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, 2008. 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, 2008, 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 local exchange telephone services and wireless personal communications services (as a Sprint PCS Affiliate of Sprint Nextel), as well as cable television, video, Internet and data services, long distance, sale of telecommunications equipment, fiber optics facilities, paging and leased tower facilities. The Company has the following three reporting segments, which it operates and manages as strategic business units organized by lines of business:

* Wireless, which provides wireless personal communications services, or PCS, as a Sprint PCS Affiliate of Sprint Nextel, through Shenandoah Personal Communications Company, and tower facilities for personal communications services, leased to both affiliated and non-affiliated entities through Shenandoah Mobile Company;

* Wireline, which involves the provision of regulated and non-regulated telephone services, Internet access, and leased fiber optic facilities, primarily through Shenandoah Telephone Company, ShenTel Service Company, and Shenandoah Network Company, respectively, and long-distance and CLEC services through Shenandoah Long Distance Company, ShenTel Communications Company and Shentel Converged Services of West Virginia, Inc.; and

* Cable TV, which involves the provision of cable television services, through Shenandoah Cable Television Company in Shenandoah County, Virginia, and since December 1, 2008, in Alleghany County, Virginia and various locales throughout West Virginia, through Shentel Cable Company.

The Other category includes the provision of investments and management services to its subsidiaries, through Shenandoah Telecommunications Company.

In September 2008, the Company announced its intention to sell its Converged Services operation, and 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. Depreciation and amortization on long-lived assets was discontinued.

The Company began an auction process with respect to the sale of the Converged Services assets in the fourth quarter of 2008. The Company determined, both at September 30, 2008 and December 31, 2008, based on its analysis of similar transactions, comparable values for other companies in the industry, and the broad range of values indicated by potential buyers during the early stages of the auction process, that no write-down of the carrying value of the net assets held for sale was required.

Subsequently, in connection with the preparation of the Company's first quarter 2009 financial statements, based upon changes in the marketplace for this type of asset and further developments in the auction process, the Company determined that the fair value of Converged Services had declined from earlier estimates. Accordingly, the Company recorded an impairment loss of $17.5 million ($10.7 million, net of taxes) to reduce the carrying value of these assets to their estimated fair value less cost to sell as of March 31, 2009. At September 30, 2009, negotiations to complete the sale continue, and there has been no change in the estimated fair value of the assets.

Additional Information About the Company's Business

The following table shows selected operating statistics of the Company for the
three months ending on, or as of, the dates shown:


                                            Sept. 30,      Dec. 31,      Sept. 30,      Dec. 31,
                                               2009          2008           2008          2007

Retail PCS Subscribers                         219,353       211,462        205,777       187,303
PCS Market POPS (000) (1)                        2,324         2,310          2,308         2,297
PCS Covered POPS (000) (1)                       1,988         1,931          1,898         1,814
PCS Average Monthly Retail Churn % (2)            2.17 %        1.87 %         1.85 %        2.32 %
CDMA Base Stations (sites)                         448           411            378           346
EVDO-enabled sites                                 306           211            134            52
EVDO Covered POPS (000) (1)                      1,874         1,663          1,292           624
Towers (100 foot and over)                         113           103            103           101
Towers (under 100 foot)                             19            15             15            14
Telephone Access Lines                          23,547        24,042         24,193        24,536
Total Switched Access Minutes (000)             81,986        90,460         93,813        92,331
Originating Switched Access Minutes (000)       22,770        25,425         26,203        26,128
Long Distance Subscribers                       10,821        10,842         10,884        10,689
Long Distance Calls (000) (3)                    7,136         7,981          8,086         7,944
Total Fiber Miles - Wireline                    49,175        46,733         39,528        35,872
Fiber Route Miles - Wireline                       784           756            680           647
DSL Subscribers                                 10,549         9,918          9,754         8,136
Dial-up Internet Subscribers                     3,787         4,866          5,347         7,547
Cable Television Subscribers (4)                24,117        24,933          8,142         8,303
Employees (full time equivalents)                  454           445            401           411

1) POPS refers to the estimated population of a given geographic area and is based on information purchased from third party sources. 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 network's service area.

2) PCS Average Monthly Retail Churn is the average of the three monthly subscriber turnover, or churn, calculations for the period.

3) Originated by customers of the Company's Telephone subsidiary.

4) The increase at December 31, 2008 is primarily a result of the acquisition of cable customers from Rapid Communications, LLC, on December 1, 2008.

