5 unchanged sentences
Factors that could cause or contribute to these differences include, but are not limited to:
−Removed: Our pending acquisition of Sprint Communications, including delays or conditions on the obtaining of necessary regulatory approvals, our failure to close the acquisition or difficulties integrating our business with the acquired Sprint Communications business;
−Removed: the COVID-19 pandemic and accompanying government policies worldwide;
−Removed: vaccination and in-office requirements, delays in the delivery of network equipment and optical fiber, future economic instability in the global economy, including the risk of economic recession which could affect spending on Internet services;
+Added: Our acquisition of the Wireline Business of Sprint Communications (as defined below), including difficulties integrating our business with the Wireline Business, which may result in the combined company not operating as effectively and efficiently as expected;
+Added: transition services required to support the Wireline Business and the related costs continuing for a period longer than expected, the COVID-19 pandemic and accompanying government policies worldwide;
+Added: vaccination and in-office requirements, delays in the delivery of network equipment and optical fiber, future economic instability in the global economy, including the risk of economic recession and recent bank failures and liquidity concerns at certain other banks, which could affect spending on Internet services;
the impact of changing foreign exchange rates (in particular the Euro to US dollar and Canadian dollar to US dollar exchange rates) on the translation of our non-US dollar denominated revenues, expenses, assets and liabilities into US dollars;
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the management of network failures and/or disruptions;
−Removed: our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our interest rate swap agreement as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission including, without limitation, our annual report on Form 10-K for the year ended December 31, 2021.
+Added: our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our interest rate swap agreement (the “Swap Agreement”) as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, this report and our annual report on Form 10-K for the year ended December 31, 2022.
Ukraine & Russia
−Removed: Following the Russian invasion of Ukraine in February 2022, we terminated services to customers linked to Russia and the Russian government.
+Added: Following the Russian invasion of Ukraine in February 2022, we terminated services to customers based in Russia and linked to the Russian government.
These customers represented less than 0.3% of our consolidated revenues for the three months ended March 31, 2022.
3 unchanged sentences
We do not believe that the termination of services to certain Russian customers or the impact of the war on our ability to provide services in Ukraine will have, taken together, a material impact on our network, financial statements or operating results.
−Removed: Cogent Ukraine represented less than 0.1% of our consolidated revenues for the nine months ended September 30, 2022 and less than 0.1% of our consolidated assets as of September 30, 2022.
−Removed: Sprint Acquisition
−Removed: On September 6, 2022, Cogent Infrastructure, Inc., a Delaware corporation (the “Buyer”) and a wholly owned subsidiary of Holdings, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Sprint Communications LLC, a Kansas limited liability company (“Sprint”) and an indirect wholly owned subsidiary of T-Mobile US, Inc., a Delaware corporation and Sprint LLC, a Delaware limited liability company and a direct wholly owned subsidiary of T-Mobile (the “Seller”), pursuant to which Holdings will acquire the U.S.
−Removed: long-haul fiber network (including the non-U.S.
−Removed: extensions thereof) of Sprint Communications and its subsidiaries (the “Wireline Business”).
−Removed: The Purchase Agreement provides that, upon the terms and conditions set forth therein, Holdings will purchase from the Seller all of the issued and outstanding membership interests of a Delaware limited liability company that holds Sprints’ assets and liabilities relating to the Wireline Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).
+Added: Cogent Ukraine represented less than 0.3% of our consolidated revenues for the three months ended March 31, 2023 and less than 0.7% of our consolidated assets as of March 31, 2023.
Page 17 of 34
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Our network is specifically designed and optimized to transmit packet switched data.
−Removed: We deliver our services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in 51 countries across North America, Europe, Asia, South America, Australia and Africa.
+Added: We deliver our services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in 51 countries across North America, Europe, Oceania, South America, Oceania and Africa.
We are a Delaware corporation, and we are headquartered in Washington, DC.
3 unchanged sentences
Our on-net service consists of high-speed Internet access and private network services offered at speeds ranging from 100 megabits per second (“Mbps”) to 400 gigabits per second (“Gbps”).
−Removed: Our on-net revenues represented 75.5% of our revenues for the three months ended September 30, 2022, 75.1% of our revenues for the three months ended September 30, 2021, 75.5% of our revenues for the nine months ended September 30, 2022 and 75.0% of our revenues for the nine months ended September 30, 2021.
+Added: Our on-net revenues represented 75.6% of our revenues for the three months ended March 31, 2023 and 75.5% of our revenues for the three months ended March 31, 2022.
We provide our on-net Internet access and private network services to our corporate and net-centric customers.
−Removed: Our corporate customers are located in MTOBs and typically include law firms, financial services firms, advertising and marketing firms, as well as health care providers, educational institutions and other professional services businesses.
+Added: Our corporate customers are located in multi-tenant office buildings (“MTOB’s”) which typically include law firms, financial services firms, advertising and marketing firms, as well as health care providers, educational institutions and other professional services businesses.
Our net-centric customers include bandwidth-intensive users that leverage our network to either deliver content to end users or to provide access to residential or commercial internet users.
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We provide these off-net services primarily to corporate customers using other carriers’ circuits to provide the “last mile” portion of the link from the customers’ premises to our network.
−Removed: Our off-net revenues represented 24.4% of our revenues for the three months ended September 30, 2022, 24.8% of our revenues for the three months ended September 30, 2021, 24.4% of our revenues for the nine months ended September 30, 2022 and 24.9% of our revenues for the nine months ended September 30, 2021.
−Removed: We also provide certain non-core services that resulted from acquisitions.
+Added: Our off-net revenues represented 24.3% of our revenues for the three months ended March 31, 2023 and 24.4% of our revenues for the three months ended March 31, 2022.
+Added: We also provide certain non-core services as a result of certain acquisitions.
We continue to support but do not actively sell these non-core services.
We expect revenue from non-core services to continue to decline or to remain flat.
−Removed: Our non-core revenues represented less than 0.1% of our revenues for all periods.
−Removed: In connection with our Sprint acquisition we will begin to provide optical wavelength services over our fiber network.
−Removed: We will sell these wavelength services to our existing customers, Sprint customers and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.
+Added: Our non-core revenues represented less than 0.1% of our revenues for both the three months ended March 31, 2023 and March 31, 2022.
+Added: Acquisition of Sprint Communications
+Added: On May 1, 2023 (the “Closing Date”), Cogent Infrastructure, Inc., a Delaware corporation and our direct wholly owned subsidiary, closed on its acquisition of the U.S.
+Added: long-haul fiber network (including the non-U.S.
+Added: extensions thereof) of Sprint Communications and its subsidiaries (the “Wireline Business”) in accordance with the terms and conditions of the Membership Interest Purchase Agreement (the “Purchase Agreement”), dated September 6, 2022, by and among us, Sprint Communications LLC, a Kansas limited liability company (“Sprint Communications”) and an indirect wholly owned subsidiary of T-Mobile US, Inc., a Delaware corporation (“T-Mobile”), and Sprint LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of T-Mobile (the “Seller”).
+Added: On the Closing Date, we purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) of Wireline Network Holdings LLC, a Delaware limited liability company that, following an internal restructuring and divisive merger, holds Sprint Communications’ assets and liabilities relating to the Wireline Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).
+Added: Page 18 of 34
+Added: Purchase Price
+Added: On the Closing Date, we paid $1 to the Seller for the Purchased Interests, subject to customary adjustments, including working capital (the “Working Capital Adjustment”), as set forth in the Purchase Agreement.
+Added: As consideration for the Purchased Interests, the Working Capital Adjustment (primarily related to acquired cash and cash equivalents of $43.4 million in order to fund the International operations of the Wireline Business) resulted in us making a payment of $61.1 million to the Seller at the consummation of the Transaction (the “Closing”).
+Added: Additionally, the Working Capital Adjustment includes an estimated payment of $30.8 million from the Seller to us related to acquired lease obligations in equal payments of 25% each in months 55 to 58 after the Closing Date.
+Added: Wavelength and Optical Transport Services
+Added: In connection with our acquisition of the Wireline Business, we will begin to provide optical wavelength services and optical transport services over our fiber network.
+Added: We intend to sell these wavelength services to our existing customers, customers of Sprint Communications and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.
+Added: IP Transit Services Agreement
+Added: On the Closing Date, T-Mobile USA, Inc., a Delaware corporation and direct subsidiary of T-Mobile (“TMUSA”), entered into an agreement for IP transit services, pursuant to which TMUSA will pay us an aggregate of $700 million, consisting of (i) $350 million in equal monthly installments during the first year after the Closing Date and (ii) $350 million in equal monthly installments over the subsequent 42 months.
+Added: Transition Services Agreement
+Added: On the Closing Date, we also entered into a transition services agreement (the “TSA”) with the Seller, pursuant to which the Seller and certain of its affiliates will provide to us, and we will provide to the Seller and certain of its affiliates, on an interim basis following the Closing Date, certain specified services (the “Transition Services”) to ensure an orderly transition following the separation of the Wireline Business from Sprint Communications.
