Trilogy International Partners Inc. - Annual Report: 2022 (Form 10-K)

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2022

OR

For the transition period from                 to

Commission file number: 000-55716

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (425) 458-5900

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act:

Common Shares, no par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES  ☐    NO  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 YES  ☐    NO  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES  ☒    NO  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES  ☒    NO  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

  ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

  ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

YES  ☒   NO  ☐

As of June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the closing price of the registrant’s common shares, no par value (“Common Shares”), was C$0.30.  The aggregate market value of the Common Shares outstanding, other than shares held by persons who may be deemed affiliates of the registrant (each person who owns 10% or more of the outstanding Common Shares of the registrant, each officer and director), computed by reference to the closing price for the Common Shares on June 30, 2022, as reported on the Toronto Stock Exchange was C$16.6 million (US$ 12.9 million based on the exchange rate as of June 30, 2022).

As of March 30, 2023, there were 88,627,593 Common Shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

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		PAGE
GENERAL MATTERS		1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		1
PART I		2
ITEM 1.	BUSINESS	2
ITEM 1A.	RISK FACTORS	6
ITEM 1B.	UNRESOLVED STAFF COMMENTS	8
ITEM 2.	PROPERTIES	8
ITEM 3.	LEGAL PROCEEDINGS	9
ITEM 4.	MINE SAFETY DISCLOSURES	9
PART II		9
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	9
ITEM 6.	[RESERVED]	10
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	32
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	32
ITEM 9A.	CONTROLS AND PROCEDURES	32
ITEM 9B.	OTHER INFORMATION	33
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	33
PART III		34
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	34
ITEM 11.	EXECUTIVE COMPENSATION	36
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	39
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	40
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	41
PART IV		42
ITEM 15.	EXHIBIT AND FINANCIAL STATEMENT SCHEDULES	42
ITEM 16.	FORM 10-K SUMMARY	43
SIGNATURES		44

•

the timing of the liquidation and dissolution of the Company following its adoption of a plan of liquidation on June 10, 2022;

•

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 (as defined below); the escrow period is scheduled to terminate in May 2023;

•

the timing and amount of any distribution to shareholders;

•

expenses associated with the Company losing its foreign private issuer status under U.S. federal securities laws;

•

the ability of U.S. persons to sell their Common Shares;

•

the expectation of the Board of Directors of the Company (the “Board”) that the financial resources available to the Company following the cash distributions to shareholders will be adequate to fund the Company’s outstanding indemnification obligations (beyond those for which funds have been placed in escrow) and ongoing costs of operating the Company prior to its liquidation and dissolution; and

•

the possibility of changes in the securities regulations of Canada and the United States that could affect the ability of investors to trade their Common Shares.

•

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;

•

taxes payable; and

•

currency exchange rates.

•

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;

•

risks related to anti-corruption compliance;

•

reliance on limited management resources;

•

tax related risks;

•

risks related to being a publicly traded company, including, but not limited to, compliance and costs associated with the U.S. Sarbanes-Oxley Act of 2002 (to the extent applicable);

•

an increase in costs and demands on management resources as a result of the Company ceasing to qualify as an “emerging growth company” on December 31, 2022 under the U.S. Jumpstart Our Business Startups Act of 2012;

•

additional expenses in connection with the Company losing its foreign private issuer status under U.S. federal securities laws;

•

the determination to not pay dividends;

•

risks related to the liquidity of the market for the Common Shares;

•

risks related to litigation, including class actions and regulatory matters;

•

risks that the market price and trading volume of the Common Shares may materially decrease or experience increased fluctuation;

•

foreign exchange rate and associated risks;

•

risks related to currency controls and withholding taxes;

•

risks related to the impact of new laws and regulations;

•

risks associated with the Company’s internal controls over financial reporting; and

•

the costs associated with the dissolution of the Company.

Item 1B.

Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

Mine Safety Disclosures

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

		May 19,				December 31,				December 31,
		2022				2021				2022				2021				2020
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,
		2022				2021				2020
Average NZD to USD exchange rate			0.67	(2)			0.71				0.65
% Change			(5	%)			9	%

		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	%)			0	%

		Year Ended December 31,
		2022				2021				2020
Average CAD to USD exchange rate			0.77				0.80				0.75
% Change			(4	%)			7	%

		For the Year Ended December 31,												% Variance
		2022				2021				2020				2022 vs 2021				2021 vs 2020
(in millions, unless otherwise noted)
Service revenues		$	200.4			$	540.7			$	504.0				(63	%)			7	%
Total revenues		$	238.5			$	653.6			$	610.3				(64	%)			7	%
Net income (loss)		$	437.0			$	(194.4	)		$	(79.7	)			325	%			(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	%)			8	%
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	%)			20	%
pts - percentage points

•

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).

