EDGAR 10-K Filing

Company CIK: 1689382
Filing Year: 2023
Filename: 1689382_10-K_2023_0001140361-23-014864.json

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ITEM 1. BUSINESS
Item 1.
Business
Incorporation
The Company was incorporated under the name “Alignvest Acquisition Corporation” under the Business Corporations Act (Ontario) on May 11, 2015. Alignvest (as defined below) was a special purpose acquisition corporation formed for the purpose of effecting an acquisition of one or more businesses or assets, by way of a merger, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination involving Alignvest, referred to as its “qualifying acquisition”.
Background
On February 7, 2017, Trilogy LLC, a Washington limited liability company, and Alignvest Acquisition Corporation (“Alignvest”, now “TIP Inc.”), completed a court approved plan of arrangement (the “Arrangement”) pursuant to an arrangement agreement dated November 1, 2016 (as amended December 20, 2016, the “Arrangement Agreement”). As a result of the Arrangement, TIP Inc., through a wholly owned subsidiary, obtained a controlling interest in and thus consolidates Trilogy LLC. As of December 31, 2022, TIP Inc. holds a 100% economic ownership interest in Trilogy LLC.
The Company historically had two reportable segments identified by their geographic regions, New Zealand and Bolivia. Two Degrees Mobile Limited (“2degrees”) operated in New Zealand and Empresa de Telecomunicaciones NuevaTel (PCS de Bolivia), S.A. (“NuevaTel”) operated in Bolivia. During the second quarter of 2022, the Company completed the sales of its operations in New Zealand and Bolivia, which represented substantially all of the operating activity of the Company’s business.
Through former subsidiaries, Trilogy LLC provided wireless voice and data communications in New Zealand and Bolivia including local, international long distance and roaming services, for both customers and international visitors roaming on its networks. These services were provided under Global System for Mobile Communications (“GSM” or “2G”) (in Bolivia only), Universal Mobile Telecommunication Service, a GSM-based third generation mobile service for mobile communications networks (“3G”), and Long Term Evolution, a widely deployed fourth generation service (“4G LTE”), technologies. Trilogy LLC’s New Zealand former subsidiary also provided fixed broadband communications to residential and enterprise customers.
2degrees Sale
On December 31, 2021, Trilogy International New Zealand LLC (“TINZ”), Tesbrit B.V. (“Tesbrit”, together with TINZ, the “Vendors”), Voyage Digital (NZ) Limited (“Voyage Digital”), and Voyage Australia Holdings Pty Limited entered into a purchase agreement (the “Purchase Agreement”) pursuant to which Voyage Digital agreed to acquire, subject to certain terms and conditions, all of the issued and outstanding shares in the capital of 2degrees owned by the Vendors (the “2degrees Sale”). On the same date, Voyage Digital entered into a share purchase agreement with Pacific Custodians (New Zealand) Limited to acquire the issued and outstanding shares, and shares to be issued on conversion of options, in the capital of 2degrees beneficially owned by former and current employees of 2degrees. By virtue of executing these two share purchase agreements, Voyage Digital committed to purchase all of the issued and outstanding shares in the capital of 2degrees. On March 15, 2022, the 2degrees Sale was approved by special resolution at a meeting of TIP Inc.’s shareholders.
On May 19, 2022, the Company completed the sale of its 73.2% interest in 2degrees. For its ownership interest in 2degrees, the Company’s share of the total consideration was approximately $601 million ($930 million NZD), net of $21 million ($33 million NZD) of closing adjustments, including transaction advisory fees, along with payments to satisfy the outstanding 2degrees option pool. Approximately $22 million NZD of the consideration paid by Voyage Digital for the Company’s 2degrees shares is being held in escrow as recourse for potential indemnification claims that may arise under the Purchase Agreement. The escrowed proceeds are scheduled to be released in May 2023. The amount of escrow proceeds that will ultimately be received will depend upon whether any indemnification obligations arise under the Purchase Agreement, and the receivable will be monitored for potential impairment over time as facts and circumstances evolve.
NuevaTel Transaction
In March 2022, the Company entered into an agreement to transfer 100% of its indirect equity interest in NuevaTel to Balesia Technologies, Inc. (“Balesia”) for a nominal purchase price (the “NuevaTel Transaction”). The Company owned 71.5% of the equity in NuevaTel.
On May 14, 2022, the NuevaTel Transaction closed.
Indebtedness
As of December 31, 2021, the Company had $663.3 million of total debt and financing lease liabilities. Promptly following the closing of the 2degrees Sale, the Company repaid its outstanding indebtedness and related accrued interest of approximately $450 million. As a result of these prepayments and the sale of the operations, the Company had no remaining indebtedness outstanding as of December 31, 2022.
Operations Overview
Trilogy LLC Background
Trilogy LLC, based in Bellevue, Washington, is owned by Trilogy Intermediate Holdings (as defined below). Trilogy LLC was founded in 2005 by John W. Stanton, Bradley J. Horwitz, and Theresa E. Gillespie (collectively, the “Trilogy LLC Founders”), who, together with a small group of other investors, bought assets including Bolivia (NuevaTel) from Western Wireless Corporation (“Western Wireless”), which had been founded by the Trilogy LLC Founders and sold to Alltel Corporation for $6 billion in 2005.
Over the following years, Trilogy LLC completed a number of transactions. In 2008, Trilogy LLC acquired 26% of New Zealand Communications Limited, a greenfield mobile wireless operator in New Zealand, now known as 2degrees. Trilogy LLC subsequently increased its stake in 2degrees over the years. Focusing its efforts on growing 2degrees and NuevaTel, Trilogy LLC sold its operating company in Haiti in 2012 and its operating company in the Dominican Republic (adjacent to Haiti) in 2016. In 2015, 2degrees acquired Snap Limited, a New Zealand provider of fixed broadband communications services to enterprise and residential subscribers.
Trilogy International Partners Inc.
Prior to the 2degrees Sale and the NuevaTel Transaction, the Company owned and controlled majority stakes in two operations that the Trilogy LLC Founders grew from greenfield developments. 2degrees in New Zealand and NuevaTel in Bolivia provided communications services customized for each market, including local, international long distance, and roaming services for both customers and international visitors roaming on their networks. 2degrees and NuevaTel also provided fixed broadband services. Both companies provided mobile services on both a prepaid and postpaid basis.
2degrees and NuevaTel’s networks supported several digital technologies including GSM (NuevaTel only), 3G, and 4G LTE. Deployment of 4G LTE in New Zealand and Bolivia enabled the Company to offer its wireless subscribers in those markets a wide range of advanced services while achieving greater network capacity through improved spectral efficiency.
For a breakdown of total revenues for each geographic market prior to the sale of operations, see Item 7 “Operating Results- New Zealand - Operating Results” and “- Bolivia - Operating Results.”
New Zealand (2degrees) background
Prior to 2degrees’ entry, the New Zealand wireless communications market was a duopoly, and the incumbent operators, Vodafone and Spark, were able to set relatively high prices, which resulted in low wireless usage by consumers. Additionally, mobile revenue in New Zealand in 2009 was only 31% of total New Zealand telecommunications industry revenue compared to 42% for the rest of the Organization for Economic Co-operation and Development countries. These two factors led the Company to believe that New Zealand presented a significant opportunity for a third competitor to enter the market successfully.
2degrees launched in the New Zealand wireless market in 2009 through innovative pricing, a customer-centric focus and differentiated brand positioning. 2degrees introduced a novel, low-cost, prepaid mobile product that cut the incumbents’ prices of prepaid voice calls and text messages in half and rapidly gained market share. Since then, 2degrees reinforced its reputation as the challenger brand by combining higher value-for-money alternatives with excellent customer service. Additionally, 2degrees provided fixed broadband communications services to residential and enterprise customers. Fixed broadband services also supported increased business-to-business penetration. In May 2022, the 2degrees business had been disposed of and the Company no longer owned or operated the New Zealand segment.
Bolivia (NuevaTel) background
The Trilogy LLC Founders launched NuevaTel in 2000 while they served in senior management roles with Western Wireless. Trilogy LLC subsequently acquired a majority interest in the business in 2006. NuevaTel, which operated under the brand name “Viva” in Bolivia, provided wireless, long distance, public telephony and wireless broadband communication services.
In May 2022, the NuevaTel business had been disposed of and the Company no longer owned or operated the Bolivia segment.
Sale of Operations Overview
The Company historically had two reportable segments, New Zealand and Bolivia. As noted above, during the second quarter of 2022, the Company completed the sales of its operations in New Zealand and Bolivia which represented substantially all of the operating activity of the Company’s business. The disposals and comparative historical periods are not presented as discontinued operations since the associated activities represented substantially all of the Company’s net productive assets, business activities and results of operations. Accordingly, they do not meet the definition of a component of an entity that would qualify for discontinued operations presentation because they are not clearly distinguishable from the rest of the entity. Since presentation of discontinued operations is not applicable, the presentation of segment information for New Zealand and Bolivia has been retained.
Continuing Operations Overview
Substantially all of the proceeds received by the Company from the 2degrees Sale, after prepayment of debt obligations and payment of certain corporate working capital obligations accrued through the date of the transaction, were converted to USD and Canadian currency in the amounts expected to be used for distributions to shareholders and corporate use. These amounts were used to fund the initial shareholder distribution made in June 2022 in the aggregate amount of $150 million CAD ($116 million) and to provide a cash reserve. The Company’s cash reserve also includes its share of the escrow balance in the amount of $22 million NZD retained from the proceeds of the 2degrees Sale. In connection with the Company’s plan of liquidation adopted on June 10, 2022, the cash reserve will be utilized for costs related to the eventual dissolution of the Company, including costs related to continued financial reporting, and headquarters costs through mid-year 2023 along with payment of the $7.1 million balance of Other current liabilities and accrued expenses as of December 31, 2022 as presented in the Company’s Consolidated Balance Sheet (including $5.1 million of remaining expected severance payments to be made in connection with the Company’s wind-down process). The cash reserve will also be utilized for the payment of indemnification claims, if any, that may arise from the transaction but are not funded by the warranty insurance policy purchased in connection with the 2degrees Sale or by the aforementioned purchase price escrow. Furthermore, based on the Company’s current estimates, the Company expects to make a distribution in mid-2023 in a range of $15 million to $20 million. However, as previously disclosed, the amount and timing of future shareholder distributions is subject to certain factors, including the amount and timing of the release to the Company of funds held in escrow to secure payment of certain indemnification obligations under the Purchase Agreement (the escrow period is scheduled to terminate in May 2023), fluctuations in foreign currency exchange rates and costs associated with the dissolution of the Company.
On December 28, 2022, the Company’s listing of the Common Shares was transferred from the Toronto Stock Exchange to the NEX board of the TSX Venture Exchange (the “TSXV”). The Common Shares now trade under the symbol “TRL.H”.
As a foreign private issuer, as defined in Rule 3b-4 under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company was historically exempt from certain of the provisions of the U.S. federal securities laws. For example, the Exchange Act and the Section 16 reporting and “short swing” profit rules do not apply to foreign private issuers. On June 30, 2022, the Company ceased to be a foreign private issuer. Thus, these rules applied commencing with the beginning of the Company’s 2023 fiscal year and the Company is also, among other things, now required to commence reporting on forms required of U.S. companies, such as Forms 10-K, 10-Q and 8-K, rather than the forms previously available to the Company, such as Forms 20-F and 6-K. Compliance with these disclosure requirements is likely to result in increased expenses and require the Company’s management to devote time and resources to comply with new regulatory requirements. Additionally, the Company’s resale registration of its Common Shares, made on Form in 2021 while the Company was a foreign private issuer, terminates concurrently with the Company’s filing of this Annual Report. The termination of the resale registration will not affect the ability of investors who are non-US persons, as defined in Regulation S of the United States Securities Act of 1933, as amended (the “1933 Act”), to continue to sell their Common Shares in 2023 or thereafter. So long as the Common Shares remain listed on the NEX board of the TSXV, U.S. persons who hold Common Shares will continue to be able to sell their shares after March 30, 2023, pursuant to Regulation S of the 1933 Act subject to the rules of Regulation S or another designated offshore securities market (“DOSM”). Regulation S requires, among other things, that a U.S. person selling unregistered shares on a DOSM not know that the sale has been pre-arranged with a buyer in the United States. U.S. persons may also sell unregistered Common Shares via a private placement. U.S. persons who intend to trade the Common Shares are advised to seek advice from counsel with respect to any trading activity they intend to pursue.
Although the Company is no longer a foreign private issuer and ceased to be an emerging growth company on December 31, 2022, under SEC rules effective September 10, 2018, so long as the Company’s public float (market value of Common Shares held by non-affiliates) remains less than $75 million as of the end of its most recent second fiscal quarter, the Company will qualify as a “smaller reporting company” as well as a “non-accelerated filer” eligible for relief from certain SEC disclosure and reporting requirements (for the Company, most notably as to certain executive compensation matters and requirements to have an external audit opinion on internal controls). As of the applicable measurement date, June 30, 2022, the Company’s float was substantially less than $75 million. Therefore, the Company is eligible to disclose as a “smaller reporting company”. This election will reduce some of the additional expense and management attention necessary to be dedicated to compliance.
Trademarks and Other Intellectual Property Rights
Prior to the sale of its operations, the Company had proprietary rights to trademarks used in this Annual Report, including, without limitation, “2degrees”, “NuevaTel” and “Viva”. Following the 2degrees Sale and NuevaTel Transaction, the Company no longer has proprietary rights to these trademarks and uses the terms herein solely to refer to its former subsidiaries and to describe their business operations.
Human Capital Resources
As of December 31, 2022, the Company had 9 employees in the U.S., all of whom are fulltime employees. As of the date of this filing, the Company has reduced to 7 employees.
Additional Information
The SEC maintains an internet site at http://www.sec.gov, that contains reports, proxy and information statements, and other information regarding the Company. The Company’s internet address is http://www.trilogy-international.com.

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ITEM 1A. RISK FACTORS
Item 1A.
Risk Factors
This document contains forward-looking statements regarding the Company’s prospects that involve risks and uncertainties. The Company’s actual results could differ materially from the results that may be anticipated by such forward-looking statements discussed elsewhere in this Annual Report. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, as well as those discussed elsewhere in this Annual Report. If any of the following risks occur, the Company’s financial condition or results could be harmed. In that case, the trading price of the Common Shares could decline.
Investment in the Common Shares of the Company is speculative, involves a high degree of risk and limited opportunity for appreciation in the value of the Common Shares, is subject to the following specific risks among others, and should be undertaken only by purchasers whose financial resources are sufficient to enable them to assume such risks. The Common Shares should not be purchased by persons who cannot afford the possibility of the loss of their entire investment. Prospective purchasers should review these risks as well as other matters disclosed elsewhere in this Annual Report with their professional advisors.
The Company has no business or source of income and its only assets consist of cash on hand and certain funds held in escrow.
As a result of the 2degrees Sale and the NuevaTel Transaction, the Company no longer has an operating business or source of income. Accordingly, it will not engage in any future activities except those associated with winding up its affairs. Other than cash on hand of $25.1 million as of December 31, 2022, the Company’s only assets consist of approximately $22 million NZD ($14.1 million based on the exchange rate as of December 31, 2022) from the proceeds of the 2degrees Sale that are being held in escrow as recourse for potential indemnification claims that may arise under the Purchase Agreement. The escrowed proceeds are scheduled to be released in May 2023. Once these funds are released and any claims relating to the escrow are resolved, the Company intends to make a distribution to shareholders of all remaining cash less any funds retained to complete the winding up of the Company. Claims for indemnification could materially reduce the amount of funds available for such distribution. The Company previously distributed approximately $115.8 million to shareholders in the second quarter of 2022.
