EQUITY INVESTMENTS

3 Months Ended

Mar. 31, 2023

Investments, All Other Investments [Abstract]

On January 1, 2022, the Company closed a joint venture transaction in which the Company contributed certain fiber operations (including certain fiber assets of Hargray and a majority of the operations of Clearwave) and certain unaffiliated third-party investors contributed cash to a newly formed entity, Clearwave Fiber. The Company's approximately 58% investment in Clearwave Fiber was valued at $440.0 million as of the closing date. The Company recognized a non-cash gain of $22.1 million associated with this transaction in the quarter ended March 31, 2022.

On March 24, 2022, the Company invested an additional $5.4 million in Point Broadband Holdings, LLC, a fiber internet service provider ("Point Broadband"). On April 1, 2022, the Company contributed its Tallahassee, Florida system to MetroNet Systems, LLC, a fiber internet service provider ("MetroNet"), in exchange for cash consideration of $7.0 million and an equity interest of less than 10% in MetroNet valued at $7.0 million. On June 1, 2022, the Company completed a minority equity investment for a less than 10% ownership interest in Visionary Communications, Inc., an internet service provider ("Visionary"), for $7.2 million. On September 6, 2022, the Company entered into a subscription agreement with Northwest Fiber Holdco, LLC, a fiber internet service provider ("Ziply"), under which the Company agreed to invest up to $50.0 million in Ziply for a less than 10% equity interest. The Company funded $22.2 million in November 2022 and expects to fund the remaining $27.8 million during 2023.

The carrying value of the Company’s equity investments without readily determinable fair values are determined based on fair valuations as of their respective acquisition dates. As Tristar Acquisition I Corp, a special-purpose acquisition company ("Tristar") is publicly traded, the carrying value of the Company's Tristar investment is remeasured to fair value on a quarterly basis using market information.

The carrying value of the Company's equity investments consisted of the following (dollars in thousands):


	Ownership Percentage	March 31, 2023		December 31, 2022
Cost Method Investments
MetroNet	<10%	$	7,000	$	7,000
Nextlink(1)	<20%	77,245		77,245
Point Broadband	<10%	42,623		30,373
Tristar	<10%	23,995		23,413
Visionary	<10%	7,190		7,190
Ziply	<10%	22,222		22,222
Others	<10%	13,301		13,624
Total cost method investments		$	193,576	$	181,067

Equity Method Investments
Clearwave Fiber	~58%	$	395,284	$	409,514
MBI(2)	45.0%	568,672		571,075
Wisper(3)	40.4%	33,685		33,565
Total equity method investments		$	997,641	$	1,014,154

Total equity investments		$	1,191,217	$	1,195,221

(1)AMG Technology Investment Group, LLC, a wireless internet service provider ("Nextlink").

(2)The Company holds a call option to purchase all but not less than all of the remaining equity interests in Mega Broadband Investments Holdings LLC, a data, video and voice services provider (“MBI”) that the Company does not already own between January 1, 2023 and June 30, 2024. If the call option is not exercised, certain investors in MBI hold a put option to sell (and to cause all members of MBI other than the Company to sell) to the Company all but not less than all of the remaining equity interests in MBI that the Company does not already own between July 1, 2025 and September 30, 2025. The call and put options (collectively referred to as the “MBI Net Option”) are measured at fair value using Monte Carlo simulations that rely on assumptions around MBI’s equity value, MBI’s and the Company’s equity volatility, MBI’s and the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA” and as adjusted, “Adjusted EBITDA”) volatility, risk adjusted discount rates and the Company’s cost of debt, among others. The final MBI purchase price allocation resulted in $630.7 million being allocated to the MBI equity investment and $19.7 million and $75.5 million being allocated to the call and put options, respectively. The MBI Net Option is remeasured at fair value on a quarterly basis. The carrying value of the MBI Net Option liability was $172.3 million and $164.4 million as of March 31, 2023 and December 31, 2022, respectively, and was included within other noncurrent liabilities in the condensed consolidated balance sheets. Refer to note 9 for further information on the MBI Net Option.

(3)Wisper ISP, LLC, a wireless internet service provider ("Wisper").

The carrying value of MBI exceeded the Company’s underlying equity in MBI’s net assets by approximately $496.4 million and $497.8 million as of March 31, 2023 and December 31, 2022, respectively.

Equity method investment income (losses), which increase (decrease) the carrying value of the respective investment, and which are recorded on a one quarter lag, and the change in fair value of the Company's Point Broadband investment and MBI Net Option were as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Equity Method Investment Income (Loss)
Clearwave Fiber	$	(14,231)	$	—
MBI(1)	(2,403)		2,781
Wisper	120		999
Total	$	(16,514)	$	3,780

Other Income (Expense), Net
Mark-to-market adjustments(2)	$	12,833	$	125
MBI Net Option change in fair value	$	(7,980)	$	84,610

(1)The Company identified a $186.6 million difference between the fair values of certain of MBI’s finite-lived intangible assets and the respective carrying values recorded by MBI, of which $84.0 million was attributable to the Company’s 45% pro rata portion. The Company is amortizing its share on an accelerated basis over the lives of the respective assets. For the three months ended March 31, 2023, the Company recognized $0.8 million of its pro rata share of MBI’s net income and $3.2 million of its pro rata share of basis difference amortization. For the three months ended March 31, 2022, the Company recognized $6.7 million of its pro rata share of MBI’s net income and $4.0 million of its pro rata share of basis difference amortization.

(2)Amount includes a $12.3 million non-cash mark-to-market gain on its investment in Point Broadband in the first quarter of 2023 as a result of an observable market transaction in Point Broadband’s equity.

The Company assesses each equity investment for indicators of impairment on a quarterly basis. No impairments were recorded for any of the periods presented.