christopher French said the sale was completed on July 2 for $1.94 billion after adjustments and certain transaction expenses.
The company has said it will reinvest about $19.6 million of the special dividend in shares of Shentel stock through its dividend reinvestment plan over a period of 30 days after the dividend payment date. It expects that the total payout to Shentel shareholders, before any reinvestments, will be about $936.6 million.
The $18.75 per share dividend is payable on Aug. 2 to shareholders of record as of July 13,, the company said. Because the special dividend is more than 25% of the current share price, as per NASDAQ rules the stock will trade ex-dividend beginning on August 3, the first business day after the payment date, the company said in the press release. The trading price will then reflect the value of the stock without the special dividend.
Shentel stock has spiked over the past few days -- it was up 15.5% on July 2 and another 7.6% on July 6 after news that the T-Mobile deal had been completed was released. In a research note, Raymond James analyst Ric Prentiss, who downgraded the stock to “sell,” said the increase was due to “significant retail buying based on the headline of the special dividend declaration,” according to website seekingalpha.com. The stock was trading at $56.38 on July 7, down $4.53 per share or 7% each.
“The completion of the wireless sale and payment of the special dividend are significant milestones in the company’s almost 120 years – and we are excited to begin a new chapter in our long and successful history,” French said in the press release. “Going forward, we are a broadband-centric company, focused on growing our cable, Glo fiber, Beam fixed wireless, and commercial fiber businesses. We believe we have the experience and expertise to continue to execute on our growth strategy, providing quality telecommunications services to our customers and the communities we serve.”
Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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