Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain forward-looking statements regarding future events and results that are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "predicts," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "endeavors," "strives," "may," "will," "proposes," "potential," "could," "should," "outlook" or variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, anticipated growth and trends in businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption "Risk Factors" in Part II, Item 1A, and those discussed in other documents the Company filed with the Securities and Exchange Commission ("SEC"). Actual results may differ materially and adversely from those expressed in any forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements for any reason.

Introduction

This Management's Discussion and Analysis section provides an overview of Cincinnati Bell Inc.'s financial condition as of March 31, 2026 and the results of operations for the three months ended March 31, 2026 and 2025. This discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and accompanying notes as well as the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Results for interim periods may not be indicative of results for the full year or any other interim period.

Business Overview

Cincinnati Bell Inc. and its consolidated subsidiaries ("Cincinnati Bell," "we," "our," "us" or the "Company") provide integrated communications that keep consumer and enterprise customers connected with each other and with the world. We provide Data, Video, and Voice solutions to consumer and enterprise customers over an expanding fiber network and a legacy copper network. The Company serves customers in two distinct regions. These regions are defined by the Company as 1) Midwest, which consists of Cincinnati, Ohio, a radius of approximately 25 miles around Cincinnati, Ohio, including parts of northern Kentucky and southeastern Indiana ("Greater Cincinnati"), and communities around Dayton and Columbus, Ohio that is served through our altafiber brand and 2) Hawaii, which consists of the island of Oahu and the neighboring islands that is served through our Hawaiian Telcom brand. The Company operates its businesses through one reportable business segment.

During 2025, the U.S. announced a variety of trade-related actions, including the imposition of tariffs on imports from several countries. In response, many countries announced their own retaliatory tariffs. These associated tariffs are complex and continue to evolve as negotiations occur. We continue to evaluate the impact of global tariffs and trade restrictions on our business and operations. In February 2026, a Supreme Court ruling invalidated certain tariffs previously imposed. As the global economic environment, trade and tariff negotiations continue to evolve, the Company will continue to evaluate the exposure and work to mitigate these costs.

We are monitoring recent developments related to the conflict in the Middle East and the potential impact on our operations, including increased prices and lower availability of fuel, which can result in adverse effects on our operations, primarily in Hawaii. As a result, the impacts to our business may include higher cost of capital, increased expenses and lower profitability. The conflict did not have a material impact on our operations in the three months ended March 31, 2026.

Discussion of Results of Operations

The Company provides products and services in which revenue is categorized as Strategic, Legacy, or Other. Cincinnati Bell Telephone Company LLC ("CBT"), a subsidiary of the Company, is the incumbent local exchange carrier ("ILEC") for a geography that covers a radius of approximately 25 miles around Cincinnati, Ohio, and includes parts of northern Kentucky and southeastern Indiana. CBT has operated in this territory for over 150 years. In 2022, the Company announced that we will begin doing business as "altafiber" and started our network expansion outside of this territory to provide fiber services to adjacent markets. Voice and data services that are delivered beyond the Company's ILEC territory, particularly in Dayton, Mason, and Columbus, Ohio, are provided through the operations of Cincinnati Bell Extended Territories LLC ("CBET"), a subsidiary of CBT. On July 2, 2018, the Company acquired Hawaiian Telcom. Hawaiian Telcom is the ILEC for the State of Hawaii and the largest full-service provider of communications services and products in the state. Originally incorporated in Hawaii in 1883 as Mutual Telephone Company, Hawaiian Telcom has a strong heritage of over 140 years as Hawaii's communications carrier. Its services are offered on all of Hawaii's major islands, with recent expansion of its video service from Oahu to the other major islands. On May 2, 2022, the Company acquired Agile IWG Holdings, LLC ("Agile"), based in Canton, Ohio. Agile leases wireless infrastructure assets to third parties and provides connectivity through hybrid fiber wireless data networks primarily to customers in Ohio and Pennsylvania.

