Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. While the Company believes that the disclosures are adequate to not make the information misleading, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in its annual report on Form 10-K for the year ended December 31, 2025. Certain prior year amounts have been reclassified to conform to current year presentation.

The accompanying unaudited condensed consolidated financial statements include all wholly owned subsidiaries. All inter-company accounts and activity have been eliminated.

Financial instruments

Financial instruments

At June 30, 2026 and December 31, 2025, the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents and restricted cash at amortized cost, which approximates fair value based upon quoted market prices (Level 1).

Based upon recent trading prices (Level 2—market approach) at June 30, 2026:

●

The fair value of the Company’s $450.0 million aggregate principal amount of 7.00% Senior Unsecured Notes due 2027 (the “2027 Notes”) was $446.1 million;

●

The fair value of the Company’s $300.0 million aggregate principal amount of 7.00% Senior Unsecured Mirror Notes due 2027 (the “2027 Mirror Notes”) was $297.4 million;

●

The fair value of the Company’s $579.6 million aggregate principal amount of 6.50% Senior Secured Notes due 2032 (the “2032 Notes”) was $518.7 million; and

●

The fair value of the Company’s $380.4 million aggregate principal amount of secured IPv4 notes (the “IPv4 Notes”) was $387.4 million.

Gross receipts taxes, universal service fund and other surcharges

Gross receipts taxes, universal service fund and other surcharges

Revenue recognition standards include guidance relating to taxes or surcharges assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a seller and a customer and may include, but are not limited to, gross receipts taxes, excise taxes, Universal Service Fund fees and certain state regulatory fees. Such charges may be presented gross or net based upon the Company’s accounting policy election. The Company records certain excise taxes and surcharges on a gross basis and includes them in its revenue and network operations expense. Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense) were $18.9 million and $38.4 million for the three and six months ended June 30, 2026, respectively and were $20.0 million and $40.2 million for the three and six months ended June 30, 2025, respectively.

Stockholders' (Deficit) Equity

Stockholders’ (Deficit) Equity

The following details the changes in stockholders’ (deficit) equity for the three and six months ended June 30, 2026 and 2025 (in thousands except share data):


										Accumulated
							Additional			Other						Total
		Common Stock					Paid-in			Comprehensive			Accumulated			Stockholders’
		Shares		Amount			Capital			Loss			Deficit			Deficit
Balance at March 31, 2026		50,077,663		$	50		$	651,538		$	(6,327)		$	(749,423)		$	(104,162)
Forfeitures of shares granted to employees		(80,306)			—			—			—			—			—
Equity-based compensation		—			—			8,389			—			—			8,389
Foreign currency translation		—			—			—			(2,713)			—			(2,713)
Issuances of common stock		1,218,379			1			—			—			—			1
Dividends paid		—			—			—			—			(2,281)			(2,281)
Net income		—			—			—			—			66,636			66,636
Balance at June 30, 2026		51,215,736		$	51		$	659,927		$	(9,040)		$	(685,068)		$	(34,130)


										Accumulated
							Additional			Other						Total
		Common Stock					Paid-in			Comprehensive			Accumulated			Stockholders’
		Shares		Amount			Capital			Loss			Deficit			Equity
Balance at March 31, 2025		49,337,310		$	49		$	639,248		$	(18,933)		$	(477,520)		$	142,844
Forfeitures of shares granted to employees		(59,281)			—			—			—			—			—
Equity-based compensation		—			—			5,422			—			—			5,422
Foreign currency translation		—			—			—			17,737			—			17,737
Issuances of common stock		196,788			—			—			—			—			—
Exercises of options		886			—			30			—			—			30
Common stock purchases & retirement		(229,507)			—			(11,998)			—			—			(11,998)
Dividends paid		—			—			—			—			(49,560)			(49,560)
Net loss		—			—			—			—			(57,807)			(57,807)
Balance at June 30, 2025		49,246,196		$	49		$	632,702		$	(1,196)		$	(584,887)		$	46,668


