- Strong postpaid and broadband net customer additions in New Zealand, with both nearly doubling over the second quarter of last year.
- Combined postpaid, prepaid, and wireline service revenues in New Zealand increased 6% over the second quarter of last year on an organic basis, which excludes the impact of foreign currency exchange of $4.9 million, or 6%, and new revenue standard adoption, which had an insignificant impact of approximately 1%. These New Zealand subscriber revenues, as reported, decreased 1% over the second quarter of last year.
- New Zealand Adjusted EBITDA for the second quarter increased 18% year-over-year on an organic basis, which excludes the benefit of new revenue standard adoption of $2.5 million, or 11%, and offsetting foreign currency exchange headwinds of $1.3 million, or 6%. New Zealand Adjusted EBITDA, as reported, increased 23% over the second quarter of last year.
- Competitive environment in Bolivia continues to weigh on subscriber acquisition and market pricing. Focus remains on operational efficiencies as well as strategic alternatives.
- Broad LTE network coverage across our consolidated networks: LTE sites in New Zealand and Bolivia now covering nearly 100% and 90% of our networks, respectively.
BELLEVUE, Wash., Aug. 12, 2019 (GLOBE NEWSWIRE) -- Trilogy International Partners Inc. (“TIP Inc.” or the “Company”) (TSX: TRL), an international wireless and fixed broadband telecommunications operator, today announced its unaudited financial and operating results for the second quarter of 2019.
“We are pleased with our second quarter as we continue to deliver results that position us to achieve our 2019 guidance,” said Brad Horwitz, President and CEO. “We are particularly encouraged by our continued positive momentum in New Zealand. We posted another quarter of solid gains in both our postpaid and broadband customer bases, almost doubling our combined net additions versus the second quarter of 2018. Our steady growth in these key focus areas over the last several quarters is reflected in our increased revenues and Adjusted EBITDA in New Zealand.”
“In Bolivia, competition remains a significant factor. We are actively addressing the current market dynamics and in the second quarter we completed our strategic consultancy work to identify opportunities to improve our operating structure and enhance revenue. The impact of implementing these changes will take time; however, we remain committed to optimizing this asset and shareholder value.”
Consolidated Financial Highlights
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions unless otherwise noted, unaudited)(1) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Total revenues | 179.6 | 198.1 | (9%) | 367.3 | 400.8 | (8%) | |
| Service revenues | 136.1 | 147.6 | (8%) | 271.2 | 296.5 | (9%) | |
| Net loss | (6.4) | (6.3) | (1%) | (9.2) | (13.6) | 32% | |
| Adjusted EBITDA(2) | 35.7 | 37.5 | (5%) | 72.8 | 70.3 | 4% | |
| Adjusted EBITDA margin(2) | 26.3% | 25.4% | n/m | 26.8% | 23.7% | n/m | |
| n/m - not meaningful | |||||||
| Notes: | |||||||
| (1)On January 1, 2019, we adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”. Financial information prior to our adoption date has not been adjusted. See “About this press release” below for further detail. | |||||||
| (2)These are Non-U.S. GAAP measures and do not have standardized meanings under generally accepted accounting principles in the United States ("GAAP"). Therefore, they are unlikely to be comparable to similar measures presented by other companies. For definitions and a reconciliation with the most directly comparable U.S. GAAP financial measures, see “Non-GAAP Measures and Other Financial Measures; Basis of Presentation” herein. | |||||||
Conference Call Information
Call Date: Tuesday, August 13, 2019
Call Time: 10:30 a.m. (PT)
US Toll Free: 1-844-826-3035
Canada Toll Free: 1-855-669-9657
International Toll: 1-412-317-5144
Please ask the operator to be joined into the Trilogy International Partners (TRL) call.
Online info (audio only): http://www.trilogy-international.com/events-and-presentations
Live simulcast (listen only) available during the call. Participants should register on the website approximately 10 minutes prior to the start of the webcast.
A replay of the conference call will be available at approximately 12:30 p.m. (PT) the day of the live call. Replay dial-in access is as follows:
US Toll Free: 1-877-344-7529
Canada Toll Free: 1-855-669-9658
International Toll: 1-412-317-0088
Replay Access Code: 10131664
About Trilogy International Partners Inc.
TIP Inc. is the parent of Trilogy International Partners LLC (“Trilogy LLC”), a wireless telecommunications operator formed by wireless industry veterans John Stanton, Theresa Gillespie and Brad Horwitz. Trilogy LLC’s founders have an exceptional track record of successfully buying, building, launching and operating communications businesses in 15 international markets and the United States.
Trilogy LLC, together with its consolidated subsidiaries in New Zealand and Bolivia, is a provider of wireless voice and data communications services including local, international long distance and roaming services, for both subscribers and international visitors roaming on its networks. Trilogy LLC also provides fixed broadband communications services to residential and enterprise customers in New Zealand.
Trilogy LLC completed a transaction with Alignvest Acquisition Corporation (“AQX”) on February 7, 2017 (the “Arrangement”). For accounting purposes, the Arrangement was treated as a “reverse acquisition” and recapitalization. Trilogy LLC was considered the accounting acquirer and upon closing AQX was renamed Trilogy International Partners Inc. Accordingly, Trilogy LLC’s historical financial statements as of and for the periods ended prior to the acquisition became the historical financial statements of TIP Inc. prior to the date of the transaction.
Unless otherwise stated, the financial information provided herein is for TIP Inc. as of June 30, 2019.
TIP Inc.’s head office is located at 155 108th Avenue NE, Suite 400, Bellevue, Washington, 98004 USA. TIP Inc.’s common shares (the “Common Shares”) trade on the Toronto Stock Exchange under the ticker TRL and its warrants trade on such exchange under the ticker TRL.WT.
For more information, visit www.trilogy-international.com.
Business segments
TIP Inc.’s reportable segments are New Zealand and Bolivia. Segment information is regularly reported to our Chief Executive Officer (the chief operating decision-maker). Segments and the nature of their businesses are as follows:
| Segment | Principal activities |
| Bolivia | Wireless telecommunications operations for Bolivian consumers and businesses. |
| New Zealand | Wireless telecommunications operations for New Zealand consumers and businesses; broadband network connectivity through fiber network assets to support a range of voice, data and networking for New Zealand consumers, businesses and governments. |
About this press release
This press release contains information about our business and performance for the three and six months ended June 30, 2019, as well as forward-looking information about our 2019 fiscal year and assumptions. See “About Forward-Looking Information” for more information. This discussion should be read together with supplementary information filed on the date hereof under TIP Inc.’s profile on SEDAR (www.sedar.com) and EDGAR (www.sec.gov).
