What changed in this filing

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Item 1A. Risk Factors

2025-02-28 compared with 2024-02-29 · 85 added, 99 removed, 384 unchanged (32% of the section changed)

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

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

We believe the rapid spread of the Delta and Omicron variants during 2021 influenced corporate customers to delay or rescind their plans to end their remote work policies.

In 2023 more corporate customers increased their in-office requirements, nevertheless, the prevalence of hybrid or fully remote work environments during the pandemic has caused some companies to transition to such environments on a permanent basis, and we do not know what impact this may have on demand for commercial office space and for our services.

As a result, through much of the year ended December 31, 2023, we saw corporate customers continue to take a cautious approach to adding new services and upgrading existing services as well as reduced demand for connecting smaller satellite offices.

Since the beginning of the pandemic, we have experienced a deteriorating real estate market in the buildings we serve.

Vacancy rates for many of our MTOBs have risen as a result of many tenants terminating leases and exiting buildings and as a result of lower new leasing activity.

The impact of this greater level of vacancy rates was more pronounced in certain cities, particularly in California and the Pacific Northwest and less impactful elsewhere.

In addition, the shift of our own employees to working remotely at certain times during the past few years has amplified certain risks to our business, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks and an increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased numbers), to be secured.

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

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 boosters.

In the second half of 2021, we notified our employees worldwide that they would be required to return to the office on a full-time basis when permitted by local regulations.

For employees in the United States, our return to office began in September 2021.

As other countries relaxed their COVID regulations, our employees in those countries returned to the office as well.

Except for a brief period at the beginning of 2022 when we temporarily shifted a portion of our workforce to remote work, we have maintained our requirement that all employees work in our offices.

In August 2021, we also notified employees in the United States that they would be required to attest that they were fully vaccinated against the COVID-19 virus unless they received a medical or religious exemption.

We subsequently mandated that all U.S.

employees receive a COVID-19 booster vaccine no later than six weeks after first becoming eligible for such vaccine.

We required that the employees of the Sprint Business in the United States attest and provide proof that they are fully vaccinated against the COVID-19 virus unless they received a medical or religious exemption.

Our employees have largely complied with our vaccine mandate in the United States.

However, we experienced an increase in employee departures, particularly within our sales department, beginning in the second half of 2021 and continuing into 2022.

The departure rate returned to our long-term historical rates in 2023.

We believe that the rise in departures was attributable, in part, to the unwillingness of some employees to work in a full-time, in-office environment.

In the United States, we believe the rise in departures was also attributable to the unwillingness of some employees to be vaccinated.

If we continue to require employees to work in the office on a full-time basis and/or to mandate COVID-19 vaccinations in the United States, we may find it difficult to retain existing employees or hire new employees.

Further, a resurgence of COVID-19 due to

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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.

If this occurs, this may impact our revenue growth and profitability.

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

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Our historical reductions in our prices are expected to continue in an inflationary economy even as our costs may increase.

Many of the regions in which we operate continue to experience an increase in inflation rates.

Many of the regions in which we operate continue to experience an increase in or elevated inflation rates.

Due to the nature of our product offerings and the industry in which we operate, which is deflationary, we may be unable to raise our prices.

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

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

Catastrophic events, such as major natural disasters, extreme weather, fire, flooding, pandemics such as the COVID-19 pandemic or similar events as well as the continued threat of terrorist activity and other acts of war or hostility have had, and may continue to have, an adverse effect on our headquarters, other offices, our network, infrastructure or equipment or our customers and prospective customers, which could adversely affect our business.

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

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

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

We are particularly vulnerable to acts of terrorism because our largest customer concentration is

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located in New York, our headquarters is located in Washington, D.C., and we have significant operations in Paris, Madrid and London, cities that have historically been targets for terrorist attacks and may be vulnerable to pandemics.