		For the Year Ended December 31,												% Variance
(in millions)		2022				2021				2020				2022 vs 2021				2021 vs 2020
Interest expense		$	22.9			$	53.7			$	46.5				(57	%)			15	%
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				-				22	%			100	%
Other, net			(15.4	)			3.3				4.6				(567	%)			(28	%)

		For the Year Ended December 31,												% Variance
(in millions)		2022				2021				2020				2022 vs 2021				2021 vs 2020
Income tax expense		$	(11.5	)		$	(10.5	)		$	(23.1	)			(9	%)			54	%

		For the Year Ended December 31,												% Variance
(in millions, unless otherwise noted)		2022				2021				2020				2022 vs 2021				2021 vs 2020
Service revenues		$	161.0			$	416.1			$	357.0				(61	%)			17	%
Total revenues		$	199.1			$	528.6			$	458.9				(62	%)			15	%
Segment Adjusted EBITDA		$	51.5			$	127.6			$	111.4				(60	%)			15	%
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	%)			25	%
Capital intensity			18.9	%			19.5	%			18.2	%		(0.5) pts				1.3 pts
pts - percentage points

•

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.

•

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.

		For the Year Ended December 31,												% Variance
(in millions, unless otherwise noted)		2022				2021				2020				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				390	%			(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

•

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.

•

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.

Consolidated Income Statement Data
		For the Year Ended December 31,
(in millions, except per share amounts)		2022				2021				2020
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	)

Consolidated Balance Sheet Data
		As of December 31,				As of December 31,
(in millions, except as noted)		2022				2021			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)		2022				2021			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			114	%
Total liabilities and shareholders’ equity (deficit)		$	40.6			$	803.9

		For the Year Ended December 31,
		2022																2021
(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	)

➢

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.

•

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.

•

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.

		For the Year Ended December 31,												% Variance
(in millions)		2022				2021				2020				2022 vs 2021				2021 vs 2020
Net cash (used in) provided by
Operating activities		$	(8.6	)		$	48.7			$	40.9				(118	%)			19	%
Investing activities			519.1				(93.8	)			(86.4	)			653	%			(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				41	%			(304	%)
n/m - not meaningful

		For the Year Ended December 31,
(in millions)		2022				2021				2020
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)

Equipment Subsidy
		For the Year Ended December 31,
(in millions)		2022				2021				2020
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

•

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.

•

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

Item 9B.

Other Information

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10.

Directors, Executive Officers and Corporate Governance

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

(1)

Chair of the Audit Committee of the Company (the “Audit Committee”)

(2)

Member of the Audit Committee

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

	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)	2022	$400,000	$300,000	Nil	Nil	$22,347	$722,347
		2021	$400,000	$351,414	$336,750	Nil	$20,735	$1,108,899
	Erik Mickels Senior Vice President and Chief Financial Officer(7)	2022	$480,000	$288,000	Nil	$256,000	$22,399	$1,046,399
		2021	$480,000	$337,357	$677,763	$128,000	$23,037	$1,646,157
	Scott Morris Senior Vice President, General Counsel and Corporate Secretary(8)	2022	$400,000	$240,000	Nil	$213,333	$34,547	$887,880
		2021	$400,000	$281,131	$564,802	$106,667	$32,135	$1,384,735
	Tomas Perez Chief Executive Officer of NuevaTel(9)	2022	$248,484	$319,837	Nil	Nil	$550,089	$1,118,410
		2021	$405,634	$300,000	$258,175	Nil	$342,183	$1,305,992

(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.

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

(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.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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%

(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.

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%

(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.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Amounts in thousands US$		2022				2021
Audit Fees(1)		$	1,010			$	1,985
Audit-Related Fees		$	-			$	-
Tax Fees		$	-			$	-
All Other Fees(2)		$	-			$	48

(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.

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)	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations and Comprehensive Income (Loss)	F-3
Consolidated Statement of Shareholders’ (Deficit) Equity	F-4
Consolidated Statements of Cash Flows	F-5
Notes to the Consolidated Financial Statements	F-6

2.

Financial Statement Schedules

3.

Exhibits

b)

Exhibits

Item 16.

Form 10-K Summary

	TRILOGY INTERNATIONAL PARTNERS INC.
Date: March 30, 2023	By: /s/ Erik Mickels
	Title: Senior Vice President and
	Chief Financial Officer

	Signature		Title		Date
	/s/ Bradley J. Horwitz		Director and Chief Executive Officer		March 30, 2023
	/s/ Erik Mickels		Senior Vice President and Chief Financial Officer		March 30, 2023
	/s/ John W. Stanton		Director		March 30, 2023
	/s/ Mark Kroloff		Director		March 30, 2023