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Item 1A. Risk Factors

2021-02-26 compared with 2020-02-28 · 176 added, 295 removed, 109 unchanged (81% of the section changed)

Our connections to the Internet require us to establish and maintain relationships with other providers, which we may not be able to maintain.

The Internet is composed of various network providers who operate their own networks that interconnect at public and private interconnection points.

Our network is one such network.

In order to obtain Internet

connectivity for our network, we must establish and maintain relationships with other Internet access providers and certain of our larger customers.

These providers may be customers (who connect their network to ours by buying Internet access from us) or may be other large Internet access providers to whom we connect on a settlement-free peering basis as described below.

Both customers and settlement-free peers may be competitors of ours.

By entering into what are known as settlement-free peering arrangements, providers agree to exchange traffic between their respective networks without charging each other.

Our ability to avoid the higher costs of acquiring paid dedicated network capacity (transit or paid peering) and to maintain high network performance is dependent upon our ability to establish and maintain settlement-free peering relationships and to increase the capacity of the interconnections provided by these relationships.

The terms and conditions of our settlement-free peering relationships may also be subject to adverse changes, which we may not be able to control.

For example, several network operators with large numbers of individual users are arguing that they should be able to charge or charge more to network operators and businesses that deliver the large volumes of traffic requested by their users.

If we are not able to maintain or increase our settlement-free peering relationships in all of our markets on favorable terms or to upgrade the capacity of our existing settlement-free peering relationships, we may not be able to provide our customers with high performance or affordable or reliable services, which could cause us to lose existing and potential customers, damage our reputation and have a material adverse effect on our business.

We have in the past had peering disputes with other network providers that resulted in a temporary disruption of the exchange of traffic between our network and the network of the other carrier.

We have resolved the majority of such disputes through negotiations.

In 2013 the major incumbent telephone and cable companies in the United States began to refuse to upgrade our peering connections.

This refusal caused congestion at our existing peering connections with these networks as our connections were unable to handle the large volume of traffic requested by the customers of these incumbent telephone and cable companies.

This congestion impacted our network and our services to our other customers.

Following issuance by the FCC of its Open Internet Order we were able to enter into agreements with most of these carriers that have alleviated the congestion we were experiencing.

We cannot assure you that the upgrade commitments in those agreements will be sufficient to accommodate the growth of Internet traffic on our network.

In December 2017 the FCC rescinded the protections of the Open Internet Order.

This may impact the willingness of telephone and cable companies to continue our current agreements or to enter into agreements to augment interconnections as traffic grows and to continue current agreements.

We have experienced the same congestion problem in Europe with incumbent telephone companies.

As the use of streaming video increases this problem is exacerbated.

Recently, several European incumbent telephone companies have increased the capacity of our interconnections.

We do not know if they will continue to do so.

The major carrier in Germany, Deutsche Telekom, continues to limit our interconnection capacity.

We cannot assure you that we will be able to continue to establish and maintain relationships with other Internet access providers, favorably resolve disputes with such providers, or increase the capacity of our interconnections with such providers.

The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business, financial condition and results of operations.

We serve 47 countries, most of which were significantly impacted by the COVID-19 pandemic.

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.

Such future uncertain and unpredictable developments include the ultimate duration and scope of the pandemic, the availability and efficacy of vaccines and therapeutic treatments, 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.

Approximately 67.5% of our revenue for the year ended December 31, 2020 was from our corporate customers.

Corporate customers are located in multi-tenant office buildings, almost exclusively in the United States and Canada.

Authorities in many of these markets have implemented numerous measures in response to the pandemic, such as travel bans and restrictions, quarantines, curfews, shelter-in-place and stay-at-home orders and 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 and our employees, customers, suppliers and other third parties with whom we do business.

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

Some jurisdictions have re-opened, while other jurisdictions began 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 whom we do business.

In addition, a significant number of our corporate customers have continued remote work policies instituted at the beginning of the COVID-19 pandemic, slowed the pace of opening new offices and closed offices due to global economic conditions.

As a result, through much of 2020, we saw corporate customers take a cautious approach to adding new services and upgrading existing services as well as reduced demand for connecting smaller satellite offices.

We also witnessed a deteriorating real estate market in and around the buildings we service, with rising vacancy levels and falling lease initiations or renewals resulting in fewer sales opportunities for our salesforce.

As a result, we experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue growth.

In the future, these trends may continue.

We have taken measures to protect our workforce and minimize their exposure to COVID-19 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.

In addition to the associated costs incurred, these measures may be insufficient in protecting our employees.

If a significant percentage of our workforce is unable to work due to the impact of COVID-19, 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 of our workforce to 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.

Any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks, may adversely affect our business.

Our growth and financial health are subject to a number of economic risks.

A downturn in the world economy, especially the economies of North America and Europe would negatively impact our growth.

We would be particularly impacted by a decline in the development of new applications and businesses that make use of the Internet.

Our revenue growth is predicated on growth in the use of the Internet that makes up for the declining prices of Internet service.

An economic downturn could impact the Internet business more significantly than other businesses that are less dependent on new

applications and growth in the use of those applications because of the retrenchment by consumers and businesses that typically occurs in an economic downturn.

Events beyond our control may impact our ability to provide our services to our customers or increase the costs or reduce the profitability of providing our services

Catastrophic events, such as major natural disasters, extreme weather, fire, flooding or similar events as well as the continued threat of terrorist activity and other acts of war or hostility have had, and may continue to have, an adverse effect on our headquarters, other offices, our network, infrastructure or equipment or our customers and prospective customers, which could adversely affect our business.

These events may also have an adverse impact on business, financial and general economic conditions around the world.

We have certain locations through which a large amount of our Internet traffic passes.

Examples are facilities in which we exchange traffic with other carriers, the facilities through which our transoceanic traffic passes, and certain of our network hub sites.

We are particularly vulnerable to acts of terrorism because our largest customer concentration is located in New York, our headquarters is located in Washington, D.C., and we have significant operations in Paris, Madrid and London, cities that have historically been targets for terrorist attacks and vulnerable to pandemics.

If these or any other of our key facilities were destroyed or seriously damaged, a significant amount of our network traffic could be disrupted.

Because of the large volume of traffic passing through these facilities our ability (and the ability of carriers with whom we exchange traffic) to quickly restore service would be challenged.

