(Registrant’s telephone number, including area code)

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on

Which Registered

Common Shares ($0.01 par value)

CBB

New York Stock Exchange

Depositary Shares, each representing 1/20

interest in a Share of 6 ¾% Cumulative
Convertible Preferred Stock, without par value

CBB.PB

New York Stock Exchange

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 x☒ No o

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes x☒ No o

☐

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. (Check one):



Large accelerated filer	x ☒	Accelerated filer	o ☐

Non-accelerated filer	o ☐	Smaller reporting company	o ☐

		Emerging growth company	o	☐

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. o

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o ☐No x

☒

Securities Registered Pursuant to Section 12(b) of the Act:

At October 31, ~~2017,~~2020, there were ~~42,185,514~~50,680,605 common shares outstanding.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

TABLE OF CONTENTS

PART I. Financial Information



Description				Page
Item 1.		Financial Statements

		Condensed Consolidated Statements of Operations (Unaudited) Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019		1

		Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019		2

		Condensed Consolidated Statements of Shareowners' Deficit (Unaudited) Three and Nine Months Ended September 30, 2020 and 2019		3

		Condensed Consolidated Balance Sheets (Unaudited) September 30, ~~2017~~2020 and December 31, ~~2016~~2019	3	4

		Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019	4	5

		Notes to Condensed Consolidated Financial Statements (Unaudited)	5	6

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	17	23

Item 3.		Quantitative and Qualitative Disclosures about Market Risk	32	40

Item 4.		Controls and Procedures	32	40

		PART II. Other Information

Item 1.		Legal Proceedings	33	41

Item 1A.		Risk Factors	33	41

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	37	48

Item 3.		Default upon Senior Securities	37	48

Item 4.		Mine Safety Disclosure	37	48

Item 5.		Other Information	37	48

Item 6.	~~Exhibits~~	38Exhibits		49

	~~Signatures~~	40Signatures		50

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenue	$	389.5		$	382.5		$	1,149.5		$	1,146.3

Costs and expenses
Cost of services and products, excluding items below		203.9			194.7			591.0			587.9
Selling, general and administrative, excluding items below		86.0			88.0			255.3			261.3
Depreciation and amortization		71.9			75.5			220.8			229.1
Restructuring and severance related charges		0.8			1.3			16.4			6.4
Transaction and integration costs		2.2			0.2			33.8			3.8
Total operating costs and expenses		364.8			359.7			1,117.3			1,088.5
Operating income		24.7			22.8			32.2			57.8
Interest expense		33.4			35.0			100.6			105.0
Other components of pension and postretirement benefit plans expense		2.6			2.8			9.0			8.4
Other (income) expense, net		(0.2	)		0.5			(1.2	)		(0.4	)
Loss before income taxes		(11.1	)		(15.5	)		(76.2	)		(55.2	)
Income tax benefit		(2.9	)		(1.9	)		(26.2	)		(9.2	)
Net loss		(8.2	)		(13.6	)		(50.0	)		(46.0	)
Preferred stock dividends		2.6			2.6			7.8			7.8
Net loss applicable to common shareowners	$	(10.8	)	$	(16.2	)	$	(57.8	)	$	(53.8	)

Basic and diluted net loss per common share	$	(0.21	)	$	(0.32	)	$	(1.14	)	$	(1.07	)

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenue
Services $ 244.3
$ 246.7
$ 734.8
$ 733.1
Products 44.9
65.7
126.6
167.4
Total revenue 289.2
312.4
861.4
900.5
Costs and expenses
Cost of services, excluding items below 129.0
127.7
381.2
375.7
Cost of products sold, excluding items below 33.6
56.1
101.6
141.6
Selling, general and administrative, excluding items below 54.5
55.5
166.6
164.9
Depreciation and amortization 47.3
46.5
140.1
134.7
Restructuring and severance related charges —
—
29.2
—
Transaction and integration costs 12.1
—
14.4
—
Other —
1.1
—
1.1
Total operating costs and expenses 276.5
286.9
833.1
818.0
Operating income 12.7
25.5
28.3
82.5
Interest expense 18.8
17.9
54.9
58.1
Loss on extinguishment of debt, net —
11.4
—
14.2
Gain on sale of Investment in CyrusOne —
(33.3 ) (117.7 ) (151.9 )
Other expense (income), net 4.5
(0.1 ) 3.5
(1.2 )
(Loss) income before income taxes (10.6 ) 29.6
87.6
163.3
Income tax expense 0.6
10.8
36.3
59.9
Net (loss) income (11.2 ) 18.8
51.3
103.4
Preferred stock dividends 2.6
2.6
7.8
7.8
Net (loss) income applicable to common shareowners $ (13.8 ) $ 16.2
$ 43.5
$ 95.6

Basic net (loss) earnings per common share $ (0.33 ) $ 0.39
$ 1.03
$ 2.28
Diluted net (loss) earnings per common share $ (0.33 ) $ 0.38
$ 1.03
$ 2.27

The accompanying notes are an integral part of the condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss	$	(8.2	)	$	(13.6	)	$	(50.0	)	$	(46.0	)
Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss)		2.0			(1.0	)		(2.1	)		2.1
Cash flow hedges:
Unrealized loss on cash flow hedges arising during the period, net of tax of ($0.1), $(0.9), ($3.3), ($4.2)		(0.5	)		(3.0	)		(11.3	)		(13.9	)
Reclassification adjustment for net losses included in net income, net of tax of $0.5, $0.2, $1.4, $0.3		1.8			0.4			4.6			0.8
Defined benefit plans:
Net gain (loss) arising from remeasurement during the period, net of tax of $1.0, ($3.4), $0.0		3.2			0			(11.5	)		0.1
Amortization of prior service benefits included in net income, net of tax of ($0.1), ($0.2), ($0.4), ($0.5)		(0.5	)		(0.4	)		(1.5	)		(1.4	)
Amortization of net actuarial loss included in net income, net of tax of $1.1, $1.0, $3.3, $2.7		3.7			2.9			11.1			8.9
Reclassification adjustment for pension settlement charges included in net income, net of tax of $0.2		0			0			0.9			0
Total other comprehensive income (loss)		9.7			(1.1	)		(9.8	)		(3.4	)
Total comprehensive income (loss)	$	1.5		$	(14.7	)	$	(59.8	)	$	(49.4	)

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net (loss) income $ (11.2 ) $ 18.8
$ 51.3
$ 103.4
Other comprehensive income (loss), net of tax:
Unrealized gains on Investment in CyrusOne, net of tax of $4.4 —
—
8.3
—
Reclassification adjustment for gain on sale of Investment in CyrusOne included in net income, net of tax of ($41.3) —
—
(76.4 ) —
Foreign currency translation gain (loss) 0.1
—
0.1
(0.1 )
Defined benefit plans:
Amortization of prior service benefits included in net income, net of tax of ($0.4), ($1.2), ($1.2), ($3.9) (0.8 ) (2.4 ) (2.2 ) (7.1 )
Amortization of net actuarial loss included in net income, net of tax of $1.9, $2.1, $5.9, $6.4 3.6
3.8
10.7
11.6
Total other comprehensive income (loss) 2.9
1.4
(59.5 ) 4.4
Total comprehensive (loss) income $ (8.3 ) $ 20.2
$ (8.2 ) $ 107.8

The accompanying notes are an integral part of the condensed consolidated financial statements.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~

STATEMENTS OF SHAREOWNERS' DEFICIT

(Dollars in ~~millions, except share amounts)~~millions)

(Unaudited)

	6 3/4 % Cumulative Convertible Preferred Shares				Common Shares				Additional Paid-in			Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Total
Balance at June 30, 2020		3.1	$	129.4		50.7	$	0.5	$	2,672.9		$	(2,817.8	)	$	(189.6	)	$	(204.6	)
Net loss		—		—		—		—		—			(8.2	)		—			(8.2	)
Other comprehensive income		—		—		—		—		—			—			9.7			9.7
Stock-based compensation		—		—		—		—		1.2			—			—			1.2
Dividends on preferred stock		—		—		—		—		(2.6	)		—			—			(2.6	)
Balance at September 30, 2020		3.1	$	129.4		50.7	$	0.5	$	2,671.5		$	(2,826.0	)	$	(179.9	)	$	(204.5	)

Balance at June 30, 2019		3.1	$	129.4		50.4	$	0.5	$	2,677.4		$	(2,741.8	)	$	(177.8	)	$	(112.3	)
Net loss		—		—		—		—		—			(13.6	)		—			(13.6	)
Other comprehensive loss		—		—		—		—		—			—			(1.1	)		(1.1	)
Stock-based compensation		—		—		—		—		2.0			—			—			2.0
Dividends on preferred stock		—		—		—		—		(2.6	)		—			—			(2.6	)
Balance at September 30, 2019		3.1	$	129.4		50.4	$	0.5	$	2,676.8		$	(2,755.4	)	$	(178.9	)	$	(127.6	)

~~(Unaudited)~~

	6 3/4 % Cumulative Convertible Preferred Shares				Common Shares				Additional Paid-in			Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Total
Balance at December 31, 2019		3.1	$	129.4		50.4	$	0.5	$	2,676.2		$	(2,776.0	)	$	(170.1	)	$	(140.0	)
Net loss		—		—		—		—		—			(50.0	)		—			(50.0	)
Other comprehensive loss		—		—		—		—		—			—			(9.8	)		(9.8	)
Shares issued under employee plans		—		—		0.3		—		—			—			—			—
Shares purchased under employee plans and other		—		—		—		—		(1.1	)		—			—			(1.1	)
Stock-based compensation		—		—		—		—		4.2			—			—			4.2
Dividends on preferred stock		—		—		—		—		(7.8	)		—			—			(7.8	)
Balance at September 30, 2020		3.1	$	129.4		50.7	$	0.5	$	2,671.5		$	(2,826.0	)	$	(179.9	)	$	(204.5	)

Balance at December 31, 2018		3.1	$	129.4		50.2	$	0.5	$	2,680.0		$	(2,709.4	)	$	(175.5	)	$	(75.0	)
Net loss		—		—		—		—		—			(46.0	)		—			(46.0	)
Other comprehensive loss		—		—		—		—		—			—			(3.4	)		(3.4	)
Shares issued under employee plans		—		—		0.2		—		—			—			—			—
Shares purchased under employee plans and other		—		—		—		—		(0.8	)		—			—			(0.8	)
Stock-based compensation		—		—		—		—		5.4			—			—			5.4
Dividends on preferred stock		—		—		—		—		(7.8	)		—			—			(7.8	)
Balance at September 30, 2019		3.1	$	129.4		50.4	$	0.5	$	2,676.8		$	(2,755.4	)	$	(178.9	)	$	(127.6	)

September 30,
2017 December 31,
2016
Assets
Current assets
Cash and cash equivalents $ 43.7
$ 9.7
Receivables, less allowances of $10.3 and $9.9 170.0
178.6
Inventory, materials and supplies 19.8
22.7
Prepaid expenses 17.7
15.0
Other current assets 6.6
3.9
Total current assets 257.8
229.9
Property, plant and equipment, net 1,112.8
1,085.5
Investment in CyrusOne —
128.0
Goodwill 18.6
14.3
Deferred income taxes, net 50.4
64.5
Other noncurrent assets 17.7
18.8
Total assets $ 1,457.3
$ 1,541.0
Liabilities and Shareowners’ Deficit
Current liabilities
Current portion of long-term debt $ 12.0
$ 7.5
Accounts payable 109.0
105.9
Unearned revenue and customer deposits 32.6
36.3
Accrued taxes 19.2
12.9
Accrued interest 13.4
12.7
Accrued payroll and benefits 35.3
25.7
Other current liabilities 31.2
31.9
Total current liabilities 252.7
232.9
Long-term debt, less current portion 1,120.8
1,199.1
Pension and postretirement benefit obligations 186.3
197.7
Other noncurrent liabilities 31.0
33.0
Total liabilities 1,590.8
1,662.7
Shareowners’ deficit
Preferred stock, 2,357,299 shares authorized, 155,250 shares (3,105,000 depositary shares) of 6 ³/₄% Cumulative Convertible Preferred Stock issued and outstanding at September 30, 2017 and December 31, 2016; liquidation preference $1,000 per share ($50 per depositary share)
129.4
129.4
Common shares, $.01 par value; 96,000,000 shares authorized; 42,182,031 and 42,056,237 shares issued; 42,182,031 and 42,056,237 shares outstanding at September 30, 2017 and December 31, 2016 0.4
0.4
Additional paid-in capital 2,567.3
2,570.9
Accumulated deficit (2,680.8 ) (2,732.1 )
Accumulated other comprehensive loss (149.8 ) (90.3 )
Total shareowners’ deficit (133.5 ) (121.7 )
Total liabilities and shareowners’ deficit $ 1,457.3
$ 1,541.0

The accompanying notes are an integral part of the condensed consolidated financial statements.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

CONDENSED CONSOLIDATED ~~STATEMENTS OF CASH FLOWS~~

BALANCE SHEETS

(Dollars in ~~millions)~~millions, except share amounts)

(Unaudited)

	September 30,			December 31,
	2020			2019
Assets
Current assets
Cash and cash equivalents	$	8.8		$	11.6
Receivables, less allowances of $20.2 and $14.3		280.1			307.7
Inventory, materials and supplies		28.7			44.6
Prepaid expenses		30.8			28.3
Other current assets		13.2			11.6
Total current assets		361.6			403.8
Property, plant and equipment, net		1,732.5			1,780.8
Operating lease right-of-use assets		34.1			35.8
Goodwill		159.3			160.5
Intangible assets, net		143.4			155.4
Deferred income tax assets		86.2			59.3
Other noncurrent assets		46.7			58.2
Total assets	$	2,563.8		$	2,653.8
Liabilities and Shareowners’ Deficit
Current liabilities
Current portion of long-term debt	$	21.6		$	22.3
Accounts payable		223.6			284.6
Unearned revenue and customer deposits		50.3			59.1
Accrued taxes		20.4			29.1
Accrued interest		24.5			26.8
Accrued payroll and benefits		62.8			49.0
Other current liabilities		46.9			52.6
Total current liabilities		450.1			523.5
Long-term debt, less current portion		1,936.4			1,901.3
Operating lease liabilities		30.9			32.1
Pension and postretirement benefit obligations		216.9			215.5
Pole license agreement obligation		37.1			38.0
Deferred income tax liability		10.8			11.7
Other noncurrent liabilities		86.1			71.7
Total liabilities		2,768.3			2,793.8
Shareowners’ deficit
Preferred stock, 2,357,299 shares authorized, 155,250 shares (3,105,000 depositary shares) of 6 3/4% Cumulative Convertible Preferred Stock issued and outstanding at September 30, 2020 and December 31, 2019; liquidation preference $1,000 per share ($50 per depositary share)		129.4			129.4
Common shares, $.01 par value; 96,000,000 shares authorized; 50,680,605 and 50,420,700 shares issued and outstanding at September 30, 2020 and December 31, 2019		0.5			0.5
Additional paid-in capital		2,671.5			2,676.2
Accumulated deficit		(2,826.0	)		(2,776.0	)
Accumulated other comprehensive loss		(179.9	)		(170.1	)
Total shareowners’ deficit		(204.5	)		(140.0	)
Total liabilities and shareowners’ deficit	$	2,563.8		$	2,653.8

~~(Unaudited)~~

Nine Months Ended
September 30,
2017 2016
Cash flows from operating activities
Net income $ 51.3
$ 103.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 140.1
134.7
Loss on extinguishment of debt, net —
14.2
Gain on sale of Investment in CyrusOne (117.7 ) (151.9 )
Provision for loss on receivables 5.6
7.2
Noncash portion of interest expense 1.5
2.4
Deferred income taxes 35.9
59.3
Pension and other postretirement payments less than (in excess of) expense 2.1
(3.9 )
Stock-based compensation 5.2
4.8
Other, net 1.1
(3.1 )
Changes in operating assets and liabilities, net of effects of acquisitions:
Decrease (increase) in receivables 20.8
(11.0 )
Increase in inventory, materials, supplies, prepaid expenses and other current assets (1.7 ) (6.0 )
Increase (decrease) in accounts payable 2.4
(3.9 )
Increase (decrease) in accrued and other current liabilities 11.1
(3.9 )
Decrease (increase) in other noncurrent assets 1.8
(2.1 )
(Decrease) increase in other noncurrent liabilities (2.7 ) 1.4
Net cash provided by operating activities 156.8
141.6
Cash flows from investing activities
Capital expenditures (148.2 ) (188.8 )
Increase in restricted cash —
(90.7 )
Proceeds from sale of Investment in CyrusOne 140.7
181.2
Acquisitions of businesses (9.6 ) —
Dividends received from Investment in CyrusOne —
6.2
Other, net 0.3
(0.8 )
Net cash used in investing activities (16.8 ) (92.9 )
Cash flows from financing activities
Proceeds from issuance of long-term debt —
425.0
Net (decrease) increase in corporate credit and receivables facilities with initial maturities less than 90 days (89.5 ) 5.9
Repayment of debt (6.4 ) (461.0 )
Debt issuance costs (1.3 ) (8.4 )
Dividends paid on preferred stock (7.8 ) (7.8 )
Common stock repurchase —
(4.8 )
Other, net (1.0 ) 3.5
Net cash used in financing activities (106.0 ) (47.6 )
Net increase in cash and cash equivalents 34.0
1.1
Cash and cash equivalents at beginning of period 9.7
7.4
Cash and cash equivalents at end of period $ 43.7
$ 8.5

Noncash investing and financing transactions:
Accrual of CyrusOne dividends $ —
$ 1.2
Acquisition of property by assuming debt and other noncurrent liabilities $ 16.7
$ 10.9
Acquisition of property on account $ 19.8
$ 43.0

The accompanying notes are an integral part of the condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)

	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities
Net loss	$	(50.0	)	$	(46.0	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		220.8			229.1
Provision for loss on receivables		11.6			9.1
Noncash portion of interest expense		4.1			4.8
Deferred income taxes		(26.4	)		(8.4	)
Pension and other postretirement payments less than (in excess of) expense		0.3			(0.2	)
Stock-based compensation		4.2			5.4
Other, net		(0.7	)		(3.4	)
Changes in operating assets and liabilities:
Decrease in receivables		14.8			82.4
Decrease (increase) in inventory, materials, supplies, prepaid expenses and other current assets		12.2			(0.6	)
Decrease in accounts payable		(56.6	)		(76.4	)
Decrease in accrued and other current liabilities		(12.2	)		(12.1	)
Decrease in other noncurrent assets		9.9			7.7
Increase (decrease) in other noncurrent liabilities		6.9			(2.5	)
Net cash provided by operating activities		138.9			188.9
Cash flows from investing activities
Capital expenditures		(159.2	)		(167.3	)
Other, net		(1.6	)		0.3
Net cash used in investing activities		(160.8	)		(167.0	)
Cash flows from financing activities
Net increase (decrease) in corporate credit and receivables facilities with initial maturities less than 90 days		48.0			(8.1	)
Repayment of debt		(19.3	)		(13.4	)
Debt issuance costs		(0.5	)		(0.8	)
Dividends paid on preferred stock		(7.8	)		(7.8	)
Other, net		(1.1	)		(0.8	)
Net cash provided by (used in) financing activities		19.3			(30.9	)
Effect of exchange rate changes on cash and cash equivalents		(0.2	)		0.1
Net decrease in cash and cash equivalents		(2.8	)		(8.9	)
Cash and cash equivalents at beginning of period		11.6			15.4
Cash and cash equivalents at end of period	$	8.8		$	6.5
Noncash investing and financing transactions:
Acquisition of property by assuming debt and other noncurrent liabilities	$	4.0		$	13.4
Acquisition of property on account	$	23.7		$	26.1

~~Table~~

The accompanying notes are an integral part of ~~Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

the condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.	~~Description of Business and Accounting Policies~~

1. Description of Business and Accounting Policies

Description of Business — Cincinnati Bell Inc. and its consolidated subsidiaries ("Cincinnati Bell," "we," "our," "us" or the "Company") ~~provides~~provide diversified telecommunications and technology services. The Company generates a large portion of its revenue by serving customers in ~~the Greater~~ Cincinnati, ~~and~~Ohio, Dayton, Ohio ~~areas.~~and the islands of Hawaii. An economic downturn or natural disaster occurring in ~~this,~~these, or a portion of ~~this,~~these, limited operating ~~territory~~territories could have a disproportionate effect on our business, financial condition, results of operations and cash flows compared to similar companies of a national scope and similar companies operating in different geographic areas.

The Company has receivables with ~~one large~~1 customer, ~~General Electric Company, that makes~~Verizon Communications Inc., which make up ~~14%~~11% and ~~21%~~25% of the outstanding accounts receivable balance at September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. ~~This same customer represented 12%~~Revenue derived from foreign operations was approximately 5% of consolidated revenue for the three and nine months ended September 30, ~~2016.~~

~~Merger~~2020 and ~~Acquisition Activity —~~ On October 2, 2017, we consummated our previously announced acquisition of OnX Holdings LLC ("OnX"), a privately held company that provides technology services and solutions to enterprise customers in the U.S., Canada and the U.K. The acquisition of OnX, originally announced on July 10, 2017, indicated that the purchase price of $201 million was subject to customary post-closing adjustments. Based on preliminary working capital adjustments, the cash consideration exchanged for the acquisition on October 2, 2017 was $242.3 million. The final purchase price is subject to completion of post-closing adjustments. The initial accounting for the business combination was not complete at the time the financial statements were issued due to the timing of the acquisition and the filing of this Quarterly Report on Form 10-Q. As a result, disclosures required under ASC 805-10-50, Business Combinations, are not possible at this time.

On July 9, 2017, the Company and Hawaiian Telcom Holdco, Inc., a Delaware corporation (“Hawaiian Telcom”), entered into an Agreement and Plan of Merger (the "Hawaiian Telcom Merger Agreement") providing for the merger of Hawaiian Telcom with a wholly-owned subsidiary of the Company in exchange for the consideration described below. Hawaiian Telcom is a fiber-centric technology leader providing voice, video, broadband, data center and cloud solutions to consumer, business and wholesale customers on the Hawaiian islands.

At the effective time of the merger, each share of Hawaiian Telcom common stock, par value of $0.01 per share, issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive, at the holder’s election and subject to proration as set forth in the Hawaiian Telcom Merger Agreement (1) 1.6305 common shares, par value $0.01 per share, of the Company (the “Company Common Shares”) (the “Share Consideration”); (2) 0.6522 Company Common Shares and $18.45 in cash, without interest (the “Mixed Consideration”); or (3) $30.75 in cash, without interest (the “Cash Consideration”). Hawaiian Telcom stockholders who elect to receive the Share Consideration or the Cash Consideration will be subject to proration to ensure that the aggregate number of Company Common Shares to be issued by the Company in the Hawaiian Telcom Merger and the aggregate amount of cash to be paid in the Hawaiian Telcom Merger will be the same as if all electing stockholders received the Mixed Consideration.

Based on (1) the closing price of Cincinnati Bell’s common shares of $19.45 as of October 27, 2017, (2) the number of shares of Hawaiian Telcom common stock outstanding as of August 8, 2017, (3) the number of shares of Hawaiian Telcom common stock potentially issuable in respect of RSUs under Hawaiian Telcom benefit and compensation plans between August 17, 2017 and the closing date and (4) the number of shares of Hawaiian Telcom common stock potentially issuable in respect of Annual and Retention Bonuses under Hawaiian Telcom benefit and compensation plans outstanding between August 17, 2017 and the closing date (which aggregate number of shares of Hawaiian Telcom common stock in clauses (2) through (4) equals the maximum number of shares of Hawaiian Telcom common stock that could be outstanding as of the closing date), the estimated total consideration, less Hawaiian Telcom’s existing indebtedness of approximately $310 million as of June 30, 2017 to be repaid in conjunction with the merger, is approximately $380 million. The estimated total consideration expected to be transferred may not represent what the actual total consideration transferred will be when the merger is completed. The fair value of equity securities issued as part of the total consideration transferred is required to be measured on the closing date of the merger at the then current number of Hawaiian Telcom shares of common stock outstanding and RSUs that will vest between August 17, 2017 and the closing date. This requirement will likely result in equity and cash components different from what has been estimated as of September 30, 2017.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

The merger is subject to standard closing conditions including the approval of Hawaiian Telcom's stockholders, the approval of the listing of additional shares of Cincinnati Bell common stock to be issued to Hawaiian Telcom’s stockholders, required federal and state regulatory approvals and other customary closing conditions. We expect the merger to close in the second half of 2018.

In connection with the mergers with Hawaiian Telcom and OnX, we secured financing for $1,150 million in senior secured credit facilities and senior notes, as described in Note 3, that, in addition to cash on hand and other sources of liquidity, are expected to be used to repay the existing indebtedness of Hawaiian Telcom, pay the cash consideration for both mergers, repay certain indebtedness of the Company and pay the fees and expenses in connection with both mergers.

2019.

Basis of Presentation — The Condensed Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, other comprehensive income, financial position and cash flows for each period presented.

The adjustments referred to above are of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations for interim reporting.

The Condensed Consolidated Balance Sheet as of December 31, ~~2016~~2019 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s ~~2016~~2019 Annual Report on Form 10-K. Operating results for the three and nine months ended September 30, ~~2017~~2020 are not necessarily indicative of the results expected for the full year or any other interim period.

~~Business Combinations —~~ In accounting for business combinations, we apply the accounting requirements of ASC 805, “Business Combinations,” which requires the recording of net assets of acquired businesses at fair value. In developing estimates of fair value of acquired assets and assumed liabilities, management analyzes a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets, and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. In addition, contingent consideration is presented at fair value at the date of acquisition. Transaction costs are expensed as incurred.

On February 28, 2017, we acquired SunTel Services, a private company that provides network security, data connectivity, and unified communications solutions to commercial and enterprise customers across multiple sectors throughout Michigan for cash consideration of $10.0 million. Based on final fair value assessment, the acquired assets and liabilities assumed consisted primarily of property plant and equipment of $0.4 million, customer relationship intangible assets of $1.2 million, working capital of $4.1 million and goodwill of $4.3 million. These assets and liabilities are included in the IT Services and Hardware segment.

Use of Estimates —Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates. 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 U.S. GAAP. Such matters are subject to many uncertainties and outcomes that are not predictable with assurance.

~~Investment~~

On March 13, 2020, in ~~CyrusOne —~~ response to the COVID-19 pandemic, the Federal Communications Commission (“FCC”) called on broadband and telephone service providers to keep Americans connected as the country reacts to the serious disruptions caused by the coronavirus outbreak. Cincinnati Bell, on behalf of all of its affiliates, including Hawaiian Telecom, signed on to the Keep Americans Connected pledge (“Pledge”) and committed to waive late fees for, and not terminate service to, any of our consumer or small business customers who did not pay their bills timely due to an inability to pay caused by the COVID-19 crisis. The Pledge expired on June 30, 2020 and beginning in July, the Company started initial communications to collect amounts that were past due and reinstated our standard collection practices. In accordance with regulatory orders in Hawaii, the Pledge has continued to be honored for certain regulated services through the date of this filing. As of September 30, 2020, our allowance for credit losses considered the current and potential future impacts caused by COVID-19 on each of the segments based on available information to date. It is reasonably possible that, as the economic factors and impacts of COVID-19 continue to evolve and the full impact of not terminating service is identified, the estimate could change and the effect could be material. While the stay at home orders have eased in certain markets, social distancing mandates communicated by the local, state and federal governments continue to impact how businesses must now operate and ultimately if they can remain open. With the exception of the incremental increase to the allowance for doubtful accounts, the Company is not aware of any other specific events or circumstances that would require updates to the Company’s estimates and judgements, or revisions to the carrying value of its assets or liabilities as of the date of issuance of these financial statements. These estimates may change, as new events occur and additional information is obtained, and such change requires an update in the consolidated financial statements. Actual results could differ from those estimates and any such differences may be material to the financial statements.

Accounting Policies —The complete summary of significant accounting policies is included in the notes to the consolidated financial statements as presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, "Investment in CyrusOne" on the Condensed Consolidated Balance Sheets was recorded at fair value, which was determined based on closing market price of CyrusOne Inc. at December 31, 2016. This investment is classified as Level 1 in the fair value hierarchy. Unrealized gains and losses on our investment in CyrusOne are included in "Accumulated other comprehensive loss", net of taxes on the Condensed Consolidated Balance Sheets.

In the first quarter of 2017, we sold our remaining 2.8 million shares of CyrusOne Inc. common stock for net proceeds totaling $140.7 million that resulted in a realized gain of $117.7 million. As of March 31, 2017, we no longer have an investment in CyrusOne Inc.

