Foreign Currency
Average NZD to USD exchange rate 0.67 (2) 0.71 0.65 % Change
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The table below summarizes the Company’s consolidated key financial metrics for the years ended
(15.8 %) 254.0 pts (20.1) pts Consolidated Adjusted EBITDA(2)
Reclassification of Fixed Broadband Service Revenues
2022 Full Year Highlights
• On
ownership interest in 2degrees, the Company’s share of the total consideration
was
the date the consideration was received), net of
of closing adjustments, including transaction advisory fees, along with
payments to satisfy the outstanding 2degrees option pool. Approximately
million NZD of the consideration paid by Voyage Digital for the Company’s
2degrees shares is being held in escrow for a maximum period of one year after
• Promptly following the closing of the 2degrees Sale, the Company repaid its
outstanding indebtedness and the outstanding indebtedness of its subsidiary,
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• In the second quarter, the Board declared and paid a distribution to
shareholders of
plan of liquidation adopted by the Board.
• On
related to the NuevaTel Transaction were in a nominal amount and the Company
recorded a net gain on the transaction of
value of liabilities in excess of assets for the business.
• Total cash was
Company’s share of the purchase price escrow established in connection with the
2degrees Sale of approximately
exchange rate as of
(1)Beginning in 2021, we replaced “Wireline” with “Fixed broadband” and reclassified fixed LTE revenues from Wireless service revenues to Fixed broadband service revenues.
Consolidated Wireless Service Revenues
Consolidated Fixed Broadband Service Revenues
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Consolidated Equipment Sales
Consolidated Non-subscriber International Long Distance (“ILD”) and Other Revenues
Consolidated Operating Expenses
Operating expenses represent expenditures incurred by the Company’s operations and its corporate headquarters.
Consolidated Cost of Equipment Sales
Cost of equipment sales declined
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Consolidated Sales and Marketing
Sales and marketing declined
Consolidated General and Administrative
Consolidated Depreciation, Amortization and Accretion
Consolidated Impairment of Long-Lived Assets
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Consolidated (Gain) on Sale of Operations and Loss (Gain) on Disposal of Assets and Sale-Leaseback Transaction
Consolidated Other Expenses (Income)
Consolidated Change in Fair Value of Warrant Liability
Consolidated Debt Extinguishment, Modification and Issuance Costs
Consolidated Other, Net
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Income Tax (Expense) Benefit
Income tax expense declined
Business Segment Analysis
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31.2 % 1.3 pts (0.6) pts
Capital expenditures (2)
(1) Segment Adjusted EBITDA Margin is calculated as Segment Adjusted EBITDA
divided by service revenues.
(2) Represents purchases of property and equipment excluding purchases of
property and equipment acquired through vendor-backed financing and finance
Year Ended
For the year ended
• Cost of service declined
period in 2021. Excluding the impact of foreign currency, cost of service
declined
• Cost of equipment sales declined
period in 2021. Excluding the impact of foreign currency, cost of equipment
sales declined
• Sales and marketing declined
in 2021. Excluding the impact of foreign currency, sales and marketing declined
• General and administrative declined
Excluding the impact of foreign currency, general and administrative declined
2022. Approximately
by 2degrees were associated with the 2degrees Sale. Due to the nonrecurring
nature of these expenses, such costs were removed from Segment Adjusted EBITDA;
• Depreciation, amortization, and accretion declined
compared to the same period in 2021. Excluding the impact of foreign currency,
depreciation, amortization, and accretion declined
primarily due to the 2degrees business meeting the accounting criteria to be
classified as held for sale on
ceased recording depreciation and amortization of 2degrees’ long-lived assets
on that date. For additional information, see Note 2 – Sale of Operations to
the Consolidated Financial Statements.
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Year Ended
For the year ended
• Cost of service increased
period in 2020. Excluding the impact of foreign currency, cost of service
increased
expense associated with the growth of the fixed broadband subscriber base. In
addition, there was an increase in network-related maintenance costs
attributable to investments in outsourced infrastructure support surrounding
new platforms for 5G delivery, managed security firewall programs, and disaster
recovery. These increases were partially offset by a decline in combined
network sharing and national roaming costs due to a network sharing agreement
which commenced in the second quarter of 2020;
• Cost of equipment sales increased
period in 2020. Excluding the impact of foreign currency, cost of equipment
sales increased
of sales of higher priced devices in 2021 compared to 2020;
• Sales and marketing increased
period in 2020. Excluding the impact of foreign currency, sales and marketing
increased
in commissions expense of
primarily associated with higher amortization expense of incremental contract
acquisition costs capitalized subsequent to
• General and administrative increased
Excluding the impact of foreign currency, general and administrative increased
consulting costs and increases in office rent expense due to the 2degrees
corporate headquarters lease beginning in the second quarter of 2021.