There could be parts of our network or the networks of other carriers that could not be quickly restored or that would experience substantially reduced service for a significant time.

If such a disruption occurs, our reputation could be negatively impacted which may cause us to lose customers and adversely affect our ability to attract new customers, resulting in an adverse effect on our business and operating results.

Business Risks

We need to retain existing customers and continue to add new customers in order to become consistently profitable and cash flow positive.

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Further, as some of our customers grow larger they may decide to build their own Internet backbone networks or enter into direct connection agreements with telephone and cable companies that provide Internet service to consumers.

A migration of a few very large Internet users to their own networks, or to special networks that may be offered by major telephone and cable providers of last

mile broadband connections to consumers, or the loss or reduced purchases from several significant customers could impair our growth, cash flow and profitability.

A migration of a few very large Internet users to their own networks, or to special networks that may be offered by major telephone and cable providers of last mile broadband connections to consumers, or the loss or reduced purchases from several significant customers could impair our growth, cash flow and profitability.

We have customers who depend on the U.S.

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A failure of such programs to continue could result in a loss of customers and impair our growth, cash flow and profitability.

Our growth and financial health are subject to a number of economic risks.

A downturn in the world economy, especially the economies of North America and Europe would negatively impact our growth.

We would be particularly impacted by a decline in the development of new applications and businesses that make use of the Internet.

Our revenue growth is predicated on growth in the use of the Internet that makes up for the declining prices of Internet service.

An economic downturn could impact the Internet business more significantly than other businesses that are less dependent on new applications and growth in the use of those applications because of the retrenchment by consumers and businesses that typically occurs in an economic downturn.

A substantial and long-term shift to remote work may impact our ability to add new customers and to retain existing customers.

Through much of 2020, we saw corporate customers institute remote work policies and take a cautious approach to new services and upgrades, as well as a reduced demand for connecting smaller satellite offices.

As a result, we experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue growth.

If, after the end of the COVID-19 pandemic, a significant number of our corporate customers or potential customers decide to retain remote work policies, we may experience increased customer turnover, fewer upgrades of existing customer configurations and fewer new tenant opportunities.

These trends may negatively impact our revenue growth, cash flows and profitability.

Our business and operations are growing rapidly and we may not be able to efficiently manage our growth.

We have grown our company rapidly through network expansion and by obtaining new customers through our sales efforts.

We have grown our company rapidly through network expansion, by obtaining new customers through our sales efforts and through increasing the number of our sales personnel.

Our expansion places significant strains on our management, operational and financial infrastructure.

Our ability to manage our growth will be particularly dependent upon our ability to:

● expand, develop and retain an effective sales force and qualified personnel, especially in light of the tight job market in the U.S.;

● expand, develop and retain an effective sales force and qualified personnel;

● maintain the quality of our operations and our service offerings;

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If we fail to implement these measures successfully, our ability to manage our growth will be impaired.

We may experience difficulties operating in countries outside of the United States, Canada and Western Europe.

We have expanded our network into Eastern Europe, Mexico and on a limited basis to Tokyo, Hong Kong, Singapore, Latin America and Australia.

We have experienced difficulties, ranging from lack of dark fiber to regulatory issues to slower revenue growth rates in operating in these markets.

If we are not successful in developing our market presence in these regions our operating results and revenue growth could be adversely impacted.

We may experience delays and additional costs in expanding our on-net buildings.

We plan on continuing to increase the number of carrier-neutral data centers and multi-tenant office buildings that are connected to our network.

We may be unsuccessful at identifying appropriate buildings or negotiating favorable terms for acquiring access to such buildings, and we may be unable to procure dark fiber to connect such buildings to our network or to procure such fiber on favorable terms.

Consequently, we may experience difficulty in adding customers to our network and fully using our network’s available capacity.

We may be required to censor content on the Internet, which we may find difficult to do and which may impact our ability to provide our services in some countries as well as impact the growth of Internet usage, upon which we depend.

Some governments attempt to limit access to certain content on the Internet.

It is impossible for us (and other providers as far as we know) to filter all content that flows across the Internet connections we provide.

For example, some content is encrypted when a secure web site is accessed.

It is difficult to limit access to web sites by blocking a fixed set of Internet addresses when the website operators engage in practices that make it difficult to block them.

Should any government require us to perform these types of blocking procedures we could experience difficulties ranging from incurring additional expenses to ceasing to provide service in that country.

We could also be subject to penalties if we fail to implement the censorship.

We may not successfully make or integrate acquisitions or enter into strategic alliances.

As part of our growth strategy, we may pursue selected acquisitions and strategic alliances.

To date, we have completed 13 significant acquisitions.

However, we are very selective with respect to such acquisitions and alliances and we have not undertaken either for more than 15 years.

We compete with other companies for acquisition opportunities and we cannot assure you that we will be able to execute future acquisitions or strategic alliances on commercially reasonable terms, or at all.

Even if we enter into these transactions, we may experience:

● delays in realizing or a failure to realize the benefits we anticipate;

● difficulties or higher-than-anticipated costs associated with integrating any acquired companies, products or services into our existing business;

● attrition of key personnel from acquired businesses;

● unexpected costs or charges;

● unforeseen operating difficulties that require significant financial and managerial resources that would otherwise be available for the ongoing development or expansion of our existing operations.

In the past, our acquisitions have often included assets, service offerings and financial obligations that are not compatible with our core business strategy.

We have expended management attention and other resources to the divestiture of assets, modification of products and systems as well as restructuring financial obligations of acquired operations.

In most acquisitions, we have been successful in renegotiating the agreements that we have acquired.

If we are unable to satisfactorily renegotiate such agreements in the future or with respect to future acquisitions, we may be exposed to large claims for payment for services and facilities we do not need.

Consummating these transactions could also result in the incurrence of additional debt and related interest expense, as well as unforeseen contingent liabilities, all of which could have a material adverse effect on our business, financial condition and results of operations.

Because we have purchased financially distressed companies or their assets, and may continue to do so in the future, we have not had, and may not have, the opportunity to perform extensive due diligence or obtain contractual protections and indemnifications that are customarily provided in acquisitions.

As a result, we may face unexpected contingent liabilities arising from these acquisitions.

We may also issue additional equity in connection with these transactions, which would dilute our existing shareholders.

