SHENANDOAH TELECOMMUNICATIONS COMPANY This management's discussion and analysis includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this report, the words "anticipate," "believe," "estimate," "expect," "intend," "plan" and similar expressions as they relate toShenandoah Telecommunications Company or its management are intended to identify these forward-looking statements. All statements regardingShenandoah Telecommunications Company's expected future financial position and operating results, business strategy, financing plans, forecasted trends relating to the markets in whichShenandoah Telecommunications Company operates and similar matters, including information concerning our response to COVID-19, are forward-looking statements. We cannot assure you that the Company's expectations expressed or implied in these forward-looking statements will turn out to be correct. The Company's actual results could be materially different from its expectations because of various factors, that may include natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, natural disasters, changes in general economic conditions, increases in costs, changes in regulation and other competitive factors. Updates to the Risk Factors described in "Item 1A-Risk Factors" as provided in our Annual Report on Form 10-K for the year endedDecember 31, 2019 , may be found below in Part II, under the heading "Item 1A-Risk Factors. The following management's discussion and analysis should be read in conjunction with the Company's Annual Report on Form 10-K for its fiscal year endedDecember 31, 2019 , including the consolidated financial statements and related notes included therein. OverviewShenandoah Telecommunications Company ("Shentel", "we", "our", "us", or the "Company"), is a provider of a comprehensive range of wireless and broadband communications products and services in the Mid-Atlantic portion ofthe United States . Management's Discussion and Analysis is organized around our reporting segments. Refer to Note 13, Segment Reporting, in our unaudited condensed consolidated financial statements for additional information.
2020 Developments
T-Mobile business combination with Sprint: OnApril 1, 2020 , T-Mobile US, Inc. ("T-Mobile") announced the completion of its business combination with Sprint Corporation ("Sprint") and subsequently delivered to the Company a notice of Network Technology Conversion, Brand Conversion and Combination Conversion (a "Conversion Notice") pursuant to the terms of the Company's affiliate agreement with Sprint. As described in more detail in the Company's 2019 Annual Report on Form 10-K, our Wireless segment has been an affiliate of Sprint since 1995. The affiliate agreement provides for a 90-day period following receipt of the Conversion Notice for the parties to negotiate mutually agreeable terms and conditions under which the Company would continue as an affiliate of T-Mobile. The affiliate agreement further provides that, if T-Mobile and the Company have not negotiated a mutually acceptable agreement within the 90-day period, then T-Mobile would have a period of 60 days thereafter to exercise an option to purchase the assets of our Wireless operations for 90% of the "Entire Business Value" (as defined under our affiliate agreement). If T-Mobile does not exercise its purchase option, the Company would then have a 60-day period to exercise an option to purchase the legacy T-Mobile network and subscribers in our service area. If the Company does not exercise its purchase option, T-Mobile must sell or decommission its legacy network and customers in our service area. COVID-19: We have been closely monitoring the latest developments around the outbreak of a new strain of coronavirus ("COVID-19") and its impact globally. As we focus on our community and do our part to stop COVID-19 from spreading, we have taken the following actions to keep families and businesses safe and connected virtually:
• In our Broadband segment, we expanded our service offerings by temporarily
increasing the minimum speed and data allowance of our broadband service
to 50 Mbps and by 250 GB, respectively, each at no additional charge, and
introducing a new
• In our Wireless segment, we have supported Sprint's adoption of the Keep
Americans Connected pledge while temporarily closing approximately 40% of
the Sprint branded retail locations in our service area to comply with
federal and state mandates.
• We have implemented alternative working arrangements where practicable to
keep our employees safe and maintained our geographically redundant
equipment, diverse fiber facilities and monitoring services to support
maximum uptime of all our essential networks and services.
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While these actions did not have a material impact on our first quarter operating results nor do we expect them to impact our long-term growth prospects, we do expect them to temporarily dislocate our wireless operating momentum until the economies in the markets that we serve re-open.