Approximately
incurred during 2021 associated with the strategic transactions that were under
consideration throughout that year, including approximately
costs primarily related to 2degrees’ preparation for a planned public listing
and equity issuance which were deferred and included within Prepaid expenses
and other current assets on the Consolidated Balance Sheet as of
2021, reflecting the facts and circumstances as of that date. During the fourth
quarter of 2021, upon announcement of the Company’s definitive agreement to
sell 100% of its equity in 2degrees, 2degrees recorded these deferred
professional service costs of approximately
administrative expenses. Due to the nonrecurring nature of these expenses, the
total of approximately
ended
increases were partially offset by a decline in bad debt expense attributable
to accounts receivable collection efforts and the improved credit risk of our
customer portfolio. In addition, there was a
the first quarter of 2020 associated with 2degrees’ improvement in collections
of Equipment Installment Plan (“EIP”) receivables previously sold to the
third-party EIP receivables purchaser and a decline in equity-based
compensation expense as a result of
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• Depreciation, amortization, and accretion increased
compared to the same period in 2020. Excluding the impact of foreign currency,
depreciation, amortization, and accretion increased
increase was due primarily to an increase in depreciation expense associated
with wireless network assets previously placed in service and accelerated
• Loss on disposal of assets declined
period in 2020. Excluding the impact of foreign currency, loss on disposal of
assets declined
with disposal and abandonment charges of approximately
second quarter of 2020 for certain construction in progress due in part to a
reassessment of capital expenditures needs as 2degrees undertook cost reduction
measures in response to the COVID-19 pandemic.
Capital expenditures were
(1)Segment Adjusted EBITDA Margin is calculated as Segment Adjusted EBITDA divided by service revenues. (2)Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and finance lease arrangements. Expenditures related to the acquisition of spectrum licenses, if any, were not included in capital expenditures amounts.
Year Ended
Total revenues declined
For the year ended
• Cost of service declined
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• Sales and marketing declined
the closing of the NuevaTel Transaction in
• General and administrative costs declined
primarily due to the closing of the NuevaTel Transaction in
• Depreciation, amortization and accretion declined
2022, primarily due to the NuevaTel business meeting the accounting criteria to
be classified as held for sale on
ceased recording depreciation and amortization of NuevaTel’s long-lived assets
on that date. For additional information, see Note 2 – Sale of Operations to
the Consolidated Financial Statements. The declines were also attributable to a
lower asset base being depreciated in 2022 compared to 2021 as a result of an
impairment charge recognized in the third quarter of 2021; and
• Impairment of long-lived assets declined
result of the charge recorded in the third quarter of 2021. There was no
impairment recorded in the year ended
Description of Business, Basis of Presentation and Summary of Significant
Accounting Policies to the Consolidated Financial Statements for additional
Year Ended
For the year ended
• Cost of service declined
decrease in interconnection costs as a result of lower voice traffic
terminating outside of NuevaTel’s network. Additionally, NuevaTel implemented
workforce reductions in the fourth quarter of 2020 with related cost reductions
continuing through 2021. Transaction fees were also impacted by the decline in
revenue and subscribers in 2021 compared to 2020;
• Cost of equipment sales declined
decline in the number of handsets sold during the period;
• Sales and marketing declined
cost control measures, including a decrease in salaries and wages as a result
of workforce reductions which occurred during the fourth quarter of 2020. These
declines were partially offset by an increase in advertising expense;
• General and administrative costs declined
primarily due to lower bad debt expense as a result of societal restrictions
related to the COVID-19 pandemic which impacted collections in the periods in
2020. The decline was also attributable to a decrease in salaries and wages and
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• Depreciation, amortization and accretion declined
2021, primarily due to a lower asset base during the year being depreciated as
a result of the impairment charge recognized in the third quarter of 2021;
• Impairment of long-lived assets was
31, 2021 as a result of the charge recorded in the third quarter of 2021. There
was no impairment recorded in the year ended
Description of Business, Basis of Presentation and Summary of Significant
Accounting Policies to the Consolidated Financial Statements for additional
• Loss on disposal of assets and sale-leaseback transaction increased
million, or 107%, in 2021, primarily due to the timing of the gains recognized
in connection with the closings of the tower sale-leaseback transaction in
Segment Adjusted EBITDA declined
Selected Financial Information
The following tables set forth our summary consolidated financial data for the periods ended and as of the dates indicated below.
The summary consolidated financial data is derived from the Consolidated Financial Statements for each of the periods indicated in the following tables.