2019.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Income and Operating Taxes

Income taxes —~~The~~ In accordance with ASC 740-270, the Company’s income tax provision for interim periods is determined through the use of an estimated annual effective tax rate applied to year-to-date ~~ordinary income, as well as~~income/loss plus or minus the tax effects ~~associated with~~of discrete items. ~~The~~Since the Company ~~expects its~~is reporting a net loss before tax, the Company’s estimated annual effective tax rate ~~to exceed~~is lower than statutory rates ~~primarily due to non-deductible expenses.~~

~~During 2016,~~as a result of permanent items such as meals and entertainment expenses that are not fully deductible for tax. The net effect of several discrete items recorded increased the ~~Company reclassed $14.5 million of Alternative Minimum Tax ("AMT") refundable~~ tax ~~credits from "Deferred income taxes, net" to "Receivables" as these credits were expected to be utilized during 2017. In~~benefit in the nine months ended September 30, ~~2017,~~2020. Most significantly, the Company ~~reclassed~~released valuation allowances of $15.3 million during the nine months ended September 30, 2020, which were previously recorded on deferred tax assets related to interest expense for which the tax deduction was limited. The release of these valuation allowances was driven by the enactment of the U.S. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) on March 27, 2020, which contains provisions that increase the Company’s ability to deduct interest expense. Discrete tax benefits were offset, in part, by the $7.6 million tax effect of nondeductible transaction costs.

Operating taxes — The Company elected to record certain operating taxes such as property, sales, use, and gross receipts taxes including telecommunications surcharges as expenses, primarily within cost of services and products. These taxes are not included in income tax expense because the amounts to be paid are not dependent on our level of income. Liabilities for audit exposures are established based on management's assessment of the probability of payment. The provision for such liabilities is recognized as either property, plant and equipment, operating tax expense, or depreciation expense depending on the nature of the audit exposure. Upon resolution of an ~~additional $10.2 million from "Deferred income taxes, net" to "Receivables." In~~audit, any remaining liability not paid is released against the ~~second quarter of 2017,~~account in which it was originally recorded. During the three and nine months ended September 30, 2020, the Company ~~received $14.5~~had net releases of $0.3 million and $4.7 million, respectively, of ~~payments related~~sales and use tax reserve due primarily to favorable audit results. Certain telecommunication taxes and surcharges that are collected from customers are also recorded as revenue; however, in accordance with ASC 606, revenue associated with these charges is excluded from the transaction price.

Derivative Financial Instruments — The Company accounts for derivative financial instruments by recognizing derivative instruments as either assets or liabilities in the Condensed Consolidated Balance Sheets at fair value and recognizing the resulting gains or losses as adjustments to the ~~2016 AMT tax credits. Acceleration~~Condensed Consolidated Statements of the AMT refundable tax credits was the result of the Company's decision to make an election on its 2016 federal income tax return to claim the credits in lieu of claiming bonus depreciation. New tax legislation enacted in 2015 increased the amount of AMT credits that can be claimed beginning with the 2016 tax year.Operations or "Accumulated Other Comprehensive Loss." The Company ~~plans~~does not hold or issue derivative financial instruments for trading or speculative purposes.

For derivative instruments that hedge the exposure to ~~make~~variability in expected future cash flows that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is reported as a component of "Accumulated Other Comprehensive Loss" in stockholder's equity and reclassified into earnings in the same ~~election~~period or periods during which the hedged transaction affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on ~~its 2017 federal income tax return.~~

hedged transactions. Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period.

Recently Issued Accounting Standards—

In ~~May 2017,~~August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2017-09, Compensation~~2020-06, Debt - ~~Stock Compensation, which amends~~Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The ASU reduces the ~~scope~~number of ~~modification~~ accounting models for ~~share-based payment arrangements.~~convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As compared with current U.S. GAAP, more convertible debt instruments will be reported as a single liability instrument and the interest rate of more convertible debt instruments will be closer to the coupon interest rate. In addition, the ASU increases information related to disclosures for convertible instruments and aligns the consistency of diluted Earnings Per Share ("EPS") calculations for convertible instruments by requiring that (1) an entity use the if-converted method and (2) share settlement be included in the diluted EPS calculation for both convertible instruments and equity contracts when those contracts include an option of cash settlement or share settlement. The ASU is effective for ~~public business entities for annual periods~~fiscal years beginning after December 15, ~~2017. The Company plans to prospectively adopt the standard effective January 1, 2018 and will apply the amended guidance to any awards modified on or after this date.~~

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Period Pension Cost and Net Periodic Postretirement Benefit Cost, which amends the requirements in Accounting Standards Codification ("ASC") 715 related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. The ASU requires entities to disaggregate the current service cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and present the other components elsewhere in the income statement and outside of income from operations if such a subtotal2021, including interim periods within those fiscal years. Early adoption is presented on a retrospective basis as of the date of adoption. In addition, only the service cost component of net benefit cost is eligible for capitalization on a prospective basis. The ASU is effective for public business entities for annual periods beginning after December 15, 2017. The Company plans to adopt the standard effective January 1, 2018, and will be applied retrospectively for prior periods. The Company estimates approximately $2 million and $1 million of other components of net benefit cost will be reclassed from "Cost of Services" and "Selling, general and administrative," respectively, to a new line below Operating income, "Other components of pension and postretirement benefit plans expense," on the Consolidated Statements of Operations upon adoption.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. Under the amended guidance, the Company shall now recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit's fair value. The new standard is effective for public entities for annual reporting periodspermitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. ~~Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.~~ The Company ~~early adopted~~is currently evaluating the ~~amended~~impact this guidance may have on its condensed consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. These amendments are effective ~~January 1, 2017~~as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 and ~~will apply~~may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating our contracts and the ~~guidance when performing~~optional expedients provided by the ~~annual impairment test in the fourth quarter of 2017.~~new standard.

In ~~November~~June 2016, the FASB issued ASU ~~2016-16, Statement of Cash Flow - Restricted Cash,~~2016-13, Financial Instruments – Credit Losses (Topic 326), which ~~amends ASC 230 to require that a statement of cash flows explain~~replaces the change during the period in total cash, cash equivalents, and amounts described as restricted cash. As a result, amounts classified as restricted cash will now be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company plans to early adopt the standard effective December 31, 2017. The adoption of this standard will not result in a prior period adjustment for the twelve months ended December 31, 2016.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow - Classification of Certain Cash Receipts and Cash Payments, which amends ASC 230 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The FASB issued the ASUincurred loss model with the ~~intent~~current expected credit loss (“CECL”) model to estimate credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures. The CECL model requires a company to estimate credit losses expected over the life of reducing diversity in practice. The new standard is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. The impact of adopting this standard effective January 1, 2018 is not expected to have a material affect on the Company’s consolidated statement of cash flows.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

~~In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies various aspects related to how share-based payments are accounted for and presented in~~ the financial ~~statements. The new guidance requires excess tax benefits~~assets based on all relevant information including historical information, current conditions and ~~tax deficiencies to be recorded in~~reasonable and supportable forecasts that affect the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The standard also allows us to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. The new standard was adopted effective January 1, 2017.

The primary impact of adoption is the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital starting in the first quarter of fiscal year 2017. Additional amendments to the accounting for income taxes and minimum statutory withholding tax requirements had no impact to retained earnings ascollectability of the date of adoption. Effective January 1, 2017, we adopted a prospective company-wide policy change due to the change in accounting principle and now record forfeitures as they are incurred on a go-forward basis. As a result of the change in accounting principle, the cumulative-effect adjustment to retained earnings to account for the accounting policy election was immaterial to the financial statements.

The presentation requirements for cash flows related to excess tax benefits were applied retrospectively to all periods presented and did not result in a material impact to prior period net cash provided by operations and net cash used in financing. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in our consolidated cash flows statements since such cash flows have historically been presented as a financing activity.

In February 2016, the FASB issued ASU 2016-02, Leases, which represents a wholesale change to lease accounting. The standard introduces a lessee model that brings most leases on the balance sheet as well as aligns certain underlying principles of the new lessor model with those in ASC 606. The newamounts. This standard is effective for public entities for fiscal years beginning after December 15, ~~2018, and lessees and lessors are required to use~~2019. The standard requires a modified retrospective ~~transition method for existing leases. The Company is in the process of evaluating the impact of adoption of this ASU on the Company’s consolidated financial statements.~~

The FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments in January 2016. The amended guidance requires entities to carry all investments in equity securities at fair value through net income unless the entity has elected the practicability exception to fair value measurement. This standard will be effective for the fiscal year ending December 31, 2018 and will requireapproach by recording a cumulative-effect adjustment to ~~beginning~~ retained earnings ~~on this date.~~as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 was amended in November 2018 by the provisions of ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, in April 2019 by the provisions of ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, in May 2019 by the provisions of ASU 2019-05, Financial Instruments – Credit Loses (Topic 326), and in November 2019 by the provisions of ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. The Company ~~is currently in the process of evaluating the impact of adoption of~~adopted this ASU ~~on the consolidated financial statements.~~

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard also includes expanded disclosure requirements that result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. In August 2015, ASU 2015-14 was issued deferring the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017 with an optional early application date for annual reporting periods beginning after December 15, 2016. The Company will adopt the standard and all subsequent amendments ~~in the first quarter~~effective January 1, 2020. The adoption of ~~the fiscal year ending December 31, 2018.~~

~~The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative~~this standard, as amended, did not have a material effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). We currently anticipate adopting the standard using the full retrospective method to restate each prior reporting period presented. Our ability to adopt using the full retrospective method is dependent on the ~~successful and timely implementation of a revenue software application procured from a third-party provider, as well as the completion of our analysis of information necessary to restate prior period~~Company’s condensed consolidated financial statements.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Other accounting standards that have reached conclusions on our key accounting assessments related to the standard and are finalizing our accounting policies. Based on our initial assessment, we believe the timing of revenue recognition for our Entertainment and Communications segment, and certain revenue streams within our IT Services and Hardware segment, will not materially change. However, we are continuing to assess the potential impact of the standard on the treatment of Telecom and IT hardware revenue and our current practice of recording hardware revenue on a gross basis versus net. As a part of this assessment, we are analyzing ASU 2016-08, ~~Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~,been issued or proposed by the FASB ~~in March 2016. ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations focusing on~~or other standard-setting bodies that do not require adoption until a ~~control model rather than a risk and reward model. This guidance could materially change revenue and cost of products. In addition, we~~future date are still finalizing our accounting policies related to variable consideration, rebates and certain contract assets and liabilities. We are still assessing the full impact of disclosure requirements; however, upon adopting FASB ASC Topic 606, we will provide additional disclosures in the notes to the consolidated financial statements related to disaggregated revenue, contract balances and performance obligations.

In preparation for adoption of the standard, we have implemented internal controls, new system functionality and revised business processes to prepare financial information in accordance with the standard. These new processes and procedures ensure data utilized for financial reporting is complete and accurate and is assessed in accordance with the guidelines of the standard. We are assessing new internal controls to address risks associated with applying the five-step model, as well as monitoring controls to identify new sales arrangements or changes in our business environment that will affect our current accounting assessment.

~~No other new accounting pronouncement issued or effective during the year had, or is~~not expected to have a material impact on the Company’s condensed consolidated financial ~~statements.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

statements upon adoption.

2. Earnings Per Common Share

Basic ~~earnings per common share (“EPS”)~~EPS is based upon the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would occur upon ~~the~~ issuance of common shares for awards under stock-based compensation plans ~~the exercise of warrants~~ or ~~the~~ conversion of preferred stock, but only to the extent that they are considered dilutive.

The following table shows the computation of basic and diluted EPS:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	2020			2019			2020			2019
Numerator:
Net loss	$	(8.2	)	$	(13.6	)	$	(50.0	)	$	(46.0	)
Preferred stock dividends		2.6			2.6			7.8			7.8
Net loss applicable to common shareowners - basic and diluted	$	(10.8	)	$	(16.2	)	$	(57.8	)	$	(53.8	)
Denominator:
Weighted average common shares outstanding - basic		50.7			50.4			50.6			50.4
Stock-based compensation arrangements		0			0			0			0
Weighted average common shares outstanding - diluted		50.7			50.4			50.6			50.4
Basic and diluted net loss per common share	$	(0.21	)	$	(0.32	)	$	(1.14	)	$	(1.07	)

Three Months Ended
September 30,
(in millions, except per share amounts) 2017 2016
Numerator:
Net (loss) income $ (11.2 ) $ 18.8
Preferred stock dividends 2.6
2.6
Net (loss) income applicable to common shareowners - basic and diluted $ (13.8 ) $ 16.2
Denominator:
Weighted average common shares outstanding - basic 42.2
42.0
Stock-based compensation arrangements —
0.1
Weighted average common shares outstanding - diluted 42.2
42.1
Basic (loss) earnings per common share $ (0.33 ) $ 0.39
Diluted (loss) earnings per common share $ (0.33 ) $ 0.38

Nine Months Ended
September 30,
(in millions, except per share amounts) 2017 2016
Numerator:
Net income $ 51.3
$ 103.4
Preferred stock dividends 7.8
7.8
Net income applicable to common shareowners - basic and diluted $ 43.5
$ 95.6
Denominator:
Weighted average common shares outstanding - basic 42.1
42.0
Stock-based compensation arrangements 0.2
0.1
Weighted average common shares outstanding - diluted 42.3
42.1
Basic earnings per common share $ 1.03
$ 2.28
Diluted earnings per common share $ 1.03
$ 2.27

For the three and nine months ended September 30, ~~2017,~~2020 and 2019, the Company had a net loss available to common shareholders and, as a result, all common stock equivalents were excluded from the computation of diluted EPS as their inclusion would have been anti-dilutive. For the nine months ended September 30, 2017, awards under the Company's stock-based compensation plans for common shares of 0.2 million were excluded from the computation of diluted EPS as the inclusion would have been anti-dilutive. For the three and nine months ended September 30, 2016, awards under the Company's stock-based compensation plans for common shares of 0.2 million and 0.4 million, respectively, were excluded from the computation of diluted EPS as the inclusion would have been anti-dilutive. For all periods presented, preferred stock convertible into 0.9 million common shares was excluded as it was anti-dilutive.

3. Mergers and Acquisitions

Pending Acquisition by MIP

On December 21, 2019, the Company entered into an Agreement and Plan of Merger (as amended from time to time, the “Brookfield Merger Agreement”) with affiliates of the Brookfield Infrastructure Group (“Brookfield”), the infrastructure investment division of Brookfield Asset Management, which was subsequently amended. Pursuant to the amended Brookfield Merger Agreement, the Company would be acquired by an affiliate of Brookfield for $14.50 per Common Share.

On March 13, 2020, the Company terminated the Brookfield Merger Agreement and entered into an Agreement and Plan of Merger (the “MIP Merger Agreement”) pursuant to which the Company will be acquired by an affiliate of Macquarie Infrastructure Partners V (“MIP”), a fund managed by Macquarie Infrastructure and Real Assets (the “MIP Merger”). At the effective time of the MIP Merger (the “Effective Time”), each of our issued and outstanding Common Shares will be converted into the right to receive $15.50 in cash per Common Share, without interest, and the 6 3/4% Cumulative Convertible Preferred Shares will remain issued and outstanding as 6 ³/₄% Cumulative Convertible Preferred Shares of the Company, without par value, following the Effective Time.

~~Table~~

In connection with the termination of ~~Contents~~the Brookfield Merger Agreement in the first quarter of 2020, the Company paid to an affiliate of Brookfield a termination fee of $24.8 million as required by the terms of the Brookfield Merger Agreement. The termination fee is recorded in “Transaction and integration costs” on the Condensed Consolidated Statements of Operations.

The consummation of the MIP Merger is subject to customary closing conditions, including (i) the adoption of the MIP Merger Agreement by the affirmative vote of the holders of at least two-thirds of all outstanding Common Shares and 6 ³/₄% Cumulative Convertible Preferred Shares, voting as a single class; (ii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the receipt of any required consents or approvals from (a) the Committee on Foreign Investment in the United States, (b) the Federal Communications Commission, (c) state public service and state public utility commissions and (d) local regulators in connection with the provision of telecommunications and media services; and (iv) the absence of any legal restraint preventing the consummation of the MIP Merger. On May 7, 2020, the shareholders of the Company adopted the MIP Merger Agreement at a virtual special meeting of shareholders.

The MIP Merger Agreement contains representations and warranties and covenants of the parties customary for a transaction of this nature.

The MIP Merger is expected to close in the first half of 2021, although there can be no assurance that the MIP Merger will occur by that date. At the Effective Time, the Company will cease to be a publicly traded company as a result of the completion of the MIP Merger.

Consent Solicitation for 7.000% Senior Notes due 2024 and 8.000% Senior Notes due 2025

On June 15, 2020, the Company announced that it had commenced consent solicitations (the “Consent Solicitations”) with respect to certain proposed amendments to the (i) indenture, dated as of September 22, 2016 (as supplemented and amended, the “2024 Notes Indenture”) governing its 7.000% Senior Notes due 2024 (the “2024 Notes”) and (ii) indenture, dated as of October 6, 2017 (as supplemented and amended, the “2025 Notes Indenture,” and together with the 2024 Notes Indenture, the “Indentures”) governing its 8.000% Senior Notes due 2025 (the “2025 Notes,” and together with the 2024 Notes, the “Notes”).

Upon the terms and subject to the conditions described in the consent solicitation statement, dated June 15, 2020 (as supplemented by the Company's press release, dated June 22, 2020, the Company's press release, dated June 25, 2020, the supplement to the consent solicitation statement, dated June 25, 2020 and the Company's press release, dated June 30, 2020, the “Consent Solicitation Statement”), the Company solicited consents in order to (i) amend the definition of “Change of Control” in the Indentures so that the MIP Merger would not constitute a Change of Control and (ii) add a definition of, and designate certain persons, including MIP and its affiliates and Ares Management Corporation and its affiliates as, “Permitted Holders” (collectively, the “Proposed Amendments”).

On July 2, 2020 (the “Effective Date”), following receipt of the requisite consents from holders of the Notes pursuant to the Consent Solicitations to amend certain provisions of the Indentures, which Consent Solicitations expired at 5:00 p.m., New York City time on July 2, 2020, the Company, certain of the Company’s subsidiaries, as guarantors, and Regions Bank, as trustee, entered into a sixth supplemental indenture, dated as of July 2, 2020 (the “Sixth Supplemental Indenture”) to the 2024 Notes Indenture and a second supplemental indenture, dated as of July 2, 2020 to the 2025 Notes Indenture (the “Second Supplemental Indenture”, and, together with the Sixth Supplemental Indenture, the “Supplemental Indentures”).

Subject to the terms and conditions in the Consent Solicitation Statement (including the consummation of the MIP Merger), holders who validly delivered (and did not validly revoke) their consents on or prior to the Effective Date are eligible to receive (i) with respect to the 2024 Notes, an aggregate cash payment of $2,812,500, on a pro rata basis (based on aggregate principal amount of 2024 Notes for which consents have been validly delivered and not revoked), and (ii) with respect to the 2025 Notes, an aggregate cash payment of $1,050,000, on a pro rata basis (based on aggregate principal amount of 2025 Notes for which consents have been validly delivered and not revoked). The Company expects to make this cash payment substantially concurrently with the consummation of the MIP Merger.

The Supplemental Indentures became effective upon execution thereof, but the Proposed Amendments will only become operative upon the occurrence of certain conditions described in the Supplemental Indentures, including payment of the consent fees pursuant to the Consent Solicitations. If the conditions described in the Supplemental Indentures are not satisfied, the Indentures will revert to the form in effect immediately prior to the Effective Date. In addition, subject to the terms and conditions described in the Consent Solicitation Statement and upon satisfaction or waiver of such conditions, including the consummation of the MIP Merger, the Company will secure the Notes and the related guarantees on a pari passu basis (subject to certain exceptions) with the new senior secured credit facilities expected to be entered into in connection with the MIP Merger (the “Collateral”). Any Collateral granted by the Company (but not its subsidiaries) to secure the Notes will also secure the Issuer’s 7.25% Senior Notes due 2023 and any Collateral granted by the Company’s subsidiary Cincinnati Bell Telephone Company LLC (“CBT”) to secure the Notes will also secure CBT’s 6.30% Senior Notes due 2028, in each case on an equal and ratable basis.

4. Revenue

The Entertainment and Communications segment provides products and services to both residential and commercial customers that can be categorized as either Fioptics in Cincinnati or Consumer/SMB in Hawaii (collectively, "Consumer/SMB"), Enterprise Fiber or Legacy. The products and services within these three categories can be further categorized as either Data, Voice, Video or Other. Consumer/SMB and Legacy revenue includes both residential and commercial customers. Enterprise Fiber revenue includes ethernet and dedicated internet access services that are provided to enterprise customers, as well as revenue associated with the trans-Pacific submarine cable ("SEA-US").

Residential customers have implied month-to-month contracts. Commercial customers, with the exception of contracts associated with the SEA-US, typically have contracts with a duration of one to five years and automatically renew on a month-to-month basis. Customers are invoiced on a monthly basis for services rendered. Contracts for projects that are included within the Other revenue stream are typically short in duration and less than one year. Contracts associated with the SEA-US typically range from 15 to 25 years, and payment is prepaid.

The IT Services and Hardware segment provides a full range of Information Technology ("IT") solutions, including Communications, Cloud and Consulting services. IT Services and Hardware customers enter into contracts that have a typical duration of one to five years, with varied renewal options at the end of the term. Customers are invoiced on a monthly basis for services rendered. The IT Services and Hardware segment also provides enterprise customers with Infrastructure Solutions, which includes the sale of hardware and maintenance contracts. These contracts are typically satisfied in less than twelve months and revenue is recognized at a point in time.

The Company has elected the practical expedient described in ASC 606-10-32-18 that allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects that the period of time between the transfer of a promised good or service to the customer and when the customer pays for such good or service will be one year or less. Customers are typically billed immediately upon the rendering of services or the delivery of products. Payment terms for customers are between 30 and 120 days. Subsequent to the acquisition of Hawaiian Telcom Holdco., Inc. ("Hawaiian Telcom"), the Company began recognizing a financing component associated with the up-front payments for services to be delivered under indefeasible right of use ("IRU") contracts for fiber circuit capacity. The IRU contracts are primarily associated with the SEA-US. The IRU contracts typically have a duration ranging from 15 to 25 years.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, or a series of distinct goods or services, and is the unit of account defined in ASC Topic 606. The transaction price identified in the contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contract modifications for changes to services provided are routine throughout the term of our contracts. In most instances, contract modifications are for the addition or reduction of services that are distinct, and price changes are based on the stand-alone selling price of the service and, as such, are accounted for on a prospective basis as a new contract.

Goods and services are sold individually, or a contract may include multiple goods or services. For contracts with multiple goods and services, the transaction price identified in the contract is allocated to each performance obligation using the stand-alone selling price of each distinct good or service in the contract.

Certain customers of the Company may receive cash-based rebates based on volume of sales, which are accounted for as variable consideration. Potential rebates are considered at contract inception in our estimate of transaction price based on the estimated projection of sales volume. Estimates are reassessed quarterly.

Performance obligations are satisfied either over time as services are performed or at a point in time. Substantially all of our service revenue is recognized over time. For services transferred over time, the Company has elected the practical expedient to recognize revenue based on amounts invoiced to the customer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the customer. Management considers this a faithful depiction of the transfer of control as services are provided evenly over the month and are substantially the same over the life of the contract. As the Company has elected the practical expedients detailed at ASC 606-10-50-13, revenue for these unsatisfied performance obligations that will be billed in future periods has not been disclosed.

As of September 30, 2020, our estimated revenue, including a financing component, expected to be recognized in the future related to performance obligations associated with customer contracts that are unsatisfied (or partially unsatisfied) is $35.5 million. Approximately 80% of this revenue is related to IRU contracts associated with the SEA-US. Certain IRU contracts extend for periods of up to 30 years and are invoiced at the beginning of the contract term. The revenue from such contracts is recognized over time as services are provided over the contract term. The expected revenue to be recognized for existing IRU contracts is as follows:

(dollars in millions)
Three months ended December 31, 2020	$	0.8
2021		2.5
2022		2.6
2023		2.5
2024		2.6
Thereafter		24.5

Entertainment and Communications

The Company has identified four distinct performance obligations in the Entertainment and Communications segment, namely Data, Voice, Video and Other. For each of the Data, Voice and Video services, service is delivered to the customer continuously and in a substantially similar manner for each period of the agreement, the customer takes full control over the services as the service is delivered, and as such Data, Voice and Video are identified to be a series of distinct services. Services provided by the Entertainment and Communications segment can be categorized into three main categories that include Consumer/SMB, Enterprise Fiber and Legacy, each of which may include one or more of the aforementioned performance obligations. Data services include high-speed internet access, digital subscriber lines, ethernet, routed network services, SONET (Synchronous Optical Network), dedicated internet access, wavelength, digital signal and IRU revenue. Voice services include traditional and fiber voice lines, switched access, digital trunking and consumer long distance calling. Video services are offered through our fiber network to residential and commercial customers based on various standard plans with the opportunity to add premium channels. To receive video services, customers are required to use the Company's set top boxes that are billed as part of the monthly recurring service. Set top boxes are not considered a separate performance obligation from video because the equipment is necessary for the service to operate and the customer has no alternative use for the equipment.

Services and products not included in Data, Voice or Video are included in Other revenue and are comprised of wire care, time and materials projects and advertising. Transfer of control of these services and products is evaluated on an individual project basis and can occur over time or at a point in time.

The Company uses multiple methods to determine stand-alone selling prices in the Entertainment and Communications segment. For Data, Video and Voice products in Consumer/SMB, market rate is the primary method used to determine stand-alone selling prices. For Data performance obligations under the Enterprise Fiber category, and Voice, Data and Other performance obligations under the Legacy category, stand-alone selling prices are determined based on a list price, discount off of list price, a tariff rate, a margin percentage range, or a minimum margin percentage.

IT Services and Hardware

The Company has identified four distinct performance obligations in the IT Services and Hardware segment. These performance obligations are Communications, Cloud, Consulting and Infrastructure Solutions. Communications services are monthly services that include data and VoIP services, tailored solutions that include converged IP communications of data, voice, video and mobility applications, enterprise long distance, MPLS (Multi-Protocol Label Switching) and conferencing services. Cloud services include storage, backup, disaster recovery, SLA-based monitoring and management, cloud computing and cloud consulting. Consulting services provide customers with IT staffing, consulting and emerging technology solutions. Infrastructure Solutions includes the sale of hardware and maintenance contracts as well as installation projects.

For the sale of hardware, the Company evaluated whether it is the principal or the agent. The Company has concluded it acts as an agent because it does not control the inventory before it is transferred to customers, it does not have the ability to direct the product to anyone besides the purchasing customer, and it does not integrate the hardware with any of its own goods or services. Based on this assessment, the performance obligation is to arrange a sale of hardware between the vendor and the customer. In the instance where there is an issue with the hardware, the Company coordinates with the manufacturer to facilitate a return in accordance with the standard manufacturer warranty. Hardware returns are not significant to the Company.

Within the IT Services and Hardware segment, stand-alone selling prices for the four performance obligations are determined based on either a margin percentage range, minimum margin percentage or standard price list.

For hardware sales, revenue is recognized net of the cost of product and is recognized when the hardware is either shipped or delivered in accordance with the terms of the contract. For certain projects within Communications and Consulting, revenue is recognized when the customer communicates acceptance of the services performed. For contracts with freight on board shipping terms, management has elected to account for shipping and handling as activities to fulfill the promise to transfer the good, and therefore has not evaluated whether shipping and handling activities are promised services to its customers.

Contract Balances

The Company recognizes incremental fulfillment costs as an asset when installation expenses are incurred as part of performing the agreement for Voice, Video and Data product offerings in the Entertainment and Communications segment in which the contract life is longer than one year. These fulfillment costs are amortized ratably over the expected life of the customer, which is representative of the expected period of benefit of the asset capitalized. The expected life of the customer is determined utilizing the average churn rate for each product. The Company calculates average churn based on the historical average customer life. We also recognize an asset for incremental fulfillment costs for certain Communications services in the IT Services and Hardware segment that require us to incur installation and provisioning expenses. The asset recognized for Communication services is amortized over the average contract life. Churn rates and average contract life are reviewed on an annual basis. Fulfillment costs are capitalized to “Other noncurrent assets.” The related amortization expense is recorded to “Cost of services and products.”