For example, changing macroeconomic factors could impact the collectability of accounts receivable and revenue in our Broadband segment, and macroeconomic factors and the Keep Americans Connected pledge could impact our recognition of wireless service revenue in our Wireless segment in future periods. In addition, the measurement of our contract asset, which is reduced by our estimated obligation to refund amounts that Sprint or T-Mobile are later unable to collect from subscribers, could be impacted by macroeconomic factors, the Keep Americans Connected pledge, or any change to credit or collection policies that T-Mobile might make after itsApril 1, 2020 acquisition of Sprint. As we focus on our community and do our part to stop COVID-19 from spreading, we will continue to evaluate the impact of COVID-19 on our business and operations, including the effect of related state, local and federal government guidelines. The virus and related macroeconomic factors may impact the demand for our products and services, the ways in which our customers use our products and services and our suppliers' and vendors' ability to provide products and services to us. Some of these factors could increase the demand for our products and services, while others could decrease demand or make it more difficult for us to serve our customers. Due to the uncertainty surrounding the magnitude and duration of COVID-19, we are unable at this time to predict the impact of COVID-19 on our financial condition, results of operations or cash flow.
Results of Operations
Three Months Ended
The Company's consolidated results from operations are summarized as follows:
Three Months Ended March 31, Change
($ in thousands) 2020 % of Revenue 2019 % of Revenue $ %
Revenue $ 153,188 100.0 $ 158,843 100.0 (5,655 ) (3.6 )
Operating expenses 130,138 85.0 134,056 84.4 (3,918 ) (2.9 )
Operating income 23,050 15.0 24,787 15.6 (1,737 ) (7.0 )
Interest expense (6,211 ) (4.1 ) (7,954 ) (5.0 ) (1,743 ) (21.9 )
Other income 733 0.5 1,287 0.8 (554 ) (43.0 )
Income before taxes 17,572 11.5 18,120 11.4 (548 ) (3.0 )
Income tax expense 4,292 2.8 4,210 2.7 82 1.9
Net income $ 13,280 8.7 $ 13,910 8.8 (630 ) (4.5 )
Revenue
Revenue decreased approximately $5.7 million , or 3.6%, during the three months
ended March 31, 2020 compared with the three months ended March 31, 2019 ,
primarily due to a decline of $8.5 million in the Wireless segment, partially
offset by growth of $2.9 million and $0.7 million in the Broadband and Tower
segments, respectively. The Wireless segment recognized $4.5 million in lower
travel revenue in the first quarter of 2020 compared to the first quarter of
2019 due to the ongoing dispute with Sprint over resetting of the travel fee.
Refer to the discussion of the results of operations for the Wireless, Broadband
and Tower segments, included within this quarterly report, for additional
information.
Operating expenses
Operating expenses decreased approximately $3.9 million , or 2.9%, during the
three months ended March 31, 2020 compared with the three months ended March 31,
2019 . The decrease was primarily due to a decline in Wireless operating expenses
driven by depreciation and amortization expense as certain assets acquired from
nTelos became fully depreciated and lower cost of goods sold and selling,
general and administrative expenses related to temporary retail store closures.
This decrease was partially offset by an increase in Broadband operating
expenses incurred for the launch of our new fiber-to-the-home service, Glo
Fiber .
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Interest expense Interest expense decreased approximately$1.7 million , or 21.9%, during the three months endedMarch 31, 2020 compared with the three months endedMarch 31, 2019 . The decrease in interest expense was primarily attributable to the reduction of the applicable base interest rate by 25 basis points and principal repayments on our Credit Facility term loans, combined with the effect of year-over-year declines in LIBOR. Other income Other income decreased approximately$0.6 million , or 43.0%, during the three months endedMarch 31, 2020 compared with the three months endedMarch 31, 2019 . The decrease was primarily due to a decline in the value of our investments that are used to fund our obligation under the supplemental executive retirement plan.
Wireless
Wireless earns postpaid, prepaid and wholesale revenues from Sprint for their subscribers that use our Wireless network service in our Wireless network coverage area. The Company's wireless revenue is variable based on billed revenues to Sprint's subscribers in our Affiliate Area less applicable fees retained by Sprint. Sprint retains an 8% Management Fee and an 8.6% Net Service Fee on postpaid revenues and a 6% Management Fee on prepaid wireless revenues. For postpaid, the Company is also charged for the costs of subsidized handsets sold through Sprint's national channels as well as commissions paid by Sprint to third-party dealers in our Sprint Affiliate Area. Sprint also charges the Company separately to acquire and support prepaid customers. These charges are calculated based on Sprint's national averages for its prepaid programs, and are billed per user or per gross additional customer, as appropriate.