Results of Operations

Three Months Ended September 30, 2009 Compared with the Three Months Ended
September 30, 2008

Consolidated Results

The Company's consolidated results from continuing operations for the third
quarter of 2009 and 2008 are summarized as follows:


                                          Three Months Ended
(in thousands)                               September 30,                 Change
                                           2009          2008          $             %

Operating revenues                      $   40,115     $ 37,408     $  2,707         7.2
Operating expenses                          29,546       24,920        4,626        18.6
Operating income                            10,569       12,488       (1,919 )     (15.4 )
Other income (expense)                         103         (336 )        439       130.7
Income tax expense                           4,326        4,774         (448 )      (9.4 )
Net income from continuing operations   $    6,346     $  7,378     $ (1,032 )     (14.0 )

Operating revenues

For the three months ended September 30, 2009, operating revenue increased $2.7 million, or 7.2%, primarily due to increased service revenue in the Wireless segment and the additional revenue from the Shentel Cable acquisition in late 2008. For the quarter ended September 30, 2009, Wireless operating revenues increased $1.2 million, or 4.2%, while Cable TV segment operating revenues increased $2.5 million. All other Company revenues decreased by $1.0 million, compared to the three months ended September 30, 2008.

Operating expenses

For the quarter ended September 30, 2009, operating expenses increased $4.6 million, or 18.6%, compared to the 2008 period. The incremental costs of the Shentel Cable operations accounted for $3.9 million of the year over year increase. Capital improvements to the Company's fiber optic network and to provide expanded wireless coverage and additional services, specifically EVDO high speed wireless internet data access availability, added $1.0 million of depreciation to operating expenses, while other costs in the Wireless segment increased $0.5 million. The Company expensed approximately $0.5 million of one-time professional fees during the third quarter of 2008.

Income tax expense

The Company's effective tax rate on income from continuing operations increased from 39.3% in the third quarter of 2008 to 40.5% in the third quarter of 2009 due to changes in the allocation of taxable income to higher tax states.

Net income from continuing operations

For the three months ended September 30, 2009, net income from continuing operations decreased $1.0 million, as operating expenses increased faster than operating revenues, as described above.

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 PCS Company ("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 Company ("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. Revenues received from Sprint Nextel are recorded net of fees totaling 16.8% of net billed revenue, as defined, retained by Sprint Nextel.

PCS had 448 PCS base stations in service at September 30, 2009, compared to 378 base stations in service at September 30, 2008. As of September 30, 2009, PCS had 306 EVDO-enabled sites, up from 134 EVDO-enabled sites operating as of September 30, 2008, covering 94% of our currently covered population. Approximately 25 additional base stations and 30 additional EVDO-enabled sites are expected to be added by year end 2009.

The Company's average PCS retail customer turnover, or churn rate, was 2.17% in the third quarter of 2009, compared to 1.85% in the third quarter of 2008. As of September 30, 2009, the Company had 219,353 retail PCS subscribers compared to 205,777 subscribers at September 30, 2008. The PCS operation added 3,286 net retail subscribers in the third quarter of 2009 compared to 5,380 net retail subscribers added in the third quarter of 2008.

Mobile owned 130 towers at September 30, 2009, up from 116 at September 30, 2008. Mobile expects to complete 10 or more new towers during the remainder of 2009. At September 30, 2009, Mobile had 192 leases for non-affiliate cell sites, and 127 affiliate leases, compared to 176 non-affiliate and 112 affiliate leases as of September 30, 2008.

                               Three Months Ended
(in thousands)                   September 30,                   Change
                               2009          2008            $             %

Segment operating
revenues
Wireless service revenue    $   25,287     $  24,240     $   1,047           4.3
Tower lease revenue              1,813         1,623           190          11.7
Equipment revenue                1,046         1,409          (363 )       (25.8 )
Other revenue                      544           254           290         114.2
Total segment operating
revenues                        28,690        27,526         1,164           4.2
Segment operating
expenses
Cost of goods and
services, exclusive of
depreciation and
amortization shown
separately below                 9,594         8,583         1,011          11.8
Selling, general and
administrative, exclusive
of depreciation and
amortization shown
separately below                 4,123         4,557          (434 )        (9.5 )
Depreciation and
amortization                     5,178         4,259           919          21.6
Total segment operating
expenses                        18,895        17,399         1,496           8.6
Segment operating income    $    9,795     $  10,127     $    (332 )        (3.3 )

Operating revenues

Wireless service revenue increased $1.0 million, or 4.3%, for the three months ended September 30, 2009, compared to the comparable 2008 period. Average subscribers increased 7.0% in the current quarter compared to the 2008 third quarter. Total credits against gross billed revenue and bad debt write-offs were essentially unchanged from the third quarter of 2008.

The increase in tower lease revenue resulted from additional cell site leases.