The financial information included in this press release was prepared in accordance with GAAP. In our discussion, we also use certain Non-GAAP financial measures to evaluate our performance. See “Non-GAAP Measures and Other Financial Measures; Basis of Presentation” for more information.
Certain amounts in the prior period Condensed Consolidated Balance Sheet have been reclassified to conform to the current presentation related to certain deferred tax liabilities and the tax paying components to which they apply.
In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” and has since modified the standard with several ASUs (collectively, the “new revenue standard”). We adopted this new revenue standard on January 1, 2019, using the modified retrospective method. This method requires the cumulative effect of initially applying the standard to be recognized at the date of adoption. Financial information prior to our adoption date has not been adjusted. See “Note 1 – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies” and “Note 11 – Revenue from Contracts with Customers” to the Condensed Consolidated Financial Statements filed on the date hereof under TIP Inc.’s profile on SEDAR (www.sedar.com) and EDGAR (www.sec.gov) for further information.
All dollar amounts are in United States dollars (“USD”) unless otherwise stated. In New Zealand, the Company generates revenues and incurs costs in New Zealand dollars (“NZD”). Fluctuations in the value of the NZD relative to the USD can increase or decrease the Company’s overall revenue and profitability as stated in USD, which is the Company’s reporting currency. The following table sets forth for each period indicated the exchange rates in effect at the end of the period and the average exchange rates for such periods, for the NZD, expressed in USD.
| June 30, 2019 | December 31, 2018 | % Change | |||||||||||
| End of period NZD to USD exchange rate | 0.67 | 0.67 | 0% | ||||||||||
| Three Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||
| Average NZD to USD exchange rate | 0.66 | 0.70 | (6%) | 0.67 | 0.72 | (6%) | |||||||
Amounts for subtotals, totals and percentage changes included in tables in this press release may not sum or calculate using the numbers as they appear in the tables due to rounding. Differences between amounts set forth in the following tables and corresponding amounts in TIP Inc.’s Condensed Consolidated Financial Statements and related notes for the period ended June 30, 2019 are a result of rounding. Information is current as of August 12, 2019, and was approved by TIP Inc.’s Board of Directors. This press release includes forward-looking statements and assumptions. See “About Forward-Looking Information” for more information.
Additional information relating to TIP Inc., including our financial statements, Management’s Discussion and Analysis for the three and six months ended June 30, 2019 and for the year ended December 31, 2018, Annual Information Form for the year ended December 31, 2018, and other filings with Canadian securities commissions and the U.S. Securities and Exchange Commission, is available on TIP Inc.’s website (www.trilogy-international.com) in the investor relations section and under TIP Inc.’s profile on SEDAR (www.sedar.com) and EDGAR (www.sec.gov).
Consolidated Financial Results
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions unless otherwise noted, unaudited) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Revenues | |||||||
| New Zealand | 126.3 | 136.5 | (7%) | 258.9 | 278.5 | (7%) | |
| Bolivia | 53.1 | 61.5 | (14%) | 108.0 | 121.9 | (11%) | |
| Unallocated Corporate & Eliminations | 0.3 | 0.1 | 114% | 0.4 | 0.4 | 9% | |
| Total revenues | 179.6 | 198.1 | (9%) | 367.3 | 400.8 | (8%) | |
| Total service revenues | 136.1 | 147.6 | (8%) | 271.2 | 296.5 | (9%) | |
| Net loss | (6.4) | (6.3) | (1%) | (9.2) | (13.6) | 32% | |
| Adjusted EBITDA | |||||||
| New Zealand | 27.0 | 22.0 | 23% | 52.3 | 40.8 | 28% | |
| Bolivia | 11.4 | 18.3 | (38%) | 25.6 | 35.2 | (27%) | |
| Unallocated Corporate & Eliminations | (2.6) | (2.7) | 3% | (5.1) | (5.8) | 11% | |
| Adjusted EBITDA(1) | 35.7 | 37.5 | (5%) | 72.8 | 70.3 | 4% | |
| Adjusted EBITDA margin(1)(2) | 26.3% | 25.4% | n/m | 26.8% | 23.7% | n/m | |
| Cash provided by operating activities | 3.4 | 5.2 | (35%) | 6.7 | 12.2 | (45%) | |
| Capital expenditures(3) | 21.6 | 20.8 | 4% | 40.9 | 38.2 | 7% | |
| Capital intensity | 16% | 14% | n/m | 15% | 13% | n/m | |
| n/m - not meaningful | |||||||
| Notes: | |||||||
| (1)These are Non-GAAP measures and do not have standardized meanings under GAAP. Therefore, they are unlikely to be comparable to similar measures presented by other companies. For definitions and a reconciliation with the most directly comparable GAAP financial measures, see “Non-GAAP Measures and Other Financial Measures; Basis of Presentation” herein. | |||||||
| (2)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Service revenues. | |||||||
| (3)Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and capital lease arrangements. | |||||||
Results of Our Business Segments
New Zealand
Financial Results
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions unless otherwise noted, unaudited) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Revenues | |||||||
| Wireless service revenues | 65.3 | 67.4 | (3%) | 130.0 | 137.5 | (5%) | |
| Wireline service revenues | 17.2 | 15.9 | 8% | 33.8 | 31.1 | 9% | |
| Non-subscriber ILD and other revenues | 1.8 | 3.4 | (46%) | 3.4 | 7.1 | (52%) | |
| Service revenues | 84.3 | 86.7 | (3%) | 167.2 | 175.7 | (5%) | |
| Equipment sales | 42.0 | 49.8 | (16%) | 91.7 | 102.8 | (11%) | |
| Total revenues | 126.3 | 136.5 | (7%) | 258.9 | 278.5 | (7%) | |
| Adjusted EBITDA(1) | 27.0 | 22.0 | 23% | 52.3 | 40.8 | 28% | |
| Adjusted EBITDA margin(2) | 32.1% | 25.4% | n/m | 31.3% | 23.2% | n/m | |
| Capital expenditures(3) | 16.0 | 12.8 | 25% | 31.0 | 25.9 | 19% | |
| Capital intensity | 19% | 15% | n/m | 19% | 15% | n/m | |
| Subscriber Results | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (Thousands unless otherwise noted) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Postpaid | |||||||
