10-Q

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, 2013

o 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 filero 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, 2013 was  23,987,634.

SHENANDOAH TELECOMMUNICATIONS COMPANY

INDEX

		Page
		Numbers
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets March 31, 2013 and December 31, 2012	3-4
	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2013 and 2012	5
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2013 and the Year Ended December 31, 2012	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012	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	14-24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 6.	Exhibits	28
	Signatures	29
	Exhibit Index	30

2

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

ASSETS	March 31,  2013		December 31, 2012
Current Assets
Cash and cash equivalents	$	67,095	$	71,086
Accounts receivable, net		24,566		25,274
Income taxes receivable		2,239		4,705
Materials and supplies		7,186		9,789
Prepaid expenses and other		5,790		4,749
Deferred income taxes		942		832
Total current assets		107,818		116,435
Investments, including $2,173 and $2,064 carried at fair value		8,448		8,214
Property, plant and equipment, net		370,196		365,474
Other Assets
Intangible assets, net		73,783		74,942
Deferred charges and other assets, net		6,483		5,675
Net other assets		80,266		80,617
Total assets	$	566,728	$	570,740

See accompanying notes to unaudited condensed consolidated financial statements.

(Continued)

3

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY	March 31,  2013			December 31, 2012
Current Liabilities
Current maturities of long-term debt	$	1,238		$	1,977
Accounts payable		20,500			31,729
Advanced billings and customer deposits		11,191			11,190
Accrued compensation		2,277			2,671
Accrued liabilities and other		9,597			10,573
Total current liabilities		44,803			58,140
Long-term debt, less current maturities		230,200			230,200
Other Long-Term Liabilities
Deferred income taxes		56,952			57,896
Deferred lease payable		5,221			4,903
Asset retirement obligations		5,966			5,896
Other liabilities		6,570			5,857
Total other liabilities		74,709			74,552
Commitments and Contingencies
Shareholders’ Equity
Common stock		24,973			24,688
Accumulated other comprehensive loss		(331	)		(863	)
Retained earnings		192,374			184,023
Total shareholders’ equity		217,016			207,848
Total liabilities and shareholders’ equity	$	566,728		$	570,740

See accompanying notes to unaudited condensed consolidated financial statements.

4

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,
	2013			2012
Operating revenues	$	76,010		$	68,823
Operating expenses:
Cost of goods and services, exclusive of depreciation and  amortization shown separately below		30,700			29,029
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		16,129			15,170
Depreciation and amortization		13,972			15,807
Total operating expenses		60,801			60,006
Operating income		15,209			8,817
Other income (expense):
Interest expense		(2,152	)		(1,795	)
Gain on investments, net		148			471
Non-operating income, net		520			188
Income from continuing operations before income taxes		13,725			7,681
Income tax expense		5,374			3,273
Net income from continuing operations		8,351			4,408
Income from discontinued operations, net of tax (expense) of $0 and $(38), respectively		-			58
Net income	$	8,351		$	4,466
Other comprehensive income:
Unrealized gain on interest rate hedge, net of tax		532			-
Comprehensive income	$	8,883		$	4,466
Basic and diluted net income per share:
Net income from continuing operations	$	0.35		$	0.19
Net income from discontinued operations		-			-
Net income	$	0.35		$	0.19
Weighted average shares outstanding, basic		23,973			23,843
Weighted average shares, diluted		24,032			23,868

See accompanying notes to unaudited condensed consolidated financial statements.

5

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, 2011		23,838		$	22,043		$	175,616		$	-		$	197,659
Net income		-			-			16,303			-			16,303
Other comprehensive loss, net of tax		-			-			-			(863	)		(863	)
Dividends declared ($0.33 per share)		-			-			(7,896	)		-			(7,896	)
Dividends reinvested in common stock		37			493			-			-			493
Stock based compensation		-			1,842			-			-			1,842
Common stock issued through exercise of incentive stock  options		55			404			-			-			404
Common stock issued for share awards		45			-			-			-			-
Common stock issued		1			10			-			-			10
Common stock repurchased		(13	)		(143	)		-			-			(143	)
Net excess tax benefit from stock options exercised		-			39			-			-			39
Balance, December 31, 2012		23,962		$	24,688		$	184,023		$	(863	)	$	207,848
Net income		-			-			8,351			-			8,351
Other comprehensive income, net of tax		-			-			-			532			532
Stock based compensation		-			425			-			-			425
Common stock issued for share awards		37			-			-			-			-
Common stock issued		-			2			-			-			2
Common stock repurchased		(11	)		(155	)		-			-			(155	)
Net excess tax benefit from stock options exercised		-			13			-			-			13
Balance, March 31, 2013		23,988		$	24,973		$	192,374		$	(331	)	$	217,016

6

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended March 31,
	2013			2012
Cash Flows From Operating Activities
Net income	$	8,351		$	4,466
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		12,808			13,929
Amortization		1,164			1,878
Provision for bad debt		453			624
Stock based compensation expense		425			403
Excess tax benefits on stock awards		(30	)		-
Deferred income taxes		(1,394	)		(5,304	)
Net loss on disposal of equipment		100			55
Realized (gain) loss on disposal of investments		(3	)		(48	)
Unrealized (gains) on investments		(93	)		(161	)
Net (gain) loss from patronage and equity investments		(171	)		(343	)
Other		696			229
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		230			(704	)
Materials and supplies		2,603			211
Income taxes receivable		2,466			11,147
Increase (decrease) in:
Accounts payable		(2,815	)		(2,095	)
Deferred lease payable		318			122
Other prepaids, deferrals and accruals		(2,399	)		(1,959	)
Net cash provided by operating activities	$	22,709		$	22,450
Cash Flows From Investing Activities
Purchase and construction of property, plant and equipment	$	(26,024	)	$	(14,831	)
Proceeds from sales of assets		25			1,146
Proceeds from sale of equipment		128			71
Purchase of investment securities		(12	)		-
Proceeds from sale of investment securities		45			412
Net cash used in investing activities	$	(25,838	)	$	(13,202	)

(Continued)

7

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended March 31,
	2013			2012
Cash Flows From Financing Activities
Principal payments on long-term debt	$	(739	)	$	(5,434	)
Excess tax benefits on stock awards		30			-
Repurchases of stock		(155	)		(47	)
Proceeds from sale of stock		2			2
Net cash used in financing activities	$	(862	)	$	(5,479	)
Net increase (decrease) in cash and cash equivalents	$	(3,991	)	$	3,769
Cash and cash equivalents:
Beginning		71,086			15,874
Ending	$	67,095		$	19,643
Supplemental Disclosures of Cash Flow Information
Cash paid (received) for:
Interest	$	2,171		$	1,636
Income taxes	$	4,302		$	(2,532	)

During 2013, the Company traded in certain PCS equipment and received credits of $3,160 against the purchase price of new equipment.  The decrease in accounts payable for 2013 included $8,414 associated with PCS Network Vision capital expenditures.

See accompanying notes to unaudited condensed consolidated financial statements.

8

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, 2012.  The balance sheet information at December 31, 2012 was derived from the audited December 31, 2012 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.  Discontinued Operations

In September 2008, the Company announced its intention to sell its Converged Services operation, the related assets and liabilities were reclassified as held for sale in the consolidated balance sheet and the historical operating results were reclassified as discontinued operations, and depreciation and amortization on long-lived assets was discontinued.

At March 31, 2013, the Company had one remaining property under an agreement to sell in the amount of $55 thousand, which is expected to be finalized by no later than August 1, 2013.  Revenues and income before taxes associated with discontinued operations were $769 thousand and $97 thousand, respectively, for the three months ended March 31, 2012. Comparable amounts for 2013 were not significant.

3.  Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	March 31, 2013		December 31, 2012
Plant in service	$	592,900	$	586,216
Plant under construction		29,248		25,469
		622,148		611,685
Less accumulated amortization and depreciation		251,952		246,211
Net property, plant and equipment	$	370,196	$	365,474

During the first quarter of 2012, the Company entered into agreements with Sprint Nextel and Alcatel-Lucent to begin updating the Company’s Wireless network.  The update uses base station equipment acquired from Alcatel-Lucent in conjunction with Sprint Nextel’s wireless network upgrade plan known as Network Vision.  Beginning in the second quarter of 2012, the Company began replacing cell site equipment at a number of its cell sites.  As of March 31, 2013, 274 sites had been upgraded, and the Company expects to replace substantially all of its existing cell site equipment by the third quarter of 2013.  The Company accelerated depreciation on these assets so that net book value at time of trade-in will equal the expected value to be realized upon trade-in.  During 2012, the Company recognized approximately $8.4 million of accelerated depreciation expense for Network Vision related activities, including $2.0 million in the first three months of 2012; the first quarter of 2013 included $0.8 million of accelerated depreciation expense.

4.  Earnings per share

Basic net income (loss) per share was computed on the weighted average number of shares outstanding.  Diluted net income (loss) 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 725 thousand and 600 thousand shares and options outstanding at March 31, 2013 and 2012, respectively, 341 thousand and 424 thousand options were anti-dilutive, respectively.  These 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.

9

5.  Investments Carried at Fair Value

Investments include $2.2 million and $2.1 million of investments carried at fair value as of March 31, 2013 and December 31, 2012, respectively, 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, 2013, the Company recognized $3 thousand in net gains on dispositions of investments, recognized $12 thousand in dividend and interest income from investments, and recognized net unrealized gains of $93 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.

6.  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.