The Company recognizes an asset for the incremental costs of acquiring a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs related to Voice, Video, Data and certain Communications and Cloud services meet the requirements to be capitalized. The contract asset established for the costs of acquiring a contract is recorded to “Other noncurrent assets.” Sales incentives are amortized ratably over the period that services are delivered using either an average churn rate or average contract term, both representative of the expected period of benefit of the asset capitalized. Customer churn rates and average contract term assumptions are reviewed on an annual basis. The related amortization expense is recorded to “Selling, general and administrative.”

Management has elected to use the practical expedient detailed in ASC 340-40-25-4 to expense any costs to fulfill a contract and costs to obtain a contract as they are incurred when the amortization period would have been one year or less. This practical expedient has been applied to fulfillment costs that include installation costs associated with wiring projects and certain Cloud services. In addition, this practical expedient has been applied to acquisition costs associated with revenue from certain Communications projects.

The following table presents the activity for the Company’s contract assets:

	Fulfillment Costs									Cost of Acquisition									Total Contract Assets
(dollars in millions)	Entertainment and Communications			IT Services and Hardware			Total Company			Entertainment and Communications			IT Services and Hardware			Total Company			Entertainment and Communications			IT Services and Hardware			Total Company
Balance as of December 31, 2019	$	8.0		$	4.1		$	12.1		$	14.8		$	2.3		$	17.1		$	22.8		$	6.4		$	29.2
Additions		0.9			0.5			1.4			2.3			0.3			2.6			3.2			0.8			4.0
Amortization		(2.1	)		(0.6	)		(2.7	)		(2.0	)		(0.4	)		(2.4	)		(4.1	)		(1.0	)		(5.1	)
Balance as of March 31, 2020		6.8			4.0			10.8			15.1			2.2			17.3			21.9			6.2			28.1
Additions		0.9			0.4			1.3			2.2			0.3			2.5			3.1			0.7			3.8
Amortization		(2.0	)		(0.6	)		(2.6	)		(2.0	)		(0.4	)		(2.4	)		(4.0	)		(1.0	)		(5.0	)
Balance as of June 30, 2020		5.7			3.8			9.5			15.3			2.1			17.4			21.0			5.9			26.9
Additions		0.9			0.6			1.5			2.3			0.1			2.4			3.2			0.7			3.9
Amortization		(2.0	)		(0.6	)		(2.6	)		(2.1	)		(0.3	)		(2.4	)		(4.1	)		(0.9	)		(5.0	)
Balance as of September 30, 2020		4.6			3.8			8.4			15.5			1.9			17.4			20.1			5.7			25.8

The Company recognizes a liability for cash received upfront for IRU contracts. At September 30, 2020 and December 31, 2019, $1.6 million and $1.5 million, respectively, of contract liabilities were included in "Other current liabilities." At September 30, 2020 and December 31, 2019, $26.6 million and $27.1 million, respectively, of contract liabilities were included in "Other noncurrent liabilities."

Disaggregated Revenue

The following table presents revenues disaggregated by product and service lines:

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2020			2019			2020			2019
Data	$	119.8		$	119.5		$	358.8		$	356.5
Video		48.1			50.2			145.1			153.5
Voice		65.5			70.7			197.6			215.4
Other		7.6			8.1			23.0			23.9
Total Entertainment and Communications		241.0			248.5			724.5			749.3
Consulting		49.4			37.6			138.5			114.6
Cloud		21.1			22.6			63.0			69.8
Communications		53.9			51.3			160.3			147.0
Infrastructure Solutions		30.8			29.0			82.7			85.6
Total IT Services and Hardware		155.2			140.5			444.5			417.0
Intersegment revenue		(6.7	)		(6.5	)		(19.5	)		(20.0	)
Total revenue	$	389.5		$	382.5		$	1,149.5		$	1,146.3

The following table presents revenues disaggregated by contract type:

	Three Months Ended September 30,
(dollars in millions)	Entertainment and Communications				IT Services and Hardware				Intersegment revenue elimination						Total
	2020		2019		2020		2019		2020			2019			2020		2019
Products and Services transferred at a point in time	$	6.6	$	7.7	$	34.1	$	33.5	$	0		$	0		$	40.7	$	41.2
Products and Services transferred over time		229.5		235.5		119.3		105.8		0			0			348.8		341.3
Intersegment revenue		4.9		5.3		1.8		1.2		(6.7	)		(6.5	)		—		—
Total revenue	$	241.0	$	248.5	$	155.2	$	140.5	$	(6.7	)	$	(6.5	)	$	389.5	$	382.5

	Nine Months Ended September 30,
(dollars in millions)	Entertainment and Communications				IT Services and Hardware				Intersegment revenue elimination						Total
	2020		2019		2020		2019		2020			2019			2020		2019
Products and Services transferred at a point in time	$	19.1	$	23.6	$	93.2	$	95.2	$	0		$	0		$	112.3	$	118.8
Products and Services transferred over time		690.6		709.2		346.6		318.3		0			0			1,037.2		1,027.5
Intersegment revenue		14.8		16.5		4.7		3.5		(19.5	)		(20.0	)		—		—
Total revenue	$	724.5	$	749.3	$	444.5	$	417.0	$	(19.5	)	$	(20.0	)	$	1,149.5	$	1,146.3

5. Goodwill and Intangible Assets

Goodwill

The changes in the Company's goodwill consisted of the following:

(dollars in millions)	IT Services and Hardware			Entertainment and Communications		Total Company
Goodwill, balance as of December 31, 2019	$	148.1		$	12.4	$	160.5
Activity during the year:
Currency translations		(1.2	)		0		(1.2	)
Goodwill, balance as of September 30, 2020	$	146.9		$	12.4	$	159.3

NaN impairment losses were recognized in goodwill for the three and nine months ended September 30, 2020 and 2019.

Intangible Assets

The Company’s intangible assets consisted of the following:

	September 30, 2020							December 31, 2019
	Gross Carrying		Accumulated			Net		Gross Carrying		Accumulated			Net
(dollars in millions)	Amount (a)		Amortization			Amount		Amount (a)		Amortization			Amount
Customer relationships	$	140.0	$	(36.0	)	$	104.0	$	140.8	$	(28.4	)	$	112.4
Trade names		40.9		(8.4	)		32.5		41.3		(6.0	)		35.3
Technology		9.8		(2.9	)		6.9		9.9		(2.2	)		7.7
Total	$	190.7	$	(47.3	)	$	143.4	$	192.0	$	(36.6	)	$	155.4

(a)	Change in gross carrying amounts is due to foreign currency translation on certain intangible assets.

Amortization expense for intangible assets was $3.6 million and $10.8 million for the three and nine months ended September 30, 2020, respectively. Amortization expense for intangible assets was $3.7 million and $11.0 million for the three and nine months ended September 30, 2019, respectively. In addition to amortization expense, the changes in definite-lived intangible assets from December 31, 2019 to September 30, 2020 are due to foreign currency translation. NaN impairment losses were recognized for the three and nine months ended September 30, 2020 and 2019.

The estimated useful lives for each intangible asset class are as follows:

Customer relationships		8 to 15 years
Trade names		10 to 15 years
~~Form 10-Q Part I~~ Technology		~~Cincinnati Bell Inc.~~ 10 years

The annual estimated amortization expense for future years is as follows:

(dollars in millions)
Three months ended December 31, 2020	$	3.6
2021		14.1
2022		13.9
2023		13.5
2024		13.3
Thereafter		85.0
Total	$	143.4

During the third quarter of 2020, the Company participated in Auction 105 conducted by the FCC for Priority Access Licenses of the Citizens Band Radio Service Spectrum (“CBRS”). In September 2020, the FCC announced that the Company was the winning bidder of 56 wireless spectrum licenses for an aggregate price of $6.2 million. Prior to the inception of Auction 105 in June 2020, the Company deposited $1.7 million with the FCC. The deposit is included in “Other current assets” as of September 30, 2020 in the Condensed Consolidated Balance Sheets. On October 1, 2020, the Company paid the FCC the remaining $4.5 million of the purchase price for the licenses won in the auction. The Company expects the licenses to be transferred in the fourth quarter of 2020.

6. Debt

and Other Financing Arrangements

The Company’s debt consists of the following:

	September 30,			December 31,
(dollars in millions)	2020			2019
Current portion of long-term debt:
Credit Agreement - Tranche B Term Loan due 2024	$	6.0		$	6.0
Other financing arrangements		2.0			2.0
Finance lease liabilities		13.6			14.3
Current portion of long-term debt		21.6			22.3
Long-term debt, less current portion:
Receivables Facility		179.5			131.5
Credit Agreement - Revolving Credit Facility		57.0			57.0
Credit Agreement - Tranche B Term Loan due 2024		582.0			586.5
7 1/4% Senior Notes due 2023		22.3			22.3
7% Senior Notes due 2024		625.0			625.0
8% Senior Notes due 2025		350.0			350.0
Various Cincinnati Bell Telephone notes		87.9			87.9
Other financing arrangements		1.3			3.2
Finance lease liabilities		50.3			59.5
		1,955.3			1,922.9
Net unamortized premium	��	1.1			1.3
Unamortized note issuance costs		(20.0	)		(22.9	)
Long-term debt, less current portion		1,936.4			1,901.3
Total debt	$	1,958.0		$	1,923.6

(dollars in millions) September 30,
2017 December 31,
2016
Current portion of long-term debt:
Capital lease obligations and other debt $ 12.0
$ 7.5
Current portion of long-term debt 12.0
7.5
Long-term debt, less current portion:
Receivables Facility —
89.5
Corporate Credit Agreement - Tranche B Term Loan 315.8
315.8
       7 1/4% Senior Notes due 2023

22.3
22.3
       7% Senior Notes due 2024
625.0
625.0
Cincinnati Bell Telephone Notes 87.9
87.9
Capital lease obligations and other debt 72.4
62.0
1,123.4
1,202.5
Net unamortized premium 8.0
8.5
Unamortized note issuance costs (10.6 ) (11.9 )
         Long-term debt, less current portion 1,120.8
1,199.1
Total debt $ 1,132.8
$ 1,206.6

~~Corporate~~

Credit Agreement

~~There were no~~

The Company had $57.0 million of outstanding borrowings on the ~~Corporate~~Revolving Credit ~~Agreement's revolving credit facility,~~Facility, leaving ~~$150.0~~$143.0 million available for borrowings as of September 30, ~~2017. On October 2, 2017, the Company entered into a new Credit Agreement (the “Credit Agreement”) and Revolving Credit Facility that terminated the existing Corporate Credit Agreement.~~

~~New Revolving Credit Facility and Term Loan Facility (Credit Agreement)~~

~~In October 2017, the Company entered into a new Credit Agreement.~~2020. The Credit Agreement provides for (i) a five-year $200 million senior secured revolving credit facility (including both a letter of credit subfacility of up to $30 million and a swingline loan subfacility of up to $25 million) (the “Revolving Credit Facility”) and (ii) a seven-year $600 million senior secured term loan facility (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facilities”). The Revolving Credit Facility expires in October ~~2022 and the Term Loan Facility expires in October 2024.~~

Borrowings under the Credit Facilities will bear interest, at the Company’s option, at a rate per annum determined by reference to either the London Interbank Offered Rate (“LIBOR”) or an adjusted base rate, in each case plus an applicable margin. In the case of the Term Loan Facility, the adjusted base rate and LIBOR will not, in any event, be less than 2.00% and 1.00%, respectively. The applicable margin for the Credit Facilities with respect to LIBOR borrowings will be 3.75% and, with respect to adjusted base rate borrowings, will be 2.75%. In addition, the Company will be required to pay a commitment fee on any unused portion of the Revolving Credit Facility at a rate of 0.50% per annum.

On October 2, 2017, the Term Loan Facility net proceeds of $577.0 million, after fees, expenses and note discount, were used to repay the remaining $315.8 million outstanding principal amount of its Tranche B Term Loan and accrued and unpaid interest. As a result, a loss on extinguishment of debt will be recorded in the fourth quarter of approximately $3 million. The remaining proceeds of the Term Loan Facility were used to fund the purchase price and associated transaction costs of the acquisition of OnX that closed on October 2, 2017.

As a result of the Company entering into the Credit Agreement in October 2017, certain previously deferred costs associated with the Corporate Credit Agreement's revolving credit facility will be written off in the fourth quarter. The loss on extinguishment of debt associated with the transaction is expected to be less than $1 million.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

2022.

Accounts Receivable Securitization Facility

As of September 30, ~~2017~~,2020, the Company had no$179.5 million in borrowings and ~~$6.3~~$12.4 million of letters of credit outstanding under the accounts receivable securitization facility ("Receivables ~~Facility"~~Facility”), leaving ~~$96.4~~$8.1 million remaining availability on the total borrowing capacity of ~~$102.7~~$200.0 million. In the second quarter of ~~2017,~~2020, the Company executed ~~an amendment of~~amendments to its Receivables Facility, which replaced, amended and added certain provisions and definitions to ~~increase~~decrease the credit availability and renew the facility, which is subject to renewal every 364 days, until May ~~2018. The facility's~~2021, and extend the facility’s termination date ~~is in~~to May ~~2019~~2023. The maximum borrowing limit for loans and ~~was not changed by this amendment. In the event~~letters of credit under the Receivables Facility was reduced from $225.0 million to $200.0 million in the aggregate. The available borrowing capacity is not renewed, the Company has the ability to refinance any outstanding borrowings with borrowings under the Corporate Credit Agreement. Under the terms of the Receivables Facility, the Company could obtain up to $120.0 million dependingcalculated monthly based on the quantity and quality of outstanding accounts ~~receivable.~~ receivable, and thus may be lower than the maximum borrowing limit. The amendments also added provisions for a successor to LIBOR in the event LIBOR is no longer applicable and made technical changes to account for the continued integration of the Company’s Hawaiian Telcom and OnX acquisitions into the facility. In addition, a provision was added that the LIBOR rate for the Receivables Facility may not fall below 0.75%.

Under ~~this agreement,~~the Receivables Facility, certain U.S. and Canadian subsidiaries, oras originators, sell their respective trade receivables on a continuous basis to Cincinnati Bell Funding LLC (“CBF”). or Cincinnati Bell Funding Canada Ltd. ("CBFC"), wholly-owned consolidated subsidiaries of the Company. Although CBF ~~is a~~and CBFC are wholly-owned consolidated ~~subsidiary~~subsidiaries of the Company, CBF isand CBFC are legally separate from the Company and each of the Company’s other subsidiaries. Upon and after the sale or contribution of the accounts receivable to CBF or CBFC, such accounts receivable are legally assets of CBF and CBFC and, as such, are not available to creditors of ~~the Company's~~ other subsidiaries or the ~~Company.~~parent company. The Receivables Facility includes an option for CBF to sell, rather than borrow against, certain receivables on a non-recourse basis. As of September 30, 2020, there was 0 outstanding balance for accounts receivable sold.

7. Leases

Lessee Disclosures

The Company primarily leases real estate for offices, retail stores and central offices, as well as equipment, cell towers and fleet vehicles.Upon adoption of ASC 842, the Company elected not to recognize leases with terms of one-year or less on the balance sheet.

Supplemental balance sheet information related to the Company's leases is as follows:

~~New 8% Senior Notes due 2025~~

(dollars in millions)	Balance Sheet Location	September 30, 2020		December 31, 2019
Operating lease assets, net of amortization	Operating lease right-of-use assets	$	34.1	$	35.8
Finance lease assets, net of amortization	Property, plant and equipment, net		25.8		33.2
Operating lease liabilities:
Current operating lease liabilities	Other current liabilities		9.2		10.9
Noncurrent operating lease liabilities	Operating lease liabilities		30.9		32.1
Total operating lease liabilities			40.1		43.0
Finance lease liabilities:
Current finance lease liabilities	Current portion of long-term debt		13.6		14.3
Noncurrent finance lease liabilities	Long-term debt, less current portion		50.3		59.5
Total finance lease liabilities		$	63.9	$	73.8

Supplemental cash flow information related to leases is as follows:

~~In October 2017, CB Escrow Corp. (the “Issuer”~~

(dollars in millions)	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	3.3	$	3.9
Operating cash flows from operating leases	$	9.5	$	8.3
Financing cash flows from finance leases	$	13.9	$	8.2
Right-of-use assets obtained in exchange for lease obligations:
New operating leases	$	6.8	$	5.1
New finance leases	$	4.0	$	13.4

8. Financial Instruments and Fair Value Measurements

Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. To increase consistency and comparability in fair value measurements, the Company uses a three-level hierarchy that prioritizes the use of observable inputs. The three levels are:

Level 1 — Quoted market prices for identical instruments in an active market;

Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and

Level 3 — Unobservable inputs that reflect management's determination of assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including our own data.

The determination of where an ~~Ohio corporation~~asset or liability falls in the hierarchy requires significant judgment.

Interest Rate Swaps

The Company uses interest rate swap agreements to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Interest rate swaps involve the exchange of fixed and ~~wholly owned subsidiary~~variable rate interest payments and do not represent an actual exchange of ~~Cincinnati Bell Inc., closed~~ the ~~private offering~~underlying notional amounts between parties.

In the second quarter of ~~$350 million aggregate principal~~2018, the Company entered into one forward starting non-amortizing interest rate swap with a notional amount of ~~8% senior notes due 2025 (the “8% Senior Notes”) at par.~~$300.0 million to convert variable rate debt to fixed rate debt. The ~~8% Senior Notes were issued pursuant~~interest rate swap became effective in June 2018 and expires in June 2023. The interest rate swap results in interest payments based on an average fixed rate of 2.938% plus the applicable margin per the requirements in the Credit Agreement.

In the first quarter of 2019, the Company entered into three forward starting non-amortizing interest rate swaps, with a notional amount of $89.0 million each, to convert variable rate debt to fixed rate debt. The interest rate swaps became effective in March 2019 and expire in March 2024. The interest rate swaps result in interest payments based on an ~~indenture, dated~~average fixed rate per swap of 2.275%, 2.244% and 2.328% plus the applicable margin per the requirements in the Credit Agreement.

During the next twelve months, the Company estimates that $9.3 million will be reclassified as ~~of October 6, 2017 (the “Indenture”), between the Issuer and Regions Bank, as trustee.~~

~~Concurrently with the closing~~an increase to interest expense.

The fair value of the offering, the Issuer entered into an escrow agreement (the “Escrow Agreement”) pursuant to which the initial purchasers of the 8% Senior Notes on behalf (and at the direction) of the Issuer, deposited the gross proceeds of the offering into an escrow account. The Issuer deposited into the escrow account an additional amount of cash that will be sufficient to pay allCompany's interest ~~that would accrue on the Notes up to, but not including, October 9, 2018.~~

The offering of the 8% Senior Notes is part of the financing of the cash portion of the merger consideration for the previously announced acquisition of Hawaiian Telcom Holdco, Inc. (“Hawaiian Telcom”)rate swaps are impacted by the ~~Company (the “HCOM Acquisition”). At the closing~~credit risk of the HCOM Acquisition, the Issuer will merge with and into the Company (the “Escrow Merger”), with the Company continuing as the surviving corporation. At the time of the Escrow Merger, the Company will assume the obligations of the Issuer under the 8% Senior Notes and the Indenture (the “Assumption”) and, subject to the satisfaction of certain other conditions, the proceeds from the offering will be released from the escrow account to the Company. In the event that the HCOM Acquisition has not occurred on or prior to January 9, 2019, the Issuer has notified the escrow agent that the HCOM Acquisition will not be consummated, the Agreement and Plan of Merger, dated as of July 9, 2017, among Hawaiian Telcom,both the Company and ~~Twin Acquisition Corp.~~its counterparties. The Company has ~~been terminated or~~agreements with its derivative financial instrument counterparties that contain provisions providing that if the ~~Issuer fails, after receiving written notice from~~Company defaults on the ~~escrow agent~~indebtedness associated with its derivative financial instruments, then the Company could also be declared in default on its derivative financial instruments obligations. In addition, the Company minimizes nonperformance risk on its derivative instruments by evaluating the creditworthiness of its counterparties, which are limited to major banks and financial institutions.

Upon inception, the interest rate swaps were designated as cash flow hedges under ASC 815, with gains and losses, net of tax, measured on an ongoing basis recorded in accumulated other comprehensive loss. The fair value of the ~~Issuer’s failure to timely deposit cash into~~interest rate swaps are categorized as Level 2 in the ~~escrow account equal to~~fair value hierarchy as they are based on well-recognized financial principles and available market data.

As of September 30, ~~days~~2020, the fair value of the interest ~~that would accrue on~~rate swap liability was $27.6 million and is recorded in the ~~8% Senior Notes to deposit such~~Condensed Consolidated Balance Sheets as follows:

(dollars in millions)	Balance Sheet Location	September 30, 2020		Quoted Prices in active markets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Liabilities:
Interest Rate Swap	Other current liabilities	$	9.3	$	0	$	9.3	$	0
Interest Rate Swap	Other noncurrent liabilities	$	18.3	$	0	$	18.3	$	0

As of December 31, 2019, the fair value of the interest rate swap liability was $19.0 million and is recorded in the Condensed Consolidated Balance Sheets as follows:

(dollars in millions)	Balance Sheet Location	December 31, 2019		Quoted Prices in active markets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Liabilities:
Interest Rate Swap	Other current liabilities	$	5.7	$	0	$	5.7	$	0
Interest Rate Swap	Other noncurrent liabilities	$	13.3	$	0	$	13.3	$	0

The amount of ~~cash within five business days after receipt~~gains (losses) recognized in Accumulated Other Comprehensive Income ("AOCI") net of ~~such notice, the Issuer will be required to redeem all~~reclassifications into earnings is as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(dollars in millions)

2020

2019

2020

2019

Interest Rate Swap

1.7

(3.3

)

(8.6

)

(17.0

)

The amount of losses reclassified from AOCI into earnings is as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(dollars in millions)

Statement of Operations Location

2020

2019

2020

2019

Interest Rate Swap

Interest expense

(2.3

)

(0.6

)

(6.0

)

(1.1

)

Disclosure on Financial Instruments

The carrying values of the ~~8% Senior Notes at a redemption price equal to 100%~~Company's financial instruments approximate the estimated fair values as of September 30, 2020 and December 31, 2019, except for the Company's long-term debt and other installment financing arrangements. The carrying and fair values of these items are as follows:

	September 30, 2020				December 31, 2019
(dollars in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion*	$	1,910.8	$	1,945.4	$	1,867.5	$	1,921.5
Other installment financing arrangements		42.2		52.4		43.5		55.5

*	Excludes finance leases, other financing arrangements and note issuance costs.

The fair value of our long-term debt was based on closing or estimated market prices of the ~~initial issue price, plus accrued~~Company’s debt at September 30, 2020 and ~~unpaid interest to, but excluding, the redemption date.~~

The 8% Senior Notes will bear interest at a rate of 8.000% per annum, payable semi-annually on April 15 and October 15 of each year, beginning on April 15, 2018, to persons who are registered holdersDecember 31, 2019, which is considered Level 2 of the ~~8% Senior Notes on~~fair value hierarchy. The fair value of the ~~immediately preceding April 1~~other installment financing arrangements was calculated using a discounted cash flow model that incorporates current borrowing rates for obligations of similar duration, which is considered Level 3 of the fair value hierarchy. As of September 30, 2020, the current borrowing rate was estimated by applying the Company's credit spread to the risk-free rate for a similar duration borrowing.

9. Pension and ~~October 1, respectively.~~ Postretirement Plans

As of September 30, 2020, the Company sponsors three noncontributory defined benefit plans and a postretirement health and life insurance plan in Cincinnati (collectively the "Cincinnati Plans"), and one noncontributory defined benefit plan for union employees, one cash balance pension plan for nonunion employees, and two postretirement health and life insurance plans for Hawaiian Telcom employees (collectively the "Hawaii Plans").

In the three and nine months ended September 30, 2020, Hawaiian Telcom’s defined benefit plans made lump sum payments of $3.4 million and $10.8 million, respectively, resulting in a reduction of the benefit obligation of $10.8 million. The ~~8% Senior Notes will mature on October 15, 2025.~~Company recorded a pension settlement cost of $1.1 million in the nine months ended September 30, 2020 as a result of the lump sum payments to the plan participants exceeding the sum of the service cost and the interest cost component of the net pension cost.

In accordance with ASC 715, only the service cost component of net benefit cost is eligible for capitalization, which was immaterial for the three and nine months ended September 30, 2020 and 2019.

For the three and nine months ended September 30, 2020 and 2019, pension and postretirement costs (benefits) were as follows:

	Three Months Ended September 30,
	2020			2019			2020			2019
(dollars in millions)	Pension Benefits						Postretirement and Other Benefits
Service cost	$	0		$	0		$	0.1		$	0.2
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation		4.6			5.9			0.9			1.3
Expected return on plan assets		(7.1	)		(7.7	)		0			0
Amortization of:
Prior service benefit		0			0			(0.6	)		(0.6	)
Actuarial loss		4.5			3.5			0.3			0.4
Pension / postretirement costs	$	2.0		$	1.7		$	0.7		$	1.3

	Nine Months Ended September 30,
	2020			2019			2020			2019
(dollars in millions)	Pension Benefits						Postretirement and Other Benefits
Service cost	$	0		$	0		$	0.3		$	0.5
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation		14.2			17.9			2.8			3.8
Expected return on plan assets		(21.6	)		(23.0	)		0			0
Amortization of:
Prior service benefit		0			0			(1.9	)		(1.9	)
Actuarial loss		13.5			10.3			0.9			1.3
Pension settlement charges		1.1			0			0			0
Pension / postretirement costs	$	7.2		$	5.2		$	2.1		$	3.7

~~Table~~

Amortizations of ~~Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

4.prior service benefit and actuarial loss represent reclassifications from accumulated other comprehensive income.

Based on current assumptions, contributions are expected to be approximately $5 million and $3 million to the qualified and non-qualified plans in 2020, respectively. Management expects to make cash payments of approximately $8 million related to its postretirement health plans in 2020.

For the nine months ended September 30, 2020, contributions to the pension plans were $4.8 million and contributions to the postretirement plans were $4.3 million. For the nine months ended September 30, 2019, contributions to the pension plans were $4.4 million and contributions to the postretirement plans were $4.6 million.

10. Restructuring and Severance

Liabilities have been established for employee separations and lease abandonment. A summary of activity in the restructuring and severance liability is shown below:

(dollars in millions)	Employee Separation			Lease Abandonment			Total
Balance as of December 31, 2019	$	2.6		$	0.3		$	2.9
Charges		15.2			0			15.2
Utilizations		(8.2	)		(0.1	)		(8.3	)
Balance as of March 31, 2020		9.6			0.2			9.8
Charges		0.4			0			0.4
Utilizations		(3.4	)		(0.1	)		(3.5	)
Balance as of June 30, 2020		6.6			0.1			6.7
Charges		0.8			0			0.8
Utilizations		(2.4	)		(0.1	)		(2.5	)
Balance as of September 30, 2020	$	5.0		$	0		$	5.0

(dollars in millions)
Employee
Separation

Lease
Abandonment
Total
Balance as of December 31, 2016 $ 11.0
$ 0.2
$ 11.2
Charges 25.6
—
25.6
Utilizations (12.7 ) —
(12.7 )
Balance as of March 31, 2017 23.9
0.2
24.1
Charges 3.6
—
3.6
Utilizations (4.4 ) —
(4.4 )
Balance as of June 30, 2017 23.1
0.2
23.3
Charges —
—
—
Utilizations (9.8 ) (0.1 ) (9.9 )
Balance as of September 30, 2017 $ 13.3
$ 0.1
$ 13.4

~~The Company had no~~

Restructuring and severance charges recorded in each of the first three quarters of 2020 in the ~~third quarter of 2017. In the second quarter of 2017, the Company initiated reorganizations within both segments of the business in order~~IT Services and Hardware segment are associated with initiatives to ~~more appropriately align the Company for future growth. As a result, head count reductions were made resulting in a $3.6 million severance charge.~~reduce and contain costs. In the first quarter of ~~2017,~~ 2020, the Company finalized a voluntary severance program in Cincinnati and Hawaii for certain bargained and management employees ~~related~~in an effort to ~~an initiative~~continue to reduce costs associated with our copper field and network ~~costs within our legacy copper network.~~operations. As a result, a severance charge of ~~$25.6~~$14.5 million was recorded toin the Entertainment and Communications segment. ~~The Company made severance payments during the nine months ended September 30, 2017 for employee separations associated with the previously discussed initiatives.~~

Lease abandonment costs represent future minimum lease obligations, net of expected sublease income, for abandoned facilities. Lease payments on abandoned facilities ~~will continue through 2019.~~were completed in the third quarter of 2020.