| Gross additions | 27.0 | 23.7 | 14% | 47.3 | 47.2 | 0% | |
| Net additions | 13.7 | 7.2 | 91% | 21.0 | 12.3 | 71% | |
| Total postpaid subscribers | 451.2 | 408.3 | 11% | 451.2 | 408.3 | 11% | |
| Prepaid | |||||||
| Net (losses) additions | (22.7) | 0.9 | n/m | (11.2) | (41.6)(4) | 73% | |
| Total prepaid subscribers | 954.3 | 983.5 | (3%) | 954.3 | 983.5 | (3%) | |
| Total wireless subscribers | 1,405.5 | 1,391.8 | 1% | 1,405.5 | 1,391.8 | 1% | |
| Wireline | |||||||
| Gross additions | 11.5 | 7.7 | 50% | 21.2 | 14.6 | 45% | |
| Net additions | 6.2 | 2.9 | 112% | 11.6 | 6.1 | 90% | |
| Total wireline subscribers | 93.4 | 74.6 | 25% | 93.4 | 74.6 | 25% | |
| Total Subscribers | 1,498.8 | 1,466.4 | 2% | 1,498.8 | 1,466.4 | 2% | |
| Monthly blended wireless ARPU ($, not rounded) | 15.43 | 16.20 | (5%) | 15.47 | 16.30 | (5%) | |
| Monthly postpaid wireless ARPU ($, not rounded) | 32.07 | 35.65 | (10%) | 31.86 | 35.94 | (11%) | |
| Monthly prepaid wireless ARPU ($, not rounded) | 7.60 | 7.90 | (4%) | 7.74 | 7.85 | (1%) | |
| Monthly residential wireline ARPU ($, not rounded) | 47.53 | 52.39 | (9%) | 47.80 | 52.14 | (8%) | |
| Blended wireless churn | 2.8% | 2.3% | n/m | 2.7% | 3.0%(4) | n/m | |
| Postpaid Churn | 1.3% | 1.6% | n/m | 1.3% | 1.7% | n/m | |
| n/m - not meaningful | |||||||
| Notes: | |||||||
| (1)These are Non-GAAP measures and do not have standardized meanings under GAAP. Therefore, they are unlikely to be comparable to similar measures presented by other companies. For definitions and a reconciliation with the most directly comparable GAAP financial measures, see “Non-GAAP Measures and Other Financial Measures; Basis of Presentation” herein. | |||||||
| (2)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Service revenues. | |||||||
| (3)Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and capital lease arrangements. | |||||||
| (4)Includes approximately 37 thousand deactivations of prepaid wireless subscribers relating to the 2degrees’ planned shutdown of its 2G services in March 2018. | |||||||
Revenues
Our New Zealand total revenues decreased $10.2 million, or 7%, for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to equipment sales which declined $7.8 million, or 16%. This decrease in equipment sales was primarily the result of a decline in sales of higher priced devices and higher subsidies offered over the same period last year. Additionally, total revenues were also impacted by a 6% decline in foreign currency exchange. Service revenues declined $2.4 million, or 3%, for the three months ended June 30, 2019, compared to the same period in 2018 due to the following:
- Postpaid service revenues declined by $0.5 million, or 1%. Excluding the impact of foreign currency, postpaid service revenues increased $2.0 million, or 5%, for the three months ended June 30, 2019, compared to the same period in 2018 driven by an increase in the subscriber base offset by an ARPU decline of 4%. Postpaid service revenues were also reduced by $0.3 million in the second quarter of 2019 due to the adoption of the new revenue standard;
- Prepaid service revenues declined by $1.3 million, or 5%. Excluding the impact of foreign currency exchange, prepaid service revenues were up slightly when compared to the same period in 2018 as prepaid ARPU increased 2% over prior year, which included a $0.3 million benefit due to the adoption of the new revenue standard;
- Roamer (reported within wireless service revenues) and non-subscriber international long distance (“ILD”) revenues decreased by $1.9 million, or 45%, as a result of a decline that began in the third quarter of 2018 in the volume of other operators’ subscribers’ traffic on our network and lower rates in an agreement with an operator for ILD. These declines were partially offset as:
- Wireline service revenues increased $1.3 million, or 8%. Excluding the impact of foreign currency exchange, wireline service revenues increased $2.2 million, or 15%, when compared to the same period in 2018. This increase was driven by a 25% year-over-year growth in the wireline customer base, offset by an ARPU decline of 4%.
Adjusted EBITDA
Our New Zealand Adjusted EBITDA increased by $3.7 million, or 18%, on an organic basis. This increase excludes the benefit of new revenue standard adoption of $2.5 million, or 11%, and offsetting foreign currency exchange headwinds of $1.3 million, or 6%. This increase in Adjusted EBITDA was primarily due to an increase in subscriber revenues, coupled with reductions in certain operating costs. On a reported basis our Adjusted EBITDA increased $5.0 million, or 23%, compared to the second quarter of 2018. This increase in Adjusted EBITDA was primarily the result of a reduction in certain operating costs as follows:
- Cost of service declined $1.9 million, or 7%, primarily due to a $1.7 million foreign currency benefit coupled with the aforementioned decrease in non-subscriber interconnection and ILD costs associated with the decline in roamer traffic and certain lower non-subscriber interconnection rates, partially offset by an increase in transmission expense associated with the increase in broadband subscribers;
- Sales and marketing declined $3.7 million, or 23%, primarily due to a $2.6 million decrease in commission costs of which $2.4 million related to the implementation of the new revenue standard. Additionally, there was a foreign currency benefit of $1.0 million; and
- General and administrative declined $3.5 million, or 17%, primarily as a result of a reduction in bad debt expense due to higher sales of EIP receivables, improved accounts receivable recovery efforts, and improved credit risk of our customer portfolio. Additionally, there was a foreign currency benefit of $1.2 million.
Capital Expenditures
Capital expenditures increased $3.2 million, or 25%, compared to the same period in 2018. These increases were primarily due to the timing of those expenditures and network capacity developments. In addition, beginning in July 2018 as a result of revisions to the terms and conditions of the fixed broadband agreements with customers, the Company began to capitalize modem equipment purchases.