7.  Derivative Instruments, Hedging Activitiesand 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 initially 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 total outstanding notional amount of interest rate swaps not designated as cash flow hedges was $50.6 million as of March 31, 2013.  This swap expires in July 2013.  Changes in fair value recorded in interest expense for the three months ended March 31, 2013 and 2012, were a decrease of $104 thousand and an increase of $28 thousand, respectively.

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, 2013.

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 accrued on the Company’s variable-rate debt. As of March 31, 2013, 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 hedge interest rate exceeds the variable interest rate on the debt.

10

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, 2013 and December 31, 2012 (in thousands):

	Liability Derivatives
		Fair Value as of
	Balance Sheet	March 31,		December 31,
	Location	2013		2012
Derivatives not designated as hedging instruments:
Interest rate swaps	Accrued liabilities and other	$	135	$	239
Total derivatives not designated as cash flow hedges		$	135	$	239
Derivatives designated as hedging instruments:
Interest rate swaps	Accrued liabilities and other	$	1,559	$	1,613
	Deferred charges and other assets, net		1,007		177
Total derivatives designated as hedging instruments		$	552	$	1,436

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).

The table below presents change in accumulated other comprehensive income by component for the three months ended March 31, 2013 (in thousands; amounts in parentheses indicate debits):

	Gains and Losses on Cash Flow Hedges			Taxes			Accumulated Other Comprehensive Income
Balance as of December 31, 2012	$	(1,436	)	$	573		$	(863	)
Other comprehensive income before reclassifications		490			(196	)		294
Amounts reclassified from accumulated other comprehensive income (to interest expense)		394			(156	)		238
Net current period other comprehensive income		884			(352	)		532
Balance as of March 31, 2013	$	(552	)	$	221		$	(331	)

8.  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.

11

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 of Sprint Nextel.  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.

The Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long distance access services throughout Shenandoah County and portions of northwestern Augusta County, Virginia, 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.

Selected financial data for each segment is as follows:

Three months ended March 31, 2013 (In thousands)	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	44,065	$	17,380		$	3,900	$	-		$	-		$	65,345
Other		3,019		2,476			5,170		-			-			10,665
Total external revenues		47,084		19,856			9,070		-			-			76,010
Internal revenues		1,073		49			4,639		-			(5,761	)		-
Total operating revenues		48,157		19,905			13,709		-			(5,761	)		76,010
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		17,530		12,289			6,099		-			(5,218	)		30,700
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		8,771		5,438			1,709		754			(543	)		16,129
Depreciation and amortization		6,028		5,564			2,372		8			-			13,972
Total operating expenses		32,329		23,291			10,180		762			(5,761	)		60,801
Operating income (loss)		15,828		(3,386	)		3,529		(762	)		-			15,209

Three months ended March 31, 2012 (In thousands)	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	38,403	$	16,052		$	3,868	$	-		$	-		$	58,323
Other		3,451		2,456			4,593		-			-			10,500
Total external revenues		41,854		18,508			8,461		-			-			68,823
Internal revenues		815		75			4,449		-			(5,339	)		-
Total operating revenues		42,669		18,583			12,910		-			(5,339	)		68,823
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		16,393		12,226			5,229		17			(4,836	)		29,029
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		7,994		5,047			1,717		915			(503	)		15,170
Depreciation and amortization		7,757		5,852			2,173		25			-			15,807
Total operating expenses		32,144		23,125			9,119		957			(5,339	)		60,006
Operating income (loss)		10,525		(4,542	)		3,791		(957	)		-			8,817

12

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,
	2013			2012
Total consolidated operating income	$	15,209		$	8,817
Interest expense		(2,152	)		(1,795	)
Non-operating income (expense), net		668			659
Income from continuing operations before income taxes	$	13,725		$	7,681

The Company’s assets by segment are as follows:

(In thousands)	March 31, 2013			December 31, 2012
Wireless	$	178,049		$	179,929
Cable		198,820			202,436
Wireline		86,469			88,776
Other (includes assets held for sale)		462,428			458,650
Combined totals		925,766			929,791
Inter-segment eliminations		(359,038	)		(359,051	)
Consolidated totals	$	566,728		$	570,740

9.  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 2009 are no longer subject to examination. The Company is under audit in the state of Maryland for the 2007, 2008 and 2009 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, 2013.

10.  Long-Term Debt

As of March 31, 2013 and December 31, 2012, the Company’s outstanding long-term debt consisted of the following:

(In thousands)

	March 2013		December 2012
CoBank (fixed term loan)	$	1,183	$	1,876
Term Loan A		230,000		230,000
Other debt		255		301
		231,438		232,177
Current maturities		1,238		1,977
Total long-term debt	$	230,200	$	230,200

As of March 31, 2013, the Company was in compliance with the covenants in its Credit Agreement.

13

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, 2012.  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, 2012, 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 of Sprint Nextel), 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 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 of Sprint Nextel.  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 franchise areas in Virginia, West Virginia and portions of western Maryland, and leases fiber optic facilities throughout its service area.

* The Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long-distance access services throughout Shenandoah County and portions of Rockingham and Augusta Counties, Virginia, 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.

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

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Results of Operations

Three Months Ended March 31, 2013 Compared with the Three Months Ended March 31, 2012

Consolidated Results

The Company’s consolidated results from continuing operations for the first quarter of 2013 and 2012 are summarized as follows:

(in thousands)	Three Months Ended March 31,						Change
	2013			2012			$			%
Operating revenues	$	76,010		$	68,823		$	7,187			10.4
Operating expenses		60,801			60,006			795			1.3
Operating income		15,209			8,817			6,392			72.5
Interest expense		(2,152	)		(1,795	)		(357	)		(19.9	)
Other income (expense)		668			659			9			1.4
Income before taxes		13,725			7,681			6,044			78.7
Income tax expense		5,374			3,273			2,101			64.2
Net income from continuing operations	$	8,351		$	4,408		$	3,943			89.5

Operating revenues

For the three months ended March 31, 2013, operating revenues increased $7.2 million, or 10.4%. Wireless segment revenues increased $5.5 million compared to the first quarter of 2012.  Net postpaid service revenues increased $3.7 million, as data fees on smartphones increased $1.7 million in the 2013 period from 2012’s first quarter, while 5.5% growth in quarter-over-quarter average postpaid subscribers added an additional $2.2 million to net postpaid service revenue.  Net prepaid service revenues grew $1.9 million, or nearly 28%, compared to the 2012 first quarter.  Average prepaid subscribers increased 18.6% in 2013 over 2012. Cable segment revenues increased $1.3 million due to a 2.3% increase in average revenue generating units and a 5.5% average price increase, compared to the first quarter of 2012.

Operating expenses

For the three months ended March 31, 2013, operating expenses increased $0.8 million, or 1.3%, compared to the 2012 period. Wireless prepaid expenses increased $1.2 million, including $0.3 million in higher handset costs, $0.8 million for marketing costs, and $0.1 million in other costs. Wireless segment postpaid depreciation and amortization expense declined $1.5 million primarily due to $2.0 million of accelerated depreciation associated with Network Vision upgrades in the first quarter of 2012.  Wireline segment operating expenses increased $1.1 million, including $0.3 million in costs to provide transition services to Converged Services properties sold to third parties, $0.2 million in increased depreciation expense on expanded fiber networks, and $0.6 million in costs to support expanded services to affiliates.  Cable segment operating expenses increased $0.2 million, while parent company operating expenses decreased $0.2 million.

Other income (expense)

Changes in other income (expense) included increased interest expense on higher outstanding debt balances, partially offset by additional patronage income from CoBank, following the refinancing of debt in the third quarter of 2012, as well as lower gains recorded on other investments.

Income tax expense

The Company’s effective tax rate on income from continuing operations decreased from 42.6% in the first quarter of 2012 to 39.2% in the first quarter of 2013 principally due corporate changes undertaken in 2012 to simplify the Company’s structure and to changes in the mix of taxable income, resulting in a decrease in the effective state tax rate.

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Net income from continuing operations

For the three months ended March 31, 2013, net income from continuing operations increased $3.9 million, or 89.5%, reflecting higher wireless and cable segment revenues partially offset by growth in wireless handset costs and subsidies and wireline segment expenses, and increases in interest expense and taxes.

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 of Sprint Nextel.  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 Nextel for subscribers that obtain service in PCS’s network coverage area.  PCS relies on Sprint Nextel to provide timely, accurate and complete information to record the appropriate revenue for each financial period.  Postpaid revenues received from Sprint Nextel are recorded net of certain fees totaling 20% of net postpaid billed revenue retained by Sprint Nextel.  These fees include an 8% management fee and a 12% net service fee.  Sprint Nextel also retains a 6% management fee on prepaid revenues.

During the first quarter of 2012, the Company entered into agreements with Sprint Nextel and Alcatel-Lucent to begin adding 4G LTE service to the Company’s Wireless network.  The 4G service uses base station equipment acquired from Alcatel-Lucent in conjunction with Sprint Nextel’s wireless network upgrade plan known as Network Vision. There was no immediate change to the fees paid to Sprint, but the net service fee cap that is currently 12% of net billed revenues will increase to 14% on July 1, 2013.  If an analysis of the balance of payments between Sprint and Shentel supports raising the rate, Sprint could increase the net service fee to 14% at that time.