A summary of restructuring activity by business segment is presented below:

(dollars in millions)	Entertainment and Communications			IT Services and Hardware			Corporate		Total
Balance as of December 31, 2019	$	2.4		$	0.5		$	0	$	2.9
Charges		14.8			0.4			0		15.2
Utilizations		(7.6	)		(0.7	)		0		(8.3	)
Balance as of March 31, 2020		9.6			0.2			0		9.8
Charges		0			0.3			0.1		0.4
Utilizations		(3.1	)		(0.4	)		0		(3.5	)
Balance as of June 30, 2020		6.5			0.1			0.1		6.7
Charges		0			0.8			0		0.8
Utilizations		(1.6	)		(0.9	)		0		(2.5	)
Balance as of September 30, 2020	$	4.9		$	0		$	0.1	$	5.0

(dollars in millions) Entertainment and Communications IT Services and Hardware Corporate Total
Balance as of December 31, 2016 $ 7.5
$ 3.0
$ 0.7
$ 11.2
Charges 25.6
—
—
25.6
Utilizations (9.8 ) (2.3 ) (0.6 ) (12.7 )
Balance as of March 31, 2017 23.3
0.7
0.1
24.1
Charges 1.3
2.3
—
3.6
Utilizations (3.6 ) (0.8 ) —
(4.4 )
Balance as of June 30, 2017 21.0
2.2
0.1
23.3
Charges —
—
—
—
Utilizations (8.1 ) (1.7 ) (0.1 ) (9.9 )
Balance as of September 30, 2017 $ 12.9
$ 0.5
$ —
$ 13.4

At September 30, ~~2017~~2020 and December 31, ~~2016, $4.7~~2019, $5.0 million and ~~$7.4~~$2.9 million, respectively, of the restructuring ~~and severance~~ liabilities were included in “Other current ~~liabilities.” At September 30, 2017 and December 31, 2016, $8.7 million and $3.8 million was included in "Other noncurrent liabilities," respectively.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

~~5. Financial Instruments and Fair Value Measurements~~

~~The carrying values of the Company's financial instruments approximate the estimated fair values as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, except for the Company's long-term debt. The carrying and fair values of these financial instruments are as follows:~~

September 30, 2017 December 31, 2016
(dollars in millions) Carrying Value Fair Value Carrying Value Fair Value
Long-term debt, including current portion* $ 1,059.1
$ 1,041.0
$ 1,149.2
$ 1,177.9
*Excludes capital leases and note issuance costs.

~~The fair value of our long-term debt was based on closing or estimated market prices of the Company’s debt at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, which is considered Level 2 of the fair value hierarchy.~~

~~Non-Recurring Fair Value Measurements~~

Certain long-lived assets are required to be measured at fair value on a non-recurring basis subsequent to their initial measurement. These non-recurring fair value measurements generally occur when evidence of impairment has occurred. In the third quarter of 2017 an equity method investment recorded within “Other noncurrent assets”liabilities” in the Condensed Consolidated Balance Sheets was remeasured at fair value due to a triggering event identified by management. As a result of the fair value analysis, the entire carrying value of $4.7 million was impaired and recorded to "Other expense (income), net" on the Consolidated Statements of Operations. This fair value measurement is considered a Level 3 measurement due to the significance of its unobservable inputs.

~~6. Pension and Postretirement Plans~~

~~The Company sponsors three noncontributory defined benefit plans and a postretirement health and life insurance plan.~~ .

11. Shareowners' Deficit

Accumulated Other Comprehensive Loss

For the three and nine months ended September 30, ~~2017, approximately 13% of the costs were capitalized as a component of property, plant~~2020 and equipment related to construction of our copper and fiber networks. For the three and nine months ended September 30, 2016, approximately 10% of the costs were capitalized as a component of property, plant and equipment related to construction of our copper and fiber networks.

~~For the three and nine months ended September 30, 2017 and 2016, pension and postretirement benefit costs were as follows:~~

Three Months Ended September 30,
2017 2016 2017 2016
(dollars in millions) Pension Benefits
Postretirement and
Other Benefits
Service cost $ —
$ —
$ 0.1
$ 0.1
Interest cost on projected benefit obligation 4.9
4.9
0.8
0.8
Expected return on plan assets (6.5 ) (6.9 ) —
—
Amortization of:
Prior service cost (benefit) —
0.1
(1.2 ) (3.7 )
Actuarial loss 4.3
4.7
1.2
1.2
Total amortization 4.3
4.8
—
(2.5 )
Pension / postretirement costs (benefits) $ 2.7
$ 2.8
$ 0.9
$ (1.6 )

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Nine Months Ended September 30,
2017 2016 2017 2016
(dollars in millions) Pension Benefits
Postretirement and
Other Benefits
Service cost $ —
$ —
$ 0.2
$ 0.2
Interest cost on projected benefit obligation 14.6
14.5
2.4
2.5
Expected return on plan assets (19.5 ) (20.5 ) —
—
Amortization of:
Prior service cost (benefit) —
0.1
(3.4 ) (11.1 )
Actuarial loss 13.1
14.3
3.5
3.7
Total amortization 13.1
14.4
0.1
(7.4 )
Pension / postretirement costs (benefits)

$ 8.2
$ 8.4
$ 2.7
$ (4.7 )

~~Amortizations of prior service cost (benefit) and actuarial loss represent reclassifications from accumulated other comprehensive income.~~

Based on current assumptions, contributions to qualified and non-qualified pension plans in 2017 are expected to be approximately $2 million each. Management expects to make cash payments of approximately $9 million related to its postretirement health plans in 2017.

~~For the nine months ended September 30, 2017, contributions to the pension plans were $3.3 million and contributions to the postretirement plan were $5.5 million.~~

~~7. Shareowners' Deficit~~

~~Accumulated Other Comprehensive Loss~~

~~For the nine months ended September 30, 2017,~~2019, the changes in accumulated other comprehensive loss by component were as follows:

(dollars in millions)	Unrecognized Net Periodic Pension and Postretirement Benefit Cost				Unrealized Loss on Cash Flow Hedges, Net				Foreign Currency Translation Loss			Total
Balance as of June 30, 2020	$	(159.4	)		$	(22.7	)		$	(7.5	)	$	(189.6	)
Remeasurement of benefit obligations		3.2				—				—			3.2
Reclassifications, net		3.2		(a)		1.8		(b)		—			5.0
Unrealized loss on cash flow hedges arising during the period, net		—				(0.5	)	(c)		—			(0.5	)
Foreign currency gain		—				—				2.0			2.0
Balance as of September 30, 2020	$	(153.0	)		$	(21.4	)		$	(5.5	)	$	(179.9	)

Balance as of June 30, 2019	$	(159.4	)		$	(14.4	)		$	(4.0	)	$	(177.8	)
Reclassifications, net		2.5		(a)		0.4		(b)		—			2.9
Unrealized loss on cash flow hedges arising during the period, net		—				(3.0	)	(c)		—			(3.0	)
Foreign currency loss		—				—				(1.0	)		(1.0	)
Balance as of September 30, 2019	$	(156.9	)		$	(17.0	)		$	(5.0	)	$	(178.9	)

(dollars in millions)	Unrecognized Net Periodic Pension and Postretirement Benefit Cost				Unrealized Loss on Cash Flow Hedges, Net				Foreign Currency Translation Loss			Total
Balance as of December 31, 2019	$	(152.0	)		$	(14.7	)		$	(3.4	)	$	(170.1	)
Remeasurement of benefit obligations		(11.5	)			—				—			(11.5	)
Reclassifications, net		10.5		(a)		4.6		(b)		—			15.1
Unrealized loss on cash flow hedges arising during the period, net		—				(11.3	)	(c)		—			(11.3	)
Foreign currency loss		—				—				(2.1	)		(2.1	)
Balance as of September 30, 2020	$	(153.0	)		$	(21.4	)		$	(5.5	)	$	(179.9	)

Balance as of December 31, 2018	$	(164.5	)		$	(3.9	)		$	(7.1	)	$	(175.5	)
Remeasurement of benefit obligations		0.1				—				—			0.1
Reclassifications, net		7.5		(a)		0.8		(b)		—			8.3
Unrealized loss on cash flow hedges arising during the period, net		—				(13.9	)	(c)		—			(13.9	)
Foreign currency gain		—				—				2.1			2.1
Balance as of September 30, 2019	$	(156.9	)		$	(17.0	)		$	(5.0	)	$	(178.9	)

(dollars in millions) Unrecognized Net Periodic Pension and Postretirement Benefit Cost Unrealized gain on Investment in CyrusOne Foreign Currency Translation Loss Total
Balance as of December 31, 2016 $ (157.6 ) $ 68.1
$ (0.8 ) $ (90.3 )
Unrealized gain on Investment in CyrusOne, net —
8.3
(a) —
8.3
Reclassifications, net 8.5
(b) (76.4 ) (c) —
(67.9 )
Foreign currency gain $ —
$ —
$ 0.1
$ 0.1
Balance as of September 30, 2017 $ (149.1 ) $ —
$ (0.7 ) $ (149.8 )


(a)	The unrealized gain on Investment in CyrusOne, net of tax, represents changes in the fair value of CyrusOne shares of common stock owned by the Company during the period, before any subsequent sales of those shares.

~~(b)~~

These reclassifications are included in the other components of net periodic pension and postretirement benefit ~~costs (see Note 6 for additional details)~~plans expense and represent amortization of prior service benefit and actuarial loss, net of tax and pension settlement charges, net of tax. The other components of net periodic pension and postretirement benefit ~~cost~~plans expense are ~~reported within "Cost~~recorded in "Other components of ~~services," "Cost of products sold,"~~pension and ~~"Selling, general and administrative" expenses~~postretirement benefit plans expense" on the Condensed Consolidated Statements of Operations. See Note 9 for further disclosures.


~~(c)~~ (b)	These reclassifications are reported within ~~"Gain on sale of Investment in CyrusOne"~~"Interest expense" on the Condensed Consolidated Statements of ~~Operations.~~Operations when the hedged transactions impact earnings.

~~Table of Contents~~


	(c)
~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~ The unrealized loss, net on cash flow hedges represents the change in the fair value of the derivative instruments that occurred during the period, net of tax. The unrealized loss on cash flow hedges is recorded in "Other current liabilities" and "Other noncurrent liabilities" on the Condensed Consolidated Balance Sheets. See Note 8 for further disclosures.

12. Business Segment Information

The Company’s segments are strategic business units that offer distinct products and services and are aligned with ~~its~~the Company's internal management structure and reporting. The Company operates 2 business segments identified as Entertainment and Communications and IT Services and Hardware.

The Entertainment and Communications segment provides products and services ~~such~~that can be categorized as ~~data transport,~~Data, Video, Voice or Other. Data products include high-speed internet ~~video, local~~access, digital subscriber lines, ethernet, SONET, dedicated internet access, wavelength, digital signal and IRU. Video services provide our customers access to over 400 entertainment channels, over 150 high-definition channels, parental controls, HD DVR, Video On-Demand and access to a live TV streaming application. Voice represents traditional voice lines as well as fiber voice lines, consumer long distance, ~~voice over internet protocol ("VoIP")~~switched access and ~~other~~digital trunking. Other services consist of revenue generated from wiring projects for enterprise customers, advertising, directory assistance, maintenance and information services.

The IT Services and Hardware segment provides ~~a range of fully managed~~end-to-end solutions from consulting to implementation to ongoing optimization. These solutions include Cloud, Communications and ~~outsourced IT and telecommunications~~Consulting services along with the sale, installation and maintenance of major branded Telecom and IT ~~hardware.~~

hardware reported as Infrastructure Solutions.

Certain corporate administrative expenses have been allocated to the segments based upon the nature of the expense and the relative size of the segment. Intercompany transactions between segments have been eliminated.

Selected financial data for the Company’s business segment information is as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in millions)	2020			2019			2020			2019
Revenue
Entertainment and Communications	$	241.0		$	248.5		$	724.5		$	749.3
IT Services and Hardware		155.2			140.5			444.5			417.0
Intersegment		(6.7	)		(6.5	)		(19.5	)		(20.0	)
Total revenue	$	389.5		$	382.5		$	1,149.5		$	1,146.3
Intersegment revenue
Entertainment and Communications	$	4.9		$	5.3		$	14.8		$	16.5
IT Services and Hardware		1.8			1.2			4.7			3.5
Total intersegment revenue	$	6.7		$	6.5		$	19.5		$	20.0
Operating income (loss)
Entertainment and Communications	$	27.2		$	27.7		$	69.8		$	81.2
IT Services and Hardware		4.6			0.6			11.5			(5.1	)
Corporate		(7.1	)		(5.5	)		(49.1	)		(18.3	)
Total operating income	$	24.7		$	22.8		$	32.2		$	57.8
Expenditures for long-lived assets *
Entertainment and Communications	$	57.6		$	51.3		$	144.2		$	150.3
IT Services and Hardware		3.9			5.4			16.7			16.9
Corporate		0			0			0			0.1
Total expenditures for long-lived assets	$	61.5		$	56.7		$	160.9		$	167.3
Depreciation and amortization
Entertainment and Communications	$	61.6		$	64.4		$	190.0		$	190.5
IT Services and Hardware		10.2			11.1			30.7			38.5
Corporate		0.1			0			0.1			0.1
Total depreciation and amortization	$	71.9		$	75.5		$	220.8		$	229.1

*Includes deposit for the purchase of wireless licenses

(dollars in millions)	September 30, 2020		December 31, 2019
Assets
Entertainment and Communications	$	1,788.0	$	1,840.0
IT Services and Hardware		447.5		500.7
Corporate and eliminations		328.3		313.1
Total assets	$	2,563.8	$	2,653.8

Three Months Ended Nine Months Ended
September 30, September 30,
(dollars in millions) 2017
2016 2017 2016
Revenue
Entertainment and Communications $ 196.2
$ 193.0
$ 592.9
$ 575.8
IT Services and Hardware 96.3
122.9
278.5
335.2
Intersegment (3.3 ) (3.5 ) (10.0 ) (10.5 )
Total revenue $ 289.2
$ 312.4
$ 861.4
$ 900.5
Intersegment revenue
Entertainment and Communications $ 0.4
$ 0.4
$ 1.3
$ 1.0
IT Services and Hardware 2.9
3.1
8.7
9.5
Total intersegment revenue $ 3.3
$ 3.5
$ 10.0
$ 10.5
Operating income
Entertainment and Communications $ 25.0
$ 21.1
$ 49.8
$ 76.0
IT Services and Hardware 4.8
7.8
7.9
21.9
Corporate (17.1 ) (3.4 ) (29.4 ) (15.4 )
Total operating income $ 12.7
$ 25.5
$ 28.3
$ 82.5
Expenditures for long-lived assets
Entertainment and Communications $ 41.4
$ 63.1
$ 138.9
$ 178.7
IT Services and Hardware 1.6
4.1
18.9
9.9
Corporate —
—
—
0.2
Total expenditures for long-lived assets $ 43.0
$ 67.2
$ 157.8
$ 188.8
Depreciation and amortization
Entertainment and Communications $ 43.9
$ 43.0
$ 129.1
$ 124.8
IT Services and Hardware 3.4
3.4
10.9
9.8
Corporate —
0.1
0.1
0.1
Total depreciation and amortization $ 47.3
$ 46.5
$ 140.1
$ 134.7

September 30,
2017 December 31,
2016
Assets
Entertainment and Communications $ 1,114.7
$ 1,093.5

IT Services and Hardware 85.9
60.0

Corporate and eliminations 256.7
387.5

Total assets $ 1,457.3
$ 1,541.0

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~


~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. 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, including but not limited to, the possible impacts of the current adverse economic conditions associated with the COVID-19 global health pandemic, 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 that the Company has 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 September 30, ~~2017~~,2020 and the results of operations for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~.2019. 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, ~~2016~~.2019. Results for interim periods may not be indicative of results for the full year or any other interim period.

Pending Acquisition by MIP

On March 13, 2020, the Company terminated the Brookfield Merger Agreement and entered into an Agreement and Plan of Merger (the “MIP Merger Agreement”) pursuant to which the Company will be acquired by an affiliate of Macquarie Infrastructure Partners V (“MIP”), a fund managed by Macquarie Infrastructure and Real Assets (the “MIP Merger”). At the effective time of the MIP Merger (the “Effective Time”), each of our issued and outstanding Common Shares will be converted into the right to receive $15.50 in cash per Common Share, without interest, and the 6 ³/₄% Cumulative Convertible Preferred Shares will remain issued and outstanding as 6 ³/₄% Cumulative Convertible Preferred Shares of the Company, without par value, following the Effective Time.

In connection with the termination of the Brookfield Merger Agreement, the Company paid an affiliate of Brookfield a termination fee of $24.8 million in the first quarter of 2020 as required by the terms of the Brookfield Merger Agreement.

The MIP Merger Agreement contains representations and warranties and covenants of the parties customary for a transaction of this nature.

The MIP Merger is expected to close in the first half of 2021, although there can be no assurance that the MIP Merger will occur by that date. Upon the closing of the MIP Merger, the Company will cease to be a publicly traded company.

Executive Summary

Segment results described in the Executive Summary and Consolidated Results of Operations sections are net of intercompany eliminations.

Cincinnati Bell Inc. and its consolidated subsidiaries ("Cincinnati Bell," "we," "our," "us" or the "Company") ~~provides~~provide integrated communications and IT solutions that keep ~~residential~~consumer and ~~business~~enterprise customers connected with each other and with the world. Through its Entertainment and Communications segment, the Company provides ~~high speed data, video,~~Data, Video, and ~~voice~~Voice solutions to ~~consumers~~consumer and ~~businesses~~enterprise customers over an expanding fiber network and a legacy copper network. In addition, ~~business~~enterprise customers across the United States, Canada and Europe rely on ~~Cincinnati Bell Technology Solutions Inc. ("CBTS"), a wholly-owned subsidiary, reported as~~ the IT Services and Hardware segment for the sale and service of efficient, end-to-end communications and IT systems and solutions.

Consolidated revenue totaling ~~$289.2~~$389.5 million and ~~$861.4~~$1,149.5 million for the three and nine months ended September 30, ~~2017,~~2020 increased $7.0 million and $3.2 million, respectively, ~~decreased~~ compared to the ~~prior year comparable~~same periods ~~primarily due to~~in 2019 as growth in the IT Services and Hardware segment more than offset declines in the Entertainment and Communications segment. ~~The~~Entertainment and Communications Legacy revenue decreased $10.4 million and $29.2 million, respectively, for the three and nine months ended September 30, 2020 compared to similar periods in the prior year. Decline in Video revenue due to fewer video subscribers and lower nonrecurring revenue due to participation in the Keep Americans Connected pledge (“Pledge”) also contributed to the decline year over year in each of the comparable periods. IT Services and Hardware ~~segment is a result of Telecom and IT hardware revenue decreasing $21.4~~increased by $14.1 million and ~~$41.0~~$26.3 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, ~~as well as declining service revenue as one of our significant customers pursued cost out initiatives by in-sourcing IT professionals. For~~compared to the same periods in the prior year. In the three months ended September 30, 2020, IT Services and Hardware experienced revenue growth in all practices with the exception of Cloud revenue. In the nine months ended September 30, ~~2017,~~2020, revenue ~~from our strategic products totaled $167.9 million~~growth in the Consulting and ~~$504.0 million, respectively, up 3%~~Communications practices more than offset decreased revenue contributed by the Cloud and ~~7% from~~Infrastructure Solutions practices. Cloud revenue declined in the nine months ended September 30, 2020 compared to the prior year ~~comparable periods. Declining legacy~~due to General Electric Company (“GE”) revenue ~~in addition~~related to ~~the aforementioned changes~~certain programs still included in the ~~IT Services and Hardware segment offset the increases~~first quarter of 2019 that did not recur in ~~our strategic revenue.~~

2020.

Operating income was ~~$12.7~~$24.7 million for the three months ended September 30, 2020, up $1.9 million compared to the same period in the prior year. The increase in operating income was primarily due to lower selling, general and ~~$28.3~~administrative and depreciation and amortization costs incurred in the third quarter of 2020 compared to the same period in 2019. The decrease in selling, general and administrative costs is a result of cost containment strategies taken to reduce the negative impact of the COVID-19 pandemic on the business. These strategies more than offset incremental expense of $5.7 million recorded in the third quarter to reward employees for their efforts during COVID-19 that is impacting cost of services and products and selling, general and administrative expense for the three and nine months ended September 30, ~~2017, respectively,~~2020. Lower depreciation and amortization expense is primarily due to a decrease in assets placed in service during 2020 in connection with the expansion of our fiber network. Operating income was $32.2 million for the nine months ended September 30, 2020, down ~~from~~$25.6 million compared to the same period in 2019. The decrease in operating income was primarily due to higher transaction and integration charges, including the termination fee of $24.8 million paid to an affiliate of Brookfield in the first quarter of 2020, as well as restructuring and severance related charges related to the voluntary severance program (“VSP”) finalized in the three months ended March 31, 2020.

Loss before income taxes totaled $11.1million for the three months ended September 30, 2020, resulting in a decrease in the loss as compared to the comparable period in 2019 primarily due to the increase in operating income and a decrease in interest expense. Loss before income taxes totaled $76.2 million for the nine months ended September 30, 2020, higher than the prior year ~~comparable periods. Transaction~~due to the factors impacting operating income.

Impact of COVID-19 on Our Business

The COVID-19 pandemic has resulted, and ~~integration~~is likely to continue to result, in significant economic disruption and has adversely affected, and will likely continue to adversely affect, our business. As of the date of this filing, significant uncertainty continues to exist concerning the magnitude of the impact and duration of the COVID-19 pandemic. While certain parts of the country have eased stay-at-home orders, the current rise in cases may result in restrictions being reinstated. On March 13, 2020, in response to the COVID-19 pandemic, the Federal Communications Commission (“FCC”) called on broadband and telephone service providers to keep Americans connected as the country reacts to the serious disruptions caused by the coronavirus outbreak. Cincinnati Bell, on behalf of all of its affiliates, including Hawaiian Telecom, signed on to the Pledge and committed to waive late fees for, and not terminate service to, any of our consumer or small business customers who did not pay their bills timely due to an inability to pay caused by the COVID-19 crisis. The Pledge expired on June 30, 2020, and the Company started to collect late payment fees and reactivation fees starting in August 2020. In accordance with regulatory orders in Hawaii, the Pledge continues to be honored for certain regulated services. The Company proactively worked with customers in an effort to avoid deactivations, but not all accounts could be cured and approximately 3,300 customer accounts in the Cincinnati market were disconnected in the third quarter.

In response to the number of households that must provide remote schooling either full or part-time as a result of the COVID-19 pandemic, the Company partnered with several community organizations to provide free internet to qualifying students through the “Connect our Students” program. As of September 30, 2020, the Company has delivered internet to approximately 4,300 households.

The majority of our operations have continued as usual as the services that we provide and the networks that we maintain are considered critical by local and state authorities in the geographies in which we operate. The Company started executing its business continuity plan in March and transitioned employees who could execute their work remotely to work from home with little disruption and has implemented additional safety protocols for customer facing employees. In states in which employees are allowed to return to the office, the Company has implemented updated safety policies to ensure the safety of our employees and customers. As of September 30, 2020, a significant portion of our workforce continues to work from home.

With respect to liquidity, we continue to evaluate and take actions to reduce costs ~~associated with merger~~ and ~~acquisition activity incurred~~spending across our organization. This includes reducing hiring activities, adjusting pay programs, limiting discretionary spending, significantly reducing non-essential travel until further notice and re-evaluating the timing of capital projects. Additionally, we have leveraged certain benefits included in the U.S. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) that was enacted on March 27, 2020, including deferral of 2020 required pension plan contributions to the fourth quarter of 2020 and deferral of employer social security tax payments for wage payments subsequent to March 12, 2020 of approximately $5 million each quarter for the remainder of 2020 to be paid equally in the fourth quarters of 2021 and 2022.

We expect the ultimate significance of the impact on our financial condition, results of operations, or cash flows will be dictated by the length of time that such circumstances continue, which will depend on the currently unknowable extent and duration of the COVID-19 pandemic. COVID-19 also makes it more challenging for management to estimate future performance of our businesses, particularly over the near term. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders. The programs put in place and efforts by employees to manage and reduce expenses have more than offset the negative impacts caused by COVID-19 in the second and third quarters of 2020 due to revenue loss and incremental spend for personal protective equipment, employee compensation programs and bad debt expense. To reward employees for their continued efforts during COVID-19, a one-time bonus was recorded in the third quarter of $5.7 million that will be paid in the fourth quarter. While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our business, results of operations, liquidity or capital resources, we believe that it is important to share where our Company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses.

Consolidated Results of Operations

Revenue

	Three Months Ended September 30,										Nine Months Ended September 30,
(dollars in millions)	2020		2019		$ Change			% Change			2020		2019		$ Change			% Change
Revenue
Entertainment and Communications	$	236.1	$	243.2	$	(7.1	)		(3	)%	$	709.7	$	732.8	$	(23.1	)		(3	)%
IT Services and Hardware		153.4		139.3		14.1			10	%		439.8		413.5		26.3			6	%
Total revenue	$	389.5	$	382.5	$	7.0			2	%	$	1,149.5	$	1,146.3	$	3.2			0	%

Entertainment and Communications revenue decreased for the three and nine months ended September 30, ~~2017 contributed~~2020 compared to the same periods in 2019 primarily due to the decline in ~~operating income from the prior year.~~Legacy revenue. In addition to ~~transaction costs, operating income for~~Legacy revenue decline, Video revenue declined in each of the ~~nine months ended September 30, 2017 was down~~comparable periods due to ~~restructuring~~7,000 fewer subscribers in Cincinnati and ~~severance related charges. Restructuring and severance charges were incurred for reorganizations done to appropriately align~~3,000 fewer subscribers in Hawaii as well as decline of certain nonrecurring revenue as a result of the Company ~~for future growth, adjust to~~suspending late payment fees and reactivation fees as part of the ~~cost out initiatives pursued by one of our significant customers,~~Pledge.

IT Services and ~~reduce field and network costs associated with our legacy copper network. Net loss totaled $11.2 million and net income totaled $51.3 million~~Hardware revenue increased for the three and nine months ended September 30, ~~2017, respectively, including the $117.7 million gain recognized on the sale of 2.8 million CyrusOne Inc. common shares~~2020 compared to similar periods in the ~~first quarter~~prior year primarily due to revenue growth in the Consulting and Communications practices. In addition, Infrastructure Solutions revenue increased in the three months ended September 30, 2020 compared to the same period in the prior year primarily due to additional projects generating revenue growth from existing customers. Cloud revenue declined in the nine months ended September 30, 2020 compared to the same period in 2019 due to lower revenue resulting from GE insourcing certain cloud services. Lower Infrastructure Solutions revenue was recorded in the nine months ended September 30, 2020 due to a decline in hardware sales partially due to the impacts of ~~2017.~~

COVID-19 and customers migrating to managed services.