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

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● inability to achieve the financial and strategic goals for the Sprint Business and the combined businesses;

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● inability to achieve the projected cost savings for the Sprint Business and the combined businesses and the resulting impact on profitability;

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● elevated delinquency or bad debt write-offs related to receivables of the Sprint Business;

● difficulty in maintaining internal controls, procedures and policies during the transition and integration;

● impairment of our relationships with employees, customers, partners, distributors or third-party providers of our technologies, products or services;

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● exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, the Transaction, such as claims from terminated employees, customers, or other third parties;

● inability to conclude that our internal control over financial reporting is effective;

● delay in customer purchasing decisions due to uncertainty about the direction of our product and service offerings;

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● Transition Services (as defined below) costs for longer than anticipated;

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These integration matters could have an adverse effect on us during the transition period and on the combined company for an undetermined period after completion of the Transaction.

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Business Risks

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Lower vacancy rates as a result of diminished lease terminations and increased leasing and subleasing activity will be a key factor in driving renewed growth in our corporate business.

During the pandemic, we saw increasing vacancy rates in many of our buildings due to higher lease terminations and lower leasing activity.

Throughout the year concluding on December 31, 2023, we observed a gradual reduction in vacancy rates and an upward trend in office occupancy rates but elevated vacancy rates remain in a number of markets, predominantly in California and the Pacific Northwest.

During the COVID-19 pandemic, we saw increasing vacancy rates in many of our buildings due to higher lease terminations and lower leasing activity.

Throughout the year ended December 31, 2024, we observed a gradual reduction in vacancy rates and an upward trend in office occupancy rates but elevated vacancy rates remain in a number of markets, predominantly in California, Washington D.C.

and the Pacific Northwest.

Concurrently, there were encouraging developments in our corporate business.

Despite these positive indicators, the precise timing and trajectory of these trends remain uncertain.

The lingering effects of the COVID-19 pandemic introduce an element of unpredictability, and we may continue to see increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities, which would negatively affect our corporate revenue growth.

The lingering effects of the pandemic introduce an element of unpredictability, and we may continue to see increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities, which would negatively affect our corporate revenue growth.

The elimination of non-core and low margin products also has a negative impact on our corporate revenue results.

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

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● maintain and enhance our system of internal controls to ensure timely and accurate compliance with our financial and regulatory reporting requirements;

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● expand our accounting and operational information systems in order to support our growth.

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In addition, enterprise customers are more likely to require customized solutions and processes and to look for a single provider to meet their connectivity needs.

A number of our acquired enterprise customers purchased non-core services that we are in the process of eliminating, and this may cause such customers to look to other providers who offer a broader set of services.

We may encounter difficulties retaining such customers, in converting such customers from their legacy services to newer technologies or in attracting new enterprise customers.

Our inability to retain or attract such customers or to convert them to our services, could impair our growth, cash flow and profitability.

The elimination of non-core and low margin products also has a negative impact on our enterprise revenue results.

Demand from certain employees to work remotely may reduce the attractiveness of our business as an employer versus some competitors who are allowing employees to work remotely.

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

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● attrition of key personnel from acquired businesses;

● additional costs or charges associated with the repurposing or retirement of acquired assets or the elimination of acquired non-core products and services;

● unexpected costs or charges;

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

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

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To sustain our growth in various existing and emerging markets, we may need to expand an existing data center, lease a new facility, or acquire suitable land, with or without existing structures.

Following the acquisition of the Sprint Business, we embarked on the conversion of Sprint facilities into data centers suitable for either wholesale lease or sale – of which 23 are wholesale facilities and 55 are edge data center facilities.

Undertaking such projects exposes us to numerous risks that could adversely impact our financial condition and operational results.

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Any unforeseen disruptions to our supply chain or inflationary pressures might substantially impact the costs associated with our planned expansion projects, potentially hindering our ability to fulfill commitments to customers who have contracted for space in new data centers under construction.

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Construction projects are dependent on receiving permits from public agencies and utility companies.

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Should a designer, general contractor, significant subcontractor or key supplier experience financial problems or other problems during the design or construction process, we could experience significant delays, increased costs to complete the project and/or other negative impacts to our expected returns.

We may be unable to lease or sell data centers on attractive financial terms, in sufficient volume or at all.

If we are unable to do so, we may not recover the costs incurred in converting these facilities to data centers and that could adversely impact our financial condition and operational results.

Our commitments and disclosures regarding environmental, social, and governance (“ESG”) matters expose us to potential reputational and legal risks.