+Added: The services to be provided by the Seller and its affiliates include, among others, information technology support, back office and finance, real estate and facilities, vendor and supply chain management and human resources.
+Added: The services to be provided by us include, among others, information technology and network support, finance and back office and other wireless business support.
+Added: The initial cost of services provided by the Seller to us is expected to be approximately $1.7 million per month and the cost of the services provided by us to the Seller is expected to be approximately $0.1 million per month however we believe these initial costs may fluctuate and diminish over time as each party modifies and eventually discontinues the use of Transition Services.
+Added: The Transition Services are generally intended to be provided for a period of up to two years following the Closing Date, although such period may be extended for an additional one-year term by either party upon 30 days’ prior written notice.
+Added: The fees for the Transition Services have been calculated using either a per service monthly fee or an hourly rate for the employees allocated to provide such services.
+Added: Any third-party costs incurred in providing the Transition Services will be passed on to the party receiving such services at cost.
+Added: Either party to the TSA may terminate the agreement (i) with respect to any individual service for convenience upon 30 days’ prior written notice or (ii) in its entirety if the other party has failed to perform any of its material obligations and such failure is not cured within 30 days.
+Added: The TSA provides for customary indemnification and limits on liability.
+Added: Other Services Provided to Seller
+Added: In addition, on the Closing Date, we entered into an agreement with TMUSA for colocation, connectivity services, pursuant to which we will provide such services to the Seller for a per service monthly fee plus certain third-party costs incurred in providing the services.
+Added: The initial amount of the services provided by us to the Seller is expected to be approximately $2.7 million per month however we believe this initial amount may fluctuate and diminish over time as Seller modifies and eventually discontinues the use of such services.
+Added: Page 19 of 34
Competitive Advantages
We believe we address many of the data communications needs of small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations by offering them high-quality, high-speed Internet access and private network services at attractive prices.
+Added: With our acquisition of the Wireline Business we will be offering services to larger enterprise customers.
We believe that our organization has the following competitive advantages:
−Removed: Page 21 of 40
Low Cost of Operation:
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We made this selection in order to take advantage of the significantly greater installed base and lower cost of Ethernet network equipment versus other protocols, the substantially lower costs associated with operating and maintaining one network protocol and the continued benefits of the rapid price performance ratio improvements of Ethernet-related equipment.
−Removed: Our single network design allows us to avoid many of the costs that our competitors who operate circuit-switched, TDM and hybrid fiber coaxial networks incur related to provisioning, monitoring and maintaining multiple transport protocols.
+Added: Our single network design allows us to avoid many of the costs that our competitors who operate circuit-switched, time-division multiplexing (“TDM”) and hybrid fiber coaxial networks incur related to provisioning, monitoring and maintaining multiple transport protocols.
Selecting one operating protocol has also had positive effects in terms of our operating overhead and the simplicity of our organization.
3 unchanged sentences
This choice to lease rather than build reduces our capital intensity and the operating costs of our intercity and metro networks.
−Removed: The nature of this portfolio and the individual leases provide us long-term access to dark fiber at attractive rates and the opportunity in many cases to extend these leases for multiple terms.
+Added: The nature of this portfolio and the individual leases provide us long-term access to dark fiber at attractive rates and, in many cases the opportunity to extend these leases for multiple terms.
On average, a modest number of our dark fiber leases come up for renewal each year.
12 unchanged sentences
This replication strategy provides us scale benefits in equipment purchases, training, and maintenance.
+Added: Page 20 of 34
Greater Control and Superior Delivery .
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As a result, only a cross-connection within the data center is required to provide our services to our customers.
−Removed: The structure of our on-net service provides us more control over our service, quality and pricing.
+Added: The structure of our on-net service provides us with more control over our service, quality and pricing.
It also allows us to provision services more quickly and efficiently than provisioning services on a third-party carrier network.
The vast majority of our on-net services can be installed in less than two weeks, which is materially faster than the installation times for some of our incumbent competitors.
−Removed: Page 22 of 40
High-Quality, Reliable Service.
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Our network is connected to 3,190 total buildings located in 219 metropolitan markets.
−Removed: These buildings include 1,832 large MTOBs (totaling 995.5 million square feet of office space) in major North American cities where we offer our services to a diverse set of high-quality corporate customers within close physical proximity of each other.
−Removed: These buildings also include 1,433 CNDCs located in 1,240 buildings in North America, Europe, Asia, South America, Australia and Africa where our net-centric customers directly interconnect with our network.
+Added: These buildings include 1,841 large MTOBs (totaling 1.0 billion square feet of office space) in major North American cities where we offer our services to a diverse set of high-quality corporate customers within close physical proximity of each other.
+Added: These buildings also include 1,490 CNDCs located in 1,294 buildings in North America, Europe, South America, Oceania and Africa where our net-centric customers directly interconnect with our network.
We also operate 55 of our own data centers across the United States and in Europe, which comprise over 621,000 square feet of floor space and are directly connected to our network.
+Added: Our acquisition of the Wireline Business added 45 data centers to our network.
We believe that these network points of presence strategically position our network to attract high levels of Internet traffic and maximize our revenue opportunities and profitability.
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The breadth of our network, extensive size of our customer base, and the volume of our traffic enables us to be one of a handful of Tier 1 networks that are interconnected on a settlement-free basis.
−Removed: This Tier 1 peering status broadens our geographic delivery capability and materially reduces our network costs.
+Added: This Tier 1 network peering status broadens our geographic delivery capability and materially reduces our network costs.
Proven and Experienced Management Team .
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Several members of the senior management team have been working together at the Company since 2000.
−Removed: Our senior management team has designed and built our network and, during our formative years, led the integration of network assets we acquired through 13 significant acquisitions and managed the expansion and growth of our business.
+Added: Our senior management team has designed and built our network and, during our formative years, led the integration of network assets we acquired through 13 significant previous acquisitions and managed the expansion and growth of our business.
+Added: We anticipate that our management team will successfully manage the integration of the Wireline Business into our current operations.
We intend to become the leading provider of high-quality, high-speed Internet access and private network services and to continue to improve our profitability and cash flow.
The principal elements of our strategy include:
+Added: Page 21 of 34
Grow our Corporate Customer Base.
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We believe that the importance of data centers will increasingly lead tenants to reconfigure their communications infrastructure to include dedicated internet access across their locations.
−Removed: Page 23 of 40
+Added: With our acquisition of Wireline Business we will be offering services to larger enterprise customers.
Increase our Share of the Net-Centric Market .
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● Large and dedicated salesforce – Our team of net-centric sales professionals is one of the largest salesforces in this industry segment and enables us to better serve this customer segment while also identifying new sales opportunities and gaining new business and customers.
+Added: ● The customers of the Wireline Business will include a number of large enterprise customers, a type of customer that we have not traditionally served.
Develop a Worldwide Peering Platform.
In late 2020 we introduced a new product, Global Peer Connect, targeted at the growing demand for certain net-centric customers to dynamically peer traffic anywhere on our global platform.
−Removed: Our GPC product provides access to our Global Peer Exchange which is a worldwide connectivity platform for the exchange of peering traffic destined for the Internet.
+Added: Our Global Peer Connect product provides access to our Global Peer Exchange which is a worldwide connectivity platform for the exchange of peering traffic destined for the Internet.
Similar product offerings in the marketplace offer a materially smaller geographic footprint configuration and require a higher fixed cost for customers.
+Added: We currently serve over 400 connections via our Global Peer Exchange.
Pursue On-net Customer Growth.
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We intend to increase usage of our network and operational infrastructure by adding customers in our existing on-net buildings, as well as developing additional markets and connecting more MTOBs and CNDCs to our network.
−Removed: We emphasize our on-net services because they generate greater profit margins and we have more control over service levels, quality, pricing and our on-net services are provisioned in considerably less time than our off-net services.
+Added: We emphasize our on-net services because they generate greater profit margins and we have more control over service levels, quality and pricing, and our on-net services are provisioned in considerably less time than our off-net services.
Our fiber network connects directly to our on-net customers’ premises and we pay no local access (“last mile”) charges to other carriers to provide our on-net services.
+Added: Page 22 of 34
Continue to Improve our Sales Efforts and Productivity.
2 unchanged sentences
In order to gain market share in our targeted businesses, we expect to continue our sales efforts including introducing strategies and tools to optimize and improve our sales productivity.
+Added: We have developed several training programs that are directed toward increasing our sales representative tenure and increasing our sales representative productivity.
+Added: In addition, we have required all of our employees to work in the office on a full-time basis, thereby providing additional opportunities for management coaching and oversight in order to increase productivity.
Expand our Off-net Corporate Internet Access Business.