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

	Mar. 31,		Dec. 31,		Mar. 31,		Dec. 31,
	2013		2012		2012		2011
Retail PCS Subscribers – Postpaid		263,957		262,892		250,684		248,620
Retail PCS Subscribers – Prepaid		134,404		128,177		114,384		107,100
PCS Market POPS (000) (1)		2,390		2,390		2,388		2,388
PCS Covered POPS (000) (1)		2,058		2,057		2,055		2,055
CDMA Base Stations (sites)		521		516		510		509
LTE-enabled sites		232		200		-		-
LTE-covered POPS (000) (1)		1,450		1,131		-		-
EVDO-enabled sites		451		444		434		433
EVDO Covered POPS (000) (1)		2,032		2,029		2,027		2,027
Towers, Company owned		151		150		149		149
Non-affiliate cell site leases		218		216		219		219

	Three Months Ended
	March 31,
	2013			2012
Gross PCS Subscriber Additions – Postpaid		15,824			15,966
Net PCS Subscriber Additions – Postpaid		1,065			2,064
Gross PCS Subscriber Additions – Prepaid		21,422			19,364
Net PCS Subscriber Additions – Prepaid		6,227			7,285
PCS Average Monthly Retail Churn % - Postpaid		1.87	%		1.86	%
PCS Average Monthly Retail Churn % - Prepaid		3.87	%		3.65	%

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1) POPS refers to the estimated population of a given geographic area and is based on information purchased from third parties.  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.

Three Months Ended March 31, 2013 Compared with the Three Months Ended March 31, 2012

(in thousands)	Three Months Ended March 31,				Change
	2013		2012		$			%
Segment operating revenues
Wireless service revenue	$	44,065	$	38,403	$	5,662			14.7
Tower lease revenue		2,562		2,251		311			13.8
Equipment revenue		1,331		1,530		(199	)		(13.0	)
Other revenue		199		485		(286	)		(59.0	)
Total segment operating revenues		48,157		42,669		5,488			12.9
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		17,530		16,393		1,137			6.9
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		8,771		7,994		777			9.7
Depreciation and amortization		6,028		7,757		(1,729	)		(22.3	)
Total segment operating expenses		32,329		32,144		185			0.6
Segment operating income	$	15,828	$	10,525	$	5,303			50.4

Operating revenues

Wireless service revenue increased $5.7 million, or 14.7%, for the three months ended March 31, 2013, compared to the 2012 first quarter.  Net postpaid service revenues increased $3.7 million, as data fees on smartphones increased $1.7 million in the 2013 period from 2012’s first quarter.  A 5.5% growth in quarter-over-quarter average postpaid subscribers added an additional $2.2 million to net postpaid service revenue. Net prepaid service revenues grew $1.9 million, or nearly 28%, compared to the 2012 first quarter.  Average prepaid subscribers increased 18.6% in 2013 over 2012, with changes in the mix of subscribers to higher revenue plans accounting for the remainder of the increase in prepaid service revenues.

Cost of goods and services

Cost of goods and services increased $1.1 million, or 6.9%, in 2013 from the first quarter of 2012.  Postpaid handset costs decreased $0.7 million primarily due to fewer handsets sold through Company-controlled channels in 2013.  Handset costs associated with prepaid customer acquisitions increased $0.2 million due to an increase in gross additions. Network costs increased $1.2 million, primarily due to increases in rent and backhaul associated with the Network Vision project. Maintenance expense grew $0.3 million due to increases in maintenance contracts that support the upgraded wireless network.

Selling, general and administrative

Selling, general and administrative costs increased $0.8 million, or 9.7%, in the first quarter of 2013 over the comparable 2012 period.  Costs associated with supporting the existing prepaid subscriber base accounted for $0.6 million of the increase, while costs to add new prepaid subscribers increased $0.5 million. Advertising and commission expenses associated with postpaid activities decreased a total of $0.3 million.

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Depreciation and amortization

Depreciation and amortization decreased $1.7 million in 2013 over the 2012 first quarter, due primarily to $2.0 million of accelerated depreciation recorded in the first quarter of 2012 on assets to be replaced during Network Vision upgrades.  Accelerated depreciation in first quarter 2013 totaled $0.8 million.  Also contributing to the decrease was a $0.2 million decline in amortization of the initial purchase cost of acquired prepaid customers.

Cable

The Cable segment provides analog, digital and high-definition television service under franchise agreements in Virginia, West Virginia and portions of western Maryland, as well as internet and voice services in these markets.

The following table shows selected operating statistics of the Cable segment as of the dates shown:

	Mar. 31,  2013			Dec. 31, 2012			Mar. 31, 2012			Dec. 31, 2011
Homes Passed (1)		185,099			184,533			182,828			182,156
Customer Relationships (2)
Video customers		59,353			59,089			62,519			62,835
Non-video customers		16,220			15,709			13,611			12,513
Total customer relationships		75,573			74,798			76,130			75,348
Video
Customers (3)		61,257			61,559			64,532			64,979
Penetration (4)		33.1	%		33.4	%		35.3	%		35.7	%
Digital video penetration (5)		39.6	%		39.5	%		39.7	%		39.0	%
High-speed Internet
Available Homes (6)		164,789			163,273			156,791			156,119
Customers (3)		42,479			41,025			38,856			37,021
Penetration (4)		25.8	%		25.1	%		24.8	%		23.7	%
Voice
Available Homes (6)		157,409			154,552			143,907			143,235
Customers (3)		12,840			12,307			10,618			9,881
Penetration (4)		8.2	%		8.0	%		7.4	%		6.9	%
Total Revenue Generating Units (7)		116,576			114,891			114,006			111,881
Total Fiber Miles (8)		40,686			39,418			35,086			34,772
Total Route Miles		2,116			2,077			1,998			1,990

1) 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.

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

3) 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.

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

5) 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 counts as one digital video customer.

6) 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.  Homes passed in Shenandoah County are excluded from available homes as we do not offer high-speed internet or voice services over our co-axial distribution network in this market.

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

8) 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.

Three Months Ended March 31, 2013 Compared with the Three Months Ended March 31, 2012

(in thousands)	Three Months Ended March 31,						Change
	2013			2012			$			%
Segment operating revenues
Service revenue	$	17,380		$	16,052		$	1,328			8.3
Equipment and other revenue		2,525			2,531			(6	)		(0.2	)
Total segment operating revenues		19,905			18,583			1,322			7.1
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		12,289			12,226			63			0.5
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		5,438			5,047			391			7.7
Depreciation and amortization		5,564			5,852			(288	)		(4.9	)
Total segment operating expenses		23,291			23,125			166			0.7
Segment operating loss	$	(3,386	)	$	(4,542	)	$	1,156			25.5

Operating revenues

Cable segment service revenue increased $1.3 million, or 8.3%, due to a 2.3% increase in average revenue generating units, video price increases averaging 5.5% implemented in the first quarter 2013 driven by rising programming costs, and customers selecting higher priced digital TV services and higher speed data access packages.

Operating expenses

Cable segment cost of goods and services increased 0.5% principally due to higher maintenance expenses.  Cable programming costs were flat as declining video subscriber counts offset the impact of rising rates per sub.

Selling, general and administrative expenses have increased principally due to costs of our new brand and allocated costs for customer service functions, offset partly by lower charges for bad debts.

The decrease in depreciation and amortization expense consists of lower amortization on customer base intangibles established in the cable acquisitions, which were set-up to amortize at accelerated rates that decline with each anniversary of their establishment, partially offset by higher depreciation expense on assets placed in service.

Wireline

The Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham and Augusta Counties, Virginia, 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.

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	Mar. 31,		Dec. 31,		Mar. 31,		Dec. 31,
	2013		2012		2012		2011
Wireline Segment
Telephone Access Lines		22,234		22,297		22,838		23,083
Long Distance Subscribers		10,116		10,157		10,416		10,483
DSL Subscribers		12,665		12,567		12,472		12,351
Dial-up Internet Subscribers		918		996		1,282		1,410
Total Fiber Miles (1)		84,365		84,107		79,225		78,523
Fiber Route Miles		1,428		1,420		1,356		1,349

(1) Total 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.

Three Months Ended March 31, 2013 Compared with the Three Months Ended March 31, 2012

(in thousands)	Three Months Ended March 31,				Change
	2013		2012		$			%
Segment operating revenues
Service revenue	$	4,245	$	4,129	$	116			2.8
Access revenue		3,248		2,993		255			8.5
Facilities lease revenue		5,148		5,052		96			1.9
Equipment and other revenue		1,068		736		332			45.1
Total segment operating revenues		13,709		12,910		799			6.2
Segment operating expenses
Cost of goods and services, exclusive of depreciation and amortization shown separately below		6,099		5,229		870			16.6
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		1,709		1,717		(8	)		(0.5	)
Depreciation and amortization		2,372		2,173		199			9.2
Total segment operating expenses		10,180		9,119		1,061			11.6
Segment operating income	$	3,529	$	3,791	$	(262	)		(6.9	)

Operating revenues

Total operating revenues increased $0.8 million in the three months ended March 31, 2013, up from the comparable 2012 period.  The increase in service revenue resulted primarily from contracts to lease fiber facilities and provide internet access to third parties.  Access revenue increased primarily due to the Company’s mid-2012 decision to re-tariff DSL rates.   Other revenue increased due to billings for transition services to buyers of Converged Services’ properties (offset by increased costs of goods and services mentioned below).

Operating expenses

Operating expenses overall increased $1.1 million, or 11.6%, in the three months ended March 31, 2013, compared to the 2012 three month period. The increase in cost of goods and services resulted primarily from costs to provide services to PCS, Shentel Cable and other customers, related to the increases in revenues shown above. The increase in depreciation resulted from additions to switch and circuit equipment in support of fiber and other service contract revenue increases as discussed above.