Operating Costs

	Three Months Ended September 30,										Nine Months Ended September 30,
(dollars in millions)	2020		2019		$ Change			% Change			2020		2019		$ Change			% Change
Cost of services and products
Entertainment and Communications	$	105.8	$	110.2	$	(4.4	)		(4	)%	$	314.7	$	334.8	$	(20.1	)		(6	)%
IT Services and Hardware		98.1		84.5		13.6			16	%		276.3		253.1		23.2			9	%
Total cost of services and products	$	203.9	$	194.7	$	9.2			5	%	$	591.0	$	587.9	$	3.1			1	%

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

~~Consolidated Results of Operations~~

~~Revenue~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Service revenue
Entertainment and Communications $ 195.0
$ 192.4
$ 2.6
1 % $ 589.2
$ 572.6
$ 16.6
3 %
IT Services and Hardware 49.3
54.3
(5.0 ) (9 )% 145.6
160.5
(14.9 ) (9 )%
Total service revenue $ 244.3
$ 246.7
$ (2.4 ) (1 )% $ 734.8
$ 733.1
$ 1.7
— %

Entertainment and Communications ~~revenue increased as the growth in Fioptics and other strategic services offset legacy declines. Fioptics revenue totaled $79.1 million~~costs decreased for the three months ended September 30, ~~2017 and $229.7 million for~~2020 compared to the ~~nine months then ended, up 21% and 24% from~~same period in the prior year ~~comparable periods, respectively. IT Services~~due to lower video content costs and ~~Hardware revenue declined primarily~~operating taxes. Lower operating taxes are due to decreases in ~~billable headcount as one of our significant customers pursued cost out initiatives by in-sourcing IT professionals.~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Product revenue
Entertainment and Communications $ 0.8
$ 0.2
$ 0.6
n/m
$ 2.4
$ 2.2
$ 0.2
9 %
IT Services and Hardware 44.1
65.5
(21.4 ) (33 )% 124.2
165.2
(41.0 ) (25 )%
Total product revenue $ 44.9
$ 65.7
$ (20.8 ) (32 )% $ 126.6
$ 167.4
$ (40.8 ) (24 )%

~~Product revenue is primarily driven by the volume of Telecom~~regulatory fees and ~~IT hardware sales reflecting capital spending fluctuations by our enterprise customers in our IT Services and Hardware segment.~~

~~Operating Costs~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Cost of services
Entertainment and Communications $ 90.1
$ 87.1
$ 3.0
3 % $ 272.5
$ 256.0
$ 16.5
6 %
IT Services and Hardware 38.9
40.6
(1.7 ) (4 )% 108.7
119.7
(11.0 ) (9 )%
Total cost of services $ 129.0
$ 127.7
$ 1.3
1 % $ 381.2
$ 375.7
$ 5.5
1 %

Entertainment and Communications costs increased primarily due to programming costs associated with our growing Fioptics video subscriber base and rising programming rates. Costs associated with the new business product, Hosted Communications Solution, also contributed to the increasing cost of services for Entertainment and Communications.general excise tax. IT Services and Hardware costs ~~declined due to fewer billable resources because of the professional services revenue decline.~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Cost of products
Entertainment and Communications $ 0.3
$ 0.7
$ (0.4 ) (57 )% $ 1.3
$ 1.6
$ (0.3 ) (19 )%
IT Services and Hardware 33.3
55.4
(22.1 ) (40 )% 100.3
140.0
(39.7 ) (28 )%
Total cost of products $ 33.6
$ 56.1
$ (22.5 ) (40 )% $ 101.6
$ 141.6
$ (40.0 ) (28 )%

~~Cost of products are primarily impacted by changes in Telecom and IT hardware sales.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Selling, general, and administrative
Entertainment and Communications $ 33.8
$ 37.1
$ (3.3 ) (9 )% $ 104.5
$ 107.1
$ (2.6 ) (2 )%
IT Services and Hardware 15.7
15.1
0.6
4 % 47.6
42.5
5.1
12 %
Corporate 5.0
3.3
1.7
52 % 14.5
15.3
(0.8 ) (5 )%
Total selling, general and administrative $ 54.5
$ 55.5
$ (1.0 ) (2 )% $ 166.6
$ 164.9
$ 1.7
1 %

Entertainment and Communications SG&A expenses were down due to lower payroll related to reduced headcount in addition to reductions in bad debt, reflecting changes to our credit policies. IT Services and Hardware SG&A costs were up due to additional headcount at branch office locations to support the expansion of our national footprint. Corporate SG&Aincreased for the three months ended September 30, ~~2017 increased~~2020 compared to the same period in 2019 primarily due to ~~higher~~increases in payroll related ~~charges. Corporate SG&A~~costs and contractor costs as a result of additional headcount to support the growth in the Communications and Consulting practices. Higher software licensing costs were also incurred to support the revenue growth in the Communications practice.

Entertainment and Communications costs decreased for the nine months ended September 30, ~~2017 as compared to the prior year driven largely by additional stock-based compensation expense recorded in 2016 as a result of changes in our stock price.~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Depreciation and amortization expense
Entertainment and Communications $ 43.9
$ 43.0
$ 0.9
2 % $ 129.1
$ 124.8
$ 4.3
3 %
IT Services and Hardware 3.4
3.4
—
— % 10.9
9.8
1.1
11 %
Corporate —
0.1
(0.1 ) n/m
0.1
0.1
—
— %
Total depreciation and amortization expense $ 47.3

$ 46.5
$ 0.8
2 % $ 140.1
$ 134.7
$ 5.4
4 %

~~The increase in depreciation and amortization expense is primarily~~2020 due to ~~an increase in Entertainment~~lower payroll related costs, video content costs and ~~Communications depreciation as a result of expanding our fiber-based network.~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Other operating costs
Transaction and integration costs $ 12.1
$ —
$ 12.1
n/m $ 14.4
$ —
$ 14.4
n/m
Restructuring and severance related charges $ —
$ —
$ —
n/m $ 29.2
$ —
$ 29.2
n/m
Loss on sale or disposal of assets, net —
1.1
(1.1 ) n/m —
1.1
(1.1 ) n/m

~~Restructuring and severance~~operating taxes. Lower payroll related ~~charges incurred by both segments~~costs are due to headcount reductions made during restructuring initiatives that were executed in the first quarter of 2020 and throughout 2019. In addition to restructuring initiatives, payroll related costs declined due to lower expense for workers compensation benefits in the nine months of 2017 relate to company initiated reorganizations of the business in order to more appropriately align the Company for future growth. Additionally, restructuring and severance related charges incurred by the Entertainment and Communications segment during the first nine months of 2017 were related to a voluntary severance program for certain bargained employees to reduce field and network costs associated with our legacy copper network. Transaction and integration costs incurred in the third quarter, recorded in the Corporate segment,ended September 30, 2020. Lower operating taxes are due to the ~~acquisition~~release of ~~OnX Holdings that closed on October 2, 2017,~~a sales and use tax reserve in the ~~pending merger agreement with Hawaiian Telcom. Transaction~~nine months ended September 30, 2020 of $4.2 million due to favorable audit results in addition to a decrease in general excise tax. IT Services and ~~integrations~~Hardware costs ~~incurred~~increased for the nine months ended September 30, ~~2017 relate~~2020 compared to the ~~acquisition of OnX, the pending merger with Hawaiian Telcom, and the acquisition of SunTel Services~~same period in the ~~first~~prior year due to the same trends that impacted the quarter ~~of 2017. The merger with Hawaiian Telcom is expected to close~~as well as increased regulatory fees.

	Three Months Ended September 30,										Nine Months Ended September 30,
(dollars in millions)	2020		2019		$ Change			% Change			2020		2019		$ Change			% Change
Selling, general and administrative
Entertainment and Communications	$	44.4	$	44.2	$	0.2			0	%	$	130.2	$	133.9	$	(3.7	)		(3	)%
IT Services and Hardware		36.7		38.5		(1.8	)		(5	)%		110.0		113.0		(3.0	)		(3	)%
Corporate		4.9		5.3		(0.4	)		(8	)%		15.1		14.4		0.7			5	%
Total selling, general and administrative	$	86.0	$	88.0	$	(2.0	)		(2	)%	$	255.3	$	261.3	$	(6.0	)		(2	)%

Entertainment and Communications SG&A costs increased in ~~the second half of 2018.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Non-operating costs
Interest expense $ 18.8
$ 17.9
$ 0.9
5 % $ 54.9
$ 58.1
$ (3.2 ) (6 )%
Loss on extinguishment of debt, net —
11.4
(11.4 ) n/m
—
14.2
(14.2 ) n/m
Gain on sale of CyrusOne investment —
(33.3 ) 33.3
n/m
(117.7 ) (151.9 ) 34.2
(23 )%
Other expense (income), net 4.5
(0.1 ) 4.6
n/m
3.5
(1.2 ) 4.7
n/m
Income tax expense 0.6
10.8
(10.2 ) n/m
36.3
59.9
(23.6 ) (39 )%

~~Interest expense for~~ the three months ended September 30, ~~2017 increased~~2020 compared to the same period in the prior year as cost containment strategies taken in 2020 to reduce the negative impact of the COVID-19 pandemic on the business were offset by an increase in contract services due to higher insurance costs and incremental bonus expense for a ~~full quarter of interest expense related to the 7% Senior Notes that were issued in the third quarter of 2016. This was partially offset by lower interest as a result of paying off the 8~~ ³/₈ % Senior Notes due 2020 with the proceeds of the 7% Senior Notes. Interest expense decreased year to date due to the Company primarily using proceeds from the sale of a portion of its CyrusOne investment to repay debt in 2016.

The Company recognized a realized gain of $117.7 million on the sale of 2.8 million shares of CyrusOne, Inc. common stock in the first quarter of 2017. In the third quarter of 2016, the Company recognized a realized gain of $33.3 million on the sale of 0.8 million shares of Cyrus One Inc. common stock. In the second quarter of 2016, the Company recognized a realized gain of $118.6 million on the sale of 3.1 million shares of CyrusOne Inc. common stock.

~~Other expense is primarily due to an impairment charge~~one-time award recorded in the three months ended September 30, ~~2017 related~~2020. IT Services and Hardware and Corporate SG&A costs decreased in the three months ended September 30, 2020 compared to ~~an equity method investment.~~

~~Income tax expense decreased year over~~the prior year primarily due to ~~lower income before tax.~~ cost containment strategies taken due to the COVID-19 pandemic more than offsetting the expense recorded for the one-time award.

SG&A costs decreased in both segments in the nine months ended September 30, 2020 compared to the same period in the prior year primarily due to cost containment strategies taken in 2020 to reduce the negative impact of the COVID-19 pandemic on the business. Decreases in both segments were partially offset by an increase in bad debt expense due to updating our estimate of the impact of the economic downturn associated with the COVID-19 pandemic on the Company’s receivables and incremental bonus expense recorded in the third quarter. The decrease in Entertainment and Communications SG&A costs was also partially offset by an increase in contract services due to higher insurance costs. Corporate SG&A costs increased in the nine months ended September 30, 2020 compared to the comparable period in 2019 primarily due to the Company no longer qualifying for a payroll tax benefit that was received in 2019.

	Three Months Ended September 30,										Nine Months Ended September 30,
(dollars in millions)	2020		2019		$ Change			% Change			2020		2019		$ Change			% Change
Depreciation and amortization expense
Entertainment and Communications	$	61.6	$	64.4	$	(2.8	)		(4	)%	$	190.0	$	190.5	$	(0.5	)		0	%
IT Services and Hardware		10.2		11.1		(0.9	)		(8	)%		30.7		38.5		(7.8	)		(20	)%
Corporate		0.1		—		0.1		n/m				0.1		0.1		—			0	%
Total depreciation and amortization expense	$	71.9	$	75.5	$	(3.6	)		(5	)%	$	220.8	$	229.1	$	(8.3	)		(4	)%

Entertainment and Communications depreciation and amortization expense decreased in the three and nine months ended September 30, 2020 compared to the same periods in the prior year primarily due to a decrease in assets placed in service in connection with the expansion of our fiber network.The decrease in IT Services and Hardware depreciation and amortization expense is primarily related to accelerated depreciation for certain network assets that were determined in the first quarter of 2019 to have a shorter useful life due to a change in customer requirements and were fully depreciated as of December 31, 2019.

	Three Months Ended September 30,										Nine Months Ended September 30,
(dollars in millions)	2020		2019		$ Change			% Change			2020		2019		$ Change		% Change
Other operating costs
Restructuring and severance related charges	$	0.8	$	1.3	$	(0.5	)		(38	)%	$	16.4	$	6.4	$	10.0	n/m
Transaction and integration costs		2.2		0.2		2.0		n/m				33.8		3.8		30.0	n/m
Total other operating costs	$	3.0	$	1.5	$	1.5			100	%	$	50.2	$	10.2	$	40.0	n/m

Restructuring and severance charges recorded in the three and nine months ended September 30, 2020 in the IT Services and Hardware segment are associated with initiatives to reduce and contain costs. Restructuring and severance charges recorded in the nine months ended September 30, 2020 in the Entertainment and Communications segment are primarily related to a VSP for certain bargained and management employees in an effort to reduce costs associated with our copper field and network operations. Restructuring and severance charges recorded in the three and nine months ended September 30, 2019 in the Entertainment and Communications segment are related to a severance program for certain management employees as the Company continued its efforts to streamline Cincinnati and Hawaii operations. Restructuring and severance charges recorded in the second and third quarters of 2019 in the IT Services and Hardware segment are associated with initiatives to reduce and contain costs as well as headcount reductions as a result of insourcing initiatives by one of our significant customers.

Transaction and integration costs incurred in 2020, recorded as a Corporate expense, are primarily due to $24.8 million paid to an affiliate of ~~$12.1 million, non-deductible~~Brookfield to terminate the Brookfield Merger Agreement in the first quarter of 2020. The Company also incurred transaction and integration costs in the three and nine months ended September 30, 2020 associated with the MIP Merger Agreement. Transaction and integration costs incurred in 2019, recorded as a Corporate expense, are primarily due to the continued integration of Hawaiian Telcom.

Non-operating Costs

	Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in millions)	2020			2019			$ Change			% Change			2020			2019			$ Change			% Change
Non-operating costs
Interest expense	$	33.4		$	35.0		$	(1.6	)		(5	)%	$	100.6		$	105.0		$	(4.4	)		(4	)%
Other components of pension and postretirement benefit plans expense		2.6			2.8			(0.2	)		(7	)%		9.0			8.4			0.6			7	%
Other (income) expense, net		(0.2	)		0.5			(0.7	)	n/m				(1.2	)		(0.4	)		(0.8	)	n/m
Income tax benefit		(2.9	)		(1.9	)		(1.0	)		53	%		(26.2	)		(9.2	)		(17.0	)	n/m

Interest expense decreased for ~~income~~the three and nine months ended September 30, 2020 compared to the same periods in the prior year due to the decrease in LIBOR rates.

Income tax ~~purposes, resulted in income tax expense~~benefit increased for the three months ended September 30, ~~2017. In~~2020 compared to the ~~fourth~~same period in the prior year primarily due to the effect of interest expense limitation released in the reporting period, and unfavorable discrete adjustments recorded in the comparable period, offset in part by the decreased loss before taxes. Income tax benefit increased in the nine months ended September 30, 2020 compared to the same period in 2019 due to an increase in the loss before income taxes and several significant discrete items recorded primarily in the first quarter ~~as a result~~ of 2020. During the ~~OnX Holdings acquisition,~~nine months ended September 30, 2020, the Company ~~anticipates a partial release~~released $15.3 million of ~~the~~ valuation allowances ~~against Texas margin credits and state, local and foreign net operating losses.~~that were previously recorded on deferred tax assets related to interest expense for which the tax deduction was limited. The ~~Company expects~~CARES Act contains provisions that increase the Company’s ability to ~~use federal and state net operating loss carryforwards to substantially defray payment~~deduct interest expense. Discrete tax benefits were offset, in part, by the $7.6 million tax effect of ~~federal and state tax liabilities in 2017.~~

nondeductible transaction costs.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Entertainment and Communications

The Entertainment and Communications segment provides products and services ~~such~~that can be categorized as ~~data transport, high-speed internet, video, local voice, long distance, VoIP and other services.~~either Fioptics in Cincinnati or Consumer/SMB Fiber in Hawaii (collectively, "Consumer/SMB Fiber"), Enterprise Fiber or Legacy. 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 ~~140~~145 years. Voice and data services in the Enterprise Fiber and Legacy categories that are delivered beyond ~~its~~the Company's ILEC territory, particularly in Dayton and Mason, Ohio, are provided through the operations of Cincinnati Bell Extended Territories LLC ("CBET"), a ~~competitive local exchange carrier ("CLEC") and~~ 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 135 years as Hawaii’s communications carrier. Its services are offered on all of Hawaii’s major islands, except its video service, which currently is only available on the island of Oahu.

Consumer/SMB Fiber products include high-speed internet access, voice lines and video. The Company ~~provides~~is able to deliver speeds of up to 30 megabits or more to approximately 75% of Greater Cincinnati and up to 20 megabits or more to approximately 50% of Hawaii's total addressable market.

Enterprise Fiber products include metro-ethernet, dedicated internet access, wavelength, IRU contracts, and wireless backhaul to macro-towers and small cell. 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 products include traditional voice lines, consumer long distance, switched access, digital trunking, DSL, DS0, DS1, DS3 and ~~VoIP~~other value-added services ~~primarily through CBTS Technology Solutions LLC which was formerly known~~such as ~~Cincinnati Bell Any Distance Inc.~~caller identification, voicemail, call waiting and call return.

	Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in millions)	2020			2019			Change			% Change			2020			2019			Change			% Change
Revenue:
Data	$	119.8		$	119.5		$	0.3			0	%	$	358.8		$	356.5		$	2.3			1	%
Video		48.1			50.2			(2.1	)		(4	)%		145.1			153.5			(8.4	)		(5	)%
Voice		65.5			70.7			(5.2	)		(7	)%		197.6			215.4			(17.8	)		(8	)%
Other		7.6			8.1			(0.5	)		(6	)%		23.0			23.9			(0.9	)		(4	)%
Total Revenue		241.0			248.5			(7.5	)		(3	)%		724.5			749.3			(24.8	)		(3	)%
Operating costs and expenses:
Cost of services and products		107.8			111.5			(3.7	)		(3	)%		319.7			338.8			(19.1	)		(6	)%
Selling, general and administrative		44.4			44.2			0.2			0	%		130.2			133.9			(3.7	)		(3	)%
Depreciation and amortization		61.6			64.4			(2.8	)		(4	)%		190.0			190.5			(0.5	)		0	%
Restructuring and severance charges		—			0.7			(0.7	)	n/m				14.8			4.9			9.9		n/m
Total operating costs and expenses		213.8			220.8			(7.0	)		(3	)%		654.7			668.1			(13.4	)		(2	)%
Operating income	$	27.2		$	27.7		$	(0.5	)		(2	)%	$	69.8		$	81.2		$	(11.4	)		(14	)%
Operating margin		11.3	%		11.1	%				0.2 pts				9.6	%		10.8	%				(1.2) pts
Capital expenditures	$	55.9		$	51.3			4.6			9	%	$	142.5		$	150.3			(7.8	)		(5	)%

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Entertainment and Communications, continued

	September 30,
Metrics information (in thousands):	2020		2019		Change			% Change
Cincinnati
Fioptics
Data
Internet FTTP*		235.0		214.6		20.4			10	%
Internet FTTN*		27.7		32.5		(4.8	)		(15	)%
Total Fioptics Internet		262.7		247.1		15.6			6	%
Video
Video FTTP*		108.7		113.5		(4.8	)		(4	)%
Video FTTN*		20.8		23.0		(2.2	)		(10	)%
Total Fioptics Video		129.5		136.5		(7.0	)		(5	)%
Voice
Fioptics Voice Lines		104.4		108.0		(3.6	)		(3	)%
Fioptics Units Passed
Units passed FTTP*		494.8		482.0		12.8			3	%
Units passed FTTN*		138.0		138.6		(0.6	)		0	%
Total Fioptics units passed		632.8		620.6		12.2			2	%
Enterprise Fiber
Data
Ethernet Bandwidth (Gb)		5,978		5,006		972			19	%
Legacy
Data
DSL		63.3		65.9		(2.6	)		(4	)%
Voice
Legacy Voice Lines		180.3		202.9		(22.6	)		(11	)%

*	Fiber-to-the-Premise (FTTP), Fiber-to-the-Node (FTTN)

Entertainment and Communications, continued	September 30,
Metrics information (in thousands):	2020		2019		Change			% Change
Hawaii
Consumer / SMB Fiber
Data
Internet FTTP*		58.6		54.6		4.0			7	%
Internet FTTN*		11.7		13.2		(1.5	)		(11	)%
Total Consumer / SMB Fiber Internet		70.3		67.8		2.5			4	%
Video
Video FTTP*		30.6		31.8		(1.2	)		(4	)%
Video FTTN*		11.4		13.2		(1.8	)		(14	)%
Total Consumer / SMB Fiber Video		42.0		45.0		(3.0	)		(7	)%
Voice
Consumer / SMB Fiber Voice Lines		29.8		30.1		(0.3	)		(1	)%
Consumer / SMB Fiber Units Passed **
Units passed FTTP*		178.1		170.6		7.5			4	%
Units passed FTTN*		72.5		72.8		(0.3	)		0	%
Total Consumer / SMB Fiber units passed		250.6		243.4		7.2			3	%
Enterprise Fiber
Data
Ethernet Bandwidth (Gb)		4,063		3,424		639			19	%
Legacy
Data
DSL		38.2		44.3		(6.1	)		(14	)%
Voice
Legacy Voice Lines		164.2		183.0		(18.8	)		(10	)%

*	Fiber-to-the-Premise (FTTP), Fiber-to-the-Node (FTTN)

**	Includes units passed for both consumer and business on Oahu and neighboring islands.

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in millions) 2017 2016 Change % Change 2017 2016 Change % Change
Revenue:

Data $ 88.0
$ 86.4
$ 1.6
2 % $ 263.3
$ 258.4
$ 4.9
2 %
Voice 66.7
68.7
(2.0 ) (3 )% 201.5
208.0
(6.5 ) (3 )%
Video 37.8
32.2
5.6
17 % 111.0
92.1
18.9
21 %
Services and Other 3.7
5.7
(2.0 ) (35 )% 17.1
17.3
(0.2 ) (1 )%
Total revenue 196.2
193.0
3.2
2 % 592.9
575.8
17.1
3 %
Operating costs and expenses:
Cost of services and products 93.5
91.0
2.5
3 % 282.6
267.1
15.5
6 %
Selling, general and administrative 33.8
37.1
(3.3 ) (9 )% 104.5
107.1
(2.6 ) (2 )%
Depreciation and amortization 43.9
43.0
0.9
2 % 129.1
124.8
4.3
3 %
Restructuring and severance charges —
0.8
(0.8 ) n/m
26.9
0.8
26.1
n/m

Total operating costs and expenses 171.2
171.9
(0.7 ) — % 543.1
499.8
43.3
9 %
Operating income $ 25.0
$ 21.1
$ 3.9
18 % $ 49.8
$ 76.0
$ (26.2 ) (34 )%
Operating margin 12.7 % 10.9 % 1.8
pts 8.4 % 13.2 % (4.8 ) pts
Capital expenditures $ 41.4
$ 63.1
$ (21.7 ) (34 )% $ 138.9
$ 178.7
$ (39.8 ) (22 )%

Metrics information (in thousands):
Fioptics units passed 564.7
509.5
55.2
11 %

Internet subscribers:
DSL 86.7
114.2
(27.5 ) (24 )%

Fioptics 221.2
185.6
35.6
19 %

Total internet subscribers 307.9
299.8
8.1
3 %

Fioptics video subscribers 143.5
133.4
10.1
8 %

Residential voice lines:
Legacy voice lines 99.5
124.6
(25.1 ) (20 )%
Fioptics voice lines 88.1
80.3
7.8
10 %
Total residential voice lines 187.6
204.9
(17.3 ) (8 )%
Business voice lines
Legacy voice lines 172.1
197.7
(25.6 ) (13 )%
VoIP lines* 151.9
121.2
30.7
25 %
Total business voice lines 324.0
318.9
5.1
2 %
Total voice lines 511.6
523.8
(12.2 ) (2 )%

Long distance lines

Residential 179.2
190.9
(11.7 ) (6 )%
Business 119.9
132.8
(12.9 ) (10 )%
Total Long Distance Lines 299.1
323.7
(24.6 ) (8 )%

* VoIP lines include Fioptics voice lines.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Entertainment and Communications, continued

Revenue

	Three Months Ended September 30,
	2020						2019
	Cincinnati		Hawaii		Total		Cincinnati		Hawaii		Total
Revenue
Consumer / SMB Fiber *
Data	$	43.0	$	9.1	$	52.1	$	39.3	$	8.0	$	47.3
Video		38.7		9.4		48.1		39.5		10.7		50.2
Voice		8.9		2.7		11.6		9.2		2.7		11.9
Other		0.4		0.2		0.6		0.4		0.2		0.6
		91.0		21.4		112.4		88.4		21.6		110.0
Enterprise Fiber
Data		21.4		10.6		32.0		21.6		9.9		31.5
Legacy
Data		23.4		12.3		35.7		26.1		14.6		40.7
Voice		27.9		26.0		53.9		31.5		27.3		58.8
Other		3.1		3.9		7.0		3.2		4.3		7.5
		54.4		42.2		96.6		60.8		46.2		107.0
Total Entertainment and Communications revenue	$	166.8	$	74.2	$	241.0	$	170.8	$	77.7	$	248.5

	Nine Months Ended September 30,
	2020						2019
	Cincinnati		Hawaii		Total		Cincinnati		Hawaii		Total
Revenue
Consumer / SMB Fiber *
Data	$	126.0	$	26.5	$	152.5	$	115.5	$	23.8	$	139.3
Video		116.3		28.8		145.1		120.3		33.2		153.5
Voice		25.0		8.1		33.1		27.6		8.2		35.8
Other		1.1		0.6		1.7		1.1		0.5		1.6
		268.4		64.0		332.4		264.5		65.7		330.2
Enterprise Fiber
Data		64.3		31.0		95.3		63.8		29.3		93.1
Legacy
Data		71.6		39.4		111.0		78.4		45.7		124.1
Voice		85.7		78.8		164.5		96.3		83.3		179.6
Other		9.3		12.0		21.3		10.2		12.1		22.3
		166.6		130.2		296.8		184.9		141.1		326.0
Total Entertainment and Communications revenue	$	499.3	$	225.2	$	724.5	$	513.2	$	236.1	$	749.3

*	Represents Fioptics in Cincinnati

~~Revenue~~

Three Months ended September 30, Nine Months ended September 30,
(dollars in millions) 2017 2016 2017 2016
Revenue:
Consumer
Strategic
Data $ 32.2
$ 26.5
$ 93.2
$ 75.2
Voice 6.2
5.4
18.2
16.0
Video 37.2
31.7
109.1
90.6
Services and other 0.4
0.8
1.2
2.6
76.0
64.4
221.7
184.4
Legacy
Data 8.4
10.4
27.0
34.4
Voice 16.1
18.2
50.8
56.7
Services and other 0.7
1.0
2.2
3.2
25.2
29.6
80.0
94.3
Integration
Services and other 0.2
0.9
0.3
3.0
Total consumer revenue $ 101.4
$ 94.9
$ 302.0
$ 281.7

Business
Strategic
Data $ 25.1
$ 24.3
$ 74.9
$ 71.9
Voice 16.3
13.3
46.3
37.8
Video 0.6
0.5
1.9
1.5
Services and other 0.5
0.6
1.6
1.5
42.5
38.7
124.7
112.7
Legacy
Data 4.1
4.9
13.3
15.4
Voice 24.4
27.7
74.5
85.1
Services and other 0.1
0.4
0.6
1.0
28.6
33.0
88.4
101.5
Integration
Services and other 0.4
0.4
1.1
1.3
Total business revenue $ 71.5
$ 72.1
$ 214.2
$ 215.5

Carrier
Strategic
Data $ 10.7
$ 11.3
$ 31.5
$ 33.9
Services and other —
—
5.4
—
10.7
11.3
36.9
33.9
Legacy
Data 7.5
9.0
23.4
27.6
Voice 3.7
4.1
11.7
12.4
Services and other 1.4
1.6
4.7
4.7
12.6
14.7
39.8
44.7
Total carrier revenue $ 23.3
$ 26.0
$ 76.7
$ 78.6

Total Entertainment and Communications revenue $ 196.2
$ 193.0
$ 592.9
$ 575.8

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Entertainment and Communications, continued

~~Consumer~~

~~Consumer market~~

Cincinnati Fioptics and Hawaii Consumer/SMB Fiber (collectively, "Consumer/SMB Fiber")

Consumer/SMB Fiber revenue ~~has~~ increased ~~from~~by $2.4 million for the comparable periods in the previous year due to Fioptics growth offsetting losses in legacy access lines, DSL subscribers and long-distance lines. Our Consumer Fioptics internet subscriber base increased 18% and average revenue per user ("ARPU") was up 4% compared to the third quarter of 2016. Consumer Fioptics video subscribers as of the end of the third quarter of 2017 increased 9%three months ended September 30, 2020 compared to the same period ain the prior year ~~ago, in addition to a 4%~~as the increase in ~~ARPU.~~

the subscriber base for internet more than offset the decline in video and voice subscribers. The ~~Company~~internet subscriber base continues to ~~lose access~~increase as we focus our attention on growing the internet FTTP subscriber base. Favorable churn in the three months ended September 30, 2020 compared to the same period in 2019 has also contributed to the increased internet subscriber base. In addition, the Average Revenue Per User (“ARPU”) for the three months ended September 30, 2020 increased for internet in both Cincinnati and ~~long distance lines because of customers electing~~Hawaii by 3% and 10%, respectively, as compared to ~~use wireless service~~the same period in ~~lieu of traditional local wireline service or electing~~2019. ARPU increases are related to ~~move~~price increases for internet.