−Removed: We have agreements with national carriers providing us last mile network access to over 4.0 million commercial buildings that are lit by fiber optic cable across North America and that are not currently served by our network.
+Added: We have agreements with over 500 national and international carriers providing us last mile network access to over 5 million commercial buildings that are lit by fiber optic cable across North America and that are not currently served by our network.
We believe these agreements broaden our addressable market for corporate dedicated internet access and enhances our competitive position through the ability to provide enterprise-wide connectivity for corporate customers.
1 unchanged sentence
We continue to negotiate reduced pricing under our numerous carrier agreements that enable us to reduce our cost of off-net services which enhances our competitive position in the marketplace.
−Removed: Expand our product offerings to include wavelength services.
−Removed: In connection with our Sprint acquisition we will begin to provide optical wavelength services over our fiber network.
−Removed: We will sell these wavelength services to our existing customers, Sprint customers and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.
−Removed: Page 24 of 40
+Added: Expand our Product Offerings to Include Wavelength and Optical Transport Services .
+Added: In connection with our acquisition of the Wireline Business of Sprint Communications, we will provide optical wavelength and optical transport services, initially in the United States, over our fiber network.
+Added: We will sell these services to our existing customers, customers of Sprint Communications and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.
Results of Operations
−Removed: Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022
+Added: Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality and variability of our service revenue, operating results and cash flows.
The following summary tables present a comparison of our results of operations with respect to certain key financial measures.
−Removed: The comparisons illustrated in the table are discussed in greater detail below.
+Added: The comparisons illustrated in the tables are discussed in greater detail below.
Three Months Ended
−Removed: September 30,
(in thousands)
4 unchanged sentences
Selling, general, and administrative expenses (2)
−Removed: Acquisition costs - Sprint (T-Mobile Wireline)
Depreciation and amortization expenses
−Removed: Foreign exchange gain - 2024 Notes
−Removed: Change in valuation expense – interest rate swap
+Added: Unrealized foreign exchange gain on 2024 Notes
+Added: Change in valuation – interest rate swap agreement
Interest expense
Income tax expense
−Removed: (1) Includes equity-based compensation expenses of $176 and $163 in the three months ended September 30, 2022 and 2021, respectively.
−Removed: (2) Includes equity-based compensation expenses of $6,035 and $6,425 in the three months ended September 30, 2022 and 2021, respectively.
+Added: (1) Includes non-cash equity-based compensation expenses of $149 and $144 in the three months ended March 31, 2023 and 2022, respectively.
+Added: (2) Includes non-cash equity-based compensation expenses of $6,432 and $5,912 in the three months ended March 31, 2023 and 2022, respectively.
NM – not meaningful
+Added: Page 23 of 34
Three Months Ended
−Removed: September 30,
Other Operating Data
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We continually work to grow our total service revenue by increasing the number of potential customers that we can reach on our network.
−Removed: We do this by investing capital to expand the geographic footprint of our network, increasing the number of buildings that we are connected to, including CNDCs and MTOBs and increasing our penetration rate into our existing buildings.
+Added: We do this by investing capital to expand the geographic footprint of our network, increasing the number of buildings that we are connected to, including CNDC’s and MTOB’s, and increasing our penetration rate into our existing buildings.
These efforts broaden the global reach of our network and increase the size of our potential addressable market.
We also seek to grow our service revenue by investing in our sales and marketing team.
−Removed: We typically sell corporate connections at similar pricing to our competitors, but our clients benefit from our significantly faster speeds, enhanced service level agreements and rapid installation times.
+Added: We typically sell corporate connections at similar pricing to our competitors, but our clients benefit from our significantly faster speeds, greater aggregate throughput, enhanced service level agreements and rapid installation times.
In the net-centric market, we offer comparable services in terms of capacity but typically at significantly lower prices.
−Removed: Our service revenue increased by 1.4% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
+Added: Our service revenue increased by 3.0% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
Exchange rates negatively impacted our increase in service revenue by $1.6 million.
−Removed: All foreign currency comparisons herein reflect results for the three months ended September 30, 2022 translated at the average foreign currency exchange rates for the three months ended September 30, 2021.
−Removed: We increased our total service revenue by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
−Removed: Page 25 of 40
+Added: All foreign currency comparisons herein reflect results for the three months ended March 31, 2023 translated at the average foreign currency exchange rates for the three months ended March 31, 2022.
+Added: We increased our total service revenue by expanding our network, adding additional buildings to our network, increasing our penetration into the buildings connected to our network and gaining market share by offering our services at lower prices than our competitors.
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees.
We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of comprehensive income.
−Removed: The impact of these taxes including the Universal Service Fund, resulted in a decrease to our revenues of $0.7 million from the three months ended September 30, 2021 to the three months ended September 30, 2022.
+Added: The impact of these taxes including the Universal Service Fund, resulted in an increase to our revenues of $0.5 million from the three months ended March 31, 2022 to the three months ended March 31, 2023.
Our corporate customers generally purchase their services on a price per connection basis.
−Removed: Our net-centric customers generally purchase their services on a price per megabit basis.
−Removed: Revenues from our corporate and net-centric customers represented 57.0% and 43.0% of total service revenue, respectively, for the three months ended September 30, 2022 and represented 60.2% and 39.8% of total service revenue, respectively, for the three months ended September 30, 2021.
−Removed: Revenues from corporate customers decreased by 4.0% to $85.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.
−Removed: Revenues from our net-centric customers increased by 9.6% to $64.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.
−Removed: Exchange rates negatively impacted our increase in our net–centric service revenue by approximately $4.2 million.
−Removed: Our corporate customers take advantage of our superior speeds, service levels and installation times versus our competitors.
−Removed: The growing trend of customers installing second lines for redundancy in order to construct Virtual Private Networks (“VPNs”) has also led to our ability to increase our corporate revenues.
−Removed: However, beginning in the second quarter of 2020, we saw corporate customers take a more cautious approach to new configurations and upgrades as well as a reduction in demand for connecting smaller satellite offices as a result of the challenges and uncertainties of the COVID-19 pandemic.
−Removed: 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.
−Removed: As a result, we have experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue results.
−Removed: While we believe that demand for office space in the buildings in which we operate will remain among the strongest in our markets, we may experience increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities which would negatively impact our corporate revenue growth.
−Removed: Our revenue from our net-centric customers increased primarily due to an increase in our number of net-centric customers and growth in network traffic from these customers partly offset by a decline in our average price per megabit.
−Removed: Our net-centric customers purchase our services on a price per megabit basis.
−Removed: The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology which lowers the marginal cost of transmission and routing, and the commodity nature of the service where price is typically the only differentiating factor for these customers.
−Removed: Our average price per megabit of our installed base of customers declined by 20.8% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
−Removed: We expect that our average price per megabit will continue to decline at similar rates.
−Removed: The impact of foreign exchange rates has a more significant impact on our net-centric revenues.
−Removed: Our on-net revenues increased by 1.9% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
−Removed: Our on-net revenues increased as we increased the number of our on-net customer connections by 3.1% at September 30, 2022 from September 30, 2021.
−Removed: On-net customer connections increased at a greater rate than on-net revenues primarily due to a decrease in our on-net ARPU from the three months ended September 30, 2021 to the three months ended September 30, 2022 and the negative impact of foreign exchange rates.
−Removed: ARPU is determined by dividing revenue for the period by the average customer connections for that period.
−Removed: Our off-net revenues decreased by 0.1% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
−Removed: Our off-net revenues decreased primarily from the decrease in our off-net ARPU from the three months ended September 30, 2021 to the three months ended September 30, 2022 offsetting the 6.9% increase in the number of our off-net customer connections from September 30, 2021 to September 30, 2022 and the negative impact of foreign exchange rates.
−Removed: Page 26 of 40
−Removed: Network Operations Expenses.
−Removed: Network operations expenses include the costs of personnel associated with service delivery, network management and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis.
−Removed: Our network operations expenses, including non-cash equity-based compensation expense, increased by 1.0% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
−Removed: Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation.
−Removed: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities partly offset by a $0.7 million reduction in taxes including the Universal Service Fund.
−Removed: Selling, General, and Administrative (“SG&A”) Expenses.
−Removed: Our SG&A expenses, including non-cash equity-based compensation expense, decreased by 2.5% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
−Removed: Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation.
−Removed: SG&A expenses decreased primarily from a decrease in salaries and benefits from a weighted average reduction in our total headcount during the three months ended September 30, 2022 compared to the three months ended September 30, 2021 and a reduction in our bad debt expense.
−Removed: Our sales force headcount, inclusive of sales management, was 669 at September 30, 2022 and 662 at September 30, 2021, and our total headcount was 1,041 at September 30, 2022 and 1,031 at September 30, 2021.
−Removed: We experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, beginning in the second half of 2021 and continuing into 2022.