Following an acquisition, we have experienced a decline in revenue attributable to acquired customers as these customers’ contracts have expired and they have entered into our standard customer contracts at generally lower rates or have chosen not to renew service with us.

We anticipate that we would experience similar revenue declines with respect to customers we may acquire in the future.

We depend upon our key employees and may be unable to attract or retain sufficient qualified personnel.

Our future performance depends upon the continued contribution of our executive management team and other key employees, in particular, our Chairman and Chief Executive Officer, Dave Schaeffer.

As founder of our company, Mr.

Schaeffer’s knowledge of our business and our industry combined with his deep involvement in

every aspect of our operations and planning make him particularly well-suited to lead our company and difficult to replace.

In addition, our senior management team has been in place for many years and has deep experience with our operations and abilities that would make them difficult to replace.

We will need to renew the long-term leases of the optical fiber that composes our network.

Our network is composed of optical fiber that we have leased from many carriers.

Most of the leases are long-term, i.e.

15 years with renewal rights.

These leases are generally referred to as indefeasible rights of use (IRU).

In coming years we will need to renew certain of these leases either pursuant to the renewal terms of the lease or by negotiating an extension of the term.

In particular, the lease for a large portion of our U.S.

intercity network will need to be renewed in 2020.

We have exercised our renewal right as provided in the lease.

However, the owner of the fiber has the right to abandon the fiber rather than renew the lease.

We do not expect the owner to abandon the fiber but if the owner did so we would experience substantial disruption and expense in replacing our U.S.

backbone network with fiber from other providers.

We face similar risks with respect to the other portions of our network.

Substantially all of our network infrastructure equipment is manufactured or provided by a single network infrastructure vendor.

We purchase from Cisco Systems, Inc.

(Cisco) the routers and transmission equipment used in our network.

If Cisco fails to provide equipment on a timely basis or fails to meet our performance expectations, including in the event that Cisco fails to enhance, maintain, upgrade or improve its products, hardware or software we purchase from them when and how we need them, we may be delayed or unable to provide services as and when requested by our customers.

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

Transitioning from Cisco to another vendor would be disruptive because of the time and expense required to learn to install, maintain and operate the new vendor’s equipment and to operate a multi-vendor network.

Any such disruption could increase our costs, decrease our operating efficiencies and have an adverse effect on our business, results of operations and financial condition.

Cisco may also be subject to litigation with respect to the technology on which we depend, including litigation involving claims of patent infringement.

Such claims have been growing rapidly in the communications industry.

Regardless of the merit of these claims, they can result in the diversion of technical and management personnel, or require us to obtain non-infringing technology or enter into license agreements for the technology on which we depend.

There can be no assurance that such non-infringing technology or licenses will be available on acceptable terms and conditions, if at all.

Competitive Risks

Our connections to the Internet require us to establish and maintain relationships with other providers, which we may not be able to maintain.

The Internet is composed of various network providers who operate their own networks that interconnect at public and private interconnection points.

Our network is one such network.

In order to obtain Internet connectivity for our network, we must establish and maintain relationships with other ISPs and certain of our larger customers.

These providers may be customers (who connect their network to ours by buying Internet access from us) or may be other large ISPs to whom we connect on a settlement-free peering basis as described below.

Both customers and settlement-free peers may be competitors of ours.

By entering into what are known as settlement-free peering arrangements, providers agree to exchange traffic between their respective networks without charging each other.

The terms and conditions of our settlement-free peering relationships may also be subject to adverse changes, which we may not be able to control.

If we are not able to maintain or increase our settlement-free peering relationships in all of our markets on favorable terms or to upgrade the capacity of our existing settlement-free peering relationships, we may not be able to provide our customers with high performance, affordable or reliable services, which could cause us to lose existing and potential customers, damage our reputation and have a material adverse effect on our business.

We cannot assure you that we will be able to continue to establish and maintain relationships with other ISPs, favorably resolve disputes with such providers, or increase the capacity of our interconnections with such providers.

The sector in which we operate is highly competitive, and we may not be able to compete effectively.

We face significant competition from incumbent carriers, Internet service providers and facilities-based network operators.

Relative to us, many of these providers have significantly greater financial resources, more well established brand names, larger customer bases, and more diverse strategic plans and service offerings.

A number of these providers also have large bases of consumers, which makes their networks particularly attractive to content providers as they can provide a direct connection to their customers.

Intense competition from these traditional and new communications companies has led to declining prices and margins for many communications services, and we expect this trend to continue as competition intensifies in the future.

Decreasing prices for high-speed Internet services have somewhat diminished the competitive advantage that we have enjoyed as a result of our service pricing.

Our business is premised on the idea that customers want simple Internet access and private networks rather than a combination of such services with other services such as VOIP and complex enterprise services.

Our competitors offer such services.

Should the market come to favor such services our ability to acquire and keep customers would be impaired.

Our competitors may also upgrade their existing services or introduce new technologies or services, such as satellite-based Internet or 5G services that could make our services less attractive to potential customers.

Our business could suffer because telephone companies and cable companies may provide better delivery of certain Internet content, including content originating on their own networks, than content on the public Internet.

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The providers of these broadband connections may treat Internet content or other broadband content delivered from different sources differently.

The possibility of this has been characterized as an issue of “net neutrality.” As many of our customers operate websites and services that deliver content to consumers our ability to sell our services would be negatively impacted if Internet content delivered by us was less easily received by consumers than Internet content delivered by others.

The possibility of this has been characterized as an issue of "net neutrality."

As many of our customers operate websites and services that deliver content to consumers our ability to sell our services would be negatively impacted if Internet content delivered by us was less easily received by consumers than Internet content delivered by others.

The FCC had promulgated rules that would have banned practices such as blocking and throttling of Internet traffic, but those rules were rescinded by the FCC in December 2017.

The European Union has issued similar net neutrality rules but they remain untested.

Some US states have either issued or are trying to issue their own net neutrality rules.

Also, the European Union and other countries in which we operate, have issued similar net neutrality rules.

We also do not know the extent to which the providers of broadband Internet access to consumers may favor certain content or providers in ways that may disadvantage us.

Our operations outside of the United States expose us to economic, regulatory and other risks.

