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LEASES

9 Months Ended

Sep. 30, 2024

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, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Operating lease cost:
Operating lease cost	$	5,884	$	5,975	$	16,989	$	17,719
Short-term lease cost		657		655		2,105		1,958
Variable lease cost		1,415		1,266		4,539		3,311
Total operating lease cost	$	7,956	$	7,896	$	23,633	$	22,988

Finance lease cost:
Amortization of right-of-use asset	$	1,647	$	735	$	3,235	$	2,239
Variable costs		170		211		538		641
Interest costs		87		103		287		265
Total finance lease cost	$	1,904	$	1,049	$	4,060	$	3,145

During the nine months ended September 30, 2024 and 2023, the Company paid $14.8 million and $14.6 million, respectively, for operating lease liabilities. During the nine months ended September 30, 2024 and 2023, the Company recorded $11.5 million and $15.8 million, respectively, of operating lease liabilities arising from right of use assets. During the nine months ended September 30, 2023, in conjunction with the restructuring activities the Company terminated certain leases and removed $5.6 million of lease right of use assets and $5.9 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 September 30, 2024, finance leases with a cost of $32.3 million and accumulated amortization of $19.5 million were included in fixed assets, net. During the nine months ended September 30, 2024, the Company paid $1.4 million of financing cash flows and $0.3 million of operating cash flows for finance lease liabilities. 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. At September 30, 2024, finance leases had a lease liability of $4.8 million, of which $1.6 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 fixed assets, net.

The weighted average remaining lease terms and discount rates as of September 30, 2024 and December 31, 2023 are noted in the table below:


	September 30, 2024		December 31, 2023
Weighted-average remaining lease term
Operating leases		12.6 years		13.3 years
Financing leases		4.8 years		9.2 years

Weighted-average discount rate
Operating leases		6.7%		6.3%
Financing leases		7.3%		6.6%

Maturities of lease liabilities as of September 30, 2024 were as follows (in thousands):


	Operating Leases		Financing Leases
2024 (excluding the nine months ended September 30, 2024)	$	4,957	$	543
2025		18,858		1,541
2026		15,023		721
2027		12,143		685
2028		9,273		554
Thereafter		84,025		2,145
Total lease payments		144,279		6,189
Less imputed interest		(56,694)		(1,431)
Total	$	87,585	$	4,758

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 September 30, 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 nine months ended September 30, 2024 and 2023, the Company recorded $6.3 million and $5.8 million, respectively, of lease income from agreements in which the Company is the lessor. For the three months ended September 30, 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 nine months ended September 30, 2024)	$	1,837
2025		7,178
2026		6,848
2027		5,624
2028		5,228
Thereafter		13,568
Total future lease payments	$	40,283