−Removed: We believe that this rise in departures was attributable both to an increased focus on monitoring sales productivity and to the unwillingness of some employees to be vaccinated and/or to return to a full-time, in-office environment.
−Removed: Acquisition Costs – Sprint (T-Mobile Wireline).
−Removed: In connection with the Transaction and the negotiation of the Purchase Agreement the Company incurred $2.0 million of professional fees in the three months ended September 30, 2022.
−Removed: Subject to the satisfaction or waiver of certain conditions and the other terms and conditions of the Purchase Agreement, the Transaction is expected to close in the second half of 2023.
−Removed: Depreciation and Amortization Expenses.
−Removed: Our depreciation and amortization expense increased by 1.3% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
−Removed: The increase is primarily due to the depreciation expense associated with the increase in deployed fixed assets.
−Removed: Interest Expense.
−Removed: Our interest expense resulted from interest incurred on our €350.0 million of 2024 Notes until these notes were fully extinguished in June 2022, interest incurred on our $450.0 million of 2027 Notes that we issued in June 2022, interest incurred on our $500.0 million of 2026 Notes that we issued in May 2021 and interest incurred on our finance lease obligations.
−Removed: Our interest expense increased by 25.7% from the three months ended September 30, 2021 to the three months ended September 30, 2022.
−Removed: This increase was primarily due to the increase in interest expense from the increase in interest rates on our 7.0% 2027 Notes as compared to our 4.375% 2024 Euro Notes.
−Removed: Change in Valuation - Interest Rate Swap Agreement.
−Removed: In August 2021 we entered into our Swap Agreement that has the economic effect of modifying the fixed interest rate obligation associated with our 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”).
−Removed: This results in the interest payable on our 2026 Notes effectively becoming variable based on overnight SOFR.
−Removed: The Swap Agreement is recorded at its fair value at each reporting period, and we incur gains and losses due to changes in market interest rates.
−Removed: The values that we report for the Swap Agreement as of each reporting date are recognized as non-cash amounts with the corresponding amounts included in assets or liabilities in our consolidated balance sheets.
−Removed: As of September 30, 2022 the fair value of our Swap Agreement was a net liability of $54.7 million and we recorded an unrealized loss for the non-cash change in the valuation of the Swap Agreement of $16.9 million in the three months ended September 30, 2022 and $3.1 million in the three months ended September 30, 2021.
−Removed: We did not elect hedge accounting for our Swap Agreement.
−Removed: Under our Swap Agreement, we pay the counterparty a semi-annual payment based upon overnight SOFR plus a contractual interest rate spread, and the counterparty pays us a semi-annual fixed 3.50% interest payment.
−Removed: These settlement payments are made in November and May of each year until the Swap Agreement expires in February 2026.
−Removed: Under the first Swap Agreement settlement payment made in November 2021 we received a payment of $0.6 million from the counterparty for a net cash savings of $0.6 million for the period from August 9, 2021 (the Swap Agreement inception date) to October 31, 2021.
−Removed: Under the Swap Agreement settlement payment made in May 2022, we received a payment of $1.2 million from the counterparty for a net cash savings of $1.2 million for the period from November 1, 2021 to April 30, 2022.
−Removed: Under the Swap Agreement settlement payment made in November 2022, the Company made a payment of $3.4 million to the counterparty for a net cash interest cost of $3.4 million for the period from May 1, 2022 to October 31, 2022.
−Removed: Page 27 of 40
−Removed: Gain on Foreign Exchange – 2024 Notes .
−Removed: Our 2024 Notes were issued in Euros and were reported in our reporting currency - US Dollars - until they were extinguished and redeemed in June 2022.
−Removed: Our 2024 Notes were issued in June 2019 and June 2020 when the Euro to USD rate was approximately $1.13 and they were extinguished in September 2022 at a Euro to USD rate of $1.06.
−Removed: Our gain on foreign exchange on our 2024 Notes from converting our 2024 Notes into US Dollars was $10.2 million for the three months ended September 30, 2021.
−Removed: We have not entered into hedging arrangements for our foreign currency obligations.
−Removed: Income Tax Expense.
−Removed: Our income tax expense was $1.0 million for the three months ended September 30, 2022 and $8.7 million for the three months ended September 30, 2021.
−Removed: The decrease in our income tax expense is primarily related to the decrease in our income before income taxes.
−Removed: Buildings On-net.
−Removed: As of September 30, 2022 and 2021, we had a total of 3,126 and 3,008 on-net buildings connected to our network, respectively.
−Removed: The increase in our on-net buildings was a result of our disciplined network expansion program.
−Removed: We anticipate adding a similar number of buildings to our network for the next several years.
−Removed: Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021
−Removed: The following summary tables present a comparison of our results of operations with respect to certain key financial measures.
−Removed: The comparisons illustrated in the table are discussed in greater detail below.
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: (in thousands)
−Removed: Service revenue
−Removed: On-net revenue
−Removed: Off-net revenue
−Removed: Network operations expenses (1)
−Removed: Selling, general, and administrative expenses (2)
−Removed: Acquisition costs - Sprint (T-Mobile Wireline)
−Removed: Depreciation and amortization expenses
−Removed: Foreign exchange gains – 2024 Notes
−Removed: Loss on debt extinguishment and redemption – 2024 Notes
−Removed: Loss on debt extinguishment and redemption – 2022 Notes
−Removed: Change in valuation expense - interest rate swap
−Removed: Interest expense
−Removed: Income tax expense
−Removed: (1) Includes equity-based compensation expenses of $465 and $2,375 in the nine months ended September 30, 2022 and 2021, respectively.
−Removed: (2) Includes equity-based compensation expenses of $17,709 and $18,394 in the nine months ended September 30, 2022 and 2021, respectively.
−Removed: NM – not meaningful
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Other Operating Data
−Removed: Average Revenue Per Unit (ARPU)
−Removed: Average Price per Megabit — installed base
−Removed: Customer Connections—end of period
+Added: Our net-centric customers generally purchase their services on a price per megabit metered basis.
+Added: Revenues from our corporate and net-centric customers represented 55.8% and 44.2% of total service revenue, respectively, for the three months ended March 31, 2023 and represented 57.7% and 42.3% of total service revenue, respectively, for the three months ended March 31, 2022.
+Added: Revenues from corporate customers decreased by 0.6% to $85.6 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.
+Added: Revenues from our net-centric customers increased by 7.8% to $68.0 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.
Page 24 of 34
−Removed: Service Revenue.
−Removed: We continually work to grow our total service revenue by increasing the number of potential customers that we can reach on our network.
−Removed: We do this by investing capital to expand the geographic footprint of our network, increasing the number of buildings that we are connected to, including CNDCs and MTOBs and increasing our penetration rate into our existing buildings.
−Removed: These efforts broaden the global reach of our network and increase the size of our potential addressable market.
−Removed: We also seek to grow our service revenue by investing in our sales and marketing team.
−Removed: We typically sell corporate connections at similar pricing to our competitors, but our clients benefit from our significantly faster speeds, enhanced service level agreements and rapid installation times.
−Removed: In the net-centric market, we offer comparable services in terms of capacity but typically at significantly lower prices.
−Removed: Our service revenue increased by 1.1% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
−Removed: Exchange rates negatively impacted our increase in service revenue by $9.7 million.
−Removed: All foreign currency comparisons herein reflect results for the nine months ended September 30, 2022 translated at the average foreign currency exchange rates for the nine months ended September 30, 2021.
−Removed: We increased our total service revenue by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
−Removed: Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees.
−Removed: We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of comprehensive income.
−Removed: The impact of these taxes including the Universal Service Fund, resulted in a decrease to our revenues of $2.8 million from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
−Removed: Our corporate customers generally purchase their services on a price per connection basis.
−Removed: Our net-centric customers generally purchase their services on a price per megabit basis.
−Removed: Revenues from our corporate and net-centric customers represented 57.4% and 42.6% of total service revenue, respectively, for the nine months ended September 30, 2022 and represented 61.4% and 38.6% of total service revenue, respectively, for the nine months ended September 30, 2021.
−Removed: Revenues from corporate customers decreased by 5.4% to $256.8 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.
−Removed: Revenues from our net-centric customers increased by 11.6% to $190.8 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.
−Removed: Exchange rates negatively impacted our increase in our net-centric service revenue by approximately $9.7 million.
−Removed: Our corporate customers take advantage of our superior speeds, service levels and installation times versus our competitors.
+Added: Our corporate customers take advantage of our superior speeds, greater aggregate throughput, service levels and installation times versus our competitors.
The growing trend of customers installing second lines for redundancy in order to construct virtual private networks (“VPNs”) has also led to our ability to increase our corporate revenues.
−Removed: However, beginning in the first quarter of 2020, we saw corporate customers take a more cautious approach to new configurations and upgrades as well as a reduction in demand for connecting smaller satellite offices as a result of the challenges and uncertainties of the COVID-19 pandemic.
