Welcome

2017 Executive Report

It is our pleasure to present the 2017 Executive Report. The cover of this year’s Annual Meeting Report alludes to the ‘experience’ we strive to deliver daily, and you may notice a recurring presence of an orange chair throughout this publication. The orange chair serves as a metaphor for SkyLine, representing elements of style, comfort, stability and quality, and exemplifies the relationship we enjoy with you, our members and customers. It is our mission to keep you reliably connected to a state-of-the-art communications network so that you can focus on what is most important to you: your family, your home, your business, your life.

We are well positioned on many fronts to take advantage of expansion opportunities in this fast-paced digital world.

Jimmy C. Blevins
Chief Executive Officer
SkyLine Membership Corporation

R.C. Mitchell >
President
SkyLine Membership Corporation

This is a very exciting time for our company with 2016 capping off one of our best financial years. Now that we have completed our fiber-to-the-premise (FTTP) buildout in SkyLine’s incumbent local exchange area (ILEC ), our pathway to grow has turned to expanding our quality network and superb customer service skills to areas lacking high-speed broadband.

We are well positioned on many fronts to take advantage of expansion opportunities in this fast-paced digital world. Our cash position remains solid and our asset base continues to strengthen. However, one could say we are at a crossroads. Where do we go from here? With our state-of-theart network and a strong record of accomplishment as a telecom provider, where are the best areas to expand and acquire companies? The board of directors and executive staff regularly evaluate prospective buildout plans and acquisition opportunities. We have a clear strategic mission for growth, and our tactical plan is always a work in progress as we continually evaluate all opportunities. We will share some of our recent growth plans later in this report.

Making the proper long-term decisions in this rapidly changing telecommunications environment is crucial. Customer expectations are increasing, technology is advancing and competition continues to rise. We must steadily make improvements in our network, our skillsets, and in our team, in order to deliver the digital services of the future. As we contemplate future endeavors, we are certain of this: our employees readily embrace learning and change, and we are prepared for this challenge.

Financially, our consolidated net income for 2016 totals nearly $12 million, and our balance sheet reflects over $257 million in total plant. Our company’s cash reserves remain strong, which allowed the Board of Directors to approve $1.26 million in capital credit refunds to members and estates in 2016.

As we contemplate future endeavors, we are certain of this: our employees readily embrace learning and change, and we are prepared for this challenge.

Over the last 30 years, we have invested $200 million dollars in our network, creating one of the first all-fiber state-of-the-art networks in the country. We have over 1,800 miles of fiber deployed, making fiber available in 98 percent of our service area. We were one of the first companies nationwide to offer gigabit speeds system-wide. We are proud to have completed a fiber milestone project years ahead of comparable companies.

Since last year’s report, SkyLine has garnered additional national recognition and awards from NTCA —The Rural Broadband Association, the first being designated as a Smart Rural Community. The Cooperative received two TeleChoice Awards this spring, and in a collaborative effort with Ashe Assisted Living, SkyLine received a SRC Collaboration Challenge grant from NTCA to install a new closed-circuit surveillance system at the assisted living facility in West Jefferson.

Earlier this year, we began constructing fiber in Lenoir, expanded our fiber presence in Boone and most recently, began fiber construction in Mountain City, Tennessee. Consumer take-rates are aligned with projections, and we are pleased with our presence and growth in these areas. Our plans are to further evaluate the residential areas in these counties.

In another significant development, we executed a Stock Purchase Agreement to purchase Chesnee Telephone Company in Chesnee, South Carolina. Chesnee Telephone provides service to portions of Cherokee and Spartanburg counties in South Carolina that border North Carolina. This area represents an excellent opportunity to assume instant revenue and is geographically well positioned to expand later into the Spartanburg and Greenville areas. We anticipate closing on this property before the end of 2017, at which time more details will be shared.

In August 2017, we completed the acquisition of Dogtown Security located in Avery County, North Carolina. This has increased our security customer base and allowed SkyLine to expand our security services farther into Avery County.

The telecommunications environment is ripe for merger-and-acquisition (M&A) activity, and we will continually evaluate the best opportunities to enhance the core market of SkyLine.

We would like to thank our team of exceptional employees for their hard work, dedication and willingness to take on new challenges. Our employee group makes us what we are and who we are. Like the style, quality, comfort and familiarity of a favorite chair, our employees embody the very best qualities of SkyLine. Their one-on- one relationship with customers and genuine care for our member communities are what set us apart from our competition.

We are also grateful to have a dedicated, forward-thinking and thoughtful board of directors that ensures our company will continue to expand and prosper, keeping customer service a top priority no matter how large we grow our business.

Sincerely,

Jimmy C. Blevins

Chief Executive Officer
SkyLine Membership Corporation

R.C. Mitchell

President
SkyLine Membership Corporation

While only 12.6 percent* of North Carolinians have access to gigabit broadband, now more than 98 percent of SkyLine’s service area is fiber-ready and Gig-capable.

*broadbandnow.com/North-Carolina

SkyLine is the largest telecommunications cooperative in North Carolina and the eighth largest in the nation.

Highlights of Operation

Voice & Internet Services

Total Access Lines

Mailing Address
P.O. Box 759
1200 NC Hwy 194 N.
West Jefferson, NC 28694

Phone Numbers
Toll free: 1-800-759-2226
Phone: (336) 877-3111
Fax: (336) 877-2020

Web Address
skybest.com

Office Locations
Banner Elk
Boone
Sparta
West Jefferson
(Smart Home & Call Center)