Consumer/SMB Fiber revenue increased by $2.2 million for the nine months ended September 30, 2020 compared to ~~other service providers. The Company~~the same period in 2019 as similar trends impacting the revenue increase for the quarter also ~~continues~~impacted the nine months ended September 30, 2020. ARPU for the nine months ended September 30, 2020 increased for internet in both Cincinnati and Hawaii by 4% and 8%, respectively, as compared to ~~experience DSL subscriber loss because of customers migrating~~the same period in the prior year. In addition, revenue in the nine months ended September 30, 2020 was negatively impacted by a decline in non-recurring revenue due to ~~Fioptics, or an alternative internet provider, particularly~~COVID-19 and the Company’s participation in ~~areas not upgraded to Fioptics.~~

~~Business~~

~~Business market~~the Pledge that expired on June 30, 2020.

Enterprise Fiber

Enterprise Fiber revenue ~~is down slightly from prior comparable periods~~increased $0.5 million and $2.2 million for the three and nine months ended September 30, ~~2017~~2020 as compared to the ~~growth~~same periods in ~~strategic revenue only partially offset declines realized by our legacy and integration products and services. Data revenue~~2019 as a result of customers migrating from ~~our business customers was consistent for the three months ended September 30, 2017, and increased for the nine months ended September 30, 2017 as customers migrate from our~~ legacy product offerings to higher bandwidth fiber ~~solutions. Voice~~solutions, as evidenced by the 19% increase in Ethernet Bandwidth in both Cincinnati and Hawaii. The increase to revenue ~~declined~~from additional customers switching to fiber solutions is partially offset by pricing pressures to provide higher speeds for a lower cost.

Legacy

Legacy revenue decreased for the three and nine months ended September 30, ~~2017,~~2020 compared to the same periods in the prior year due to the decline in voice lines and DSL subscribers. Voice lines declined 11% and 10% in Cincinnati and Hawaii, respectively, as the traditional voice lines become less relevant. DSL subscribers decreased by 4% and 14% in Cincinnati and Hawaii, respectively, 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 revenue decline for these products in 2020 compared to the same periods in the prior year as customers migrate away from these solutions to fiber-based solutions.

Operating Costs and Expenses

Cost of services and products decreased $3.7 million for the three months ended September 30, 2020 compared to the same period in 2019 due to decreases in video content costs and operating taxes of $1.8 million and $1.3 million, respectively. Lower video content costs are a result of decreased subscribers. The decrease in operating taxes is due to decreases in regulatory fees and general excise tax. In addition to video content costs and operating taxes, payroll wages and taxes decreased by $1.3 million due to reduced headcount as a result of the restructuring that took place in the first quarter of 2020 and throughout 2019. Partially offsetting this cost savings is higher bonus expense due to a one-time bonus awarded to employees for their efforts during COVID-19.

Cost of services and products decreased $19.1 million for the nine months ended September 30, 2020 compared to the same period in the prior year due primarily to decreases in payroll related costs, video content costs and operating taxes. Payroll related costs decreased $2.2 million for the nine months ended September 30, 2020 compared to the same period in the prior year due to reduced headcount as well as lower workers compensation benefits more than offsetting incremental bonus expense. Video content costs decreased by $5.8 million for the nine months ended September 30, 2020 compared to the same period in 2019 as a result of decreased subscribers. Lower operating taxes are primarily due to favorable audit results that resulted in a nonrecurring benefit of $4.2 million for the nine months ended September 30, 2020 in addition to a decrease in general excise tax.

SG&A expenses increased $0.2 million for the three months ended September 30, 2020 compared to the same period in 2019. An increase in contract services as a result of higher insurance costs in third quarter of 2020 and increased bonus expense of $1.9 million primarily due to a one-time employee award was partially offset by cost containment strategies taken in 2020 to reduce the negative impact of the COVID-19 pandemic on the business.

SG&A expenses decreased $3.7 million for the nine months ended September 30, 2020 compared to the comparable period in the prior year primarily related to cost containment strategies taken in 2020 to reduce the negative impact of the COVID-19 pandemic on the business. The decrease was partially offset by increases to contract services as a result of higher insurance costs, bad debt expense due to updating our estimate of the impact of the economic downturn associated with the ~~loss of legacy voice lines~~COVID-19 pandemic on the Company’s receivables and ~~long distance lines was greater than the growth~~incremental bonus expense recorded in the ~~revenue associated with VoIP lines.~~third quarter.

~~Carrier~~

~~For~~

Entertainment and Communications, continued

Depreciation and amortization decreased $2.8 million and $0.5 million in the three and nine months ended September 30, ~~2017, data revenue declined by $2.1 million and $6.6 million,~~2020, respectively, as carriers increased focus on improving the efficiency of their networks as they migrate from legacy product offerings to higher bandwidth fiber solutions. Voice revenue continues to decrease in 2017 in part due to Federal Communications Commission ("FCC") mandated reductions of terminating switched access rates. Strategic services and other revenue of $5.4 million is related to a one time project that was completed in the second quarter of 2017.

~~Operating costs and expenses~~

Cost of services and products has increased primarily due to higher programming costs of $4.8 million in the three months ended September 30, 2017 and $13.4 million in the nine months ended September 30, 2017 compared to the same periods during 2016. These increases are the result of the growing number of Fioptics video subscribers combined with rising programming rates. For the three months ended September 30, 2017 increased programming costs were partially offset by lower payroll and contract services costs. For the nine months ended September 30, 2017, in addition to increased programming costs, network costs increased because of the completion of a one-time carrier project in the second quarter of 2017. Furthermore, costs were incurred during the nine months ended September 30, 2017 related to the new product Hosted Communications Solution, launched in the fourth quarter of 2016.

~~SG&A expenses were down in 2017 in both comparable periods primarily due to lower payroll and bad debt expense.~~

~~Depreciation and amortization expenses for the three and nine months ended September 30, 2017 increased compared to~~ the prior year primarily due to a decrease in assets placed in service during 2020 in connection with the expansion of our fiber network.

Restructuring and severance charges recorded in the nine months ended September 30, ~~2017~~2020 are primarily related to a ~~voluntary~~VSP for certain bargained and management employees in an effort to continue to reduce costs associated with our copper field and network operations. Restructuring and severance charges recorded in the three and nine months ended September 30, 2019 were related to a severance program for certain ~~bargained~~management employees as the Company continued its efforts to ~~reduce field~~streamline operations between Cincinnati and ~~network costs associated with our legacy copper network.~~Hawaii.

Capital Expenditures

	Three Months Ended September 30,
	2020						2019
	Cincinnati		Hawaii		Total		Cincinnati		Hawaii		Total
Consumer / SMB Fiber capital expenditures *
Construction	$	6.1	$	4.1	$	10.2	$	4.8	$	2.4	$	7.2
Installation		8.4		3.4		11.8		10.7		3.4		14.1
Other		2.4		0.2		2.6		2.9		0.8		3.7
Total Consumer / SMB Fiber		16.9		7.7		24.6		18.4		6.6		25.0
Enterprise Fiber		4.4		2.7		7.1		4.9		2.1		7.0
Other		9.8		14.4		24.2		10.4		8.9		19.3
Total Entertainment and Communications capital expenditures	$	31.1	$	24.8	$	55.9	$	33.7	$	17.6	$	51.3

	Nine Months Ended September 30,
	2020						2019
	Cincinnati		Hawaii		Total		Cincinnati		Hawaii		Total
Consumer / SMB Fiber capital expenditures *
Construction	$	14.1	$	9.5	$	23.6	$	21.4	$	6.2	$	27.6
Installation		25.1		10.6		35.7		36.8		11.5		48.3
Other		6.9		0.3		7.2		7.2		2.1		9.3
Total Consumer / SMB Fiber		46.1		20.4		66.5		65.4		19.8		85.2
Enterprise Fiber		8.8		8.2		17.0		8.4		5.4		13.8
Other		26.8		32.2		59.0		24.8		26.5		51.3
Total Entertainment and Communications capital expenditures	$	81.7	$	60.8	$	142.5	$	98.6	$	51.7	$	150.3

~~Table of Contents~~


*
~~Form 10-Q Part I~~		Represents Fioptics in Cincinnati ~~Bell Inc.~~

~~Entertainment and Communications, continued~~

Capital ~~Expenditures~~

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in millions) 2017 2016 2017 2016
Fioptics capital expenditures
   Construction $ 12.5
$ 21.6
$ 43.9
$ 59.0
   Installation 11.1
19.0
39.5
40.2
   Other 1.6
2.3
8.1
13.3
Total Fioptics 25.2
42.9
91.5
112.5

Other strategic 7.1
9.6
23.0
35.9
Maintenance 9.1
10.6
24.4
30.3
Total capital expenditures $ 41.4
$ 63.1
$ 138.9
$ 178.7

~~Expanding the~~expenditures in Cincinnati are incurred to expand our Fioptics product suite, ~~upgrading~~upgrade and ~~increasing~~increase capacity for our networks, and ~~maintaining~~to extend the life of our fiber and copper ~~networks, are the main drivers of capital expenditures for the Entertainment and Communications segment.~~networks. In the third quarter of ~~2017,~~2020, we passed an additional ~~8,000~~5,200 FTTP addresses ~~with Fioptics.~~in Cincinnati. As of September 30, ~~2017,~~2020, the Company is able to ~~provide~~deliver its Fioptics services with speeds up to ~~564,700~~30 megabits or more to approximately 632,800 residential and ~~business~~commercial addresses, or ~~approximately 70%~~75% of our operating ~~territory. Construction costs decreased~~territory in ~~2017~~Cincinnati. Cincinnati construction capital expenditures increased $1.3 million in the three months ended September 30, 2020 compared to ~~2016~~the same period in the prior year primarily due to ~~slowing~~passing more addresses in the ~~build process. The timing~~third quarter of ~~cash disbursements, as well as higher costs associated with building~~2020 compared to ~~less densely populated areas~~the same period in ~~2017 partially offset~~2019. Cincinnati construction capital expenditures decreased $7.3 million in the ~~decreased costs associated with a slower build out. Fioptics installation costs decreased~~nine months ended September 30, 2020 compared to the comparable period in ~~2017~~2019 primarily due to the timing of ~~purchases~~capital expenditures, which does not necessarily coincide with the timing of ~~set-top boxes~~when addresses become available. Cincinnati installation capital expenditures are primarily related to the timing of expenditures for customer premise equipment (“CPE”) utilized for installations. In the three and ~~modems~~nine months ended September 30, 2020, Cincinnati installation capital expenditures decreased $2.3 million and $11.7 million compared to the same periods in 2019 primarily due to lower volume of CPE purchased.

Enterprise Fiber capital expenditures in Cincinnati are related to success-based fiber builds, including associated equipment, for enterprise and carrier projects to provide ethernet services as well as network refresh projects that ~~occurred~~ensure that we continue to grow our capacity and services within the network core. Other capital expenditures are related to IT projects, cable and equipment maintenance and capacity additions, real estate upgrades and maintenance, plus other minor capital purchases.

Hawaii construction capital expenditures increased $1.7 million and $3.3 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods in the prior year due to building out 1,900 new addresses in the third quarter of ~~2016. Other Fioptics related costs include costs to expand core network capacity, as well as projects to enhance~~2020, primarily in rural areas and on the ~~customer experience.~~

~~Other strategic~~neighbor islands, and 4,200 new addresses in the nine months ended September 30, 2020. Hawaii installation capital expenditures ~~are for success-based~~decreased $0.9 million in the nine months ended September 30, 2020 compared to the prior year primarily due to less video and high-speed internet installations. Enterprise fiber ~~builds, including related equipment, for business~~capital in Hawaii is primarily driven by new ethernet customers. Hawaii capital expenditures classified as other include IT projects, real estate projects, road jobs or plant damage projects, and ~~carrier projects in order to provide ethernet and other data transport services.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

network upgrades or optimization projects.

IT Services and Hardware

The IT Services and Hardware segment provides ~~a full range of managed~~end-to-end IT solutions ~~including managed infrastructure~~ranging from consulting to implementation to ongoing optimization of existing technology. These solutions include Cloud, Communications and Consulting services ~~telephony~~along with the sale and maintenance of major branded Telecom and IT ~~equipment sales, and professional IT staffing services.~~hardware reported as Infrastructure Solutions. These services and products are provided through the Company's subsidiaries in various geographic areas throughout the United States, Canada and ~~the United Kingdom.~~Europe. By offering a full range of equipment and ~~outsourced~~strategic services in conjunction with the Company’s fiber and copper networks, the IT Services and Hardware segment provides ~~end-to-end IT and telecommunications infrastructure management~~our customers personalized solutions designed to ~~reduce cost~~meet their business objectives.

Cloud services include the design, implementation and ~~mitigate~~on-going management of the customer’s infrastructure. This includes on-premise, public cloud and private cloud solutions. The Company assists customers with the risk ~~while optimizing performance for its customers.~~

assessment phase through an in-depth understanding of the customer’s business as well as building and designing a solution, using either the customer's existing infrastructure or new cloud based options, that transforms the way that the customer does business.

Communications solutions help to transform the way our customers do business by connecting employees, customers, and business partners. By upgrading legacy technologies through customized build projects and reducing customer costs, the Company helps to transform the customer’s business. These services include Unified Communications as a Service ("UCaaS"), Software-Defined Wide Area Network ("SD-WAN"), Network as a Service ("NaaS"), Contact Center and Collaboration.

Using our experience and expertise, Infrastructure Solutions are tailored to our customers’ organizational goals. We offer a complete portfolio of services that provide customers with efficient and optimized IT solutions that are agile and responsive to their business and are integrated, simplified and manageable. Through consulting with customers, the Company will build a solution using standard manufacturer equipment to meet our customers’ specific requirements.

Consulting services help customers assess their business and technology needs and provide the talent needed to ensure success. The Company is a premier provider of application services and IT staffing.


	Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in millions)	2017			2016			Change			% Change			2017			2016			Change			% Change			2020			2019			Change			% Change			2020			2019			Change			% Change
Revenue:
Professional Services	$	24.9		$	26.5		$	(1.6	)	(6	)%		$	70.1		$	79.9		$	(9.8	)	(12	)%
Management and Monitoring	5.5			8.1			(2.6		)	(32	)%		15.6			24.1			(8.5		)	(35	)%
Unified Communications	10.7			9.9			0.8			8	%		31.6			30.1			1.5			5	%
Cloud Services	10.9			12.2			(1.3		)	(11	)%		36.2			33.2			3.0			9	%
Telecom and IT hardware	44.3			66.2			(21.9		)	(33	)%		125.0			167.9			(42.9		)	(26	)%
Consulting																									$	49.4		$	37.6		$	11.8			31	%	$	138.5		$	114.6		$	23.9			21	%
Cloud																										21.1			22.6			(1.5	)		(7	)%		63.0			69.8			(6.8	)		(10	)%
Communications																										53.9			51.3			2.6			5	%		160.3			147.0			13.3			9	%
Infrastructure Solutions																										30.8			29.0			1.8			6	%		82.7			85.6			(2.9	)		(3	)%
Total revenue	96.3			122.9			(26.6		)	(22	)%		278.5			335.2			(56.7		)	(17	)%			155.2			140.5			14.7			10	%		444.5			417.0			27.5			7	%
Operating costs and expenses:
Cost of services and products	72.4			96.2			(23.8		)	(25	)%		209.8			260.3			(50.5		)	(19	)%			102.7			89.4			13.3			15	%		290.2			268.3			21.9			8	%
Selling, general and administrative	15.7			15.2			0.5			3	%		47.6			42.9			4.7			11	%			36.9			38.8			(1.9	)		(5	)%		110.6			113.8			(3.2	)		(3	)%
Depreciation and amortization	3.4			3.4			—			—	%		10.9			9.8			1.1			11	%			10.2			11.1			(0.9	)		(8	)%		30.7			38.5			(7.8	)		(20	)%
Restructuring and severance related charges	—			0.3			(0.3		)	n/m			2.3			0.3			2.0			n/m				0.8			0.6			0.2			33	%		1.5			1.5			—			—
Total operating costs and expenses	91.5			115.1			(23.6		)	(21	)%		270.6			313.3			(42.7		)	(14	)%			150.6			139.9			10.7			8	%		433.0			422.1			10.9			3	%
Operating income	$	4.8		$	7.8		$	(3.0	)	(38	)%		$	7.9		$	21.9		$	(14.0	)	(64	)%
Operating income (loss)																									$	4.6		$	0.6		$	4.0		n/m			$	11.5		$	(5.1	)	$	16.6		n/m
Operating margin	5.0		%	6.3		%				(1.3	)	pts	2.8		%	6.5		%				(3.7	)	pts		3.0	%		0.4	%				2.6 pts				2.6	%		(1.2	)%				3.8 pts
Capital expenditures	$	1.6		$	4.1		$	(2.5	)	(61	)%		$	9.3		$	9.9		$	(0.6	)	(6	)%		$	3.9		$	5.4		$	(1.5	)		(28	)%	$	16.7		$	16.9		$	(0.2	)		(1	)%

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

IT Services and Hardware, continued

	September 30,
Metrics information (in thousands):	2020		2019		Change		% Change
Consulting
Billable Resources		1,437		1,007		430		43	%

Communications
NaaS Locations		5,419		3,492		1,927		55	%
SD - WAN Locations		2,783		1,849		934		51	%
Hosted UCaaS Profiles*		277,610		270,335		7,275		3	%

*	Includes Hawaii Hosted UCaaS Profiles

Revenue

~~The following~~

IT Services and Hardware ~~services~~segment revenue increased $14.7 million and ~~products have either been classified as strategic or integration:~~

Three months ended September 30, Nine months ended September 30,
(dollars in millions) 2017 2016 2017 2016
Strategic business revenue
   Professional Services $ 17.5
$ 22.9
$ 54.2
$ 68.3
   Management and Monitoring 5.5
8.1
15.6
24.1
   Unified Communications 7.2
7.3
21.7
22.1
   Cloud Services 10.9
12.2
36.2
33.2
Total strategic business revenue 41.1
50.5
127.7
147.7

Integration business revenue
   Professional Services 7.4
3.6
15.9
11.6
   Unified Communications 3.5
2.6
9.9
8.0
   Telecom and IT hardware 44.3
66.2
125.0
167.9
Total integration business revenue 55.2
72.4
150.8
187.5
Total IT Services and Hardware revenue $ 96.3
$ 122.9
$ 278.5
$ 335.2

~~For~~$27.5 million for the three and nine months ended September 30, ~~2017, strategic professional~~2020, respectively, as compared to the same periods in the prior year. Communications and Consulting revenue are the main contributors to this revenue increase in 2020. Communications revenue increased as a result of customers migrating to newer technologies which has increased the Company’s Hosted UCaaS profiles, NaaS locations and SD-WAN locations. In addition, Communications revenue was favorably impacted as certain customers required additional services to mitigate the issues caused by the COVID-19 pandemic on their businesses. The decline in legacy communications revenue and ~~management and monitoring~~one-time Communications projects partially offset these increases. Consulting revenue ~~decreased primarily~~increased due to ~~declines~~obtaining new projects throughout 2019 which continue to bill and grow in ~~billable headcount as one our significant customers pursued cost out initiatives by in-sourcing IT professionals. For~~2020. Infrastructure Solutions revenue increased $1.8 million in the three months ended September 30, ~~2017, cloud services revenue declined~~2020 compared to the same period in the prior year due to additional project volume from existing customers, primarily in the ~~loss~~retail and education sectors, in the third quarter of ~~storage and backup revenue. For~~2020. In the nine months ended September 30, ~~2017,~~2020, Infrastructure Solutions revenue decreased $2.9 million compared to the same period in 2019 as increased ~~cloud services~~ revenue ~~has primarily been driven~~from projects in the third quarter was more than offset by the ~~increase~~decline in ~~virtual machines managed within our current customer base.~~

~~Integration revenue is primarily driven by the volume of Telecom and IT~~ hardware sales ~~reflecting~~that occurred in the ~~reduction in capital spending by our enterprise customers. The change in spending by our~~second quarter partially due to the impacts of COVID-19 and customers may be influenced by many factors, including the timing of customers' capital spend, the size of their capital budgets and general economic conditions. The reductions in Telecom and IT hardware are onlymigrating to managed services. Increased revenue was partially offset by ~~increases~~decreases in ~~Professional Services, which can be attributed to the acquisition of Suntel.~~

~~Costs and Expenses~~

~~Cost of services and products is primarily impacted by changes~~Cloud revenue in ~~Telecom and IT hardware sales and reductions in headcount-related costs associated with professional services. For~~ the three and nine months ended September 30, ~~2017, costs of goods sold related~~2020 compared to ~~Telecom and IT hardware sales~~the comparable periods in 2019. Cloud revenue decreased ~~$20.4 million and $39.8 million, respectively, from the prior year~~ due to less revenue generated from one-time projects in addition to lower ~~Telecom and IT hardware sales. Changes in billable resources driven~~revenue contributed by ~~the professional services revenue reductions contributed to payroll costs decreasing $4.7 million in the three months ended September 30, 2017 and $9.7~~GE of $4.3 million in the nine months ended September 30, ~~2017~~2020 compared to the ~~same periods during 2016.~~

~~For the nine months ended September 30, 2017, SG&A costs increased~~prior year due to ~~additional headcount at branch locations to support the expansion~~GE insourcing certain cloud services.

Operating Costs and Expenses

IT Services and Hardware cost of ~~our national footprint.~~

~~For the nine months ended September 30, 2017, restructuring~~services and ~~severance related charges of $2.3~~products increased $13.3 million ~~related to the reorganization initiated to better align the segment~~and $21.9 million for ~~future growth.~~

~~Capital Expenditures~~

~~Capital expenditures decreased during~~ the three and nine months ended September 30, ~~2017~~2020, respectively, as compared to the same periods in the prior year due to increases in payroll related costs, contractor costs, software licensing costs and regulatory fees. The increase in payroll related costs and contractor costs is due to additional headcount to support the growth in the Communications and Consulting practices as well as a one-time bonus to reward employees for their efforts during COVID-19. As a result of the consulting projects obtained in 2019, billable resources increased by 430 compared to September 30, 2019. Higher software licensing costs were also incurred to support the revenue growth in the Communications practice.

SG&A expenses decreased $1.9 million and $3.2 million for the three and nine months ended September 30, 2020, respectively, as compared to the comparable periods in 2019. The decreases are primarily related to cost containment strategies taken in 2020 to reduce the negative impact of the COVID-19 pandemic on the business. This was partially offset by an increase in bad debt expense due to updating our estimate of the impact of the economic downturn associated with the COVID-19 pandemic on the Company’s receivables and a one-time bonus awarded to employees in the third quarter. In addition, employee contract termination costs incurred in the first quarter of 2020 partially offset the decrease in the nine months ended September 30, 2020 compared to the same period in the prior year.

Depreciation and amortization expenses decreased $0.9 million and $7.8 million for the three months and nine months ended September 30, 2020, respectively, as compared to the same periods in the prior year due to accelerated depreciation expense for certain network assets designated for use by a specific customer. The network assets for which accelerated depreciation expense was incurred were determined to have a shorter useful life due to a change in the customer's requirements in the first quarter of 2019 and were fully depreciated as of December 31, 2019.

Restructuring and severance related charges recorded in the three and nine months ended September 30, 2020 and 2019 are associated with initiatives to reduce and contain costs. In addition, restructuring and severance related charges recorded in the second quarter of 2019 are related to insourcing initiatives by one of our significant customers.

Capital Expenditures

Capital expenditures are dependent on the timing of success-based projects. Capital expenditures for the three and nine months ended September 30, 2020, were primarily related to projects supporting the ~~growth of our strategic products, primarily cloud services.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

Cloud and Communications practices. In addition to success-based projects, the Company incurred $1.3 million for implementation work associated with internal software projects in the nine months ended September 30, 2020.

Financial Condition, Liquidity, and Capital Resources

As of September 30, ~~2017,~~2020, the Company had ~~$1,132.8~~$1,958.0 million of outstanding indebtedness and an accumulated deficit of ~~$2,680.8~~$2,826.0 million. A significant amount of the Company's ~~indebtedness and~~ accumulated deficit resulted from the purchase and operation of a national broadband business, which was sold in 2003.

The Company’s primary source of cash is generated by operations. The Company generated ~~$156.8~~$138.9 million and ~~$141.6~~$188.9 million of cash flows from operations during the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. As of September 30, ~~2017,~~2020, the Company had ~~$290.1~~$159.9 million of short-term liquidity, comprised of ~~$43.7~~$8.8 million of cash and cash equivalents, ~~$150.0~~$143.0 million of undrawn capacity on our ~~Corporate~~Revolving Credit ~~Agreement~~Facility, and ~~$96.4~~$8.1 million available under the Receivables Facility.

The Receivables Facility permits maximum borrowings of up to $200.0 million and is subject to annual renewal. As of September 30, ~~2017,~~2020, the Company had no borrowings of $179.5 million and ~~$6.3~~$12.4 million of letters of credit outstanding under the Receivables Facility on a borrowing capacity of ~~$102.7~~$200.0 million. In the second quarter of 2017, the Company executed an amendment of its Receivables Facility, which replaced, amended and added certain provisions and definitions to increase the credit availability and renew the facility, which is subject to renewal every 364 days, until May 2018. The facility's termination date is in May 2019. While we expect to continue to renew this facility, we would be required to use cash or our ~~Corporate~~Revolving Credit ~~Agreement or other sources~~Facility to repay any outstanding balance on the Receivables Facility if it ~~were~~was not renewed.

The Company’s primary uses of cash are for capital expenditures and debt service and, to a lesser extent, to fund pension and retiree medical obligations and preferred stock dividends. In ~~2017, cash was also utilized to fund merger and acquisition activity.~~ the first quarter of 2020, as a result of terminating the Brookfield Merger Agreement, we paid an affiliate of Brookfield a termination fee of $24.8 million on March 13, 2020. The Company believes that its cash on hand, cash generated from operations, and available funding under its credit facilities will be adequate to meet its cash requirements for the next twelve months. ~~In addition, management expects that~~

As of September 30, 2020, the Company ~~will continue to have access to~~was in compliance with the ~~capital markets to refinance debt and other obligations should such a need arise in the near future.~~

Credit Agreement covenants.

Cash Flows

Cash provided by operating activities during the nine months ended September 30, ~~2017~~2020 totaled ~~$156.8~~$138.9 million, ~~an increase~~a decrease of ~~$15.2~~$50.0 million compared to the same period in ~~2016.~~2019. The ~~increase~~decrease is due primarily to ~~a $5.4 million decrease in interest payments resulting from~~increased transaction and termination costs and increased cash outflow due to working capital compared to the ~~Company refinancing the 8~~ ³/₄~~% Senior Notes due 2020, with 7% senior notes due 2024~~same period in the ~~third quarter of 2016, in addition to a decrease in borrowings under the Tranche B Term Loan Facility. The remaining increase is primarily~~prior year. Increased cash outflow due to ~~the Company's discontinued wireless operations, including the decommissioning of wireless towers, which utilized $6.9~~working capital is partially due to $20.2 million of ~~cash in~~accounts receivables sold on the ~~nine months ended~~Receivables Facility as of September 30, ~~2016.~~

2019, and no outstanding balance of accounts receivables sold as of September 30, 2020, as well as increased days sale outstanding in 2020 due to COVID-19 and the Pledge.

Cash flows used in investing activities during the nine months ended September 30, ~~2017~~2020 totaled ~~$16.8~~$160.8 million, a decrease of ~~$76.1~~$6.2 million compared to the same period in ~~2016. The decrease is primarily~~2019 due to the ~~Company depositing $90.7 million of funds into a restricted cash account to redeem the remaining balance of the 8~~ ³/₈~~% Senior Notes due 2020~~decrease in ~~the third quarter of 2016 and $6.2 million in dividends received from CyrusOne in 2016. This decrease was partially offset by $9.6 million of net cash used to acquire SunTel Services in 2017.~~

capital expenditures.

Cash flows ~~used~~provided by financing activities during the nine months ended September 30, ~~2017~~2020 totaled ~~$106.0~~$19.3 million as compared to ~~$47.6~~cash used in financing activities of $30.9 million ~~used~~during the same period in the prior year. In the first half of 2017, we repaid $89.5 million on the Receivables Facility, compared to borrowing $5.9 million in the prior year. In the third quarter of 2016, the Company issued $425.0 million of 7% Senior Notes due 2024. In addition, debt repayments totaling $6.4 million for the nine months ended September 30, ~~2017 was a decrease of $454.6 million from the prior year. We also repurchased and retired approximately 0.2 million shares of the Company's common stock for $4.8 million in the prior year.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

~~Debt Covenants~~

~~Corporate Credit Agreement~~

The Corporate Credit Agreement contains financial covenants that require we maintain certain leverage and interest coverage ratios. The facility also contains certain covenants which, among other things, limit the Company’s ability to incur additional debt or liens, pay dividends, repurchase Company common stock, sell, transfer, lease, or dispose of assets, and make certain investments or merge with another company. If2020, the Company ~~was to violate any of its covenants and was unable to obtain a waiver, it would be considered in default. If~~borrowed $48.0 million on the Receivables Facility. In the nine months ended September 30, 2019, the Company ~~was in default under~~borrowed $27.0 million on the Revolving Credit Facility and repaid $35.1 million on the Receivables Facility.