−Removed: 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.
−Removed: As a result, we have experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue results.
−Removed: While we believe that demand for office space in the buildings in which we operate will remain among the strongest in our markets, we may experience increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities which would negatively impact our corporate revenue growth.
+Added: Beginning with and throughout the COVID-19 pandemic, we witnessed a deteriorating real estate market in and around the buildings we service in central business districts in North America.
+Added: As a result of the rising vacancy levels and falling lease initiations or renewals, we experienced a slowdown in new sales to our corporate customers, which negatively impacted our corporate revenue results.
+Added: During the three months ended March 31, 2023, we slowly began to see declining vacancy rates and rising office occupancy rates.
+Added: In addition, we began to see positive trends in our corporate business.
+Added: As the option to fully or partially work from home becomes permanently established at many companies, our corporate customers are integrating some of the new applications that became part of the remote work environment, which benefits our corporate business as these customers upgrade their Internet access infrastructure to higher capacity connections.
+Added: Further, if and when companies eventually return to the buildings in which we operate, we believe it will present an opportunity for increased sales.
+Added: However, the exact timing and path of these positive trends remains uncertain, and as the after effects of the COVID-19 pandemic linger, we may continue to see increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities, which would negatively impact our corporate revenue growth.
Our revenue from our net-centric customers increased primarily due to an increase in our number of net-centric customers and growth in network traffic from these customers partly offset by a decline in our average price per megabit.
1 unchanged sentence
The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology which lowers the marginal cost of transmission and routing, and the commodity nature of the service where price is typically the only differentiating factor for these customers.
−Removed: Our average price per megabit of our installed base of customers declined by 19.4% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
+Added: Our average price per megabit of our installed base of customers declined by 20.4% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
We expect that our average price per megabit will continue to decline at similar rates.
The impact of foreign exchange rates has a more significant impact on our net-centric revenues.
−Removed: Page 29 of 40
−Removed: Our on-net revenues increased by 1.7% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
−Removed: Our on-net revenues increased as we increased the number of our on-net customer connections by 3.1% at September 30, 2022 from September 30, 2021.
−Removed: On-net customer connections increased at a greater rate than on-net revenues primarily due to a decrease in our on-net ARPU from the nine months ended September 30, 2021 to the nine months ended September 30, 2022 and the negative impact of foreign exchange rates.
+Added: Our on-net revenues increased by 3.1% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
+Added: Our on-net revenues increased as we increased the number of our on-net customer connections by 2.0% at March 31, 2023 from March 31, 2022.
+Added: On-net revenue increased at a greater rate than on-net customer connections primarily due to an increase in our on-net ARPU from the three months ended March 31, 2022 to the three months ended March 31, 2023.
ARPU is determined by dividing revenue for the period by the average customer connections for that period.
−Removed: Our off-net revenues decreased by 0.7% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
−Removed: Our off-net revenues decreased primarily from the decrease in our off-net ARPU from the nine months ended September 30, 2021 to the nine months ended September 30, 2022 offsetting the 6.9% increase in the number of our off-net customer connections from September 30, 2021 to September 30, 2022 and the negative impact of foreign exchange rates.
+Added: Our off-net revenues increased by 2.5% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
+Added: Our off-net revenues increased primarily from the 6.7% increase in the number of our off-net customer connections from March 31, 2022 to March 31, 2023 offsetting the decrease in our off-net ARPU from the three months ended March 31, 2022 to the three months ended March 31, 2023.
Network Operations Expenses.
Network operations expenses include the costs of personnel associated with service delivery, network management and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis.
−Removed: Our network operations expenses, including non-cash equity-based compensation expense, increased by 0.7% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
+Added: Our network operations expenses, including non-cash equity-based compensation expense, increased by 2.1% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation.
−Removed: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities partly offset by price reductions obtained in certain of our leased circuit costs and by a $2.8 million reduction in taxes including the Universal Service Fund.
+Added: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities and an increase in power costs.
Selling, General, and Administrative (“SG&A”) Expenses.
−Removed: Our SG&A expenses, including non-cash equity-based compensation expense, decreased by 3.1% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
+Added: Our SG&A expenses, including non-cash equity-based compensation expense, increased by 11.0% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation.
−Removed: SG&A expenses decreased primarily from a decrease in salaries and benefits from a weighted average reduction in our total headcount during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 and a reduction in our bad debt expense.
−Removed: Our sales force headcount, inclusive of sales management, was 669 at September 30, 2022 and 662 at September 30, 2021, and our total headcount was 1,041 at September 30, 2022 and 1,031 at September 30, 2021.
−Removed: We experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, beginning in the second half of 2021 and continuing into 2022.
−Removed: We believe that this rise in departures is attributable both to an increased focus on monitoring sales productivity and to the unwillingness of some employees to be vaccinated and/or to return to a full-time, in-office environment.
−Removed: Acquisition Costs – Sprint (T-Mobile Wireline).
−Removed: In connection with the Sprint Transaction and the negotiation of the Purchase Agreement the Company incurred $2.0 million of professional fees in the nine months ended September 30, 2022.
−Removed: Subject to the satisfaction or waiver of certain conditions and the other terms and conditions of the Purchase Agreement, the Transaction is expected to close in the second half of 2023.
+Added: SG&A expenses increased primarily from an increase in salaries and benefits from a 12.2% increase in our total headcount.
+Added: Our sales force headcount was 714 at March 31, 2023 and 620 at March 31, 2022, and our total headcount was 1,107 at March 31, 2023 and 987 at March 31, 2022.
Depreciation and Amortization Expenses.
−Removed: Our depreciation and amortization expense increased by 3.0% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
+Added: Our depreciation and amortization expense increased by 10.9% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
The increase is primarily due to the depreciation expense associated with the increase in deployed fixed assets.
−Removed: Interest Expense and Losses on Debt Extinguishment and Redemptions.
−Removed: Our interest expense resulted from interest incurred on our 5.375% 2022 Notes until these notes were fully extinguished in May 2021, interest incurred on our €350.0 million of 4.375% 2024 Notes until these notes were fully extinguished in June 2022, interest incurred on our $450.0 million of 7.00% 2027 Notes that we issued in June 2022, interest incurred on our $500.0 million of 3.50% 2026 Notes that we issued in May 2021 and interest incurred on our finance lease obligations.
−Removed: Our interest expense increased by 2.8% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022.
−Removed: The increase was primarily due to the reduction in interest expense from the lower interest rate on our 3.50% 2026 Notes as compared to our 5.375% 2022 Notes and from a net interest payment of $1.2 million that we received in May 2022 related to our Swap Agreement being offset by the increase in interest rates on our 7.0% 2027 Notes as compared to our 4.375% 2024 Euro Notes.
Page 25 of 34
−Removed: In March 2021, we redeemed and extinguished $115.9 million of our 5.375% 2022 Notes at 103.24% of par value resulting in a loss on debt extinguishment and redemption of $3.9 million and reduced the par value from $445.0 million to $329.1 million.
−Removed: In May 2021, we extinguished the remaining $329.1 million of our 2022 Notes at par value resulting in a loss on debt extinguishment and redemption of $10.8 million.
−Removed: In June 2022, we extinguished our 4.375% 2024 Notes at 101.094% of par value resulting in a loss on debt extinguishment and redemption of $11.9 million.
+Added: Interest Expense.
+Added: Our interest expense resulted from interest incurred on our €350.0 million aggregate principal amount of Senior Unsecured Euro Notes due 2024 (the “2024 Notes”) until these notes were fully extinguished in June 2022, interest incurred on our $500.0 million of 3.50% 2026 Notes that we issued in May 2021, interest incurred on our $450.0 million of 7.00% 2027 Notes that we issued in June 2022 and interest incurred on our finance lease obligations.
+Added: Our interest expense increased by 34.1% from the three months ended March 31, 2022 to the three months ended March 31, 2023.
+Added: The increase was primarily due to the increase in interest rates on our $450.0 million aggregate principal amount of Senior Unsecured 7.0% Notes due 2027 (the “2027 Notes”) as compared to our 4.375% 2024 Notes.
Change in Valuation - Interest Rate Swap Agreement.
−Removed: As of September 30, 2022 the fair value of our Swap Agreement was a net liability of $54.7 million and we recorded an unrealized loss for the non-cash change in the valuation of the Swap Agreement of $45.7 million in the nine months ended September 30, 2022 and $3.1 million in the nine months ended September 30, 2021.
−Removed: Under the Swap Agreement settlement payment made in May 2022, we received a payment of $1.2 million from the counterparty for a net cash savings of $1.2 million for the period from November 1, 2021 to April 30, 2022.
−Removed: Under the Swap Agreement settlement payment made in November 2022, the Company made a payment of $3.4 million to the counterparty for a net cash interest cost of $3.4 million for the period from May 1, 2022 to October 31, 2022
−Removed: Gain on Foreign Exchange – 2024 Notes.