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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 expenses incurred for the payment of income taxes and other 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, 2013 and 2012:

(in thousands)	Three Months Ended March 31,
	2013		2012
Adjusted OIBDA	$	29,635	$	26,709

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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, 2013 and 2012:

(in thousands)	Three Months Ended March 31,
	2013		2012
Operating income	$	15,209	$	8,817
Plus depreciation and amortization		13,972		15,807
Adjusted prepaid results		-		1,695
Plus loss on asset sales		82		33
Plus share based compensation expense		372		357
Adjusted OIBDA	$	29,635	$	26,709

Adjusted prepaid results refers to the impact on first quarter 2012 had Sprint Nextel calculated prepaid costs consistent with the adjustment received from Sprint Nextel in the fourth quarter of 2012, related to the previous nine quarters, and recorded in the fourth quarter of 2012.

The following tables reconcile adjusted OIBDA to operating income by major segment for the three months ended March 31, 2013 and 2012:

Wireless Segment:

(in thousands)	Three Months Ended March 31,
	2013		2012
Operating income	$	15,828	$	10,525
Plus depreciation and amortization		6,028		7,757
Adjusted prepaid results		-		1,695
Plus loss on asset sales		90		4
Plus share based compensation expense		108		104
Adjusted OIBDA	$	22,054	$	20,085

Cable Segment:

(in thousands)	Three Months Ended March 31,
	2013			2012
Operating loss	$	(3,386	)	$	(4,542	)
Plus depreciation and amortization		5,564			5,852
Plus (gain) loss on asset sales		(19	)		9
Plus share based compensation expense		162			149
Adjusted OIBDA	$	2,321		$	1,468

Wireline Segment:

(in thousands)	Three Months Ended March 31,
	2013		2012
Operating income	$	3,529	$	3,791
Plus depreciation and amortization		2,372		2,173
Plus loss on asset sales		12		20
Plus share based compensation expense		78		82
Adjusted OIBDA	$	5,991	$	6,066

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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 $22.7 million of net cash from operations in the first three months of 2013, compared to $22.5 million in the first three months of 2012.  Net income increased from the 2012 period to 2013, including the effects of non-cash items such as depreciation, amortization, deferred income taxes and provisions for bad debt.  A smaller decrease in income taxes receivable in the first three months of 2013 compared to 2012 offset the improvements in net income described above.

Indebtedness.As of March 31, 2013, the Company’s indebtedness totaled $231.4 million, with an annualized overall weighted average interest rate of approximately 2.97%.  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, 2013, the Company was in compliance with all debt covenants, and ratios at March 31, 2013 were as follows:

	Actual	Covenant Requirement at March 31, 2013
Total Leverage Ratio	1.97	3.00 or Lower
Debt Service Coverage Ratio	6.65	2.50 or Higher
Equity to Assets Ratio	38.3%	30.0% 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, 2013. 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, 2013.

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.

Capital Commitments. Capital expenditures budgeted for 2013 total $125.2 million.  Planned spending contemplates the replacement of remaining base stations in our wireless network as part of Sprint Nextel’s Network Vision project started in 2012, as well as adding capacity to our PCS network, new towers to support the expansion of PCS network capacity, and on-going spending to expand and upgrade our fiber networks and information technology capabilities.  Cable segment capital spending for 2013 included spending for upgrades of the last acquired Cable markets, extensions of current systems and other continuing cable segment expenditures.

For the first three months of 2013, the Company spent $26.0 million on capital projects, compared to $14.8 million in the comparable 2012 period.  Spending related to Wireless projects accounted for $20.0 million in the first three months of 2013, primarily for base station upgrades, while Cable projects accounted for $2.9 million primarily for network upgrades to support new services or customers. Wireline projects accounted for $1.9 million primarily for fiber builds and switching/routing capability, and other projects accounted for $1.2 million, largely related to information technology projects.

The Company received $1.1 million in cash from sales of Converged Services properties completed during the first quarter of 2012.

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.

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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 Nextel, and other conditions.  The Wireless segment’s operations are dependent upon Sprint Nextel’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 Nextel.   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, 2013, that are expected to have a material impact on the Company’s results of operations or financial condition.

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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, 2013, the Company had $230.0 million of variable rate debt outstanding, bearing interest at a rate of 2.95% 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 interest rate swaps.  An additional $1.2 million of the Company’s outstanding debt has a fixed rate of 7.37% through maturity in August 2013; the remaining $0.3 million of outstanding debt bears no interest.  Due to the relatively short time frame to maturity of the fixed rate debt, market value approximates carrying value of the fixed rate debt.  The Company entered into two swap agreements that, through the maturity of the 2010 swap agreement on July 31, 2013, cover notional principal equal to nearly all of the outstanding variable rate debt to pay a blended fixed rate of just over 1.00% and receive a variable rate based on one month LIBOR; subsequently, the 2012 swap agreement 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 two treasury bills with face amounts of $5 million each which will mature at par in April and May of 2013. 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.  The Company will have approximately $55 million of variable rate debt with no interest rate protection outstanding after August of 2013.  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, 2013, the Company has $6.3 million of cost and equity method investments.  Approximately $2.1 million is invested in privately held companies through investments with portfolio managers.  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.

25

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.  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, 2013.

Changes in Internal Control Over Financial Reporting

During the first quarter of 2013, 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 Nextel, Sprint Nextel provides the Company with billing, collections, customer care, certain network operations and other back office services for the PCS operation. As a result, Sprint Nextel remits to the Company approximately 58% of the Company’s total operating revenues.  Due to this relationship, the Company necessarily relies on Sprint Nextel 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 Nextel includes reports regarding the subscriber accounts receivable in the Company’s markets.  Sprint Nextel 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 Nextel, 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 20.0% of revenue retained by Sprint Nextel.  Because of the Company’s reliance on Sprint Nextel for financial information, the Company must depend on Sprint Nextel to design adequate internal controls with respect to the processes established to provide this data and information to the Company and Sprint Nextel’s other Sprint PCS affiliate network partners.  To address this issue, Sprint Nextel 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, 2012 to September 30, 2012.  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 Nextel related to the Company’s relationship with them.

26

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, 2012.

On April 15, 2013, Dish Network Corporation announced that it had made an offer to acquire Sprint Nextel for $25.5 billion, competing with Softbank Corporation’s previously announced offer to acquire 70% of Sprint Nextel for $20.1 billion.  The terms of these proposed transactions, or delays in consummating a transaction, could affect Sprint Nextel’s business in a way that could be adverse to us.

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, 2013:

	Number of Shares Purchased		Average Price Paid per Share
January 1 to January 31		5	$	15.06
February 1 to February 28		3	$	14.49
March 1 to March 31		3	$	14.76
Total		11	$	14.82

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ITEM 6. Exhibits

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

10.43 Addendum XV dated as of March 11, 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.

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

28

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 3, 2013

29

EXHIBIT INDEX

Exhibit No. Exhibit

10.43 Addendum XV dated as of March 11, 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.

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

30

EX-10.43

Exhibit 10.43

Addendum XV

to

Sprint PCS Management Agreement and

Sprint PCS Services Agreement

Dated as of March 11, 2013

Manager: SHENANDOAH PERSONAL COMMUNICATIONS, LLC

Service Area BTAs: 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 XV (this “Addendum”) contains amendments to the Sprint PCS Management Agreement, dated November 5, 1999, between Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company (predecessor in interest to Shenandoah Personal Communications, LLC) (the “Management Agreement”), the Sprint PCS Services Agreement, dated November 5, 1999, between Sprint Spectrum L.P. and Shenandoah Personal Communications Company (the “Services Agreement”), the Sprint Trademark and Service Mark License Agreement(s) and the Schedule of Definitions, dated November 5, 1999, attached to the Management Agreement (the “Schedule of Definitions”). The Management Agreement, the Services Agreement, the Trademark License Agreements and the Schedule of Definitions were amended by:

(1) Addendum I dated as of November 5, 1999,

(2) Addendum II dated as of August 31, 2000,

(3) Addendum III dated as of September 26, 2001,

(4) Addendum IV dated as of May 22, 2003,

(5) Addendum V dated as of January 30, 2004,

(6) Addendum VI dated as of May 24, 2004,

(7) Addendum VII dated as of March 13, 2007,

(8) Addendum VIII dated as of September 28, 2007,

(9) Addendum IX dated as of April 14, 2009,

(10) Addendum X dated as of March 15, 2010,

(11) Addendum XI dated as of July 7, 2010,

(12) Addendum XII dated as of February 1, 2012;

(13) Addendum XIII dated as of September 12, 2012;  and

(14) Addendum XIV dated as of November 19, 2012.

Manager and Sprint PCS have engaged together to upgrade their respective wireless networks to introduce 4G LTE services under a program called “Network Vision” by Sprint PCS.  In order to assure continued interoperability of Manager’s Service Area Network with the Sprint PCS Network, Manager was prepared to acquire, at its own expense, the hardware and software components of the network that control and direct LTE traffic between the mobile Manager LTE Devices (as defined below) and the internet.  However, Sprint PCS and Manager have  determined that significant operational efficiencies will be achieved if the LTE Data Core (as defined below) is located solely within the Sprint PCS Network, rather than residing in Manager’s Service Area Network as well as in the Sprint PCS Network.  The purpose of this Addendum is to allow Sprint to recover the significant capital costs incurred in providing to Manager the LTE Data Core located within the Sprint PCS Network and to set forth terms relating to Sprint PCS’s provision of LTE Data Core Services.

The terms and provisions of this Addendum control over any conflicting terms and provisions contained in the Management Agreement, the Services Agreement, the Trademark License Agreements or the Schedule of Definitions.  The Management Agreement, the Services Agreement, the Trademark License Agreements, the Schedule of Definitions and all prior addenda continue in full force and effect, except for the express modifications made in this Addendum.  This Addendum does not change the effective date of any prior amendment made to the Management Agreement, the Services Agreement, the Trademark License Agreements or the Schedule of Definitions through previously executed addenda.