If the Company does not comply with anti-corruption legislation, the Company may become subject to monetary or criminal penalties.
The Company was and remains subject to compliance with various laws and regulations, including the Canadian Corruption of Foreign Public Officials Act, the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from engaging in bribery or making other improper payments to foreign officials for the purpose of obtaining or retaining business or gaining an unfair business advantage. The Company’s employees were and are trained and required to comply with these laws, and the Company is committed to legal compliance and corporate ethics. There is no assurance that the Company’s training and compliance programs will protect it from acts committed by its employees, affiliates or agents. Violations of these laws could result in severe criminal or civil sanctions and financial penalties and other consequences that may have a material adverse effect on the Company.
If the Company loses any key member of its management team, the windup of the Company could suffer. The Company may have difficulty in obtaining qualified managerial personnel to successfully complete the windup of the Company.
In connection with the 2degrees Sale, the NuevaTel Transaction and the plan of liquidation, the Company terminated substantially all its employees. As of the date of this filing, the Company has 7 employees and if a key member of its management team leaves, the Company’s ability to successfully complete the windup of the Company could be adversely affected.
The Company is treated as a U.S. corporation for U.S. federal income tax purposes and is liable for both U.S. and Canadian income tax.
The Company is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, the Company is subject to U.S. federal income tax on its worldwide income and this treatment will continue indefinitely. In addition, the Company is subject to Canadian income tax on its worldwide income. Consequently, the Company is liable for both U.S. and Canadian income tax on its worldwide income, which could have a material adverse effect on its financial condition and results of operations. U.S. foreign tax credits, which are generally available to offset U.S. tax liability when both U.S. and Canadian tax is imposed on the same income, may not be available to mitigate the effects of this double tax.
Potentially adverse tax consequences may result from distributions to our shareholders.
In June 2022, the Company distributed approximately $116 million to its shareholders. It is the Company’s position that this distribution, which was made in connection with the plan of liquidation adopted by the Company in June 2022, was a liquidating distribution for U.S. tax purposes and a return of capital for Canadian tax purposes. It is possible, however, that taxing authorities may assert that the distribution was a non-liquidating distribution, and thus possibly treated as a dividend.
If the distribution were treated as a dividend, such amounts received by holders of Common Shares who are residents of Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”) will be subject to U.S. withholding tax. A foreign tax credit under the Tax Act in respect of such U.S. withholding taxes may not be available to such holder.
If the distribution were treated as a dividend, such amounts received by a holder of Common Shares who is a U.S. person or U.S. tax resident generally will not be subject to U.S. withholding tax but, if such recipient is not also a resident in Canada for the purposes of the Tax Act, the dividends will be subject to Canadian withholding tax. The Company is considered to be a U.S. corporation for U.S. federal income tax purposes. As a result, dividends paid by the Company will be characterized as U.S. source income for purposes of the U.S. foreign tax credit rules. Accordingly, U.S. persons and U.S. tax residents generally will not be able to claim a U.S. foreign tax credit for any Canadian tax withheld on the dividends.
If the distribution were treated as a dividend, such amounts received by shareholders who are not Canadian tax residents, U.S. persons or U.S. tax residents will be subject to U.S. withholding tax and will also be subject to Canadian withholding tax. These dividends may not qualify for a reduced rate of U.S. withholding tax under any income tax treaty otherwise applicable to a shareholder of the Company, subject to examination of the relevant treaty.
Public company requirements may strain the Company’s resources.
As a public company, the Company is subject to the reporting requirements of the Securities Act (British Columbia), as amended, as well as the applicable securities laws of the other Canadian provinces, and is subject to certain reporting requirements under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”) and, in each case, the regulations and rules thereto. The Company is also subject to the ongoing listing requirements of the NEX board of the TSXV. The obligations of operating as a public company require significant expenditures and place additional demands on management as the Company complies with the reporting requirements of a public company. The Company may need to hire additional accounting, financial and legal staff with appropriate public company experience and technical accounting and regulatory knowledge.
The Company ceased to qualify as an “emerging growth company” under the JOBS Act during the fiscal year ending December 31, 2022 and, consequently, the costs and demands placed upon management may increase.
The Company ceased to be deemed an “emerging growth company” during the fiscal year ending December 31, 2022. As a result, the Company expects the costs and demands placed upon management to increase, as the Company is now required to comply with additional disclosure and accounting requirements. However, as long as the aggregate value of the Common Shares held by non-affiliates remains less than $75 million as of the end of its most recent second fiscal quarter, the Company will qualify as a “smaller reporting company” as well as a “non-accelerated filer” eligible for relief from certain disclosure and reporting requirements. As of the applicable measurement date, June 30, 2022, the Company’s float was substantially less than $75 million. Therefore, the Company is eligible to disclose as a “smaller reporting company”. This will reduce some of the additional expense and management attention necessary to be dedicated to compliance.
Smaller reporting companies are able to provide simplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and have certain other reduced disclosure obligations.
As a result of the Company losing its foreign private issuer status under U.S. federal securities laws, the Company may incur additional expenses associated with compliance with the U.S. securities laws applicable to U.S. domestic issuers.
On June 30, 2022, the Company ceased to be a foreign private issuer. As a foreign private issuer, as defined in Rule 3b-4 under the Exchange Act, the Company was historically exempt from certain of the provisions of the U.S. federal securities laws. For example, the Exchange Act and the Section 16 reporting and “short swing” profit rules do not apply to foreign private issuers. Thus, these rules apply commencing with the beginning of the Company’s 2023 fiscal year and the Company is also, among other things, required to commence reporting on forms required of U.S. companies, such as Forms 10-K, 10-Q and 8-K, rather than the forms previously available to the Company, such as Forms 20-F and 6-K. Compliance with these disclosure requirements may result in increased expenses and require the Company’s management to devote time and resources to comply with new regulatory requirements.
Additionally, the Company’s resale registration of its Common Shares, made on Form in 2021 while the Company was a foreign private issuer, terminated with the filing of this Annual Report. The termination of the resale registration will not affect the ability of investors who are non-US persons, as defined in the 1933 Act, to continue to sell their Common Shares in 2023 or thereafter. U.S. persons who hold Common Shares will continue to be able to sell their shares after the date hereof pursuant to Regulation S of the 1933 Act so long as such sales are made on a DOSM such as the NEX board of the TSXV, on which the Common Shares are currently listed. Regulation S requires that a U.S. person selling unregistered shares on a DOSM not know that the sale has been pre-arranged with a buyer in the United States. U.S. persons may also sell unregistered Common Shares via a private placement.
The Company will not pay dividends.
Although the Company paid a dividend in the second quarter of each of 2019, 2018 and 2017, it did not do so in 2022, 2021 and 2020. The Company has determined not to make any dividend payments in light of the adoption of a plan of liquidation and the distribution of the remaining proceeds of the 2degrees Sale as described herein.
Liquid Market for Securities
The Common Shares are currently listed on the NEX board of the TSXV. However, there can be no assurance that an active and liquid market for the Common Shares will develop or be maintained, and an investor may find it difficult to resell any securities of the Company.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B.
Unresolved Staff Comments
Not applicable.

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ITEM 2. PROPERTIES
Item 2.
Properties
We lease an office space at our corporate headquarters at 155 108th Avenue NE, Suite 400, Bellevue, WA 98004. We believe that our facility is adequate to meet our needs for the immediate future.

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ITEM 3. LEGAL PROCEEDINGS
Item 3.
Legal Proceedings
The Company is not aware of any existing or contemplated legal proceedings to which it or any of its current subsidiaries is a party, or to which any of their property is subject, that would have a material adverse effect on the Company.
As a result of the sales of operations in the second quarter of 2022, the Company is no longer subject to the potential outcome of contingencies previously reported for the historical New Zealand and Bolivia segments which were subject to the telecommunications laws and regulations of these locations.
The Company’s former subsidiaries in New Zealand and Bolivia are party to various lawsuits, regulatory proceedings and other matters arising in the ordinary course of business. Although the Company no longer owns an interest in these subsidiaries, it may have liability with respect to the outcomes of certain lawsuits, regulatory proceedings or claims against the former subsidiaries to the extent specified in indemnification provisions of the share sale agreements to which the Company is a party. Management believes that although the outcomes of these proceedings are uncertain, any liability ultimately arising from these actions should not have a material adverse impact on the Company’s financial condition, results of operations or cash flows.
The Company is not aware of any penalties or sanctions imposed by a court or securities regulatory authority or other regulatory body to which the Company is subject, nor any settlement agreements before a court or with a securities regulatory authority to which the Company is a party.
In November 2022, NuevaTel and Balesia filed a complaint in U.S. District Court for the Southern District of Florida against Juan Pablo Calvo, NuevaTel’s chairman before the sale to Balesia and formerly NuevaTel’s CEO. The complaint alleges that Mr. Calvo violated his fiduciary duties to NuevaTel and interfered with NuevaTel’s contractual relations. No amount of damages was alleged in the complaint. Mr. Calvo has filed a motion to dismiss the case. The Company has agreed to indemnify Mr. Calvo for defense costs incurred and any award of damages against him. Under the Company’s insurance policy for director and officer liability, the Company bears responsibility for defense costs and damages up to C$1.5 million; the policy covers any additional costs and damages up to C$10 million. The Company views the claims against Mr. Calvo as meritless and considers the likelihood of an award of any damages against him as remote.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4.
Mine Safety Disclosures
Not applicable.
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our Common Shares are currently listed in Canada on the NEX board of the TSXV under the symbol “TRL.H.”
Holders
The Company is authorized to issue an unlimited number of Common Shares. As of the date of this Annual Report, there are 88,627,593 Common Shares outstanding.
As of March 24, 2023, the most recent date for which this information is available, there were 89 holders of record of the Company’s Common Shares. This does not take into account shareholders whose shares are held in “street name” by brokerage houses.
Dividend Policy
The declaration of dividends on the Common Shares is at the sole discretion of the Board. The Company did not pay a dividend in 2022, 2021 or 2020 and the Board has determined that the payment of dividends will be suspended until further notice.
In the second quarter of 2022, the Board declared and paid a distribution to shareholders of approximately $115.8 million, or approximately $1.31 per share (declared as a C$150 million distribution), representing a return of capital distribution pursuant to a plan of liquidation adopted by the Board. Any future additional return of capital distributions will depend on the Company’s corporate expenses, capital requirements, financial condition and other factors as determined by the Board.
Securities Authorized for Issuance
None.
Recent Sales of Unregistered Securities
None.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
The Company did not purchase any of its Common Shares during the year ended December 31, 2022.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6.
[Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis (“MD&A”) contains important information about the business of the Company and its performance for the years ended December 31, 2022, 2021 and 2020. This MD&A should be read in conjunction with TIP Inc.’s audited consolidated financial statements for the year ended December 31, 2022, and notes thereto (the “Consolidated Financial Statements”), prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) as issued by the Financial Accounting Standards Board (“FASB”).
All financial results and metrics for the year ended December 31, 2022 included in this MD&A reflect the results from the Bolivia segment from January 1, 2022 through May 14, 2022 and from the New Zealand segment from January 1, 2022 through May 19, 2022.
Historically, the market operations in New Zealand and Bolivia represented the Company’s two reportable segments. Our chief operating decision maker, TIP Inc.’s Chief Executive Officer, assessed performance of the segments and allocated resources primarily based on the financial measures of revenues and Segment Adjusted EBITDA. See Note 19 - Segment Information to the Consolidated Financial Statements for additional information.
Foreign Currency
In New Zealand, the Company generated revenue and incurred costs in NZD. Fluctuations in the value of the NZD relative to the USD increased or decreased the Company’s overall revenue and profitability as stated in USD, which is the Company’s reporting currency. The effect of these fluctuations is referenced in this MD&A as “impact of foreign currency”. The following table sets forth for each period or date indicated the exchange rates in effect at the end of such period, including as of May 19, 2022 which reflects the date of the balance sheet for New Zealand upon closing of the 2degrees Sale, and the average exchange rates for such periods for the NZD, expressed in USD. Additionally, the amount held in escrow from the 2degrees Sale is denominated in NZD and therefore, the exchange rate in effect at December 31, 2022 is provided below:
May 19,
December 31,
December 31,
End of period NZD to USD exchange rate
0.64
0.68
0.63
(1)
0.68
0.72
% Change
(7
%)
(7
%)
(5
%)
Year Ended December 31,
Average NZD to USD exchange rate
0.67
(2)
0.71
0.65
% Change
(5
%)
%
(1)While the exchange rate in effect at December 31, 2022 was 0.63, in the fourth quarter of 2022, the Company entered into forward exchange contracts to sell an aggregate of $20 million NZD and buy an aggregate of $12.3 million USD on June 30, 2023. Thus, future exposure to fluctuations in the NZD to USD exchange rate for substantially all of the proceeds from the 2degrees Sale held in escrow is mitigated.
(2)For the period from January 1, 2022 through May 19, 2022.
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 CAD, expressed in USD, as quoted by the Bank of Canada:
December 31, 2022
December 31, 2021
December 31, 2020
End of period CAD to USD exchange rate
0.74
0.79
0.79
% Change
(6
%)
%
Year Ended December 31,
Average CAD to USD exchange rate
0.77
0.80
0.75
% Change
(4
%)
%
Overall Performance
The table below summarizes the Company’s consolidated key financial metrics for the years ended December 31, 2022, 2021 and 2020:
For the Year Ended December 31,
% Variance
2022 vs 2021
2021 vs 2020
(in millions, unless otherwise noted)
Service revenues
$
200.4
$
540.7
$
504.0
(63
%)
%
Total revenues
$
238.5
$
653.6
$
610.3
(64
%)
%
Net income (loss)
$
437.0
$
(194.4
)
$
(79.7
)
%
(144
%)
Net income (loss) margin(1)
218.1
%
(36.0
%)
(15.8
%)
254.0 pts
(20.1) pts
Consolidated Adjusted EBITDA(2)
$
39.4
$
115.1
$
107.0
(66
%)
%
Consolidated Adjusted EBITDA Margin(2)
19.7
%
21.3
%
21.2
%
(1.6) pts
0.1 pts
Capital expenditures(3)
$
32.4
$
92.8
$
77.3
(65
%)
%
pts - percentage points
(1)Net income (loss) margin is calculated as Net income (loss) divided by service revenues.
(2)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 GAAP financial measures, see “Definitions and Reconciliations of Non-GAAP Measures” in this MD&A.
(3)Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and finance lease arrangements. Expenditures related to the acquisition of spectrum licenses, if any, were not included in capital expenditures amounts.
Reclassification of Fixed Broadband Service Revenues
In 2021, we replaced “Wireline” with “Fixed broadband” to describe the revenues and subscribers associated with the Company’s fixed broadband products in New Zealand and Bolivia, which were provided using fixed line or wireless technology. As a result, fixed Long Term Evolution (“LTE”) service revenues were reclassified from Wireless service revenues and were included as a component of Fixed broadband service revenues in our Consolidated Statements of Operations and Comprehensive Income (Loss). This reclassification was applied to all periods presented in this MD&A. Fixed LTE service revenues reclassified to Fixed broadband service revenues were $2.1 million, $5.1 million and $3.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. This change had no impact on total revenues or net loss for any period presented.
2022 Full Year Highlights
•
On May 19, 2022, the 2degrees Sale closed for an aggregate purchase price of $1.315 billion NZD for 100% of the equity interest in 2degrees. For its ownership interest in 2degrees, the Company’s share of the total consideration was $930 million NZD (approximately $601 million based on the exchange rate on the date the consideration was received), net of $33 million NZD ($21 million) of closing adjustments, including transaction advisory fees, along with payments to satisfy the outstanding 2degrees option pool. Approximately $22 million NZD of the consideration paid by Voyage Digital for the Company’s 2degrees shares is being held in escrow for a maximum period of one year after the sale closing date.