The nature of our operations outside of the United States involve a number of risks, including:

● fluctuations in currency exchange rates;

● exposure to additional regulatory and legal requirements, including import restrictions and controls, exchange controls, tariffs and other trade barriers and privacy and data protection regulations;

● difficulties in staffing and managing our foreign operations;

● changes in political and economic conditions;

● exposure to additional and potentially adverse tax regimes.

As we continue to expand into other countries, our success will depend, in part, on our ability to anticipate and effectively manage these and other risks.

Our failure to manage these risks and grow our operations outside the United States may have a material adverse effect on our business and results of operations.

Fluctuations in foreign exchange rates may adversely affect our financial position and results of operations.

Our operations outside the United States expose us to currency fluctuations and exchange rate risk.

For example, while we record revenues and the financial results of our European operations in Euros, these results are reflected in our consolidated financial statements in US dollars.

Therefore, our reported results are exposed to fluctuations in the exchange rates between the US dollar and the Euro.

We may fund certain of our cash flow requirements of our operations outside of the United States in US dollars.

Accordingly, in the event that the foreign currency strengthens against the US dollar to a greater extent than we anticipate, the cash flow requirements associated with these operations may be significantly greater in US dollar terms than planned.

Our business could suffer delays and problems due to the actions of “last mile” providers on whom we are partially dependent.

Our off-net customers are connected to our network by means of communications lines that are provided as services by local telephone and cable companies and others.

We may experience problems with the installation, maintenance and pricing of these lines which could adversely affect our results of operations and our plans to add additional customers to our network using such services.

We have historically experienced installation and maintenance delays when the network provider is devoting resources to other services, such as traditional telephony, cable TV services and private network services.

We have also experienced pricing problems when a lack of alternatives allows a provider to charge high prices for services in a particular area.

We attempt to reduce this problem by using many different providers so that we have alternatives for linking a customer to our network.

Competition among the providers tends to improve installation intervals, maintenance and pricing.

Additionally, these providers are often competing with us for the same customers, and have marketed their own service to our customers when our initial contract with our customer nears the end of its term.

Operational Risks

Our network may be the target of potential cyber-attacks and other security breaches that could have significant negative consequences.

Our business depends on our ability to limit and mitigate interruptions or degradation to our network availability.

Our network, including our routers, may be vulnerable to unauthorized access, computer viruses, cyber-attacks, distributed denial of service (DDOS), and other security breaches.

An attack on or security breach of our network could result in interruption or cessation of services, our inability to meet our service level commitments, and potentially compromise customer data transmitted over our network.

Cyber-attacks of increasing sophistication and breadth suggest an increase in cyber-attacks that may be state-sponsored or conducted by other well-financed organizations.

Our business depends on our ability to limit and mitigate interruptions to or degradation of the security of our network.

We are considered a critical infrastructure provider and therefore may be more likely to be the target of cyber-attacks.

Our network, systems, applications, and routers may be vulnerable to unauthorized access, computer viruses, cyber-attacks, distributed denial of service (DDOS), and other security breaches.

We experience such cyber-attacks and other security incidents of varying degrees from time to time, though none which individually or in the aggregate has led to costs or consequences which have materially impacted our operations or business.

An attack on or security breach of our network could result in theft of trade secrets, intellectual property, or other company confidential information, the interruption, degradation, or cessation of services, an inability to meet our service level commitments or our financial reporting obligations, and potentially compromise customer data stored on or transmitted over our network.

We have experienced cyber-attacks of increasing sophistication which suggest an increase in cyber-attacks that may be state-sponsored or conducted by other well-financed organizations.

Moreover, as cyber warfare becomes a tool in asymmetric conflicts between the United States and other nations, we, as a US provider, may be targeted with increasing frequency.

We cannot guarantee that our security measures will not be circumvented, thereby resulting in network failures or interruptions that could impact our network availability and have a material adverse effect on our business, financial condition and operational results.

We may be required to expend significant resources to

protect against such threats, and may experience a reduction in revenues, litigation, and a diminution in goodwill, caused by a breach.

We cannot guarantee that our security measures will not be circumvented, thereby resulting in security events, network failures or interruptions that could impact our network security or availability and have a material adverse effect on our business, our ability to meet our financial reporting obligations, financial condition and operational results.

We may be required to expend significant resources to protect against such threats, and may experience a reduction in revenues, litigation, and a diminution in goodwill, caused by a compromise of our cybersecurity.

Although our customer contracts limit our liability, affected customers and third parties may seek to recover damages from us under various legal theories.

Our network could suffer serious disruption if certain locations experience serious damage.

There are certain locations through which a large amount of our Internet traffic passes.

Examples are facilities in which we exchange traffic with other carriers, the facilities through which our transoceanic traffic passes, and certain of our network hub sites.

If any of these facilities were destroyed or seriously damaged a significant amount of our network traffic could be disrupted.

Because of the large volume of traffic passing through these facilities our ability (and the ability of carriers with whom we exchange traffic) to quickly restore service would be challenged.

There could be parts of our network or the networks of other carriers that could not be quickly restored or that would experience substantially reduced service for a significant time.

We may have difficulty and experience disruptions as we add features and upgrade our network

When we upgrade our network this process involves reconfiguring our network and making changes to software including our operating systems.

In doing so we may experience disruptions that affect our customers, our revenue, and our ability to grow.

We may require additional resources to accomplish this work in a timely manner.

That could cause us to incur unexpected expenses or delay portions of this effort to the detriment of our ability to provide service to our customers.

In response to past attacks, we have implemented further controls and taken and planned for other preventative actions to further strengthen our systems against future attacks.

However, we cannot assure you that such measures will provide absolute security, that we will be able to react in a timely manner, or that our remediation efforts following any past or future attacks will be successful.

If the information systems that we depend on to support our customers, network operations, sales, billing and financial reporting do not perform as expected, our operations and our financial results may be adversely affected.

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Our ability to track sales leads, close sales opportunities, provision services, bill our customers for our services and prepare our financial statements depends upon the effective integration of our various information systems.

If our information systems, individually or collectively, fail or do not perform as expected, our ability to process and provision orders, to make timely payments to vendors, to ensure that we collect amounts owed to us and prepare and file our financial statements would be adversely affected.

In 2020, we developed and deployed our own customer relationship management software for our sales force.

We may have difficulty maintaining this software and adding features that our sales representatives require.

If our information systems, individually or collectively, fail or do not perform as expected, our ability to make sales, to process and provision orders, to make timely payments to vendors, to ensure that we collect amounts owed to us and prepare and file our financial statements would be adversely affected.