Strategic revenue includes internet access for speeds that meet or exceed 100 megabits per second and Enterprise Fiber, each categorized below as Data, as well as Video. Enterprise Fiber products include metro-ethernet, dedicated internet access, wavelength, IRU contracts, connectivity services provided by Agile, and wireless backhaul to macro-towers and small cells. Hawaiian Telcom Enterprise Fiber revenue also includes revenue from the SEA-US cable system. As enterprise customers migrate from legacy products and copper-based technology, our metro-ethernet product becomes the preferred method of transport due to its ability to support multiple applications on a single physical connection.

Legacy revenue include internet access for speeds of less than 100 megabits per second, traditional voice lines, consumer and business long distance, switched access, digital trunking, DSL, DS0, DS1, DS3, and other value-added services such as caller identification, voicemail, call waiting and call return. Legacy products also include certain communications services including data and VoIP services, tailored solutions that include converged IP communications of data, voice and mobility applications, MPLS (Multi-Protocol Label Switching) and conferencing services.

Other revenue is comprised of wire care, time and materials projects, advertising, management of distributed antenna systems, certain pass-through fees such as franchise fees and regulatory fees, other fees that are not billed on a monthly recurring basis, and subsidized fiber build project revenue related to extending the Company's fiber network in the Midwest territory subsidized through our UniCity program and in Hawaii subsidized through a customer contract. Other revenue also includes revenue contributed by Hawaiian Telcom for the sale of hardware and maintenance contracts as well as installation projects and cloud services which include storage, SLA-based monitoring and management, cloud computing and cloud consulting.

+ Excludes certain Corporate expenditures that have not been allocated to the business segment

* Subscribers with internet speeds of 100mbps or more

** Fiber-to-the-Premise

*** Subscribers with internet speeds of less than 100mbps

* Subscribers with internet speeds of 100mbps or more

** Fiber-to-the-Premise

*** Subscribers with internet speeds of less than 100mbps

Total Network Revenue

Revenue totaling $283.6 million for the three months ended March 31, 2026 increased $7.2 million compared to the same period in 2025 as increased Strategic revenue primarily due to the increase in the Strategic Internet subscriber base more than offset the decrease in Legacy revenue.

Strategic

Strategic revenue for the three months ended March 31, 2026 increased $13.0 million compared to the same period in 2025 primarily due to the increase in the subscriber base for internet. The internet subscriber base continues to increase as we focus attention on growing the strategic internet subscriber base, adding 4,800 strategic internet subscribers in the Midwest and 6,100 strategic internet subscribers in Hawaii in the three months ended March 31, 2026. In the Midwest, we passed 16,600 addresses in the three months ended March 31, 2026 primarily related to multi-dwelling units and single family homes in the areas surrounding Dayton, Ohio and Columbus, Ohio. In Hawaii our accelerated fiber build pace enabled us to pass 14,700 addresses during the period. The Average Revenue Per User ("ARPU") for the three months ended March 31, 2026 increased for internet in both the Midwest and Hawaii compared to the same period in 2025 primarily due to price increases and more customers subscribing to higher broadband tiers.

Enterprise Fiber revenue for the three months ended March 31, 2026 decreased $0.3 million compared to the same period in 2025 due to decreased revenue in the Midwest of $1.0 million, primarily associated with nonrecurring projects that were completed in the prior year. In addition, revenue was favorably impacted in each geography as a result of customers migrating from legacy product offerings to higher bandwidth fiber solutions as evidenced by the 9% and 23% increases in Ethernet Bandwidth in the Midwest and Hawaii, respectively.

Legacy

Legacy revenue decreased $11.3 million for the three months ended March 31, 2026 compared to the same period in 2025 due to the decline in voice lines and internet subscribers. Voice lines declined 14% and 8% in the Midwest and Hawaii, respectively, as traditional voice lines become less relevant. Legacy internet subscribers continue to decrease in the Midwest and Hawaii as subscribers demand the higher speeds that can be provided by fiber. In addition, declines in DS1, DS3 and digital trunking have contributed to the Legacy revenue decline for the three months ended March 31, 2026 compared to the same period in 2025 as customers migrate away from these solutions to fiber-based solutions.

Other

Other revenue increased $5.5 million for the three months ended March 31, 2026 compared to the same period in 2025 year primarily due to professional services and hardware revenue from the completion of nonrecurring projects in the Midwest for the construction and implementation of large Wi-Fi networks.

