Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)

Item 7A. Quantitative and QualitativeDisclosures about Market Risk

Interest Rate Risk

The Company borrows funds at a combination of fixed and variable rates. The Company has exposure to interest rate risk, primarily in the form of variable-rate borrowings from its Term B-1 Loans, Term B-3 Loans, Term B-5 Loans, Revolving Credit Facility, Network Receivables Facility, and Digital Access Ohio Advance, as well as changes in current rates compared to that of its fixed rate debt. Borrowings under the Credit Agreement and Network Receivables Facility use the secured overnight financing rate ("SOFR") as administered by the Federal Reserve Bank of New York as the benchmark for establishing the rate of interest. Borrowings under the Digital Access Ohio Advance use the long term applicable federal rate.

The Company's management periodically employs derivative and other financial instruments to manage exposure to interest rate risk and variable cash flows. The use of these types of instruments to hedge a portion of our exposure to changes in interest rates carries additional risks, such as counterparty credit risk and the legal enforceability of hedging contracts.

The Company had $81.6 million principal amount of fixed-rate debt outstanding as of December 31, 2025, excluding debt with a variable rate that is effectively fixed by non-designated interest rate contracts. The estimated aggregate fair market value of this debt was $81.4 million as of December 31, 2025. At December 31, 2025, the weighted average interest rate on fixed-rate debt was 6.3%.

At December 31, 2025, the Company had variable-rate borrowings of $1,609.0 million. The estimated aggregate fair market value of this debt was $1,611.0 million as of December 31, 2025. At December 31, 2025, the weighted average interest rate on this variable-rate debt was 6.1%. A hypothetical increase or decrease of 100 basis to the market interest rates associated with this variable-rate debt would result in our annual interest expense increasing or decreasing by $16.0 million.

Our variable-rate debt is subject to non-designated floating-to-fixed interest rate swaps and cap agreements. The notional amounts of the swap and cap agreements were $775.0 million and $375.0 million, respectively as of December 31, 2025. If the underlying SOFR rate increases or decreases by 100 basis points, the aggregate fair market value of the swaps at December 31, 2025 would increase by $5.2 million or decrease by $5.3 million. If the underlying SOFR rate increases or decreases by 100 basis points, the aggregate fair market value of the caps at December 31, 2025 would increase by $0.9 million or decrease by $0.6 million.

For further information, see Footnote 9 to the accompanying consolidated financial statements contained in "Part II. Item 8. Financial Statements and Supplementary Data."

Commodity Price Risk

Certain of our operating costs are subject to price fluctuations caused by the volatility of the underlying commodity prices, such as gas utilized primarily by our field operations group, and network and building materials, such as steel, fiber and copper, used in the construction of our networks.