Bolivia
Financial Results
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions unless otherwise noted, unaudited) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Revenues | |||||||
| Wireless service revenues | 50.7 | 60.3 | (16%) | 102.4 | 119.4 | (14%) | |
| Non-subscriber ILD and other revenues | 0.8 | 0.5 | 48% | 1.2 | 1.1 | 14% | |
| Service revenues | 51.5 | 60.8 | (15%) | 103.6 | 120.4 | (14%) | |
| Equipment sales | 1.5 | 0.7 | 120% | 4.4 | 1.5 | 203% | |
| Total revenues | 53.1 | 61.5 | (14%) | 108.0 | 121.9 | (11%) | |
| Adjusted EBITDA(1) | 11.4 | 18.3 | (38%) | 25.6 | 35.2 | (27%) | |
| Adjusted EBITDA margin(2) | 22.1% | 30.0% | n/m | 24.7% | 29.3% | n/m | |
| Capital expenditures(3) | 5.6 | 7.9 | (29%) | 9.9 | 12.2 | (18%) | |
| Capital intensity | 11% | 13% | n/m | 10% | 10% | n/m | |
| Subscriber Results | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (Thousands unless otherwise noted) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Postpaid | |||||||
| Gross additions | 16.2 | 16.0 | 1% | 31.9 | 29.5 | 8% | |
| Net (losses) additions | (0.7) | 4.0 | (119%) | (4.7) | 4.9 | (196%) | |
| Total postpaid subscribers | 332.0 | 345.8 | (4%) | 332.0 | 345.8 | (4%) | |
| Prepaid | |||||||
| Net (losses) additions | (23.3) | 18.4 | (226%) | (36.9) | 73.1 | (150%) | |
| Total prepaid subscribers | 1,597.2 | 1,871.8 | (15%) | 1,597.2 | 1,871.8 | (15%) | |
| Total Wireless Subscribers(4) | 1,987.7 | 2,277.8 | (13%) | 1,987.7 | 2,277.8 | (13%) | |
| Monthly blended wireless ARPU ($, not rounded) | 8.46 | 8.87 | (5%) | 8.50 | 8.89 | (4%) | |
| Monthly postpaid wireless ARPU ($, not rounded) | 20.50 | 23.28 | (12%) | 20.24 | 22.55 | (10%) | |
| Monthly prepaid wireless ARPU ($, not rounded) | 5.67 | 5.88 | (4%) | 5.75 | 5.99 | (4%) | |
| Blended wireless churn | 7.0% | 8.2% | n/m | 6.7% | 7.6% | n/m | |
| Postpaid Churn | 2.1% | 1.7% | n/m | 2.0% | 1.8% | n/m | |
| n/m - not meaningful | |||||||
| Notes: | |||||||
| (1)These are Non-U.S. GAAP measures and do not have standardized meanings under U.S. GAAP. Therefore, they are unlikely to be comparable to similar measures presented by other companies. For definitions and a reconciliation with the most directly comparable U.S. GAAP financial measures, see “Non-GAAP Measures and Other Financial Measures; Basis of Presentation” herein. | |||||||
| (2)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Service revenues. | |||||||
| (3)Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and capital lease arrangements. | |||||||
| (4)Includes public telephony and other wireless subscribers. | |||||||
Revenues
Our Bolivia total revenues declined by $8.5 million, or 14%, for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to a decrease in service revenues of $9.3 million, or 15%. This decline was primarily the result of a $5.5 million decrease in prepaid revenues, coupled with a $1.2 million reduction in postpaid revenues due to the implementation of the new revenue standard. LTE adoption increased to 42% as of June 30, 2019, from 21% as of June 30, 2018. Growth of LTE users continues to drive an overall increase in data consumption, however pricing pressure in the market continues to persist. This decline in service revenues was partially offset by a $0.8 million increase in equipment sales, of which $0.3 million was due to the implementation of the new revenue standard.
Adjusted EBITDA
Our Bolivia Adjusted EBITDA declined $6.9 million, or 38%, for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to the decrease in service revenues partially offset by lower operating expenses largely due to the following:
- Cost of service declined $0.8 million, or 4%, primarily due to a decrease in interconnection costs as a result of lower voice and SMS traffic terminating outside of our network, coupled with a decrease in site maintenance expense. These decreases were partially offset by an increase in site rents of $0.7 million due primarily to the initial closing related to the tower sale-leaseback agreement completed in the first quarter of 2019;
- Cost of equipment sales decreased $1.5 million, or 33%, mainly due to a 40% decline in the number of handsets sold;
- Sales and marketing was comparable to the same period in 2018. An increase in customer retention expense was due to a reduction in an accrual for our customer loyalty program during the second quarter of 2018. The increase in customer retention expense was offset by a $1.2 million reduction in commission expense associated with the implementation of the new revenue standard; and
- General and administrative increased $0.5 million, or 6%, primarily due to higher consulting expense and was partially offset by a combination of individually insignificant items.
Capital Expenditures
Capital expenditures declined $2.3 million, or 29%, for the three months ended June 30, 2019, compared to the same period in 2018, mainly due to timing of spending.
Review of Consolidated Performance
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions, unaudited) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Consolidated adjusted EBITDA (1) | 35.7 | 37.5 | (5%) | 72.8 | 70.3 | 4% | |
| Consolidated adjusted EBITDA margin(1)(2) | 26.3% | 25.4% | n/m | 26.8% | 23.7% | n/m | |
| (Deduct) add: | |||||||
| Finance costs(3) | (11.8) | (11.5) | 3% | (23.5) | (22.6) | 4% | |
| Change in fair value of warrant liability | 0.1 | 2.8 | (96%) | (0.3) | 5.1 | (106%) | |
| Depreciation, amortization and accretion | (27.7) | (28.8) | (4%) | (54.4) | (56.7) | (4%) | |
| Income tax expense | (1.1) | (2.2) | (48%) | (2.8) | (4.0) | (30%) | |
| Other(4) | (1.6) | (4.2) | (62%) | (1.0) | (5.7) | (83%) | |
| Net loss | (6.4) | (6.3) | (1%) | (9.2) | (13.6) | 32% | |
| n/m - not meaningful | |||||||
| Notes: | |||||||
| (1)These are non-U.S. GAAP measures and do not have standardized meanings under U.S. GAAP. Therefore, they are unlikely to be comparable to similar measures presented by other companies. For definitions and reconciliation to most directly comparable U.S. GAAP measures, see “Non-GAAP Measures and Other Financial Measures; Basis of Presentation” herein. | |||||||
| (2)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Service revenues. | |||||||
| (3)Finance costs includes Interest Expense. For a description of these costs, see "Finance Costs" below. | |||||||
| (4)Other includes the following: Equity-based compensation, Gain on disposal assets and sale-leaseback transaction, Transaction and other nonrecurring costs and Other, net. | |||||||
Earnings per share
| Three Months Ended June 30, | Six Months Ended June 30, | ||||
| (US dollars in millions except per share data, unaudited) | 2019 | 2018 | 2019 | 2018 | |
| Net loss attributable to Trilogy International | |||||
| Partners Inc. | ($5.6) | ($3.4) | ($9.6) | ($7.9) | |
| Weighted Average Common Shares Outstanding: | |||||
| Basic | 56,443,136 | 53,360,532 | 56,400,188 | 52,830,853 | |
| Diluted | 56,443,136 | 82,004,171 | 56,400,188 | 81,941,029 | |
| Loss Per Share: | |||||
| Basic | ($0.10) | ($0.06) | ($0.17) | ($0.15) | |
| Diluted | ($0.10) | ($0.07) | ($0.17) | ($0.17) | |
Finance costs
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions, unaudited) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Interest on borrowings, net of capitalized interest | |||||||
| New Zealand | 3.1 | 3.0 | 3% | 6.2 | 5.7 | 10% | |
| Bolivia | 0.4 | 0.2 | 79% | 0.7 | 0.5 | 42% | |
| Corporate | 8.3 | 8.2 | 0% | 16.6 | 16.4 | 1% | |
| Total Interest on borrowings | 11.8 | 11.5 | 3% | 23.5 | 22.6 | 4% | |
| Total finance costs | 11.8 | 11.5 | 3% | 23.5 | 22.6 | 4% | |
Interest expense
Interest expense increased $0.3 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to an increase in the average outstanding indebtedness in Bolivia.