•
Promptly following the closing of the 2degrees Sale, the Company repaid its outstanding indebtedness and the outstanding indebtedness of its subsidiary, Trilogy International South Pacific LLC (“TISP”), plus related accrued interest, totaling approximately $450 million. As a result of these prepayments, the Company had no remaining indebtedness outstanding as of December 31, 2022.
•
In the second quarter, the Board declared and paid a distribution to shareholders of $115.8 million, or approximately $1.31 per share (declared as a $150 million CAD distribution), representing a return of capital pursuant to a plan of liquidation adopted by the Board.
•
On May 14, 2022, the NuevaTel Transaction was completed. Proceeds received related to the NuevaTel Transaction were in a nominal amount and the Company recorded a net gain on the transaction of $14.5 million due to the carrying value of liabilities in excess of assets for the business.
•
Total cash was $25.1 million as of December 31, 2022, exclusive of the Company’s share of the purchase price escrow established in connection with the 2degrees Sale of approximately $22 million NZD ($14.1 million based on the exchange rate as of December 31, 2022).
Results of Operations
Consolidated Revenues
For the Year Ended December 31,
% Variance
(in millions)
2022 vs 2021
2021 vs 2020
Revenues:
Wireless service revenues (1)
$
154.8
$
420.3
$
408.4
(63
%)
%
Fixed broadband service revenues (1)
42.5
111.5
86.6
(62
%)
%
Equipment sales
38.1
112.9
106.3
(66
%)
%
Non-subscriber ILD and other revenues
3.2
8.9
9.0
(64
%)
(2
%)
Total revenues
$
238.5
$
653.6
$
610.3
(64
%)
%
(1)Beginning in 2021, we replaced “Wireline” with “Fixed broadband” and reclassified fixed LTE revenues from Wireless service revenues to Fixed broadband service revenues.
Consolidated Wireless Service Revenues
Wireless service revenues declined $265.5 million, or 63%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022. See Note 2 - Sale of Operations to the Consolidated Financial Statements for further information. In addition, prior to the closing of the NuevaTel Transaction, there were declines in both prepaid and postpaid revenues in Bolivia, compared to the same period in 2021, mainly due to lower voice traffic and data usage, as well as declines in the subscriber base.
Wireless service revenues increased $11.9 million, or 3%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, wireless service revenues declined $12.0 million, or 3%, compared to the same period in 2020, as a decline in Bolivia more than offset an increase in New Zealand. The decline in Bolivia was due to a decline in both postpaid and prepaid revenues as a result of the COVID-19 pandemic and increased competition in the market which affected the decline in the postpaid and prepaid subscriber base. The decline in Bolivia was partially offset by increased postpaid wireless service revenues in New Zealand driven by the larger postpaid subscriber base, particularly due to business subscriber growth. There was also an increase in prepaid service revenues in New Zealand mainly due to an increase in prepaid ARPU.
Consolidated Fixed Broadband Service Revenues
Fixed broadband service revenues declined $69.0 million, or 62%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
Fixed broadband service revenues increased $24.9 million, or 29%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, fixed broadband service revenues increased $17.4 million, or 19%, compared to the same period in 2020, primarily due to the 17% growth in the fixed broadband subscriber base.
Consolidated Equipment Sales
Equipment sales declined $74.8 million, or 66%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, due to the closing of the 2degrees Sale in May 2022.
Equipment sales increased $6.6 million, or 6%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, equipment sales declined $2.5 million, or 2%, compared to the same period in 2020, as a decline in Bolivia more than offset an increase in New Zealand. The decline in Bolivia was mainly due to a decrease in the number of handsets sold in Bolivia during the period. The increase in New Zealand was primarily driven by the rise in the volume of sales of higher priced devices to new and existing subscribers.
Consolidated Non-subscriber International Long Distance (“ILD”) and Other Revenues
Non-subscriber ILD and other revenues declined $5.7 million, or 64%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
Non-subscriber ILD and other revenues declined $0.2 million, or 2%, for the year ended December 31, 2021 compared to the year ended December 31, 2020, due to individually insignificant changes in the period.
Consolidated Operating Expenses
Operating expenses represent expenditures incurred by the Company’s operations and its corporate headquarters.
For the Year Ended December 31,
% Variance
(in millions)
2022 vs 2021
2021 vs 2020
Operating expenses:
Cost of service, exclusive of depreciation,
amortization and accretion shown separately
$
81.0
$
217.6
$
202.9
(63
%)
%
Cost of equipment sales
39.2
120.9
115.8
(68
%)
%
Sales and marketing
30.8
88.8
80.3
(65
%)
%
General and administrative
62.3
123.9
112.3
(50
%)
%
Depreciation, amortization and accretion
18.4
107.2
107.0
(83
%)
%
Impairment of long-lived assets
-
113.8
-
(100
%)
%
(Gain) on sale of operations and loss (gain) on
disposal of assets and sale-leaseback transaction
(457.6
)
1.1
(2.5
)
n/
m
%
Total operating expenses
$
(225.9
)
$
773.4
$
615.7
(129
%)
%
n/m - not meaningful
Consolidated Cost of Service
Cost of service expense declined $136.6 million, or 63%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The declines were primarily due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022. In addition, prior to the closing of the NuevaTel Transaction, there were declines in interconnection costs in Bolivia as a result of lower voice traffic terminating outside of NuevaTel’s network.
Cost of service expense increased $14.8 million, or 7%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, cost of service increased $3.5 million, or 2%, primarily due to increases in New Zealand partially offset by declines in Bolivia. The increase in New Zealand was mainly attributable to an increase in transmission expense associated with the growth of the fixed broadband subscriber base. The decline in Bolivia was primarily due to a decline in interconnection costs as a result of a lower volume of voice traffic terminating outside of NuevaTel’s network.
Consolidated Cost of Equipment Sales
Cost of equipment sales declined $81.7 million, or 68%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to the closing of the 2degrees Sale in May 2022.
Cost of equipment sales increased $5.1 million, or 4%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, cost of equipment sales declined $4.6 million, or 4%, in 2021, primarily due to a decline in the number of handsets sold in Bolivia, partially offset by an increase in New Zealand in the volume of sales of higher priced devices in 2021 as compared to 2020.
Consolidated Sales and Marketing
Sales and marketing declined $58.0 million, or 65%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
Sales and marketing increased $8.5 million, or 11%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, sales and marketing increased $3.8 million, or 4%, primarily due to an increase in commissions expenses in New Zealand partially offset by a decline in salaries and wages in Bolivia.
Consolidated General and Administrative
General and administrative costs declined $61.6 million, or 50%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022. These declines were partially offset by a total of $6.5 million of severance costs recorded at corporate headquarters in the second and third quarters of 2022. The severance costs and other costs associated with the 2degrees Sale and the NuevaTel Transaction included in general and administrative costs were $10.6 million for the year ended December 31, 2022. Due to their nonrecurring nature, such costs were removed from Consolidated Adjusted EBITDA.
General and administrative costs increased $11.6 million, or 10%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, general and administrative costs increased $5.9 million, or 5%. Approximately $8.0 million of the increase was due to nonrecurring professional service costs in New Zealand and at corporate headquarters associated with strategic transactions that were under consideration related to the 2degrees business in 2021, including approximately $4.7 million of costs primarily related to the preparation for a planned public listing and equity issuance in New Zealand which were deferred and included within Prepaid expenses and other current assets on the Consolidated Balance Sheet as of September 30, 2021, reflecting the facts and circumstances as of that date. During the fourth quarter of 2021, upon announcement of the 2degrees Sale, the Company expensed these previously deferred costs of approximately $4.7 million as general and administrative expenses. Due to the nonrecurring nature of these expenses, the total of approximately $8.0 million of these costs incurred during the year ended December 31, 2021 was removed from Adjusted EBITDA. These increases were partially offset by a decline in general and administrative costs in Bolivia, primarily due to a decline in bad debt expense. In addition, there was a decline in expenses in Bolivia attributable to cost controls that were implemented in response to the COVID-19 pandemic.
Consolidated Depreciation, Amortization and Accretion
Depreciation, amortization and accretion declined $88.8 million, or 83%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022. The 2degrees and NuevaTel businesses met the accounting criteria to be classified as held for sale on March 15, 2022 and March 28, 2022, respectively, and, accordingly, recording depreciation and amortization of their long-lived assets ceased on those dates. For additional information, see Note 2 - Sale of Operations to the Consolidated Financial Statements. In addition, prior to the closing of the NuevaTel Transaction, there were declines in Bolivia due to a lower asset base being depreciated in 2022 compared to 2021 as a result of the impairment charge recognized in the third quarter of 2021.
Depreciation, amortization and accretion was flat for the year ended December 31, 2021 compared to the year ended December 31, 2020. Excluding the impact of foreign currency, depreciation, amortization and accretion declined $5.5 million, or 5%, as a decline in Bolivia was partially offset by an increase in New Zealand. The decline in Bolivia was primarily due to a lower net asset base being depreciated including the impact of the long-lived asset impairment charge recorded in 2021. The increase in New Zealand was mainly related to wireless network assets previously placed in service and accelerated depreciation expense on certain existing assets associated with the onset of 5G enabled infrastructure construction.
Consolidated Impairment of Long-Lived Assets
Impairment of long-lived assets of $113.8 million for the year ended December 31, 2021 related to the impairment charge recorded in Bolivia. There were no impairment charges recognized for 2022.
Consolidated (Gain) on Sale of Operations and Loss (Gain) on Disposal of Assets and Sale-Leaseback Transaction
(Gain) on sale of operations and loss on disposal of assets increased for the year ended December 31, 2022 compared to the year ended December 31, 2021, due to a $443.3 million gain recognized in connection with the 2degrees Sale and a $14.5 million gain recognized in connection with the NuevaTel Transaction in May 2022. For additional information, see Note 2 - Sale of Operations to the Consolidated Financial Statements.
Loss on disposal of assets and sale-leaseback transaction increased $3.6 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to gains recognized upon the final closing of the tower sale-leaseback transaction in the third quarter of 2020, partially offset by disposal and abandonment charges of approximately $1.4 million recorded during the second quarter of 2020 for certain construction in progress due in part to a reassessment of capital expenditures needs as 2degrees undertook cost reduction measures in response to the COVID-19 pandemic.
Consolidated Other Expenses (Income)
For the Year Ended December 31,
% Variance
(in millions)
2022 vs 2021
2021 vs 2020
Interest expense
$
22.9
$
53.7
$
46.5
(57
%)
%
Change in fair value of warrant liability
(0.105
)
(0.055
)
0.049
(91
%)
(212
%)
Debt extinguishment, modification and issuance costs
8.5
7.0
-
%
%
Other, net
(15.4
)
3.3
4.6
(567
%)
(28
%)
Consolidated Interest Expense
Interest expense declined $30.8 million, or 57%, for the year ended December 31, 2022 compared to the same period in 2021, primarily related to the prepayment of the outstanding indebtedness of the 8.875% senior secured notes issued by TISP and TISP Finance, Inc. due in 2023 (the “TISP 8.875% Notes”) and the 10.0% senior secured notes due 2022 issued by TISP (the “TISP 10.0% Notes”) in May 2022. See Note 8 - Debt to the Consolidated Financial Statements for further information.
Interest expense increased $7.2 million, or 15%, for the year ended December 31, 2021 compared to the same period in 2020, primarily related to the issuance of the TISP 10.0% Notes in October 2020.
Consolidated Change in Fair Value of Warrant Liability
The change in fair value of the warrant liability resulted in income of $0.1 million for year ended December 31, 2022, due to the warrants expiring on February 7, 2022. The change in fair value of the warrant liability increased income by $0.1 million for the year ended December 31, 2021, compared to same period in 2020, due to changes in the trading price of the warrants. See Note 11 - Equity to the Consolidated Financial Statements for further information.
Consolidated Debt Extinguishment, Modification and Issuance Costs
Debt extinguishment, modification and issuance costs increased $1.5 million, or 22%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily due to an $8.5 million write-off of deferred finance cost and discounts on the TISP 8.875% Notes and the TISP 10.0% Notes as a result of the prepayment of the outstanding balances in May 2022. The increase in 2022 was partially offset by costs associated with the consummation in June 2021 of the exchange of Trilogy LLC’s 8.875% senior secured notes due in 2022 (the “Trilogy LLC 2022 Notes”) for the TISP 8.875% Notes due in 2023. See Note 8 - Debt to the Consolidated Financial Statements for further information.
Debt extinguishment, modification and issuance costs increased $7.0 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. The increase was due to the consummation in June 2021 of the exchange of the Trilogy LLC 2022 Notes for the TISP 8.875% Notes due in 2023.
Consolidated Other, Net
Other, net income increased $18.7 million, or 567%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase for the year ended December 31, 2022 was primarily due to a gain of $16.6 million recognized in connection with the change in value of the forward exchange contract that the Company entered into in March 2022 to mitigate exposure to fluctuations in the NZD to USD exchange rate for a portion of the proceeds we received from the 2degrees Sale. The gain recognized reflected the differential between the contract price and the foreign exchange rate as of the settlement date under this forward exchange contract. See Note 9 - Derivative Financial Instruments to the Consolidated Financial Statements for further information.
Other, net expense declined $1.3 million, or 28%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. This decline was driven by changes in the fair value of interest rate swaps in New Zealand of $7.3 million and other individually immaterial changes. These changes were partially offset by a $10.7 million increase relating to the change in the fair value of a derivative instrument relating to an increase in the principal amount of the TISP 8.875% Notes in the fourth quarter of 2021.
Consolidated Income Taxes
For the Year Ended December 31,
% Variance
(in millions)
2022 vs 2021
2021 vs 2020
Income tax expense
$
(11.5
)
$
(10.5
)
$
(23.1
)
(9
%)
%
Income Tax (Expense) Benefit
Income tax expense increased $0.9 million, or 9%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to the benefit recorded in 2021 for the impact of NuevaTel’s losses on the Company’s deferred tax liability with respect to NuevaTel’s unrepatriated earnings. This increase is offset by a decrease in pre-tax profits in New Zealand in 2022 due to the closing of 2degrees Sale in May 2022.
Income tax expense declined $12.6 million, or 54%, for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to the valuation allowance recorded against the Company’s deferred tax assets in Bolivia in 2020.
Business Segment Analysis
The Company historically had two reporting segments (New Zealand (2degrees) and Bolivia (NuevaTel)) that provided a variety of wireless voice and data communications services, including local, international long distance and roaming services. Services were provided to subscribers on both a postpaid and prepaid basis. In Bolivia, fixed public telephony services were also offered via wireless backhaul connections. In New Zealand, fixed broadband communications services were offered since May 2015. In Bolivia, fixed LTE services, or fixed broadband services, were offered since late 2019.
During the second quarter of 2022, the Company completed the sale of its operations in New Zealand and Bolivia, which represented substantially all of the operating activities of the business. The disposals and comparative historical periods are not presented as discontinued operations since the associated activities represented substantially all of the Company’s net productive assets, business activities and results of operations. Accordingly, they do not meet the definition of a component of an entity that would qualify for discontinued operations presentation because they are not clearly distinguishable from the rest of the entity. Since presentation of discontinued operations is not applicable, the presentation of segment information for New Zealand and Bolivia has been retained.