The decrease in equipment revenue consists of $0.2 million in lower handset revenue due to fewer handsets sold, and $0.2 million less commission revenue due to fewer sales of phones that operate on the iDEN network, for which the Company is paid a commission for each phone sold.

Other revenue in 2008 reflected a reduction of $0.2 million to prior accruals for Universal Service Fund fees from Sprint Nextel.

Cost of goods and services

Cost of goods and services increased $1.0 million, or 11.8%, in 2009 from the third quarter of 2008. Costs of the expanded network coverage and roll-out of EVDO coverage resulted in a $1.2 million increase in network costs including rent for additional tower and co-location sites, power and backhaul line costs.

Network costs are expected to increase in future periods as additional EVDO sites are brought on-line, and as new towers and base stations are added to expand our network coverage and capacity.

Selling, general and administrative

Selling, general and administrative expenses decreased $0.4 million in 2009 from the third quarter of 2008 due approximately equally to a decrease in commissions and operating taxes.

Depreciation and amortization

Depreciation and amortization increased $0.9 million in 2009 over 2008, due to capital projects for EVDO capability and new cell sites placed in service beginning in 2008 and into early 2009. Depreciation is expected to continue to increase as additional sites are brought on-line.

Wireline

The Wireline segment is comprised of several subsidiaries providing telecommunications services. Through these subsidiaries, this segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long distance access services throughout Shenandoah 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.

                               Three Months Ended
(in thousands)                   September 30,                   Change
                               2009          2008            $             %

Segment operating
revenues
Service revenue             $    3,594     $   3,403     $     191           5.6
Access revenue                   2,766         3,581          (815 )       (22.8 )
Facilities lease revenue         3,991         3,222           769          23.9
Equipment revenue                   24           433          (409 )       (94.5 )
Other revenue                    1,312         1,319            (7 )        (0.5 )
Total segment operating
revenues                        11,687        11,958          (271 )        (2.3 )
Segment operating
expenses
Cost of goods and
services, exclusive of
depreciation and
amortization shown
separately below                 4,346         4,082           264           6.5
Selling, general and
administrative, exclusive
of depreciation and
amortization shown
separately below                 1,934         1,883            51           2.7
Depreciation and
amortization                     1,999         1,887           112           5.9
Total segment operating
expenses                         8,279         7,852           427           5.4
Segment operating income    $    3,408     $   4,106     $    (698 )       (17.0 )

Operating revenues

Operating revenues decreased $0.3 million overall in the third quarter of 2009 from the third quarter of 2008, principally due to a one-time sale of equipment recorded in the 2008 period. Access revenue declined due to declining minutes of use, while facilities lease revenue increased due to new and revised contracts with third parties.

Cost of goods and services

Cost of goods and services increased $0.3 million, due primarily to increased line costs associated with facilities lease revenues.

Cable Television

The Cable TV segment provides analog, digital and high-definition television signals under franchise agreements within Shenandoah County, Virginia, and since December 1, 2008, in various locales in West Virginia and in Alleghany County, Virginia. As of September 30, 2009, it served 24,117 customers, up from 8,142 subscribers served as of September 30, 2008. Essentially all of the increase resulted from the acquisition of cable assets and customers from Rapid Communications, LLC, completed December 1, 2008. Since the acquisition, the Company has been working to upgrade a number of the acquired systems, and completed upgrades in the Alleghany County, Virginia, market during the second quarter of 2009, and during the third quarter, in the Franklin and Petersburg, West Virginia markets. The Company introduced expanded service offerings in the Alleghany County market late in the second quarter of 2009, and expects additional expansion as markets in West Virginia are upgraded through 2010. The Company expects to spend approximately $23 million on these upgrades through 2010; spending through September 30, 2009 totaled approximately $10 million.

                               Three Months Ended
(in thousands)                    September 30,                   Change
                               2009           2008            $             %

Segment operating
revenues
Service revenue             $     3,526     $   1,187     $   2,339         197.1
Equipment and other
revenue                             339           140           199         142.1
Total segment operating
revenues                          3,865         1,327         2,538         191.3

Segment operating
expenses
Cost of goods and
services, exclusive of
depreciation and
amortization shown
separately below                  3,285           902         2,383         264.2
Selling, general and
administrative, exclusive
of depreciation and
amortization shown
separately below                  1,309           383           926         241.8
Depreciation and
amortization                        895           265           630         237.7
Total segment operating
expenses                          5,489         1,550         3,939         254.1
Segment operating loss      $    (1,624 )   $    (223 )   $  (1,401 )         n/m

Operating revenues and expenses

The newly acquired cable operations generated $1.3 million of the change in segment operating loss shown above as the Company rebuilds the networks in order to launch new services