Change in fair value of warrant liability
As of February 7, 2017, in connection with the completion of the Arrangement, TIP Inc.’s outstanding warrants were classified as a liability, as the warrants are written options that are not indexed to the Common Shares. The warrant liability is marked-to-market each reporting period with the changes in fair value recorded as a gain or loss in the Condensed Consolidated Statement of Operations. The non-cash gain from the change in fair value of the warrant liability decreased by $2.7 million for the three months ended June 30, 2019, compared to the same period in 2018, due to changes in the trading price of the warrants.
Depreciation, amortization and accretion
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions, unaudited) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| New Zealand | 16.1 | 17.4 | (8%) | 31.4 | 33.8 | (7%) | |
| Bolivia | 11.5 | 11.3 | 1% | 22.7 | 22.6 | 0% | |
| Corporate | 0.2 | 0.2 | 13% | 0.4 | 0.3 | 27% | |
| Total depreciation, amortization and accretion | 27.7 | 28.8 | (4%) | 54.4 | 56.7 | (4%) | |
Income tax expense
Income tax expense declined $1.1 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to lower pre-tax earnings in Bolivia.
Other
Other decreased $2.6 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to a decrease in equity-based compensation and costs related to the implementation of the new revenue accounting standard incurred in 2018.
Managing our Liquidity and Financial Resources
As of June 30, 2019, the Company had approximately $86.1 million in cash and cash equivalents, of which $12.3 million was held by 2degrees, $68.4 million was held by NuevaTel and $5.4 million was held at headquarters and others. The cash and cash equivalents held by NuevaTel include $54.8 million of remaining net cash proceeds from the initial closing of the tower sale-leaseback transaction. Net cash proceeds from the tower sale are subject to certain reinvestment conditions or must otherwise be used to make an offer to purchase Trilogy LLC’s senior secured notes due 2022. The net cash proceeds reinvested as of June 30, 2019, were reinvested in accordance with such conditions. The Company had $8.9 million of available capacity under the working capital facility in the New Zealand senior facilities agreement as of June 30, 2019. Cash and cash equivalents increased $42.2 million since December 31, 2018, primarily from the $64.3 million cash consideration received upon the initial closing of the sale-leaseback of 400 towers in Bolivia completed in February 2019. Of the $64.3 million cash consideration, $49.9 million was considered investing activity and the remaining considered financing activity. For additional information, see Note 2 – Property and Equipment to the Company’s Condensed Consolidated Financial Statements. For the six months ended June 30, 2019, cash was primarily used for the purchase of property and equipment.
In November 2019, the license for 30 MHz of NuevaTel’s 1900 MHz spectrum holdings will expire. NuevaTel expects to renew the license and estimates that a payment of approximately $25 million will be due in the fourth quarter of 2019 prior to the expiration. The payment is expected to be funded with cash resources from a combination of NuevaTel’s operating cash flows, changes in the timing of property and equipment purchases and from reinvestment of a portion of the proceeds of the sale-leaseback of NuevaTel’s towers.
In August 2019, NuevaTel entered into an agreement with the purchaser under the sale-leaseback transaction entered into in February 2019 to complete a second closing of the transaction. The second closing will include 143 towers with cash consideration of $20.2 million expected to be received in August 2019. Upon completion and funding of the second closing, 543 sites will have been closed under the transaction for total proceeds of $84.5 million, and the remaining sites are anticipated to close under the arrangement during the remainder of 2019. See discussion in Note 2 – Property and Equipment to the Company’s Condensed Consolidated Financial Statements for additional information regarding the sale-leaseback transaction.
Operating, investing and financing activities
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (US dollars in millions) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |
| Net cash provided by (used in): | |||||||
| Operating activities | 3.4 | 5.2 | (35%) | 6.7 | 12.2 | (45%) | |
| Investing activities | (19.8) | (20.7) | 4% | 11.1 | (21.7) | 151% | |
| Financing activities | 2.4 | (7.2) | 134% | 24.1 | (5.1) | 569% | |
| Net (decrease) increase in cash and cash equivalents | (14.0) | (22.7) | 38% | 41.9 | (14.6) | 387% | |
Operating activities
Cash flow provided by operating activities decreased by $5.6 million for the six months ended June 30, 2019, compared to the same period in 2018. This change was mainly due to changes in certain working capital accounts, including cash used to purchase current assets due to timing of payments.
Investing activities
Cash flow provided by investing activities increased by $32.8.2 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to $49.9 million in cash proceeds received in the first quarter of 2019 from the initial closing of the NuevaTel tower sale-leaseback transaction. For additional information, see “Note 2 – Property and Equipment” to the Company’s Condensed Consolidated Financial Statements. This inflow was partially offset by a decrease in the maturities and sales of short-term investments for the six months ended June 30, 2019, compared to the same period in 2018.
Financing activities
Cash flow provided by financing activities increased by $29.2 million for the six months ended June 30, 2019, compared to the same period in 2018. This change is primarily due to proceeds of $14.5 million from the NuevaTel tower transaction financing obligation and a $13.0 million increase in net cash proceeds from drawdowns of the New Zealand senior facilities agreement during the six months ended June 30, 2019. For additional information regarding the financing obligation, see “Note 2 – Property and Equipment” to the Company’s Condensed Consolidated Financial Statements.
Non-GAAP Measures and Other Financial Measures; Basis of Presentation
In managing our business and assessing our financial performance, we supplement the information provided by the financial statements presented in accordance with GAAP with several customer-focused performance metrics and non-GAAP financial measures which are utilized by our management to evaluate our performance. Although we believe these measures are widely used in the wireless industry, some may not be defined by us in precisely the same way as by other companies in the wireless industry, so there may not be reliable ways to compare us to other companies. Adjusted EBITDA represents Net loss (the most directly comparable GAAP measure) excluding amounts for: income tax expense; interest expense; depreciation, amortization and accretion; equity-based compensation (recorded as a component of General and administrative expense); gain on disposal of assets and sale-leaseback transaction; and all other non-operating income and expenses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Service revenues. Adjusted EBITDA and Adjusted EBITDA Margin are common measures of operating performance in the telecommunications industry. We believe Adjusted EBITDA and Adjusted EBITDA Margin are helpful measures because they allow us to evaluate our performance by removing from our operating results items that do not relate to our core operating performance. Adjusted EBITDA and Adjusted EBITDA Margin are not measures of financial performance under GAAP and should not be considered in isolation or as a substitute for Net loss, the most directly comparable GAAP financial measure. Adjusted EBITDA and Adjusted EBITDA Margin are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same.
