Acquisitions

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

2022 Acquisitions

Acquisition of Entel Chile Data Centers (the "Entel Chile Acquisition") and Entel Peru Data Center (the "Entel Peru Acquisition")

On May 2, 2022, we further expanded in Latin America through an acquisition of four data centers in Chile from Entel, a leading Chilean telecommunications provider, for a total purchase consideration of $638.3 million at the exchange rate in effect on that date. On August 1, 2022, we completed the acquisition of a data center in Peru from Entel for a total purchase consideration of $80.3 million at the exchange rate in effect on that date. The Entel Chile Acquisition and Entel Peru Acquisition support our ongoing expansion to meet customer demand in the Latin American market.

Acquisition of MainOne (the "MainOne Acquisition")

On April 1, 2022, we completed the acquisition of all outstanding shares of MainOne, consisting of four data centers as well as a subsea cable and terrestrial fiber network. We acquired MainOne and its assets for a total purchase consideration of $278.4 million. The MainOne Acquisition supports our desire to meet customer demand in the West African market.

2021 Acquisition

Acquisition of GPX India (the "GPX India Acquisition")

On September 1, 2021, we completed the acquisition of GPX India, representing two data centers in Mumbai, India, for a total purchase consideration of approximately INR12.5 billion, or $170.5 million at the exchange rate in effect on that date. The GPX India Acquisition supports our desire to meet customer demand in the Indian market.

Purchase Price Allocation

Each of the acquisitions noted above constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under this method, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition, except where alternative measurement is required under GAAP.

As of September 30, 2022, we had not completed the detailed valuation analysis to derive the fair value of assets acquired and liabilities assumed from the Entel Peru Acquisition, Entel Chile Acquisition and MainOne Acquisition, including property, plant and equipment, intangible assets and the related tax impacts; therefore, the purchase price allocation is based on provisional estimates and subject to continuing management analysis.

A summary of the allocation of total purchase consideration is presented as follows (in thousands):


	GPX India		Entel Peru		Entel Chile		MainOne
	Final		Provisional
Cash and cash equivalents	$	9,406	$	—	$	—	$	33,026
Accounts receivable	4,399		—		—		9,431
Other current assets	8,883		—		12,424		21,988
Property, plant and equipment	88,130		13,423		81,132		239,583
Operating lease right-of-use assets	62		—		—		—
Intangible assets	15,408		10,000		153,489		54,800
Goodwill	77,145		46,118		380,867		110,648
Deferred tax and other assets	20		10,801		12,090		6,731
Total assets acquired	203,453		80,342		640,002		476,207
Accounts payable and accrued liabilities	(1,566)		—		(195)		(19,790)
Other current liabilities (1)	(478)		—		—		(13,061)
Operating lease liabilities	(62)		—		—		—
Finance lease liabilities	(20,565)		—		—		—
Mortgage and loans payable	—		—		—		(25,944)
Deferred tax and other liabilities (1)	(10,317)		—		(1,463)		(139,062)
Net assets acquired	$	170,465	$	80,342	$	638,344	$	278,350

(1)For the MainOne Acquisition, other current liabilities includes $9.9 million of deferred revenue - current and the other liabilities includes $95.4 million of deferred revenue - non-current.

Property, plant and equipment - The fair values of property, plant and equipment acquired from these four acquisitions were estimated by applying the cost approach, with the exception of land, which we estimated by applying the market approach. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age.

Intangible assets - The following table presents certain information on the acquired intangible assets (in thousands):


Intangible Assets	Fair Value		Estimated Useful Lives (Years)	Weighted-average Estimated Useful Lives (Years)	Discount Rate
GPX India:
Customer relationships (1)	$	15,408	15.0	15.0	11.0	%
Entel Peru:
Customer relationships (1)	10,000		15.0	15.0	7.0	%
Entel Chile:
Customer relationships (1)	153,489		12.0 - 15.0	14.0	8.5% - 9.5%
MainOne:
Customer relationships (1)	51,500		10.0 - 15.0	14.0	11.5	%
Trade names (2)	3,300		5.0	5.0	11.5	%

(1)The fair value was estimated by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue and/or by using benchmarking. The rates reflect the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows, as well as the risk of the country within which the acquired business operates.

(2)The fair value of the MainOne trade name was estimated using the relief from royalty method under the income approach. We applied a relief from royalty rate of 1.0%.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after the acquisition. Goodwill from the GPX India Acquisition is attributable to the Asia-Pacific region and is not deductible for local tax purposes. Goodwill from the Entel Peru and Entel Chile acquisitions are attributable to the Americas region and are not expected to be amortizable for local tax purposes. Goodwill from the MainOne Acquisition is attributable to the EMEA region and is not deductible for local tax purposes except for the portion attributable to Ghana.

Revenues and net income and loss from operations

The operating results of the Entel Peru and Entel Chile acquisitions are reported in the Americas region and the operating results of the MainOne Acquisition are reported in the EMEA region following the date of acquisition. During the three and nine months ended September 30, 2022, our revenues from these acquisitions were $30.2 million and $57.2 million, respectively. During the three months ended September 30, 2022, our net income was insignificant and during the nine months ended September 30, 2022, our net income was $6.2 million from these acquisitions.

Transaction costs

During the three and nine months ended September 30, 2022, the transaction costs for the MainOne, Entel Chile and Entel Peru acquisitions were insignificant.