Operating Costs and Expenses

Cost of services and products decreased $9.2 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to decreased payroll expense of $1.2 million due to reduced headcount, decreased video content costs of $0.7 million due to fewer subscribers and decreased network related expenses of $1.7 million related to the decommissioning of certain copper assets as customers continue to migrate from copper-based services to fiber-based services.

SG&A expenses increased $2.1 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to increased advertising expenses of $2.4 million.

Depreciation and amortization expense decreased $0.3 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to decreased amortization related to customer relationships that utilize an accelerated amortization convention. Decreased amortization expense was partially offset by increased depreciation expense from the continued capital investment to expand and upgrade the Company's fiber network and related capacity.

Restructuring and severance charges of $18.2 million were recorded in the first quarter of 2026 related to a continuation of a voluntary severance program offered to certain bargained employees in the first quarter of 2026 in addition to further headcount reductions from Involuntary Severance Program actions.

Capital Expenditures

Capital expenditures are incurred to expand our fiber network, upgrade and increase capacity for our networks, and to maintain our fiber and copper networks. The Company is focused on building FTTP addresses, and during the three months ended March 31, 2026 we passed 16,600 FTTP addresses in the Midwest.

Midwest capital expenditures decreased $26.1 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to network upgrades that were completed in the prior year and decreased fleet vehicle purchases.

Hawaii capital expenditures increased $5.7 million for the three months ended March 31, 2026 compared to the same period in 2025 due to increased network construction expenditures, partially offset by decreased real estate purchases. In Hawaii, we passed 14,700 FTTP addresses during the three months ended March 31, 2026.

Corporate

Corporate is comprised primarily of general and administrative costs that have not been allocated to the Network business segment and transaction and integration costs. Corporate costs totaled $14.8 million and $5.6 million in three months ended March 31, 2026 and 2025, respectively. Corporate costs increased $9.2 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to $1.7 million of increased payroll related expenses and $2.5 million of additional costs related to the Company's Transformation Project that are no longer deferred. Additionally, the Company incurred $2.5 million of consulting fees related to a nonrecurring project that the Company launched in the fourth quarter of 2025. Increased amortization expense of $0.5 million and depreciation expense of $1.1 million was also recorded in the quarter due to software assets related to the Company's Transformation Project placed in service in the third quarter of 2025 and the first quarter of 2026.

Interest expense decreased $5.3 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to lower interest rates on the Company's Term Loans.

Other components of pension and postretirement benefit plans benefit decreased for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to a settlement gain of $1.0 million recorded in the first quarter of 2025 related to lump sum payments funded by the Hawaii defined benefit plan for union employees.

Other income, net totaled $14.2 million for the three months ended March 31, 2026 primarily due to a patronage distribution of $6.4 million from one of the syndicated lenders of the Term B-1 Loans and Term B-3 Loans in the Company's Credit Agreement, in addition to a net gain associated with the Company's interest rate swap agreements and interest rate cap agreements of $7.4 million.

Other income, net totaled $7.1 million for the three months ended March 31, 2025 primarily due to interest income of $3.8 million and a patronage distribution of $6.7 million from one of the syndicated lenders of the Term B-1 Loans and Term B-3 Loans in the Company's Credit Agreement. Income was partially offset by a net loss associated with the Company's interest rate swap agreements and interest rate cap agreements of $3.3 million.

Loss from continuing operations before income taxes totaled $11.9 million for the three months ended March 31, 2026, resulting in a decrease of $2.0 million compared to the same period in 2025 as a result of the previously discussed trends.

The income tax provision for the three months ended March 31, 2026 for continuing operations was a benefit of $2.6 million on a reported loss before income tax of $11.9 million. The tax benefit reported is higher than the $2.5 million benefit expected at statutory rates, due primarily to adjustments to valuation allowances on net operating loss deferred tax assets.

In the three months ended March 31, 2025, a tax expense was reported in continuing operations, despite a loss before income tax, due most notably to additional valuation allowances recorded in that comparable period.

Financial Condition, Liquidity, and Capital Resources

As of March 31, 2026, the Company had an accumulated deficit of $598.9 million and $1,701.9 million of outstanding indebtedness.