−Removed: Our 2024 Notes were issued in Euros and were reported in our reporting currency - US Dollars - until they were extinguished and redeemed in June 2022.
−Removed: Our 2024 Notes were issued in June 2019 and June 2020 when the Euro to USD rate was approximately $1.13 and they were extinguished in June 2022 at a Euro to USD rate of $1.06.
−Removed: Our gain on foreign exchange on our 2024 Notes from converting our 2024 Notes into US Dollars was $31.6 million for the nine months ended September 30, 2022 and was $23.8 million for the nine months ended September 30, 2021.
−Removed: We have not entered into hedging arrangements for our foreign currency obligations.
+Added: As of March 31, 2023, the fair value of our Swap Agreement was a net liability of $50.3 million, and we recorded an unrealized gain (loss) for the non-cash change in the valuation of the Swap Agreement of $1.8 million in the three months ended March 31, 2023 and ($21.3) million in the three months ended March 31, 2022
+Added: Under the Swap Agreement settlement payment made in November 2021, we received $0.6 million from the counterparty for a net cash savings of $0.6 million for the period from August 9, 2021 (the Swap Agreement inception date) to October 31, 2021, in May 2022, we received $1.2 million from the counterparty for a net cash savings of $1.2 million for the period from November 1, 2021 to April 30, 2022.
+Added: Under the Swap Agreement settlement payment made in November 2022, we paid $3.4 million to the counterparty for a net cash interest cost of $3.4 million for the period from May 1, 2022 to October 31, 2022.
+Added: Under the Swap Agreement settlement payment made in May 2023, we paid approximately $9.5 million to the counterparty for a net cash interest cost of approximately $9.5 million for the period from November 1, 2022 to April 30, 2023.
+Added: Unrealized Gain on Foreign Exchange – 2024 Notes .
+Added: Our 2024 Notes were issued in Euros and were reported in our reporting currency – US Dollars until they were fully extinguished in June 2022.
+Added: The unrealized gain on foreign exchange on our 2024 Notes from converting our 2024 Notes into USD was $8.0 million for the three months ended March 31, 2022.
Income Tax Expense.
−Removed: Our income tax expense was $10.1 million for the nine months ended September 30, 2022 and $16.5 million for the nine months ended September 30, 2021.
−Removed: The decrease in our income tax expense is primarily related to the decrease in our income before income taxes.
+Added: Our income tax expense was $4.5 million for the three months ended March 31, 2023 and $0.5 million for the three months ended March 31, 2022.
+Added: The increase in our income tax expense is primarily related to the increase in our income before income taxes.
Buildings On-net.
−Removed: As of September 30, 2022 and 2021, we had a total of 3,126 and 3,008 on-net buildings connected to our network, respectively.
+Added: As of March 31, 2023 and 2022, we had a total of 3,190 and 3,065 on-net buildings connected to our network, respectively.
The increase in our on-net buildings was a result of our disciplined network expansion program.
2 unchanged sentences
In assessing our liquidity, management reviews and analyzes our current cash balances, accounts receivable, accounts payable, accrued liabilities, capital expenditure commitments, and required finance lease and debt payments and other obligations.
+Added: As our business has grown as a result of an increasing customer base, broader geographic coverage and increased traffic on our network, we have produced a growing level of cash provided by operating activities.
+Added: As a result of the operating leverage of our network, our annual capital expenditures as measured as a percentage of revenues has fallen over the last decade.
+Added: Increasing our cash provided by operating activities is, in part, dependent upon expanding our geographic footprint and increasing our network capacity.
+Added: Supply chain issues may adversely impact our ability to grow our network and revenue.
+Added: We have also had increasing success in raising capital by issuing notes and arranging financing and leases that have had a lower cost and more flexible terms.
+Added: The combination of this improved operating performance and access to capital has enhanced our financial flexibility and increased our ability to make distributions to stockholders in the form of cash dividends or through share repurchases.
+Added: Since our initial public offering, we have returned over $1.3 billion to our stockholders through share repurchases and dividends.
+Added: We will continue to assess our capital and liquidity needs and, where appropriate, return capital to stockholders.
+Added: Page 26 of 34
Over the next several years, we have significant contractual and anticipated cash outlays including our indicative dividend payments on our common stock, our maturing debt obligations, interest payments on our debt obligations and our projected capital expenditure requirements in order to help execute our business plan.
Based upon our historical growth rate of our dividend, we expect that we would have to provide approximately $367 million in order to meet our expected quarterly dividend payments over the next two years.
−Removed: In March 2021, we redeemed and extinguished $115.9 million of our 2022 Notes.
−Removed: In April 2021 we redeemed $45.0 million of our 2022 Notes and in May 2021 we redeemed the remaining $284.1 million of our 2022 Notes with the proceeds from our issuance of $500.0 million of our 2026 Notes.
−Removed: Our 2022 Notes accrued interest at 5.375% and our 2026 Notes accrue interest at 3.50%.
+Added: Our 2026 Notes accrue interest at 3.50%.
Our $500.0 million of 2026 Notes mature in May 2026 and include annual interest payments of $17.5 million until maturity.
2 unchanged sentences
Our $450.0 million of 2027 Notes mature in June 2027 and include annual interest payments of $31.5 million until maturity.
−Removed: Page 31 of 40
Under our Swap Agreement, we pay the counterparty a semi-annual payment based upon overnight SOFR plus a contractual interest rate spread, and the counterparty pays us a semi-annual fixed 3.50% interest payment.
These settlement payments are made in November and May of each year until the Swap Agreement expires in February 2026.
−Removed: Under the first Swap Agreement settlement payment made in November 2021 we received a payment of $0.6 million from the counterparty for a net cash savings of $0.6 million for the period from August 9, 2021 (the Swap Agreement inception date) to October 31, 2021.
−Removed: Under the Swap Agreement settlement payment made in May 2022, we received a payment of $1.2 million from the counterparty for a net cash savings of $1.2 million for the period from November 1, 2021 to April 30, 2022.
−Removed: Under the Swap Agreement the settlement payment made in November 2022, the Company made a payment of $3.4 million to the counterparty for a net cash interest cost of $3.4 million for the period from May 1, 2022 to October 31, 2022.
−Removed: As of September 30, 2022 the fair value of the Swap Agreement was a net liability of $54.7 million.
−Removed: We have made a $57.2 million deposit with the counterparty to our Swap Agreement.
−Removed: If the fair value of our Swap Agreement exceeds a net liability of $57.2 million we will be required to deposit additional funds with the counterparty equal to the net liability fair value.
−Removed: As of September 30, 2022, $54.7 million of our deposit was restricted and $2.4 million was unrestricted.
+Added: As of March 31, 2023 $50.3 million of our cash and cash equivalents are restricted for use under our Swap Agreement.
+Added: We have made a $52.4 million deposit with the counterparty to the Swap Agreement.
+Added: If the fair value of the Swap Agreement exceeds a net liability of $52.4 million we will be required to deposit additional funds with the counterparty equal to the net liability fair value.
+Added: As of March 31, 2023, $50.3 million of the deposit was restricted and $2.1 million was unrestricted.
We may need to, or elect to, refinance all or a portion of our indebtedness at or before maturity and we cannot provide assurances that we will be able to refinance any such indebtedness on commercially reasonable terms or at all.
In addition, we may elect to secure additional capital in the future, at acceptable terms, to improve our liquidity or fund acquisitions or for general corporate purposes.
−Removed: In addition, in an effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, we may, from time to time, issue new debt, enter into debt for debt, or cash transactions to purchase our outstanding debt securities in the open market or through privately negotiated transactions.
+Added: In addition, in an effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, we may, from time to time, issue new debt, enter into interest rate swap agreements, enter into debt for debt, or cash transactions to purchase our outstanding debt securities in the open market or through privately negotiated transactions.
We will evaluate any such transactions in light of the existing market conditions.
3 unchanged sentences
The amounts involved may be material.
−Removed: Any future acquisitions or other significant unplanned costs or cash requirements in excess of amounts we currently hold may require that we raise additional funds through the issuance of debt or equity.
−Removed: We cannot assure you that such financing will be available on terms acceptable to us or our stockholders, or at all.
−Removed: Insufficient funds may require us to delay or scale back the number of buildings and markets that we add to our network, reduce our planned increase in our sales and marketing efforts, or require us to otherwise alter our business plan or take other actions that could have a material adverse effect on our business, results of operations and financial condition.
−Removed: If issuing equity securities raises additional funds, substantial dilution to existing stockholders may result.
−Removed: In light of the economic uncertainties associated with the COVID-19 pandemic, our executive officers and Board of Directors have continued to carefully monitor our liquidity and cash requirements.
−Removed: Based on current circumstances, we plan to continue our current dividend policy.