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Any perceived failure to achieve our ESG-related initiatives, goals, commitments, or mandates could adversely affect our reputation and materially harm our business.

Conversely, if public or investor sentiment turns against ESG-related initiatives, our commitment to ESG initiatives at any level could lead to government scrutiny or private litigation or otherwise adversely affect our reputation and materially harm our business.

The growing emphasis on ESG matters has prompted the adoption of legal and regulatory requirements to address climate change effects and necessitate additional disclosures.

If new laws or regulations surpass current requirements, we may face heightened compliance burdens and increased costs.

Our selection of voluntary disclosure frameworks and standards, as well as their

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interpretation or application, may change and might not align with investor or stakeholder expectations.

Our selection of voluntary disclosure frameworks and standards, as well as their interpretation or application, may change and might not align with investor or stakeholder expectations.

Achieving our ESG commitments is contingent on numerous external factors beyond our control, including evolving and potentially inconsistent regulatory requirements, supplier availability meeting our standards, and the recruitment, development, and retention of diverse talent.

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

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

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

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

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

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

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

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

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

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

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

Broadband connections provided by cable TV, telephone, and fixed and mobile companies have become the predominant means by which consumers connect to the Internet.

Broadband connections provided by cable TV, telephone, and fixed and mobile wireless companies have become the predominant means by which consumers connect to the Internet.

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

The possibility of this has been characterized as an issue of “net

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

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

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

In October 2023 the FCC voted to move ahead with a plan that would restore net neutrality rules and common-carrier regulation of Internet service providers.

The proposal would reclassify broadband as a telecommunications service, a designation that allows the FCC to regulate ISPs under the common-carrier provisions in Title II of the Communications Act.

Some US states have either issued or are considering their own net neutrality rules.

A subsequent attempt to reintroduce these rules in 2024 was overturned by the U.S.

Court of Appeals for the Sixth Circuit in 2025.

Furthermore, the Sixth Circuit decision appears to foreclose any future possibility of the FCC reclassifying broadband as a telecommunications service, a designation that allows the FCC to regulate ISPs under the common-carrier provisions in Title II of the Communications Act.

While certain US states, including California, have either issued or are considering their own net neutrality rules, it is unclear whether these state regulations should have the same national impact as the former FCC order.

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

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

We rely on computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, “IT Systems”).

We rely on our own and third-party computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, “IT Systems”).

We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services, including but not limited to cloud computing services.

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Our IT Systems are subject and vulnerable to unauthorized access, social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error, and as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware, computer viruses, cyber-attacks, distributed denial of service (“DDOS”), and other cybersecurity risks.

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We and our employees are the target of phishing attempts and compromised links, and our IT Systems are the target of attempts at unauthorized access, a small number of which have been successful in accessing non-critical areas of our IT Systems.

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Although none of the incidents, individually or in the aggregate, have materially impacted our operations or business, we cannot guarantee material incidents will not occur in the future.

An attack on or security breach of our network could result in theft Confidential Information, the interruption, degradation, or cessation of services, an inability to meet our service level commitments or our financial reporting obligations, and potentially compromise customer data stored on or transmitted over our network.

An attack on or security breach of our network could result in theft of Confidential Information, the interruption, degradation, or cessation of services, an inability to meet our service level commitments or our financial reporting obligations, and could potentially compromise customer data stored on or transmitted over our network.

Cyber-attacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools – including artificial intelligence – that circumvent security controls, evade detection and remove forensic evidence.

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

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

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

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We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.

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

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

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

There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information.

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impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs.

Any adverse impact to the availability, integrity or confidentiality of our IT Systems or Confidential Information can result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs.

Any or all of the foregoing could materially adversely affect our business, operating results, and financial condition.

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Such inadequacy could significantly and negatively affect our business, financial health, and operational outcomes.

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Cogent has not signed a Legacy Registration Services Agreement with the American Registry for Internet Numbers (“ARIN”) or any other regional Internet registry (“RIR”) with respect to a substantial portion of our IPv4 addresses.

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This increased potential for route hijacking and longer recovery time may also result in some customers opting to lease IPv4 addresses from our competitors.

