Leases

3 Months Ended

Mar. 31, 2023

Leases

Leases

8.Leases

We enter into non-cancelable operating and finance leases for, among other things, communication towers, satellites, office space, dark fiber and transport equipment, warehouses and distribution centers, vehicles and other equipment. Substantially all of our leases have remaining lease terms from one to 15 years, some of which include renewal options, and some of which include options to terminate the leases within one year. For certain arrangements (generally communication towers), the lease term includes the non-cancelable period plus the renewal period that we are reasonably certain to exercise.

Through the first quarter of 2022, our Anik F3 and Nimiq 5 satellites were accounted for as finance leases. However, during April 2022, we extended the Anik F3 lease and as a result it is currently accounted for as an operating lease. Substantially all of our remaining leases are accounted for as operating leases.

The components of lease expense were as follows:

	For the Three Months Ended
	March 31,
	2023		2022
		(In thousands)
Operating lease cost (1)	$	111,433	$	61,102
Short-term lease cost (2)		2,718		3,554
Finance lease cost:
Amortization of right-of-use assets		27,056		9,893
Interest on lease liabilities		3,570		2,732
Total finance lease cost		30,626		12,625
Total lease costs	$	144,777	$	77,281

(1) The increase in operating lease cost is primarily related to communication tower leases.

(2) Leases that have terms of 12 months or less.

Supplemental cash flow information related to leases was as follows:
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	For the Three Months Ended
	March 31,
	2023		2022
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	67,223	$	24,360
Operating cash flows from finance leases	$	2,397	$	917
Financing cash flows from finance leases	$	8,713	$	4,420
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	231,868	$	543,868
Finance leases	$	51,110	$	—

Supplemental balance sheet information related to leases was as follows:

	As of
	March 31,		December 31,
	2022		2022
	(In thousands)
Operating Leases:
Operating lease assets	$	2,854,337	$	2,687,522
Other current liabilities	$	225,464	$	194,030
Operating lease liabilities		2,864,923		2,687,883
Total operating lease liabilities	$	3,090,387	$	2,881,913
Finance Leases:
Property and equipment, gross	$	462,887	$	411,778
Accumulated depreciation		(330,858)		(303,802)
Property and equipment, net	$	132,029	$	107,976
Other current liabilities	$	57,309	$	48,066
Other long-term liabilities		108,302		75,287
Total finance lease liabilities	$	165,611	$	123,353
Weighted Average Remaining Lease Term:
Operating leases		11.6 years		11.8 years
Finance leases		2.7 years		2.7 years
Weighted Average Discount Rate:
Operating leases		7.5%		7.3%
Finance leases		9.9%		9.8%

Maturities of lease liabilities as of March 31, 2023 were as follows:

	Maturities of Lease Liabilities
	Operating		Finance
For the Years Ending December 31,	Leases		Leases		Total
	(In thousands)
2023 (remaining nine months)	$	229,048	$	57,701	$	286,749
2024		334,298		61,934		396,232
2025		367,051		34,344		401,395
2026		396,883		36,588		433,471
2027		399,850		2,574		402,424
Thereafter		3,103,067		—		3,103,067
Total lease payments		4,830,197		193,141		5,023,338
Less: Imputed interest		(1,739,810)		(27,530)		(1,767,340)
Total		3,090,387		165,611		3,255,998
Less: Current portion		(225,464)		(57,309)		(282,773)
Long-term portion of lease obligations	$	2,864,923	$	108,302	$	2,973,225