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Selected annual financial information
Consolidated Income Statement Data
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Selected balance sheet information
Consolidated Balance Sheet Data
368.5 Decline is due to the closing of the 2degrees Sale and % Change
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Selected quarterly financial information
The following table shows selected quarterly financial information prepared in accordance with
For the Year Ended
476.6 (22.6 ) (23.2 ) (128.7 ) (23.8 ) (8.2 ) Income tax (expense) benefit
468.9
? Cash and cash equivalents totaled
exclusive of our share of the purchase price escrow established in connection
? In the fourth quarter of 2022, the Company entered into forward exchange
contracts to sell an aggregate of
million USD on
mitigate exposure to fluctuations in the NZD to USD exchange rate in respect of
substantially all of the
Quarterly Trends and Seasonality
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• Lower prepaid subscribers due to a shift in focus to postpaid sales;
• Higher usage of wireless data due to the migration from 3G to 4G LTE in
• Increased competition and changes in the market leading to larger data bundles
offered for prices which impacted data ARPU;
• Stable postpaid churn in
reflection of the Company’s heightened focus on high-value subscribers, bundled
service offerings, and the Company’s enhanced subscriber service efforts;
• Decreasing voice revenue as rate plans increasingly incorporated more monthly
minutes and calling features, such as long distance;
• Lower roaming revenue due to mobility restrictions associated with the COVID-19
pandemic;
• Varying handset subsidies as more consumers shifted toward smartphones with the
latest technologies;
• Varying handset costs related to advancement of technologies and reduced
supplier rebates or discounts on highly-sought devices;
• Seasonal promotions which were typically more significant in periods closer to
year-end;
• Subscribers activating and suspending service to take advantage of promotions
by the Company or its competitors;
• Higher voice and data costs related to the increasing number of subscribers,
or, alternatively, a decline in costs associated with a decline in voice usage;
• Higher costs associated with the retention of high-value subscribers; and
• Decline in gross subscriber additions due to decreased commercial activity
resulting from COVID-related societal restrictions and economic contraction.
Trends in
• Higher internet subscription fees as subscribers increasingly upgraded to
higher-tier speed plans, including those with unlimited usage;
• Subscribers bundling their service plans at a discount;
• Fluctuations in retail broadband pricing and operating costs influenced by
government-regulated copper wire services pricing and changing consumer and
competitive demands;
• Availability of fiber services in a particular area or general network
coverage; and
• Individuals swapping technologies as fiber became available in their connection
Liquidity and Capital Resources Measures
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In the fourth quarter of 2022, the Company entered into forward exchange contracts to sell an aggregate of
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Selected cash flows information
The following table summarizes the Consolidated Statement of Cash Flows for the periods indicated:
Cash flow (used in) provided by operating activities
Cash flow used in operating activities increased
Cash flow provided by (used in) investing activities
Cash flow used in financing activities
As a result of the sale of operations in the second quarter of 2022, the Company no longer has any significant contractual obligations as of
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Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that would have a material effect on the financial statements as of
Critical Accounting Estimates
Revenue Recognition
Income Taxes
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Recent Accounting Pronouncements
The effects of recently issued accounting standards are discussed in Note 1 – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated Financial Statements.
Changes in Accounting Policies Including Initial Adoption
Other than the adoption of new accounting standards, as discussed in the Notes to the Consolidated Financial Statements, there have been no changes in the Company’s accounting policies.
Financial Instruments and Other Instruments
Definitions and Reconciliations of Non-GAAP Measures
Consolidated Adjusted EBITDA and Adjusted EBITDA Margin
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107.0
–
–
(Gain) on sale of operations and loss (gain) on disposal of assets and sale-leaseback transaction
2.4
107.0
Net income (loss) margin (Net income (loss) divided by service revenues)
Consolidated Equipment Subsidy
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Key Industry Performance Measures – Definitions
• Monthly average revenues per wireless user (“ARPU”) is calculated by dividing
average monthly wireless service revenues during the relevant period by the
average number of wireless subscribers during such period.
• Wireless data revenues (“data revenues”) is a component of wireless service
revenues that includes the use of web navigation, multimedia messaging service
and value-added services by subscribers over the wireless network through their
• Wireless service revenues (“wireless service revenues”) is a component of total
revenues that excludes fixed broadband revenues, equipment sales and
non-subscriber international long distance revenues; it captures wireless
performance and is the basis for the blended wireless ARPU calculations.
• Wireless data average revenue per wireless user (“data ARPU”) is calculated by
dividing monthly data revenues during the relevant period by the average number
of wireless subscribers during the period.
• Service revenues (“service revenues”) is a component of total revenues that
• Churn (“churn”) is the rate at which existing subscribers cancel their
services, or are suspended from accessing the network, or have no revenue
generating event within the most recent 90 days, expressed as a percentage.
Subscribers that subsequently have their service restored within a certain
period of time are presented net of disconnections which may result in a
negative churn percentage in certain periods. Churn is calculated by dividing
the number of subscribers disconnected by the average subscriber base. It is a
measure of monthly subscriber turnover.
• Capital intensity (“capital intensity”) represents purchases of property and
equipment divided by total service revenues. The Company’s capital expenditures
do not include expenditures on spectrum licenses. Capital intensity allows the
Company to compare the level of the Company’s additions to property and
equipment to those of other companies within the same industry.
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