REVENUE RECOGNITION AND RECEIVABLES

3 Months Ended

Mar. 31, 2024

REVENUE RECOGNITION AND RECEIVABLES

REVENUE RECOGNITION AND RECEIVABLES

3. REVENUE RECOGNITION AND RECEIVABLES

Revenue Accounted for in Accordance with Other Guidance

The Company records revenue in accordance with ASC 606 from contracts with customers and ASC 842 from lease agreements, as well as government grants. Lease revenue recognized under ASC 842 is disclosed in Note 4 and government grant revenue is disclosed in Note 8.

Timing of Revenue Recognition

Revenue accounted for in accordance with ASC 606 consisted of the following for the periods presented below (in thousands):

	Three months ended March 31,2024
	International		US
	Telecom		Telecom		Total
Services transferred over time	$	88,560	$	78,043	$	166,603
Goods and services transferred at a point in time		3,034		3,271		6,305
Total revenue accounted for under ASC 606	$	91,594	$	81,314	$	172,908
Operating lease income		72		2,034		2,106
Government grant revenue (1)		1,393		10,387		11,780
Total revenue	$	93,059	$	93,735	$	186,794

	Three months ended March 31,2023
	International		US
	Telecom		Telecom		Total
Services transferred over time	$	85,680	$	81,072	$	166,752
Goods and services transferred at a point in time		3,259		2,546		5,805
Total revenue accounted for under ASC 606	$	88,939	$	83,618	$	172,557
Operating lease income		72		1,831		1,903
Government grant revenue (1)		1,397		9,917		11,314
Total revenue	$	90,408	$	95,366	$	185,774

(1) Revenue recognized from CAF II, USF and RDOF programs. Refer to Note 8.

Contract Assets and Liabilities

The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from consumer Mobility contracts with both a multiyear service period and a promotional discount. In these contracts, the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’s balance sheets.

Contract liabilities consist of advance payments and billings in excess of revenue recognized. Mobility and Fixed revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including Mobility services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities also include certain long term fixed business and carrier service customer contracts. The current portion of contract liabilities are recorded in advanced payments and deposits and the noncurrent portion is included in deferred revenue, long-term on the Company’s balance sheets.

In July 2019, the Company entered into a Network Build and Maintenance Agreement with AT&T Mobility, LLC (“AT&T”) that was subsequently amended through March 31, 2024 (the “FirstNet Agreement”). In connection with the FirstNet Agreement, the Company is building a portion of AT&T’s network for the First Responder Network Authority in or near the Company’s current operating areas in the western United States (the “FirstNet Transaction”). The FirstNet Transaction includes construction and service performance obligations. The current portion of receivables under this agreement is recorded in customer receivable and the long-term portion is recorded in customer receivable long-term on the Company’s balance sheet.

In May 2023, the Company amended its current roaming agreement and entered into a carrier management services agreement with Verizon Wireless (the “Verizon CMS Agreement”). The transaction includes service performance obligations under which revenue is recognized over time. The Company allocates the transaction price of these agreements to each performance obligation based on the relative standalone selling price of each performance obligation in the contract. The standalone selling price is the estimated price the Company would charge for the good or service in a separate transaction with similar customers in similar circumstances.

Contract assets and liabilities consisted of the following (amounts in thousands):

	March 31, 2024		December 31, 2023			$ Change	% Change
Contract asset – current	$	3,469	$	3,616	$	(147)		(4.1)	%
Contract asset – noncurrent		5,490		5,509		(19)		(0.3)	%
Contract liability – current		(31,721)		(30,990)		(731)		2.4	%
Contract liability – noncurrent		(61,611)		(64,035)		2,424		(3.8)	%
Net contract liability	$	(84,373)	$	(85,900)	$	1,527		(1.8)	%

The decrease in the Company’s net contract liability was due to the timing of customer prepayments, contract billings, and recognition of deferred revenue. During the three months ended March 31, 2024, the Company recognized revenue of $16.8 million related to its December 31, 2023 contract liability and amortized $1.3 million of the December 31, 2023 contract asset to revenue.

Contract Acquisition Costs

The March 31, 2024 and 2023 balance sheets include contract acquisition costs of $11.4 million and $9.0 million, respectively, in other assets. During the three months ended March 31, 2024 and 2023, the Company amortized $1.6 million and $1.1 million, respectively, of contract acquisition costs.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear Mobility contracts, which include a promotional discount, Managed Services contracts, and the Company’s Carrier Services construction and service contracts. The transaction price allocated to unsatisfied performance obligations was $463 million and $494 million at March 31, 2024 and December 31, 2023, respectively. The decrease during 2024 was due to the Company satisfying certain performance obligations. The Company expects to satisfy approximately 34% of the remaining performance obligations and recognize the transaction price within 24 months and approximately $50 million annually from 2026 through 2031.

The Company has certain Mobility, Fixed, and Carrier Services contracts where the transaction price is allocated to remaining performance obligations. However, the Company omits these contracts from its disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients.

Disaggregation

The Company's revenue is presented on a disaggregated basis in Note 12 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision makers for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from Communication Services, Construction, and Other revenue. Communication Services revenue is further disaggregated into business and consumer Mobility, business and consumer Fixed, Carrier Services, and Other services. Other revenue is further disaggregated into Managed Services revenue.

Receivables

The Company records an estimate of future credit losses in conjunction with the revenue transaction based on the information available including historical experience and management’s expectations of future conditions. Those estimates will be updated as additional information becomes available. The Company’s allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.

The Company had gross accounts receivable of $155.3 million and an allowance for credit losses of $16.9 million as of March 31, 2024. In addition, the Company had receivables under the FirstNet Agreement totaling $52.7 million, of which $45.2 million was long-term. At December 31, 2023, the Company had gross accounts receivable of $155.0 million and an allowance for credit losses of $16.4 million and a receivable under the FirstNet Agreement totaling $52.9 million, of which $45.7 million was long-term. The Company monitors receivables through the use of historical operating data adjusted for the expectation of future performance as appropriate. Activity in the allowance for credit losses is below (in thousands):

	Three months ended
	March 31, 2024		March 31, 2023
Balance at beginning of period	$	16,362	$	15,171
Current period provision for expected losses		1,322		1,378
Write-offs charged against the allowance		(903)		(591)
Recoveries collected		83		74
Balance at end of period	$	16,864	$	16,032