Capitalized terms used and not otherwise defined in this Addendum have the meaning ascribed to them in the Schedule of Definitions or in prior addenda.  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, the Services Agreement and the Schedule of Definitions Services are amended as follows:

2

Management Agreement

1.  The last paragraph of Section 1.1 of the Management Agreement is amended to read as follows:

Subject to the terms and conditions of this agreement, including, without limitation, Sections 1.9, 9.5 and 12.1.2, Sprint PCS has the right to unfettered access to the Service Area Network to be constructed by Manager under this agreement.  Except with respect to the payment obligations under Sections 1.4, 1.9.2, 1.10, 3.1.7, 4.4, 9.3, 10.2, 10.5, 10.6, 10.8, 10.9, 12.1.2 and Article XIII of this agreement, Sections 2.1.1(d), 2.1.2(b), 3.2, 3.3, 3.4, 5.1.2, 3.5 and Article VI of the Services Agreement and any payments arising as a result of any default of the parties’ obligations under this agreement and the Services Agreement, the Fee Based on Billed Revenue described in Section 10.2.1 of this Agreement, the Prepaid Management Fee described in 10.2.7.3 of this Agreement, the LTE Fee described in Section 10.2.7.4 of this Agreement, the Command Center Fee described in Section 10.2.7.5 of this Agreement and the Net Service Fee, the Prepaid CPGA Fee, Prepaid CCPU Fees and LTE Data Core Services Fee described in the Services Agreement will constitute the only payments between the parties under the Management Agreement, the Services Agreement and the Trademark License Agreements.

Schedule of Definitions

2. The Schedule of Definitions is revised to including the following:

“LTE Data Core” means the software and hardware components of the network that controls and directs LTE traffic between the mobile Manager LTE Devices and the internet.

“LTE Data Core Services Fee” means the fee payable by Manager to Sprint PCS to compensate Sprint PCS for the costs of deploying, operating and maintaining the LTE Data Core and providing LTE Data Core Services applicable to LTE data traffic on the  Sprint PCS Network.

“LTE Data Core Services” meansservices relating to the LTE Data Core including licenses, packet gateway and mobility management entity functionality.  LTE Data Core Services are more completely set forth on Schedule 2.1.1-B attached to this Addendum and incorporated herein.

“Manager LTE Devices” means LTE devices activated using an NPA-NXX assigned to the Service Area.

3

Services Agreement

3.  Section 2.2.1 (e) is added to the Services Agreement:

(e)   LTE Data Core Services.  Notwithstanding anything to the contrary contained herein, and in addition to the Services and the Separately Settled Services, Sprint PCS will provide to Manager, and Manager will obtain from Sprint PCS, LTE Data Core Services subject to Manager’s payment of the LTE Data Core Services Fee and the following:

(1) Sprint PCS will own, operate and manage all components of the LTE Data Core. Manager will not have physical access to the LTE Data Core and must comply with all Sprint PCS performance requirements and network security standards relating to the LTE Data Core.

(2) Sprint PCS may designate additional or fewer LTE Data Core Services if consistent with Sprint’ PCS’ addition or reduction of LTE Data Core Services with respect to the Sprint PCS Network.  Sprint PCS must give  at least 180 days’ prior written notice to Manager of the deletion or addition of LTE Data Services by providing an amended Schedule 2.1.1-B to Manager in accordance with provisions of Section 9.

(3) If Sprint PCS determines to no longer offer LTE Data Core Services, the LTE Data Core Services may be discontinued pursuant to the same process set forth in Section 2.1.2 Discontinuance of Services that is applicable to Services.

4.  Section 3.5 is added to the Service Agreement.

3.5.  LTE Data Core Services Fee.

A.       In addition to the Net Service Fee, Separately Settled Manager Expenses and other fees payable under this Service Agreement, Manager will pay annually in advance the LTE Data Core Services Fee.  The initial LTE Data Core Services Fee for   2013  will be payable within 30 days of the Effective Date and will be equal to $9.23 multiplied by 100,000, which represents the maximum number of  Manager LTE Devices projected by Sprint PCS to be in service at any one time during the calendar year of 2013.  Following December 31, 2013, Manager and Sprint PCS will true up any deficiency or surplus in the LTE Data Core Service Fee for 2013 based on the differential between the projected number of Manager LTE Devices in service at any one time during the year (100,000) and the maximum number of Manager LTE Devices actually in service at any one time during the year.

The LTE Data Core Services Fee will thereafter be payable annually on each January 1, in advance, and will be based on $9.23 (as it may be subsequently adjusted pursuant to this agreement) multiplied by the projected number of net positive activations of Manager LTE Devices forecast by Manager for such calendar year.  At the conclusion of each calendar year following December 31, 2013, Manager and Sprint PCS will true up any deficiency or surplus in the prior LTE Data Core Services Fee based on the differential between (i) the projected number of net activations of Manager LTE Devices and (ii) the actual number of net activations of Manager LTE Devices that were completed during the calendar year, determined by subtracting the number of Manager LTE Devices actually in service for the prior year (as used in the prior year’s true-up) from the highest number of Manager LTE Devices actually in service at the end of the calendar month having the largest number of LTE Subscribers. In the event there are not positive net activations of Manager LTE Devices for a calendar year, Sprint PCS will refund to Manager an amount not to exceed the amount of the LTE Data Core Services Fee that was prepaid based on a net add positive forecast, if applicable.

4

 B.       Sprint PCS reserves the right during the Term to equitably adjust the LTE Data Core Services Fee to permit Sprint PCS to recover its reasonable costs for providing LTE Data Core Services to Manager.  Any proposed changes in the LTE Data Core Services Fee will be communicated in a Review Notice in accordance with the timeframes and applicable requirements set forth in Sections 3.2.2, with the adjustment to take effect and be applied to the forecast of the year following notification. With respect to any Review Notice delivered by Sprint PCS reflecting changes in the LTE Data Core Service Fee, Sprint PCS will include with such delivery copies of excerpts of such books, records and supporting documentation as may be reasonably necessary or appropriate for Manager to verify such calculation of the LTE Data Core Services Fee. The Parties agree that there will be no LTE Data Core Service Fee adjustment until, at the earliest, pursuant to the Review Notice Period commencing June 30, 2013.

C.       In the event Sprint PCS discontinues offering of LTE Data Core Services pursuant to Section 2.2.1(e) (2), Manager will receive a credit for unused portions of licenses, which will be equal to the difference between the forecasted amount paid in advance by Manager and the actual number of net activations of Manager LTE Devices in the then current year to date at the time LTE Data Core Services are discontinued, calculated as set forth for the true up described in subsection A above.

D.       The Parties agree that matters concerning calculation of the LTE Data Core Services Fee and costs and expenses (including operating metrics referred to in this Agreement relating to or used in the determination of the LTE Data Core Services Fee) may be incorporated within the scope of any audit conducted pursuant to Section 5.1.2 of this Agreement.

General Provisions

5.             Manager and Sprint PCS’ Representations.  Manager and Sprint PCS each represents and warrants that its respective execution, delivery and performance of its obligations described in this Addendum have been duly authorized by proper action of its governing body and do not and will not violate any material agreements to which it is a party.  Each of Manager and Sprint PCS also represents and warrants that there are no legal or other claims, actions, counterclaims, proceedings or suits, at law or in arbitration or equity, pending or, to its knowledge, threatened against it, its Related Parties, officers or directors that question or may affect the validity of this Addendum, the execution and performance of the transactions contemplated by this Addendum or that party's right or obligation to consummate the transactions contemplated by this Addendum.

6.             Counterparts.  This Addendum may be executed in one or more counterparts, including facsimile counterparts, and each executed counterpart will have the same force and effect as an original instrument as if the parties to the aggregate counterparts had signed the same instrument. The parties have caused this Addendum XV to be executed as of the date first above written.

5

The parties have executed this Addendum XV as of the Effective Date.

SPRINT SPECTRUM L.P.
By:	/s/ Traci Jovanovic

Name:	Traci Jovanovic
Title:	Vice president

WIRELESSCO, L.P.
By:	/s/ Traci Jovanovic

Name:	Traci Jovanovic
Title:	Vice president

APC PCS, LLC
By:	/s/ Traci Jovanovic

Name:	Traci Jovanovic
Title:	Vice president

PHILLIECO, L.P.
By:	/s/ Traci Jovanovic

Name:	Traci Jovanovic
Title:	Vice president

SPRINT COMMUNICATIONS COMPANY L.P.
By:	/s/ Traci Jovanovic

Name:	Traci Jovanovic
Title:	Vice president

6

SHENANDOAH PERSONAL
COMMUNICATIONS, LLC (successor in interest to Shenandoah Personal Communications Company)
By:	/s/ Christopher E. French

Name:	Christopher E. French
Title:	President

7

Schedule 2.1.1-B

LTE Data Core Services

The core tracks end user devices to know where to page the device for incoming traffic and subsequently set up the data sessions.  The core authenticates the LTE Subscribers to ensure valid and current subscriptions.  The core tracks data sessions and applies policy adjustments as needed, i.e. data limits, throughput limiting, white list, black list, etc.  The LTE Data Core Maintains data sessions as mobile subscribers travel from eNB (Base station) to eNB, as well as between core gateways. The core provides the gateway to the Sprint PCS Network and to the internet.