New Zealand (2degrees)
2degrees launched commercial service in 2009. As described above and as further discussed in Note 2 - Sale of Operations to the Consolidated Financial Statements, in December 2021, the Company entered into the 2degrees Sale to sell its 73.2% indirect equity interest in 2degrees to Voyage Digital. On May 19, 2022, the 2degrees Sale closed for an aggregate purchase price of $1.315 billion NZD.
New Zealand - Operating Results
For the Year Ended December 31,
% Variance
(in millions, unless otherwise noted)
2022 vs 2021
2021 vs 2020
Service revenues
$
161.0
$
416.1
$
357.0
(61
%)
%
Total revenues
$
199.1
$
528.6
$
458.9
(62
%)
%
Segment Adjusted EBITDA
$
51.5
$
127.6
$
111.4
(60
%)
%
Segment Adjusted EBITDA Margin(1)
32.0
%
30.7
%
31.2
%
1.3 pts
(0.6) pts
Capital expenditures (2)
$
30.5
$
81.1
$
65.1
(62
%)
%
Capital intensity
18.9
%
19.5
%
18.2
%
(0.5) pts
1.3 pts
pts - percentage points
(1)
Segment Adjusted EBITDA Margin is calculated as Segment Adjusted EBITDA divided by service revenues.
(2)
Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and finance lease arrangements. Expenditures related to the acquisition of spectrum licenses, if any, were not included in capital expenditures amounts.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Service revenues declined $255.0 million, or 61%, compared to 2021. Excluding the impact of foreign currency, service revenues declined $232.5 million, or 59%, compared to the same period in 2021. This decline was primarily due to the closing of the 2degrees Sale in May 2022. For additional information, see Note 2 - Sale of Operations to the Consolidated Financial Statements.
Total revenues declined $329.6 million, or 62%, compared to 2021. Excluding the impact of foreign currency, total revenues declined $300.9 million, or 60%, compared to the same period in 2021, attributable to the declines in service revenues mentioned above. In addition, equipment sales declined $74.5 million, or 66%, compared to the same period in 2021. Excluding the impact of foreign currency, equipment sales declined $68.4 million, or 64%, primarily due to the closing of the 2degrees Sale in May 2022.
For the year ended December 31, 2022 compared to 2021, operating expenses declined $319.7 million, or 66% ($293.5 million, or 64%, excluding the impact of foreign currency), primarily due to the following:
•
Cost of service declined $88.5 million, or 60%, in 2022 compared to the same period in 2021. Excluding the impact of foreign currency, cost of service declined $80.6 million, or 58%, primarily due to the closing of the 2degrees Sale in May 2022;
•
Cost of equipment sales declined $79.7 million, or 67%, compared to the same period in 2021. Excluding the impact of foreign currency, cost of equipment sales declined $73.3 million, or 65%, primarily due to the closing of the 2degrees Sale in May 2022;
•
Sales and marketing declined $40.8 million, or 63%, compared to the same period in 2021. Excluding the impact of foreign currency, sales and marketing declined $37.2 million, or 61%, primarily due to the closing of the 2degrees Sale in May 2022;
•
General and administrative declined $50.7 million, or 65%, compared to 2021. Excluding the impact of foreign currency, general and administrative declined $46.4 million, or 63%, primarily due to the closing of the 2degrees Sale in May 2022. Approximately $1.0 million of general and administrative costs incurred by 2degrees were associated with the 2degrees Sale. Due to the nonrecurring nature of these expenses, such costs were removed from Segment Adjusted EBITDA; and
•
Depreciation, amortization, and accretion declined $59.8 million, or 81%, compared to the same period in 2021. Excluding the impact of foreign currency, depreciation, amortization, and accretion declined $55.8 million, or 80%, primarily due to the 2degrees business meeting the accounting criteria to be classified as held for sale on March 15, 2022 and, accordingly, the Company ceased recording depreciation and amortization of 2degrees’ long-lived assets on that date. For additional information, see Note 2 - Sale of Operations to the Consolidated Financial Statements.
Segment Adjusted EBITDA declined $76.1 million, or 60%, compared to 2021. Excluding the impact of foreign currency, Segment Adjusted EBITDA declined $69.2 million, or 57%, compared to 2021, primarily as a result of the closing of the 2degrees Sale in May 2022.
Capital expenditures declined $50.6 million, or 62%, compared to 2021. Excluding the impact of foreign currency, capital expenditures declined $46.2 million, or 60%, compared to 2021, due to the closing of the 2degrees Sale in May 2022.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Service revenues increased $59.1 million, or 17%, compared to 2020. Excluding the impact of foreign currency, service revenues increased $27.1 million, or 7%, compared to 2020. This increase was primarily due to growth in fixed broadband revenues driven by the larger fixed broadband subscriber base and increases in residential fixed broadband ARPU. There was also an increase in postpaid wireless service revenues driven by the larger postpaid subscriber base, due mainly to growth in business subscribers. In addition, there was an increase in prepaid wireless service revenues compared to the same period in 2020, driven by an increase in prepaid ARPU.
Total revenues increased $69.8 million, or 15%, compared to 2020. Excluding the impact of foreign currency, total revenues increased $28.7 million, or 6%, compared to 2020. This increase was attributable to the increase in service revenues mentioned above. Equipment sales increased $10.7 million, or 10%, compared to the same periods in 2020. Excluding the impact of foreign currency, equipment sales increased $1.6 million, or 1%, primarily driven by the rise in the volume of sales of higher priced devices in 2021 compared to 2020.
For the year ended December 31, 2021 compared to 2020, operating expenses increased $65.5 million, or 16% ($28.1 million, or 6%, excluding the impact of foreign currency), primarily due to the following:
•
Cost of service increased $21.0 million, or 17%, in 2021 compared to the same period in 2020. Excluding the impact of foreign currency, cost of service increased $9.7 million, or 7%, primarily due to an increase in transmission expense associated with the growth of the fixed broadband subscriber base. In addition, there was an increase in network-related maintenance costs attributable to investments in outsourced infrastructure support surrounding new platforms for 5G delivery, managed security firewall programs, and disaster recovery. These increases were partially offset by a decline in combined network sharing and national roaming costs due to a network sharing agreement which commenced in the second quarter of 2020;
•
Cost of equipment sales increased $10.5 million, or 10%, compared to the same period in 2020. Excluding the impact of foreign currency, cost of equipment sales increased $0.9 million, or 1%, primarily due to an increase in the volume of sales of higher priced devices in 2021 compared to 2020;
•
Sales and marketing increased $11.8 million, or 22%, compared to the same period in 2020. Excluding the impact of foreign currency, sales and marketing increased $7.1 million, or 12%, compared to 2020, primarily due to an increase in commissions expense of $4.2 million compared to the same period in 2020 primarily associated with higher amortization expense of incremental contract acquisition costs capitalized subsequent to December 31, 2020;
•
General and administrative increased $14.8 million, or 23%, compared to 2020. Excluding the impact of foreign currency, general and administrative increased $9.1 million, or 13%. This increase was due to higher legal, audit and consulting costs and increases in office rent expense due to the 2degrees corporate headquarters lease beginning in the second quarter of 2021. Approximately $6.0 million was due to nonrecurring professional service costs incurred during 2021 associated with the strategic transactions that were under consideration throughout that year, including approximately $4.0 million of costs primarily related to 2degrees’ preparation for a planned public listing and equity issuance which were deferred and included within Prepaid expenses and other current assets on the Consolidated Balance Sheet as of September 30, 2021, reflecting the facts and circumstances as of that date. During the fourth quarter of 2021, upon announcement of the Company’s definitive agreement to sell 100% of its equity in 2degrees, 2degrees recorded these deferred professional service costs of approximately $4.0 million to general and administrative expenses. Due to the nonrecurring nature of these expenses, the total of approximately $6.0 million of these costs incurred during the year ended December 31, 2021 were removed from Segment Adjusted EBITDA. These increases were partially offset by a decline in bad debt expense attributable to accounts receivable collection efforts and the improved credit risk of our customer portfolio. In addition, there was a $1.8 million one-time benefit in the first quarter of 2020 associated with 2degrees’ improvement in collections of Equipment Installment Plan (“EIP”) receivables previously sold to the third-party EIP receivables purchaser and a decline in equity-based compensation expense as a result of $1.7 million recorded in the second quarter of 2020 associated with the extension of the expiration date of certain 2degrees’ service-based share options;
•
Depreciation, amortization, and accretion increased $9.3 million, or 14%, compared to the same period in 2020. Excluding the impact of foreign currency, depreciation, amortization, and accretion increased $3.5 million, or 5%. This increase was due primarily to an increase in depreciation expense associated with wireless network assets previously placed in service and accelerated depreciation expense on certain existing assets associated with the commencement of 5G enabled infrastructure construction; and
•
Loss on disposal of assets declined $1.9 million, or 72%, compared to the same period in 2020. Excluding the impact of foreign currency, loss on disposal of assets declined $2.1 million, or 75%. This decline was primarily associated with disposal and abandonment charges of approximately $1.4 million during the second quarter of 2020 for certain construction in progress due in part to a reassessment of capital expenditures needs as 2degrees undertook cost reduction measures in response to the COVID-19 pandemic.
Segment Adjusted EBITDA increased $16.2 million, or 15%, compared to 2020. Excluding the impact of foreign currency, Segment Adjusted EBITDA increased $6.2 million, or 5%, compared to 2020. This increase in Segment Adjusted EBITDA was primarily the result of the increase in fixed broadband revenues and postpaid wireless revenues discussed above partially offset by an increase in cost of service and sales and marketing.
Capital expenditures were $81.1 million in 2021, an increase of $16.0 million, or 25%, compared to 2020. Excluding the impact of foreign currency, capital expenditures increased $10.2 million, or 14%, compared to 2020, primarily attributable to 5G network investments.
Bolivia (NuevaTel)
The Trilogy LLC founders launched NuevaTel in 2000 while they served in senior management roles with Western Wireless. Trilogy LLC subsequently acquired a majority interest in the business in 2006. On March 28, 2022, the Company entered into the NuevaTel Transaction to transfer its 71.5% indirect equity interest in NuevaTel and, on May 14, 2022, the NuevaTel Transaction closed.
Bolivia - Operating Results
For the Year Ended December 31,
% Variance
(in millions, unless otherwise noted)
2022 vs 2021
2021 vs 2020
Service revenues
$
39.3
$
124.3
$
146.6
(68
%)
(15
%)
Total revenues
$
39.4
$
124.6
$
151.0
(68
%)
(17
%)
Segment Adjusted EBITDA
$
0.2
$
(0.1
)
$
6.6
%
(101
%)
Segment Adjusted EBITDA Margin(1)
0.5
%
(0.1
%)
4.5
%
0.6 pts
(4.6) pts
Capital expenditures(2)
$
1.9
$
11.8
$
12.3
(84
%)
(4
%)
Capital intensity
4.9
%
9.5
%
8.4
%
(4.6) pts
1.1 pts
pts - percentage points
(1)Segment Adjusted EBITDA Margin is calculated as Segment Adjusted EBITDA divided by service revenues.
(2)Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and finance lease arrangements. Expenditures related to the acquisition of spectrum licenses, if any, were not included in capital expenditures amounts.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Service revenues declined $85.0 million, or 68%, in 2022 compared to 2021, primarily due to the closing of the NuevaTel Transaction in May 2022. See Note 2 - Sale of Operations to the Consolidated Financial Statements for further information. There were also declines in both prepaid and postpaid revenues mainly due to lower voice traffic and data usage, as well as declines in the subscriber base.
Total revenues declined $85.3 million, or 68%, in 2022 compared to 2021, primarily due to the decline in service revenues discussed above.
For the year ended December 31, 2022, operating expenses declined $228.3 million, or 84%, compared to the same period in 2021, primarily due to the following:
•
Cost of service declined $48.0 million, or 68%, in 2022, primarily due to the closing of the NuevaTel Transaction in May 2022. In addition, there were declines in interconnection costs as a result of lower voice traffic terminating outside of NuevaTel’s network;
•
Sales and marketing declined $17.3 million, or 71%, in 2022, primarily due to the closing of the NuevaTel Transaction in May 2022 as well as a decline in advertising expense;
•
General and administrative costs declined $17.7 million, or 64%, in 2022, primarily due to the closing of the NuevaTel Transaction in May 2022;
•
Depreciation, amortization and accretion declined $29.0 million, or 87%, in 2022, primarily due to the NuevaTel business meeting the accounting criteria to be classified as held for sale on March 28, 2022 and, accordingly, the Company ceased recording depreciation and amortization of NuevaTel’s long-lived assets on that date. For additional information, see Note 2 - Sale of Operations to the Consolidated Financial Statements. The declines were also attributable to a lower asset base being depreciated in 2022 compared to 2021 as a result of an impairment charge recognized in the third quarter of 2021; and
•
Impairment of long-lived assets declined $113.8 million, or 100%, in 2022 as a result of the charge recorded in the third quarter of 2021. There was no impairment recorded in the year ended December 31, 2022. See Note 1 - Description of Business, Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated Financial Statements for additional information.
Segment Adjusted EBITDA increased $0.3 million, or 390%, in 2022 compared to 2021, as Segment Adjusted EBITDA was negative in 2021. This increase was primarily due to the declines in cost of service, general and administrative costs and sales and marketing described above partially offset by the decrease in service revenues.
Capital expenditures declined $9.8 million, or 84%, to $1.9 million, in 2022 compared to 2021, mainly due to the closing of the NuevaTel Transaction in May 2022 along with timing of spending in 2021.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Service revenues declined $22.3 million, or 15%, in 2021 compared to 2020, primarily due to a decline in postpaid revenues of $15.8 million, or 23%. The decline in postpaid revenues was due to a 15% decline in the subscriber base primarily as a result of the impact of the COVID-19 pandemic and effects of increased competition in the market. Prepaid revenues declined $7.8 million, or 12%, in 2021 compared to 2020, primarily due to a 13% decline in the prepaid wireless subscriber base. The decline in prepaid revenues was also attributable to a decline in voice revenues due to lower voice traffic as a result of subscribers shifting from voice usage to data-based voice applications, which was accelerated by the impact of the COVID-19 pandemic.
Total revenues declined $26.4 million, or 17%, in 2021 compared to 2020, primarily due to the decline in service revenues discussed above. Equipment sales, which also contributed to the decline in total revenues, declined $4.1 million, or 93%, due to the decline in the number of handsets sold during the period.
For the year ended December 31, 2021, operating expenses increased $89.7 million, or 49%, compared to the same period in 2020, primarily due to the following:
•
Cost of service declined $6.2 million, or 8%, in 2021, primarily due to a decrease in interconnection costs as a result of lower voice traffic terminating outside of NuevaTel’s network. Additionally, NuevaTel implemented workforce reductions in the fourth quarter of 2020 with related cost reductions continuing through 2021. Transaction fees were also impacted by the decline in revenue and subscribers in 2021 compared to 2020;
•
Cost of equipment sales declined $5.5 million, or 69%, in 2021, mainly due to a decline in the number of handsets sold during the period;
•
Sales and marketing declined $3.3 million, or 12%, in 2021, primarily due to cost control measures, including a decrease in salaries and wages as a result of workforce reductions which occurred during the fourth quarter of 2020. These declines were partially offset by an increase in advertising expense;
•
General and administrative costs declined $6.1 million, or 18%, in 2021, primarily due to lower bad debt expense as a result of societal restrictions related to the COVID-19 pandemic which impacted collections in the periods in 2020. The decline was also attributable to a decrease in salaries and wages and outsourcing costs associated with continued cost controls implemented in response to the COVID-19 pandemic;
•
Depreciation, amortization and accretion declined $8.6 million, or 21%, in 2021, primarily due to a lower asset base during the year being depreciated as a result of the impairment charge recognized in the third quarter of 2021;
•
Impairment of long-lived assets was $113.8 million for the year ended December 31, 2021 as a result of the charge recorded in the third quarter of 2021. There was no impairment recorded in the year ended December 31, 2020. See Note 1 - Description of Business, Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated Financial Statements for additional information; and
•
Loss on disposal of assets and sale-leaseback transaction increased $5.5 million, or 107%, in 2021, primarily due to the timing of the gains recognized in connection with the closings of the tower sale-leaseback transaction in 2020.