Such failures or delays could result in increased capital expenditures, customer and vendor dissatisfaction, loss of business or the inability to add new customers or additional services, and the inability to prepare accurate and timely financial statements all of which would adversely affect our business and results of operations.

Tax Cuts and Jobs Act will impact us.

The Tax Cuts and Jobs Act (the “Act”) significantly changed U.S.

tax law by reducing the U.S.

corporate tax rate, making certain changes to U.S.

taxation of income earned abroad, the deduction of capital expenditures, and the deduction of interest expense.

Although we generally believe the impact of the Act will be favorable to us, it is complex and there may be aspects that will negatively affect us.

Tax audits could adversely affect us.

We are subject to audit of our tax compliance in numerous jurisdictions.

These may result in the assessment of amounts due that are material and therefore would have an adverse effect on us.

The utilization of certain of our net operating loss carryforwards is limited and depending upon the amount of our taxable income we may be subject to paying income taxes earlier than planned.

Section 382 of the Internal Revenue Code in the United States limits the utilization of net operating losses when ownership changes, as defined by that section, occur.

We have performed an analysis of our Section 382

ownership changes and have determined that the utilization of certain of our net operating loss carryforwards in the United States is limited.

Further, recent changes to the tax law in the United States may impact our utilization of our net operating losses.

Network Augmentation and Maintenance Risks

Our network is comprised of a number of separate pieces, and we may be unable to obtain or maintain the agreements necessary to augment or maintain our network.

Our network is primarily composed of (i) leased capacity on transoceanic optical fiber;

(ii) terrestrial inter-city optical fiber;

(iii) intra-city optical fiber;

and (iv) the buildings that we serve and the associated optical fiber connecting those buildings.

We lease our optical fiber and obtain access to the buildings on our network, both carrier neutral data centers and multi-tenant office buildings, from a number of vendors.

A number of our leases, both for fiber and building access, are up for renewal in any given year.

A deterioration

in our existing relationship with these operators could impact our network, harm our sales and marketing efforts and could substantially reduce our potential customer base.

In addition, portions of our long-haul optical fiber and metro optical fiber are nearing the end of their original projected useful life.

While we believe that this fiber will remain usable beyond the projected end date, we face the risk that portions of our network may need to be replaced in the future.

We expect to enter additional agreements with carriers and operators to obtain additional facilities, whether optical fiber or buildings, for our network in order to add capacity to our network and to expand our addressable market.

However, we cannot assure you that we will be able to enter into such agreements in the future, be able to do so on economically attractive terms or find an adequate substitute if we are unable to reach an agreement.

Failure to acquire new facilities to augment our network could keep us from adding new markets, capacity or buildings to our network and negatively impact our growth opportunities.

Our business could suffer delays and problems due to the actions of "last mile"

providers on whom we are partially dependent.

Our off-net customers are connected to our network by means of communications lines that are provided as services by local telephone and cable companies and others.

We have also experienced pricing problems when a lack of alternatives allows a provider to charge high prices for services in a particular area.

We attempt to reduce this problem by using many different providers so that we have alternatives for linking a customer to our network.

Competition among the providers tends to improve installation intervals, maintenance and pricing.

Our business could suffer from an interruption of service from our fiber providers.

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While we have successfully mitigated the effects of prior service interruptions and business disputes in the past, we may incur significant delays and costs in restoring service to our customers in connection with future service interruptions, and as a result we may lose customers.

Our business depends on agreements with carrier neutral data center operators, which we could fail to obtain or maintain.

Our business depends upon access to customers in carrier neutral data centers, which are facilities in which many users of the Internet house the computer servers that deliver content and applications to users by means of the Internet and provide access to multiple Internet access networks.

Most carrier neutral data centers allow any carrier to operate within the facility (for a standard fee).

We expect to enter into additional agreements with carrier neutral data center operators as part of our growth plan.

Current government regulations do not require carrier neutral data center operators to allow all carriers access on terms that are reasonable or nondiscriminatory.

We have been successful in obtaining agreements with these operators in the past and have generally found that the operators want to have us located in their facilities because we offer low-cost, high-capacity Internet service to their customers.

Any deterioration in our existing relationships with these operators could harm our sales and marketing efforts and could substantially reduce our potential customer base.

Increasing concentration in this industry could negatively impact us if any such combined entities decide to discontinue operation of their facilities in a carrier neutral fashion.

Our ability to serve customers in multi-tenant office buildings depends on access agreements with building owners and managers, which we could fail to obtain or maintain.

Our on-net business depends upon our in-building networks.

Our in-building networks depend on access agreements with building owners or managers allowing us to install our in-building networks and provide our services in these buildings.

These agreements typically have terms of five to ten years, with one or more renewal options.

Any deterioration in our existing relationships with building owners or managers could harm our sales and marketing efforts and could substantially reduce our potential customer base.

We expect to enter into additional access agreements as part of our growth plan.

Current federal and state regulations do not require building owners to make space available to us or to do so on terms that are reasonable or nondiscriminatory.

While the FCC has adopted regulations that prohibit common carriers (subject to regulation under Title II of the Communications Act) from entering into exclusive arrangements with owners of multi-tenant commercial office buildings, these regulations do not require building owners to offer us access to their buildings.

Building owners or managers may decide not to permit us to install our networks in their buildings or they may elect not to renew or amend our access agreements.

Most of these agreements have one or more automatic renewal periods and others may be renewed at the option of the landlord.

Some of these access agreements have or will have exhausted all automatic renewal periods and, as such, will be coming up for renewal in the near future.

While we have historically been successful in renewing these agreements and no single building access agreement is material to our success, the failure to obtain or maintain a number of these agreements would reduce our revenue, and we might not recover our costs of procuring building access and installing our in-building networks in those locations.

We may not be able to obtain or construct additional building laterals to connect new buildings to our network.

In order to connect a new building to our network we need to obtain or construct a lateral from our metropolitan network to the building.

We may not be able to obtain fiber in an existing lateral at an attractive price from a provider and may not be able to construct our own lateral due to the cost of construction or municipal regulatory restrictions.

Failure to obtain fiber in an existing lateral or to construct a new lateral could keep us from adding new buildings to our network and negatively impact our growth opportunities.