							Additional			Other						Total
		Common Stock					Paid-in			Comprehensive			Accumulated			Stockholders’
		Shares		Amount			Capital			Loss			Deficit			Deficit
Balance at December 31, 2025		50,062,158		$	50		$	643,256		$	1,428		$	(708,582)		$	(63,848)
Forfeitures of shares granted to employees		(91,316)			—			—			—			—			—
Equity-based compensation		—			—			16,671			—			—			16,671
Foreign currency translation		—			—			—			(10,468)			—			(10,468)
Issuances of common stock		1,244,894			1			—			—			—			1
Dividends paid		—			—			—			—			(3,580)			(3,580)
Net income		—			—			—			—			27,094			27,094
Balance at June 30, 2026		51,215,736		$	51		$	659,927		$	(9,040)		$	(685,068)		$	(34,130)


							Additional			Other						Total
		Common Stock					Paid-in			Comprehensive			Accumulated			Stockholders’
		Shares		Amount			Capital			Loss			Deficit			Equity
Balance at December 31, 2024		49,034,925		$	49		$	629,829		$	(30,685)		$	(376,345)		$	222,848
Forfeitures of shares granted to employees		(69,541)			—			—			—			—			—
Equity-based compensation		—			—			14,720			—			—			14,720
Foreign currency translation		—			—			—			29,489			—			29,489
Issuances of common stock		507,386			—			—			—			—			—
Exercises of options		2,933			—			151			—			—			151
Common stock purchases & retirement		(229,507)			—			(11,998)			—			—			(11,998)
Dividends paid		—			—			—			—			(98,693)			(98,693)
Net loss		—			—			—			—			(109,849)			(109,849)
Balance at June 30, 2025		49,246,196		$	49		$	632,702		$	(1,196)		$	(584,887)		$	46,668

Leases

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 replaced most existing lease accounting guidance. The operating lease liability under ASU 2016-02 is not considered a liability under the consolidated leverage ratio calculations in the indentures governing the Company’s senior unsecured and senior secured note obligations. The Company has made an accounting policy election to not apply the recognition requirements of ASU 2016-02 to its short-term leases, which are leases with a term of one year or less. The Company has also elected to apply certain practical expedients under ASU 2016-02 including not separating lease and non-lease components on its finance and operating leases.


		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
(Amounts in thousands)		June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
Finance lease cost
Amortization of right-of-use assets		$	13,553		$	13,975		$	27,089		$	27,891
Interest expense on finance lease liabilities			12,472			12,509			24,985			23,615
Operating lease cost			18,169			18,569			35,816			36,013
Total lease costs		$	44,194		$	45,053		$	87,890		$	87,519


		Six Months			Six Months
		Ended			Ended
		June 30, 2026			June 30, 2025
Other lease information (amounts in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases		$	(28,276)		$	(22,650)
Operating cash flows from operating leases			(37,084)			(35,790)
Financing cash flows from finance leases			(23,007)			(16,523)
Right-of-use assets obtained in exchange for new finance lease liabilities			52,102			79,076
Right-of-use assets obtained in exchange for new operating lease liabilities			1,765			15,105
Weighted-average remaining lease term — finance leases (in years)			16.8			17.1
Weighted-average remaining lease term — operating leases (in years)			11.4			11.3
Weighted-average discount rate — finance leases			8.3	%		8.1	%
Weighted-average discount rate — operating leases			7.2	%		7.6	%

Operating leases and finance leases

The Company has entered into lease agreements with numerous providers of dark fiber under IRUs. These IRUs typically have initial terms of 15-20 years and include renewal options after the initial lease term. The majority of these leases are finance leases. The Company also leases office space, rights-of-way, dark fiber and certain data center facilities under operating leases. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease.

As of June 30, 2026, the Company had committed to additional IRU agreements totaling $96.7 million in future payments to be paid over periods of up to 20 years. These obligations begin when the related fiber is accepted, which is generally expected to occur in the next 12 months.

The future minimum payments under the Company’s operating lease and finance lease agreements are as follows (in thousands):


		Operating			Finance
For the Twelve Months Ending June 30,		Leases			Leases
2027		$	60,082		$	70,239
2028			57,534			69,157
2029			55,440			67,913
2030			34,482			67,537
2031			27,688			67,426
Thereafter			220,283			827,320
Total minimum lease obligations			455,509			1,169,592
Less—amounts representing interest			(146,033)			(539,382)
Present value of minimum lease obligations			309,476			630,210
Current maturities			(53,102)			(21,171)
Lease obligations, net of current maturities		$	256,374		$	609,039