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LEASES

9 Months Ended

Sep. 30, 2023

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				Nine months ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Operating lease cost:
Operating lease cost	$	5,975	$	6,061	$	17,719	$	18,398
Short-term lease cost		655		714		1,958		1,869
Variable lease cost		1,266		1,010		3,311		2,456
Total operating lease cost	$	7,896	$	7,785	$	22,988	$	22,723

Finance lease cost:
Amortization of right-of-use asset	$	735	$	742	$	2,239	$	2,321
Variable costs		211		209		641		667
Interest costs		103		93		265		290
Total finance lease cost	$	1,049	$	1,044	$	3,145	$	3,278

During the nine months ended September 30, 2023 and 2022, the Company paid $14.6 million and $16.0 million, respectively, for operating lease liabilities. During the nine months ended September 30, 2023 and 2022, the Company recorded $15.8 million and $6.1 million, respectively, of operating lease liabilities arising from ROU assets. During the nine months ended September 30, 2023, in conjunction with the restructuring activities the Company terminated $5.6 million of lease right of use assets, $5.9 million of lease liabilities from its balance sheet, and recorded a gain of $0.3 million in the restructuring expense line of its statement of operations.

At September 30, 2023, finance leases with a cost of $31.6 million and accumulated amortization of $15.7 million were included in property, plant and equipment. During the nine months ended September 30, 2023, the Company paid $0.9 million of financing cash flows, $3.5 million of investing cash flows and $0.3 million of operating cash flows for finance lease liabilities. During the nine months ended September 30, 2022, the Company paid $0.8 million of financing cash flows and $0.3 million of operating cash flows for finance lease liabilities. Additionally, during the nine months ended September 30, 2022, the Company disposed of a finance lease with a net book value of $2.3 million recording a loss for $1.0 million. At September 30, 2023, finance leases had a lease liability of $6.0 million, of which $1.8 million was current.

At December 31, 2022, finance leases with a cost of $26.6 million and accumulated amortization of $13.5 million were included in property, plant and equipment.

The weighted average remaining lease terms and discount rates as of September 30, 2023 and December 31, 2022 are noted in the table below:


	September 30, 2023		December 31, 2022
Weighted-average remaining lease term
Operating leases		13.0 years		12.4 years
Financing leases		9.3 years		9.3 years

Weighted-average discount rate
Operating leases		6.3%		6.0%
Financing leases		7.1%		6.7%

Maturities of lease liabilities as of September 30, 2023 were as follows (in thousands):


	Operating Leases		Financing Leases
2023 (excluding the nine months ended September 30, 2023)	$	4,896	$	535
2024		19,349		2,153
2025		15,811		1,341
2026		11,498		542
2027		9,129		511
Thereafter		88,052		2,651
Total lease payments		148,735		7,733
Less imputed interest		(58,122)		(1,755)
Total	$	90,613	$	5,978

Maturities of lease liabilities as of December 31, 2022 were as follows (in thousands):


	Operating Leases		Financing Leases
2023	$	19,417	$	1,403
2024		17,836		1,342
2025		14,805		978
2026		10,505		504
2027		8,096		495
Thereafter		76,452		2,651
Total lease payments		147,111		7,373
Less imputed interest		(53,794)		(1,914)
Total	$	93,317	$	5,459

As of September 30, 2023, 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 nine months ended September 30, 2023 and 2022, the Company recorded $5.8 million and $4.4 million, respectively, of lease income from agreements in which the Company is the lessor. For the three months ended September 30, 2023 and 2022, the Company recorded $1.9 million and $1.5 million, respectively, of lease income. 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:


2023 (excluding the nine months ended September 30, 2023)	$	1,891
2024		6,587
2025		6,394
2026		6,062
2027		4,874
Thereafter		15,641
Total future lease payments	$	41,449