Impairment of our proprietary property and our alleged infringement on other companies’ intellectual property rights could harm our business.

We cannot assure you that the steps taken by us to protect our proprietary property will be adequate to deter misappropriation of proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our rights.

We also are subject to the risk of litigation alleging infringement of third party intellectual property rights.

Any such claims could require us to spend significant sums in litigation, pay damages, develop non-infringing intellectual property or acquire licenses to the intellectual property that is the subject of the alleged infringement.

We are aware of other companies in our and other industries that use the word “Cogent” in their corporate names.

Consequently, we do not have rights to the name “Cogent”.

This may weaken our ability to market our services.

The sector in which we operate is highly competitive, and we may not be able to compete effectively.

We face significant competition from incumbent carriers, Internet service providers and facilities-based network operators.

Relative to us, many of these providers have significantly greater financial resources, more well-established brand names, larger customer bases, and more diverse strategic plans and service offerings.

Decreasing prices for high-speed Internet services have somewhat diminished the competitive advantage that we have enjoyed as a result of our service pricing.

Our competitors offer such services.

Should the market come to favor such services our ability to acquire and keep customers would be impaired.

Our competitors may also upgrade their existing services or introduce new technologies or services, such as satellite-based Internet or 5G services, that could make our services less attractive to potential customers.

We issue projected results and estimates for future periods from time to time, and such projections and estimates are subject to inherent uncertainties and may prove to be inaccurate.

Financial information, results of operations and other projections that we may issue from time to time are based upon our assumptions and estimates.

While we believe these assumptions and estimates to be reasonable when they are developed, they are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.

You should understand that certain unpredictable factors could cause our actual results to differ from our expectations and those differences may be material.

No independent expert participates in the preparation of these estimates.

These estimates should not be regarded as a representation by us as to our results of operations during such periods as there can be no assurance that any of these estimates will be realized.

In light of the foregoing, we caution you not to place undue reliance on these estimates.

These estimates constitute forward-looking statements.

We have negative stockholders’ equity and may not be able to pay dividends in the future.

We have negative stockholders equity.

Our Board of Directors has declared dividends based upon an independent expert valuation of our assets that determined sufficient funds existed to pay a dividend under Delaware Law.

We cannot assure you that a future valuation of our assets will reach the same conclusion.

In the future if we do not receive a similar valuation of our assets and we continue to have negative stockholders equity, we will not be able to pay dividends.

The indentures governing our debt agreements, among other things, limits our ability to incur indebtedness;

to pay dividends or make other distributions;

to make certain investments and other restricted payments;

to create liens;

consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

to incur restrictions on the ability of a subsidiary to pay dividends or make other payments;

and to enter into certain transactions with our affiliates.

The payment of any future dividends and any other returns of capital, including stock buybacks, will be at the discretion of our Board of Directors and may be reduced, eliminated or increased and will be dependent upon our financial position, results of operations, available cash, cash flow, capital requirements, limitations under our debt indentures and other factors deemed relevant by the our Board of Directors.

We are a Delaware Corporation as are our U.S subsidiaries and under the General Corporate Law of the State of Delaware distributions may be restricted including a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation’s capital, as defined under Delaware Law.

Network failure or delays and errors in transmissions expose us to potential liability.

Our network is part of the Internet which is a network of networks.

Our network uses a collection of communications equipment, software, operating protocols and proprietary applications for the high-speed transportation of large quantities of data among multiple locations.

Given the complexity of our network, it is possible that data will be lost or distorted.

Delays in data delivery may cause significant losses to one or more customers using our network.

Our network may also contain undetected design faults and software bugs that, despite our testing, may not be discovered in time to prevent harm to our network or to the data transmitted over it.

The failure of any equipment or facility on our network could result in the interruption of customer service until we affect the necessary repairs or install replacement equipment.

Network failures, delays and errors could also result from natural disasters, power losses, security breaches, computer viruses, distributed denial of service attacks, fiber cuts, and other natural or man-made events.

Our off-net services are dependent on the network facilities of other providers or on local telephone companies or cable companies.

Network failures, faults or errors could cause delays or service interruptions, require us to provide increased service credits to our customers, expose us to customer liability or require expensive modifications that could have a material adverse effect on our business.

As an Internet access provider, we may incur liabilities for information disseminated through our network.

The law relating to the liabilities of Internet access providers and on-line services companies for information carried on or disseminated through their networks is unsettled.

Substantially all of our network infrastructure equipment is manufactured or provided by a single network infrastructure vendor.

We purchase from Cisco Systems, Inc.

(“Cisco”) the routers and transmission equipment used in our network.

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

Any such disruption could increase our costs, decrease our operating efficiencies and have an adverse effect on our business, results of operations and financial condition.

Cisco may also be subject to litigation with respect to the technology on which we depend, including litigation involving claims of patent infringement.

Such claims have been growing rapidly in the communications industry.

There can be no assurance that such non-infringing technology or licenses will be available on acceptable terms and conditions, if at all.

International Operations Risks

Our international operations expose us to numerous risks.

We have expanded our network into 47 countries worldwide on every continent other than Antarctica.

We continue to explore expansion opportunities.

We have experienced difficulties, ranging from lack of dark fiber, to regulatory issues, to slower revenue growth rates from our operations in these markets.

If we are not successful in developing our market presence in these regions, our operating results and revenue growth could be adversely impacted.

Our international operations involve a number of risks, including:

● fluctuations in currency exchange rates, particularly those involving the Euro as we are required to fund certain of our cash flow requirements of our operations outside of the United States and our €350.0 million senior unsecured notes in Euros;

● compliance with laws regarding corruption and bribery, including the United States Foreign Corrupt Practices Act;

● difficulties in staffing and managing our foreign operations;

● changes in political and economic conditions, such as the exit of the United Kingdom from the European Union, and

● exposure to additional and potentially adverse tax regimes.

As we continue to expand into other countries, our success will depend, in part, on our ability to anticipate and effectively manage these and other risks.

Our failure to manage these risks and grow our operations outside the United States may have a material adverse effect on our business and results of operations.

Litigation Risks

As an Internet service provider, we may incur liabilities for the content disseminated through our network or for network failures, delays or errors in transmissions

The law relating to the liabilities of ISPs for information carried on or disseminated through their networks is unsettled.