Reconciliation of Adjusted EBITDA and EBITDA Margin
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| (US dollars in millions, unaudited) | 2019 | 2018 | % Chg | 2019 | 2018 | % Chg | |||||||
| Net loss | (6.4 | ) | (6.3 | ) | (1 | %) | (9.2 | ) | (13.6 | ) | 32 | % | |
| Add: | |||||||||||||
| Interest expense | 11.8 | 11.5 | 3 | % | 23.5 | 22.6 | 4 | % | |||||
| Depreciation, amortization and accretion | 27.7 | 28.8 | (4 | %) | 54.4 | 56.7 | (4 | %) | |||||
| Income tax expense | 1.1 | 2.2 | (48 | %) | 2.8 | 4.0 | (30 | %) | |||||
| Change in fair value of warrant liability | (0.1 | ) | (2.8 | ) | 96 | % | 0.3 | (5.1 | ) | 106 | % | ||
| Other, net | 0.2 | 0.5 | (56 | %) | 1.4 | (0.5 | ) | 358 | % | ||||
| Equity-based compensation | 1.2 | 2.2 | (46 | %) | 2.0 | 3.9 | (47 | %) | |||||
| (Gain) loss on disposal of assets and sale-leaseback transaction | (0.2 | ) | 0.1 | (436 | %) | (7.6 | ) | - | (100 | %) | |||
| Transaction and other nonrecurring costs(1) | 0.4 | 1.5 | (71 | %) | 5.2 | 2.4 | 114 | % | |||||
| Consolidated Adjusted EBITDA | 35.7 | 37.5 | (5 | %) | 72.8 | 70.3 | 4 | % | |||||
| Consolidated Adjusted EBITDA Margin | 26.3 | % | 25.4 | % | n/m | 26.8 | % | 23.7 | % | n/m | |||
| n/m - not meaningful | |||||||||||||
| Notes: | |||||||||||||
| (1)2018 includes costs related to the implementation of the new revenue recognition standard of approximately $0.8 million and $1.3 million for the three months and six months ended June 30, 2018, respectively, and other nonrecurring costs. 2019 includes costs related to the NuevaTel tower sale-leaseback transaction of approximately $3.9 million for the six months ended June 30, 2019 and other nonrecurring costs. | |||||||||||||
Other Information
Consolidated financial results – quarterly summary
TIP Inc.’s operating results may vary from quarter to quarter because of changes in general economic conditions and seasonal fluctuations, among other things, in each of TIP Inc.’s operations and business segments. Different products and subscribers have unique seasonal and behavioral features. Accordingly, one quarter’s results are not predictive of future performance.
Fluctuations in net income (loss) from quarter to quarter can result from events that are unique or that occur irregularly, such as losses or gains on the refinance of debt, foreign exchange gains or losses, changes in the fair value of derivative instruments, impairment of assets and changes in income taxes.
The following table shows selected quarterly financial information prepared in accordance with GAAP.
| (US dollars in millions except per share data, unaudited) | 2019 | 2018 | 2017 | |||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||||
| Service revenues | 136.1 | 135.1 | 139.0 | 141.0 | 147.6 | 148.9 | 143.5 | 153.0 | ||||||||||||
| Equipment sales | 43.5 | 52.6 | 68.0 | 49.4 | 50.5 | 53.8 | 58.9 | 38.8 | ||||||||||||
| Total revenues | 179.6 | 187.7 | 207.0 | 190.4 | 198.1 | 202.7 | 202.5 | 191.8 | ||||||||||||
| Operating expenses | (172.9 | ) | (175.6 | ) | (198.9 | ) | (184.2 | ) | (193.1 | ) | (200.4 | ) | (198.8 | ) | (184.1 | ) | ||||
| Operating income | 6.7 | 12.1 | 8.0 | 6.3 | 5.0 | 2.3 | 3.7 | 7.7 | ||||||||||||
| Interest expense | (11.8 | ) | (11.8 | ) | (12.2 | ) | (11.1 | ) | (11.5 | ) | (11.1 | ) | (11.1 | ) | (11.2 | ) | ||||
| Change in fair value of warrant liability | 0.1 | (0.4 | ) | 0.3 | 0.9 | 2.8 | 2.3 | 5.6 | - | |||||||||||
| Debt modification and extinguishment costs | - | - | - | (4.2 | ) | - | - | - | - | |||||||||||
| Other, net | (0.2 | ) | (1.2 | ) | (0.3 | ) | (4.9 | ) | (0.5 | ) | 1.0 | 0.5 | 0.5 | |||||||
| Loss before income taxes | (5.2 | ) | (1.2 | ) | (4.3 | ) | (13.0 | ) | (4.1 | ) | (5.5 | ) | (1.3 | ) | (3.0 | ) | ||||
| Income tax expense | (1.1 | ) | (1.7 | ) | - | (0.9 | ) | (2.2 | ) | (1.8 | ) | (1.0 | ) | (2.6 | ) | |||||
| Net loss | (6.4 | ) | (2.9 | ) | (4.2 | ) | (13.9 | ) | (6.3 | ) | (7.3 | ) | (2.4 | ) | (5.6 | ) | ||||
| Net loss (income) attributable to noncontrolling interests | 0.7 | (1.1 | ) | 0.3 | 5.5 | 2.9 | 2.8 | 2.6 | 1.4 | |||||||||||
| Net (loss) income attributable to TIP Inc. | (5.6 | ) | (4.0 | ) | (3.9 | ) | (8.4 | ) | (3.4 | ) | (4.5 | ) | 0.3 | (4.1 | ) | |||||
| Net (loss) income attributable to TIP Inc. | ||||||||||||||||||||
| per share: | ||||||||||||||||||||
| Basic | (0.10 | ) | (0.07 | ) | (0.07 | ) | (0.15 | ) | (0.06 | ) | (0.09 | ) | 0.01 | (0.10 | ) | |||||
| Diluted | (0.10 | ) | (0.07 | ) | (0.07 | ) | (0.15 | ) | (0.07 | ) | (0.09 | ) | (0.03 | ) | (0.10 | ) | ||||
Supplementary Information
Condensed Consolidated Statements of Operations and Comprehensive Loss
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
| (US dollars in millions, unaudited) | 2019 | 2018 | 2019 | 2018 | |||||
| Revenues | |||||||||
| Wireless service revenues | 116.0 | 127.7 | 232.4 | 256.9 | |||||
| Wireline service revenues | 17.2 | 15.9 | 33.8 | 31.1 | |||||
| Equipment sales | 43.5 | 50.5 | 96.2 | 104.3 | |||||
| Non-subscriber international long distance and other revenues | 2.9 | 4.0 | 5.0 | 8.5 | |||||
| Total revenues | 179.6 | 198.1 | 367.3 | 400.8 | |||||
| Operating expenses | |||||||||
| Cost of service, exclusive of depreciation, amortization and accretion shown separately | 48.1 | 50.8 | 97.9 | 105.6 | |||||
| Cost of equipment sales | 45.7 | 55.0 | 98.7 | 113.0 | |||||
| Sales and marketing | 20.9 | 24.6 | 40.4 | 52.1 | |||||
| General and administrative | 30.9 | 33.9 | 64.8 | 66.1 | |||||
| Depreciation, amortization and accretion | 27.7 | 28.8 | 54.4 | 56.7 | |||||
| (Gain) loss on disposal of assets and sale-leaseback transaction | (0.2 | ) | 0.1 | (7.6 | ) | - | |||
| Total operating expenses | 172.9 | 193.1 | 348.6 | 393.5 | |||||
| Operating income | 6.7 | 5.0 | 18.8 | 7.3 | |||||
| Other (expenses) income | |||||||||
| Interest expense | (11.8 | ) | (11.5 | ) | (23.5 | ) | (22.6 | ) | |
| Change in fair value of warrant liability | 0.1 | 2.8 | (0.3 | ) | 5.1 | ||||
| Other, net | (0.2 | ) | (0.5 | ) | (1.4 | ) | 0.5 | ||
| Total other expenses, net | (11.9 | ) | (9.1 | ) | (25.2 | ) | (16.9 | ) | |