The following tables indicate selected operating statistics of Wireless, including Sprint subscribers:
March 31 ,March 31, 2020 2019
Postpaid:
Retail PCS total subscribers 847,771 800,952 Retail PCS phone subscribers 738,410 722,830
Retail PCS connected device subscribers 109,361 78,122 Gross PCS total subscriber additions 51,991 50,847 Gross PCS phone additions
36,734 37,786
Gross PCS connected device additions 15,257 13,061 Net PCS total subscriber additions
3,577 5,776
Net PCS phone additions (losses) (2,311 ) 105
Net PCS connected device additions 5,888 5,671
PCS monthly retail total churn % 1.91 % 1.89 %
PCS monthly phone churn % 1.76 % 1.74 %
PCS monthly connected device churn % 2.97 % 3.35 % Prepaid: Retail PCS subscribers
279,096 267,220
Gross PCS subscriber additions 39,074 40,979
Net PCS subscriber additions 5,084 8,516
PCS monthly retail churn % 4.13 % 4.14 %
PCS market POPS (000) (1) 7,227 7,023
PCS covered POP (000) (1) 6,325 6,261
Macro base stations (cell sites) 1,966 1,874
_______________________________________________________
(1) "POPS" refers to the estimated population of a given geographic area.
Market POPS are those within a market area which we are authorized to
serve under our Sprint PCS affiliate agreements, and Covered POPS are
those covered by our network. The data source for POPS is
data.
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Wireless results from operations are summarized as follows:
Three Months Ended March 31, Change
($ in thousands) 2020 % of Revenue 2019 % of Revenue $ %
Wireless revenue:
Gross postpaid billings $ 103,096 99.0 $ 101,869 90.5 1,227 1.2 %
Allocated bad debt (5,013 ) (4.8 ) (4,393 ) (3.9 ) 620 14.1 %
Amortization of contract asset
and other (6,838 ) (6.6 ) (5,188 ) (4.6 ) 1,650 31.8 %
Sprint management fee and net
service fee (16,317 ) (15.7 ) (16,106 ) (14.3 ) 211 1.3 %
Total postpaid service revenue 74,928 72.0 76,182 67.6 (1,254 ) (1.6 )%
Gross prepaid billings 30,936 29.7 29,533 26.2 1,403 4.8 %
Amortization of contract asset
and other (15,892 ) (15.3 ) (14,537 ) (12.9 ) 1,355 9.3 %
Sprint management fee (1,935 ) (1.9 ) (1,866 ) (1.7 ) 69 3.7 %
Total prepaid service revenue 13,109 12.6 13,130 11.7 (21 ) (0.2 )%
Travel and other 3,351 3.2 8,018 7.1 (4,667 ) (58.2 )%
Wireless service revenue and
other 91,388 87.8 97,330 86.4 (5,942 ) (6.1 )%
Equipment revenue 12,750 12.2 15,291 13.6 (2,541 ) (16.6 )%
Total wireless revenue 104,138 100.0 112,621 100.0 (8,483 ) (7.5 )%
Wireless operating expenses:
Cost of services 33,439 32.1 32,532 28.9 907 2.8 %
Cost of goods sold 12,528 12.0 14,427 12.8 (1,899 ) (13.2 )%
Selling, general and
administrative 9,428 9.1 11,079 9.8 (1,651 ) (14.9 )%
Depreciation and amortization 25,299 24.3 30,370 27.0 (5,071 ) (16.7 )%
Total wireless operating expenses 80,694 77.5 88,408 78.5 (7,714 ) (8.7 )%
Wireless operating income $ 23,444 22.5 $ 24,213 21.5 (769 ) (3.2 )%
Revenue
Under our affiliate agreement with Sprint, we have historically earned and
recognized monthly revenue of $1.5 million for providing service to Sprint
customers who pass through our network area. While we continue to provide these
services to Sprint, the agreed upon payments were suspended by Sprint on April
30, 2019 . Accordingly, we have ceased recognizing revenue for the services
provided after that date until a new prospective fee can be agreed. We have
triggered the final dispute resolution option with Sprint and expect resolution
during the second quarter of 2020.
Wireless revenue decreased approximately $8.5 million , or 8%, for the three
months ended March 31, 2020 compared with the three months ended March 31, 2019 .