Segment Adjusted EBITDA declined $6.7 million, or 101%, in 2021 compared to 2020, primarily due to the decrease in both postpaid and prepaid service revenues, partially offset by the declines in cost of service, general and administrative costs and sales and marketing described above.
Capital expenditures declined $0.5 million, or 4%, to $11.8 million, in 2021 compared to 2020, mainly due to the timing of spending and as a result of NuevaTel’s continuing efforts to preserve cash resources. Capital expenditures of $11.8 million in 2021 were primarily related to investment in the LTE network, including additional 4G LTE sites.
Selected Financial Information
The following tables set forth our summary consolidated financial data for the periods ended and as of the dates indicated below.
The summary consolidated financial data is derived from the Consolidated Financial Statements for each of the periods indicated in the following tables.
Differences between amounts set forth in the following tables and corresponding amounts in the Consolidated Financial Statements and related notes which accompany this MD&A are a result of rounding. Amounts for subtotals, totals and percentage variances presented in the following tables may not sum or calculate using the numbers as they appear in the tables as a result of rounding.
Selected annual financial information
The following table shows selected consolidated financial information of the Company for the years ended December 31, 2022, 2021 and 2020, prepared in accordance with U.S. GAAP. The Company discusses the factors that caused results to vary over the past three years throughout this MD&A.
Consolidated Income Statement Data
For the Year Ended December 31,
(in millions, except per share amounts)
Service revenues
$
200.4
$
540.7
$
504.0
Equipment sales
38.1
112.9
106.3
Total revenues
238.5
653.6
610.3
Operating expenses
225.9
(773.4
)
(615.7
)
Operating income (loss)
464.4
(119.9
)
(5.4
)
Interest expense
(22.9
)
(53.7
)
(46.5
)
Change in fair value of warrant liability
0.1
0.1
-
Debt extinguishment, modification and issuance costs
(8.5
)
(7.0
)
-
Other, net
15.4
(3.3
)
(4.6
)
Income (loss) before income taxes
448.5
(183.8
)
(56.6
)
Income tax expense
(11.5
)
(10.5
)
(23.1
)
Net income (loss)
437.0
(194.4
)
(79.7
)
Net (income) loss attributable to noncontrolling interests
(3.6
)
49.7
31.9
Net income (loss) attributable to TIP Inc.
$
433.5
$
(144.7
)
$
(47.8
)
Net income (loss) attributable to TIP Inc. per share:
Basic
$
4.93
$
(2.15
)
$
(0.83
)
Diluted
$
4.90
$
(2.15
)
$
(0.83
)
Selected balance sheet information
The table below shows selected consolidated financial information for the Company’s financial position as of December 31, 2022 and 2021. The table below provides information related to the cause of the changes in financial position by financial statement line item for the period compared.
Consolidated Balance Sheet Data
As of December 31,
As of December 31,
(in millions, except as noted)
Change includes:
Cash, cash equivalents and restricted cash
$
25.1
$
55.0
Decline is primarily due to $421.5 million of payments of debt and EIP receivables financing obligation, net of proceeds, $115.8 million of return of capital distributions to shareholders, and $32.4 million of purchases of property and equipment. These declines were largely offset by $552.2 million of proceeds from the sale of operations, inclusive of proceeds from forward exchange contract, net of $51.1 million of cash sold. For additional information on the sale of operations, see Note 2 - Sale of Operations to the Consolidated Financial Statements.
% Change
(54
%)
Other current assets
15.6
145.8
Decline is due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022. Approximately $14.1 million of the balance as of December 31, 2022 represents the consideration from the 2degrees Sale held in escrow.
% Change
(89
%)
Property, equipment and intangibles, net
-
368.5
Decline is due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
% Change
(100
%)
Other non-current assets
-
234.6
Decline is due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
% Change
(100
%)
Total assets
$
40.6
$
803.9
As of December 31,
As of December 31,
(in millions, except as noted)
Change includes:
Current portion of long-term
debt and financing lease
liabilities
$
-
$
31.6
Decline is due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
% Change
(100
%)
All other current liabilities
7.2
194.0
Decline is primarily due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022, partially offset by the $5.1 million balance of accrued severance costs as of December 31, 2022 at corporate headquarters.
% Change
(96
%)
Long-term debt and financing lease liabilities
-
631.7
Decline is due to the prepayment of the TISP 8.875% Notes and the TISP 10.0% Notes and the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
% Change
(100
%)
All other non-current liabilities
-
192.6
Decline is due to the closing of the 2degrees Sale and the NuevaTel Transaction in May 2022.
% Change
(100
%)
Total shareholders’ equity (deficit)
33.5
(246.0
)
Increase in shareholders’ equity is mainly due to net income for the year ended December 31, 2022, partially offset by the return of capital to shareholders, the change in noncontrolling interests and the impact of foreign currency translation adjustments.
% Change
%
Total liabilities and
shareholders’ equity (deficit)
$
40.6
$
803.9
Selected quarterly financial information
The following table shows selected quarterly financial information prepared in accordance with U.S. GAAP:
For the Year Ended December 31,
(in millions, except per share amounts)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Service revenues
$
-
$
-
$
69.2
$
131.2
$
133.8
$
134.4
$
134.2
$
138.2
Equipment sales
-
-
14.0
24.1
35.3
23.1
23.4
31.1
Total revenues
-
-
83.2
155.4
169.1
157.5
157.6
169.3
Operating expenses
(1.9
)
(3.4
)
380.3
(149.1
)
(170.7
)
(275.0
)
(161.6
)
(166.1
)
Operating (loss) income
(1.9
)
(3.4
)
463.5
6.2
(1.6
)
(117.5
)
(4.1
)
3.3
Interest expense
-
-
(8.6
)
(14.3
)
(13.8
)
(13.4
)
(13.2
)
(13.3
)
Change in fair value of warrant liability
-
-
-
0.1
(0.1
)
-
0.1
0.1
Debt extinguishment, modification and issuance costs
-
-
(8.5
)
-
-
-
(7.0
)
-
Other, net
1.8
(2.0
)
30.2
(14.6
)
(7.7
)
2.2
0.4
1.8
(Loss) income before income taxes
(0.1
)
(5.4
)
476.6
(22.6
)
(23.2
)
(128.7
)
(23.8
)
(8.2
)
Income tax (expense) benefit
(0.1
)
-
(5.2
)
(6.2
)
(5.3
)
1.0
(2.7
)
(3.6
)
Net (loss) income
(0.2
)
(5.4
)
471.5
(28.8
)
(28.5
)
(127.7
)
(26.5
)
(11.7
)
Net (income) loss attributable to noncontrolling interests
-
-
(2.5
)
(1.1
)
0.3
37.1
9.3
3.0
Net (loss) income attributable to TIP Inc.
$
(0.2
)
$
(5.4
)
$
468.9
$
(29.8
)
$
(28.2
)
$
(90.6
)
$
(17.2
)
$
(8.7
)
Net (loss) income attributable to TIP Inc. per share:
Basic
$
-
$
(0.06
)
$
5.36
$
(0.34
)
$
(0.33
)
$
(1.37
)
$
(0.29
)
$
(0.15
)
Diluted
$
-
$
(0.06
)
$
5.31
$
(0.34
)
$
(0.33
)
$
(1.37
)
$
(0.29
)
$
(0.15
)
Q4 2022 Recap
➢
Cash and cash equivalents totaled $25.1 million as of December 31, 2022, exclusive of our share of the purchase price escrow established in connection with the 2degrees Sale.
➢
In the fourth quarter of 2022, the Company entered into forward exchange contracts to sell an aggregate of $20 million NZD and buy an aggregate of $12.3 million USD on June 30, 2023. These contracts were entered into in order to mitigate exposure to fluctuations in the NZD to USD exchange rate in respect of substantially all of the $22 million NZD of proceeds from the 2degrees Sale held in escrow.
Quarterly Trends and Seasonality
The Company’s operating results varied from quarter to quarter because of changes in general economic conditions and seasonal fluctuations, among other things, in each of the Company’s operations and business segments. Different products and subscribers had unique seasonal and behavioral features. Accordingly, one quarter’s results were not predictive of future performance.
Fluctuations in net income from quarter to quarter resulted from events that were unique or that occurred irregularly, such as losses on the refinance of debt, foreign exchange gains or losses, changes in the fair value of warrant liability and derivative instruments, impairment or sale of assets and operations, changes in income taxes, and impact of the COVID-19 pandemic.
New Zealand and Bolivia
Prior to the closing of the 2degrees Sale and the NuevaTel Transaction trends in New Zealand’s and Bolivia’s service revenues and overall operating performance were affected by:
•
Lower prepaid subscribers due to a shift in focus to postpaid sales;
•
Higher usage of wireless data due to the migration from 3G to 4G LTE in Bolivia;
•
Increased competition and changes in the market leading to larger data bundles offered for prices which impacted data ARPU;
•
Stable postpaid churn in New Zealand, which the Company believes was a reflection of the Company’s heightened focus on high-value subscribers, bundled service offerings, and the Company’s enhanced subscriber service efforts;
•
Decreasing voice revenue as rate plans increasingly incorporated more monthly minutes and calling features, such as long distance;
•
Lower roaming revenue due to mobility restrictions associated with the COVID-19 pandemic;
•
Varying handset subsidies as more consumers shifted toward smartphones with the latest technologies;
•
Varying handset costs related to advancement of technologies and reduced supplier rebates or discounts on highly-sought devices;
•
Seasonal promotions which were typically more significant in periods closer to year-end;
•
Subscribers activating and suspending service to take advantage of promotions by the Company or its competitors;
•
Higher voice and data costs related to the increasing number of subscribers, or, alternatively, a decline in costs associated with a decline in voice usage;
•
Higher costs associated with the retention of high-value subscribers; and
•
Decline in gross subscriber additions due to decreased commercial activity resulting from COVID-related societal restrictions and economic contraction.
Trends in New Zealand’s service revenues and operating performance that were unique to its fixed broadband business included:
•
Higher internet subscription fees as subscribers increasingly upgraded to higher-tier speed plans, including those with unlimited usage;
•
Subscribers bundling their service plans at a discount;
•
Fluctuations in retail broadband pricing and operating costs influenced by government-regulated copper wire services pricing and changing consumer and competitive demands;
•
Availability of fiber services in a particular area or general network coverage; and
•
Individuals swapping technologies as fiber became available in their connection area.
Liquidity and Capital Resources Measures
As of December 31, 2022, the Company had $25.1 million in cash and cash equivalents, exclusive of our share of the purchase price escrow established in connection with the 2degrees Sale in mid-May 2022. The $25.1 million in cash and cash equivalents includes $7.3 million CAD for future distributions and ongoing costs denominated in that currency. As of December 31, 2021, the Company had $55.0 million in cash, cash equivalents and restricted cash, of which $36.8 million was held by 2degrees, $17.5 million was held by NuevaTel, and $0.7 million was held at corporate and others.
On May 19, 2022, the 2degrees Sale closed for an equity purchase price for 100% of 2degrees of $1.315 billion NZD, based on an implied enterprise value of $1.7 billion NZD inclusive of lease liabilities. The Company’s share of the total consideration was $930 million NZD (approximately $601 million based on the exchange rate on the date the consideration was received), net of $33 million NZD ($21 million) for closing adjustments, including transaction advisory fees, along with payments to satisfy the outstanding 2degrees option pool. The Company received $587 million ($908 million NZD) of the consideration in May 2022. Approximately $22 million NZD of the consideration paid by Voyage Digital for the Company’s 2degrees shares is being held in escrow as recourse for potential indemnification claims that may arise under the Purchase Agreement. The amount in escrow represents a consideration receivable and is included in Sale proceeds held in escrow within current assets in the Company’s Consolidated Balance Sheet as it is currently considered to be probable that the amount will be received in full upon completion of the escrow period. The escrowed proceeds are scheduled to be released in May 2023. The amount of escrow proceeds that will ultimately be received will depend upon whether any indemnification obligations arise under the Purchase Agreement, and the receivable will be monitored for potential impairment over time as facts and circumstances evolve.
In connection with the closing of the 2degrees Sale, in the second quarter of 2022, the Company settled its forward exchange contract related to a portion of the sale proceeds. The forward exchange contract was settled at a gain of $16.6 million and the related cash proceeds were included in investing activities in the Consolidated Statement of Cash Flows. See Note 9 - Derivative Financial Instruments to the Consolidated Financial Statements for additional information.
Upon closing of the 2degrees Sale, the Company also used a portion of the proceeds to prepay approximately $450 million in aggregate outstanding indebtedness and accrued interest under the TISP 8.875% Notes, the TISP 10.0% Notes and the Company’s 13.5% bridge loans due 2023 (the “Bridge Loans”). As a result of these prepayments, the Company had no remaining indebtedness outstanding as of December 31, 2022. See Note 8 - Debt to the Consolidated Financial Statements for additional information on the prepayments of debt.
The remaining amount of proceeds received by the Company from the 2degrees Sale, after prepayment of debt obligations and payment of certain corporate working capital obligations accrued through the date of the transaction, was converted to USD and CAD in the amounts expected to be used for distributions to shareholders and corporate use. These amounts were used to fund the initial shareholder distribution made in June 2022 in the aggregate amount of $150 million CAD ($116 million) and to provide a cash reserve. The Company’s cash reserve also includes its share of the escrow balance in the amount of $22 million NZD retained from the proceeds of the 2degrees Sale. In connection with the Company’s plan of liquidation adopted on June 10, 2022, the cash reserve will be utilized for costs related to the eventual dissolution of the Company, including costs related to continued financial reporting, and headquarters costs through mid-year 2023 along with payment of the $7.1 million balance of Other current liabilities and accrued expenses as of December 31, 2022 as presented in the Company’s Consolidated Balance Sheet (including $5.1 million of remaining expected severance payments to be made in connection with the Company’s wind-down process). The cash reserve will also be utilized for the payment of indemnification claims, if any, that may arise from the transaction but are not funded by the warranty insurance policy purchased in connection with the 2degrees Sale or by the aforementioned purchase price escrow. Furthermore, based on the Company’s current estimates, the Company expects to make a distribution in mid-2023 in a range of $15 million to $20 million. However, as previously disclosed, the amount and timing of future shareholder distributions is subject to certain factors, including the amount and timing of the release to the Company of funds held in escrow to secure payment of certain indemnification obligations under the Purchase Agreement (the escrow period is scheduled to terminate in May 2023), fluctuations in foreign currency exchange rates and costs associated with the dissolution of the Company.
In the fourth quarter of 2022, the Company entered into forward exchange contracts to sell an aggregate of $20 million NZD and buy an aggregate of $12.3 million USD on June 30, 2023. These contracts were entered into in order to mitigate exposure to fluctuations in the NZD to USD exchange rate for substantially all of the proceeds from the 2degrees Sale held in escrow.