8

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Christopher E. French, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ CHRISTOPHER E. FRENCH

Christopher E. French, President and Chief Executive Officer

Date:  May 3, 2013

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Adele M. Skolits, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ADELE M. SKOLITS

Adele M. Skolits, Vice President - Finance and Chief Financial Officer

Date: May 3, 2013

EX-32

EXHIBIT 32

Written Statement of Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Each of the undersigned, the President and Chief Executive Officer and the Vice President - Finance and Chief Financial Officer, of Shenandoah Telecommunications Company (the “Company”), hereby certifies that, on the date hereof:

(1)           The quarterly report on Form 10-Q of the Company for the three months ended March 31, 2013 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           Information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/S/CHRISTOPHER E. FRENCH

Christopher E. French

President and Chief Executive Officer

May 3, 2013

/S/ADELE M. SKOLITS

Adele M. Skolits

Vice President - Finance and

Chief Financial Officer

May 3, 2013

The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.  This certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act except to the extent this Exhibit 32 is expressly and specifically incorporated by reference in any such filing.

XML

Property, Plant and Equipment (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2013 site	Mar. 31, 2012	Dec. 31, 2012
Property, plant and equipment [Abstract]
Total property, plant and equipment	$ 622,148,000		$ 611,685,000
Less accumulated amortization and depreciation	251,952,000		246,211,000
Property, plant and equipment, net	370,196,000		365,474,000
Number of sites	274
Accelerated depreciation expense	800,000	2,000,000	8,400,000
Plant in Service [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	592,900,000		586,216,000
Plant under Construction [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	$ 29,248,000		$ 25,469,000

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Other cash flow information:
Exchange of equipment for new equipment purchase	$ 3,160
Increase (Decrease) in accounts payable	$ 8,414

XML

Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Segment State	Mar. 31, 2012	Dec. 31, 2012
Segment Information [Abstract]
Number of reportable segments	3
Non Sprint-Nextel operations, number of states	4
External revenues [Abstract]
Service revenues	$ 65,345	$ 58,323
Other revenues	10,665	10,500
Total external revenues	76,010	68,823
Internal revenues	0	0
Total operating revenues	76,010	68,823
Operating expenses [Abstract]
Cost of goods and services, exclusive of depreciation and amortization shown separately below	30,700	29,029
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	16,129	15,170
Depreciation and amortization	13,972	15,807
Total operating expenses	60,801	60,006
Operating income (loss)	15,209	8,817
Reconciliation of income from continuing operations from segments to consolidated [Abstract]
Total consolidated operating income	15,209	8,817
Interest expense	(2,152)	(1,795)
Non-operating income (expense), net	668	659
Income from continuing operations before income taxes	13,725	7,681
Assets by segment [Abstract]
Assets	566,728		570,740
Wireless [Member]
External revenues [Abstract]
Service revenues	44,065	38,403
Other revenues	3,019	3,451
Total external revenues	47,084	41,854
Internal revenues	1,073	815
Total operating revenues	48,157	42,669
Operating expenses [Abstract]
Cost of goods and services, exclusive of depreciation and amortization shown separately below	17,530	16,393
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	8,771	7,994
Depreciation and amortization	6,028	7,757
Total operating expenses	32,329	32,144
Operating income (loss)	15,828	10,525
Reconciliation of income from continuing operations from segments to consolidated [Abstract]
Total consolidated operating income	15,828	10,525
Assets by segment [Abstract]
Assets	178,049		179,929
Cable [Member]
External revenues [Abstract]
Service revenues	17,380	16,052
Other revenues	2,476	2,456
Total external revenues	19,856	18,508
Internal revenues	49	75
Total operating revenues	19,905	18,583
Operating expenses [Abstract]
Cost of goods and services, exclusive of depreciation and amortization shown separately below	12,289	12,226
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	5,438	5,047
Depreciation and amortization	5,564	5,852
Total operating expenses	23,291	23,125
Operating income (loss)	(3,386)	(4,542)
Reconciliation of income from continuing operations from segments to consolidated [Abstract]
Total consolidated operating income	(3,386)	(4,542)
Assets by segment [Abstract]
Assets	198,820		202,436
Wireline [Member]
External revenues [Abstract]
Service revenues	3,900	3,868
Other revenues	5,170	4,593
Total external revenues	9,070	8,461
Internal revenues	4,639	4,449
Total operating revenues	13,709	12,910
Operating expenses [Abstract]
Cost of goods and services, exclusive of depreciation and amortization shown separately below	6,099	5,229
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	1,709	1,717
Depreciation and amortization	2,372	2,173
Total operating expenses	10,180	9,119
Operating income (loss)	3,529	3,791
Reconciliation of income from continuing operations from segments to consolidated [Abstract]
Total consolidated operating income	3,529	3,791
Assets by segment [Abstract]
Assets	86,469		88,776
Other [Member]
External revenues [Abstract]
Service revenues	0	0
Other revenues	0	0
Total external revenues	0	0
Internal revenues	0	0
Total operating revenues	0	0
Operating expenses [Abstract]
Cost of goods and services, exclusive of depreciation and amortization shown separately below	0	17
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	754	915
Depreciation and amortization	8	25
Total operating expenses	762	957
Operating income (loss)	(762)	(957)
Reconciliation of income from continuing operations from segments to consolidated [Abstract]
Total consolidated operating income	(762)	(957)
Assets by segment [Abstract]
Assets	462,428		458,650
Eliminations [Member]
External revenues [Abstract]
Service revenues	0	0
Other revenues	0	0
Total external revenues	0	0
Internal revenues	(5,761)	(5,339)
Total operating revenues	(5,761)	(5,339)
Operating expenses [Abstract]
Cost of goods and services, exclusive of depreciation and amortization shown separately below	(5,218)	(4,836)
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	(543)	(503)
Depreciation and amortization	0	0
Total operating expenses	(5,761)	(5,339)
Operating income (loss)	0	0
Reconciliation of income from continuing operations from segments to consolidated [Abstract]
Total consolidated operating income	0	0
Assets by segment [Abstract]
Assets	(359,038)		(359,051)
Total Segments [Member]
Assets by segment [Abstract]
Assets	$ 925,766		$ 929,791

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Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income (Details) (USD $)	3 Months Ended															3 Months Ended
	Mar. 31, 2013	Mar. 31, 2013 Gains and Losses on Cash Flow Hedges [Member]	Mar. 31, 2013 Interest Rate Swap [Member]	Sep. 30, 2012 Interest Rate Swap [Member]	Aug. 31, 2010 Interest Rate Swap [Member]	Mar. 31, 2013 Designated as Hedging Instrument [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Designated as Hedging Instrument [Member] Accrued liabilities and other [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member] Accrued liabilities and other [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Designated as Hedging Instrument [Member] Deferred charges and other assets, net [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member] Deferred charges and other assets, net [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Not Designated as Hedging Instrument [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Not Designated as Hedging Instrument [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Not Designated as Hedging Instrument [Member] Accrued liabilities and other [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Not Designated as Hedging Instrument [Member] Accrued liabilities and other [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Expense [Member]	Mar. 31, 2012 Interest Expense [Member]
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income [Abstract]
Notional amount of interest rate swaps not designated as cash flow hedges	$ 50,600,000
Notional amount of cash flow hedges	174,600,000
Derivative Instruments, Gain (Loss) [Line Items]
Changes in fair value recorded in interest expense																(104,000)	28,000
Amount reclassified as an increase to interest expense during next twelve months																1,600,000
Derivatives, Fair Value [Line Items]
Amount of notional principal interest rate swap				174,600,000	63,300,000
Derivative, expiry date	Jul. 31, 2013		Jul. 31, 2013
Derivatives Liabilities, Fair Value								1,559,000	1,613,000					135,000	239,000
Derivative Assets, Fair Value										1,007,000	177,000
Derivative Assets (Liabilities), at Fair Value, Net						552,000	1,436,000					135,000	239,000
Accumulated Other Comprehensive Income (Loss), before Tax [Abstract]
Accumulated Other Comprehensive Income (Loss), before Tax		(1,436,000)
Other comprehensive income before reclassifications, before tax		490,000
Amounts reclassified from accumulated other comprehensive income (to interest expense), before tax		394,000
Net current period other comprehensive income before tax		884,000
Accumulated Other Comprehensive Income (Loss), before Tax		(552,000)
Accumulated Other Comprehensive Income (Loss), Tax [Abstract]
Accumulated Other Comprehensive Income (Loss), Tax		573,000
Other comprehensive income before reclassifications, tax		(196,000)
Amounts reclassified From accumulated other comprehensive income tax (to interest expense)		(156,000)
Net current period other comprehensive income, tax		(352,000)
Accumulated Other Comprehensive Income (Loss), Tax		221,000
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Total	(863,000)	(863,000)
Other comprehensive income before reclassifications, net of tax		294,000
Amounts reclassified from accumulated other comprehensive income (to interest expense), net of tax		238,000
Net current period other comprehensive income, net of tax		532,000
Accumulated Other Comprehensive Income (Loss), Net of Tax, Total	$ (331,000)	$ (331,000)

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Long-Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Debt	$ 231,438	$ 232,177
Current maturities	1,238	1,977
Total long-term debt	230,200	230,200
CoBank (fixed term loan) [Member]
Debt Instrument [Line Items]
Debt	1,183	1,876
Term Loan A [Member]
Debt Instrument [Line Items]
Debt	230,000	230,000
Other Debt [Member]
Debt Instrument [Line Items]
Debt	$ 255	$ 301