The decrease was primarily attributable to the aforementioned $4.5 million
decline in travel revenue, a $2.5 million decline in equipment revenue as retail
stores closed amidst the COVID-19 outbreak, $3.0 million in higher amortized
customer contract costs partially offset by a $1.7 million increase in postpaid
and prepaid revenue from growth in subscribers.
Cost of services
Cost of services increased approximately $0.9 million , or 3%, for the three
months ended March 31, 2020 compared with the three months ended March 31, 2019 ,
primarily due to higher cell site rent expense related to our network expansion.
Cost of goods sold
Cost of goods sold decreased approximately $1.9 million , or 13%, for the three
months ended March 31, 2020 compared with the three months ended March 31, 2019
due to lower volume of equipment sales driven by temporary closure of certain
retail stores.
Selling, general and administrative
Selling, general and administrative expense decreased approximately $1.7
million , or 15%, for the three months ended March 31, 2020 compared with the
three months ended March 31, 2019 primarily due to lower advertising expense of
approximately $1.0 million , and a $0.8 million sales and use tax settlement
gain.
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Depreciation and amortization Depreciation and amortization decreased approximately$5.1 million , or 17%, for the three months endedMarch 31, 2020 compared with the three months endedMarch 31, 2019 . Depreciation expense declined$4.6 million as certain assets acquired from nTelos in 2016 became fully depreciated. Amortization expense also declined primarily as a result of our Sprint affiliate contract expansion asset which amortizes under an accelerated method that declines over time.
Broadband
Our Broadband segment provides broadband, video and voice services to residential and commercial customers in portions ofVirginia ,West Virginia ,Maryland , andKentucky , via fiber optic and hybrid fiber coaxial ("HFC") cable. The Broadband segment also leases dark fiber and provides Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. The Broadband segment also provides voice and digital subscriber line ("DSL") telephone services to customers inVirginia's Shenandoah County as a Rural Local Exchange Carrier ("RLEC"). These integrated networks are connected by an approximately 6,300 fiber route mile network. This fiber optic network also supports our Wireless segment operations and these intercompany transactions are reported at their market value.
The following table indicates selected operating statistics of Broadband:
March 31 ,March 31, 2020 2019
Broadband homes passed (1) (2) 212,129 206,113 Broadband customer relationships (3) 103,287 95,933
Video:
RGUs 53,067 59,202 Penetration (4) 25.0 % 28.7 % Digital video penetration (5) 94.3 % 85.7 % Broadband: RGUs 86,667 78,867 Penetration (4) 40.9 % 38.3 % Voice: RGUs 31,836 30,737 Penetration (4) 16.3 % 16.2 %
Total Cable and Glo Fiber RGUs 171,570 168,806
RLEC homes passed 25,848 25,798 RLEC customer relationships (3) 10,111 11,101 RLEC RGUs: Data RLEC 7,947 8,744 Penetration (4) 30.7 % 33.9 % Voice RLEC 14,137 15,262 Penetration (4) 54.7 % 59.2 % Total RLEC RGUs 22,084 24,006 Total RGUs 193,654 192,812 Fiber route miles 6,273 5,799 Total fiber miles (6) 334,802 303,511
_______________________________________________________
(1) Homes and businesses are considered passed ("homes passed") if we can
connect them to our distribution system without further extending the
transmission lines. Homes passed is an estimate based upon the best
available information. Homes passed have access to video, broadband and
voice services.
(2) Includes approximately 16,600 RLEC homes passed where we are the dual
incumbent telephone and cable provider.
(3) Customer relationships represent the number of billed customers who
receive at least one of our services.
(4) Penetration is calculated by dividing the number of users by the number of
homes passed or available homes, as appropriate.
(5) Digital video penetration is calculated by dividing the number of digital
video users by total video users. Digital video users are video customers
who receive any level of video service via digital transmission. A
dwelling with one or more digital set-top boxes or digital adapters counts
as one digital video user.
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(6) Total fiber miles are measured by taking the number of fiber strands in a
cable and multiplying that number by the route distance. For example, a 10
mile route with 144 fiber strands would equal 1,440 fiber miles.