In the second quarter of 2020, the Company executed amendments to its ~~Corporate Credit Agreement, no additional borrowings under~~Receivables Facility, which replaced, amended and added certain provisions and definitions to decrease the ~~Corporate Credit Agreement would be available~~credit availability and renew the facility, which is subject to renewal every 364 days, until May 2021, and extend the ~~default was waived or cured. The Company was in compliance with all of~~facility’s termination date to May 2023. Capacity on the ~~financial covenants under the Corporate Credit Agreement as of September 30, 2017.~~

~~In order to~~AR facility is calculated and will continue to ~~have access to~~be calculated based on the ~~amounts available to it under the Corporate Credit Agreement,~~quantity and quality of outstanding accounts receivables; therefore if the Company ~~must remain~~experiences declines in ~~compliance with all of~~revenue or extends discounts to customers, the ~~covenants. Definitions~~capacity could be negatively impacted and ~~components of these calculations are detailed in~~reduce our ~~Corporate Credit Agreement and can be found in the Company's Form 8-K filed on May 17, 2016.~~

~~In October 2017, the Company terminated the Corporate Credit Agreement and entered into a new Credit Agreement which replaces the previous financial covenants with new financial covenants.~~

~~Bond~~ short term liquidity. Management is continuously monitoring liquidity to ensure sufficient cash is available.

Indentures

The Company’s ~~debt, which includes the 7%~~ Senior Notes ~~due 2024, and the New 8% Senior Notes due 2025 issued in October 2017, contains~~are governed by indentures which contain covenants that, among other things, limit the Company’s ability to incur additional debt or liens, pay dividends or make other restricted payments, sell, transfer, lease or dispose of assets and make investments or merge with another company. The Company is in compliance with all of its debt ~~indentures.~~

indentures as of September 30, 2020.

Share Repurchase Plan

In 2010, the Board of Directors approved a plan for the repurchase of the Company's outstanding common stock in an amount up to $150.0 million. In prior years, the Company repurchased and retired a total of 1.7 million shares at a total cost of $25.6 ~~million.~~million dollars. As of September 30, ~~2017,~~2020, the Company has the authority to repurchase its common stock with a value of up to $124.4 million under the plan approved by its Board of Directors, subject to satisfaction of the requirements under its bond indentures.

Regulatory Matters

Universal Service

In January 2020, the FCC adopted a Report and Order establishing the Rural Digital Opportunity Fund (“RDOF”), which will be used to distribute $20.4 billion over ten years to expand broadband in areas that remain unserved at the conclusion of the CAF II price cap support program. The funds will be awarded via two reverse auctions. In June 2020, the FCC released the procedures for the Phase I auction which is scheduled to begin on October 29, 2020. On October 13, 2020, the FCC announced that 386 applicants, including Cincinnati Bell Inc., are qualified to bid in the Phase I auction, which will award up to $16 billion over the 10-year support term. The remaining $4.4 billion plus any funds not awarded during Phase I will be distributed via a second auction to be held at a later date when more accurate broadband availability data becomes available.The Report and Order also extended the current price cap CAF II support for an additional year (through 2021). CBT and Hawaiian Telcom have accepted the seventh year of CAF II support, which will provide $2.2 million for CBT and $4.4 million for Hawaiian Telcom in 2021.

Special Access/Business Data Services

The deadline for detariffing of price cap carrier Business Data Services (“BDS”) as mandated by the FCC’s 2017 BDS Report and Order was August 1, 2020. By that date, all price cap carriers must have removed from their federal tariffs all packet-based services, Ethernet services, TDM services above the DS3 level, DS1 and DS3 transport services, and DS1 and DS3 services provided to end users within counties the FCC has determined are competitive. Hawaiian Telcom detariffed all of these services in late 2017 and early 2018 for all counties within Hawaii, whereas CBT chose to maintain its tariffs for these services during this permissive tariffing period. However, effective August 1, 2020, CBT eliminated its tariffs for all of these services except for DS1 and DS3 end user services in the two counties that the FCC has determined are non-competitive. Nearly all of the Company’s current federally tariffed BDS revenue is derived from the competitive counties that are subject to the detariffing mandate.

Keep Americans Connected Pledge

On March 13, 2020, in response to the COVID-19 pandemic, FCC Chairman Pai called on broadband and telephone service providers to keep Americans connected as the country reacts to the serious disruptions caused by the coronavirus outbreak. To ensure that Americans do not lose their broadband or telephone connectivity during this outbreak, he asked the service providers to take the Keep Americans Connected pledge. Cincinnati Bell, on behalf of all of its affiliates, including Hawaiian Telecom, signed on to the Pledge under which it committed that for the next 60 days, it would (1) not terminate service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic; (2) waive any late fees that any residential or small business customers incur because of their economic circumstances related to the coronavirus pandemic; and (3) open its Wi-Fi hotspots to any American who needs them. Chairman Pai later called on companies to extend the pledge through June 30, 2020, which Cincinnati Bell and all of its affiliates agreed to do. In accordance with regulatory orders in Hawaii, the Pledge has continued to be honored for certain regulated services through the date of this filing.

Intercarrier Compensation

On October 9, 2020, the FCC released a Report and Order transitioning originating access charges for toll free calls to bill and keep over a three-year period. The Order does not provide a specific recovery mechanism for price cap companies to replace this lost revenue, finding instead that these companies can increase their existing Subscriber Line Charge or Access Recovery Charge to the extent they are otherwise able to do so. CBT and Hawaiian Telcom will assess the impact of the reduction in toll free charges and determine whether they have the ability to recover the lost revenue via existing mechanisms.

Unbundled Network Elements

In November 2019, the FCC opened a new proceeding to consider whether to update the remaining unbundling and resale obligations that apply to ILECs and proposed eliminating most remaining unbundling obligations with the exception of mass-market broadband-capable loops in rural areas. The FCC has announced that it will vote on a report and order at its October meeting that will eliminate DS0 loops in densely populated areas, DS1 and DS3 loops in areas with sufficient competition, and dark fiber loops near competitive fiber networks. Although Cincinnati Bell’s ILEC operations may benefit from the elimination of the UNE unbundling requirements, the benefits will likely be outweighed by the increased costs the changes will impose on its CLEC operations.

Citizens Band Radio Service Spectrum Auction

The FCC conducted an auction of over 22,000 county-sized Priority Access Licenses (“PALs”) in the 3550-3650 MHz portion of the Citizens Band Radio Service (“CBRS”) 3.5 GHz spectrum band. This auction, which was designated as Auction 105, commenced on July 23, 2020 and ended on August 25, 2020. This auction offered up to seven PALs in each county-based license area, for a total of 22,631 PALs nationwide. Each PAL consists of a 10-megahertz unpaired channel in the 3.55-3.65 GHz band. Cincinnati Bell was the winning bidder for 56 PALs (23 in Ohio, 20 in Kentucky, and 13 in Hawaii) at a total cost of $6.2 million.

Refer to the Company’s Annual Report on Form 10-K for the year ended ~~2016~~2019 for a complete description of regulatory matters. ~~Refer to the Company Quarterly Report on Form 10-Q for the period ended June 30, 2017 for changes to certain regulatory matters that occurred in the first and second quarter of 2017.~~

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

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 ~~U.S. GAAP.~~accounting principles generally accepted in the United States. Such matters are subject to many uncertainties and outcomes that are not predictable with assurance.

Future Operating Trends

On October 2, 2017 the Company completed the acquisition of OnX. The expectation is that this acquisition will provide future growth opportunities in the IT Services and Hardware segment by providing additional geographies to operate within, and an expanded customer base in which to sell our products and services. In addition, the acquisition can create synergies and opportunities for cost savings.

Refer to the Company’s Annual Report on Form 10-K for the year ended ~~2016~~2019 for a complete description of future operating trends for our business.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~

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~~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 its Annual Report on Form 10-K for the year ended December 31, ~~2016~~.

2019.

Recently Issued Accounting Standards

Refer to Note 1 of the Condensed Consolidated Financial Statements for further information on recently issued accounting ~~standards. The adoption~~standards and the impact to the Condensed Consolidated Financial Statements as a result of ~~new accounting standards did not have a material impact on the Company’s financial results for the three and nine months ended~~ ~~September 30, 2017~~.

adopting ASU 2016-13 effective January 1, 2020.

~~Table of Contents~~



~~Form 10-Q Part I~~		~~Cincinnati Bell Inc.~~


~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 for a description of the Company's market risks.

Item 4.Controls and Procedures


~~Item 4.~~ (a)	~~Controls and Procedures~~


~~(a)~~	Evaluation of disclosure controls and procedures.

Cincinnati Bell Inc.’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in SEC Rule ~~13-a 15(e)~~13a-15(e)) as of the end of the period covered by this report. Based on this evaluation, Cincinnati Bell Inc.’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, such controls and procedures were effective.


(b)	Changes in internal control over financial reporting.

Cincinnati Bell Inc.’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated any changes in the Company’s internal control over financial reporting that occurred during the third quarter of ~~2017~~ ~~and have~~2020, including the continuation of employees working remotely that started mid-March in response to the COVID-19 pandemic. Management has concluded that there were no changes to Cincinnati Bell Inc.’s internal control over financial reporting during the third quarter of ~~2017~~2020 that materially affect, or are reasonably likely to materially affect, Cincinnati Bell Inc.’s internal control over financial reporting.

We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact to their design and operating effectiveness.

~~Table of Contents~~



~~Form 10-Q Part II~~		~~Cincinnati Bell Inc.~~

PART II. OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

Item 1. Legal Proceedings

Cincinnati Bell and its subsidiaries are involved in a number of legal proceedings. Liabilities are established for legal claims when losses associated with the claims are judged to be probable and the loss can be reasonably estimated. In many lawsuits and arbitrations, including most class action lawsuits, it is not possible to determine whether a liability has been incurred or to estimate the amount of the liability until the case is close to resolution, in which case a liability will not be recognized until that time. Based on information currently available, consultation with counsel, available insurance coverage and recognized liabilities, the Company believes that the eventual outcome of all claims will not, individually or in the aggregate, have a material effect on the Company’s financial position or results of operations.

Item 1A. Risk Factors

The following risk factors should be read in conjunction with those risk factors and other information disclosed in our Form 10‑K filed on February 24, 2020 and should be considered carefully in evaluating us. Our business, financial condition, liquidity or results of operations could be materially affected by any of these risks.

Risk Factors Related to our Business and Operations

The recent global outbreak of COVID-19 and related government, private sector and individual consumer responsive actions have adversely affected the Company’s business operations, employee availability, financial performance, liquidity and cash flow and may continue to do so for an unknown period of time.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the President of the United States declared a national emergency relating to the outbreak. The outbreak has resulted in infections in the United States and abroad and has adversely affected workforces, customers and consumer sentiment and, along with a decrease in consumer spending, led to an economic downturn in many markets. National, state and local authorities have recommended social distancing measures and have imposed or are considering quarantine and isolation measures for large portions of the population, including mandatory business closures. These measures, while intended to protect human life, have had, and are expected to continue to have, serious adverse impacts on domestic and foreign economies of uncertain severity and duration. The effectiveness of economic stabilization efforts, including government payments under the CARES Act to affected citizens and industries, is uncertain.

In the United States and in other countries and regions where we have a significant employee presence, facilities or critical operations, the outbreak of COVID-19 has impacted our ability to manage day-to-day operations and service our customers and has increased our costs of operations and resulted in, among other things, loss of revenue. For example, we have implemented corporate and personal travel restrictions for employees and vendors, cancelled events and enabled work-from-home for many employees by equipping them to safely support customers remotely. We have also implemented additional safety measures for our retail stores and field operations teams. Additionally, we have been required to temporarily close or reduce operations at some of our retail locations, facilities and customer call centers. Retail locations inside malls were closed temporarily, but reopened in June 2020 as stay-at-home orders began to ease in Ohio. Retail locations that remain open continue to have reduced hours of operation. As a result of travel restrictions enacted by local government, our third-party off-shore call center was forced to reduce its hours of operation for several weeks, resulting in longer than normal hold times during that period. The call centers that support the Cincinnati market returned to normal hours of operation on April 28, 2020. Due to stay-at-home orders easing in the primary markets in which the Company operates, operations have normalized as of the date of this filing, but we may be required to temporarily close or reduce operations at more of or all of our retail locations, facilities or call centers again if there is a resurgence of COVID-19 in the markets in which we operate. The foregoing effects, and other effects of COVID-19, may continue for an unknown period of time.

Our business has been, and may continue to be, negatively impacted by the effects of, or precautions taken to avoid exposure to, COVID-19, such as reduced travel or recommendations or mandates from governmental authorities to avoid large gatherings or to self-quarantine, and by the resulting disruptions to economic conditions and financial markets. Such impacts include, but are not limited to:

•

Disruptions to our third-party providers, including those who provide many of our information technology, call center functions, certain accounting functions and other critical vendor services;

~~Refer~~

•

Reduced workforces caused by, among other things, the temporary inability of the workforce to work due to illness, quarantine, or government mandates, or temporary unwillingness to work due to health concerns;

•

Reduced customer demand or customer payment of accounts receivables as a result of adverse economic conditions resulting from the COVID-19 pandemic;

•

Reduced availability of certain network equipment in the supply chain due to increased demand and certain suppliers who have had, or continue to have, workforce constraints due to the COVID-19 pandemic; and

•

Reduced revenues as a result of our pledge to not terminate service to certain customers due to their inability to pay bills because of disruptions caused by COVID-19 and to waive late fees for certain customers as a result of circumstances related to COVID-19.

Potential future impacts include, but are not limited to:

•

Increased capital costs and service disruptions or reduced bandwidth for customers due to significant short-term increases in consumer activations and bandwidth usage due to individuals working from home;

•

Increased supply chain risks such as increased scrutiny or embargoing of goods produced in infected areas;

•

Increased health insurance and labor-related costs arising from illness, quarantine and the implementation of social distancing and work-from-home measures;

•

Reduced employee productivity and a negative impact on the execution of our business plans and operations as employees must balance working remotely from home with personal responsibilities, such as child care and education;

•

Increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us, our customers or other third parties as a result of employees or third-party vendors’ employees working remotely; and

•

In the event of a natural disaster, power outage, connectivity issue or other event that impacts our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue to support our customers’ needs and respond to inquiries through call center operations or to perform necessary repairs and maintenance.

The foregoing impacts, and other impacts of COVID-19 discussed elsewhere in these risk factors, are consistent with those generally affecting the economic, financial, regulatory and political conditions in the United States and elsewhere in the world, and are generally applicable to the industries and markets in which the Company and its subsidiaries operate. These impacts could materially increase our costs, negatively impact our consumer and business sales and damage the Company’s financial condition, results of operations, cash flows and liquidity position, possibly to a significant degree. The severity and duration of any such impacts cannot be predicted because of the rapidly evolving nature of the COVID-19 pandemic.

The Company may be unable to grow our revenues and cash flows despite the initiatives we have implemented.

We must produce adequate revenues and cash flows that, when combined with cash on hand and funds available under our revolving credit facilities, will be sufficient to service our debt, fund our capital expenditures, fund our pension and other employee benefit obligations and pay preferred dividends pursuant to our dividend policy. We have identified some potential areas of opportunity and implemented several growth initiatives. We cannot be assured that these opportunities will be successful or that these initiatives will improve our financial position or our results of operations. The outbreak of COVID-19 may also negatively impact these opportunities and require us to incur additional related costs responding to the virus, particularly if the effects of COVID-19 persist for a significant period of time.

The Company’s failure to meet performance standards under its agreements could result in customers terminating their relationships with the Company or customers being entitled to receive financial compensation, leading to reduced revenues and/or increased costs.

The Company’s agreements with its customers contain various requirements regarding performance and levels of service. If the Company fails to provide the levels of service or performance required by its agreements, customers may be able to receive financial compensation or may be able to terminate their relationship with the Company. In order to provide these levels of service, the Company is required to protect against human error, natural disasters, equipment failure, power failure, sabotage and vandalism, and have disaster recovery plans available in the event of disruption of service. As a result of the COVID-19 outbreak, this same level of service must now be provided in a predominantly remote working environment due to many members of the workforce now executing their daily responsibilities from their homes. Our increased reliance on personnel working from home may negatively impact productivity and there is no certainty that such measures will be sufficient to mitigate the risks posed by the COVID-19 outbreak. Additionally, our field technicians are classified as essential personnel and continue to operate business as usual. In the event that a significant number of our field technicians are affected by COVID-19, our ability to maintain our network could be reduced. The failure to address these or other events may result in a disruption of service. In addition, any inability to meet service level commitments or other performance standards could reduce the confidence of customers. Decreased customer confidence could impair the Company’s ability to attract and retain customers, which could adversely affect the Company’s ability to generate revenues and operating results.

The Company generates a substantial portion of its revenue by serving a limited geographic area.

The Company generates a substantial portion of its revenue by serving customers in Cincinnati, Ohio, Dayton, Ohio and the islands of Hawaii. An economic downturn or natural disaster occurring in any of these limited operating territories would have a disproportionate effect on the Company’s business, financial condition, results of operations and cash flows compared to similar companies of a national scope and similar companies operating in different geographic areas. Furthermore, because of Hawaii’s geographic isolation, the successful operation and growth of the business in Hawaii is dependent on favorable economic and regulatory conditions in the state. The impact of COVID-19 on the Hawaiian Islands has been, and could continue to be, more significant than in other geographies due to reliance on tourism by many businesses and reductions in tourism due to social distancing measures, self-quarantine requirements for visitors and recommendations of federal, state and local governments.

The customer base for telecommunications services in Hawaii is small and geographically concentrated. The population of Hawaii is approximately 1.4 million, approximately 70% of whom live on the island of Oahu. Any adverse economic conditions affecting Oahu (including the outbreak of COVID-19), or Hawaii generally, could materially impair our ability to operate our business. Labor shortages or increased labor costs in Hawaii could also have an adverse effect on our business. In addition, we may be subject to increased costs for goods and services that the Company is unable to control or defray as a result of operating in this limited territory or as a result of the COVID-19 outbreak. Increased expenses including, but not limited to, energy and health care could have an adverse effect on our business and results of operations.

Increases in broadband usage may cause network capacity limitations, resulting in service disruptions or reduced capacity for customers.

Video streaming services and peer-to-peer file sharing applications use significantly more bandwidth than traditional internet activity such as web browsing and email. As utilization rates and availability of these services continue to grow, our high-speed internet customers may use much more bandwidth than in the past. As a result of stay-at-home orders in Ohio and Hawaii in response to the COVID-19 outbreak, increased numbers of people working from home and students attending school online have resulted in, and could continue to result in, significantly higher than normal demands on our network capacity. If this continues to occur and our existing network capacity becomes unable to handle the increased demand, we could be required to make significant capital expenditures to increase network capacity in order to avoid service disruptions or reduced capacity for customers. We may not be able to recover the costs of the necessary network investments. Service disruptions or reduced capacity for customers may result if we do not sufficiently increase network capacity in response to further sudden and significant increases in demand, such as may result from the COVID-19 outbreak. Any of these occurrences could result in an adverse impact to our results of operations and financial condition.

The regulation of the Company’s businesses by federal and state authorities may, among other things, place the Company at a competitive disadvantage, restrict its ability to price its products and services competitively and threaten its operating licenses.

Several of the Company’s subsidiaries are subject to regulatory oversight of varying degrees at both the state and federal levels, which may differ from the regulatory scrutiny faced by the Company’s competitors. A significant portion of the Company’s revenue is derived from pricing plans that are subject to regulatory review and approval. These regulated pricing plans limit the rates the Company can charge for some services while the competition has typically been able to set rates for services with limited or no restriction. In the future, regulatory initiatives that would put the Company at a competitive disadvantage or mandate lower rates for its services would result in lower profitability and cash flows for the Company. In addition, different regulatory interpretations of existing regulations or guidelines may affect the Company’s revenues and expenses in future periods.

At the federal level, the Company’s telecommunications services are subject to the Communications Act of 1934 as amended by the Telecommunications Act of 1996, including rules adopted by the Federal Communications Commission (“FCC”). In addition, the Company’s submarine cable facilities and operations are also subject to requirements imposed by the national security and law enforcement agencies (e.g., the Departments of Justice, Defense and Homeland Security). At the state level, Cincinnati Bell Telephone Company LLC (“CBT”) operates as the incumbent local exchange carrier (“ILEC”) and carrier of last resort in portions of Ohio, Kentucky, and Indiana, while Hawaiian Telcom, Inc. (“HTI”) serves as the ILEC and carrier of last resort in Hawaii. As the ILEC in those states, these entities are subject to regulation by the Public Utilities Commissions in those states. Various regulatory decisions or initiatives at the federal or state level may from time to time have a negative impact on CBT’s and HTI’s ability to compete in their respective markets. In addition, although less heavily regulated than the Company’s ILEC operations, other subsidiaries are authorized to provide competitive local exchange service, long distance, and cable television service in various states, and are consequently also subject to various state and federal telecommunications and cable regulations that could adversely impact their operations.

There are currently many regulatory actions under way and being contemplated by federal and state authorities regarding issues, including national security and law enforcement issues that could result in significant changes to the business conditions in the telecommunications industry. On April 4, 2020, the President of the United States issued Executive Order No. 13913 Establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the “Committee”), which formalized the ad-hoc foreign investment review process (formerly referred to as “Team Telecom”) applicable to FCC licenses and transactions. The Executive Order empowers the Committee to review FCC license and transfer applications involving foreign participation to determine whether grant of the requested license or transfer approval may pose a risk to the national security or law enforcement interests of the United States, and to review existing licenses to identify any additional or new risks to national security or law enforcement interests that did not exist when a license was first granted. Following an investigation, the Committee may recommend that the FCC revoke or modify existing licenses, or deny or condition approval of new licenses and license transfers. It is not possible for the Company to determine whether it may be subject to a proceeding to revoke or modify its existing licenses or predict the outcome of a review of new license or transfer applications by the Committee in the future. A review of existing licenses and/or a review of new licenses and transfers by the Committee may result in additional compliance obligations that may affect the Company’s expenses and business operations in the future.

In addition, in connection with our internet access offerings, we could become subject to laws and regulations as they are adopted or applied to the internet. There is currently only limited regulation applicable to these services although court decisions and/or legislative action could lead to greater regulation of the internet (including internet access services). We cannot provide any assurances that changes in current or future regulations adopted by the FCC or state regulators, or other legislative, administrative, or judicial initiatives relating to the telecommunications industry, will not have an adverse effect on the Company’s business, financial condition, results of operations and cash flows.

From time to time, different regulatory agencies conduct audits to ensure that the Company is in compliance with the respective regulations. The Company could be subject to fines and penalties if found to be out of compliance with these regulations, and these fines and penalties could be material to the Company’s ~~Annual Report~~financial condition.

The Company depends on ~~Form 10-K for~~a number of third-party providers and the ~~year ended December 31, 2016 for a comprehensive listing~~loss of or problems with one or more of these providers may impede the Company’s growth, cause it to lose customers or materially and adversely impact our business, financial condition, and results of operations.

The Company depends on third-party providers to supply products and services. For example, many of the Company’s ~~risk factors.~~information technology, call center functions and certain accounting functions are performed by third-party providers, some of which are located outside of the United States, and network equipment is purchased from and maintained by vendors. Additionally, certain installation services sold by our IT Services and Hardware segment are performed by third-party providers.

Governments, public institutions and other organizations in countries and regions where cases of COVID-19 have been detected have taken certain emergency measures to combat its spread and impact, including implementation of travel bans, suspension of public transportation and closures of factories, schools, public buildings, businesses and other institutions. As a result of such measures, our third-party off-shore call center was forced to reduce its hours of operation for several weeks, resulting in longer than normal hold times during that period. The ~~risk factors below supersede~~loss of, or further problems with, one or more of these third-party providers may result in an adverse effect on our ability to provide products and services to our customers. While the ~~risk factors included~~full impact of the COVID-19 outbreak is not yet known, potential effects on our business include disruptions to or restrictions on our third-party providers, suppliers and other vendors in our supply chain, including limitations on the ability of their employees to travel and temporary closures or reductions in the ~~Company's Quarterly Report~~hours of their facilities or customer call centers.

We have suppliers around the world, including in China, the United States and other countries where cases of COVID-19 have been reported and are continuing to spread. As a result, the COVID-19 pandemic may result in shortages, price increases or delays to the delivery of materials. We could be materially adversely impacted, including from any disruption to critical vendor services or losses of business, if any of our suppliers face significant business disruptions as a result of COVID-19 or any similar outbreak.

Moreover, certain policies and statements of the President of the United States and senior government officials have given rise to uncertainty about the status of certain international trade agreements to which the United States is a party and the position of the United States with respect to international trade generally. The U.S. government has recently increased tariffs and imposed new tariffs on ~~Form 10-Q for~~a wide range of products imported from China. It remains unclear what additional actions, if any, the ~~quarter ended June 30, 2017.~~

current U.S. administration will take with respect to existing trade relationships. Additional trade restrictions, including tariffs, quotas, embargoes, safeguards and customs restrictions, could increase the cost or reduce the supply of products available to us and to our suppliers based in the United States and may require us to modify our supply chain organization or other current business practices, any of which could harm our business, financial condition, and results of operations.

Risks Related to Our Indebtedness

The servicing of the Company’s indebtedness is dependent on its ability to generate cash, which could be impacted by many factors beyond its control.

The Company’s ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory, and other factors, including the effects of the COVID-19 outbreak, many of which are beyond its control. The Company cannot provide assurance that its business will generate sufficient cash flow from operations, that additional sources of debt financing will be available or that future borrowings will be available under its Revolving Credit Facility or Receivables Facility, in each case, in amounts sufficient to enable the Company to service its indebtedness or to fund other liquidity needs. If the Company cannot service its indebtedness, it will have to take actions such as reducing or delaying capital expenditures, strategic acquisitions, investments and alliances, selling assets, restructuring or refinancing indebtedness or seeking additional equity capital, which may adversely affect its shareholders, debt holders and customers. The Company may not be able to negotiate remedies on commercially reasonable terms or at all. In addition, the terms of existing or future debt instruments may restrict the Company from adopting any of these alternatives. The Company’s inability to generate the necessary cash flows could result in its dissolution, bankruptcy, liquidation or reorganization.

Risks Relating to the Merger with ~~Hawaiian Telcom~~

~~The merger~~Macquarie Infrastructure Partners

There are material uncertainties and risks associated with the MIP Merger Agreement and proposed MIP Merger.

On March 13, 2020, the Company entered into an Agreement and Plan of Merger (the ~~“merger”~~“MIP Merger Agreement”) pursuant to which the Company will be acquired by an affiliate of ~~Hawaiian Telcom Holding, Inc.~~Macquarie Infrastructure Partners V (“~~Hawaiian Telcom”~~MIP”) ~~into~~, a ~~wholly owned subsidiary~~fund managed by Macquarie Infrastructure and Real Assets (the “MIP Merger”). Below are material uncertainties and risks associated with the MIP Merger Agreement and the proposed MIP Merger. If any of the risks develop into actual events, then the Company’s business, financial condition, results and ongoing operations, share price or prospects could be adversely affected.

•

The announcement or pendency of the MIP Merger may impede the Company’s ability to retain and hire key personnel and its ability to maintain relationships with its customers, suppliers and others with whom it does business or its operating results and business generally;

•

The attention of the Company’s employees and management may be diverted due to activities related to the MIP Merger, which may affect the Company’s business operations;

•

Matters relating to the transactions may require substantial commitments of time and resources by the Company’s management, which could harm the Company’s relationships with its employees, customers, distributors, suppliers or other business partners, and may result in a loss of or a substantial decrease in purchases by its customers;

•

The MIP Merger Agreement restricts the Company from engaging in certain actions without the approval of MIP, which could prevent the Company from pursuing certain business opportunities outside the ordinary course of business that arise prior to the closing of the MIP Merger;

•

The MIP Merger Agreement contains provisions that could discourage a potential competing acquirer of the Company;

•

The Company’s directors and executive officers have financial interests in the MIP Merger that may be different from, or in addition to, the interests of the Company’s shareholders generally, which could have influenced their decisions to support or approve the MIP Merger;

•

Shareholder litigation in connection with the transactions contemplated by the MIP Merger Agreement may result in significant costs of defense, indemnification and liability; and

•

The MIP Merger may materially limit the Company’s ability to utilize existing deferred tax assets related to federal and state net operating losses.