The Company's primary source of cash is generated by operations. The Company generated $93.3 million and $14.4 million of cash flows from operations during the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had $428.1 million of short-term liquidity, comprised of $9.0 million of cash and cash equivalents, $400.0 million of undrawn capacity on our Revolving Credit Facility due 2028 and $19.1 million available under the Network Receivables Facility.

As of March 31, 2026, the Company had $14.3 million in borrowings and $26.6 million of letters of credit outstanding under the Network Receivables Facility, leaving $19.1 million remaining availability on the total borrowing capacity of $60.0 million. Capacity on the Network Receivables Facility is calculated and will continue to be calculated based on the quantity and quality of outstanding accounts receivables.

In March 2025, the Company executed an amendment to the Network Receivables Facility that increased the maximum borrowing limit for loans and letters of credit to $60.0 million, extended the termination date to March 2028 and extended the renewal date to March 2027.

One of the syndicated lenders of the Term B-1 Loans and Term B-3 Loans in the Credit Agreement is a cooperative bank owned by its customers. Annually, this bank distributes patronage in the form of cash and stock in the cooperative based on the Company's average outstanding loan balance. The Company will recognize the patronage, generally as declared, in "Other income, net." The stock component will be recognized at its stated cost basis. The Company received $6.4 million and $6.7 million in patronage dividends in the three months ended March 31, 2026 and 2025, respectively.

The Company's primary uses of cash are for working capital requirements, capital expenditures and debt service and, to a lesser extent, to fund pension and retiree medical obligations. The Company believes that cash on hand, operating cash flows, its Revolving Credit Facility due 2028, its Network Receivables Facility, and the expectation that the Company will continue to have access to capital markets to refinance debt and other obligations as they mature and come due, should allow the Company to meet its cash requirements for the foreseeable future.

As of March 31, 2026, the Company was in compliance with the Credit Agreement covenants and ratios.

Cash Flows

Cash provided by operating activities during the three months ended March 31, 2026 totaled $93.3 million, an increase of $78.9 million compared to the same period in the prior year. The increase is primarily due to restructuring payments of $4.7 million in the first quarter of 2026, a decrease of $35.5 million compared to payments of $40.2 million in the same period in the prior year. In addition, decreased working capital outflows and lower interest payments of $4.9 million, primarily due to lower interest rates in the first quarter of 2026, contributed to higher operating cash flow.

Cash used in investing activities during the three months ended March 31, 2026 totaled $118.8 million, a decrease of $24.4 million compared to the same period in the prior year. Network capital expenditures decreased $20.4 million primarily due to network upgrades performed in the Midwest in the first quarter of 2025 and lower vehicle purchases. Additionally, Corporate capital expenditures decreased $2.5 million compared to the same period in the prior year due to reduced spend related to the Company's Transformation Project.

Cash used in financing activities during the three months ended March 31, 2026 totaled $6.5 million primarily due to repayments of $13.7 million of outstanding principal amounts of the Company's CBT Notes and required payments on the Company's Term Loans due 2028 of $4.1 million, partially offset by net borrowings on the Network Receivables Facility of $14.3 million.

Cash used in financing activities during the three months ended March 31, 2025 totaled $44.5 million primarily due to the extinguishment of the Company's existing Paniolo financing arrangement of $21.4 million and a repayment of $18.9 million to resolve a temporary overdraft resulting from a miscommunication on payroll dates and related funding requirements.

Regulatory Matters

Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for a complete description of regulatory matters. There were no material changes for the three months ended March 31, 2026.

Contingencies

In the normal course of business, the Company is subject to various regulatory and tax proceedings, lawsuits, claims and other matters. The Company believes adequate provision has been made for all such asserted and unasserted claims in accordance with accounting principles generally accepted in the United States. Such matters are subject to many uncertainties and outcomes that are not predictable with assurance.

Critical Accounting Policies

The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the accompanying Condensed Consolidated Financial Statements and information available as of the date of the financial statements. As this information changes, the financial statements could reflect different estimates or judgments.

The Company's most critical accounting policies and estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recently Issued Accounting Standards

The Company did not adopt any new accounting standards during the three months ended March 31, 2026. Furthermore, accounting standards that have been issued or proposed by the FASB or other standard-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's condensed consolidated financial statements upon adoption.