ORGANIZATION AND BUSINESS OPERATIONS

6 Months Ended

Jun. 30, 2021

ORGANIZATION AND BUSINESS OPERATIONS

ORGANIZATION AND BUSINESS OPERATIONS

1.ORGANIZATION AND BUSINESS OPERATIONS

The Company strives to be a leading platform for the operation of, and investment in, smaller and specialty market communications services and technology companies.  The Company has a long track record of delivering critical infrastructure-based solutions to rural and historically underserved markets. The Company’s majority-owned operating subsidiaries provide facilities-based communications services, along with related information technology solutions, in the United States, Bermuda, and the Caribbean. The Company also has non-controlling investments in a renewable energy company and several communications and technology companies, and it continues to consider opportunities to make controlling and minority investments in businesses that it believes have the potential for generating substantial and relatively steady cash flows over extended periods of time or have technologies or business models that might prove valuable to the Company’s main operating subsidiaries or create significant longer term growth potential for the Company as a whole.

At the holding company level, the Company oversees the allocation of capital within and among its subsidiaries, affiliates, new investments, and stockholders. The Company also has developed significant operational expertise and resources that it uses to augment the capabilities of its individual operating subsidiaries. Over the past ten years, the Company has built a platform of resources and expertise to support its operating subsidiaries and to improve their quality of service, and customer acquisition, retention, and satisfaction while maintaining optimal operating efficiencies. The Company has a number of shared service functions, including billing, network and engineering and customer service, and also employs personnel with specialized skills that provide greater economies of scale and expertise than would typically be available at the operating subsidiary level.

The Company was incorporated in Delaware in 1987, began trading publicly in 1991 and spun off more than half of its operations to stockholders in 1998. The Company actively evaluates potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, and generally looks for those that it believes have the potential for generating steady excess cash flows over extended periods of time. In addition, the Company considers non-controlling investments in earlier stage businesses that it considers strategically relevant, and which may offer long-term growth potential for us, either individually, or as research and development businesses that can support the Company’s operating subsidiaries in new technology, product, and service development and offerings. The Company has used the cash generated from its established operating units, and any asset sales, to re-invest in its existing businesses, to make strategic investments in additional businesses, and to return cash to the Company’s investors. The Company provides management, technical, financial, regulatory, and marketing services to its subsidiaries and typically receives a management fee calculated as a percentage of their revenues, which is eliminated in consolidation. For further information about the Company’s financial segments and geographical information about its operating revenues and assets, see Note 13 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Through June 30, 2021, the Company had identified three operating segments to manage and review its operations and to facilitate investor presentations of its results. These three operating segments are as follows:

● International Telecom. Businesses contained in the Company’s international telecom segment offer a mix of fixed data, internet and voice services (“Fixed”) as well as retail mobility (“Mobility”) services to customers in Bermuda, the Cayman Islands, Guyana and the US Virgin Islands. The Company offers fixed video services in Bermuda, the Cayman Islands, and the US Virgin Islands and managed information technology services (“Managed Services”) to enterprise customers in all its markets. The Company also offers services to other telecom providers (“Carrier Services”), such as international long-distance, transport and access services, and roaming from such telecom providers’ customers traveling in its network service areas.

● US Telecom. In the United States, primarily in the Southwest, the Company offers Carrier Services, including wholesale roaming services, the leasing of critical network infrastructure such as towers and transport facilities, and site maintenance. The Company also provides Fixed, Mobility, and Managed Services to its retail and enterprise customers, and private network services to enterprise customers, municipalities and other service providers.

● Renewable Energy. In India, the Company provided distributed generation solar power to commercial and industrial customers through January 27, 2021. See Sale of Renewable Energy Operations for further details

The following chart summarizes the operating activities of the Company’s principal subsidiaries, the segments in which it reports its revenue and the markets it served during the three months ended June 30, 2021:

Segment	Services	Markets	Tradenames
International Telecom	Mobility	Bermuda, Guyana, US Virgin Islands	One, GTT+, Viya
	Fixed	Bermuda, Cayman Islands, Guyana, US Virgin Islands	One, Logic, GTT+, Viya
	Carrier Services	Bermuda, Guyana, US Virgin Islands	One, GTT+, Viya
	Managed Services	Bermuda, Cayman Islands, US Virgin Islands, Guyana	Fireminds, One, Logic, GTT+, Viya
US Telecom	Mobility	United States (rural markets)	Choice, Choice NTUA Wireless, Geoverse
	Fixed	United States	Commnet, Choice, Choice NTUA Wireless, Deploycom
	Carrier Services	United States	Commnet, Essextel
	Managed Services	United States	Choice
Renewable Energy (1)	Solar	India	Vibrant Energy

(1) See Sale of Renewable Energy Operations for further details.

For further information about the Company’s financial segments and geographical information about its operating revenues and assets, see Note 13 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

COVID-19

The Company is continuing to monitor and assess the effects of the ongoing COVID-19 pandemic on its commercial operations, the safety of its employees and their families, its sales force and customers and any potential impact on its revenue in 2021.

The preparation of the condensed consolidated financial statements requires the Company to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates estimates, judgments and methodologies. The Company assessed certain accounting matters and estimates that generally require consideration of forecasted financial information in context with the information and estimates reasonably available to it and the unknown future impacts COVID-19 as of June 30, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the allowance for credit losses, the carrying value of goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition.

The Company assessed the impacts of COVID-19 on its consolidated financial statements as of and for the three and six months ended June 30, 2021, in particular, the impacts on revenues, operating expenses and cash flows. During the three and six months ended June 30, 2021, the International Telecom segment experienced an increase in its Mobility, Fixed and Carrier Services revenue as certain pandemic-related travel and stay-at-home restrictions were lifted during the latter half of the three months ended June 30, 2021 which allowed for the reopening of many retail stores in all of the Company’s international markets and an increase in tourism in certain markets. Expenses within the Company’s International Telecom segment increased as a result of the increased demand for its products and services and as a result of certain expenses, such as facility and utility costs, being incurred during the three and six months ended June 30, 2021 that were not incurred during the same periods of 2020. Within the US Telecom segment, the Company experienced an increase in revenue during the three and six months ended June 30, 2021, for its rural broadband services to further support the demand, which has been increased by the impact of COVID-19, for remote working and connectivity. Similar to the International Telecom segment, the US Telecom segment recorded an increase in expenses associated with the increased demand for its products and services as well as the recording certain expenses that were incurred during the three and six months ended June 30, 2021 that were not incurred during the same periods of 2020.

As a result, the Company’s assessment did not indicate that there was a material adverse impact to its consolidated financial statements as of and for the three and six months ended June 30, 2021. However, future assessments of the impacts of COVID-19 for the remainder of 2021, as well as other factors, including the possible reinstatement of certain COVID-19 travel-related and stay-at-home restrictions, could result in material adverse impacts to the Company’s consolidated financial statements in future reporting periods. For example, the local economies of many of the Caribbean markets are tourism-dependent and a decline in global travel activity resulting from reinstated COVID-19 restrictions may adversely impact revenue and cash flows for certain services in these markets. Further, the Company may experience difficulty in procuring network or retail equipment, such as handsets for subscribers, if such COVID-19 restrictions are reinstated. Apart from possible government issued travel restrictions, the Company currently cannot assess how COVID-19 may influence subscribers’ procurement behavior for services or how that behavior will impact revenues in the foreseeable future.