+Added: In light of the economic uncertainties associated with the global recessionary economy, the COVID-19 pandemic and recent bank failures and liquidity concerns at certain other banks, our executive officers and Board of Directors have continued to carefully monitor our liquidity and cash requirements.
+Added: Based on current circumstances, we currently plan to continue our current dividend policy.
Given uncertainties regarding the duration of the pandemic and timing for economic recovery, we will continue to monitor our capital spending.
As we do each year, we will continue to monitor our future sources and uses of cash, and anticipate that we will make adjustments to our capital allocation strategies when, as and if determined by our Board of Directors.
+Added: Acquisition of Sprint Communications
+Added: The parties agreed to a $1 purchase price in consideration for the Purchased Interests of Sprint Communications, subject to customary adjustments, including the Working Capital Adjustment, as set forth in the Purchase Agreement.
+Added: The Purchase Agreement includes customary representations, warranties, indemnities and covenants, including regarding the conduct of the Wireline Business prior to the Closing.
+Added: In addition, the Closing was subject to customary closing conditions, including as to the receipt of certain required regulatory approvals and consents.
+Added: All necessary closing conditions had been met and the Transaction closed on May 1, 2023.
+Added: As consideration for the Purchased Interests the Working Capital Adjustment (primarily related to acquired cash and cash equivalents of $43.4 million in order to fund the International operations of the Wireline Business) resulted us making a payment of $61.1 million at Closing.
+Added: Additionally, the Working Capital Adjustment includes an estimated payment of $30.8 million from the Seller to us related to acquired lease obligations in equal payments of 25% each in months 55 to 58 after the Closing Date.
+Added: IP Transit Services Agreement
+Added: On the Closing Date, TMUSA, entered into an agreement for IP transit services, pursuant to which TMUSA will pay us an aggregate of $700 million, consisting of (i) $350 million in equal monthly installments during the first year after the Closing Date and (ii) $350 million in equal monthly installments over the subsequent 42 months.
+Added: Page 27 of 34
+Added: Transition Services Agreement (“TSA”)
+Added: On the Closing Date, we entered into a TSA with the Seller, pursuant to which the Seller and certain of its affiliates will provide to us, and we will provide to the Seller and certain of its affiliates, on an interim basis following the Closing Date, transition services (“Transition Services”) to ensure an orderly transition following the separation of the Wireline Business from Sprint Communications.
+Added: The Transition Services to be provided by the Seller and its affiliates include, among others, information technology support, back office and finance, real estate and facilities, vendor and supply chain management and human resources.
+Added: The Transition Services to be provided us include, among others, information technology and network support, finance and back office and other wireless business support.
+Added: The Transition Services are generally intended to be provided for a period of up to two years following the Closing Date, although such period may be extended for an additional one-year term by either party upon 30 days’ prior written notice.
+Added: The fees for the Transition Services have been calculated using either a per service monthly fee or an hourly rate for the employees allocated to provide such services.
+Added: Any third-party costs incurred in providing the Transition Services will be passed on to the party receiving such services at cost.
+Added: The initial cost of services provided by the Seller to us is expected to be approximately $1.7 million per month and the cost of the services provided by us to the Seller is expected to be approximately $0.1 million per month however we believe these initial costs may fluctuate and diminish over time as each party modifies and eventually discontinues the use of Transition Services.
+Added: Either party to the TSA may terminate the agreement (i) with respect to any individual service for convenience upon 30 days’ prior written notice or (ii) in its entirety if the other party has failed to perform any of its material obligations and such failure is not cured within 30 days.
+Added: The TSA provides for customary indemnification and limits on liability.
+Added: Other Services Provided to Seller
+Added: In addition, on the Closing Date, we entered into an agreement with TMUSA for colocation, connectivity services, pursuant to which we will provide such services to the Seller for a per service monthly fee plus certain third-party costs incurred in providing the services.
+Added: The initial amount of the services provided by us to the Seller is expected to be approximately $2.7 million per month however we believe this initial amount may fluctuate and diminish over time as Seller modifies and eventually discontinues the use of such services.
The following table sets forth our consolidated cash flows.
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(in thousands)
3 unchanged sentences
Effect of exchange rates changes on cash
−Removed: Net decrease in cash, cash equivalents and restricted cash
−Removed: Page 32 of 40
+Added: Net decrease in cash and cash equivalents and restricted cash
Net Cash Provided by Operating Activities.
Our primary source of operating cash is receipts from our customers who are billed on a monthly basis for our services.
−Removed: Our primary uses of operating cash are payments made to our vendors and employees and interest payments made to our finance lease vendors and our note holders.
+Added: Our primary uses of operating cash are payments made to our vendors, employees and interest payments made to our finance lease vendors and our note holders.
Our changes in cash provided by operating activities are primarily due to changes in our operating profit and changes in our interest payments.
1 unchanged sentence
Our primary use of cash for investing activities is for purchases of property and equipment.
−Removed: Purchases of property and equipment were $59.4 million and $54.6 million for the nine months ended September 30, 2022 and 2021, respectively.
+Added: Purchases of property and equipment were $23.2 million and $18.1 million for the three months ended March 31, 2023 and 2022, respectively.
The changes in purchases of property and equipment are primarily due to the timing and scope of our network expansion activities including geographic expansion and adding buildings to our network.
+Added: Page 28 of 34
Net Cash Used In Financing Activities.
−Removed: Our primary uses of cash for financing activities are payments to redeem and extinguish our debt, dividend payments, principal payments under our finance lease obligations and our installment payment agreement, and for purchases of our common stock.
−Removed: During the nine months ended September 30, 2022 and 2021, we paid $125.9 million and $110.7 million, respectively, for our quarterly dividend payments.
+Added: Our primary uses of cash for financing activities are for payments to redeem and extinguish our debt, dividend payments and principal payments under our finance lease obligations and for purchases of our common stock.
+Added: During the three months ended March 31, 2023 and 2022 we paid $45.3 million and $41.3 million, respectively, for our quarterly dividend payments.
Our quarterly dividend payments have increased due to increases in our quarterly dividend per share amounts.
−Removed: Principal payments under our finance lease obligations were $21.0 million and $16.8 million for the nine months ended September 30, 2022 and 2021, respectively.
+Added: Principal payments under our finance lease obligations were $9.5 million and $5.9 million for the three months ended March 31, 2023 and 2022, respectively.
The changes in our principal payments under our finance lease obligations are primarily due to the timing and extent of our network expansion activities including geographic expansion and adding buildings to our network.
−Removed: There were no purchases of our common stock in both the nine months ended September 30, 2022 and 2021.
−Removed: We completed a series of debt redemptions and issuances in the nine months ended September 30, 2022 and the nine months ended September 30, 2021.
−Removed: In March 2021, we paid $119.7 million to redeem and extinguish $115.9 million of our 2022 Notes at 103.24% of par value.
−Removed: In May 2021, we redeemed and extinguished the remaining $329.1 million of our 2022 Notes at par value and paid $11.5 million of interest through December 1, 2021.
−Removed: The total payments to redeem our 2022 Notes were $459.3 million.
−Removed: In May 2021 we issued $500.0 million of our 2026 Notes for net proceeds of $496.9 million.
−Removed: In June 2022 we paid $375.4 million to redeem and extinguish our 2024 Notes at 101.094% of par value.
−Removed: In June 2022 we issued $450.0 million of our 2027 Notes for net proceeds of $446.0 million.
+Added: There were no purchases of our common stock in both the three months ended March 31, 2023 and 2022.
Cash Position and Indebtedness
−Removed: Our total indebtedness, at par, at September 30, 2022 was $1.2 billion and our total cash, cash equivalents and restricted cash were $323.7 million.
−Removed: Our total indebtedness at September 30, 2022 includes $287.9 million of finance lease obligations for dark fiber under long-term IRU agreements.
+Added: At March 31, 2023, our total indebtedness, at par, was $1.3 billion and our total cash, cash equivalents and restricted cash ($50.3 million) was $234.4 million.
+Added: Our total indebtedness at March 31, 2023 includes $320.4 million of finance lease obligations for dark fiber under long-term IRU agreements.
Summarized Financial Information of Holdings
−Removed: Holdings is not a restricted subsidiary as defined under the indentures governing our 2027 Notes and our 2026 Notes.
+Added: Holdings is not a restricted subsidiary as defined under the indentures governing our 2026 Notes and our 2027 Notes (the “Indentures”).
Holdings is a guarantor under these notes.
Under the Indentures we are required to disclose financial information of Holdings including its assets, liabilities and its operating results (“Holdings Financial Information”).
−Removed: The Holdings Financial Information is detailed below (in thousands).
−Removed: September 30, 2022
+Added: The Holdings Financial Information as of and for the three months ended March 31, 2023 is detailed below (in thousands).