The Company expects that it will be required to comply with Canadian and U.S. public company reporting obligations through the six year indemnification period following the closing of the 2degrees Sale. During the period in which the Company continues to report publicly, we will be responsible for maintaining appropriate processes and controls around financial reporting. However, given the significantly reduced risk profile of the Company following the 2degrees Sale and NuevaTel Transaction, we have reduced the cost structure of our corporate function, with a significant portion of the workforce having ceased employment with the Company in September 2022, and we have retained only a limited number of resources to ensure compliance with ongoing regulatory and audit requirements. The Company has also negotiated with service providers to ensure a significant reduction in costs going forward. It is also the Company’s expectation that following the escrow release in May 2023, the Company will endeavor to further adjust its cost structure commensurate with the risk profile of the Company.
Accordingly, management believes that our working capital will be adequate to meet the Company’s requirements for the next twelve months following the date of this MD&A. With the sale of our operations, the Company no longer has material cash requirements to fund capital expenditures or significant contractual obligations.
Selected cash flows information
The following table summarizes the Consolidated Statement of Cash Flows for the periods indicated:
For the Year Ended December 31,
% Variance
(in millions)
2022 vs 2021
2021 vs 2020
Net cash (used in) provided by
Operating activities
$
(8.6
)
$
48.7
$
40.9
(118
%)
%
Investing activities
519.1
(93.8
)
(86.4
)
%
(9
%)
Financing activities
(537.3
)
(0.5
)
67.8
n/
m
(101
%)
Net (decrease) increase in cash, cash equivalents and restricted cash
$
(26.8
)
$
(45.6
)
$
22.3
%
(304
%)
n/m - not meaningful
Cash flow (used in) provided by operating activities
Cash flow used in operating activities increased $57.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. This change was primarily due to the sales of the Company’s operating entities, 2degrees and NuevaTel, in May 2022.
Cash flow provided by operating activities increased $7.8 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. This change reflects various offsetting changes in working capital in 2021 compared to 2020, including, among other changes, lease incentives received in the third quarter of 2021, partially offset by $7.0 million of fees paid to third parties in connection with the exchange in June 2021 of the Trilogy LLC 2022 Notes and a $6.2 million increase in interest paid, net of capitalized interest, primarily due to an increase in interest expense related to the issuance of the TISP 10.0% Notes during the fourth quarter of 2020. See Note 8 - Debt to the Consolidated Financial Statements for further information.
Cash flow provided by (used in) investing activities
Cash flow provided by investing activities increased $612.9 million for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to the $552.2 million proceeds from the sales of operations, inclusive of proceeds from forward exchange contract of $16.6 million, net of cash sold of $51.1 million, see Note 2 - Sale of Operations to the Consolidated Financial Statements for further information. The increase was also due to a $60.4 million decrease in capital expenditures.
Cash flow used in investing activities increased $7.4 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, due to a $15.5 million increase in capital expenditures and aggregate payments of $6.7 million for spectrum licenses in 2021, including renewal of 2degrees’ 1800 and 2100 MHz spectrum holdings, and the receipt in 2020 of $5.8 million in cash proceeds from the fourth and final closing of the NuevaTel tower sale-leaseback transaction. These changes were partially offset by $10.0 million of purchases of short-term investments in 2020 and related $10.0 million in maturities and sales of short-term investments in 2021.
Cash flow used in financing activities
Cash flow used in financing activities increased $536.8 million for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by a $396.3 million increase in payment of debt, net of proceeds, and a $115.8 million return of capital distribution to shareholders. The increase was also due to a $32.6 million reduction in proceeds from the EIP receivable financing obligation.
Cash flow used in financing activities increased $68.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. This change was primarily due to a $76.8 million reduction in proceeds from debt, net of payments, including proceeds in 2020 from the issuance of $50 million of senior secured notes by TISP and proceeds of $35.1 million from the New Zealand 2023 Senior Facilities Agreement. These changes were partially offset by a $6.0 million decline in dividends paid to noncontrolling interests in 2021 compared to 2020.
Contractual obligations
As a result of the sale of operations in the second quarter of 2022, the Company no longer has any significant contractual obligations as of December 31, 2022.
Effect of inflation
The Company’s management believes inflation has not had a material effect on its financial condition or results of operations in recent years.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that would have a material effect on the financial statements as of December 31, 2022.
Critical Accounting Estimates
The preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. The estimates, discussed below, are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. The Company generally bases its judgments on its historical experience and on various other assumptions that the Company believes are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying values of assets and liabilities that are not readily apparent from other sources. See Note 1 - Description of Business, Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated Financial Statements for additional information.
Revenue Recognition
Prior to the sale of our operations, the Company derived its revenues primarily from wireless services, fixed broadband services and equipment sales. Of these, we considered the most critical of our revenue recognition policies to be those related to contracts with more than one product or service (or performance obligation). Determining whether products and services were considered distinct performance obligations that should have been accounted for separately versus together required significant judgment.
Judgement was required to determine the stand-alone price for each product or service (or performance obligation). In instances where the stand-alone price was not directly observable, such as when we did not sell the product or service separately, we determined the stand-alone price using information that may have included market conditions and other observable inputs.
When we capitalized permissible contract costs (costs to obtain or fulfill a contract), we made judgments in determining the anticipated period of benefit, or amortization period. For example, when we paid commissions to sales personnel and agents, we applied judgement in estimating the useful life of the asset, including assumptions about the likelihood of customer renewals which was generally based on historical experience and market conditions.
Our products were generally sold with a right of return, and we provided other credits or incentives in some circumstances, which were accounted for as variable consideration when determining the amount of revenue to recognize. Returns and credits were estimated at contract inception and updated at the end of each reporting period if additional information became available. Changes to our estimated variable consideration were not material for the periods presented.
Income Taxes
The Company accounts for income taxes pursuant to the asset and liability method of Accounting Standards Codification (“ASC”) 740 “Income Taxes” (“ASC 740”), which require us to recognize current tax liabilities or receivables for the amount of taxes we estimate are payable or refundable for the current year, and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible.
The Company follows the provisions of ASC 740 to record uncertain tax positions under the use of the two-step process. We review and adjust our liability for unrecognized tax benefits based on our best judgment given the facts, circumstances and information available at each reporting date. To the extent that the final outcome of these tax positions is different than the amounts recorded, such differences may impact income tax expense and actual tax payments. We recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. Actual tax payments may materially differ from estimated liabilities as a result of changes in tax laws as well as unanticipated transactions impacting related income tax balances.
The income tax effect of the financial statement gains realized from the 2degrees Sale and NuevaTel Transaction were entirely offset by the reversal of the deductible outside basis difference attributable to the Company’s investments in 2degrees and NuevaTel. Given that the deferred tax assets were historically offset with a full valuation allowance, there was no net income tax impact. Proceeds received in the transactions did not exceed the Company’s tax basis in its investments in 2degrees and NuevaTel, resulting in no current tax payable. As of December 31, 2022, the Company’s deferred tax assets principally consisted of capital and operating loss carryforwards, which are significant, offset by a full valuation allowance.
Recent Accounting Pronouncements
The effects of recently issued accounting standards are discussed in Note 1 - Description of Business, Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated Financial Statements.
Changes in Accounting Policies Including Initial Adoption
Other than the adoption of new accounting standards, as discussed in the Notes to the Consolidated Financial Statements, there have been no changes in the Company’s accounting policies.
Financial Instruments and Other Instruments
The Company considers the management of financial risks to be an important part of its overall corporate risk management policy. The Company uses derivative financial instruments to manage existing exposures, irrespective of whether such relationships are formally documented as hedges in accordance with hedge accounting requirements. This is further described in the Consolidated Financial Statements. See Note 9 - Derivative Financial Instruments to the Consolidated Financial Statements.
Definitions and Reconciliations of Non-GAAP Measures
The Company reports certain non-U.S. GAAP measures that are used to evaluate the performance of the Company and to manage its capital structure. Non-U.S. GAAP measures do not have any standardized meaning under U.S. GAAP and therefore may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined and reconciled with their most directly comparable U.S. GAAP measure.
Consolidated Adjusted EBITDA and Adjusted EBITDA Margin
Consolidated Adjusted EBITDA (“Adjusted EBITDA”) represents Net income (loss) (the most directly comparable U.S. 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 sale of operations and loss (gain) on disposal of assets and sale-leaseback transaction; and all other non-operating income and expenses. Net income (loss) margin is calculated as Net income (loss) divided by service revenues. 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. The Company’s management believes Adjusted EBITDA and Adjusted EBITDA Margin are helpful measures because they allow management to evaluate the Company’s performance by removing from its operating results items that do not relate to core operating performance. The Company’s management believes that certain investors and analysts use Adjusted EBITDA to value companies in the telecommunications industry. The Company’s management believes that certain investors and analysts also use Adjusted EBITDA and Adjusted EBITDA Margin to evaluate the performance of the Company’s business. Adjusted EBITDA and Adjusted EBITDA Margin have no directly comparable U.S. GAAP measure. The following table provides a reconciliation of Adjusted EBITDA to the most comparable financial measure reported under U.S. GAAP, Net income (loss).
Consolidated Adjusted EBITDA
For the Year Ended December 31,
(in millions)
Net income (loss)
$
437.0
$
(194.4
)
$
(79.7
)
Interest expense
22.9
53.7
46.5
Depreciation, amortization and accretion
18.4
107.2
107.0
Debt extinguishment, modification and issuance costs
8.5
7.0
-
Change in fair value of warrant liability
(0.1
)
(0.1
)
-
Income tax expense
11.5
10.5
23.1
Other, net
(15.4
)
3.3
4.6
Equity-based compensation
3.6
3.4
5.6
Impairment of long-lived assets
-
113.8
-
(Gain) on sale of operations and loss (gain) on disposal of assets and sale-leaseback transaction
(457.6
)
1.1
(2.5
)
Transaction and other nonrecurring costs(1)
10.6
9.4
2.4
Consolidated Adjusted EBITDA(2)
$
39.4
$
115.1
$
107.0
Net income (loss) margin (Net income (loss) divided by service revenues)
218.1
%
(36.0
%)
(15.8
%)
Consolidated Adjusted EBITDA Margin
19.7
%
21.3
%
21.2
%
(Consolidated Adjusted EBITDA divided by service revenues)
(1)2022 includes $7.1 million costs recorded at corporate headquarters of which $6.5 million are related to severance costs. 2022 also includes $2.1 million of costs incurred in connection with the 2degrees Sale and $1.3 million of costs related to the NuevaTel Transaction for the year ended December 31, 2022. See Note 2 - Sale of Operations to the Consolidated Financial Statements for further information. 2021 includes $6.4 million of costs related to the Company's preparation for a planned public listing and equity issuance in New Zealand. 2021 also includes $1.7 million of costs in connection with the 2degrees Sale. 2020 includes $1.6 million of workforce reduction restructuring costs in response to the impact of the COVID-19 pandemic.
(2)In July 2013, Trilogy LLC sold to Salamanca Holding Company (“SHC”), a Delaware limited liability company, 80% of its interest in its wholly owned subsidiary, Salamanca Solutions International LLC (“SSI”). Although Trilogy LLC held a 20% equity interest in SSI, due to the fact that NuevaTel was SSI’s primary customer, Trilogy LLC was considered SSI’s primary beneficiary and, as such, the Company consolidated 100% of SSI’s net (losses) income. In April 2022, the Company surrendered its 20% ownership interest in SSI. Prior to the Company's surrender of its SSI ownership interest, the impact on the Company's consolidated results of the 80% that Trilogy LLC did not own decreased Adjusted EBITDA by $0.1 million for each of the years ended December 31, 2022, 2021 and 2020.
Consolidated Equipment Subsidy
Equipment subsidy (“Equipment Subsidy”) is the cost of devices in excess of the revenue generated from equipment sales and is calculated by subtracting Cost of equipment sales from Equipment sales. Management used Equipment Subsidy on a consolidated level to evaluate the net loss that was incurred in connection with the sale of equipment or devices in order to acquire and retain subscribers. Equipment Subsidy included devices acquired and sold for fixed broadband subscribers. Consolidated Equipment Subsidy is used in computing Equipment subsidy per gross addition. A reconciliation of Equipment Subsidy to Equipment sales and Cost of equipment sales, both U.S. GAAP measures, is presented below:
Equipment Subsidy
For the Year Ended December 31,
(in millions)
Cost of equipment sales
$
39.2
$
120.9
$
115.8
Less: Equipment sales
(38.1
)
(112.9
)
(106.3
)
Equipment Subsidy
$
1.1
$
8.0
$
9.5
Key Industry Performance Measures - Definitions
The following measures are industry metrics that management historically found useful in assessing the operating performance of the Company, and are often used in the wireless telecommunications industry, but do not have a standardized meaning under U.S. GAAP:
•
Monthly average revenues per wireless user (“ARPU”) is calculated by dividing average monthly wireless service revenues during the relevant period by the average number of wireless subscribers during such period.
•
Wireless data revenues (“data revenues”) is a component of wireless service revenues that includes the use of web navigation, multimedia messaging service and value-added services by subscribers over the wireless network through their devices.
•
Wireless service revenues (“wireless service revenues”) is a component of total revenues that excludes fixed broadband revenues, equipment sales and non-subscriber international long distance revenues; it captures wireless performance and is the basis for the blended wireless ARPU calculations.
•
Wireless data average revenue per wireless user (“data ARPU”) is calculated by dividing monthly data revenues during the relevant period by the average number of wireless subscribers during the period.
•
Service revenues (“service revenues”) is a component of total revenues that excludes equipment sales.
•
Churn (“churn”) is the rate at which existing subscribers cancel their services, or are suspended from accessing the network, or have no revenue generating event within the most recent 90 days, expressed as a percentage. Subscribers that subsequently have their service restored within a certain period of time are presented net of disconnections which may result in a negative churn percentage in certain periods. Churn is calculated by dividing the number of subscribers disconnected by the average subscriber base. It is a measure of monthly subscriber turnover.
•
Capital intensity (“capital intensity”) represents purchases of property and equipment divided by total service revenues. The Company’s capital expenditures do not include expenditures on spectrum licenses. Capital intensity allows the Company to compare the level of the Company’s additions to property and equipment to those of other companies within the same industry.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8.
Financial Statements and Supplementary Data
All financial statements and supplementary data required by this Item are listed in Part IV, Item 15 of this Annual Report on Form 10-K (or are incorporated therein by reference) and are presented beginning on Page .

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures to ensure that information required to be disclosed in the Company’s filings under the Exchange Act is recorded, processed, summarized and reported in accordance with the requirements specified in the rules and forms of the SEC. The Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (in accordance with the requirements of National Instrument 52-109 of the Canadian Securities Administrators and as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report. Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures as of December 31, 2022 are effective to ensure that information required to be disclosed by the Registrant in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and, as indicated in the preceding paragraph, the CEO and CFO believe that the Company’s disclosure controls and procedures are effective at that reasonable assurance level, although the CEO and CFO do not expect that the disclosure controls and procedures or internal control over financial reporting will prevent or detect all errors and all fraud.
Management of the Company, under the supervision of the CEO and CFO, is responsible for establishing and maintaining effective “internal control over financial reporting” as such term is defined by the rules of the SEC and the Canadian Securities Administrators. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the U.S. GAAP. The Company’s internal control over financial reporting includes:
•
maintaining records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets and consolidated entities;
•
providing reasonable assurance that transactions are recorded as necessary to permit the preparation of the Consolidated Financial Statements in accordance with U.S. GAAP and that receipts and expenditures by the Company and its subsidiaries are being made only in accordance with the authorization of the Company’s management and Directors; and
•
providing reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of Company assets that could have a material effect on the Consolidated Financial Statements.
Limitations of Controls and Procedures
The Company’s disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives. However, due to their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect all misstatements and fraud.