| Loss before income taxes | (5.2 | ) | (4.1 | ) | (6.4 | ) | (9.6 | ) | |
| Income tax expense | (1.1 | ) | (2.2 | ) | (2.8 | ) | (4.0 | ) | |
| Net loss | (6.4 | ) | (6.3 | ) | (9.2 | ) | (13.6 | ) | |
| Less: Net loss (income) attributable to noncontrolling interest | 0.7 | 2.9 | (0.4 | ) | 5.7 | ||||
| Net loss attributable to Trilogy International Partners Inc. | (5.6 | ) | (3.4 | ) | (9.6 | ) | (7.9 | ) | |
| Comprehensive (loss) income | |||||||||
| Net loss | (6.4 | ) | (6.3 | ) | (9.2 | ) | (13.6 | ) | |
| Foreign currency translation adjustments | (1.6 | ) | (7.7 | ) | 0.1 | (5.3 | ) | ||
| Other comprehensive (loss) income | (1.6 | ) | (7.7 | ) | 0.1 | (5.3 | ) | ||
| Comprehensive loss | (7.9 | ) | (14.0 | ) | (9.2 | ) | (18.9 | ) | |
| Comprehensive loss (income) attributable to noncontrolling interests | 1.5 | 6.9 | (0.4 | ) | 8.6 | ||||
| Comprehensive loss attributable to Trilogy International Partners Inc. | (6.5 | ) | (7.1 | ) | (9.6 | ) | (10.4 | ) | |
Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||
| (US dollars in millions, unaudited) | 2019 | 2018 | ||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | 86.1 | 43.9 | ||||
| Short-term investments | - | 2.0 | ||||
| Accounts receivable, net | 65.6 | 71.9 | ||||
| Equipment Installment Plan ("EIP") receivables, net | 22.8 | 22.2 | ||||
| Inventory | 22.7 | 46.0 | ||||
| Prepaid expenses and other current assets | 34.3 | 12.6 | ||||
| Total current assets | 231.4 | 198.6 | ||||
| Property and equipment, net | 377.3 | 394.8 | ||||
| License costs and other intangible assets, net | 72.9 | 81.0 | ||||
| Goodwill | 9.0 | 9.0 | ||||
| Long-term EIP receivables | 21.8 | 21.2 | ||||
| Deferred income taxes | 23.7 | 10.7 | ||||
| Other assets | 28.3 | 23.6 | ||||
| Total assets | 764.4 | 739.0 | ||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||
| Current liabilities: | ||||||
| Accounts payable | 25.7 | 36.7 | ||||
| Construction accounts payable | 20.3 | 26.8 | ||||
| Current portion of debt | 16.1 | 8.3 | ||||
| Customer deposits and unearned revenue | 19.9 | 17.0 | ||||
| Other current liabilities and accrued expenses | 124.1 | 143.4 | ||||
| Total current liabilities | 206.1 | 232.3 | ||||
| Long-term debt | 523.8 | 498.5 | ||||
| Deferred gain | 35.1 | - | ||||
| Deferred income taxes | 11.3 | 11.4 | ||||
| Other non-current liabilities | 29.7 | 30.4 | ||||
| Total liabilities | 805.9 | 772.6 | ||||
| Commitments and contingencies | ||||||
| Total shareholders’ deficit | (41.5 | ) | (33.6 | ) | ||
| Total liabilities and shareholders’ deficit | 764.4 | 739.0 | ||||
Condensed Consolidated Statements of Cash Flows
| Six Months Ended June 30, | |||||
| (US dollars in millions, unaudited) | 2019 | 2018 | |||
| Operating activities: | |||||
| Net loss | (9.2 | ) | (13.6 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities | |||||
| Provision for doubtful accounts | 6.1 | 8.1 | |||
| Depreciation, amortization and accretion | 54.4 | 56.7 | |||
| Equity-based compensation | 2.0 | 3.9 | |||
| Gain on disposal of assets and sale-leaseback transaction | (7.6 | ) | - | ||
| Non-cash interest expense, net | 1.4 | 1.8 | |||
| Settlement of cash flow hedges | (0.4 | ) | (0.7 | ) | |
| Change in fair value of warrant liability | 0.3 | (5.1 | ) | ||
| Non-cash loss from change in fair value on cash flow hedges | 1.3 | 0.5 | |||
| Unrealized loss on foreign exchange transactions | 1.0 | 0.2 | |||
| Deferred income taxes | (14.6 | ) | (0.4 | ) | |
| Changes in operating assets and liabilities: | |||||
| Accounts receivable | 0.8 | (0.5 | ) | ||
| EIP receivables | (1.4 | ) | (6.6 | ) | |
| Inventory | 23.4 | (5.7 | ) | ||
| Prepaid expenses and other current assets | (13.5 | ) | (8.2 | ) | |
| Other assets | (3.2 | ) | (4.8 | ) | |
| Accounts payable | (11.0 | ) | (3.2 | ) | |
| Other current liabilities and accrued expenses | (24.1 | ) | (7.3 | ) | |
| Customer deposits and unearned revenue | 1.0 | (2.6 | ) | ||
| Net cash provided by operating activities | 6.7 | 12.2 | |||
| Investing activities: | |||||
| Proceeds from sale-leaseback transaction | 49.9 | - | |||
| Purchase of property and equipment | (40.9 | ) | (38.2 | ) | |
| Maturities and sales of short-term investments | 2.0 | 24.2 | |||
| Purchase of short-term investments | - | (7.0 | ) | ||
| Other, net | 0.2 | (0.7 | ) | ||
| Net cash provided by (used in) investing activities | 11.1 | (21.7 | ) | ||
| Financing activities: | |||||
| Proceeds from debt | 120.9 | 96.5 | |||
| Payments of debt | (104.7 | ) | (97.0 | ) | |
| Proceeds from sale-leaseback financing obligation | 14.5 | - | |||
| Dividends to shareholders and noncontrolling interest | (5.0 | ) | (3.6 | ) | |
| Debt modification costs | - | (1.1 | ) | ||
| Other, net | (1.6 | ) | - | ||
| Net cash provided by (used in) financing activities | 24.1 | (5.1 | ) | ||
| Net increase (decrease) in cash and cash equivalents | 41.9 | (14.6 | ) | ||
| Cash and cash equivalents, beginning of period | 43.9 | 47.1 | |||
| Effect of exchange rate changes | 0.3 | (0.1 | ) | ||
| Cash and cash equivalents, end of period | 86.1 | 32.4 | |||
About Forward-Looking Information
Forward-looking information and statements
This press release contains “forward-looking information” within the meaning of applicable securities laws in Canada and “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 of the United States of America. Forward-looking information and forward–looking statements may relate to, the expected cost of renewing the 30 MHZ license of NuevaTel’s 1900 MHz spectrum holdings, our future outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, new credit facilities, plans and objectives. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “estimates”, “plans”, “targets”, “expects” or “does not expect”, “an opportunity exists”, “outlook”, “prospects”, “strategy”, “intends”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, estimates, projections or other characterizations of future events or circumstances contain forward-looking information and statements.