+Added: March 31, 2023
Cash and cash equivalents
2 unchanged sentences
Accumulated deficit
−Removed: Page 33 of 40
−Removed: September 30, 2022
+Added: March 31, 2023
Equity‑based compensation expense
1 unchanged sentence
Common Stock Buyback Program
−Removed: Our Board of Directors has approved purchases of our common stock under a buyback program (the “Buyback Program”).
−Removed: There were no purchases of our common stock in the three or nine months ended September 30, 2022 and September 30, 2021.
−Removed: As of September 30, 2022, there was a total of $30.4 million available under the Buyback Program which is authorized to continue through December 31, 2023.
+Added: Our Board of Directors has approved purchases of shares of our common stock under a buyback program (the “Buyback Program”).
+Added: There were no purchases of shares of our common stock in the three months ended March 31, 2023 and 2022.
+Added: As of March 31, 2023, there was a total of $30.4 million available under the Buyback Program that is authorized to continue through December 31, 2023.
Dividends on Common Stock and Return of Capital Program
−Removed: On November 2, 2022, our Board of Directors approved the payment of our quarterly dividend of $0.915 per common share.
−Removed: This estimated $42.8 million dividend payment is expected to be made on December 2, 2022.
+Added: On May 3, 2023, our Board of Directors approved the payment of our quarterly dividend of $0.935 per common share.
+Added: This estimated $44.0 million dividend payment is expected to be made on June 2, 2023.
+Added: Page 29 of 34
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.
13 unchanged sentences
The amounts involved in any such transaction, individually or in the aggregate, may be material.
−Removed: Page 34 of 40
Off-Balance Sheet Arrangements
1 unchanged sentence
In addition, we do not engage in trading activities involving non-exchange traded contracts.
−Removed: As such, we are not materially exposed to any financing, liquidity, market or credit risks that could arise if we had engaged in these relationships.
+Added: As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.
Impact of COVID-19 on Our Liquidity and Operating Performance
−Removed: We continue to operate with a high level of liquidity, and as of September 30, 2022, we had cash, cash equivalents and restricted cash of $323.7 million.
+Added: We continue to operate with a high level of liquidity, and as of March 31, 2023, we had cash, cash equivalents and restricted cash ($50.3 million) totaling $234.4 million.
The COVID-19 pandemic has not impacted our credit rating to date, nor do we believe that it has materially changed our cost of capital.
1 unchanged sentence
We believe we will have access to additional capital from a variety of sources and the public capital markets for debt and equity.
−Removed: In late March 2020, we adopted a mandatory policy through which we required all employees to work from home and follow shelter in place guidelines issued by state and local authorities.
−Removed: In July 2021, we allowed all employees to return voluntarily to all offices in the United States.
−Removed: In August 2021, we notified our employees that they would be required to return to the office on a full time basis in the United States beginning in September 2021 and that they would be required to attest that they were fully vaccinated against the COVID-19 virus to do so.
−Removed: Employees had until October 11, 2021 to provide their vaccine self-attestation.
−Removed: Fully vaccinated employees in the United States returned to our offices on a full-time basis in early September 2021.
−Removed: In October 2021, we opened most of our non-US offices for employees to return on a voluntary basis and, where permitted, on a mandatory basis in November 2021.
−Removed: The spread of the Omicron variant around the world in December 2021 caused us to modify further our office environment.
−Removed: First, we mandated that all U.S.
−Removed: employees receive a COVID-19 booster vaccine no later than nine weeks after first becoming eligible for such vaccine.
−Removed: Second, we mandated that all U.S.
−Removed: employees provide proof of vaccination to us.
−Removed: Third, for offices around the world that had not been closed by government order, we shifted much of our workforce to fully remote status on a temporary basis at the end of 2021 in order to reduce the density of our offices.
−Removed: Sales representatives with less than 12 months tenure, sales representatives on performance improvement plans and their managers remained working in our offices on a full-time basis, as we believe that the training and coaching required by new and underperforming sales representatives is significantly more effective when provided in an in-office environment.
−Removed: In March 2022, all of our US employees returned to our offices on a full-time basis, and our employees around the world have returned to the office as and when permitted by local regulations.
−Removed: Our employees have largely complied with our vaccine mandate in the United States.
−Removed: However, we experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, beginning in the second half of 2021 and continuing into 2022.
−Removed: We believe this rise in departures is attributable both to an increased focus on managing underperforming sales representatives and to the unwillingness of some employees to be vaccinated and/or to return to a full time, in-office environment.
−Removed: As a result of our decisions to mandate COVID vaccination and to require employees to return to our offices on a full time basis, we may find it difficult to retain existing employees or hire new employees.
−Removed: Further, a resurgence of COVID-19 due to immunity-resistant variants may cause employees to be more reluctant to continue in, or make new employees more reluctant to accept, a full time, in-office position due to concerns about COVID-19.
−Removed: If this occurs, we may experience lower sales, revenue and profitability.
+Added: The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business, financial condition and results of operations.
+Added: We may find it difficult to retain existing employees or to hire new employees because we have required all employees to return to the office on a full-time basis and in the United States to receive the COVID-19 vaccine and at least one booster.
Page 30 of 34
−Removed: We have experienced certain corporate customers taking a more cautious approach to new configurations and upgrades as well as a reduction in demand for connecting smaller satellite offices as a result of the challenges and uncertainties of the COVID-19 pandemic.
−Removed: We also have witnessed a deteriorating real estate market in and around the buildings we service with rising vacancy levels and falling lease initiations or renewals which resulted in fewer sales opportunities for our salesforce and a reduction in VPN opportunities.
−Removed: As a result, we experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue growth.
−Removed: Moreover, with the spread of the Delta variant of COVID-19 in the summer of 2021 and then the Omicron variant in December of 2021, we believe many companies delayed the return of their employees to in-office work.
−Removed: As the pandemic has continued, and the return of employees to their offices has been delayed, a greater number of corporate customers with contracts that reached their termination date have elected not to renew their service with us.
−Removed: As such, we began to see increased corporate customer turnover.
−Removed: We also experienced a reduction in new sales to corporate customers.
−Removed: While we believe that demand for office space in the buildings in which we operate will remain among the strongest in our markets, and that most employers will eventually require their employees to return to their offices, we may experience increased customer turnover, fewer upgrades of existing customer configurations and fewer new tenant opportunities.
−Removed: A potential resurgence of COVID-19 due to new immunity-resistant variants in the fall and winter of 2022 into 2023 could cause companies to continue to delay the return of their employees to the office, to cause companies to shift workers in the office back to remote work and to delay further opening new offices.
−Removed: These trends may negatively impact our revenue growth, cash flows and profitability.
+Added: Beginning with and throughout the COVID-19 pandemic, we witnessed a deteriorating real estate market in and around the buildings we service in central business districts in North America.
+Added: As a result of the rising vacancy levels and falling lease initiations or renewals, we experienced a slowdown in new sales to our corporate customers, which negatively impacted our corporate revenue results.
+Added: As the option to fully or partially work from home becomes permanently established at many companies, our corporate customers are integrating some of the new applications that became part of the remote work environment, which benefits our corporate business as these customers upgrade their Internet access infrastructure to higher capacity connections.
+Added: Further, if and when companies eventually return to the buildings in which we operate, we believe it will present an opportunity for increased sales.
+Added: However, the exact timing and path of these positive trends remains uncertain, and as the after effects of the COVID-19 pandemic linger, we may continue to see increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities, which would negatively impact our corporate revenue growth.
We continue to experience a slowdown in the availability and delivery of networking equipment and optical fiber.
While we believe we can adequately manage the operation, maintenance, upgrading and growth of our network, a worsening or prolonged slowdown may impact our ability to expand and augment our network.
−Removed: Shortly after COVID-19 began its rapid spread around the world, domestic and worldwide capital markets ceased normal operations for a short period.
While worldwide capital markets have remained unstable or unpredictable since then, particularly for non-investment grade issuers, legislative bodies and reserve banks have taken various actions in response to the pandemic that have impacted the capital markets, and we expect that these efforts may continue.
We cannot predict whether new COVID-19 variants will arise and spread widely, the impact of the spread of new COVID-19 variants on the global economy, how national and local governments may react to the spread of new variants nor predict the impact the variants and any measures taken in response may have on our operations, employee retention, revenue growth, cash flows and our profitability.
−Removed: Critical Accounting Policies and Significant Estimates
−Removed: Management believes that as of September 30, 2022, there have been no material changes to our critical accounting policies and significant estimates from those listed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2021.
−Removed: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: Management believes that as of September 30, 2022, there have been no material changes to our exposures to market risk from those disclosed in Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of our annual report on Form 10-K for the year ended December 31, 2021.
+Added: Critical Accounting Estimates
+Added: Management believes that as of March 31, 2023, there have been no material changes to our critical accounting policies and significant estimates from those listed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2022.
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.