Nine Months Ended September 30, 2009 Compared with the Nine Months Ended
September 30, 2008

Consolidated Results

The Company's consolidated results from continuing operations for the nine
months ended September 30, 2009 and 2008, respectively, are summarized as
follows:


                                           Nine Months Ended
(in thousands)                               September 30,                Change
                                          2009          2008           $           %

Operating revenues                      $ 120,356     $ 107,304     $ 13,052       12.2
Operating expenses                         86,137        71,750       14,387       20.1
Operating income                           34,219        35,554       (1,335 )     (3.8 )
Other income (expense)                       (882 )        (891 )          9        1.0
Income tax expense                         14,019        13,881          138        1.0
Net income from continuing operations   $  19,318     $  20,782     $ (1,464 )     (7.0 )

Operating revenues

For the nine months ended September 30, 2009, operating revenue increased $13.1 million, or 12.2%, primarily due to increased service revenue in the Wireless segment and the additional revenue from the Shentel Cable acquisition in late 2008. For the 2009 period, Wireless operating revenues increased $7.3 million, or 9.2%, while the incremental Shentel Cable revenues in the Cable TV segment totaled $6.9 million for 2009. All other Company revenues decreased by $1.1 million, compared to the nine months ended September 30, 2008.

Operating expenses

For the nine months ended September 30, 2009, operating expenses increased $14.4 million, or 20.1%, compared to the 2008 period. The incremental costs of the Shentel Cable operations accounted for $9.4 million of the year over year increase. Additional depreciation expense of $3.3 million on improvements to the Company's fiber optic network and to support expanded wireless coverage and additional services, specifically EVDO high speed wireless internet data access availability, and the associated additional $1.7 million of operating costs for rent and power, accounted for the remainder of the increase in operating expenses.

Income tax expense

The Company's effective tax rate on income from continuing operations increased from 40.0% in the first nine months of 2008 to 42.1% in the first nine months of 2009 primarily due to revisions to certain tax estimates recorded in the first quarter of 2009, and the allocation of taxable income to higher tax states.

Net income from continuing operations

For the nine months ended September 30, 2009, net income from continuing operations decreased $1.5 million, due primarily to operating losses in the Cable TV segment subsequent to the Shentel Cable acquisition in December 2008, and lower operating income in the Wireline segment, partially offset by increased operating income in the Wireless segment.

Wireless


                               Nine Months Ended
(in thousands)                   September 30,                   Change
                               2009          2008            $             %

Segment operating
revenues
Wireless service revenue    $   76,348     $  67,802     $   8,546          12.6
Tower lease revenue              5,268         4,812           456           9.5
Equipment revenue                3,485         4,221          (736 )       (17.4 )
Other revenue                    1,453         2,439          (986 )       (40.4 )
Total segment operating
revenues                        86,554        79,274         7,280           9.2
Segment operating
expenses
Cost of goods and
services, exclusive of
depreciation and
amortization shown
separately below                27,534        25,731         1,803           7.0
Selling, general and
administrative, exclusive
of depreciation and
amortization shown
separately below                12,237        12,826          (589 )        (4.6 )
Depreciation and
amortization                    15,021        12,802         2,219          17.3
Total segment operating
expenses                        54,792        51,359         3,433           6.7
Segment operating income    $   31,762     $  27,915     $   3,847          13.8

Operating revenues

Wireless service revenue increased $8.5 million, or 12.6%, for the nine months ended September 30, 2009, compared to the comparable 2008 period. Average subscribers increased 8.9% in the first half of 2009 compared to the 2008 first half, while subscribers upgrading to higher revenue plans also added to revenue growth during the first half of the year. Total credits against gross billed revenue decreased 1.1% to $11.1 million, while bad debt write-offs declined 15.7% to $5.2 million, compared to the first nine months of 2008.

The increase in tower lease revenue resulted primarily from additional cell site leases to non-affiliates.

The decrease in equipment revenue consists of $0.3 million in lower handset revenue due to fewer handsets sold, and $0.4 million less commission revenue due to fewer sales of phones that operate on the iDEN network, for which the Company is paid a commission for each phone sold.

The decrease in other revenue reflects a one-time pass through of approximately $0.9 million of Universal Service Fund fees from Sprint Nextel in the second quarter of 2008, combined with subsequent declines in recurring Universal Service Fund fees.

Cost of goods and services

Cost of goods and services increased $1.8 million in the 2009 period compared to 2008. Costs of the expanded network coverage and roll-out of EVDO coverage resulted in a $3.1 million increase in network costs and a $0.4 million increase . . .