Discontinued Operations

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

On August 26, 2020, Sprint Corporation ("Sprint"), an indirect subsidiary of T-Mobile US, Inc., ("T-Mobile"), on behalf of and as the direct or indirect owner of Sprint PCS, delivered notice to the Company exercising its option to purchase the assets and operations of our Wireless operations for 90% of the “Entire Business Value” (as defined under our affiliate agreement and determined pursuant to the appraisal process set forth therein). Shortly thereafter, the Company committed to a plan to sell the discontinued Wireless operations.

On July 1, 2021, pursuant to the previously announced Asset Purchase Agreement (the “Purchase Agreement”), dated May 28, 2021, between Shentel and T-Mobile, Shentel completed the sale to T-Mobile of its Wireless assets and operations for cash consideration of approximately $1.94 billion, inclusive of the approximately $60 million settlement of the waived management fees by Sprint, and net of certain transaction expenses (the “Transaction”).

The assets and liabilities that transferred in the sale (the "disposal group") were presented as held for sale within our historical consolidated balance sheets, and discontinued operations within our historical consolidated statements of comprehensive income.

The transaction was structured as an asset sale for income tax purposes. As a result, no current or deferred tax assets or liabilities were included within the disposal group. While the Company’s long-term debt did not transfer in the sale, its provisions required full repayment of all outstanding amounts, concurrent with the consummation of the sale. Accordingly, all debt balances and related interest rate swap liabilities were therefore presented outside of the disposal group as a current liability as of December 31, 2020, and. the related interest expense and debt extinguishment costs were presented within discontinued operations under the relevant authoritative guidance.

The carrying amounts of the major classes of assets and liabilities, classified as held for sale in the consolidated balance sheets, were as follows:


(in thousands)	December 31, 2020
ASSETS
Inventory	$	5,746
Prepaid expenses and other	47,003
Property, plant and equipment, net	299,647
Intangible assets, net	176,459
Goodwill	146,383
Operating lease right-of-use assets	421,586
Deferred charges and other assets	36,470
Current assets held for sale	$	1,133,294

LIABILITIES
Current operating lease liabilities	$	409,887
Accrued liabilities and other	8,770
Asset retirement obligations	33,545
Current liabilities held for sale	$	452,202

Income from discontinued operations, net of tax in the consolidated statements of comprehensive income consist of the following for the years ended December 31, 2021, 2020 and 2019:


(in thousands)
Revenue:	2021		2020		2019
Service revenue and other	$	201,076	$	401,035	$	375,730
Equipment revenue	12,253		41,338		67,659
Total revenue	213,329		442,373		443,389
Operating expenses:
Cost of services	38,144		116,394		128,482
Cost of goods sold	11,964		40,642		65,148
Selling, general and administrative	17,514		34,011		39,128
Severance expense	465		—		—
Depreciation and amortization	—		62,930		111,467
Total operating expenses	68,087		253,977		344,225
Operating income	145,242		188,396		99,164
Other (expense) income:
Debt extinguishment	(11,032)		—		—
Interest expense and other, net	(9,178)		(20,455)		(29,286)
Gain on sale of disposition of Wireless assets and operations	1,227,531		—		—
Income before income taxes	1,352,563		167,941		69,878
Income tax expense	361,661		43,844		16,310
Income from discontinued operations, net of tax	$	990,902	$	124,097	$	53,568

Consummation of the sale triggered the recognition of approximately $21.2 million of incremental selling costs during 2021, for contingent deal advisory fees and severance expenses, which are netted against the gain on sale of disposition of Wireless assets and operations. In addition, also triggered by the disposition event, we recognized an $11.0 million loss on debt extinguishment and incurred interest expense of approximately $2.6 million on the termination of our interest rate swaps in connection with the Wireless sale.

The Company generated $10.2 million in revenue from T-Mobile throughout the remainder of 2021 after the consummation of the sale.