A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The Company will continue to periodically review its disclosure controls and procedures and internal control over financial reporting and may make such modifications from time to time as it considers necessary.
Management’s Report on Internal Controls Over Financial Reporting
Management of the Company, under the supervision and with the participation of the CEO and CFO, assessed the Company’s internal control over financial reporting using the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission as of December 31, 2022. This evaluation included a review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Management of the Company has determined that its internal control over financial reporting is effective as of December 31, 2022.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B.
Other Information
Not applicable.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10.
Directors, Executive Officers and Corporate Governance
Concurrently with the Company’s delisting from the Toronto Stock Exchange on December 23, 2022, Theresa Gillespie, Alan Horn, Nadir Mohamed and Reza Satchu resigned from the Board. The Company listed its Common Shares on the NEX board of the TSXV on December 28, 2022. The listing rules applicable to issuers listed on the NEX Board of the TSXV (the “Listing Rules”) require a listed company to have (i) at least three directors and (ii) an Audit Committee. Accordingly, the number of Directors following the above-described resignations complies with the Listing Rules. The Company also disbanded its Compensation and Corporate Governance Committee.
The names, age, municipality of residence and positions with the Company of the persons that serve as Directors and executive officers of the Company as of the date hereof are set out below. All of the members of the Board were initially appointed to the Board pursuant to the Arrangement. The Company’s officers were appointed on February 7, 2017 and continue to serve as officers until they resign or until their appointments are terminated by the Board.
Directors
Name, Age, State or Province
and Country of Residence
Present Principal Occupation
Director Since
Bradley J. Horwitz, 67(2)
Washington, U.S.
Director and Chief Executive Officer of the Company
February 7, 2017
Mark Kroloff, 66(1)
Alaska, U.S.
Managing Partner, First Alaskan Capital Partners
February 7, 2017
John W. Stanton, 67(2)
Washington, U.S.
Director of the Company
February 7, 2017
Notes:
(1)
Chair of the Audit Committee of the Company (the “Audit Committee”)
(2)
Member of the Audit Committee
The Directors of the Company are elected by the shareholders of the Company at each annual meeting of shareholders, and will hold office until the next annual meeting of the Company, unless: (i) his office is earlier vacated in accordance with the Articles; or (ii) he becomes disqualified to act as a Director.
Further, the Directors of the Company are authorized to appoint one or more additional Directors of the Company, such appointed Directors shall cease to hold office immediately before the election of Directors at the next annual meeting of shareholders of the Company, but are eligible for re-election, provided that the total number of Directors so appointed may not exceed one third of the number of Directors of the Company approved pursuant to the Arrangement or elected at the previous annual meeting of shareholders of the Company, as the case may be.
Executive Officers
Name, Age and Residence
Present Principal Occupation
Bradley J. Horwitz, 67
Washington, U.S.
Chief Executive Officer of the Company
Erik Mickels, 46
Washington, U.S.
Senior Vice President and Chief Financial Officer of the Company
Scott Morris, 70
Washington, U.S.
Senior Vice President, General Counsel and Corporate Secretary of the Company
Biographies
The following are brief profiles of the Directors and NEOs of the Company, including a description of each individual’s principal occupation within the past five years.
Directors
John W. Stanton. John W. Stanton was a Co-Founder and Chairman of the Management Committee of Trilogy LLC from 2005 until the completion of the Arrangement with TIP Inc. in 2017. He was Chairman of the Board of Directors and Chief Executive Officer of Western Wireless and its predecessors from 1992 until Alltel Corporation’s acquisition of Western Wireless in 2005. Western Wireless was one of the largest providers of rural wireless communications services in the United States and through its subsidiary, Western Wireless International Corporation, was licensed to provide wireless communications services in 11 countries in Europe, Eastern Europe, Africa, Latin America, and the Caribbean. Mr. Stanton was Chairman of the Board of Directors of T-Mobile USA from 1994 to 2004 and Chief Executive Officer of T-Mobile USA from February 1998 to March 2003. Mr. Stanton served as a director of McCaw Cellular Communications (“McCaw Cellular”) from 1986 to 1994, and as a director of LIN Broadcasting from 1990 to 1994, during which time it was a publicly traded company. From 1983 to 1991, Mr. Stanton served in various capacities with McCaw Cellular; he was Vice Chairman of the Board of McCaw Cellular from 1988 to September 1991 and Chief Operating Officer of McCaw Cellular from 1985 to 1988. Mr. Stanton served as a director of Clearwire Corporation from 2008 to 2013, and was Chairman of the Board of Directors of Clearwire Corporation from January 2011 to July 2013. Mr. Stanton serves on the boards of directors of Microsoft Corporation and Costco Wholesale Corporation, both of which are publicly traded companies. Mr. Stanton is also currently the Chairman and Managing Partner of First Avenue Entertainment LLLP, which owns the Seattle Mariners, a Major League Baseball team. Mr. Stanton has a bachelor’s degree in political science from Whitman College and an MBA from Harvard University.
Bradley J. Horwitz. Bradley J. Horwitz is the Company’s President and Chief Executive Officer. He was a Co-Founder of Trilogy LLC and was its President and Chief Executive Officer from 2005 until the completion of the Arrangement with TIP Inc. in 2017. Mr. Horwitz has been involved in the wireless industry since 1983, spending 13 years at McCaw Cellular where he held various management positions: he served as Director of Sales and Marketing from 1983 to 1986, Director of Paging Operations from 1986 to 1990, Director of Business Development from 1990 to 1992, and Vice President of International Operations from 1992 to 1994. After the sale of McCaw to the AT&T Corporation in 1994, Mr. Horwitz joined the management team of Western Wireless. Mr. Horwitz was Executive Vice President of Western Wireless and President of Western Wireless International until Western Wireless was acquired by Alltel Corporation in 2005. Mr. Horwitz led Western Wireless’s expansion into 11 international markets with operations in Europe, Eastern Europe, Africa, Latin America, and the Caribbean. Mr. Horwitz is the Chairman of the Board of Directors of Hong Kong Broadband, a publicly listed provider of fiber services in Hong Kong, and serves on the boards of the Center for Global Development and the Mobile Giving Foundation.
Mark Kroloff. Mark Kroloff is the Managing Member of First Alaskan Capital Partners, LLC, a private investment firm. He served as a director of General Communication Inc., an integrated telecommunications provider, until its acquisition by Liberty Ventures. He served as a board observer of Nova ehf, an Icelandic telecommunications provider. Previously, Mr. Kroloff served as the General Counsel and later as the Chief Operating Officer of Cook Inlet Region, Inc., at that time one of the largest minority-owned wireless, radio, and television providers in the U.S. Mr. Kroloff is a lawyer who began his career with the firm of Munger, Tolles & Olson LLP in Los Angeles. He received his B.A. from Claremont McKenna College and his J.D. from the University of Texas School of Law.
Executive Officers
Bradley J. Horwitz. Please see Mr. Horwitz’s biography above.
Erik Mickels. Erik Mickels serves as the Senior Vice President and Chief Financial Officer for the Company and is responsible for leading the financial functions of the Company. Mr. Mickels joined Trilogy LLC in 2014 as the company's Chief Accounting Officer and Vice President - Corporate Controller and in 2016 was appointed group Chief Financial Officer supporting operational, financial and strategic initiatives of the Company. Mr. Mickels began his career at Arthur Andersen LLP and spent twelve years with KPMG LLP working primarily in the technology and retail industries. Mr. Mickels is also a Certified Public Accountant. Mr. Mickels has a bachelor’s degree in accounting from Hillsdale College and is a graduate of Harvard Business School (Advanced Management Program).
Scott Morris. Scott Morris has been Trilogy LLC’s Senior Vice President and General Counsel since it commenced operations in 2006. Before joining Trilogy LLC in 2006, Mr. Morris served as General Counsel of Western Wireless International in 2005. From 2000 to 2004, he was Senior Vice President and General Counsel for Terabeam Corporation, a manufacturer of broadband wireless equipment. Previously he was Senior Vice President - External Affairs for AT&T Wireless and held senior legal and government affairs positions at McCaw Cellular and Viacom Cable. After graduating from University of California College of the Law San Francisco (formerly Hastings College of the Law), he joined the Federal Trade Commission in Washington, D.C., where he served as an attorney-advisor to the chairman of the Commission.
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to the Company’s Directors, officers and employees, including the Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller, persons performing similar functions and other officers, Directors and employees of the Company. The Code was adopted in February 2017 and set forth in Exhibit 99.3 to the Company’s Form 6-K furnished to the SEC on February 22, 2017. The Company will provide to any person without charge, upon request, a copy of the Code by contacting Trilogy International Partners Inc. Investor Relations by telephone at 425-458-5900 or by mail at 105 108th Avenue NE, Suite 400, Bellevue, Washington 98004. The Company has not made any amendments to the Code. In the fiscal year ended December 31, 2022, the Company did not grant a waiver (including an implicit waiver) from a provision of the Code to any of its Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller or persons performing similar functions that relates to one or more of the items set forth in Item 10 of this Annual Report.
Audit Committee
The primary mandate of the Audit Committee is to provide assistance to the Board in fulfilling its responsibility to the Company’s shareholders, potential shareholders and the investment community, to oversee the work and review the qualifications and independence of the external auditors of the Company, to review the financial statements of the Company and public disclosure documents containing financial information and to assist the Company with the legal compliance and ethics programs as established by management and by the Board and as required by law.
The Audit Committee consists of Mark Kroloff (Chair), Bradley J. Horwitz and John W. Stanton. A majority of the Audit Committee members are neither executive officers, employees nor control persons of the Company. Mr. Horwitz is the only committee member who is employed by the Company. Mr. Kroloff receives compensation from the Company only with respect to his service as a member of the Board. Mr. Stanton receives no compensation from the Company. All three members of the Audit Committee are financially literate under NI 52-110. The Board has determined that Mark Kroloff is an “audit committee financial expert” as defined under the rules and regulations of the Securities and Exchange Commission.
For the relevant education and experience of each of the members of the Audit Committee, please refer to the biographies of Mr. Kroloff, Mr. Horwitz and Mr. Stanton in “Directors and Executive Officers - Biographies” in this Annual Report.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11.
Executive Compensation
Equity Compensation Plans
The Company had in effect a (i) deferred share plan (the “DSU Plan”) pursuant to which deferred share units that could be settled into Common Shares were granted to the Company’s Directors and (ii) restricted share unit plan (the “RSU Plan” and with the DSU Plan, the “Plans”) pursuant to which restricted share units that when vested were settled through the issuance of Common Shares were granted to the Company’s employees and consultants.
In accordance with the rules of the Toronto Stock Exchange, the shareholders of the Company ratified the continued use of the DSU Plan and all unallocated DSUs thereunder at the Company’s Annual General Meeting held on May 10, 2019 (the “AGM”). In addition, the shareholders approved an amendment to the DSU Plan at the AGM to allow non-independent, non-employee Directors to participate in the DSU Plan. The Company had the ability to continue granting DSUs under the DSU Plan until May 10, 2022, the third anniversary of the shareholders’ approval of the DSU Plan. There were no DSUs granted in 2022.
At the AGM, the shareholders of the Company also ratified the continued use of the RSU Plan and all unallocated restricted share units (“RSUs”) thereunder. The Company had the ability to continue granting RSUs under the RSU Plan until May 10, 2022. RSUs granted prior to that date may, when vested, be settled into Common Shares. There were no grants of RSUs in 2022.
In 2022, immediately before the closing of the 2degrees Sale, the Company (i) settled all the DSUs issued to Directors under its DSU Plan and (ii) accelerated the vesting of all outstanding RSUs issued under its RSU Plan. In connection with the settlement of the DSUs, 489,762 Common Shares were issued in 2022 to former holders of DSUs. As a result of the accelerated vesting of all outstanding RSUs, 2,310,988 Common Shares were issued in 2022 to former holders of RSUs. Consequently, there were no DSUs or RSUs outstanding as of December 31, 2022.
The Company did not seek shareholder approval to extend the Plans. Accordingly, the Plans have expired and no further grants of DSUs or RSUs may be made.
RSU grants made in 2018, 2019, 2020 and 2021 to the NEOs specified that any gain realized in connection with the (i) settlement of RSUs into Common Shares, (ii) transfer or sale of the RSUs, or (iii) sale of Common Shares received in respect of settle RSUs will be forfeited in the event of a restatement of the Company’s financial results due to fraudulent or other intentional illegal conduct on the part of the NEO to the extent that RSUs would not have been awarded had the financial results been initially issued in accurate form.
Executive Compensation
Executive Summary Compensation Table
The following table sets forth the total annual and long-term equity and non-equity compensation, along with all other compensation awarded, for services rendered in all capacities to the Company for the years ended December 31, 2022 and 2021, in respect of the Company’s NEOs during those periods.
Name and
principal
position
Year
Salary(1)
(US$)
Bonus(2)
(US$)
Stock
awards(3)
(US$)
Nonequity
incentive
plan
compensation
(US$)(4)
All other
compensation
(US$)(5)
Total
(US$)
Bradley J. Horwitz Chief Executive Officer(6)
$400,000
$300,000
Nil
Nil
$22,347
$722,347
$400,000
$351,414
$336,750
Nil
$20,735
$1,108,899
Erik Mickels Senior Vice President and Chief Financial Officer(7)
$480,000
$288,000
Nil
$256,000
$22,399
$1,046,399
$480,000
$337,357
$677,763
$128,000
$23,037
$1,646,157
Scott Morris Senior Vice President, General Counsel and Corporate Secretary(8)
$400,000
$240,000
Nil
$213,333
$34,547
$887,880
$400,000
$281,131
$564,802
$106,667
$32,135
$1,384,735
Tomas Perez Chief Executive Officer of NuevaTel(9)
$248,484
$319,837
Nil
Nil
$550,089
$1,118,410
$405,634
$300,000
$258,175
Nil
$342,183
$1,305,992
Notes:
(1)
All dollar amounts in the Executive Summary Compensation Table and footnotes thereto are reflected in U.S. dollars.
(2)
Amounts reflect the annual cash bonuses that were earned by the NEOs for 2022 and 2021, although payment of each bonus was made in the year following the period for which the bonus was earned.
(3)
Share-based awards represent the fair value of restricted share units (“RSUs”) granted in the year under the restricted share unit plan (the “RSU Plan”). The fair value of the RSUs is based on the closing market price of the Common Shares on the effective date of grant multiplied by the number of RSUs grants. Accordingly, this value does not reflect the current value of any share-based award.
(4)
Mr. Mickels and Mr. Morris participated in a retention benefit program that entitled each of them to their respective annual salary and target bonus, split equally into a cash award that vested ratably over three years between January 1, 2021 and January 1, 2024. Due to a change in control in 2022, the remaining cash award was fully vested in 2022.
(5)
All other compensation includes amounts representing each NEO’s estimated health insurance, 401(k) matching benefits and health care savings account contributions. In the case of Mr. Perez, the compensation includes $423,119 in 2022 related to a severance payment Mr. Perez received from NuevaTel upon his resignation with good reason in connection with the NuevaTel Transaction. All other compensation for Mr. Perez also includes certain tax equalization benefits.
(6)
Stock awards value reflects a grant of 300,000 units to Mr. Horwitz in 2021.
(7)
Stock awards value reflects a grant of 603,797 units to Mr. Mickels in 2021.
(8)
Stock awards value reflects a grant of 503,164 units to Mr. Morris in 2021.
(9)
Stock awards value reflects a grant of 230,000 units to Mr. Perez in 2021.