Broadband results from operations are summarized as follows:
Three Months Ended March 31, Change
($ in thousands) 2020 % of Revenue 2019 % of Revenue $ %
Broadband revenue
Cable, residential and SMB $ 34,943 70.2 $ 32,426 69.2 2,517 7.8
Fiber, enterprise and wholesale 7,645 15.4 6,563 14.0 1,082 16.5
Rural local exchange carrier 5,132 10.3 5,681 12.1 (549 ) (9.7 )
Equipment and other 2,066 4.1 2,211 4.7 (145 ) (6.6 )
Total broadband revenue 49,786 100.0 46,881 100.0 % 2,905 6.2
Broadband operating expenses
Cost of services 19,243 38.7 19,061 40.7 182 1.0
Cost of goods sold 143 0.3 211 0.5 (68 ) (32.2 )
Selling, general, and administrative 9,499 19.1 7,569 16.1 1,930 25.5
Depreciation and amortization 10,871 21.8 9,991 21.3 880 8.8
Total broadband operating expenses 39,756 79.9 36,832 78.6 2,924 7.9
Broadband operating income $ 10,030 20.1 $ 10,049 21.4 (19 ) (0.2 )
Cable, residential and small and medium business (SMB) revenue
Cable, residential and SMB revenue increased during the three months ended
Fiber, enterprise and wholesale revenue Fiber, enterprise and wholesale revenue increased during the three months endedMarch 31, 2020 approximately$1.1 million , or 16.5%, due primarily to an increase in new enterprise and backhaul connections. Rural local exchange carrier (RLEC) revenue RLEC revenue decreased approximately$0.5 million , or 9.7%, compared with the three months endedMarch 31, 2019 due to a decline in residential data subscribers and switched access revenue from other carriers. Cost of services Cost of services were comparable with three months endedMarch 31, 2019 . Cost of goods sold Cost of goods sold were comparable with three months endedMarch 31, 2019 . Selling, general and administrative Selling, general and administrative expense increased$1.9 million or 25% compared with the three months endedMarch 31, 2019 , primarily due to$1.3 million of expenses incurred to supportGlo Fiber in four markets and a$0.3 million increase in advertising expenses. Depreciation and amortization Depreciation and amortization increased$0.9 million or 9%, compared with the three months endedMarch 31, 2019 , primarily as a result of our network expansion and the introduction of fiber to the home service under our brand,Glo Fiber . Tower Our Tower segment owns 226 cell towers and leases colocation space on those towers to our Wireless segment, as well as to other wireless communications providers. Substantially all of our owned towers are built on ground that we lease from the respective landlords. The colocation space that we lease to our Wireless segment is priced at our estimate of fair market value, which updates from time to time based upon our observation of the market. 23
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The following table indicates selected operating statistics of the Tower
segment:
March 31, March 31,
2020 2019
Towers owned 226 211
Tenants (1) 408 368
Average tenants per tower 1.8 1.7
_______________________________________________________
(1) Includes 203 and 175 intercompany tenants for our Wireless segment as of
Tower results from operations are summarized as follows:
Three Months Ended March 31, Change
($ in thousands) 2020 % of Revenue 2019 % of Revenue $ %
Tower revenue $ 3,730 100.0 $ 3,033 100.0 697 23.0
Tower operating expenses 1,935 51.9 1,909 62.9 26 1.4
Tower operating income $ 1,795 48.1 $ 1,124 37.1 671 59.7
Revenue
Revenue increased approximately $0.7 million , or 23%, during the three months
ended March 31, 2020 compared with the three months ended March 31, 2019 . This
increase was due to a 10.9% increase in tenants and an 11.4% increase in the
lease rate.
Operating expenses
Operating expenses were comparable with the prior year quarter.
Non-GAAP Financial Measures
Adjusted OIBDA
Adjusted OIBDA represents Operating income before depreciation, amortization of intangible assets, stock-based compensation and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature. Adjusted OIBDA is a non-GAAP financial measure that we use to evaluate our operating performance in comparison to our competitors. Management believes that analysts and investors use Adjusted OIBDA as a supplemental measure of operating performance to facilitate comparisons with other telecommunications companies. This measure isolates and evaluates operating performance by excluding the cost of financing (e.g., interest expense), as well as the non-cash depreciation and amortization of past capital investments, non-cash share-based compensation expense, and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.