As the law in this area develops and as we expand our international operations, the potential imposition of liabilities upon us for the behavior of our customers or the information carried on and disseminated through our network could require us to implement measures to reduce our exposure to such liabilities, which may require the expenditure of substantial resources or the discontinuation of certain products or service offerings.

Any costs that are incurred as a result of such measures or the imposition of liabilities could have a material adverse effect on our business.

Privacy requirements in the EU may impact our business.

The General Data Protection Regulation (“GDPR”) came into force in May 2018 in the European Union.

The GDPR creates significant new requirements regarding the protection of personal data and significantly increases the financial penalties for noncompliance.

We believe we are in compliance with GDPR, and we do not believe that GDPR will have a significant impact on our provision of services to our customers.

However, in the

absence of precedence and guidance from EU regulators, the application of GDPR to the provision of internet services remains unsettled, and we may be required to adopt additional measures in the future.

In addition to the new requirements imposed upon us by GDPR, the privacy requirements and expectations created in the EU by GDPR are stricter than those in the US.

These requirements include rules restricting the flow of data across borders.

These restrictions may cause companies to localize data, decline to make use of services provided by our customers in the US, and otherwise impact the use of our services.

Notwithstanding the existence of programs such as the Privacy Shield program in place between the US and EU and other means of compliance created by GDPR, European companies and individuals may be reluctant to use US companies, which could negatively impact our business.

Proposed privacy requirements in the United States and other countries may impact our business.

Many countries, including the United States, are considering adopting privacy regulations or laws that would govern the way an Internet user's data is used.

On January 1, 2020, the California Consumer Privacy Act (“CCPA”) came into effect.

Regulatory Risks

Existing and proposed privacy regulations may impact our business

Many countries, including the United States, are considering adopting, or have already adopted, privacy regulations or laws that would govern the way an Internet user's data is used.

The primary impact of these rules are on businesses that collect personal information about consumer users of their services.

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However, we transmit data across the Internet, which data may include personal information collected by our customers.

We believe we are in compliance with the CCPA, and we do not believe our transmission of this information creates any separate obligations under the CCPA.

Nevertheless, as the application of the CCPA is novel and unsettled, interpretation and enforcement of the CCPA will develop over time, and we may be required to adopt additional measures in the future.

In addition to the CCPA, numerous other states are contemplating similar privacy regulation.

Some of these proposed privacy rules could impose obligations on us that could negatively impact our business.

Although our customer contracts limit our liability, affected customers and third parties may seek to recover damages from us under various legal theories.

As the applicability of privacy regulations to the types of services we provide remains unsettled, we may be required to adopt additional measures in the future.

Privacy regulations, such as the General Data Protection Regulation (“GDPR”) in the European Union and the California Consumer Privacy Act (“CCPA”) in California vary in scope and in the obligations they impose on us.

As new laws are implemented or existing structures are declared insufficient, such as the Privacy Shield program in place between the US and EU, we may find it difficult to comply with such regulations or find it costly to do so.

Moreover, for our customers who collect personal information, increased regulation of the collection, processing and use of personal data may impact their business and their use of services in unknown ways.

Changes in laws, rules, and enforcement could adversely affect us.

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Elsewhere the regulation is greater, though not as extensive as the regulation for providers of voice services.

If we decide to offer traditional voice services or otherwise expand our service offerings to include services that would cause us to be deemed a common carrier, we will become subject to additional regulation.

Additionally, if we offer voice service using IP (VOIP) or offer certain other types of data services, we may become subject to additional regulation.

This regulation could impact our business because of the costs and time required to obtain necessary authorizations, the additional taxes that we may become subject to or may have to collect from our customers, and the additional administrative costs of providing these services, and other costs.

Even if we do not decide to offer additional services, governmental authorities may decide to impose additional regulation and taxes upon providers of Internet access and private network services.

However, governmental authorities may decide to impose additional regulation and taxes upon providers of Internet access and private network services.

All of these matters could inhibit our ability to remain a low-cost carrier and could have a material adverse effect on our business, financial condition and our results of operations.

As with the privacy laws described earlier, much of the law related to the liability of Internet service providers for content on the network and the behavior of our customers and their end users remains unsettled.

Some jurisdictions have laws, regulations, or court decisions that impose obligations upon Internet access providers to restrict access to certain content.

As with the privacy laws described earlier, much of the laws related to the liability of Internet service providers for content on the network and the behavior of our customers and their end users remains unsettled.

Some jurisdictions have laws, regulations, or court decisions that impose obligations upon ISPs to restrict access to certain content.

Other legal issues, such as the sharing of copyrighted information, data protection, trans-border data flow, unsolicited commercial email (“spam”), universal service, and liability for software viruses could become subjects of additional legislation and legal development and changes in enforcement policies.

Laws that could subject us to claims or otherwise impact our business include, among others:

● The Canadian Anti-Spam Legislation (“CASL”) implemented in 2015.

The full implementation of CASL was delayed in 2017, and changes may be made to the legislation in the future.

We believe we are currently in compliance with CASL.

● Statutory safe harbors, such as the Digital Millennium Copyright Act in the United States, upon which we rely with respect to copyright liability for transitory communications.

Any changes to these safe harbors may adversely impact us.

● The United States Communications Assistance for Law Enforcement Act and similar laws of other countries require that we be able to intercept communications when required to do so by law enforcement agencies.

We may experience difficulties and incur significant costs in complying with these laws.

If we are unable to comply with the laws we could be subject to fines in the United States of up to $1.0 million per event and equal or greater fines in other countries.

We cannot predict the impact of these changes on us.

They could have a material adverse effect on our business, financial condition and our results of operations.

Changes in laws, rules and enforcement may also adversely affect our customers.

For example, a possible repeal or curtailing of Section 230 of the Communications Decency Act in the United States could have an adverse impact on our customers and, consequently, on us.

While our top 25 customers reprented less than 5.5% of our revenue for the year ended December 31, 2020, several large net-centric customers are or may be the subject of increased regulatory scrutiny, which may impact their businesses and, consequently, their use of our services in unknown ways.

Some governments attempt to limit access to certain content on the Internet.

It is impossible for us to filter all content that flows across the Internet connections we provide.

For example, some content is encrypted when a secure website is accessed.

It is difficult to limit access to websites by blocking a fixed set of Internet addresses when the website operators engage in practices that make it difficult to block them.

