LEASES

3 Months Ended

Mar. 31, 2024

LEASES

LEASES

4. LEASES

Lessee Disclosure

The Company has operating and financing leases for towers, land, corporate offices, retail facilities, and data transport capacity. The lease terms are generally between three and 10 years, some of which include additional renewal options.

Supplemental lease information

The components of lease expense were as follows (in thousands):

	Three months ended
	March 31, 2024		March 31, 2023
Operating lease cost:
Operating lease cost	$	5,479	$	5,981
Short-term lease cost		691		677
Variable lease cost		1,429		662
Total operating lease cost	$	7,599	$	7,320
Finance lease cost:
Amortization of right-of-use asset	$	612	$	699
Variable costs		198		203
Interest costs		100		84
Total finance lease cost	$	910	$	986

During the three months ended March 31, 2024 and 2023, the Company paid $4.8 million and $5.0 million, respectively, for operating lease liabilities. During the three months ended March 31, 2024 and 2023, the Company recorded $2.3 million and $2.9 million, respectively, of operating lease liabilities arising from right of use assets. During the three months ended March 31, 2023, in conjunction with the restructuring activities the Company terminated certain leases and removed $5.0 million of lease right of use assets and $5.3 million of lease liabilities from its balance sheet, resulting in the recording of a gain of $0.3 million in the restructuring expense line of its statement of operations.

At March 31, 2024, finance leases with a cost of $31.7 million and accumulated amortization of $17.0 million were included in property, plant and equipment. During the three months ended March 31, 2024, the Company paid $0.4 million of financing cash flows and $0.1 million of operating cash flows for finance lease liabilities. During the three months ended March 31, 2023, the Company paid $0.2 million of financing cash flows, $0.9 million of investing cash flows and $0.1 million of operating cash flows for finance lease liabilities. At March 31, 2024, finance leases had a lease liability of $5.2 million, of which $1.8 million was current.

At December 31, 2023, finance leases with a cost of $31.7 million and accumulated amortization of $16.4 million were included in property, plant and equipment.

The weighted average remaining lease terms and discount rates as of March 31, 2024 and December 31, 2023 are noted in the table below:

	March 31, 2024		December 31, 2023
Weighted-average remaining lease term
Operating leases		12.9 years		13.3 years
Financing leases		9.2 years		9.2 years
Weighted-average discount rate
Operating leases		6.6%		6.3%
Financing leases		7.2%		6.6%

Maturities of lease liabilities as of March 31, 2024 were as follows (in thousands):

	Operating Leases		Financing Leases
2024 (excluding the three months ended March 31, 2024)	$	13,608	$	1,614
2025		16,800		1,394
2026		12,405		570
2027		9,542		534
2028		7,553		505
Thereafter		82,078		2,145
Total lease payments		141,986		6,762
Less imputed interest		(56,664)		(1,555)
Total	$	85,322	$	5,207

Maturities of lease liabilities as of December 31, 2023 were as follows (in thousands):

	Operating Leases		Financing Leases
2024	$	18,048	$	2,030
2025		16,022		1,488
2026		11,755		601
2027		9,327		534
2028		7,807		505
Thereafter		80,637		2,145
Total lease payments		143,596		7,303
Less imputed interest		(57,133)		(1,662)
Total	$	86,463	$	5,641

As of March 31, 2024, the Company did not have any material operating or finance leases that have not yet commenced.

Lessor Disclosure

The Company is the lessor in agreements to lease the use of its network assets including its wireless cell sites and buildings. For the three months ended March 31, 2024 and 2023, the Company recorded $2.1 million and $1.9 million, respectively, of lease income from agreements in which the Company is the lessor. Lease income is classified as Carrier Services revenue in the statement of operations.

The following table presents the maturities of future undiscounted lease payments for the periods indicated (in thousands):

2024 (excluding the three months ended March 31, 2024)	$	5,995
2025		7,060
2026		6,749
2027		5,559
2028		5,180
Thereafter		13,353
Total future lease payments	$	43,896