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Network Augmentation and Maintenance Risks

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

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

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

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

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

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

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Consequently, they may have incentives to act in ways unfavorable to us.

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

We may incur significant delays and costs in restoring service to our customers in connection with future service interruptions, and as a result we may lose customers.

With the Sprint Business acquisition, our reliance on agreements with landowners has increased.

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We cannot guarantee our success in these endeavors, raising concerns about the continuity of our operations and our ability to capitalize on network expansion opportunities.

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Effects of climate change may impose risk of damage to our infrastructure and our ability to provide services.

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

We have added a new provider for certain types of IP transport equipment but Cisco remains our primary vendor for IP transport equipment.

We have expanded our suppliers of routers, added Arista Networks, Inc.

(‘Arista”) as a provider for certain types of routers but Cisco remains our primary vendor for routers.

With the acquisition of the Sprint Business in 2023, we entered into an agreement to purchase routers and transmission from Ciena Corporation (“Ciena”).

We use Ciena equipment for optical wave transport services.

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

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

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

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

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

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

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

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

Such claims have been growing rapidly in the communications industry.

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

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Our international operations involve a number of risks, including:

● fluctuations in currency exchange rates, particularly those involving the Euro as we are required to fund certain of our cash flow requirements of our operations outside of the United States;

● exposure to additional regulatory and legal requirements, including laws that may make it difficult or costly to enforce our contracts, import restrictions and controls, exchange controls, tariffs and other trade barriers, increase the regulatory approvals of or otherwise delay the expansion of our network, impose new obligations on us with respect to legal enforcement and monitoring, and privacy and data protection regulations;

● compliance with laws regarding privacy, trade restrictions, economic sanctions, and corruption and bribery, including the United States Foreign Corrupt Practices Act;

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

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

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

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reduce our exposure to such liabilities, which may require the expenditure of substantial resources or the discontinuation of certain products or service offerings.

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

Regulatory Risks

Existing and proposed privacy regulations may impact our business.

Compliance with existing and proposed privacy regulations is costly, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust that may materially impact our business.

Many countries in which we operate, including the United States, are considering adopting, or have already adopted, privacy regulations, laws, rules or industry standards that that apply generally to the handling of information about individuals.

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As new laws are implemented or existing structures are declared insufficient, we may find it difficult to comply with such regulations or find it costly to do so.

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

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

Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards and other requirements could result in proceedings or actions against us by individuals, consumer rights groups, government agencies, or others.

If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.

If any of these events were to occur, our business, results of operations, financial condition, and brand and reputation could be materially adversely affected.

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

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

In addition, the recent acquisition of the Sprint Business has made us subject to additional or duplicate regulatory obligations, particularly in the countries where the Sprint Business has subsidiaries and related to the Sprint Business.

In addition, the acquisition of the Sprint Business has made us subject to additional or duplicate regulatory obligations, particularly in the countries where the Sprint Business has subsidiaries and related to the Sprint Business.

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

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While our top 25 customers represented approximately 17.6% of our revenue for the year ended December 31, 2024, several large net-centric customers are or may be the subject of increased regulatory scrutiny, which may impact their businesses and, consequently, their use of our services in unknown ways.

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

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

Should any government require us to perform these types of blocking procedures we could experience

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difficulties ranging from incurring additional expenses to ceasing to provide service in that country.

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

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

The imposition of tariffs may increase our costs of purchasing equipment or shipping equipment to our international subsidiaries.

On February 3, 2025, President Trump announced new tariffs of 25% for most imports from Canada and Mexico and 10% for imports from China.

The tariffs on Canada and Mexico were delayed for 30 days.

At least one of our primary equipment vendors manufactures and ships equipment that we purchase from China.

If these tariffs are applied to our equipment purchases, it would increase our costs of equipment which could have an adverse effect on our financial condition and results of operations.

Further, if the United States imposes tariffs on other countries in which we operate, those countries may respond by imposing tariffs on imports from the United States.

Any such tariffs may be applied to our equipment shipments from our US operating company to our international subsidiaries, increasing our costs and impacting our financial condition and results of operations.

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

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We believe we collect all required taxes;

however, a jurisdiction may assert we have failed to collect certain taxes.

however, a jurisdiction may assert that we have failed to collect certain taxes.