We could also be subject to penalties if we fail to implement the censorship.

Governments may assert that we are liable for taxes which we have not collected from our customers and we may have to begin collecting a multitude of taxes if Internet services become subject to taxation similar to the taxation of telephone service.

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Finally, the cumulative effect of these taxes levied on Internet services could discourage potential customers from using Internet services to replace traditional telecommunication services and negatively impact our ability to grow our business.

Our private network services are subject to taxes and fees in various jurisdictions.

Our private network services, such as our VPN services, are subject to taxes and fees in various jurisdictions.

We believe we collect all required taxes, however, a jurisdiction may assert we have failed to collect certain taxes.

The expense of paying any unpaid taxes could be substantial and we might not be able to collect such back taxes from our customers.

The exit of the United Kingdom from the European Union may adversely affect us.

We operate in the EU, including the United Kingdom.

The exit of the United Kingdom from the EU could adversely affect our operations and sales in unknown ways.

Terrorist activity throughout the world, military action to counter terrorism and natural disasters could adversely impact our business.

The continued threat of terrorist activity and other acts of war or hostility have had, and may continue to have, an adverse effect on business, financial and general economic conditions internationally.

Effects from these events and any future terrorist activity, including cyber terrorism, may, in turn, increase our costs due to the need to provide enhanced security, which would adversely affect our business and results of operations.

These circumstances may also damage or destroy the Internet infrastructure and may adversely affect our ability to attract and retain customers, our ability to raise capital and the operation and maintenance of our network access points.

We are also susceptible to other catastrophic events such as major natural disasters, extreme weather, fire or similar events that could affect our headquarters, other offices, our network, infrastructure or equipment or our customers and prospective customers, which could adversely affect our business.

If we do not comply with laws regarding corruption and bribery, we may become subject to monetary or criminal penalties.

The United States Foreign Corrupt Practices Act generally prohibits companies and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business.

Other countries have similar laws to which we are subject.

We take precautions to comply with these laws.

However, these precautions may not protect us against liability, particularly as a result of actions that may be taken in the future by agents and other intermediaries through whom we have exposure under these laws even though we may have limited or no ability to control such persons.

Our competitors include foreign entities that are not subject to the United States Foreign Corrupt Practices Act or laws of similar stringency, and hence we may be at a competitive disadvantage.

Allegations that the United States Government has intercepted Internet traffic may discourage use of the Internet and the use of United States based Internet service providers.

Allegations have been made that the United States Government (through its National Security Agency) and other governments have allegedly intercepted Internet traffic on a massive scale.

It has also been alleged that user information has been collected from various Internet-based services with and without the cooperation of the companies providing those services.

Such allegations may discourage individuals and organizations from making use of Internet-based services due to privacy concerns and concerns that proprietary data can be compromised, This could impact our ability to grow our business, especially because we and other companies headquartered in the United States may be less favored by customers that perceive a connection between the activities of the United States Government and United States companies.

We are also subject to audit of our tax compliance in numerous jurisdictions.

These may result in the assessment of amounts due that are material and therefore would have an adverse effect on us.

The utilization of certain of our net operating loss carryforwards is limited and depending upon the amount of our taxable income we may be subject to paying income taxes earlier than planned.

Section 382 of the Internal Revenue Code in the United States limits the utilization of net operating losses when ownership changes, as defined by that section, occur.

We have performed an analysis of our Section 382 ownership changes and have determined that the utilization of certain of our net operating loss carryforwards in the United States is limited.

Further, recent changes to the tax law in the United States and changes to tax laws in other jurisdictions in which we operate may impact our utilization of our net operating losses.

Risk Factors Related to Our Indebtedness

We have substantial debt which we may not be able to repay when due.

Our total indebtedness, at par, at December 31, 2019 was $967.9 million and included $189.2 million of our 5.625% senior unsecured notes, $445.0 million of our 5.375% senior secured notes and €135.0 million of our 4.375% senior unsecured notes.

Our $189.2 million of senior unsecured notes are due in 2021 and require interest payments totaling $10.6 million per year.

Our $445.0 million senior secured notes are due in March 2022 and require annual interest payments of $23.9 million per year.

Our €135.0 million of senior unsecured notes are due in 2024 and require annual interest payments of €5.9 million per year.

Our total indebtedness, at par, at December 31, 2020 was $1.1 billion and included $445.0 million of our 5.375% senior secured notes and €350.0 million of our 4.375% senior unsecured notes.

Our $445.0 million senior secured notes are due in March 2022 and require annual interest payments of $23.9 million per year - paid semi-annually.

Our €350.0 million of senior unsecured notes are due in June 2024 and require annual interest payments of €15.3 million per year - paid semi-annually.

All of our noteholders have the right to be paid the principal upon default and upon certain designated events, such as certain changes of control.

Our total indebtedness at December 31, 2020 included $219.1 million of finance lease obligations for dark fiber primarily under 15 — 20 year IRUs and $7.7 million due under an installment payment agreement with a vendor.

Our total indebtedness at December 31, 2019 excludes $96.8 million of operating lease liabilities which we were required to record as a right-to-use asset and operating lease liabilities in connection with the adoption of ASU No.

Our total indebtedness at December 31, 2020 excludes $122.5 million of operating lease liabilities which we were required to be recorded as right-to-use assets and operating lease liabilities in connection with the adoption of ASU No.

2016-02 Leases on January 1, 2019.

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The amount of US dollars required to fund our interest and principal obligations for our Euro-denominated notes may be impacted due to fluctuations in the Euro to US Dollar exchange rate.

We may not have sufficient funds to pay the interest and principal related to these obligations at the time we are obligated to do so, which could result in bankruptcy, or we may only be able to raise the necessary funds on unfavorable terms.

We may not have sufficient funds to pay the interest and principal related to these obligations at

the time we are obligated to do so, which could result in bankruptcy, or we may only be able to raise the necessary funds on unfavorable terms.

Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our notes and our other indebtedness.

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● make it more difficult for us to satisfy our financial obligations, including those relating to our debt;

● require us to dedicate a substantial portion of any cash flow from operations to the payment of interest and principal due under our debt, which will reduce funds available for other business purposes, including the growth of our operations, capital expenditures and acquisitions;

● place us at a competitive disadvantage compared with some of our competitors that may have less debt and better access to capital resources;

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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-K

Item 1A. Risk Factors