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 maker. 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 as a PCS affiliate to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, along Interstate 81 to Harrisonburg, Virginia, south-central and western Virginia, West Virginia, and small portions of North Carolina, Kentucky, Maryland and Ohio. The Wireless 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, and leases fiber optic facilities throughout southern Virginia and West Virginia. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia.

The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video and cable modem services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor through West Virginia, Maryland and portions of central and southern Pennsylvania.

Three Months Ended September 30, 2017

(in thousands)



	Wireless		Cable		Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	107,395	$	26,934	$	5,126	$	—		$	—		$	139,455
Other	3,871		2,156		6,300		—			—			12,327
Total external revenues	111,266		29,090		11,426		—			—			151,782
Internal revenues	1,239		999		8,425		—			(10,663		)	—
Total operating revenues	112,505		30,089		19,851		—			(10,663		)	151,782

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below	41,041		14,913		9,807		—			(9,927		)	55,834
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	30,099		5,358		1,706		5,772			(736		)	42,199
Integration and acquisition expenses	1,691		—		—		15			—			1,706
Depreciation and amortization	32,929		6,192		3,249		198			—			42,568
Total operating expenses	105,760		26,463		14,762		5,985			(10,663		)	142,307
Operating income (loss)	$	6,745	$	3,626	$	5,089	$	(5,985	)	$	—		$	9,475

Three Months Ended September 30, 2016

(in thousands)



	Wireless			Cable		Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	111,001		$	24,948	$	4,948	$	—		$	—		$	140,897
Other	7,978			2,031		5,930		—			—			15,939
Total external revenues	118,979			26,979		10,878		—			—			156,836
Internal revenues	1,140			587		7,854		—			(9,581		)	—
Total operating revenues	120,119			27,566		18,732		—			(9,581		)	156,836

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below	43,097			14,654		9,442		—			(8,876		)	58,317
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	29,892			4,770		1,676		4,736			(705		)	40,369
Integration and acquisition expenses	14,499			—		—		773			—			15,272
Depreciation and amortization	38,038			5,860		2,822		87			—			46,807
Total operating expenses	125,526			25,284		13,940		5,596			(9,581		)	160,765
Operating income (loss)	$	(5,407	)	$	2,282	$	4,792	$	(5,596	)	$	—		$	(3,929	)

Nine Months Ended September 30, 2017

(in thousands)



	Wireless		Cable		Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	323,262	$	80,229	$	15,301	$	—		$	—		$	418,792
Other	15,133		6,283		18,712		—			—			40,128
Total external revenues	338,395		86,512		34,013		—			—			458,920
Internal revenues	3,707		2,153		24,568					(30,428		)	—
Total operating revenues	342,102		88,665		58,581		—			(30,428		)	458,920

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below	117,829		45,052		28,409		—			(28,314		)	162,976
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	88,201		15,083		5,065		19,139			(2,114		)	125,374
Integration and acquisition expenses	9,607		—		—		266			—			9,873
Depreciation and amortization	104,231		18,070		9,536		460			—			132,297
Total operating expenses	319,868		78,205		43,010		19,865			(30,428		)	430,520
Operating income (loss)	$	22,234	$	10,460	$	15,571	$	(19,865	)	$	—		$	28,400

Nine Months Ended September 30, 2016

(in thousands)



	Wireless		Cable		Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	250,053	$	73,455	$	14,727	$	—		$	—		$	338,235
Other	17,461		5,799		18,221		—			—			41,481
Total external revenues	267,514		79,254		32,948		—			—			379,716
Internal revenues	3,417		1,159		22,754		—			(27,330		)	—
Total operating revenues	270,931		80,413		55,702		—			(27,330		)	379,716

Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below	94,892		43,864		26,892		—			(25,294		)	140,354
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	65,219		14,672		4,951		13,457			(2,036		)	96,263
Integration and acquisition expenses	19,889		—		—		15,912			—			35,801
Depreciation and amortization	70,026		17,834		8,789		312			—			96,961
Total operating expenses	250,026		76,370		40,632		29,681			(27,330		)	369,379
Operating income (loss)	$	20,905	$	4,043	$	15,070	$	(29,681	)	$	—		$	10,337

A reconciliation of the total of the reportable segments’ operating income (loss) to consolidated income (loss) before taxes is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2017			2016			2017			2016
Total consolidated operating income (loss)	$	9,475		$	(3,929	)	$	28,400		$	10,337
Interest expense	(9,823		)	(8,845		)	(28,312		)	(16,369		)
Non-operating income, net	1,205			1,527			3,877			3,147
Income (loss) before income taxes	$	857		$	(11,247	)	$	3,965		$	(2,885	)