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

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

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Risk Factors Related to Our Indebtedness

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

Our total indebtedness, at par, at December 31, 2023 was $1.5 billion and includes $500.0 million of our 3.50% senior secured notes due in May 2026 (“2026 Notes”) and $450.0 million of our 7.00% senior unsecured notes due in June 2027 (“2027 Notes”).

Our 2026 Notes require annual interest payments of $17.5 million per year and our 2027 Notes require interest payments of $31.5 million per year, each paid semi-annually.

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

Our total indebtedness at December 31, 2023 included $484.5 million of finance lease obligations for dark fiber primarily under 15 to 43 year IRUs.

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

Our total indebtedness, at par, at December 31, 2024 at par value, was $2.0 billion and includes $500.0 million of our 2026 Notes, $450.0 million of our 2027 Notes, $300.0 million of our 2027 Mirror Notes and $206.0 million of our IPv4 Notes.

The 2026 Notes are due in March 2026 and require interest payments of $17.5 million per year, the 2027 Notes are due in June 2027 and require interest payments of $31.5 million per year, and the 2027 Mirror Notes are due in June 2027 and require interest payments of $21.0 million per year, each paid semi-annually.

The IPv4 Notes are effectively due in May 2029 and require monthly interest payments of $16.3 million per year (which amount increases if the IPv4 Notes are not repaid prior to May 2029).

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

Our total indebtedness at December 31, 2024 includes $538.4 million of finance lease obligations for dark fiber primarily under 15 to 42-year IRUs.

Our total indebtedness at December 31, 2024 excludes $359.2 million of operating lease liabilities, which were required to be recorded as right-to-use assets and operating lease liabilities.

The amount of our IRU finance lease obligations may be impacted due to our expansion activities, the timing of payments and fluctuations in foreign currency rates.

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

We have assumed the risk associated with variable interest rates under our interest rate swap agreement.

We are party to an interest rate swap agreement (the “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”) so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR.

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terms of the Swap Agreement match the terms of the 2026 Notes, including the notional amount and the optional redemption date on February 1, 2026.

Under the 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.

The settlement payment is made each November and May until the Swap Agreement expires in February 2026.

By entering into the Swap Agreement, we have assumed the risk associated with variable interest rates.

Changes in interest rates affect the valuation of the Swap Agreement that we recognize in our consolidated statements of comprehensive income.

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

We have substantial indebtedness.

Our substantial debt may have important consequences.

This substantial amount of debt may have important consequences.

For instance, it could:

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Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategy.

We have assumed the risk associated with variable interest rates under our interest rate swap agreement.

The critical terms of the Swap Agreement match the terms of the 2026 Notes, including the notional amount and the optional redemption date on February 1, 2026.

The settlement payment is made each November and May until the Swap Agreement expires in February 2026.

By entering into the Swap Agreement, we have assumed the risk associated with variable interest rates.

Changes in interest rates affect the valuation of the Swap Agreement that we recognize in our consolidated statements of comprehensive income.

Despite our leverage, we may still be able to incur more debt.

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If new debt or other liabilities are added to our debt levels, the related risks that we and our subsidiaries now face could intensify.

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The agreements governing our various debt obligations impose restrictions on our business and could adversely affect our ability to undertake certain corporate actions.

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● declare or pay dividends, redeem stock or make other distributions to stockholders;

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● consolidate, merge or transfer or sell all or substantially all of our assets.

In addition, our IPv4 address securitization facility requires us to maintain a specified debt service coverage ratio.

Failure to maintain the debt service coverage ratio at a specified triggered level could adversely affect our business, including full or partial amortization or an event of default, as applicable.

Our ability to comply with these agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions.

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We maintain our cash and cash equivalents at financial institutions in amounts in excess of insured limits.

The Company maintains the majority of its cash and cash equivalents in accounts with U.S.

We maintain the majority of our cash and cash equivalents in accounts with U.S.

and multi-national financial institutions, and our deposits at certain of these institutions, including the counterparty to our Swap Agreement, exceed insured limits.

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Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

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

What changed 10-K

Item 1A. Risk Factors