Adjusted OIBDA has limitations as an analytical tool and should not be
considered in isolation or as a substitute for operating income, net income or
any other measure of financial performance reported in accordance with
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The following tables reconcile Adjusted OIBDA to operating income, which we
consider to be the most directly comparable GAAP financial measure:
Three Months Ended
Corporate &
(in thousands) Wireless Broadband Tower Eliminations Consolidated
Operating income $ 23,444 $ 10,030 $ 1,795 $ (12,219 ) $ 23,050
Depreciation 21,010 10,717 470 271 32,468
Amortization of intangible assets 4,714 154 - - 4,868
OIBDA 49,168 20,901 2,265 (11,948 ) 60,386
Share-based compensation expense - - - 2,905 2,905
Non-recurring deal advisory fees - - - 910 910
Adjusted OIBDA $ 49,168 $ 20,901 $ 2,265 $ (8,133 ) $ 64,201 Three Months Ended
Corporate &
(in thousands) Wireless Broadband Tower Eliminations Consolidated
Operating income $ 24,213 $ 10,049 $ 1,124 $ (10,599 ) $ 24,787
Depreciation 24,752 9,950 680 138 35,520
Amortization of intangible assets 5,618 41 - - 5,659
OIBDA 54,583 20,040 1,804 (10,461 ) 65,966
Share-based compensation expense - - - 1,714 1,714
Adjusted OIBDA $ 54,583 $ 20,040 $ 1,804 $ (8,747 ) $ 67,680
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Financial Condition, Liquidity and Capital Resources
Sources and Uses of Cash: Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations, and proceeds available under our Credit Facility. As ofMarch 31, 2020 our cash and cash equivalents totaled$120.2 million and the availability under our revolving line of credit was$75.0 million , for total available liquidity of$195.2 million . The Company generated approximately$61.1 million of net cash from operations during the three months endedMarch 31, 2020 , consistent with the three months endedMarch 31, 2019 . Net cash used in investing activities decreased$22.4 million during the three months endedMarch 31, 2020 , compared with the three months endedMarch 31, 2019 due to the following: •$10.0 million decline in acquisitions. In 2019, the Company acquired BigSandy Broadband, Inc. for$10.0 million . •$12.1 million decrease in capital expenditures due primarily to a$17.0
million decline in Wireless segment as the Ntelos and
expansions were completed in the first half of 2019 partially offset by
$5.0 million in higher spending in Broadband segment driven by our Glo
Fiber market expansion.
Net cash used in financing activities decreased
•$0.8 million decrease in payments for taxes related to share-based compensation vesting events. Indebtedness: As ofMarch 31, 2020 , the Company's indebtedness totaled approximately$712.2 million , net of unamortized loan fees of$11.3 million , with an annualized overall weighted average interest rate of approximately 3.2%. Refer to Note 8, Long-Term Debt for information about the Company's Credit Facility and financial covenants. Borrowing Capacity: As ofMarch 31, 2020 , the Company's outstanding debt principal, under the Credit Facility, totaled$723.5 million , with an estimated annualized effective interest rate of 3.2% after considering the impact of the interest rate swap contracts and unamortized loan costs.
As of
We expect our cash on hand, available funds under our revolving credit facility, and our cash flow from operations will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months. There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our credit facility. Thereafter, capital expenditures will likely be required to continue planned capital upgrades to the wireless and broadband networks and provide increased capacity to meet expected growth in demand for our products and services. The actual amount and timing of our future capital requirements may differ materially from our estimate depending on the demand for our products and services, including the outcome of a potential amendment of our wireless affiliate agreement with T-Mobile, new market developments and expansion opportunities. Our cash flows from operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, regulatory requirements, changes in technologies, demand for our products and services, availability of labor resources and capital, changes in our relationship with Sprint, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions. The Wireless segment's operations are dependent upon T-Mobile's ability to execute certain functions such as billing, customer care, and collections; our ability to develop and implement successful marketing programs and new products and services; and our ability to effectively and economically manage other operating activities under our agreements with Sprint. Our ability to attract and maintain a sufficient customer base, particularly in our Broadband markets, is also critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results.
Critical Accounting Policies
There have been no material changes to the critical accounting policies as
previously disclosed in Part II, Item 8 of our Annual Report on Form 10-K for
the year ended
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