Forward-looking information and statements are provided for the purpose of assisting readers in understanding management’s current expectations and plans relating to the future. Readers are cautioned that such information and statements may not be appropriate for other purposes. Forward-looking information and statements contained in this press release are based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. These opinions, estimates and assumptions include but are not limited to: that the conditions to the subsequent closings of the tower sales will be satisfied; general economic and industry growth rates; currency exchange rates and interest rates; product pricing levels and competitive intensity; income tax; subscriber growth; pricing, usage, and churn rates; changes in government regulation; technology deployment; availability of devices; timing of new product launches; content and equipment costs; vendor and supplier performance; the integration of acquisitions; industry structure and stability; and data based on good faith estimates that are derived from management’s knowledge of the industry and other independent sources. Despite a careful process to prepare and review the forward-looking information and statements, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct.
Numerous risks and uncertainties, some of which may be unknown, relating to TIP Inc.’s business could cause actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking information and statements. Among such risks and uncertainties, are those that relate to TIP Inc.’s and Trilogy LLC’s history of losses; TIP Inc.’s and Trilogy LLC’s status as holding companies; TIP Inc.’s significant level of indebtedness and the refinancing, default and other risks, as well as limits, restrictive covenants and restrictions resulting therefrom; TIP Inc.’s or Trilogy LLC’s ability to incur additional debt despite their indebtedness levels; TIP Inc.’s or Trilogy LLC’s ability to refinance their indebtedness; the risk that TIP Inc.’s or Trilogy LLC’s credit ratings could be downgraded; TIP Inc. having insufficient financial resources to achieve its objectives; risks associated with any potential acquisition, investment or merger; the significant political, social, economic and legal risks of operating in Bolivia; certain of TIP Inc.’s operations being in a market with substantial tax risks and inadequate protection of shareholder rights; the need for spectrum access; the regulated nature of the industry in which TIP Inc. participates; the use of “conflict minerals” in handsets and the effect thereof on availability of certain products, including handsets; anti-corruption compliance; intense competition; lack of control over network termination, roaming and international long distance revenues; rapid technological change and associated costs; reliance on equipment suppliers including Huawei Technologies (New Zealand) Company Limited; subscriber “churn” risks, including those associated with prepaid accounts; the need to maintain distributor relationships; TIP Inc.’s future growth being dependent on innovation and development of new products; security threats and other material disruptions to TIP Inc.’s wireless networks; the ability of TIP Inc. to protect subscriber information and cybersecurity risks generally; health risks associated with handsets; litigation, including class actions and regulatory matters; fraud, including device financing, customer credit card, subscription and dealer fraud; reliance on limited management resources; risks associated with the minority shareholders of TIP Inc.’s subsidiaries; general economic risks; natural disasters including earthquakes; foreign exchange and interest rate changes; currency controls; interest rate risk; TIP Inc.’s ability to utilize carried forward tax losses; risks that TIP Inc. may not pay dividends; tax related risks; TIP Inc.’s dependence on Trilogy LLC to pay taxes and other expenses; Trilogy LLC may be required to make distributions to TIP Inc. and the other owners of Trilogy LLC; differing interests among TIP Inc’s. and Trilogy LLC’s other equity owners in certain circumstances; an increase in costs and demands on management resources when TIP Inc. ceases to qualify as an “emerging growth company” under the U.S. Jumpstart Our Business Startups Act of 2012; additional expenses if TIP Inc. loses its foreign private issuer status under U.S. federal securities laws; volatility of the Common Shares price; dilution of the Common Shares; market coverage; TIP Inc.’s internal controls over financial reporting; new laws and regulations; and risks as a publicly traded company, including, but not limited to, compliance and costs associated with the U.S. Sarbanes-Oxley Act of 2002 (to the extent applicable).
Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information and statements in this press release, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information in this press release. Please see our continuous disclosure filings available under TIP Inc.’s profile at www.sedar.com and at www.sec.gov for information on the risks and uncertainties associated with our business.
Readers should not place undue reliance on forward-looking information and statements, which speak only as of the date made. The forward-looking information and statements contained in this press release represent our expectations as of the date of this press release or the date indicated. We disclaim any intention or obligation or undertaking to update or revise any forward-looking information or statements whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
| Investor Relations Contacts | |
| Ann Saxton | Erik Mickels |
| 425-458-5900 | 425-458-5900 |
| Ann.Saxton@trilogy-international.com | Erik.Mickels@trilogy-international.com |
| Vice President, Investor Relations & Corporate Development | Chief Financial Officer |
| Media Contact | |
| Ann Saxton | |
| 425-458-5900 | |
| Ann.Saxton@trilogy-international.com | |
| Vice President, Investor Relations & Corporate Development |