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash Flows from Operating Activities
Net income	$ 8,351	$ 4,466
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	12,808	13,929
Amortization	1,164	1,878
Provision for bad debt	453	624
Stock based compensation expense	425	403
Excess tax benefits on stock awards	(30)	0
Deferred income taxes	(1,394)	(5,304)
Net loss on disposal of equipment	100	55
Realized (gain) loss on disposal of investments	(3)	(48)
Unrealized (gains) on investments	(93)	(161)
Net (gain) loss from patronage and equity investments	(171)	(343)
Other	696	229
(Increase) decrease in:
Accounts receivable	230	(704)
Materials and supplies	2,603	211
Income taxes receivable	2,466	11,147
Increase (decrease) in:
Accounts payable	(2,815)	(2,095)
Deferred lease payable	318	122
Other prepaids, deferrals and accruals	(2,399)	(1,959)
Net cash provided by operating activities	22,709	22,450
Cash Flows from Investing Activities
Purchase and construction of property, plant and equipment	(26,024)	(14,831)
Proceeds from sales of assets	25	1,146
Proceeds from sale of equipment	128	71
Purchase of investment securities	(12)	0
Proceeds from sale of investment securities	45	412
Net cash used in investing activities	(25,838)	(13,202)
Cash Flows From Financing Activities
Principal payments on long-term debt	(739)	(5,434)
Excess tax benefits on stock awards	30	0
Repurchases of stock	(155)	(47)
Proceeds from sale of stock	2	2
Net cash used in financing activities	(862)	(5,479)
Net increase (decrease) in cash and cash equivalents	(3,991)	3,769
Cash and cash equivalents:
Beginning	71,086	15,874
Ending	67,095	19,643
Cash paid (received) for:
Interest	2,171	1,636
Income taxes	$ 4,302	$ (2,532)

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current Assets
Cash and cash equivalents	$ 67,095	$ 71,086
Accounts receivable, net	24,566	25,274
Income taxes receivable	2,239	4,705
Materials and supplies	7,186	9,789
Prepaid expenses and other	5,790	4,749
Deferred income taxes	942	832
Total current assets	107,818	116,435
Investments, including $2,173 and $2,064 carried at fair value	8,448	8,214
Property, plant and equipment, net	370,196	365,474
Other Assets
Intangible assets, net	73,783	74,942
Deferred charges and other assets, net	6,483	5,675
Net other assets	80,266	80,617
Total assets	566,728	570,740
Current Liabilities
Current maturities of long-term debt	1,238	1,977
Accounts payable	20,500	31,729
Advanced billings and customer deposits	11,191	11,190
Accrued compensation	2,277	2,671
Accrued liabilities and other	9,597	10,573
Total current liabilities	44,803	58,140
Long-term debt, less current maturities	230,200	230,200
Other Long-Term Liabilities
Deferred income taxes	56,952	57,896
Deferred lease payable	5,221	4,903
Asset retirement obligations	5,966	5,896
Other liabilities	6,570	5,857
Total other liabilities	74,709	74,552
Commitments and Contingencies
Shareholders' Equity
Common stock	24,973	24,688
Accumulated other comprehensive loss	(331)	(863)
Retained earnings	192,374	184,023
Total shareholders' equity	217,016	207,848
Total liabilities and shareholders' equity	$ 566,728	$ 570,740

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2011	$ 22,043	$ 175,616	$ 0	$ 197,659
Balance (in shares) at Dec. 31, 2011	23,838
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	16,303	0	16,303
Other comprehensive income (loss), net of tax	0	0	(863)	(863)
Dividends declared	0	(7,896)	0	(7,896)
Dividends reinvested in common stock	493	0	0	493
Dividends reinvested in common stock (in shares)	37
Stock based compensation	1,842	0	0	1,842
Common stock issued through exercise of incentive stock options	404	0	0	404
Common stock issued through exercise of incentive stock options (in shares)	55
Common stock issued for share awards	0	0	0	0
Common stock issued for share awards (in shares)	45
Common stock issued	10	0	0	10
Common stock issued (in shares)	1
Common stock repurchased	(143)	0	0	(143)
Common stock repurchased (in shares)	(13)
Net excess tax benefit from stock options exercised	39	0	0	39
Balance at Dec. 31, 2012	24,688	184,023	(863)	207,848
Balance (in shares) at Dec. 31, 2012	23,962
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	8,351	0	8,351
Other comprehensive income (loss), net of tax	0	0	532	532
Stock based compensation	425	0	0	425
Common stock issued for share awards	0	0	0	0
Common stock issued for share awards (in shares)	37
Common stock issued	2	0	0	2
Common stock issued (in shares)	0
Common stock repurchased	(155)	0	0	(155)
Common stock repurchased (in shares)	(11)
Net excess tax benefit from stock options exercised	13	0	0	13
Balance at Mar. 31, 2013	$ 24,973	$ 192,374	$ (331)	$ 217,016
Balance (in shares) at Mar. 31, 2013	23,988

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2013

Segment Information [Abstract]

Selected Financial Data for Segments

Selected financial data for each segment is as follows:

Three months ended March 31, 2013 (In thousands)	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	44,065	$	17,380		$	3,900	$	-		$	-		$	65,345
Other		3,019		2,476			5,170		-			-			10,665
Total external revenues		47,084		19,856			9,070		-			-			76,010
Internal revenues		1,073		49			4,639		-			(5,761	)		-
Total operating revenues		48,157		19,905			13,709		-			(5,761	)		76,010
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		17,530		12,289			6,099		-			(5,218	)		30,700
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		8,771		5,438			1,709		754			(543	)		16,129
Depreciation and amortization		6,028		5,564			2,372		8			-			13,972
Total operating expenses		32,329		23,291			10,180		762			(5,761	)		60,801
Operating income (loss)		15,828		(3,386	)		3,529		(762	)		-			15,209

Three months ended March 31, 2012 (In thousands)	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	38,403	$	16,052		$	3,868	$	-		$	-		$	58,323
Other		3,451		2,456			4,593		-			-			10,500
Total external revenues		41,854		18,508			8,461		-			-			68,823
Internal revenues		815		75			4,449		-			(5,339	)		-
Total operating revenues		42,669		18,583			12,910		-			(5,339	)		68,823
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		16,393		12,226			5,229		17			(4,836	)		29,029
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		7,994		5,047			1,717		915			(503	)		15,170
Depreciation and amortization		7,757		5,852			2,173		25			-			15,807
Total operating expenses		32,144		23,125			9,119		957			(5,339	)		60,006
Operating income (loss)		10,525		(4,542	)		3,791		(957	)		-			8,817

Reconciliation of Income from Continuing Operations from Segments to Consolidated

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,
	2013			2012
Total consolidated operating income	$	15,209		$	8,817
Interest expense		(2,152	)		(1,795	)
Non-operating income (expense), net		668			659
Income from continuing operations before income taxes	$	13,725		$	7,681

Assets by Segment

The Company's assets by segment are as follows:

(In thousands)	March 31, 2013			December 31, 2012
Wireless	$	178,049		$	179,929
Cable		198,820			202,436
Wireline		86,469			88,776
Other (includes assets held for sale)		462,428			458,650
Combined totals		925,766			929,791
Inter-segment eliminations		(359,038	)		(359,051	)
Consolidated totals	$	566,728		$	570,740

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Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Property	Mar. 31, 2012
Discontinued Operations [Abstract]
Number of property under an agreement to sell	1
Amount to be collected from sales	$ 55
Revenue associated with discontinued operations		769
Income before taxes associated with discontinued operations		$ 97

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2012
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [Abstract]
Dividends declared per share (in dollars per share)	$ 0.33

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current Assets
Investments at fair value	$ 2,173	$ 2,064

XML

Segment Information

3 Months Ended

Mar. 31, 2013

Segment Information [Abstract]

Segment Information

8.  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 of Sprint Nextel.  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.

The Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long distance access services throughout Shenandoah County and portions of northwestern Augusta County, Virginia, 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.

Selected financial data for each segment is as follows:

Three months ended March 31, 2013 (In thousands)	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	44,065	$	17,380		$	3,900	$	-		$	-		$	65,345
Other		3,019		2,476			5,170		-			-			10,665
Total external revenues		47,084		19,856			9,070		-			-			76,010
Internal revenues		1,073		49			4,639		-			(5,761	)		-
Total operating revenues		48,157		19,905			13,709		-			(5,761	)		76,010
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		17,530		12,289			6,099		-			(5,218	)		30,700
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		8,771		5,438			1,709		754			(543	)		16,129
Depreciation and amortization		6,028		5,564			2,372		8			-			13,972
Total operating expenses		32,329		23,291			10,180		762			(5,761	)		60,801
Operating income (loss)		15,828		(3,386	)		3,529		(762	)		-			15,209

Three months ended March 31, 2012 (In thousands)	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	38,403	$	16,052		$	3,868	$	-		$	-		$	58,323
Other		3,451		2,456			4,593		-			-			10,500
Total external revenues		41,854		18,508			8,461		-			-			68,823
Internal revenues		815		75			4,449		-			(5,339	)		-
Total operating revenues		42,669		18,583			12,910		-			(5,339	)		68,823
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		16,393		12,226			5,229		17			(4,836	)		29,029
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		7,994		5,047			1,717		915			(503	)		15,170
Depreciation and amortization		7,757		5,852			2,173		25			-			15,807
Total operating expenses		32,144		23,125			9,119		957			(5,339	)		60,006
Operating income (loss)		10,525		(4,542	)		3,791		(957	)		-			8,817

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,
	2013			2012
Total consolidated operating income	$	15,209		$	8,817
Interest expense		(2,152	)		(1,795	)
Non-operating income (expense), net		668			659
Income from continuing operations before income taxes	$	13,725		$	7,681

The Company's assets by segment are as follows:

(In thousands)	March 31, 2013			December 31, 2012
Wireless	$	178,049		$	179,929
Cable		198,820			202,436
Wireline		86,469			88,776
Other (includes assets held for sale)		462,428			458,650
Combined totals		925,766			929,791
Inter-segment eliminations		(359,038	)		(359,051	)
Consolidated totals	$	566,728		$	570,740

