What changed in this filing

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Item 1A. Risk Factors

2020-08-06 compared with 2020-05-07 · 29 added, 34 removed, 1 unchanged (98% of the section changed)

The risk factors presented below supplement the risk factors previously disclosed in Item 1A “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2019.

The novel coronavirus (COVID-19) pandemic, or the perception of its effects, will impact our business and could have a material adverse effect on our business, financial condition and results of operations.

The global spread of COVID-19 has created significant macroeconomic uncertainty, volatility, and disruption.

In response, many governments and organizations have implemented policies intended to stop or slow the further spread of the disease, such as quarantines, shelter-in-place orders, or other restrictive travel guidelines.

These measures may remain in place for a significant period of time and may be disruptive to our business, financial condition and results of operations.

In particular, our results of operations may be adversely affected due to a number of operational factors, including:

● A number of our existing and potential future customers are located in multi-tenant office buildings in central business districts that may be subject to restrictive travel guidelines, and as a result these potential customers may not have a need for our services at this time, and we may see a reduced demand for our services and the loss of customers;

● As social distancing, shelter-in-place, and other restrictive travel guidelines potentially proliferate or lengthen, our sales representatives may not be able to reach potential customers who are not working in the office;

● We have informed our customers that disconnections for non-payment arising from the COVID-19 pandemic will be temporarily suspended;

● A downturn in the world economy caused by COVID-19 could generally impact the growth of Internet usage upon which our revenue growth depends.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in Item 1A, “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2019, such as those relating to fluctuations in foreign exchange rates;

our ability to pay dividends in the future;

our high level of indebtedness;

our ability to fulfill our obligations under our notes and our other indebtedness;

our ability to raise capital;

and our ability to generate sufficient cash flows to service our indebtedness;

among others.

Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of its global economic impact, including any recession, economic downturn, or increased unemployment that has occurred or may occur in the future.

The risk factors presented below supplement the risk factors previously disclosed in Item 1A “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2019 and our quarterly report on Form 10-Q for the quarter ended March 31, 2020.

The impact of the spread of COVID-19 continues to create significant uncertainty for our business, financial condition and results of operations.

The extent of the impact of the COVID-19 pandemic on our business and financial results will continue to depend on numerous evolving factors that we are not able to accurately predict and which will vary by market.

We provide services in 46 countries, most located in regions significantly impacted by COVID-19.

The extent to which COVID-19 will ultimately impact our results, including its impact on demand for our products and services and related impacts upon network usage, the ability of our customers to continue to pay in a timely manner, the impact on other third parties upon which our operations, financial performance and liquidity are materially reliant, is dependent on future developments, which are uncertain and unpredictable.

Such future uncertain and unpredictable developments include the duration and scope of the pandemic, governmental actions that have been taken, or may be taken in the future, in response to the pandemic, and global economic conditions during and after the pandemic.

● The duration and scope of the pandemic.

COVID-19 has rapidly spread globally, and it is not yet known (i) if and when the current pandemic will abate in existing areas, (ii) whether additional outbreaks may arise in areas that have not experienced outbreaks or areas that have successfully addressed past outbreaks, (iii) whether current measures being taken to mitigate the effects of the pandemic will be successful, and (iv) whether or when vaccines will be developed for COVID-19.

● The response of governmental and nongovernmental authorities.

Authorities in many of the markets in which we operate have implemented numerous measures to stall the spread and ameliorate the impact of COVID-19, including travel bans and restrictions, quarantines, curfews, shelter in place and stay-at-home orders, business shutdowns and closures, and have also implemented multi-step polices with the goal of re-opening these markets.

These measures have impacted and continue to impact us, our employees, customers, suppliers and other third parties with whom we do business.

The areas in which we operate are in varying stages of restrictions or re-opening.

Some jurisdictions have re-opened while other jurisdictions have begun re-opening only to return to restrictions in the face of increases in new COVID-19 cases.