Termination and Change of Control Benefits
The Company has in place a Severance Policy for senior executives, including Messrs. Horwitz, Mickels and Morris (the “Severance Policy”). The Severance Policy entitles each participant to a severance payment in the event that such participant is terminated without cause or resigns with good reason. The severance benefit is equal to the participant’s annual base salary and target bonus at the time of termination or resignation, except that, in the event of termination without cause or resignation with good reason within 365 days following a change of control (as defined in the Severance Policy) of the Company, the benefit is equal to two times the participant’s annual base salary and target bonus at the time of termination or resignation.
Mr. Perez has signed agreements with NuevaTel and the Company that entitled Mr. Perez to a severance benefit in the event of termination without cause or resignation with good reason within 365 days following a change of control of the Company, Trilogy LLC or NuevaTel. The severance benefit is equal to Mr. Perez’s annual base salary at the time of termination plus the amount of the annual target cash bonus for the year in which the termination occurs calculated based upon the Company’s actual financial performance against relevant targets and prorated for the portion of the relevant year that has elapsed prior to termination or resignation. Mr. Perez resigned with good reason in connection with the NuevaTel Transaction in 2022 and was terminated without cause from his position with Trilogy in January 2023. He received a severance payment from NuevaTel in accordance with his agreement with NuevaTel and he received an accrued bonus from Trilogy in accordance with his employment agreement and a severance agreement with Trilogy.
Each of Messrs Horwitz, Mickels, and Morris has executed an agreement with the Company that restricts him, both during the term of his agreement and at any time thereafter, from disclosing any confidential information to any person, or using the same for any purpose other than the purposes of the Company. The agreements further provide that these executives may not disclose or use for any purpose, other than those of the Company, the private affairs of the Company, or any other information which they acquire during the course of their employment in respect of the business and affairs of the Company.
Outstanding Equity Awards at Year Ended 2022
In 2022, immediately before the closing of the 2degrees Sale, the Company accelerated the vesting of all outstanding RSUs issued under its RSU Plan.
Director Compensation
During the year ended December 31, 2022, the Directors (other than Mr. Horwitz, whose compensation as an Executive is disclosed in the Executive Summary Compensation Table, above) received the remuneration set out below. Directors are also reimbursed for reasonable out-of-pocket expenses incurred in attending meetings or otherwise carrying out their duties as Directors.
Director Compensation
In consideration for serving on the Board, the Lead Independent Director was paid an annual retainer of US$125,000 and each other non-employee Director was entitled to an annual retainer of US$100,000; a non-employee Director who served on a committee was entitled to receive a supplemental US$15,000 annually, and a non-employee Director who served as a committee chairperson of a committee was entitled to receive US$10,000 annually in addition to the fee earned as a committee member. Directors are also reimbursed for their reasonable out-of-pocket expenses incurred while serving on the Board.
John W. Stanton and Theresa E. Gillespie waived their right to receive compensation as Directors. Bradley J. Horwitz, the President and the CEO of the Company, is not entitled to receive compensation for his services as a Director.
All Directors and officers of the Company are and will continue to be indemnified on customary terms by the Company.
Director Compensation Table
The following table shows the compensation paid in 2022 to the Company’s Directors.
Name
Fees earned or
paid in cash
(US$)
Stock awards
(US$)(1)
Total
Compensation
(US$)
Mr. Mark Kroloff
$140,000
Nil
$140,000
Mr. Nadir Mohamed(2)
$165,000
Nil
$165,000
Mr. Alan Horn(2)
$140,000
Nil
$140,000
Mr. Reza Satchu(2)
$100,000
Nil
$100,000
Notes:
(1)
In 2022, immediately before the closing of the 2degrees Sale, the Company settled all outstanding DSUs issued to Directors under its DSU Plan. In connection with the settlement of all outstanding DSUs, 489,762 Common Shares were issued in 2022.
(2)
Concurrently with the Company’s delisting from the Toronto Stock Exchange on December 23, 2022, Mr. Mohamed, Mr. Horn and Mr. Satchu resigned from the Board.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
To the knowledge of the Company, as of the date hereof, the Directors and the NEOs of the Company, as a group, beneficially own, or control or direct, directly or indirectly 23,839,600 Common Shares, representing approximately 26.90% of the number of outstanding Common Shares.
The following table states the number of Common Shares beneficially owned by each of the Directors and NEOs of the Company as of March 30, 2023:
Name
Number and Type of
Securities
Type of
Ownership(1)
Percentage of
Class(2)
John W. Stanton
16,908,563
Common Shares(3)
Beneficial
19.08%
Bradley J. Horwitz
4,419,246
Common Shares
Registered and Beneficial
4.99%
Mark Kroloff
611,227
Common Shares(4)
Beneficial
0.69%
Erik Mickels
829,908
Common Shares
Beneficial
0.94%
Scott Morris
1,070,656
Common Shares(5)
Beneficial
1.21%
Notes:
(1)
Registered shares are shares shown on the Company’s share register as being owned by the named Director or NEO directly in his name.
(2)
Based on 88,627,593 Common Shares outstanding at March 30, 2023.
(3)
16,908,563 Common Shares are beneficially controlled or directed, directly or indirectly by John W. Stanton through SG Enterprises II, LLC, an entity owned and controlled by John W. Stanton and Theresa E. Gillespie.
(4)
189,515 Common Shares are held by Mark Kroloff. 226,506 Common Shares are beneficially owned by Mr. Kroloff through FACP Investment Trilogy II, LLC, 168,884 Common Shares are beneficially owned by Mr. Kroloff through FACP Trilogy Investment LLC, and 26,322 Common Shares are beneficially owned by Mr. Kroloff through FACP TINZ LLC.
(5)
930,656 Common Shares are held by Scott Morris. 80,000 Common Shares are beneficially owned by Mr. Morris through Abigail Morris, 30,000 Common Shares are beneficially owned by Mr. Morris as Trustee of the Devon Morris Irrevocable Trust and 30,000 Common Shares are beneficially owned by Mr. Morris as Trustee of the Lily M. Morris Irrevocable Trust. Mr. Morris disclaims beneficial ownership of the Common Shares owned by Abigail Morris.
The following table states the number of Common Shares owned by each person known to us to own more than 5% of our outstanding shares, as of March 30, 2023:
Name
Number and Type
of Securities
Type of Ownership
Percentage of
Class(1)
SG Enterprises II, LLC(2)
16,908,563
Common Shares
Registered
19.08%
Anson Funds Management LP(3)
9,453,250
Common Shares
Beneficial
10.67%
Alignvest Management Corporation(4)
8,214,622
Common Shares
Registered
9.27%
Notes:
(1)
Based on 88,627,593 Common Shares outstanding at March 30, 2023.
(2)
SG Enterprises II, LLC's address is 155 108th Avenue NE, Suite 400, Bellevue, WA 98004.
(3)
Anson Funds Management LP, a Texas limited partnership (“AFM”), is a registered Investment Advisor under the U.S. securities laws. According to the Statement on Schedule 13G/A filed by AFM on April 8, 2022 with the SEC, AFM, Anson Management GP LLC, Mr. Bruce R. Winson, Anson Advisors Inc., Mr. Amin Nathoo and Mr. Moez Kassam are the beneficial owners of the shares of Common Shares held by AFM. Anson Funds Management LP reports its principal address as 1600 Dallas Parkway, Suite 800, Dallas, TX 75248.
(4)
Alignvest’s holdings reflect the holdings of Alignvest and two affiliated investment funds, Alignvest Partners Master Fund LP and Alignvest AQX LP. Alignvest Management Corporation reports its business address as 1027 Yonge Street, Suite 200, Toronto, Ontario, Canada, M4W 2K9.
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Change in Control
As of the date of this Annual Report, there are no arrangements known to the Company which may at a subsequent date result in a change in control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Transactions with Related Parties
The TISP 10.0% Notes were purchased by certain beneficial owners of the Trilogy LLC 2022 Notes. The purchasers of the TISP 10.0% Notes included SG Enterprises II, LLC, which purchased $7.0 million of TISP 10.0% Notes. SG Enterprises II, LLC is a Washington limited liability company owned by John W. Stanton and Theresa E. Gillespie. John W. Stanton is the Chairman of the Board of TIP Inc. and Theresa E. Gillespie is a former Director of TIP Inc. As stated above, upon the closing of the 2degrees Sale, the TISP 10.0% Notes were prepaid with a portion of the proceeds from the 2degrees Sale.
In order to fund its operations, pending the closing of the 2degrees Sale, in January 2022, the Company entered into the Bridge Loans with three of its principal shareholders: SG Enterprises II, LLC, Brad Horwitz and Alignvest Management Corporation. In the first quarter of 2022, SG Enterprises II, LLC, Brad Horwitz and Alignvest Management Corporation provided $6.5 million, $1.5 million and $2.0 million, respectively, to the Company under the terms of the Bridge Loans. The Bridge Loans were repaid during the second quarter of 2022. For additional information, see Note 8 - Debt to the Consolidated Financial Statements.
On July 31, 2013, Trilogy LLC entered into an agreement (the “Agreement”) with SHC and three former Trilogy LLC executives. Pursuant to the Agreement, Trilogy LLC transferred to SHC 80% of Trilogy LLC’s interest in its wholly owned subsidiary, SSI, in exchange for 2,140 Trilogy LLC Class C Units (“Class C Units”) held by the three individuals. In April 2022, the Company surrendered its 20% ownership interest in SSI to SHC and cancelled an $80 thousand promissory note that SSI had issued to the Company in January 2022. SSI owns billing and customer relations management intellectual property, and associated software support and development services that it had licensed to NuevaTel. Following the Company’s surrender of its SSI ownership interest and cancellation of the promissory note, and in connection with the anticipated closing of the NuevaTel Transaction, Balesia acquired 100% of SHC.
Trilogy LLC had a non-interest bearing loan outstanding to New Island Cellular, LLC (“New Island”), an entity with which a former member and manager of Trilogy LLC is affiliated, in an aggregate principal amount of approximately $6.2 million (the “New Island Loan”), the proceeds of which were used to cover additional taxes owed by New Island as a result of Trilogy LLC’s 2006 election to treat its former subsidiary, ComCEL, as a U.S. partnership for tax purposes. In connection with New Island’s redemption of Class C Units for Common Shares in 2021, the New Island Loan was forgiven in consideration of New Island’s assignment to Trilogy LLC of all distributions and dividends payable to New Island with respect to its TIP Inc. shares. This arrangement was treated as an equity transaction with no impact on the Consolidated Statements of Operations. New Island received 2,129,623 Common Shares in connection with the redemption. In the second quarter of 2022, the Company declared and paid a cash distribution to shareholders, inclusive of approximately $2.8 million distributed to New Island Cellular. The full amount of the distribution to New Island was subsequently repaid to Trilogy LLC and is reflected within Return of capital, net of distribution repaid in the Consolidated Statement of Changes in Shareholders’ Equity (Deficit). The New Island Loan was unsecured at the time of its cancellation and the value of the Common Shares at the time of the loan cancellation was less than the outstanding balance of the loan.
Director Independence
Certain of the Directors and executive officers of the Company are officers and Directors of, or are associated with, other public and private companies. Such associations may give rise to conflicts of interest with the Company from time to time. The Business Corporations Act (British Columbia) (“BCBCA”) requires, among other things, that the Directors and executive officers of the Company act honestly and in good faith with a view to the best interest of the Company, to disclose any personal interest which they may have in any material contract or transaction which is proposed to be entered into with the Company and, in the case of Directors, to abstain from voting as a director for the approval of any such contract or transaction. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA.
Using the definition of Independent Director set forth in Rule 5605(a)(2) of the Corporate Governance Requirements of The Nasdaq Stock Market (the “Governance Requirements”), Messrs. Kroloff and Stanton are “independent” and Mr. Horwitz is not “independent”. Ms. Gillespie and Messrs. Horn, Mohamed and Saatchu, former Directors who resigned in December 2022, were “independent” in accordance with the applicable standards set forth above. Under the standards for independence for members of the Audit Committee set forth in Rule 5605(c)(2) of the Governance Requirements and Rule 10A-3(b)(1) under the Exchange Act, Mr. Kroloff is “independent” and Messrs. Horwitz and Stanton are not “independent”. Messrs. Horn and Mohamed, who served on the Audit Committee with Mr. Kroloff, until their resignation in December 2022, were “independent” in accordance with the applicable standards set forth above.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14.
Principal Accountant Fees and Services
The Company’s independent registered public accounting firm is Grant Thornton LLP. The following table sets forth a summary of fees paid to Grant Thornton LLP for services rendered in respect of the last two fiscal years:
Amounts in thousands US$
Audit Fees(1)
$
1,010
$
1,985
Audit-Related Fees
$
-
$
-
Tax Fees
$
-
$
-
All Other Fees(2)
$
-
$
Notes:
(1)
Fees for audit services include fees associated with the annual audit, including the reviews of the Company’s quarterly reports, statutory audits required internationally, comfort letters, other assurance procedures, and review of documents publicly filed.
(2)
All other fees consist of fees for services, other than those that meet the criteria above and include fees related to operational audit services.
Pre-approved Policies and Procedures
The Audit Committee has adopted requirements regarding pre-approval of audit or non-audit services as part of its Audit Committee Charter. The Audit Committee Charter provides that the Audit Committee shall have the ultimate authority to approve all audit engagement terms and fees, and requires that the Audit Committee must approve in advance any retainer of the auditors to perform any non-audit service to the Company (together with all non-audit service fees) that it deems advisable in accordance with applicable requirements and the Board approved policies and procedures. The Audit Committee will consider the impact of such service and fees on the independence of the auditor. The Audit Committee may delegate pre-approval authority for non-audit services to a member of the Audit Committee; however, the decisions of any member of the Audit Committee to whom this authority has been delegated must be presented to the full Audit Committee at its next scheduled Audit Committee meeting.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15.
Exhibit and Financial Statement Schedules
a)
The following documents are filed as part of this report:
1.
Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income (Loss)
Consolidated Statement of Shareholders’ (Deficit) Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
2.
Financial Statement Schedules
All financial statement schedules have been omitted because they are not applicable, not required or the information is shown in the financial statements or the notes thereto.
3.
Exhibits
We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.
b)
Exhibits
1.1
Certificate of Incorporation of Alignvest Acquisition Corporation, incorporated by reference to Exhibit 99.3
to the Company’s Registration Statement on Form 40-F filed on November 15, 2016
1.2
Articles of Amendment of Alignvest Acquisition Corporation, incorporated by reference to Exhibit 99.11
to the Company’s Registration Statement on Form 40-F filed on November 15, 2016
1.3
Articles of Arrangement with attached Plan of Arrangement, incorporated by reference to Exhibit 99.2
to the Company’s Form 6-K furnished on February 9, 2017
1.4
Articles of Trilogy International Partners Inc., incorporated by reference to Exhibit 99.2 to the Company’s
Form 6-K furnished on February 22, 2017
4.1
Trilogy International Partners Inc. Senior Executive Severance Policy, amended and restated on March 24, 2021,
incorporated by reference to Exhibit 4.9 to the Company’s Form 20-F filed on March 24, 2020*
4.2
Agreement for Sale and Purchase of Shares in Two Degrees Group Limited, incorporated by reference to
Exhibit 99.2 to the Company’s Form 6-K furnished on January 10, 2022
8.1
List of Subsidiaries**
11.1
Code of Business Conduct and Ethics, incorporated by reference to Exhibit 99.3 to the Company’s Form
6-K furnished on February 9, 2017
11.2
Audit Committee Charter, incorporated by reference to Exhibit 99.1 to the Company’s Form 6-K filed on April 5, 2019
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)**
101.SCH
Inline XBRL Taxonomy Extension Schema Document**
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document**
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document**
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)**
*Compensatory plan or arrangement.
** Filed herewith.