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 24, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	SHENANDOAH TELECOMMUNICATIONS CO/VA/
Entity Central Index Key	0000354963
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		23,987,634
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013

XML

Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes [Abstract]

Income Taxes

9.  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 2009 are no longer subject to examination. The Company is under audit in the state of Maryland for the 2007, 2008 and 2009 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, 2013.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME [Abstract]
Operating revenues	$ 76,010	$ 68,823
Operating expenses:
Cost of goods and services, exclusive of depreciation and amortization shown separately below	30,700	29,029
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	16,129	15,170
Depreciation and amortization	13,972	15,807
Total operating expenses	60,801	60,006
Operating income	15,209	8,817
Other income (expense):
Interest expense	(2,152)	(1,795)
Gain on investments, net	148	471
Non-operating income, net	520	188
Income from continuing operations before income taxes	13,725	7,681
Income tax expense	5,374	3,273
Net income from continuing operations	8,351	4,408
Income from discontinued operations, net of tax (expense) of $0 and $(38), respectively	0	58
Net income	8,351	4,466
Other comprehensive income:
Unrealized gain on interest rate hedge, net of tax	532	0
Comprehensive income	$ 8,883	$ 4,466
Basic and diluted net income per share:
Net income from continuing operations (in dollars per share)	$ 0.35	$ 0.19
Net income from discontinued operations (in dollars per share)	$ 0	$ 0
Net income (in dollars per share)	$ 0.35	$ 0.19
Weighted average shares outstanding, basic (in shares)	23,973	23,843
Weighted average shares, diluted (in shares)	24,032	23,868

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Property, Plant and Equipment

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

3.  Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	March 31, 2013		December 31, 2012
Plant in service	$	592,900	$	586,216
Plant under construction		29,248		25,469
		622,148		611,685
Less accumulated amortization and depreciation		251,952		246,211
Net property, plant and equipment	$	370,196	$	365,474

During the first quarter of 2012, the Company entered into agreements with Sprint Nextel and Alcatel-Lucent to begin updating the Company's Wireless network.  The update uses base station equipment acquired from Alcatel-Lucent in conjunction with Sprint Nextel's wireless network upgrade plan known as Network Vision.  Beginning in the second quarter of 2012, the Company began replacing cell site equipment at a number of its cell sites.  As of March 31, 2013, 274 sites had been upgraded, and the Company expects to replace substantially all of its existing cell site equipment by the third quarter of 2013.  The Company accelerated depreciation on these assets so that net book value at time of trade-in will equal the expected value to be realized upon trade-in.  During 2012, the Company recognized approximately $8.4 million of accelerated depreciation expense for Network Vision related activities, including $2.0 million in the first three months of 2012; the first quarter of 2013 included $0.8 million of accelerated depreciation expense.

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Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations [Abstract]

Discontinued Operations

2.  Discontinued Operations

In September 2008, the Company announced its intention to sell its Converged Services operation, the related assets and liabilities were reclassified as held for sale in the consolidated balance sheet and the historical operating results were reclassified as discontinued operations, and depreciation and amortization on long-lived assets was discontinued.  At March 31, 2013, the Company had one remaining property under an agreement to sell in the amount of $55 thousand, which is expected to be finalized by no later than August 1, 2013.  Revenues and income before taxes associated with discontinued operations were $769 thousand and $97 thousand, respectively, for the three months ended March 31, 2012.  Comparable amounts for 2013 were not significant.

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Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2013

Long-Term Debt [Abstract]

Long-term debt

As of March 31, 2013 and December 31, 2012, the Company's outstanding long-term debt consisted of the following:

(In thousands)

	March 2013		December 2012
CoBank (fixed term loan)	$	1,183	$	1,876
Term Loan A		230,000		230,000
Other debt		255		301
		231,438		232,177
Current maturities		1,238		1,977
Total long-term debt	$	230,200	$	230,200

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Long-Term Debt

3 Months Ended

Mar. 31, 2013

Long-Term Debt [Abstract]

Long-Term Debt

10.  Long-Term Debt

As of March 31, 2013 and December 31, 2012, the Company's outstanding long-term debt consisted of the following:

(In thousands)

	March 2013		December 2012
CoBank (fixed term loan)	$	1,183	$	1,876
Term Loan A		230,000		230,000
Other debt		255		301
		231,438		232,177
Current maturities		1,238		1,977
Total long-term debt	$	230,200	$	230,200

As of March 31, 2013, the Company was in compliance with the covenants in its Credit Agreement.

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Financial Instruments

3 Months Ended

Mar. 31, 2013

Financial Instruments [Abstract]

Financial Instruments

6.  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.

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Earnings per share

3 Months Ended

Mar. 31, 2013

Earnings per share [Abstract]

Earnings per share

4.  Earnings per share

Basic net income (loss) per share was computed on the weighted average number of shares outstanding.  Diluted net income (loss) 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 725 thousand and 600 thousand shares and options outstanding at March 31, 2013 and 2012, respectively, 341 thousand and 424 thousand options were anti-dilutive, respectively.  These 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.

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Investments Carried at Fair Value

3 Months Ended

Mar. 31, 2013

Investments Carried at Fair Value [Abstract]

Investments Carried at Fair Value

5.  Investments Carried at Fair Value

Investments include $2.2 million and $2.1 million of investments carried at fair value as of March 31, 2013 and December 31, 2012, respectively, 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, 2013, the Company recognized $3 thousand in net gains on dispositions of investments, recognized $12 thousand in dividend and interest income from investments, and recognized net unrealized gains of $93 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.

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Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2013

Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income [Abstract]

Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income

7.  Derivative Instruments, Hedging Activitiesand 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 initially 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 total outstanding notional amount of interest rate swaps not designated as cash flow hedges was $50.6 million as of March 31, 2013.  This swap expires in July 2013.  Changes in fair value recorded in interest expense for the three months ended March 31, 2013 and 2012, were a decrease of $104 thousand and an increase of $28 thousand, respectively.

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, 2013.

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 accrued on the Company's variable-rate debt. As of March 31, 2013, 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 hedge interest rate 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, 2013 and December 31, 2012 (in thousands):

	Liability Derivatives
		Fair Value as of
	Balance Sheet	March 31,			December 31,
	Location			2013			2012
Derivatives not designated as hedging instruments:
Interest rate swaps	Accrued liabilities and other		$	135		$	239
Total derivatives not designated as cash flow hedges			$	135		$	239
Derivatives designated as hedging instruments:
Interest rate swaps	Accrued liabilities and other		$	1,559		$	1,613
	Deferred charges and other assets, net			1,007			177
Total derivatives designated as hedging instruments			$	552		$	1,436

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).

The table below presents change in accumulated other comprehensive income by component for the three months ended March 31, 2013 (in thousands; amounts in parentheses indicate debits):

	Gains and Losses on Cash Flow Hedges			Taxes			Accumulated Other Comprehensive Income
Balance as of December 31, 2012	$	(1,436	)	$	573		$	(863	)
Other comprehensive income before reclassifications		490			(196	)		294
Amounts reclassified from accumulated other comprehensive income (to interest expense)		394			(156	)		238
Net current period other comprehensive income		884			(352	)		532
Balance as of March 31, 2013	$	(552	)	$	221		$	(331	)

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Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income [Abstract]

Schedule of derivative financial instruments as well as its classification on the consolidated balance sheet

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, 2013 and December 31, 2012 (in thousands):

	Liability Derivatives
		Fair Value as of
	Balance Sheet	March 31,			December 31,
	Location			2013			2012
Derivatives not designated as hedging instruments:
Interest rate swaps	Accrued liabilities and other		$	135		$	239
Total derivatives not designated as cash flow hedges			$	135		$	239
Derivatives designated as hedging instruments:
Interest rate swaps	Accrued liabilities and other		$	1,559		$	1,613
	Deferred charges and other assets, net			1,007			177
Total derivatives designated as hedging instruments			$	552		$	1,436

Schedule of accumulated other comprehensive income (loss)

The table below presents change in accumulated other comprehensive income by component for the three months ended March 31, 2013 (in thousands; amounts in parentheses indicate debits):

	Gains and Losses on Cash Flow Hedges			Taxes			Accumulated Other Comprehensive Income
Balance as of December 31, 2012	$	(1,436	)	$	573		$	(863	)
Other comprehensive income before reclassifications		490			(196	)		294
Amounts reclassified from accumulated other comprehensive income (to interest expense)		394			(156	)		238
Net current period other comprehensive income		884			(352	)		532
Balance as of March 31, 2013	$	(552	)	$	221		$	(331	)

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Earnings per share (Details) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Earnings per share [Abstract]
Shares and options outstanding (in shares)	725	600
Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	341	424

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Discontinued operations:
Earnings (loss) from discontinued operations, tax benefits	$ 0	$ (38)

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Basis of Presentation

3 Months Ended

Mar. 31, 2013

Basis of Presentation [Abstract]

Basis of Presentation

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, 2012.  The balance sheet information at December 31, 2012 was derived from the audited December 31, 2012 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.

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Investments Carried at Fair Value (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Investments Carried at Fair Value [Abstract]
Investments at fair value	$ 2,173		$ 2,064
Net gains on dispositions of investments	3
Dividend and interest income from investments	12
Net unrealized gains recognized	$ 93	$ 161

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Property, Plant and Equipment (Tables)

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	March 31, 2013		December 31, 2012
Plant in service	$	592,900	$	586,216
Plant under construction		29,248		25,469
		622,148		611,685
Less accumulated amortization and depreciation		251,952		246,211
Net property, plant and equipment	$	370,196	$	365,474