The proposed MIP Merger may not be completed in a timely manner or at all.

Completion of the MIP Merger is subject to customary closing conditions, including (1) the ~~receipt~~absence of ~~clearances~~an order, injunction or ~~approvals from various regulatory authorities, which may impose conditions that could have an adverse effect on~~law prohibiting the ~~Company following~~MIP Merger, (2) the ~~closing~~expiration or early termination of the ~~merger (the “combined company”) or, if not obtained, could prevent completion of the merger.~~

~~Before the merger may be completed, the applicable~~ waiting period ~~must expire or terminate~~(including any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (3) approval of the MIP Merger by the Committee on Foreign Investment in the United States under Section 721 of the Defense Production Act of 1950, as amended and ~~clearances~~(4) certain FCC consents and state regulatory consents required in connection with the MIP Merger shall have been obtained, shall not be subject to agency reconsideration or ~~approvals must be obtained from various regulatory entities, including~~judicial review, and the time for any person to petition for agency reconsideration or judicial review shall have expired. On April 4, 2020, the President of the United States issued Executive Order No. 13913 Establishing the Committee, which formalized the ad-hoc foreign investment review process (formerly referred to as “Team Telecom”) applicable to FCC licenses and transactions. The Executive Order empowers the Committee to review FCC license and transfer applications involving foreign participation to determine whether grant of the requested license or transfer approval may pose a risk to the national security or law enforcement interests of the United States, and to review existing licenses to identify any additional or new risks to national security or law enforcement interests that did not exist when a license was first granted. Following an investigation, the Committee may recommend that the FCC revoke or modify of existing licenses, or deny or condition approval of new licenses and license transfers. It is likely that the ~~State of Hawaii Department of Commerce and Consumer Affairs and the Hawaii Public Utilities Commission. There can be no assurance that all of these required consents, orders, approvals and clearances~~MIP Merger will be ~~obtained, or will be obtained on~~reviewed by the Committee. At this time, it not possible for the Company to predict the outcome of a ~~timely basis. In deciding whether to grant regulatory clearances, the relevant governmental entities will consider, among other things, the effect~~review of the ~~merger on competition within their relevant jurisdiction. The terms~~MIP Merger by this new Committee and ~~conditions~~whether the Committee may condition approval of the ~~approvals~~MIP Merger to any specific mitigation arrangement or other conditions. Any such arrangement may result in additional compliance obligations that ~~are granted~~ may ~~impose requirements, limitations or costs or place restrictions on~~affect the ~~conduct of~~Company’s expenses and business operations in the ~~combined company’s business. The merger agreement~~future.

In addition, the MIP Merger Agreement may require the Company and ~~Hawaiian Telcom~~MIP to comply with conditions imposed by regulatory entities and neither company is required to take any action with respect to obtaining any regulatory approval that, individually or in the aggregate, would be reasonably likely to have a ~~Material Adverse Effect (as defined in the agreement~~material adverse effect on MIP and ~~plan of merger dated July 9, 2017 (the “merger agreement”), among Hawaiian Telcom,~~its affiliates (taken as a whole) or the Company and ~~Twin Acquisition Corp.) on either Hawaiian Telcom or the Company.~~its subsidiaries (taken as a whole). There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying completion of the merger, imposing additional material costs on or materially limiting the revenues of the combined company following the merger or otherwise reduce the anticipated benefits of the merger. In addition, the Company cannot provide assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the ~~merger.~~

~~The merger is subject to conditions, including certain conditions~~MIP Merger. There can be no assurance that ~~may not~~all of these required approvals and clearances will be ~~satisfied~~obtained or ~~completed~~will be obtained on a timely ~~basis, if at all. Any delay~~basis. The COVID-19 outbreak may also result in ~~completing the merger may reduce or eliminate the benefits expected.~~

~~In addition~~delays to the receipt of certain regulatory approvals required ~~stockholder approval~~to consummate the MIP Merger.

The obligation of each of the Company and ~~regulatory clearances and approvals,~~MIP to consummate the ~~merger~~MIP Merger is also conditioned on, subject to certain materiality and other ~~conditions beyond~~qualifiers, the ~~control~~accuracy of the representations and warranties of the other party and the performance in all material respects by the other party of its obligations under the MIP Merger Agreement. Competing offers or acquisition proposals for the Company may be made, resulting in delay of the MIP Merger or termination of the MIP Merger Agreement. Lawsuits have been and may be filed against the Company relating to the MIP Merger and an adverse ruling in any such lawsuit may prevent the MIP Merger from being completed in the time frame expected or at all. While the MIP Merger Agreement is not subject to any financing condition, if MIP fails to obtain debt financing, the MIP Merger is unlikely to be consummated. Each of the Company ~~that~~and MIP has the right to terminate the MIP Merger Agreement under certain circumstances, as described in the MIP Merger Agreement.

Failure to complete the MIP Merger could negatively impact the Company’s business, financial results and stock price.

If the MIP Merger is delayed or not completed, the Company’s ongoing businesses may ~~prevent, delay, or otherwise materially~~be adversely ~~affect completion of the merger. The Company cannot predict whether~~affected and ~~when these other conditions~~ will be ~~satisfied. The requirements for satisfying such conditions could delay completion of~~subject to several risks and consequences, including the ~~merger for a period of time, reducing or eliminating some or all anticipated benefits of the merger, or prevent completion of the merger from occurring at all.~~

following:

~~Table of Contents~~

•

decline in share price to the extent that the current price of Company common shares reflects an assumption that the MIP Merger will be completed;

•

negative publicity and a negative impression of the Company in the investment community;

•

loss of business opportunities and the ability to effectively respond to competitive pressures; and

~~Form 10-Q Part II~~

•

~~Cincinnati Bell Inc.~~

the Company may be required, under certain circumstances, to pay MIP a termination fee and additional expenses.

The ~~pendency~~Company has incurred, and will incur, substantial direct and indirect costs as a result of the ~~merger could materially adversely affect the future business~~MIP Merger.

The Company has incurred, and ~~operations of the Company and/or result~~will continue to incur, significant costs, expenses and fees for professional advisors, printing and other transaction costs in ~~a loss of employees for the Company.~~

In connection with the ~~pending merger, while it is not expected~~MIP Merger, and some of these fees and costs are payable by the ~~management~~Company regardless of whether the MIP Merger is consummated.

Other Risk Factors

The trading price of the ~~Company, it is possible that some customers, suppliers~~Company’s common stock has been, and may continue to be, volatile, and the value of an investment in the Company’s common stock may decline.

The market price of the Company’s common stock has been volatile and could be subject to wide fluctuations in response to, among other things, the risk factors described in this report and other ~~persons with whom~~factors beyond the ~~Company has~~Company’s control, such as volatility in equity markets and fluctuations in the valuation of companies perceived by investors to be comparable to the Company. The Company’s recent stock price reflects the assumption that the MIP Merger will be completed or a ~~business relationship may delay or defer certain business decisions, which could negatively impact revenues, earnings~~new offer will proceed to an agreement and ~~cash flows of~~an acquisition will be completed.

Equity markets have experienced price and volume fluctuations that have affected the ~~Company, as well as~~Company’s stock price and the market prices of ~~the Company’s common shares, regardless~~equity securities of ~~whether the merger is completed. Similarly, current~~many other companies. These market and ~~prospective employees of the Company~~industry fluctuations, as well as general economic, political, and market conditions, may ~~experience uncertainty about their future roles within the combined company following completion of the merger, which may materially adversely~~negatively affect the ~~ability of the Company to attract and retain key employees.~~

The pursuit of the merger and the preparation for the integration may place a significant burden on the Company’s management and internal resources. Any significant diversion of management attention away from ongoing business and any difficulties encountered in the transition and integration process could affect the Company’s financial results.

In addition, the merger agreement restricts the Company, on the one hand, and Hawaiian Telcom, on the other, without the other party’s consent, from making certain acquisitions and dispositions and taking other specified actions while the merger is pending. These restrictions may prevent the Company from pursuing attractive business opportunities and making other changes to its business prior to completion of the merger or termination of the merger agreement.

~~The Company’s shareholders will be diluted by the merger.~~

~~The merger will dilute the ownership position~~market price of the Company’s ~~current shareholders. Cincinnati Bell will issue approximately 7.9 million~~stock.

The COVID-19 outbreak has also caused severe disruption in financial and equity markets in the United States and abroad. Uncertainty around the duration of business disruptions and the extent of the spread of the virus could continue to adversely impact the national or global economy and may negatively affect the market price of the Company’s stock.

Companies that have experienced volatility in the market price of common shares have periodically been subject to ~~Hawaiian Telcom stockholders~~securities class action litigation. The Company may be the target of this type of litigation in the merger (including common shares of the Company to be issued in connection with outstanding Hawaiian Telcom equity awards). As a result of these issuances, the Company’s current shareholders and Hawaiian Telcom’s stockholders are expected to hold approximately 85% and 15%, respectively, of the Company’s outstanding common shares immediately following completion of the merger.

~~Risks Relating to the Combined Company Upon Completion of the Merger~~

~~If completed, the merger may not achieve its intended results, and the Company and Hawaiian Telcom may be unable to successfully integrate their operations.~~

The Company and Hawaiian Telcom entered into the merger agreement with the expectation that the merger will result in various benefits, including, among other things, expanding the Company’s asset base and creating synergies and opportunities for cost savings. Achieving the anticipated benefits of the merger is subject to a number of uncertainties, including whether the businesses of the Company and Hawaiian Telcom can be integrated in an efficient and effective manner.

~~It is possible that the integration process could take longer than anticipated and~~future. Securities litigation could result in ~~the loss of valuable employees, the disruption of each company’s ongoing businesses, processes~~substantial costs and/or damages and systems or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect the combined company’s ability to achieve the anticipated benefits of the merger. divert management’s attention from other business concerns.

The combined company’s results of operations could also be adversely affected by any issues attributable to either company’s operations that arise or are based on events or actions that occur prior to the closing of the merger. The companies may have difficulty addressing possible differences in corporate cultures and management philosophies. The integration process is subject to a number of uncertainties, and no assurance can be given that the anticipated benefits will be realized or, if realized, the timing of their realization. Failure to achieve these anticipated benefits could result in increased costs or decreasesuncertain economic environment, including uncertainty in the ~~amount of expected revenues~~U.S. and world securities markets, could ~~adversely affect the combined company’s future business, financial condition, operating results and prospects.~~

~~The combined company is expected to incur expenses related to the integration of the Company and Hawaiian Telcom.~~

The combined company is expected to incur expenses in connection with the integration of the Company and Hawaiian Telcom. There are a number of back-office information technology systems, processes and policies that will need to be addressed during the integration. While the Company and Hawaiian Telcom have assumed that a certain level of expenses will be incurred, there are many factors beyond their control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These integration expenses likely will result in the combined company taking charges against earnings following the completion of the merger, and the amount and timing of such charges are uncertain at present.

~~Table of Contents~~



~~Form 10-Q Part II~~		~~Cincinnati Bell Inc.~~

~~The future results of the combined company will suffer if the combined company does not effectively manage its expanded operations following the merger.~~

~~Following the merger, the size of the business of the combined company will increase significantly beyond the current size of either~~impact the Company’s or Hawaiian Telcom’s business. The combined company’s future success depends, in part, upon its ability to manage this expanded business, which could pose substantial challenges for management. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the merger.

~~Uncertainties associated with the merger may cause a loss of management personnel and other key employees, which could adversely affect the future~~ business and ~~operations of the combined company.~~

financial condition.

The Company and Hawaiian Telcom are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. The Company’s success until the merger, and the combined company’s success after the merger, will depend in part upon the ability of the Company and Hawaiian Telcom to retain key management personnel and other key employees. Current and prospective employees of the Company and Hawaiian Telcom may experience uncertainty about their roles within the combined company following the merger, which mayuncertain economic environment could have an adverse effect on the ~~ability~~Company’s business and financial liquidity. The COVID-19 pandemic has resulted in an economic downturn, including increased unemployment and a decrease in consumer and commercial activity, that may continue for an extended period of time. The Company’s primary source of cash is customer collections. As a result of current adverse economic conditions and uncertainty relating to the COVID-19 pandemic, some customers have canceled or requested discounts on future contracted services or have had difficulty paying their accounts receivable. Additional customers may cancel or request discounts on future contracted services or have difficulty paying their accounts receivable, especially if economic conditions worsen. In response to the negative economic impacts of the COVID-19 pandemic, the Company has pledged to not terminate service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by COVID-19 and ~~Hawaiian Telcom~~ to ~~attract~~waive any late fees that any residential or ~~retain key management~~small business customers would incur because of economic circumstances related to COVID-19. This pledge has resulted and ~~other key personnel. Accordingly, no assurance can~~could continue to result in lower revenues, and has resulted, and could continue to result, in increases in the allowance for doubtful accounts due to future collection risk, which has negatively affected our results of operations and could continue to negatively affect our results of operations in the future. Furthermore, the sales cycle has been lengthened, and could be ~~given that~~further lengthened, due to business customers slowing spending and/or delaying decision-making on the ~~combined company will be able to attract~~Company’s products and services, which has adversely affected, and could further adversely affect, revenues. Some competitors have lowered prices or ~~retain key management personnel~~offered promotions as a result of economic conditions, and ~~other key employees~~others may do so as well, which has exerted, and could further exert, pricing pressure on the Company. If the economies of the U.S. and the world continue to deteriorate, this could have an adverse effect on the Company’s business, financial condition, results of operations and cash flows.

The Company ~~and Hawaiian Telcom~~could be subject to a significant amount of litigation, which could require the ~~same extent~~Company to pay significant damages or settlements.

The industry that the Company operates in faces a substantial risk of litigation, including, from time to time, patent infringement lawsuits, antitrust class actions, securities class actions, wage and ~~Hawaiian Telcom have previously been able~~hour class actions, personal injury claims and lawsuits relating to ~~attract or retain their own employees.~~

~~The combined company will have substantial indebtedness following~~our advertising, sales, billing and collection processes. Additionally, while preventative measures such as social distancing, frequent hand washing and wearing personal protective equipment including masks and gloves are being taken by our field technicians, the ~~merger~~risk of inadvertent transmission of COVID-19 through human contact could still occur and ~~the credit ratings of the combined company or its subsidiaries~~result in litigation. We may incur significant expenses in defending these lawsuits. In addition, we may be ~~different from what the companies currently expect.~~

The Company has obtained new credit facilities and has issued senior unsecured notes in order to provide funds to (i) refinance its existing credit facilities, (ii) finance in part the cash portion of the merger consideration, (iii) refinance existing indebtedness of Hawaiian Telcom and (iv) pay other costs and expenses incurred in connection with the merger and related transactions. The receipt of financing by the Company, however, is not a condition to completion of the merger. In addition to the new credit facilities and the issuance of the notes, the Company may incur other indebtedness, including senior indebtedness, to finance the merger and related transactions. Following completion of the merger, the combined company will have substantial indebtedness and the credit ratings of the combined company and its subsidiaries may be different from what the companies currently expect.

~~This substantial indebtedness may adversely affect the business, financial condition and operating results of the combined company, including:~~

~~making it more difficult for the combined company to satisfy its debt service obligations;~~

~~requiring the combined company to dedicate a substantial portion of its cash flows to debt service obligations, thereby potentially reducing the availability of cash flows~~required to pay ~~cash dividends~~significant awards and ~~to fund working capital, capital expenditures, acquisitions, investments and other general operating requirements;~~

limiting the ability of the combined company to obtain additional financing to fund its working capital requirements, capital expenditures, acquisitions, investments, debt service obligations and other general operating requirements;

~~restricting the combined company from making strategic acquisitions or taking advantage of favorable business opportunities;~~

~~placing the combined company at a relative competitive disadvantage compared to competitors that have less debt;~~

limiting flexibility to plan for, or react to, changes in the businesses and industries in which the combined company operates, which may adversely affect the combined company’s operating results and ability to meet its debt service obligations;

~~increasing the vulnerability of the combined company to adverse general economic and industry conditions, including changes in interest rates; and~~

~~limiting the ability of the combined company to refinance its indebtedness or increasing the cost of such indebtedness.~~

~~If the combined company incurs additional indebtedness following the merger, the risks related to the substantial indebtedness of the combined company may intensify.~~

settlements.

~~Table of Contents~~



~~Form 10-Q Part II~~		~~Cincinnati Bell Inc.~~

~~The merger may involve unexpected costs, unexpected liabilities or unexpected delays.~~

The Company currently expects to incur substantial costs and expenses relating directly to the merger, including debt financing and refinancing costs, fees and expenses payable to financial advisors, professional fees and expenses, insurance premium costs, fees and costs relating to regulatory filings and notices, SEC filing fees, printing and mailing costs and other transaction-related costs, fees and expenses. In addition, the merger and post-merger integration process may give rise to unexpected liabilities and costs, including costs associated with the defense and resolution of possible litigation or other claims, which may significantly increase the related costs and expenses incurred by the combined company.

~~Risks Related to the Acquisition of OnX~~

~~The acquisition of OnX may not achieve its intended results, and the Company may be unable to successfully integrate OnX's operations.~~

The Company entered into the merger agreement with OnX with the expectation that the acquisition will result in various benefits, including, among other things, expanding the Company’s asset base and creating synergies and opportunities for cost savings. Achieving the anticipated benefits of the acquisition of OnX is subject to a number of uncertainties, including whether the businesses of the Company and OnX can be integrated in an efficient and effective manner.

It is possible that the integration process could take longer than anticipated and could result in the loss of valuable employees, the disruption of each company’s ongoing businesses, processes and systems or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect the Company’s ability to achieve the anticipated benefits of the acquisition of OnX. The Company’s results of operations could also be adversely affected by any issues attributable to either company’s operations that arose or are based on events or actions that occurred prior to the closing of the acquisition. The integration process is subject to a number of uncertainties, and no assurance can be given that the anticipated benefits will be realized or, if realized, the timing of their realization. Failure to achieve these anticipated benefits could result in increased costs or decreases in the amount of expected revenues and could adversely affect the Company’s future business, financial condition, operating results and prospects.

~~Table of Contents~~



~~Form 10-Q Part II~~		~~Cincinnati Bell Inc.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the nine month period ended September 30, ~~2017,~~2020, the Company had no unregistered sales of equity securities. The Company also had no purchases of its common stock for the nine months ended September 30, ~~2017.~~

2020.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosure

None.

Item 5. Other Information

No reportable items.

~~Table of Contents~~



~~Form 10-Q Part II~~		~~Cincinnati Bell Inc.~~

Item 6.Exhibits


			Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Filing Date	Exhibit No.	SEC File No.	Filed Herewith

2.1	Agreement and Plan of Merger, dated as of March 13, 2020, by and among Cincinnati Bell Inc., Red Fiber Parent LLC and RF Merger Sub Inc.	8-K	3/13/2020	2.1	1-8519
3.1	Amended and Restated Articles of Incorporation of Cincinnati Bell Inc.	8-K	4/30/2008	3.1	1-8519
3.2	Amendment to the Amended and Restated Articles of Incorporation of Cincinnati Bell Inc.	8-K	10/5/2016	3.1	1-8519
3.3	Amended and Restated Regulations of Cincinnati Bell Inc.	10-Q	8/8/2018	3.3	1-8519
4.1	Sixth Supplemental Indenture, dated as of July 2, 2020, among Cincinnati Bell Inc., as Issuer, each subsidiary of the Issuer identified as a Guarantor, and Regions Bank, as Trustee.	8-K	7/6/2020	4.1	1-8519

4.2	Second Supplemental Indenture, dated as of July 2, 2020, among Cincinnati Bell Inc., as Issuer, each subsidiary of the Issuer identified as a Guarantor, and Regions Bank, as Trustee.	8-K	7/6/2020	4.2	1-8519

31.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					+
31.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					+
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					+
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					+
101	The following financial statements from Cincinnati Bell Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 were formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Shareholders’ Deficit, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

~~Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto.~~



~~Exhibit~~
~~Number~~	~~Description~~
~~(2.1)~~	Agreement and Plan of Merger, dated as of July 9, 2017, among Cincinnati Bell Inc., Twin Acquisition Corp. and Hawaiian Telcom Holdco, Inc. (Exhibit 2.1 to Current Report on Form 8-K, date of Report July 10, 2017, File No. 1-8519).
~~(2.2)~~	Agreement and Plan of Merger, dated as of July 9, 2017, among Cincinnati Bell Inc., Yankee Acquisition LLC, OnX Holdings LLC and MLN Holder Rep LLC (Exhibit 2.2 to Current Report on Form 8-K, date of Report July 10, 2017, File No. 1-8519).
~~(3.1)~~	~~Amended and Restated Articles of Incorporation of Cincinnati Bell Inc. (Exhibit 3.1 to Current Report on Form 8-K, Date of Report April 25, 2008, File No. 1-8519).~~
~~(3.2)~~	~~Amendment to the Amended and Restated Articles of Incorporation of Cincinnati Inc. (Exhibit 3.1 to Current Report on Form 8-K, date of Report October 4, 2016, File No. 1-8519).~~
~~(3.3)~~	~~Amended and Restated Regulations of Cincinnati Bell Inc. (Exhibit 3.2 to Current Report on Form 8-K, Date of Report April 25, 2008, File No. 1-8519).~~
~~(4.1)~~	Third Supplemental Indenture dated October 2, 2017 among Cincinnati Bell Inc., Cincinnati Bell Shared Services LLC, Data Center South Holdings, LLC, Twin Acquisition Corp. and Regions Bank, as Trustee (Exhibit 4.1 to Current Report on Form 8-K, date of Report October 2, 2017, File No. 1-8519).
~~(4.2)~~	~~Indenture, dated October 6, 2017, between CB Escrow Corp. and Regions Bank, as Trustee (Exhibit 4.1 to Current Report on Form 8-K, date of Report October 6, 2017, File NO. 1-8519).~~
~~(4.3)~~	Escrow Agreement, dated as of October 6, 2017, among CB Escrow Corp., Regions Bank, as Trustee, and Regions Banks, as Escrow Agent (Exhibit 4.2 to Current Report on Form 8-K, date of Report October 6, 2017, File No. 1-8519).
~~(10.1)~~	Voting Agreement, dated as of July 9, 2017, among Cincinnati Bell Inc., Twin Haven Capital Partners, L.L.C. and the affiliates of Twin Haven Capital Partners, L.L.C. party thereto (Exhibit 10.1 to Current Report on Form 8-K, date of Report July 10, 2017, File No. 1-8519).
~~(10.2)~~	Commitment Letter, dated as of July 9, 2017, between Cincinnati Bell Inc. and Morgan Stanley Senior Funding, Inc. (Exhibit 10.2 to Current Report on Form 8-K, date of Report July 10, 2017, File No. 1-8519).
~~(10.3)~~	~~Employment Agreement between Cincinnati Bell Inc. and Andrew R. Kaiser effective as of September 1, 2017 (Exhibit 10.1 to Current Report on Form 8-K, date of Report August 3, 2017, File No. 1-8519).~~
~~(10.4)~~	Employment Agreement between Cincinnati Bell Inc. and Christie C. Cornette effective as of September 1, 2017 (Exhibit 10.2 to Current Report on Form 8-K, date of Report August 3, 2017, File No. 1-8519).
~~(10.5)~~	Credit Agreement by and among Cincinnati Bell Inc., the Guarantors party thereto, the Lenders party thereto, PNC Bank, National Association, as a Swingline Lender, and Morgan Stanley Senior Funding, Inc., as Administrative Agent, Collateral Agent, a Swingline Lender and an L\C Issuer, dated October 2, 2017 (Exhibit 10.1 to Current Report on Form 8-K, date of Report October 2, 2017, File No. 1-8519).
~~(31.1)+~~	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
~~(31.2)+~~	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
~~(32.1)+~~	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~(32.2)+~~	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~Table of Contents~~



~~Form 10-Q Part II~~		~~Cincinnati Bell Inc.~~



(101.INS)**	~~XBRL Instance Document.~~
(101.SCH)**	~~XBRL Taxonomy Extension Schema Document.~~
(101.CAL)**	~~XBRL Taxonomy Extension Calculation Linkbase Document.~~
(101.DEF)**	~~XBRL Taxonomy Extension Definition Linkbase Document.~~
(101.LAB)**	~~XBRL Taxonomy Extension Label Linkbase Document.~~
(101.PRE)**	~~XBRL Taxonomy Extension Presentation Linkbase Document.~~

~~+ Filed herewith.~~

** Submitted electronically with this report.

The Company's reports on Form 10-K, 10-Q, and 8-K are available free of charge in the Investor Relations section of the Company's website: http://www.cincinnatibell.com. The Company will furnish any other exhibit at cost.

~~Table of Contents~~



~~Form 10-Q Part II~~		~~Cincinnati Bell Inc.~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Cincinnati Bell Inc.

Date:	November ~~2, 2017~~5, 2020	/s/ Andrew R. Kaiser
		Andrew R. Kaiser
		Chief Financial Officer

Date:	November ~~2, 2017~~5, 2020	/s/ ~~Shannon M. Mullen~~	Suzanne E. Maratta
		~~Shannon M. Mullen~~	Suzanne E. Maratta
		Chief Accounting Officer

Ohio		31-1056105

~~Ohio~~		~~31-1056105~~
(State of Incorporation)		(I.R.S. Employer Identification No.)


☒
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	September 30, 2017			December 31, 2016
Assets
Current assets
Cash and cash equivalents	$	43.7		$	9.7
Receivables, less allowances of $10.3 and $9.9	170.0			178.6
Inventory, materials and supplies	19.8			22.7
Prepaid expenses	17.7			15.0
Other current assets	6.6			3.9
Total current assets	257.8			229.9
Property, plant and equipment, net	1,112.8			1,085.5
Investment in CyrusOne	—			128.0
Goodwill	18.6			14.3
Deferred income taxes, net	50.4			64.5
Other noncurrent assets	17.7			18.8
Total assets	$	1,457.3		$	1,541.0
Liabilities and Shareowners’ Deficit
Current liabilities
Current portion of long-term debt	$	12.0		$	7.5
Accounts payable	109.0			105.9
Unearned revenue and customer deposits	32.6			36.3
Accrued taxes	19.2			12.9
Accrued interest	13.4			12.7
Accrued payroll and benefits	35.3			25.7
Other current liabilities	31.2			31.9
Total current liabilities	252.7			232.9
Long-term debt, less current portion	1,120.8			1,199.1
Pension and postretirement benefit obligations	186.3			197.7
Other noncurrent liabilities	31.0			33.0
Total liabilities	1,590.8			1,662.7
Shareowners’ deficit
Preferred stock, 2,357,299 shares authorized, 155,250 shares (3,105,000 depositary shares) of 6 ³/₄% Cumulative Convertible Preferred Stock issued and outstanding at September 30, 2017 and December 31, 2016; liquidation preference $1,000 per share ($50 per depositary share)	129.4			129.4
Common shares, $.01 par value; 96,000,000 shares authorized; 42,182,031 and 42,056,237 shares issued; 42,182,031 and 42,056,237 shares outstanding at September 30, 2017 and December 31, 2016	0.4			0.4
Additional paid-in capital	2,567.3			2,570.9
Accumulated deficit	(2,680.8		)	(2,732.1		)
Accumulated other comprehensive loss	(149.8		)	(90.3		)
Total shareowners’ deficit	(133.5		)	(121.7		)
Total liabilities and shareowners’ deficit	$	1,457.3		$	1,541.0



	September 30, 2017				December 31, 2016
(dollars in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion*	$	1,059.1	$	1,041.0	$	1,149.2	$	1,177.9
*Excludes capital leases and note issuance costs.



(dollars in millions)	Unrecognized Net Periodic Pension and Postretirement Benefit Cost				Unrealized gain on Investment in CyrusOne				Foreign Currency Translation Loss			Total
Balance as of December 31, 2016	$	(157.6	)		$	68.1			$	(0.8	)	$	(90.3	)
Unrealized gain on Investment in CyrusOne, net	—				8.3			(a)	—			8.3
Reclassifications, net	8.5			(b)	(76.4		)	(c)	—			(67.9		)
Foreign currency gain	$	—			$	—			$	0.1		$	0.1
Balance as of September 30, 2017	$	(149.1	)		$	—			$	(0.7	)	$	(149.8	)