Considerable uncertainty exists regarding how current and future health and safety measures implemented in response to the pandemic will impact our business, including whether such measures will result in further changes in demand for our services, impair our ability to access buildings to install our services or maintain our network or impact our supply chain.

The continuing impact of existing or new mandates, restrictions, laws or regulations could have a material adverse impact on our operations and the operations of our customers or others with which we do business.

● Impacts on economic and market conditions.

COVID-19 has created significant disruption to economies worldwide.

These disruptions continued to affect us through the second quarter of 2020.

We expect these changes will (i) limit or restrict our ability to conduct normal business activities with customers, vendors, suppliers or others with whom we do business;

(ii) limit or reduce demand for our services;

(iii) impact the financial condition of our customers which can result in an inability to pay for our services or order new services;

(iv) impact the ability of our suppliers to provide the equipment necessary to augment and maintain our network;

(v) limit our ability to acquire, build or light fiber necessary to expand our network;

(vi) continue to result in changes in spending patterns or reduced demand for our services, and (vii) otherwise render it more difficult or impossible to implement our operational or strategic plans.

Protective measures we have implemented to protect for our workforce from the COVID-19 virus may not be effective and may expose us to additional risks.

We have taken measures to protect our workforce and minimize their exposure to the COVID-19 virus, such as cancelling in-person meetings and requiring our employees to work remotely whenever possible.

However, we cannot be certain that such measures will be sufficient to mitigate the risks posed by the COVID-19 virus to our employees, including our executive management team and key employees.

Further, a long-term remote work posture may have an adverse impact on our sales efforts and operations.

Our ability to recruit and train new employees may be hampered or slowed by our shift to remote work.

Additionally, the shift to working remotely may increase the risk of cyber-attacks as our employees may not have adequately secured their home network or environment.

Protective measures implemented by others may prevent us from upgrading and maintaining our network.

In order to maintain and upgrade our equipment on our network and to install and upgrade services at customer sites, our field engineers and third-party contractors must travel to both the buildings on our network and our network locations.

We have already experienced some instances of property owners or managers limiting or prohibiting access to their buildings.

As the COVID-19 pandemic continues, we may encounter further difficulties, and our personnel may be prevented from visiting necessary work sites or performing their job functions altogether.

Such actions could limit our ability to maintain or upgrade our network equipment, to install new services or maintain or upgrade existing services.

The COVID-19 pandemic has resulted, and may continue to result, in disruption to our supply chain.

Our business relies on Cisco Systems, Inc.

to provide the routers and transmission equipment used in our network.

If our supply chain is significantly disrupted, we would not easily be able to transition to a different vendor.

Such a disruption may limit our ability to procure certain types of routing and transmission equipment, and we may be delayed or unable to provide services when requested by our customers.

We also may be unable to upgrade our network and may face greater difficulty maintaining and expanding our network.

We have taken measures to protect our workforce and minimize their exposure to the COVID-19 virus, such as requiring our entire workforce to work remotely whenever possible, establishing safety procedures for our on-site technical personnel and severely curtailing all business travel.

As a result, we have incurred increased costs as a result of COVID-19, such as one-time costs associated with the provision of laptops to all employees as well as the recurring costs of obtaining and maintaining adequate supplies and other sanitizing equipment for our offices, should future conditions permit a return to the office.

If a significant percentage of our workforce is unable to work, including because of illness, facility closures, quarantine, curfews, shelter in place orders, travel restrictions, social distancing requirements or other governmental restrictions or voluntarily adopted practices, our operations will be negatively impacted.

As we consider a future return to our offices, even on a strictly voluntary basis, compliance with governmental measures imposed in response to COVID-19 has caused and will continue to cause us to incur additional costs, and any inability to comply with such measures may subject us to restrictions on our business activities, fines, and other penalties, any of which can adversely affect our business.

In addition, the shift to our workforce working remotely has amplified certain risks to our business, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks as cybercriminals try to exploit the uncertainty surrounding the COVID-19 pandemic, and an increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased numbers), to be secured, and any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks, may adversely affect our business.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors