UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended June 30, ~~2018~~2019

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

Commission File Number: 333-169979

Zayo Group, LLC

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE

26-2012549

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)



1821 30th Street, Unit A,

Boulder, CO 80301

(Address of Principal Executive Offices)

(303) 381-4683

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

~~None~~ ZAYo Title of each class Trading Symbol(s) Name of each exchange on which registered Not applicable Not applicable Not applicable

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

None

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

Yes ☐ No ☒

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

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, 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 ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

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.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ ~~(Do not check if a smaller reporting company)~~ Smaller reporting company ☐ Emerging growth company ☐

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

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

THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF ZAYO GROUP HOLDINGS, INC., MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS I(1) (a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION I(2).

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INDEX

GLOSSARY OF TERMS		i
PART I.
Item 1.	BUSINESS	1
Item 1A.	RISK FACTORS	1819
Item 1B.	UNRESOLVED STAFF COMMENTS	3335
Item 2.	PROPERTIES	3335
Item 3.	LEGAL PROCEEDINGS	3335
Item 4.	MINE SAFETY DISCLOSURE	3336
PART II.
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	3437
Item 6.	SELECTED FINANCIAL DATA	3538
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3539
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	66
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	67
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	67
Item 9A.	CONTROLS AND PROCEDURES	67
Item 9B	OTHER INFORMATION	68
PART III.
Item 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	6968
Item 11.	EXECUTIVE COMPENSATION	6968
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	69
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	69
Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	69
PART IV.
Item 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	71
SIGNATURES		75

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GLOSSARY OF TERMS

Our industry uses many terms and acronyms that may not be familiar to you. To assist you in reading this Annual Report on Form 10-K, we have provided definitions of some of these terms below.

Bandwidth infrastructure—Offerings of fiber and lit fiber (i.e., fiber that has been activated, or “lit”, by provider-supplied components) provisioned over the fiber network, mobile infrastructure connected to (or capable of being connected to) the fiber network, and data center based colocation and interconnection offerings. Lit fiber-based bandwidth infrastructure offerings include Wavelength, Ethernet, IP and SONET; fiber-based offerings that are not lit are sold as dark fiber capacity. Data center-based bandwidth infrastructure offerings include colocation (space and power) as well as interconnection within facilities.

Capacity—The information‑carrying ability of a lit fiber offering. Below is a list of some common units of capacity for various lit fiber offerings:

1G, 2.5G, 10G, 40G and 100G—Data communication circuits capable of accommodating Wavelengths at 1G, 2.5G, 10G, 40G, and 100G, respectively.

10Mb and 100Mb—Data communication circuits capable of accommodating Ethernet communications at 10 Mb and 100 Mb, respectively.

Carrier—A provider of communications services that commonly include voice, data, and Internet services.

Carrier hotel—A data center facility containing many carriers and other telecommunications service providers, all of which may be widely interconnected. These facilities generally have high‑capacity power service, backup batteries and generators, fuel storage, riser cable systems, large cooling capability, and advanced fire suppression systems.

Cellular tower—An outdoor structure primarily used to attach and house antennae used by wireless carriers to aggregate and transmit mobile voice and data.

CLEC—Competitive local exchange carrier; a local telecommunications provider licensed to compete with some or all of the offerings of the ILEC.

Colocation—The housing of telecommunications equipment, other communications equipment, servers and storage components within the same location. Operators of these colocation facilities typically also make available interconnection offerings to their tenants, enabling the tenants to cross connect with other customers located within the same facility and/or with bandwidth infrastructure providers.

Conduit—A pipe usually made of metal, ceramic, or plastic that protects underground fiber optic cables.

Cybersecurity— Preventative techniques used to protect the integrity of networks, programs and data from attack, damage, or unauthorized access.

Dark fiber—Fiber that has not yet been connected to telecommunications access components or optronics and, therefore, has not yet been activated or “lit” by the provider-supplied components.

Data center—A facility used to house computer systems, backup storage components, routers, servers and other Internet and other telecommunications equipment. Data centers generally have environmental controls (air conditioning, fire suppression, etc.), redundant/backup power supplies, redundant data communications connections, and high security.

DWDM—Dense Wavelength-division multiplexing. The term “dense” refers to the number of channels being multiplexed. A DWDM system typically has the capability to multiplex up to 40 Wavelength channels.

Ethernet—The standard local area network (LAN) protocol. Ethernet was originally specified as a standard for connection of components that share a company or home network, as well as to a cable modem or DSL modem for Internet access. Due to its ubiquity in the LAN, Ethernet has become a popular communication protocol in metropolitan, regional and long haul networks as well.

Fiber or fiber optic cables—Thin filaments of glass through which light beams travel over long distances.

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Fiber miles—The number of route miles in a network multiplied by the number of fiber strands within each cable on that network. For example, if a ten‑mile network segment has a 144 count fiber installed, it would represent 10x144 or 1,440 fiber miles.

Fiber‑to‑the‑Tower or FTT—The connection of cellular tower sites to the wider terrestrial network via fiber connections.

G—Gigabits per second, a measure of telecommunications speed. One gigabit equals one billion bits of information.

ILEC—Incumbent local exchange carrier; a traditional telecommunications provider that, prior to the Telecommunications Act of 1996, had the exclusive right and responsibility for providing telecommunications offerings in its local service area, and in connection therewith typically built or acquired access to key elements of bandwidth infrastructure.

Interconnection—A connection between two customers who are located within a single data center or within a single colocation space using fiber and/or other means.

IP—Internet protocol; the network protocol used in accommodating movement of data over the Internet.

IRU and IRU contract—Indefeasible right of use. The exclusive, unrestricted, and indefeasible right to use one, a pair, or more strands of fiber of a fiber cable. IRU contracts are typically long‑term in nature (20 years) and may or may not contain restrictions on the use of the fiber by the lessee.

ISP—Internet service provider; provides retail access to the Internet for consumers and businesses.

Mb—Megabits per second; a measure of telecommunications speed. One megabit equals one million bits of information.

Meet‑Me Room—A physical location in a building, usually a carrier hotel or other data center, where voice carriers, Internet service providers, data service providers and others interconnect so that data can be passed between and among their respective networks. At any given colocation facility or data center, network owners may also be able to interconnect outside the Meet‑Me Room.

Mobile switching centers—Buildings where wireless carriers house their Internet routers and voice switching equipment.

Object-Based Storage— A cost effective data storage offering which manages data as objects and has the ability to store large volumes of unstructured data.

OC—Optical carrier level; a measure of the rate of optical telecommunications traffic. For example, OC‑3 corresponds to 155 Mb. See the definition of “Capacity,” above.

On‑net—Describes a location or offering that is directly and fully supported by the provider’s fiber (as opposed to another’s fiber or some other connection solution).

Optronics—Various types of components that are commonly used to light fiber, including components that are capable of providing Wavelength, Ethernet, IP, SONET, and other technology over fiber optic cable.

POP—Point‑of‑presence; a location in a building separate from colocation facilities and data centers that houses components used to provide access to telecommunications or bandwidth infrastructure.

Private cloud— A type of cloud computing that involves a distinct and secure cloud-based computing environment dedicated to a single organization.

Private line—A dedicated private bandwidth circuit that generally utilizes SONET, Ethernet and Wavelength technology used to connect various locations.

Route miles—The actual number of non‑overlapping miles that a fiber network traverses. Route miles are distinct from fiber miles (see the definition of “Fiber miles” above).

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Small cell—A location, other than a cellular tower or building, that is used to attach an antenna used by a wireless carriers to aggregate and transmit mobile voice and data. Typically, the location is a light pole, traffic light, or other small separate purpose structure.

SONET—Synchronous optical network; a network protocol traditionally used to support private line offerings. This protocol enables movement of voice, data and video at high speeds. Protected SONET networks provide for virtually instantaneous restoration of connectivity in the event of a fiber cut or component failure.

Switch—A component that selects the path that voice, data and Internet traffic take or use on a network.

Transport—A dedicated telecommunication method to connect data, Internet, voice, video or wireless traffic from one location to another.

Wavelength—A channel (or “lane”) of light that accommodates telecommunications traffic through the process of Wavelength‑division multiplexing. See also the definition of “DWDM”, above.

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PART I

ITEM 1. BUSINESS

Overview

Zayo Group, LLC (the “Company”, “we” or “us”) is a large and ~~fast~~ growing provider of communications and bandwidth infrastructure in the United States, Canada and Europe. We are a wholly-owned subsidiary of Zayo Group Holdings, Inc. (“ZGH”). Our products and offerings enable our customers’ mission-critical, high-bandwidth applications, such as cloud-based computing, video, mobile, social media, machine-to-machine connectivity, and other bandwidth-intensive applications. Key products include leased dark fiber, fiber to cellular towers and small cell sites, dedicated Wavelength connections, Ethernet, IP connectivity, data center colocation, cloud offerings and other high-bandwidth offerings. We provide access to our bandwidth infrastructure and other offerings over a unique set of dense metro, regional, and long-haul fiber network sections and through our interconnect-oriented data center facilities. Our fiber network sections and data center facilities are critical components of the overall physical network architecture of the ~~Internet~~internet and private networks. Our customer base includes some of the largest and most sophisticated users of bandwidth infrastructure offerings, such as wireless service providers; telecommunications service providers; financial services companies; social networking, media, and web content companies; education, research, and healthcare institutions; and governmental agencies. We typically provide our bandwidth infrastructure ~~offerings~~solutions for a fixed monthly recurring access fee under contracts that vary between one and twenty or more years in length. We operate our business with a unique focus on capital allocation and financial performance with the ultimate goal of maximizing equity value for the ZGH stockholders. Our core values center on partnership, alignment, and transparency with our three primary constituent groups - employees, customers, and ZGH stockholders.

We were founded in 2007 with the investment thesis of building a bandwidth infrastructure platform to take advantage of the favorable ~~Internet~~internet, data, and wireless growth trends driving the on-going demand for bandwidth infrastructure, and to be an active participant in the consolidation of the industry. The growth of cloud-based computing, video, mobile and social media applications, machine-to-machine connectivity, and other bandwidth-intensive applications continues to drive rapidly increasing consumption of bandwidth on a global basis. As an early believer in the enduring nature of these trends, we assembled our asset base and built a business model specifically to supply high-bandwidth infrastructure for connectivity to users whose businesses depend most on the continuous and growing demand for bandwidth. Typically, such users are given access to use our bandwidth infrastructure in return for an initial contract of at least one year, and generally with options for extensions. As a core tenet of our strategy for capitalizing on these industry trends, we have been a leading industry consolidator and have acquired 45 bandwidth infrastructure businesses and assets to date. Our owned, secure, and redundant fiber network and data centers serve as the foundation for our bandwidth solutions and allow us to offer customers dark fiber solutions, network connectivity and colocation and cloud infrastructure solutions. We believe the continuously growing demand for stable and secure bandwidth and infrastructure from users such as service providers, enterprises and consumers, combined with our unique and dense metro, regional, and long-haul network sections, position us as a mission-critical infrastructure supplier to the largest users of bandwidth.

Our network footprint includes both large and small metro geographies, the extended suburban regions of many cities, and the large rural, national and international links that connect our metro network sections. We believe ~~that~~ our network assets would be difficult to replicate given the geographic reach, network density, and capital investment required. As of June 30, ~~2018~~2019, our fiber network spans ~~128~~133,~~910~~000 route miles and ~~11,867,276~~13.0 million fiber miles (representing an average of 9298 fibers per route), serves ~~403~~400 geographic markets in the United States, Canada and Europe, and connects to approximately 35,000 buildings, including 1,~~185~~200 data centers. We own fiber network sections in large metro areas, such as New York, Chicago, San Francisco, Paris, and London, as well as smaller metro areas, such as Allentown, Pennsylvania, Fargo, North Dakota, and Spokane, Washington. Our network sections allow our customers access to our high-bandwidth infrastructure solutions over redundant fiber facilities between and among key customer locations. We believe our ownership and the location and density of our expansive network footprint allow us to more competitively satisfy our target customers’ bandwidth infrastructure solutions at the local, regional, national, and international level relative to other regional bandwidth infrastructure providers or long-haul providers. We also provide our network-neutral colocation and interconnection offerings utilizing our own data centers located within major carrier hotels and other

~~strategic~~ Table ~~buildings in 50 locations throughout the United States, Canada and Europe and operate approximately 1,034,000 square feet~~ of ~~licensable colocation space.~~Contents

~~The~~strategic ~~density~~buildings ~~and~~in ~~geographic~~51 ~~reach~~locations ofthroughout ~~our network footprint allow us to provide tailored bandwidth infrastructure solutions on our own network (“on-net”) that address~~ the ~~current~~United ~~and future bandwidth needs of our customers. Our dense metro and regional network sections have high fiber counts that enable us to provide our dark fiber solutions~~States, ~~network~~Canada ~~connectivity~~ and ~~colocation~~Europe and ~~cloud~~operate infrastructure offerings. Our network sections are deep and scalable, meaning we have spare fiber, conduit access rights and/or rights of way rights that allow us to continue to add capacity to our network as our existing and new customers’ demand for our offerings increases. In addition, many of our core network technologies provide capacity through which we can continue to add dedicated Wavelengths to our network without consuming additional fiber. We also believe the density and diversity of our network provides a strong and growing competitive barrier to protect our existing revenue base. We believe our network provides significant opportunity to organically connect to new customer locations, data centers, towers, or small cell locations to help us achieve an attractive return on our capital deployed. Since our founding, we have assembled a large portfolio of fiber network sections and colocation assets through both acquisitions and customer demand-driven investments in infrastructure property and equipment. From our inception to date, we have completed acquisitions with an aggregate purchase consideration, net of cash acquired, totaling approximately ~~$6.7 billion. For the period from July~~ 1, ~~2015~~million ~~through~~square ~~June~~feet ~~30, 2018, we also invested approximately $2.3 billion in capital expenditures, exclusive~~ of ~~acquisitions~~billable ~~and~~colocation ~~stimulus grant reimbursements, primarily to expand the reach and capacity of our network~~space. As of June 30, 2018, our total debt (including capital lease obligations and before any unamortized discounts, premiums and debt issuance costs) was $5,876.6 million and was primarily incurred in connection with acquisitions.

~~Our~~The ~~business~~density ~~model~~and ~~focuses~~geographic reach of our network footprint allow us to provide tailored bandwidth infrastructure solutions on ~~providing~~our own network (“on-net”) ~~bandwidth~~that ~~infrastructure~~address ~~solutions~~the tocurrent and future bandwidth needs of our customers,. ~~which~~Our ~~results~~dense inmetro ~~what~~and weregional ~~refer~~network sections have high fiber counts that enable us to asprovide “our dark fiber solutions, network connectivity, colocation and cloud infrastructure ~~economics~~offerings.” ~~Infrastructure~~Our ~~economics~~network sections are ~~characterized~~deep byand ~~attractive~~scalable, ~~revenue~~meaning ~~visibility~~we have spare fiber, conduit access rights and/or ~~strong~~rights ~~margins~~of ~~coupled~~way ~~with~~rights ~~operating~~that ~~leverage~~allow ~~for~~us ~~new~~to ~~revenue,~~continue ~~success-based~~to ~~capital~~add ~~investments~~capacity ~~with~~to ~~low~~our ~~maintenance~~network ~~capital~~as ~~needs,~~our existing and ~~the~~new ~~ability~~customers’ todemand ~~generate~~for ~~significant~~our ~~cash~~offerings ~~flow~~increases. ~~over~~In ~~time.~~addition, ~~For~~many ~~the~~of ~~year~~our ~~ended~~core ~~June~~network ~~30,~~technologies ~~2018,~~provide ~~approximately~~capacity ~~90%~~through ofwhich we can continue to add dedicated Wavelengths to our ~~revenue~~network ~~was~~without ~~recurring~~consuming inadditional ~~nature~~fiber. ~~Our~~We ~~capital~~also ~~expenditure~~believe ~~investments~~the ~~are~~density ~~primarily~~and ~~success-based,~~diversity ~~meaning~~of ~~that~~our ~~before~~network weprovides ~~commit~~a ~~resources~~strong and growing competitive barrier to ~~expand~~protect our existing revenue base. We believe our network, weprovides ~~have~~significant aopportunity ~~signed~~to organically connect to new customer ~~contract~~locations, ~~that~~data ~~will~~centers, ~~provide~~towers, or small cell locations to help us ~~with~~achieve an attractive return on ~~the~~our ~~required~~ capital ~~investment~~deployed. ~~After~~Since ~~committing~~our ~~capital~~founding, towe ~~connect~~have ~~additional~~assembled a large portfolio of fiber network sections and colocation assets through both acquisitions and customer ~~sites,~~demand-driven ~~our~~investments ~~goal~~in isinfrastructure property and equipment. From our inception to ~~sell~~date, ~~additional~~we ~~high-bandwidth~~have ~~connectivity~~completed onacquisitions ~~these~~with ~~new~~an ~~routes~~aggregate atpurchase aconsideration, ~~relatively~~net ~~low~~of ~~incremental~~cash ~~cost~~acquired, ~~which~~totaling ~~further~~approximately ~~enhances~~$6.7 ~~the~~billion. ~~return~~For wethe ~~extract~~period from ~~our~~July 1, ~~asset~~2016 ~~base~~through June 30, 2019, we also invested approximately $2.4 ~~Finally~~billion in capital expenditures, exclusive of acquisitions and stimulus grant reimbursements, primarily to expand the ~~combination~~reach and capacity of our ~~scale~~network. As of June 30, 2019, our total debt (including capital lease obligations and ~~infrastructure~~before ~~economics~~any ~~results~~unamortized indiscounts, ~~the~~premiums ~~ability~~and todebt ~~generate~~issuance ~~meaningful~~costs) ~~free~~was ~~cash~~$6,065.2 ~~flow~~million ~~over~~and ~~time~~was primarily incurred in connection with acquisitions.

Our ~~management~~business ismodel ~~intensely~~focuses ~~focused~~on providing on-net ~~creating~~bandwidth ~~equity~~infrastructure ~~value~~solutions ~~for~~to ~~the~~our ~~ZGH~~customers, ~~stockholders~~which results in what we refer to as “infrastructure economics.” ~~Our~~Infrastructure ~~equity~~economics ~~value~~are ~~creation~~characterized ~~philosophy~~by ~~includes~~attractive ~~regular~~revenue visibility and ~~rigorous~~strong ~~financial~~margins ~~and~~coupled ~~operational~~with ~~measurement~~operating leverage for new revenue, ~~financial~~success-based ~~transparency~~capital ~~(both~~investments ~~internally~~with ~~and~~low ~~externally),~~maintenance capital needs and ~~clear~~the ~~alignment~~ability ofto ~~interests~~generate ~~among~~significant ~~employees~~cash flow over time. For the year ended June 30, ~~management~~2019, ~~and~~approximately ~~ZGH~~90% ~~stockholders~~of our revenue was recurring in nature. Our ~~real~~capital expenditure investments are primarily success-~~time~~based, ~~measurement~~meaning ~~and~~that ~~reporting~~before ~~system~~we ~~serves~~commit asresources to expand our network, we have a signed customer contract that will provide us with an attractive return on the ~~foundation~~required ~~for~~capital ~~our~~investment. ~~decision~~After ~~making~~committing ~~and~~capital to connect additional customer sites, our ~~extensive~~goal ~~financial~~is ~~and~~to ~~operational~~sell ~~disclosure.~~additional Wehigh-bandwidth ~~also~~connectivity ~~believe~~on inthese ~~fostering~~new anroutes ~~entrepreneurial~~at ~~culture~~a ~~that~~relatively ~~aligns~~low incremental cost, which further enhances the ~~interests~~return ofwe extract from our ~~employees,~~asset ~~management~~base. Finally, the combination of our scale and ~~ZGH~~infrastructure ~~stockholders~~economics results in the ability to generate meaningful free cash flow over time.

WeOur ~~are~~management ais ~~Delaware~~intensely ~~limited~~focused ~~liability~~on ~~company~~creating ~~formed~~equity invalue ~~2007~~for the ZGH stockholders. AsOur ofequity ~~June~~value ~~30,~~creation ~~2018~~philosophy includes regular and rigorous financial and operational measurement, wefinancial ~~had~~transparency 3(both internally and externally) and clear alignment of interests among employees,~~774~~ management and ZGH stockholders. Our real-time measurement and reporting system serves as the foundation for our decision making and our extensive financial and operational disclosure. We also believe in fostering an entrepreneurial culture that aligns the interests of our employees, management and ZGH stockholders.

~~Our fiscal~~We ~~year~~are ~~ends~~a ~~June~~Delaware 30limited ~~each~~liability ~~year,~~company ~~and~~formed wein ~~refer~~2007. toAs ~~the~~of ~~fiscal year ending~~ June 30, 2019 ~~as “Fiscal 2019”~~, ~~the~~we ~~fiscal~~had ~~year ended June 30~~3,781 ~~2018 as “Fiscal 2018”, the fiscal year ended June 30, 2017 as “Fiscal 2017” and the fiscal year ended June 30, 2016 as “Fiscal 2016~~employees.”

~~Bandwidth~~Our ~~Infrastructure~~fiscal ~~Industry~~year ends June 30 each year and we refer to the fiscal year ending June 30, 2020 as “Fiscal 2020,” the fiscal year ended June 30, 2019 as “Fiscal 2019,” the fiscal year ended June 30, 2018 as “Fiscal 2018” and the fiscal year ended June 30, 2017 as “Fiscal 2017.”

WeSignificant ~~are~~Merger a provider of bandwidth infrastructure solutions, and our offerings are a critical component of the broader global communications industry. Bandwidth infrastructure, consisting primarily of fiber network sections and interconnect-oriented colocation facilities, plays a fundamental role in the communications value chain, similar to other types of infrastructure such as data centers and cellular towers. Bandwidth infrastructure assets are a critical resource, Development

On May 8, 2019, ZGH, Front Range TopCo, Inc. (“Parent”), a Delaware corporation and Front Range BidCo, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) to be acquired by a consortium of private equity funds including affiliates of EQT Infrastructure IV, Digital Colony Partners, LP, DC Front Range Holdings I, LP and FMR LLC (the “Consortium”). Upon the close of the Merger (defined below), ZGH will operate as a privately-held company. Parent and Merger Sub were formed by the Consortium.

~~connecting~~ Table ~~data~~of ~~centers, cellular towers, and other carrier and private networks to support the substantial growth in global data, voice and video consumption by both business and individual consumers.~~Contents

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions of the Merger Agreement, (i) Merger Sub will be merged with and into ZGH (the “Merger”), with ZGH surviving and continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Parent, and (ii) at the effective time of the Merger, each outstanding share of common stock of ZGH, par value $0.001 per share (“Common Stock”) (other than Common Stock owned by Parent, Merger Sub or any wholly owned subsidiary of Parent or Merger Sub or held in the treasury of ZGH, all of which shall be canceled without any consideration being exchanged therefor or shares of ZGH Common Stock held by holders who have made a valid demand for appraisal in accordance with Section 262 of the Delaware General Corporation Law) will be converted into the right to receive an amount equal to $35.00 per share in cash (the “Merger Consideration”).

The closing of the Merger is subject to customary closing conditions, including (i) the adoption of the Merger Agreement by the holders of not less than a majority of the outstanding shares of ZGH Common Stock, (ii) the receipt of specified required regulatory approvals, (iii) the absence of any law or order enjoining or prohibiting the Merger or making it illegal, (iv) the accuracy of the representations and warranties contained in the Merger Agreement (subject to “material adverse effect” and materiality qualifications) and (v) compliance with covenants in the Merger Agreement in all material respects.

ZGH’s board of directors and the board of directors of Parent have each unanimously approved the Merger and the Merger Agreement. On July 26, 2019, ZGH held a special meeting of stockholders where ZGH stockholders approved the adoption of the Merger Agreement. On July 31, 2019, ZGH announced the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, satisfying one of the conditions to the closing of the pending transaction The closing of the deal continues to be subject to customary conditions, including regulatory clearances relating to review and clearance by the Committee on Foreign Investment in the United States and the receipt of certain foreign antitrust approvals, certain other foreign direct investment review approvals, and specified FCC and state public utility commission approvals. The closing of the Merger is not subject to a financing condition. The Merger is expected to close in the first half of 2020. Until the closing, we will continue to operate as an independent company.

The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, which has been filed as Exhibit 2.1 hereto.

Bandwidth Infrastructure Industry

We are a provider of bandwidth infrastructure solutions and our offerings are a critical component of the broader global communications industry. Bandwidth infrastructure, consisting primarily of fiber network sections and interconnect-oriented colocation facilities, plays a fundamental role in the communications value chain, similar to other types of infrastructure such as data centers and cellular towers. Bandwidth infrastructure assets are a critical resource, connecting data centers, cellular towers and other carrier and private networks to support the substantial growth in global data, voice and video consumption by both business and individual consumers.

Industry History

Our industry has changed substantially over the years. The first phase of the bandwidth infrastructure industry occurred with the advent of the ~~Internet~~internet and the ensuing dot com era in the late 1990s. This led to the first major wave of fiber network deployments as a number of companies of varying backgrounds and profiles invested billions of dollars in fiber network construction throughout the U.S., Canada and Europe. These fiber network developers included companies with national and international plans (e.g., Level 3 Communications, Qwest Communications, Williams Communications) and more regional plans (e.g., 360networks, Progress Telecom, OnFiber). Following these network builds, many of the fiber companies struggled in the early 2000s due to the lack of sufficient demand for their high-bandwidth offerings. Bandwidth demand during this timeframe was limited by the fact that many bandwidth-intensive applications (e.g., streaming video, cloud, mobile broadband, big data analytics, etc.) were either not yet contemplated or still very early in their life cycle. Instead, the majority of traffic at the time was low-bandwidth offerings such as voice and dial-up modem connections. In addition, the similarity of the fiber routes deployed resulted in significant overcapacity and associated pricing pressure, leaving both a “last mile” gap and heavy competition and overcapacity along these routes. These two primary factors combined to significantly limit the fiber network providers’ operating cash ~~flows, resulting in the majority of these companies transitioning their business models, consolidating and/or seeking bankruptcy protection.~~

In the following years, a substantial expansion in computing power and bandwidth-intensive applications drove meaningful bandwidth traffic growth. This growth highlighted the need to address the “last mile” gap by bringing bandwidth capacity directly to both the consumer and business end user. The capacity and performance of the consumer last mile connection was primarily addressed by the expansion of cable networks and through mobile network development by wireless carriers (supported by cellular tower operators). The growing bandwidth demand of business end users was addressed by a number of focused fiber developers constructing new networks to directly connect to data centers, cellular towers, government facilities, schools, hospitals and other locations with high-bandwidth needs. These fiber network companies were generally local or regional in nature, and were most often either survivors of the initial fiber development wave, subsidiaries of a utility parent, or owned by entrepreneurs. This period is also noted for increased financial discipline following the large speculative capital deployments of the dot com era. This is the timeframe and industry environment in which our Company was founded.3

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flows, resulting in the majority of these companies transitioning their business models, consolidating and/or seeking bankruptcy protection.

In the following years, a substantial expansion in computing power and bandwidth-intensive applications drove meaningful bandwidth traffic growth. This growth highlighted the need to address the “last mile” gap by bringing bandwidth capacity directly to both the consumer and business end user. The capacity and performance of the consumer last mile connection was primarily addressed by the expansion of cable networks and through mobile network development by wireless carriers (supported by cellular tower operators). The growing bandwidth demand of business end users was addressed by a number of focused fiber developers constructing new networks to directly connect to data centers, cellular towers, government facilities, schools, hospitals and other locations with high-bandwidth needs. These fiber network companies were generally local or regional in nature and were most often either survivors of the initial fiber development wave, subsidiaries of a utility parent, or owned by entrepreneurs. This period is also noted for increased financial discipline following the large speculative capital deployments of the dot com era. This is the timeframe and industry environment in which our Company was founded.

The Industry Today

The acceleration in the development of bandwidth-intensive components and applications has resulted in a significant need to further fill in the “last mile” gap, leading to substantial capital investments in fiber networks by bandwidth infrastructure providers. Bandwidth infrastructure solutions support customer applications such as high -definition television broadcasting and video; online streaming video; cloud applications replacing in-house enterprise software platforms; and explosive mobile data consumption (Cisco found that, ~~in 2016, global~~ mobile data traffic ~~was equivalent to 18x~~ ~~the~~will ~~volume~~increase ofsevenfold ~~global~~between ~~mobile~~2017 ~~traffic~~and ~~five years earlier in 2011~~2022). Companies whose services require large amounts of bandwidth and enterprises that consume large amounts of bandwidth are struggling to adapt to this rapidly evolving landscape, and the bandwidth infrastructure industry is growing in economic importance as it addresses this critical need. In addition to these demand trends, there has been significant consolidation in the bandwidth infrastructure industry, validating a core tenet of ~~the~~our ~~Company’s~~ founding investment thesis. Since inception we have made 45 acquisitions in the USU.S., Europe and Canada with an aggregate purchase consideration, net of cash acquired, totaling approximately $6.7 billion.

Industry Participants

We view the participants in today’s communications industry in two distinct categories:

· Providers of Infrastructure. Companies that own and operate infrastructure assets that are used to market and deliver infrastructure offerings. We believe these assets would be difficult to replicate given the significant capital, time, permitting and expertise required. Providers of infrastructure typically enjoy long-term customer contracts, a highly visible and recurring revenue base and attractive margins. We further categorize these providers of infrastructure as follows:

3 o Bandwidth Infrastructure Providers: Owners of bandwidth infrastructure assets comprised of fiber networks and interconnect-oriented colocation facilities. Bandwidth infrastructure offerings include dark fiber, lit fiber (Wavelengths, Ethernet, IP, and SONET) and colocation and interconnection offerings for the purpose of accommodating customers’ mission-critical traffic including data, voice, and video.

the significant capital, time, permitting, and expertise required. Providers of infrastructure typically enjoy long-term customer contracts, a highly visible and recurring revenue base, and attractive margins. We further categorize these providers of infrastructure as follows:

o Bandwidth Infrastructure Providers: Owners of bandwidth infrastructure assets comprised of fiber networks and interconnect-oriented colocation facilities. Bandwidth infrastructure offerings include dark fiber, lit fiber (Wavelengths, Ethernet, IP, and SONET), and colocation and interconnection offerings for the purpose of accommodating customers’ mission-critical traffic including data, voice, and video.

Data Center Providers: Owners of data center facilities that include raised floor, power and cooling infrastructure. These facilities house and support customer networking and computing equipment for carrier networks, enterprise cloud platforms, content distribution networks, and other mission-critical applications.

Cellular Tower Providers: Owners of cellular towers, the physical infrastructure upon which customer antennas and associated components are co-located for the wireless carrier industry.

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Users of Infrastructure. Users of infrastructure may purchase infrastructure offerings either to provide value-added services to their customers or for their own private network requirements. We further categorize these users of infrastructure as follows:

o Communications Service Providers. Communications service providers, such as wireless service providers, ILECs, CLECs, and ISPs, are companies that use infrastructure to package, market, and sell value-added communications services such as voice, ~~Internet~~internet, data, video, wireless, and hosting solutions.

End Users. End users are public sector entities and private enterprises that use infrastructure for their own internal networks. Note that end users may also address their needs by purchasing value-added services from communications service providers.

The Market Opportunity

The proliferation of smart devices and mobile broadband, real-time streaming video, social networks, online gaming, machine-to-machine connectivity, big data analytics, and cloud computing will continue to drive substantial demand for bandwidth infrastructure. Cisco estimates that mobile data traffic will grow at a compound annual growth rate of 4746% from ~~2016~~2017 to ~~2021~~2022 and that IP traffic will grow at a compound annual growth rate of 2426% from ~~2016~~2017 to ~~2021~~2022.

Communications service providers develop and deliver value-added solutions that are tailored to mass market residential and enterprise customers whose needs continue to grow and evolve as bandwidth trends expand. Given this rapid growth and the complexity and cost of building and maintaining networks, communications service providers are increasingly looking to bandwidth infrastructure providers to augment the reach and performance of their own networks and support the delivery of the solutions their customers demand. As this dynamic continues, bandwidth infrastructure providers will become further entrenched as mission-critical partners to the communications service providers.

Similarly, end users such as private enterprises (e.g., media/content providers, financial institutions, and hospital systems) and public sector entities (e.g., governmental agencies and school districts) have experienced significant growth and change in the role that bandwidth infrastructure plays within their organizations. As these needs continue to grow in both volume and criticality, end users will increasingly choose to directly procure bandwidth infrastructure solutions in order to gain more security, control and scale in their internal network operations. An example of this disintermediation is the trend of large school districts, adapting to e-education requirements, directly procuring dark fiber access as a replacement to more value-added solutions. We believe that, as these dynamics play out across all industries, the number of end users directly seeking access to bandwidth infrastructure will continue to expand.

By focusing on the reach, density, and performance of their physical networks, bandwidth infrastructure providers can deliver customized offerings to communications service providers and end users more quickly and with superior economics than these users could otherwise self-provide. Whether providing fiber connectivity to a wireless carrier’s towers to enable mobile broadband, supplying a national communications service provider with a metro fiber footprint in new markets, providing a lit bandwidth connection to multiple enterprise data centers for an industrial company, providing interconnection capabilities to a hosting company within a data center, or solving for the next society-impacting innovation, bandwidth infrastructure providers will continue to invest in and expand their infrastructure assets to meet this growing demand.

towers to enable mobile broadband, supplying a national communications service provider with a metro fiber footprint in new markets, providing a lit bandwidth connection to multiple enterprise data centers for an industrial company, providing interconnection capabilities to a hosting company within a data center, or solving for the next society-impacting innovation, bandwidth infrastructure providers will continue to invest in and expand their infrastructure assets to meet this growing demand.

Given the natural economies of scale, there has been significant consolidation among bandwidth infrastructure providers, particularly in the U.S. We believe this consolidation trend will continue in the U.S. and is beginning in Europe and Canada. Combined with the barriers to new entrants, we foresee a decreasing number of bandwidth infrastructure providers against a backdrop of continued strong demand for their solutions.

Our Bandwidth Infrastructure Assets

Our bandwidth infrastructure assets consist of our fiber network (including the customer-accessed optronic components used to provide our lit offerings over our fiber network) and our data centers where we provide colocation and interconnection offerings.

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Our Fiber Network

Our network footprint includes both large and small metro geographies, the extended suburban regions of many cities, and the large rural, national and international fiber links that connect our metro network sections. We believe ~~that~~ our network assets would be difficult to replicate given the geographic reach, network density, and capital investment required. Our fiber network spans over ~~128~~133,~~910~~000 route miles and ~~11,867,276~~13.0 million fiber miles (representing an average of 9298 fibers per route), reaches approximately ~~403~~400 geographic markets in the ~~United States~~U.S., Canada and Europe, and connects approximately 35,000 buildings, including 1,~~185~~200 data centers. Our network allows our customers access to our high-bandwidth infrastructure solutions over redundant fiber facilities between and among key customer locations. We believe the location and density of our expansive network footprint allow us to more competitively satisfy our target customers’ bandwidth infrastructure needs at the local, regional, national, and international level relative to other regional bandwidth infrastructure solution providers or long-haul carriers. Our fiber network also has the following key attributes:

· Extensive Coverage. Our fiber network sections are located across large and small metro geographies, as well as the extended metro and suburban regions of many cities, and traverse large rural areas to connect metro markets. This network coverage allows us to address our target customers’ needs in a variety of geographies and for a variety of applications, all while remaining “on-net” and maintaining infrastructure economics.

Scalable Network Architecture. Our network is scalable, meaning we often have spare fiber, conduit access rights and/or rights of way that allow us to continue to add capacity to our network as our customers’ demand for our bandwidth infrastructure increases. In addition, the majority of our core fiber network segments utilize DWDM systems, nearly all of which have spare capacity through which we can continue to add dedicated Wavelengths to our network without consuming additional fiber.

Modern Fiber and Optronics. Our modern fiber network supports current generation optronic components including DWDM systems, carrier class Ethernet switches and IP routers. These customer-accessed components are used to provide our lit offerings. The vast majority of our network is capable of supporting next generation technologies with minimal capital investment.

Metro Fiber Network Sections. We use our metro fiber network sections to provide access to bandwidth infrastructure within the metro markets where we operate. Our metro network sections are most commonly used in the following two scenarios: first, to provide connectivity between on-net buildings that are located in the same geographic market; second, to connect our on-net buildings within a metro market to another metro market via our regional and/or long-haul network sections. We continue to expand our metro fiber network sections within the metro geography and into the surrounding suburban areas as we extend to additional buildings to meet new demand on a success basis. Success-based expansion means that before we commit resources to expand our network, we have a signed customer contract that will provide us in most cases with an attractive return on required capital. In many of our metro markets, we have high-count fiber cables (sometimes as many as 864 fibers per cable) and in some cases multiple spare conduits on our metro fiber routes. On individual segments where our fiber capacity becomes highly utilized, we seek to augment that capacity also on a success basis.

5 Regional and Long-haul Fiber Network Sections. We use our regional fiber network sections to provide bandwidth infrastructure connectivity between the metro markets where we operate. Our regional and long-haul network sections are most commonly used in the following three scenarios: first, to provide connectivity between on-net buildings that are located in different large markets (for example, between Chicago and New York); second, to connect our on-net buildings in small and mid-sized markets back to major data centers, wireless switching centers and carrier hotels in larger markets (for example, between Lima, Ohio and Cleveland, Ohio); third, occasionally our network sections provide connectivity between on-net buildings in two different small or mid-sized markets located in various parts of our regional network sections (for example, between Sioux Falls, South Dakota and Alexandria, Minnesota). We seek to continue to add new segments and markets to our regional and long-haul network sections on a success basis, supported by a customer contract. We have deployed current generation DWDM technologies across the majority of our regional and long-haul network sections, allowing a current maximum scaling to four terabytes (i.e. 4,000G) of

long-haul network sections. We continue to expand our metro fiber network sections within the metro geography and into the surrounding suburban areas as we extend to additional buildings to meet new demand on a success basis. Success-based expansion means that before we commit resources to expand our network, we have a signed customer contract that will provide us in most cases with an attractive return on required capital. In many of our metro markets, we have high count fiber cables (sometimes as many as 864 fibers per cable) and in some cases multiple spare conduits on our metro fiber routes. On individual segments where our fiber capacity becomes highly utilized, we seek to augment that capacity also on a success basis. 6

~~Regional~~Table and Long-haul Fiber Network Sections. We use our regional fiber network sections to provide bandwidth infrastructure connectivity between the metro markets where we operate. Our regional and long-haul network sections are most commonly used in the following three scenarios: first, to provide connectivity between on-net buildings that are located in different large markets (for example, between Chicago and New York); second, to connect our on-net buildings in small and mid-sized markets back to major data centers, wireless switching centers, and carrier hotels in larger markets (for example, between Lima, Ohio and Cleveland, Ohio); third, occasionally our network sections provide connectivity between on-net buildings in two different small or mid-sized markets located in various parts of our regional network sections (for example, between Sioux Falls, South Dakota and Alexandria, Minnesota). We seek to continue to add new segments and markets to our regional and long-haul network sections on a success basis, supported by a customer contract. We have deployed current generation DWDM technologies across the majority of our regional and long-haul network sections, allowing a current maximum scaling to four terabytes (i.e. 4,000G) of bandwidth and the ability to add capacity as demand for bandwidth increases. We expect that as technology continues to advance, we will augment and invest in our regional and long-haul networks accordingly.Contents

~~Fiber-to-the-Tower~~bandwidth ~~Network~~and ~~Sections. We operate fiber-to-~~the~~-tower~~ ~~network~~ability ~~sections across our fiber network footprint and connect~~ to ~~wireless~~add ~~macro~~capacity ~~and~~as ~~small~~demand ~~cell~~for ~~sites~~bandwidth increases. ~~These~~We ~~FTT~~expect ~~network sections provide our customers with access to bandwidth infrastructure~~ that ~~offers~~as ~~significantly~~technology ~~improved~~continues ~~speed, scale, performance and reliability levels relative~~ to ~~legacy copper and microwave networks. Our FTT network sections are scalable~~advance, ~~which means that~~ we ~~can~~will ~~quickly~~augment and ~~easily~~invest ~~increase~~in ~~the amount of bandwidth that we provide to each of the towers as~~ our ~~customers’ wireless data networks grow. Our FTT markets are generally in areas where we already have dense fiber network sections (either metro or~~ regional), ~~which~~and ~~affords us the ability to offer access to ring~~long-~~protected~~haul ~~mobile~~networks ~~infrastructure~~accordingly. ~~We are increasingly providing dark fiber solutions on our FTT network sections.~~

~~Through~~Fiber-to-the-Tower ~~these~~Network Sections. We operate fiber-to-the-tower network sections, weacross ~~provide~~our ~~connectivity~~fiber tonetwork ~~approximately~~footprint ~~35,000~~and ~~on-net~~connect ~~buildings~~to wireless macro and ~~are~~small ~~continually~~cell ~~making~~sites. ~~success-based~~These ~~capital~~FTT ~~investments~~network tosections ~~increase~~provide our ~~on-net~~customers ~~building~~with ~~footprint.~~access ~~On-net~~to ~~buildings~~bandwidth ~~are~~infrastructure ~~buildings~~ that ~~are~~offers ~~directly~~significantly ~~connected~~improved ~~via~~speed, ~~fiber~~scale, toperformance ~~our~~and ~~long-haul,~~reliability ~~regional,~~levels ~~metro,~~relative to legacy copper and microwave networks. Our FTT network sections are scalable, which means we can quickly and easily increase the amount of bandwidth we provide to each of the towers as our customers’ wireless data networks grow. Our ~~customers~~FTT markets are generally ~~purchase~~in ~~our~~areas ~~bandwidth~~where ~~infrastructure~~we ~~offerings~~already sohave ~~they~~dense ~~can~~fiber ~~transport~~network ~~their~~sections ~~data,~~(either ~~Internet~~metro or regional), ~~wireless~~which ~~and~~affords ~~voice~~us ~~traffic~~the ~~between~~ability ~~buildings~~to ~~directly~~offer ~~connected~~access to ~~our~~ring-protected ~~network~~mobile infrastructure. ~~The~~We ~~types~~are ofincreasingly ~~buildings~~providing ~~connected~~dark tofiber ~~our~~solutions ~~network~~on ~~primarily~~our ~~consist~~FTT ofnetwork ~~the following:~~sections.

Through these fiber network sections, we provide connectivity to approximately 35,000 on-net buildings and are continually making success-based capital investments to increase our on-net building footprint. On-net buildings are buildings that are directly connected via fiber to our long-haul, regional, metro and FTT network sections. Our customers generally purchase our bandwidth infrastructure solutions so they can transport their data, internet, wireless and voice traffic between buildings directly connected to our network. The types of buildings connected to our network primarily consist of the following:

Data Centers, Carrier Hotels and Central Offices. These buildings house multiple users of bandwidth infrastructure, serving as telecommunications and content exchange points. Our fiber network generally connects the most important of these buildings in the markets where we operate. We have over 1,800 of these types of facilities connected to our network.

· Single-Tenant, High-Bandwidth Locations. Generally, these are other telecom, media or ~~Internet~~internet content buildings that house a single large user of bandwidth infrastructure. Examples of these buildings include video aggregation sites, mobile switching centers and carrier POPs. Our network is connected to these buildings only when the tenant is a customer. We currently have over 4,~~100~~000 single-tenant, high-bandwidth locations on-net.

Cellular Towers. We connect to cellular towers and other locations that house wireless antennas. Typically, towers have multiple tenants, which provides us with the opportunity to provide our offerings to those additional tenants.

6 · Enterprise Buildings. Our network extends to over 21,000 enterprise buildings. This grouping contains a mix of single-tenant and multi-tenant enterprise buildings and includes hospitals, corporate data centers, schools, government buildings, research centers and other key corporate locations that require access to bandwidth infrastructure.

· Enterprise Buildings. Our network extends to over 21,500 enterprise buildings. This grouping contains a mix of single-tenant and multi-tenant enterprise buildings and includes hospitals, corporate data centers, schools, government buildings, research centers and other key corporate locations that require access to bandwidth infrastructure.

Our Data Centers

Many of our data center facilities are located in some of the most important carrier hotels in North America, including 60 Hudson Street and 111 8th Avenue in New York; 165 Halsey Street in Newark; 401 N. Broad Street in Philadelphia; 1 Summer Street in Boston; 1950 N. Stemmons Freeway and 2323 Bryan Street in Dallas; 2001 6th Street in Seattle; and 151 Front Street in Toronto. We have the exclusive right to operate and provide colocation and interconnection offerings in the Meet-Me Room at 60 Hudson Street. We also have colocation facilities located in Atlanta, Ashburn, Austin, Amsterdam, Chicago, Cleveland, Denver, Las Vegas, Los Angeles, McLean, Memphis, Miami, Minneapolis, Montreal, Nashville, Paris, Phoenix, San Diego, Santa Clara, Toronto and four additional locations in Europe. All of our facilities are network-neutral and have ample power to meet customer needs, backup power in the form of batteries and generators, air conditioning, modern fire suppression technology, 24/7 security monitoring, and redundant cooling capabilities. We have long-term leases with the owners of each of the buildings where we provide colocation offerings. Our colocation facilities total approximately 1~~,034,000~~ million square feet of ~~licensable~~billable colocation space.

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Underlying Rights

We have the necessary right-of-way agreements and other required rights, including state and federal government authorization, to allow us to maintain and expand our fiber network sections that are located on private property and public rights-of-way, including utility poles. When we expand our network, we obtain the necessary construction permits, license agreements, permits and franchise agreements. Certain of these permits, licenses and franchises are for a limited duration. When we need to use private property, our strategy is to obtain rights-of-way under long-term contracts.

Our Segments and Offerings

We provide high-bandwidth infrastructure products and solutions over our extensive metro, regional, and long-haul fiber networks sections and through our interconnect-oriented data center facilities. We provide our products and solutions through our ~~six~~four operating segments: ~~Fiber~~Zayo ~~Solutions, Transport, Enterprise~~ Networks, Zayo Colocation (zColo), Allstream and Other. Across our segments, we operate individual Strategic Product Groups (“SPGs”). Each SPG has financial accountability and decision-making authority, which promotes agility in the fast-moving markets where we operate. Financial information for each of our operating segments and our domestic and foreign operations is contained in Note 1617 – Segment Reporting to our consolidated financial statements.

~~Fiber~~During ~~Solutions. Through~~ the ~~Fiber~~fourth ~~Solutions~~quarter ~~segment,~~of weFiscal ~~provide~~2019, ~~access~~with tothe ~~raw~~continued ~~bandwidth~~increase ~~infrastructure~~in toour ~~customers~~scope ~~that~~and ~~require control of their internal networks. These solutions include dark fiber~~scale, ~~dedicated~~our ~~lit~~chief ~~network~~operating ~~sections~~decision ~~and~~maker ~~mobile infrastructure~~ (~~fiber-to-the-tower and small cell~~“CODM”)., ~~Dark~~who ~~fiber~~ is aour ~~physically~~Chief ~~separate~~Executive ~~and secure~~Officer, ~~private~~implemented ~~platform~~certain ~~for~~organizational ~~dedicated~~changes ~~bandwidth.~~to Wethe ~~lease~~management ~~dark~~and ~~fiber~~operation ~~pairs~~of ~~(usually~~the 2business tothat ~~12 total~~directly ~~fibers)~~impact tohow ~~our~~the ~~customers,~~CODM ~~who~~makes ~~“light”~~resource ~~the~~allocation ~~fiber~~decisions ~~using~~and ~~their~~manages ~~own~~the ~~optronics~~Company. ~~Our~~The ~~mobile~~changes ~~infrastructure~~in ~~solutions~~structure ~~permit~~had ~~direct~~the ~~fiber~~impact ~~connections~~of tocombining ~~cell~~our ~~towers,~~legacy ~~small cells, hub sites, and mobile switching centers.~~ Fiber Solutions, ~~customers~~Transport ~~include carriers~~ and ~~other~~Enterprise ~~communication~~segments ~~service~~into ~~providers,~~a ~~Internet~~single ~~service~~new ~~providers~~segment, ~~wireless~~Zayo ~~service~~Networks ~~providers, major media~~ and ~~content~~re-aligning ~~companies,~~our ~~large~~Cloud ~~enterprises,~~ and ~~other~~Cybersecurity ~~companies~~SPG ~~that~~from ~~have~~our ~~the~~legacy ~~expertise~~Enterprise segment to ~~run~~our ~~their~~zColo ~~own~~segment. ~~fiber~~These ~~optic~~changes ~~networks~~to orour ~~require~~existing ~~interconnected~~reportable ~~technical~~segments ~~space.~~have ~~The~~been ~~contract~~recast ~~terms~~for inall ~~the~~prior ~~Fiber~~period ~~Solutions~~financial ~~segment~~and ~~tend~~operating tometrics ~~range~~presented ~~from~~in ~~three~~this toAnnual ~~twenty~~Report ~~years~~for comparability.

~~Transport~~ Zayo Networks. ~~The~~ Our ~~Transport~~Zayo Networks segment provides access to ~~lit~~ bandwidth infrastructure. ~~solutions~~For ~~over~~purposes ~~our~~of ~~metro,~~this ~~regional~~discussion, ~~and~~we ~~long-haul~~have ~~fiber~~classified ~~network~~the ~~sections.~~Zayo ~~The~~Networks ~~segment~~SPGs ~~uses~~into ~~customer-accessed~~the ~~optronics~~following tocategories: ~~light~~Fiber, Transport and Layer 2/3 solutions. In the ~~fiber~~Fiber business, ~~and~~we ~~our~~lease ~~customers~~dedicated ~~pay~~fiber ~~for~~pairs ~~access~~to ~~based~~our oncustomers; ~~the~~in ~~amount~~our ~~and~~Transport ~~type~~business, ofwe ~~bandwidth~~sell ~~they~~lit ~~require. Our~~fiber-based ~~offerings~~solutions ~~within~~that ~~this~~are ~~segment~~point ~~include~~to ~~Wavelengths,~~point ~~Ethernet,~~in ~~SONET~~nature and ~~wholesale~~in ~~IP.~~our WeLayer ~~target~~2/3 ~~customers~~business ~~who~~we ~~require~~sell alit ~~significant~~fiber-based ~~amount~~solutions ofto ~~bandwidth~~medium ~~across~~and ~~their~~large ~~networks.~~enterprises ~~Transport~~that ~~customers~~may ~~include~~be ~~carriers,~~multi-point ~~content~~or ~~providers,~~encompass ~~financial~~a ~~services~~higher ~~companies,~~service level.

7In our Fiber line of business, we lease dedicated fiber pairs (usually 2 to 12 total fibers) to our customers who often “light” the fiber using their own optronics. Dark fiber is a physically separate and secure, private platform for dedicated bandwidth and is used by sophisticated customers to build out their network connectivity. Within the Fiber business, Zayo provides access to mobile infrastructure (fiber-to-the-tower and small cell). Our mobile infrastructure solutions permit direct fiber connections to cell towers, small cells, hub sites and mobile switching centers. Fiber solutions customers include carriers and other communication service providers, internet service providers, wireless service providers, major media and content companies, large enterprises and other companies that have the expertise to run their own fiber optic networks or require interconnected technical space. The contract terms for fiber solutions customers tend to range from three to twenty or more years.

Our Transport line of business provides access to lit communications bandwidth infrastructure using customer-accessed optronics to light the fiber and, and our customers pay for access based on the amount and type of bandwidth they require. We target customers who require a significant amount of bandwidth across their networks. Transport customers include carriers, content providers, financial services companies, healthcare, government entities, education institutions and other medium and large enterprises. The contract terms in this segment tend to range from two to five years. ~~SPGs~~Our ~~within~~two ~~the~~transport ~~Transport~~solution ~~segment~~SPGs ~~include~~are described below:

· Zayo Wavelength (“Waves”) Offerings. Through our Waves SPG, we provide access to lit communications bandwidth infrastructure to our customers by deploying optical Wavelength technology. The offerings are provided by using DWDM optronic components to “multiplex” multiple channels (i.e., Wavelengths) of dedicated capacity on a single fiber pair. Access capacity is provided at speeds of 1G, 2.5G, 10G, 40G and, and 100G. Customers include carriers, financial services companies, ~~healthcare,~~major ~~government~~media ~~institutions, education institutions~~ and ~~other enterprises. The contract terms for Wavelength offerings are typically between one and five years for a fixed recurring monthly fee and in some cases an additional upfront, non-recurring fee.~~

· Zayo Ethernet Offerings. Our Ethernet SPG provides access to our lit bandwidth infrastructure to our customers by deploying Ethernet technology. Ethernet offerings are offered in metro markets as well as between metro areas (intercity) in point-to-point and multi-point configurations. Unlike data movement over a dedicated Wavelength network, information flow over Ethernet is transferred in a packet or frame across the network. The frame enables the data to navigate across a shared infrastructure in order to reach the customer required destination. Access capacity is provided in speeds ranging from 10Mb to 10G. Customers include carriers, financial services companies, healthcare, government institutions, education institutions and other enterprises. Contract terms in our Ethernet offerings typically range between one and five years for a fixed recurring monthly fee and in some cases an additional upfront, non-recurring fee.

· Zayo SONET Offerings. Through our SONET SPG we provide access to lit bandwidth infrastructure to our customers by deploying SONET technology. SONET is a standardized time-division protocol that transfers multiple digital bit streams over optical fiber using lasers. SONET technology is often used to support private line technology. This protocol enables movement of voice, data and video at high speeds. SONET network sections are protected, which provides for virtually instantaneous restoration of connectivity in the event of a fiber cut or component failure. Access capacity is provided at speeds ranging from DS-1 (1.54Mb) to OC-192 (10G). Customers in this group are largely carriers. The contract terms for SONET offerings typically range between one and five years for a fixed recurring monthly fee and in some cases an additional upfront, non-recurring fee. SONET is generally a legacy product that is gradually being replaced by Ethernet, Wavelength and dark fiber solutions. As a result, the SONET SPG generally manages its business to maximize cash generation and deploys minimal growth capital.

· Zayo Internet Protocol (“IP”) Transit Offerings. Through our IP Transit SPG we provide access to lit bandwidth infrastructure to our customers by deploying Internet Protocol technology. IP technology permits the flow of data across multiple circuits over a shared infrastructure from the customer source to the customer required destination. Information leaving the source is divided into multiple packets and each packet traverses the network utilizing the most efficient path and means available, as determined by a network of IP routers. Packets of information may utilize different physical circuits or paths in order to reach the destination, at which point the packets are reassembled to form the complete communication. The offerings are generally used to exchange communication on or access the public Internet. Access capacity is provided at speeds ranging from 10Mb to 100G on a single customer port interface. Customers include regional and International telecommunications and cable carriers, ISPs, enterprises, educational institutions and content companies. The contract terms for IP offerings typically range between one and three years for a fixed recurring monthly fee and in some cases a usage-based and/or an additional upfront, non-recurring fee. Pricing is generally a function of bandwidth capacity and the access required to accommodate traffic from the customer location to a public Internet exchange.

Enterprise Networks. The Enterprise Networks segment provides connectivity and telecommunications solutions to medium and large enterprises. Our offerings within this segment include Internet, wide area networking products, managed products and cloud based computing and storage products. Solutions range from point-to-point data connections to multi-site managed networks to international outsourced IT infrastructure environments. The contract

~~terms~~ Table inof ~~the Enterprise Networks segment tend to range from one to five years. SPGs within the Enterprise Networks segment include:~~Contents

·content ~~Wide~~companies, ~~Area~~healthcare, ~~Networks~~government (“WAN”). Our WAN SPG provides access to lit bandwidth infrastructure to customers by deploying Internet Protocol and managed Wide Area Network technology. These offerings are generally used to exchange or access traffic on the public Internet and include Dedicated Internet Accessinstitutions, IPeducation ~~Virtual~~institutions ~~Private Networks (“VPN”)~~ and ~~Distributed~~other ~~Denial of Service mitigation~~enterprises. The contract terms ~~typically~~for ~~range~~Wavelength offerings are typically between one and five years for a fixed recurring monthly fee and in some cases an additional upfront, non-recurring fee. ~~Pricing is generally a function of bandwidth capacity and the access required to accommodate traffic from customer location to an Internet gateway.~~

· Zayo ~~Cloud~~SONET ~~Services~~Offerings. ~~(“Cloud”)~~Through our SONET SPG, we provide access to lit communications bandwidth infrastructure to our customers by deploying SONET technology. ~~The~~SONET ~~Zayo~~is ~~Cloud~~a ~~Services~~standardized ~~SPG~~time-division ~~combines~~protocol that transfers multiple digital bit streams over optical fiber using lasers. SONET technology is often used to support private ~~cloud,~~line ~~public~~technology. ~~cloud~~This protocol enables movement of voice, data and ~~managed~~video ~~offerings~~at inhigh ~~order~~speeds. toSONET ~~provide~~network ~~its~~sections ~~customers~~are ~~secure~~protected, ~~infrastructure~~which asprovides for virtually instantaneous restoration of connectivity in the event of a ~~service~~fiber cut or component failure. Access capacity is provided at speeds ranging from DS-1 (~~IaaS~~1.54Mb), ~~which~~to ~~enables on~~OC-~~demand~~192 ~~scaling~~(10G). Customers in this group are largely carriers. The contract terms for SONET offerings typically range between one and ~~virtual~~five ~~computing~~years for a fixed recurring monthly fee and in ~~hybrid~~some ~~environments~~cases an additional upfront, non-recurring fee. SONET is generally a legacy product that is gradually being replaced by Ethernet, Wavelength and dark fiber solutions. As a result, the SONET SPG generally manages its business to maximize cash generation and deploys minimal growth capital.

· Our ~~CloudLink:~~Layer ~~Connect~~2/3 line of business provides connectivity and telecommunications solutions to ~~the~~medium ~~cloud~~and ~~(“CloudLink”)~~large enterprises. ~~CloudLink~~Our ~~provides~~offerings ~~users~~within ~~private,~~Layer ~~secure~~2/3 include Ethernet, ~~dedicated~~internet ~~network~~Protocol ~~connectivity~~(“IP”) toTransit ~~various~~Offerings, ~~cloud~~Wide ~~providers~~Area ~~utilizing~~Networking ~~our~~products, ~~fiber~~Media ~~communications~~Networks ~~infrastructure.~~and CloudLink. isSolutions ~~available~~range ~~across~~from ~~the~~point-to-point ~~entire~~data ~~product~~connections ~~spectrum:~~to ~~Dark~~multi-site ~~Fiber,~~managed ~~Wavelengths,~~networks ~~Ethernet,~~to ~~IP,~~international ~~and~~outsourced isIT ~~optimized~~infrastructure toenvironments. ~~leverage~~The ~~our~~contract ~~software~~terms ~~defined~~for ~~networking~~Layer ~~platform~~2/3 insolutions ~~order~~tend to ~~expedite~~range ~~the~~from ~~provisioning~~one ~~process~~to ~~and~~five ~~enhance~~years. ~~service~~SPGs ~~management.~~providing Layer 2/3 solutions include:

· Zayo ~~Colocation~~Ethernet ~~(“zColo”)~~Offerings. ~~The~~ ~~Colocation~~Our ~~segment~~Ethernet SPG provides ~~data~~access ~~center~~to ~~infrastructure~~our ~~solutions~~lit bandwidth infrastructure to aour ~~broad~~customers ~~range~~by ofdeploying ~~enterprise,~~Ethernet ~~carrier,~~technology. ~~cloud,~~Ethernet ~~and~~offerings ~~content~~are ~~customers.~~offered ~~Our~~in ~~offerings~~metro ~~within~~markets ~~this~~as ~~segment~~well ~~include~~as ~~the~~between ~~provision~~metro ofareas ~~colocation~~(intercity) ~~space,~~in ~~power~~point-to-point and ~~interconnection~~multi-point ~~offerings~~configurations. inUnlike ~~North~~data ~~America~~movement ~~and~~over ~~Western~~a ~~Europe. Solutions~~dedicated ~~range~~Wavelength innetwork, ~~size~~information ~~from~~flow ~~single~~over ~~cabinet~~Ethernet ~~solutions~~is totransferred ~~1MW+~~in ~~data~~a ~~center infrastructure~~packet ~~environments~~or frame across the network. ~~Our~~The frame enables the data ~~centers~~to ~~also~~navigate ~~support~~across a ~~large~~shared ~~component~~infrastructure ofin ~~networking~~order ~~components~~to ~~for~~reach the ~~purpose~~customer ofrequired ~~aggregating~~destination. ~~and~~Access ~~accommodating~~capacity ~~customers’~~is ~~data~~provided in speeds ranging from 10Mb to 10G. Customers include carriers, ~~voice~~financial services companies, ~~Internet~~healthcare, government institutions, education institutions and ~~video~~other ~~traffic~~enterprises. ~~The~~Contract ~~contract~~ terms in ~~this~~our ~~segment~~Ethernet ~~tend~~offerings totypically range ~~from~~between ~~two~~one toand five years for a fixed recurring monthly fee and in some cases an additional upfront, non-recurring fee.

~~Allstream~~· Zayo IP Transit Offerings. ~~The~~ ~~Allstream~~Through ~~segment~~our ~~provides~~IP ~~Cloud~~Transit ~~VoIP~~SPG, ~~and~~we ~~Data~~provide ~~Solutions~~access to lit bandwidth infrastructure to our customers by deploying Internet Protocol technology. ~~This~~IP ~~includes~~technology apermits ~~full~~the ~~range~~flow of ~~local~~data ~~voice~~across ~~offerings~~multiple ~~allowing~~circuits ~~business~~over ~~customers~~a toshared ~~complete~~infrastructure ~~telephone~~from ~~calls~~the incustomer ~~their~~source ~~local~~to ~~exchange,~~the ascustomer ~~well~~required asdestination. ~~make~~Information ~~long~~leaving ~~distance,~~the ~~toll-free~~source is divided into multiple packets and ~~related~~each ~~calls.~~packet ~~Unified~~traverses ~~Communications~~the isnetwork utilizing the ~~integration~~most ofefficient ~~real-time~~path ~~communication~~and ~~services~~means ~~such~~available, as ~~telephony~~determined ~~(including~~by ~~Cloud-based~~a network of IP ~~telephony)~~routers. Packets of information may utilize different physical circuits or paths in order to reach the destination, ~~instant~~at ~~messaging~~which ~~and~~point ~~video~~the ~~conferencing~~packets ~~with~~are ~~non-real-time~~reassembled to form the complete communication. ~~services,~~The ~~such~~offerings asare ~~integrated~~generally ~~voicemail~~used ~~and~~to ~~e-mail~~exchange communication on or access the public internet. ~~Allstream~~ ~~also~~Access ~~provides~~capacity ~~customers~~is ~~with comprehensive~~provided at speeds ranging from 10Mb to 100G on a single customer port interface. Customers include regional and international telecommunications ~~services~~and ~~including~~cable ~~Ethernet~~carriers, ISPs, enterprises, educational institutions and content companies. The contract terms for IP offerings typically range between one and three years for a fixed recurring monthly fee and in some cases a usage-based and/~~MPLS~~or ~~VPN~~an ~~Solutions~~additional upfront, non-recurring fee. Pricing is generally a function of bandwidth capacity and the access required to accommodate traffic from the customer location to a public internet exchange.

~~Other. The~~· ~~Other~~Wide ~~segment~~Area isNetworks ~~primarily comprised of Zayo Professional Services~~ (“~~ZPS~~WAN”). ~~ZPS~~Our WAN SPG provides ~~network~~access ~~and~~to ~~technical~~lit ~~resources~~bandwidth infrastructure to customers ~~who~~by ~~wish~~deploying internet Protocol and managed Wide Area Network technology. These offerings are generally used to ~~leverage~~exchange ~~our~~or ~~expertise~~access intraffic ~~designing~~on the public internet and include Dedicated Internet Access, ~~acquiring~~IP Virtual Private Networks (“VPN”) and ~~maintaining~~Distributed ~~network~~Denial ~~sections~~of Service mitigation. The contract terms typically ~~run~~range ~~for~~between one ~~year~~and five years for a fixed recurring monthly fee and in ~~the~~some ~~case~~cases ofan ~~network~~additional ~~and~~upfront, onnon-recurring anfee. ~~hourly~~Pricing ~~basis~~is ~~for~~generally ~~technical~~a ~~resources~~function ~~(usage~~of ~~revenue).~~bandwidth ~~ZPS~~capacity ~~also~~and ~~generates~~the ~~revenue~~access ~~via~~required ~~telecommunication~~to ~~equipment~~accommodate ~~sales~~traffic from customer location to an internet gateway.

~~During~~· ~~Fiscal~~Media 2018, with the continued increase in our scope and scale, our chief operating decision maker ("CODM"), who is our Chief Executive Officer, implemented certain organizational changes to the management and operation of the business that directly impact how the CODM makes resource allocation decisions and manages the CompanyNetworks. ~~The~~Zayo’s ~~changes~~Media inNetworks ~~structure~~solutions ~~had~~deliver ~~the~~dedicated ~~impact of creating a new SPG~~ and ~~re-aligning~~occasional anuse ~~existing~~video ~~SPG~~connectivity ~~among~~for ~~our~~broadcast, ~~reportable segments~~production, asvideo ~~described below. The changes in structure also resulted in changes in how we measure the relative burden each segment bears of indirect and corporate related costs~~distribution, ~~and~~sports ~~in adjustments to intercompany pricing which more closely align to third party pricing on the products~~ and ~~offerings~~live ~~which~~event ~~are~~providers. ~~exchanged~~Our ~~between~~core ~~our SPGs.~~ video

Effective April 1, 2018 the Ethernet SPG, previously reported under our Enterprise Networks segment, is now reported under our Transport segment. Additionally, certain activities and operations of our legacy Waves, WAN, and Ethernet SPGs were combined to form a new SPG, CloudLink. These changes to our existing reportable segments (the “Realignment”) have been recast for all prior period financial and operating metrics presented in this Annual Report for comparability, such as;

· Certain activities and operations of our legacy Waves, WAN, and Ethernet SPGs, after giving effect to the Realignment, are now reported in a new SPG, CloudLink, under the Enterprise Networks segment; and

· Table ~~Our IP and Sonet SPGs, and the remaining activities and operations~~ of ~~our legacy Waves, and Ethernet SPGs (the activities and operations not related to CloudLink), after giving effect to the Realignment, are now reported under the Transport segment.~~Contents

network across the U.S. and UK provides direct access to a single solutions provider, a high degree of control, and connectivity to important destinations, gateways, on and off ramps and major venues.

CloudLink: Connect to the cloud (“CloudLink”). CloudLink provides users private, secure, dedicated network connectivity to various cloud providers utilizing our fiber communications infrastructure. CloudLink is available across the entire product spectrum: Dark Fiber, Wavelengths, Ethernet, IP and is optimized to leverage our software defined networking platform in order to expedite the provisioning process and enhance service management.

Zayo Colocation (“zColo”). The zColo segment provides data center and cloud infrastructure solutions to a broad range of enterprise, carrier, cloud and content customers. Our offerings within this segment include the provision of colocation space, power and interconnection offerings in North America and Western Europe. Solutions range in size from single cabinet solutions to 1MW+ data center infrastructure environments. Our data centers also support a large component of networking components for the purpose of aggregating and accommodating customers’ data, voice, internet and video traffic. The contract terms in this segment tend to range from two to five years. Our Cloud and Cybersecurity SPG is included in the zColo segment. The Cloud and Cybersecurity SPG combines private cloud, public cloud and managed offerings in order to provide its customers secure infrastructure as a service (IaaS), which enables on-demand scaling and virtual computing in hybrid environments.

Allstream. The Allstream segment provides Cloud VoIP and Data Solutions. This includes a full range of local voice offerings allowing business customers to complete telephone calls in their local exchange, as well as make long distance, toll-free and related calls. Included in Allstream’s product offerings are Unified Communications services which is the integration of real-time communication services such as telephony (including Cloud-based IP telephony), instant messaging and video conferencing with non-real-time communication services, such as integrated voicemail and email. Allstream also provides customers with comprehensive telecommunications services including Ethernet and IP/MPLS VPN Solutions.

Other. The Other segment is primarily comprised of Zayo Professional Services (“ZPS”). ZPS provides network and technical resources to customers who wish to leverage our expertise in designing, acquiring and maintaining network sections. The contract terms typically run for one year for a fixed recurring monthly fee in the case of network and on an hourly basis for technical resources (usage revenue). ZPS also generates revenue via telecommunication equipment sales.

For a discussion of certain geographic information regarding our revenue from external customers and long-lived assets and a discussion of financial information and operating segments, please see the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Our Operations

Network Management and Operations

Our primary network operating center (“NOC”) is located in Tulsa, Oklahoma and provides 24 hours per day, 365 days per year monitoring and network surveillance. As part of our business continuity plan, our primary NOC is backed up by several regional operations centers located in Washington, D.C.;, Allentown, Pennsylvania; and Butte, Montana. We continually monitor for, and proactively respond to, any events that negatively impact or interrupt the network access and services ~~that~~ we provide to our customers. Our NOC also responds to customer network inquiries via standard customer trouble ticket procedures. Our NOC coordinates and notifies our customers of maintenance activities and is the organization responsible for ensuring ~~that~~ we meet our access and service level agreements.

Information Technology

Our Information Technology systems have been designed and built specifically for the needs of a focused bandwidth infrastructure provider primarily leveraging the salesforce.com platform. This platform was adopted at our inception and has been enhanced over time to integrate all of our acquired companies and increase functionality in every area.

Our current systems’ capability is mature, and we view our application functionality as a competitive advantage in our industry. Our system is differentiated from the typical telecom industry technology solution consisting of separate and loosely integrated sales force automation, customer relationship management, mapping, inventory, financial, provisioning and other systems with multiple, sometimes conflicting databases.10

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Our current systems’ capability is mature and we view our application functionality as a competitive advantage in our industry. Our system is differentiated from the typical telecom industry technology solution consisting of separate and loosely integrated sales force automation, customer relationship management, mapping, inventory, financial, provisioning and other systems with multiple, sometimes conflicting databases.

We have also developed within our salesforce.com platform a proprietary capability we call Tranzact. Tranzact is a set of tools and processes designed to enhance the speed and simplicity of procuring bandwidth infrastructure solutions. We believe Tranzact will further increase our competitive advantage in delivering bandwidth infrastructure solutions.

We have a fully implemented business continuity and disaster recovery plan that provides near real-time data access from physically diverse data centers (Dallas and Washington, D.C.). We further protect our data with off-site data storage practices.

Our Sales and Marketing Organization

Our business primarily engages in direct sales through our sales organization, consisting of ~~303~~312 sales representatives as of June 30, ~~2018~~2019. Each of these sales representatives is part of an enterprise or carrier focused sales team led by a sales director whose team is responsible for meeting a set of quarterly net install booking targets. The sales organization sells access and services across all our SPGs. The sales representatives are directly supported by sales management, engineering, solutions engineering and marketing staff.

The sales organization is organized into five “Mega-Vertical” sectors; Finance & Professional Services, Media Content & Commerce, Public Sector Health & Utilities, Cloud Software & Infrastructure and Carrier. Each of these channels maintains dedicated sales and solutions engineering support resources. We derive revenues from these sectors using a mix of Direct Sales, Inside Sales and Indirect Channels Partners. These sales channels operate across the US, Canada &and Europe, with occasional customer visits to Asia &and Central / South America.

Our direct sales force is compensated through a unique system relative to typical industry practices. Sales staff are compensated through salary and incentive compensation, which is comprised of cash and equity. Incentive compensation is achieved based upon the net present value (“NPV”) of the contracted access and services sold, the incremental revenue related to contracted access and services sold and the effective management of churn related to the accounts they manage. We believe this compensation system best aligns the interests of our salespeople, management and our stockholders. It also is an example of the financial philosophy and culture we have developed since our inception.

10Separate from the sales groups, we have a Strategic Marketing group that is responsible for our digital programs and presence, field marketing and vertical strategy. Vertical strategy leads are dedicated to supporting each “Mega Vertical” and focus on understanding key trends, marketplace dynamics and articulating back to the business how we can best serve our customers communications infrastructure needs.

incremental revenue related to contracted access and services sold and the effective management of churn related to the accounts they manage. We believe that this compensation system best aligns the interests of our salespeople, management and our stockholders. It also is an example of the financial philosophy and culture that we have developed since our inception.

Separate from the sales groups, we have a Strategic Marketing group that is responsible for our digital programs and presence, field marketing and vertical strategy. Vertical strategy leads are dedicated to supporting each "Mega Vertical" and focus on understanding key trends, marketplace dynamics and articulating back to the business how we can best serve our customers communications infrastructure needs.

Our Customers

Our customers generally have a significant and growing need for the bandwidth infrastructure solutions that we offer. Our customer base consists of wireless service providers, carriers and other communication service providers, media and content companies (including cable and satellite video providers), and other bandwidth-intensive businesses in the education, healthcare, financial services, governmental and technology sectors. Our largest single customer, based on recurring revenue, accounted for approximately 8% of our revenue during the year ended June 30, ~~2018,~~2019 and total revenues from our top ten customers accounted for approximately 29% of our revenue during the same period. These customers are multinational organizations with substantial liquidity and access to capital, and whose bandwidth needs are mission-critical to their own businesses and strategies. While these large customers generally have a finite set of master contracts with us, they procure a large volume of individual access rights and services from us, each of which has its own access and service level agreement and term.

The majority of our customers sign Master Customer Agreements (“MCAs”) that contain standard terms and conditions including access and service level agreements, required response intervals, indemnification, default, force majeure, assignment and notification, limitation of liability, confidentiality and other key terms and conditions. Most MCAs also contain appendices that contain information that is specific to each of the access rights and services that we provide. The MCAs either have exhibits that contain customer orders or, alternatively, the terms for access and services ordered are set forth in a separate customer order. Each customer order sets forth the minimum contract duration, the monthly recurring charge, and the non-recurring charges.11

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Our Business Strategy

In pursuit of our mission, our Business Strategy includes the following key elements:

Focus on Bandwidth Infrastructure. We expect ~~that~~ bandwidth needs for mobile applications, cloud-based computing, and machine-to-machine connectivity will continue to grow with the continued adoption of bandwidth-intensive devices, as well as the escalating demand for ~~Internet~~internet-delivered video. We focus on providing high-bandwidth infrastructure solutions, which we believe are essential in the consumption and delivery of bandwidth-intensive applications and services by our customers, enterprise customers and communications service providers. We believe our disciplined approach to providing these critical access rights and to our targeted customers enables us to offer a high level of customer satisfaction, while at the same time being responsive to changes in the marketplace.

Target Large Consumers of Bandwidth. Our asset base and product suite are geared for large users of bandwidth with high connectivity requirements. The majority of our customers require more than 10G of bandwidth; many of our customers require multiple terabytes of bandwidth. Our revenue base is generally characterized by customers with a high bandwidth spend, consisting of a large number of individual access rights and services and increasing bandwidth infrastructure access and service demand. Tailoring our operations around these offerings, services and customers allows us to operate efficiently and meet these large consumers’ requirements for mission-critical infrastructure.

· Leverage Our Extensive Asset Base by Selling Offerings on Our Network. Targeting our sales efforts to solutions that utilize our existing fiber network and data centers enables us to limit our reliance on third-party providers. We believe this in turn produces high incremental margins, which helps us expand consolidated margins, achieve attractive returns on the capital we invest and realize significant levered free cash flow. We also believe this enables us to provide our customers with a superior level of customer satisfaction due to the relative ease in responding to customer inquiries over our one contiguous fiber network. Our existing network enables us to offer additional bandwidth access to our existing customers as their capacity needs grow.

consolidated margins, achieve attractive returns on the capital we invest, and realize significant levered free cash flow. We also believe this enables us to provide our customers with a superior level of customer satisfaction due to the relative ease in responding to customer inquiries over our one contiguous fiber network. Our existing network enables us to offer additional bandwidth access to our existing customers as their capacity needs grow.

Continue to Expand Our Infrastructure Assets. Our ability to rapidly add network capacity to meet the growing requirements of our customers is an important component of our value proposition. We will continue to seek opportunities to expand our network reach where supporting customer contracts provide an attractive return on our investment. The expansion of our network footprint also provides the ancillary benefit of bringing other potential customer locations within reach. We design our network with additional capacity so that increasing bandwidth capacity can be deployed economically and efficiently. Capital expenditures are primarily success-based.

· Leverage Our Existing Relationships and Assets to Innovate. We believe we possess a unique set of assets and management systems designed to deliver customer solutions tailored to specific trends we observe in the marketplace. Our high-energy, entrepreneurial culture fosters employee innovation on an ongoing basis in response to specific customer requirements. Furthermore, we plan to continue to commit capital to new lines of infrastructure businesses that leverage our existing assets. For example, we are expanding into small cell infrastructure solutions provided to wireless services providers. These solutions entail us providing dark fiber and related offerings from a small cell location back to a mobile switching center. We provide access for the fiber-based transport over our existing and/or newly constructed fiber ~~network sections. In addition, we provide network-neutral space and power for wireless service providers to co-locate their small cell antennas and ancillary equipment.~~

· Intelligently Expand Through Acquisitions. We have made 45 acquisitions to date for an aggregate purchase price, net of cash, of $6.7 billion. We believe we have consistently demonstrated an ability to acquire and effectively integrate companies, realize cost synergies, and organically grow revenue post-acquisition. Acquisitions have the ability to increase the scale of our operations, which in turn affords us the ability to expand our operating leverage, extend our network reach, and broaden our customer base. We believe our ability to realize significant cost synergies through acquisitions provides us with a competitive advantage in future consolidation opportunities within our industry. We will continue to evaluate potential acquisition opportunities and are regularly involved in acquisition discussions. We will evaluate these opportunities based on a number of criteria, including expected return on capital, the quality of the infrastructure assets, the fit within our existing businesses, the opportunity to expand our network, and the opportunity to create value through the realization of cost synergies. 12

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network sections. In addition, we provide network-neutral space and power for wireless service providers to co-locate their small cell antennas and ancillary equipment.

Intelligently Expand Through Acquisitions. We have made 45 acquisitions to date for an aggregate purchase price, net of cash, of $6.7 billion. We believe we have consistently demonstrated an ability to acquire and effectively integrate companies, realize cost synergies and organically grow revenue post-acquisition. Acquisitions have the ability to increase the scale of our operations, which in turn affords us the ability to expand our operating leverage, extend our network reach and broaden our customer base. We believe our ability to realize significant cost synergies through acquisitions provides us with a competitive advantage in future consolidation opportunities within our industry. We will continue to evaluate potential acquisition opportunities and are regularly involved in acquisition discussions. We will evaluate these opportunities based on a number of criteria, including expected return on capital, the quality of the infrastructure assets, the fit within our existing businesses, the opportunity to expand our network and the opportunity to create value through the realization of cost synergies.

Our Competitive Strengths

We believe the following are among our core competitive strengths and enable us to differentiate ourselves in the markets where we operate:

Unique Bandwidth Infrastructure Assets. We believe replicating our extensive metro, regional, and long-haul fiber assets would be difficult given the significant capital, time, permitting, and expertise required. Our fiber spans ~~128~~133,~~910~~000 route miles and ~~11,867,276~~13.0 million fiber miles (representing an average of ~~403~~ 400 geographic markets in the United States, Canada and Europe), and connects to approximately 35,000 buildings. The majority of the markets that we serve and buildings to which we connect have few other networks capable of providing similar high-bandwidth infrastructure and connectivity solutions,. ~~which~~This wecapability ~~believe~~ provides us with a sustainable competitive advantage in these markets, and positions us as a mission-critical infrastructure supplier to the largest users of bandwidth. We believe ~~that~~ the vast majority of customers using our network, including our lit bandwidth, fiber-to-the-tower, and dark fiber customers, choose our offerings due to the quality and reach of our network, and the ability our network gives us to innovate and scale with their growing bandwidth needs. Additionally, we operate 5051 data center facilities, which are located in ~~eleven~~some of the most important carrier hotels in the U.S., Canada and France. This collective presence, combined with our high network density, creates a network effect that helps us retain existing customers and attract new customers. From July 1, 2016 through June 30, 2019, exclusive of acquisitions, we have invested approximately $2.4 billion of capital in our network, including expansion and maintenance expenditures.

12Strong Revenue Growth, Visibility, and Durability. We have consistently grown our organic revenue, as gross installed revenue has exceeded churn processed in every quarter since we began reporting in March 2010. We believe our exposure to the enduring trend of increasing bandwidth consumption combined with our focused execution have allowed us to achieve this consistent growth. We typically provide access to our bandwidth infrastructure for a fixed monthly recurring fee under multi-year contracts. Our contract terms range from one year to 20 or more years. Our customers use our bandwidth infrastructure to support their mission-critical networks and applications. The switching costs and effort required to replace our solutions can be high, particularly for the solutions within our Zayo Networks segment, given the criticality of our solutions and the potential cost and disruption. We believe increasing bandwidth needs combined with the mission-critical nature of our infrastructure-based solutions provided under multi-year contracts create strong revenue growth, visibility and durability, which support our decision-making abilities and financial stability. We believe our industry’s high barriers to entry, our economies of scale and scope and customer switching costs contribute to our strong financial performance.

~~U.S.,~~ Customer ~~Canada~~Service and ~~France.~~Ability ~~This~~to ~~collective~~Innovate ~~presence,~~for ~~combined~~Our ~~with~~Customers. Our ~~our~~sales ~~high~~and ~~network~~product ~~density,~~professionals ~~creates~~work aclosely ~~network~~with ~~effect~~potential ~~that~~and ~~helps us retain~~ existing customers ~~and~~to ~~attract~~design ~~new~~tailored ~~customers.~~high-bandwidth ~~From~~connectivity ~~July 1,~~solutions ~~2015 through June 30, 2018, exclusive of acquisitions, we have invested approximately $2.3 billion of capital in our network, including expansion and maintenance expenditures.~~

Strong Revenue Growth, Visibility, and Durability. We have consistently grown our organic revenue, as gross installed revenue has exceeded churn processed in every quarter since we began reporting in March 2010. We believe our exposure to the enduring trend of increasing bandwidth consumption, combined with our focused execution, have allowed us to achieve this consistent growth. We typically provide access to our bandwidth infrastructure for a fixed monthly recurring fee under multi-year contracts. Our contract terms range from one year to twenty years. Our customers use our bandwidth infrastructure to support their mission-critical networks and applications. The switching costs and effort required to replace our solutions can be high, particularly for the solutions within our Fiber Solutions and Transport segments, given the criticality of our solutions and the potential cost and disruption. We believe that increasing bandwidth needs combined with the mission-critical nature of our solutions provided under multi-year contracts create strong revenue growth, visibility, and durability, which support our decision-making abilities and financial stability. We believe that our industry’s high barriers to entry, our economies of scale and scope and customer switching costs contribute to our strong financial performance.

Customer Service and Ability to Innovate for Our Customers. Our sales and product professionals work closely with potential and existing customers to design tailored high-bandwidth connectivity solutions across our SPGs to meet specific, varying, and evolving customer needs. We are focused on delivering high-quality, reliable access to our customers. We achieve this by leveraging our contiguous network to expand with our customers as they seek to build scale, coverage, and/or performance. Additionally, our focus on targeting the largest and most sophisticated users of bandwidth keeps our sales, engineering, and customer satisfaction organizations attuned to the latest technologies, architectures, and solutions that our customers may seek to implement. We believe our willingness to innovate for our customers and our dedication to customer satisfaction help establish our position as an important infrastructure supplier and allow us to attract new customers and businesses, sell an increasing amount of access rights and services to our existing customers, and reduce customer turnover.

Strategic, Operational and Financial Transparency Excellence. As part of our strategy to attract and retain the largest users of bandwidth infrastructure, we have completed and integrated 45 acquisitions to date. Our acquired assets have been combined to create a contiguous network with the ability to provision and maintain local, regional, national, or international high-bandwidth connections across our SPGs. Our entire network, sales and churn activity, installation pipeline, NPV commission plans, and all customer contracts are managed through an integrated operating and reporting platform, which gives management strong visibility into the business and improves our ability to drive return-maximizing decisions throughout the organization. Our focus on operational and financial transparency not only allows us to be very nimble in attacking various market opportunities, but also provides us the ability to deliver disclosure that ZGH stockholders and other stakeholders can use to accurately judge management’s performance from a capital allocation, financial, and operational perspective.

Financially Focused and Entrepreneurial Culture. Virtually all operational and financial decisions we make are driven by the standard of maximizing the value of our enterprise. Our sales commission plans use an NPV-based approach with the goal of encouraging the proper behavior within our sales force, and our SPGs are held to group level equity internal rate of return (“IRR”) targets set by management. To align individual behaviors with ZGH stockholder objectives, equity compensation is used throughout the Company, and our compensation plans include a larger equity component than we believe is standard in our industry. In addition to striving for industry-leading operational and growth outcomes to drive value creation, we are prepared to use debt capacity to enhance ZGH stockholders’ returns, but not at the expense of other stakeholders and only at levels we believe are in the long-term interests of the

~~Company,~~ Table ~~our~~of ~~customers, and ZGH stockholders. Finally, our owners’ manual, mission, and investor transparency all serve to enhance cultural alignment across the Company and ZGH stockholders.~~Contents

~~Experienced~~across ~~Management~~our ~~with~~SPGs ~~Unique~~to ~~Leadership~~meet ~~Approach. We~~specific, ~~have~~varying ~~assembled~~and anevolving ~~experienced~~customer ~~management~~needs. ~~team~~We ~~that~~are wefocused ~~believe~~on isdelivering ~~well~~high-~~qualified~~quality, toreliable ~~lead~~access to our ~~Company~~customers. ~~and~~We ~~execute~~achieve this by leveraging our ~~strategy.~~contiguous ~~Our~~network ~~management~~to ~~team~~expand ~~has~~with ~~substantial~~our ~~industry~~customers ~~experience~~as inthey ~~managing~~seek ~~and~~to ~~designing~~build ~~fiber~~scale, ~~network~~coverage and/or ~~network-neutral~~performance. ~~colocation~~Additionally, ~~and~~our ~~interconnection~~focus ~~facilities~~on ~~and~~targeting inthe ~~selling~~largest and ~~marketing~~most sophisticated users of bandwidth ~~infrastructure.~~keeps Inour ~~addition~~sales, ~~our~~engineering ~~management~~and ~~team~~customer ~~has~~satisfaction ~~significant~~organizations ~~experience~~attuned into ~~acquiring~~the latest technologies, architectures and ~~integrating~~solutions ~~bandwidth~~that ~~infrastructure~~our ~~and~~customers ~~assets~~may seek to implement. ~~Our~~We ~~management~~believe ~~team~~our iswillingness ato ~~cohesive~~innovate ~~unit~~for ~~with~~our acustomers ~~common~~and ~~history~~our ~~that~~dedication into ~~many~~customer ~~cases~~satisfaction ~~precedes~~help ~~the~~establish ~~Company’s~~our ~~founding.~~position Weas ~~also~~an ~~believe~~important ~~that~~infrastructure ~~our~~supplier ~~approach~~and allow us to ~~leadership~~attract -new ~~operationally,~~customers ~~financially~~and businesses, ~~culturally~~sell -an isincreasing ~~unique~~amount inof ~~our~~access ~~industry~~rights and ~~differentiates~~services usto ~~from~~ our ~~competitors~~existing customers and reduce customer turnover.

Strategic, Operational and Financial Transparency Excellence. As part of our strategy to attract and retain the largest users of bandwidth infrastructure, we have completed and integrated 45 acquisitions to date. Our acquired assets have been combined to create a contiguous network with the ability to provision and maintain local, regional, national, or international high-bandwidth connections across our SPGs. Our entire network, sales and churn activity, installation pipeline, NPV commission plans and all customer contracts are managed through an integrated operating and reporting platform, which gives management strong visibility into the business and improves our ability to drive return-maximizing decisions throughout the organization. Our focus on operational and financial transparency not only allows us to be very nimble in attacking various market opportunities, but also provides us the ability to deliver disclosure that ZGH stockholders and other stakeholders can use to accurately judge management’s performance from a capital allocation, financial and operational perspective.

Financially Focused and Entrepreneurial Culture. Virtually all operational and financial decisions we make are driven by the standard of maximizing the value of our enterprise. Our sales commission plans incorporate an NPV-based approach alongside measures of absolute sales with the goal of encouraging the proper behavior within our sales force and our SPGs are held to group level equity internal rate of return (“IRR”) targets set by management. To align individual behaviors with stockholder objectives, equity compensation is used throughout the Company and our compensation plans include a larger equity component than we believe is standard in our industry. In addition to striving for industry-leading operational and growth outcomes to drive value creation, we are prepared to use debt capacity to enhance stockholder returns, but not at the expense of other stakeholders and only at levels we believe are in the long-term interests of the Company, our customers and our stockholders. Finally, our owners’ manual, mission and investor transparency all serve to enhance cultural alignment across the Company and our stockholders.

Experienced Management with Unique Leadership Approach. We have assembled an experienced management team we believe is well-qualified to lead our Company and execute our strategy. Our management team has substantial industry experience in managing and designing fiber network and network-neutral colocation and interconnection facilities and in selling and marketing bandwidth infrastructure. In addition, our management team has significant experience in acquiring and integrating bandwidth infrastructure and assets. Our management team is a cohesive unit with a common history that in many cases precedes the Company’s founding. We also believe our approach to leadership - operationally, financially, culturally - is unique in our industry and differentiates us from our competitors.

Our Competition

~~Fiber~~Zayo ~~Solutions~~Networks

Given the requirement to own the underlying bandwidth infrastructure assets ~~(e.g., fiber networks)~~ in order to provide ~~dark~~infrastructure ~~fiber~~ solutions, the competitive environment tends to be less intensive for these products and the barriers to entry are high. The degree of competition and parties in competition vary by physical infrastructure and by individual market and ~~fiber~~line ~~route~~of business: Fiber, Transport, and Layer 2/3.

Competition in dark fiber solutions tends to be less intense than for lit bandwidth infrastructure solutions primarily because a provider must predominantly own and operate a high count fiber network covering a substantial portion of the geographical demand in order to compete for a customer’s business. The uniqueness, density and depth (i.e., high fiber count) of our metro, regional, and long-haul fiber network sections is therefore a key differentiating factor. In addition, given that providing dark fiber solutions often includes some degree of network expansion, dark fiber providers must also have internal project management expertise and access to capital to execute on the expansion aspect of the business. Due to the custom nature of most dark fiber opportunities, many larger lit bandwidth infrastructure providers do not actively market dark fiber as a product, even if they own fiber networks in the desired geographies. As a result, competition is often more limited in the dark fiber market and highly dependent on the local (even sub-market) supply and demand environment. Given this dynamic and the generally longer contractual term of dark fiber solutions, dark fiber pricing tends to be more inflationary in nature.

Specific dark fiber competitors vary based on geography, and often a particular solution can be provided by only one to three providers that have sufficient fiber in place in the desired area or route. Historically, these competitors have fallen into two categories: first, privately owned regional bandwidth infrastructure providers with a similar degree of focus (e.g., Fiber Light) and second, single market dark fiber providers with market and fiber construction expertise (e.g., DQE Communications and Edison Carrier Solutions). More recently other multi-geography competitors have emerged due to acquisitions in the industry (e.g., Crown Castle and Uniti).

Competition in mobile infrastructure solutions tends to mirror dark fiber solutions because of the need to own and operate an expansive and deep metro fiber network in order to compete. Given the frequent need to expand upon an existing fiber footprint in order to reach additional cell towers and small cell locations, project management expertise and access to capital is also a key competitive factor. One additional criterion is that wireless carriers prefer to work with a more finite group of mobile infrastructure providers on either a metro or regional geographic basis. As a result, the competitive group tends to match that of dark fiber solutions, with the addition of two competitive groups: first, local cable providers and ILECs who will sometimes break from their retail and small enterprise core focus to compete for FTT business, often as a result of legacy copper or coaxial-based cable provided to these towers; second, microwave backhaul providers who focus on more remote or rural towers that have lesser bandwidth needs that they can serve with less capital-intensive (and less bandwidth-capable) microwave solutions at a lower total cost. Examples of these additional mobile infrastructure competitors are divisions of Comcast, CenturyLink, Crown Castle, Conterra and Mobilitie.

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Fiber

Competition in dark fiber solutions tends to be less intense than for lit bandwidth infrastructure solutions primarily because a provider must predominantly own and operate a high count fiber network covering a substantial portion of the geographical demand in order to compete for a customer’s business. The uniqueness, density and depth (i.e., high fiber count) of our metro, regional and long-haul fiber network sections is therefore a key differentiating factor. In addition, given that providing dark fiber solutions often includes some degree of network expansion, dark fiber providers must also have internal project management expertise and access to capital to execute on the expansion aspect of the business. Due to the custom nature of most dark fiber opportunities, many larger lit bandwidth infrastructure providers do not actively market dark fiber as a product, even if they own fiber networks in the desired geographies. As a result, competition is often more limited in the dark fiber market and highly dependent on the local (even sub-market) supply and demand environment. Given this dynamic and the generally longer contractual term of dark fiber solutions, dark fiber pricing tends to be more inflationary in nature.

Specific dark fiber competitors vary based on geography and often a particular solution can be provided by only one to three providers that have sufficient fiber in place in the desired area or route. Historically, these competitors have fallen into two categories: first, privately owned regional bandwidth infrastructure providers with a similar degree of focus (e.g., Fiber Light) and second, single market dark fiber providers with market and fiber construction expertise (e.g., DQE Communications and Edison Carrier Solutions). More recently, other multi-geography competitors have emerged due to acquisitions in the industry (e.g., Crown Castle and Uniti).

Transport

We believe ~~that~~ some of the key factors that influence our customers’ selection of us as their Transport solution provider are our ability to provide on-net solutions that utilize our fiber network on an end-to-end basis, the availability of high capacity offerings (up to 100G or higher as optical technology advances), the uniqueness, quantity and latency of available intercity and metro routes, the peering capacity and reach of our IP network, the price of the offerings available, and the ongoing level of network availability provided.

Generally, price competition for our transport solutions varies depending on the location of the customer’s selected endpoints and the uniqueness of network assets. We face direct price competition when there are other fiber-based providers who have intercity networks that leverage similar fiber routes with similar end to end route latency. Often a particular solution can be provided by only one to three providers that have comparable network reach in place. Typically, these competitors are publicly traded communications service providers that also provide bandwidth infrastructure such as Windstream, ~~TeliaSonera~~Telia Company, or Cogent Communications, or in certain geographies are privately-held companies such as EU Networks. We may also compete with large, well-capitalized ILECs that ~~also~~ provide bandwidth infrastructure, such as AT&T Inc. and CenturyLink, Inc., who have a well established and global IP offering. We believe ~~that~~ price competition will continue where our competitors have comparable existing fiber and optical networks. Some of our competitors have long-standing customer relationships, very large enterprise values, and significant access to capital.

~~Enterprise~~Layer ~~Networks~~2/3

~~Enterprise~~Layer ~~Networks~~2/3 isfocuses ~~focused~~ on offering network connectivity, ~~cloud and cyber security solutions~~ to large multi-site enterprises. The competition is intense and varied for the enterprise IT business, and the specific competitors are based on each of the offering categories and geographies. Our key challenges range from aggressive pricing to an evolving competitive field with the completion of each new merger or acquisition.

From a network connectivity perspective, our Layer 2/3 competitors range from well- capitalized ILECs that also provide bandwidth infrastructure, such as AT&T Inc., CenturyLink, Inc., and Verizon Communications Inc., or publicly traded communications service providers that also provide bandwidth infrastructure, such as Cogent and Windstream. In some geographies, we also compete with ~~Lightower~~Crown Castle, GTT and Comcast. For cloud services our competition also varies depending on the type of service. For example, we compete with Dell EMC, HPE and NetApp in the Private Cloud market but we compete with AWS and Rackspace and smaller cloud service providers for Object-Based Storage business. In the area of cybersecurity, the competitive field is vast and specialized and will vary depending on the specific security need ranging from infrastructure security, endpoint security, application security, managed security to threat analysis and protection, Internet of Things and data security to name a few.

Many of our competitors in the ~~enterprise~~Layer 2/3 market are well established with long-standing relationships, and we must compete in a variety of aspects as ~~enterprise~~Layer 2/3 IT customers are tech savvy and well informed. As an example, purchasers of network solutions generally base their decisions on the best value, which includes price, route (diversity and latency), flexibility, and customer satisfaction responsiveness. Two of our key competitive challenges are brand recognition and product set awareness. However, we believe we are very competitive when we can communicate our capabilities that include our dense, global fiber network, our ability to implement complex and unique solutions and our focus on customer satisfaction at a price that meets the customer’s budget. With Enterprise Networks, we believe we can aggressively compete with the short list of single source global providers.

zColo

The market for our colocation and interconnection offerings is very competitive. We compete based on location, availability, quality of facility infrastructure, network carrier density, breadth of network connectivity options, type and quantity of customers in our data centers, and the overall geographic reach of our platform. We compete against both public colocation providers who have large enterprise values, and privately-held colocation providers who are well funded. Some of our competitors have long-standing customer relationships and significant access to capital, which may enable them to materially increase available data center space, and therefore lower overall market pricing for such solutions. A portion of our competitors operate at larger scale in the same markets as us; others compete cross regionally attracting a customer base that values and requires global reach and scale. We differentiate from our competitors by

~~providing~~ Table ~~our customers with on-net access to our robust fiber network and by allowing spend portability between our entire portfolio~~ of ~~communications infrastructure solutions as their needs change.~~Contents

~~These~~recognition ~~focused interconnection~~ and ~~colocation~~product ~~providers~~set ~~include: Equinix,~~awareness. ~~‎Coresite~~However, ~~Cologix, Flexential, Digital~~ ~~Realty~~we ~~Trust~~believe ~~Inc,~~we ~~and~~are ~~QTS~~very ~~Realty~~competitive ~~Trust~~when ~~Inc.~~we ~~These~~can ~~companies~~communicate ~~offer~~our ~~similar~~capabilities ~~solutions~~that ~~and~~include ~~operate~~our indense, ~~similar~~global ~~markets~~fiber tonetwork, ~~us. Our~~our ability to ~~compete~~implement iscomplex ~~based~~and onunique ~~the~~solutions ~~strategic~~and ~~location~~our offocus ~~our~~on ~~assets,~~customer satisfaction at a ~~highly~~price ~~complementary~~that ~~global~~meets ~~fiber~~the ~~network,~~customer’s anbudget. ~~aptitude~~With ~~for~~Layer ~~commercial~~2/3, ~~flexibility~~we inbelieve ~~contracts,~~we ~~and~~can aaggressively ~~competency~~compete inwith the ~~implementation~~short list of ~~colocation~~single ~~and~~source ~~interconnection~~global ~~offerings~~providers.

zColo

The market for our colocation, interconnection, cloud and cybersecurity offerings is very competitive. We compete based on location, availability, quality of facility infrastructure, network carrier density, breadth of network connectivity options, type and quantity of customers in our data centers and the overall geographic reach of our platform. We compete against both public colocation providers who have large enterprise values and privately-held colocation providers who are well funded. Some of our competitors have long-standing customer relationships and significant access to capital, which may enable them to materially increase available data center space and therefore lower overall market pricing for such solutions. A portion of our competitors operate at larger scale in the same markets as us; others compete cross regionally attracting a customer base that values and requires global reach and scale. We differentiate from our competitors by providing our customers with on-net access to our robust fiber network and by allowing spend portability between our entire portfolio of communications infrastructure solutions as their needs change.

These focused interconnection and colocation providers include Equinix, ‎Coresite, Cologix, Flexential, Digital Realty Trust and QTS Realty Trust. These companies offer similar solutions and operate in similar markets to us. Our ability to compete is based on the strategic location of our assets, a highly complementary global fiber network, an aptitude for commercial flexibility in contracts and a competency in the implementation of colocation and interconnection offerings.

For cloud services our competition also varies depending on the type of service. For example, we compete with Dell EMC, HPE and NetApp in the Private Cloud market but we compete with AWS, Rackspace and smaller cloud service providers for Object-Based Storage business. In the area of cybersecurity, the competitive field is vast and specialized and will vary depending on the specific security need ranging from infrastructure security, endpoint security, application security, managed security to threat analysis and protection, Internet of Things and data security.

Allstream

Allstream serves business customers throughout the United States and Canada. Its communications technologies and services include a range of scalable IP, cloud, voice and data solutions that help organizations communicate and collaborate more efficiently and profitably. Our largest competitors in Canada are the incumbent telecommunications companies Bell, TELUS and Rogers. Our largest U.S. competitors are ~~Masergy~~CenturyLink, ~~Comcast~~Verizon, ~~WAVE~~Comcast, ~~CenturyLink~~Cox and ~~Verizon~~Ring Central. We also compete with other telecommunications companies, such as established cable and hydro companies, and smaller companies or re-sellers that have a more limited network.

Regulatory Matters

Our operations require that certain of our subsidiaries hold licenses, certificates, and/or other regulatory authorizations from the Federal Communications Commission (“FCC”), state Public Utilities Commissions (“PUCs”), European and Canadian telecommunications regulators (such as, Ofcom and ARCEP in Europe and CRTC in Canada) and other foreign regulators, all of which we have obtained and maintain in the normal course of our business. The FCC, State PUCs and foreign regulators generally have the power to modify or terminate a carrier’s authority to provide regulated wireline offerings for failure to comply with certain federal, state and foreign laws and regulations, and may impose fines or other penalties for violations of the same. The State PUCs typically have similar powers with respect to the intrastate offerings that we provide under their jurisdiction. In addition, we are required to submit periodic reports to the FCC, State PUCs, and foreign regulators documenting interstate, intrastate and foreign revenue, among other data, for fee assessments and general regulatory governance, and in some states are required to file tariffs of our rates, terms, and conditions of access and service. In order to engage in certain transactions in these jurisdictions, including changes of control, the encumbrance of certain assets, the issuance of securities, the incurrence of indebtedness, the guarantee of indebtedness of other entities, including subsidiaries of ours, and the transfer of our assets, we are required to provide notice and/or obtain prior approval from certain of these governmental agencies. The construction of additions to our current fiber network is also subject to certain governmental permitting and licensing requirements.

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notice and/or obtain prior approval from certain of these governmental agencies. The construction of additions to our current fiber network is also subject to certain governmental permitting and licensing requirements.

In addition, our business is subject to various other regulations at the federal, state, local and international levels. These regulations affect the way we can conduct our business and our costs of doing so. However, we believe, based on our examination of such existing and potential new regulations being considered in ongoing FCC and State PUC and European, Canadian and other foreign governmental proceedings, that such regulations will not have a significant impact on us.

Evaluation and Preparation for Potential Real Estate Investment Trust Conversion

On May 3, 2018, we announced ~~that~~ZGH we completed the first phase of ~~our~~their investigation on the advisability and feasibility of a conversion of ZGH to a real estate investment trust for U.S. federal income tax purposes (a “REIT”). WeAs ~~have~~part ~~begun~~of the ~~next~~current phase of ~~our~~the evaluation and preparation for a potential conversion to a REIT. AsZGH ~~part~~began ~~of these efforts, we have begun~~ a direct dialogue with the U.S. Internal Revenue Service (“IRS”) in an effort to obtain clarity and support for ~~our~~their position, and ZGH is seeking a private letter ruling (“PLR”) from the IRS. ~~Also,~~that weaddresses ~~have~~among ~~begun~~other tothings, ~~execute~~whether ~~the~~revenues ~~organizational~~from ~~changes~~dark ~~that~~and ~~are~~lit ~~required~~fiber ~~for~~satisfy ~~ZGH~~applicable toREIT ~~operate~~income astests. ZGH asubmitted ~~REIT, including~~ the ~~realignment~~PLR ofrequest ~~our~~to ~~business~~the ~~segments~~IRS toin ~~clearly~~July ~~delineate~~2018, but the ~~leasing~~IRS ofmay ~~network~~not ~~assets~~provide ~~from~~a ~~ancillary~~response ~~services~~until ~~and,~~later in ~~particular,~~2019 ~~the~~or ~~separation~~beyond ~~and~~or ~~potential~~may ~~divestiture~~not orrespond ~~deconsolidation~~at ofall. The ~~our~~ultimate ~~Allstream~~decision ~~business~~to ~~segment.~~convert ~~These~~to ~~organization~~a ~~changes~~REIT domay ~~not~~depend ~~result~~upon ina ~~any~~favorable ~~changes~~PLR tofrom ~~our~~the ~~reportable segments~~IRS.

16Also, ZGH has begun to execute various organizational changes that are required to operate as a REIT, including the adoption of amendments to organizational documents that, among other things, impose certain stock ownership limitations and transfer restrictions, the realignment of our business segments to clearly delineate the leasing of network assets from ancillary services and, in particular, the separation and potential divestiture or deconsolidation of our Allstream business segment. These organizational changes are not expected to result in any changes to our reportable segments.

If, following ~~our~~the current phase of ZGH’s evaluation and preparation, weZGH ~~make~~decides ~~a definitive decision~~ to convert ~~ZGH~~ to a REIT and are successful in qualifying ~~ZGH~~ for taxation as a REIT, wethen ZGH will generally be permitted to deduct from federal income taxes the dividends ~~that~~paid ~~ZGH pays~~ to ~~its~~ZGH stockholders. The income represented by such dividends would not be subject to federal income taxation at the entity level but would be taxed, if at all, at the stockholder level. Nevertheless, the income of ZGH’s domestic taxable REIT subsidiaries (each, a “TRS”), which will hold ~~our~~ZGH’s U.S. operations that may not be REIT-compliant, will be subject, as applicable, to federal and state corporate income tax. Likewise, ~~our~~ZGH’s foreign subsidiaries will continue to be subject to foreign income taxes in jurisdictions in which they hold assets or conduct operations, regardless of whether held or conducted through TRSs or through entities that are disregarded from usZGH for U.S. federal income tax purposes. Also, weZGH will be subject to a separate corporate income tax on any gains recognized during a specified period (generally 5five years) following the REIT conversion that are attributable to “built-in” gains with respect to the assets ~~that are~~ owned ~~by us~~ on the date ZGH converts to a REIT.

The ability of ZGH to qualify for taxation as a REIT will depend upon ~~our~~compliance ~~continuing~~with ~~compliance~~various requirements following ~~the~~our REIT conversion ~~with various requirements~~, including requirements related to the nature of our assets, the sources of our income and the distributions to ~~ZGH~~our stockholders. If ZGH fails to qualify for taxation as a REIT, weZGH will be subject to federal and state income tax at regular corporate income tax rates in the same manner as they are currently taxed. Even if ZGH qualifies for taxation as a REIT, weZGH may be subject to certain federal, state, local and foreign taxes on income and property. In particular, while state income tax regimes often parallel the federal income tax regime for REITs described above, many states do not completely follow federal rules and some may not follow them at all.

The current phase of our evaluation and preparation includes ZGH seeking a PLR from the IRS. ZGH submitted a PLR request to the IRS in July 2018, but the IRS may not provide a response until 2019 or later or may not respond at all.

At this stage of our evaluation and preparation for a potential conversion of ZGH to a REIT, we cannot accurately estimate the costs required to support any potential conversion, but we anticipate that our costs would include various administrative costs in addition to certain related tax liabilities.

Website Access and Important Investor Information

We file periodic reports, proxy statements, and other information with the Securities and Exchange Commission (the “SEC”). The public may read or copy any materials we file with, or furnish to, the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our website address is www.zayo.com, and we routinely post important investor information in the “Investors” section of our website at http://investors.zayo.com/. The information contained on, or that may be accessed through, our website is not part of this Annual Report on Form 10-K (this “Annual Report”). You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports in the “Investors” section of our website under the heading “SEC Filings”. These reports are made available on our website as soon as reasonably practicable after we electronically file them with the SEC.17

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Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our website address is www.zayo.com, and we routinely post important investor information in the “Investors” section of our website at http://investors.zayo.com/. The information contained on, or that may be accessed through, our website is not part of this Annual Report on Form 10-K (this “Annual Report”). You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports in the “Investors” section of our website under the heading “SEC Filings.” These reports are made available on our website as soon as reasonably practicable after we electronically file them with the SEC.

We have adopted a written code of ethics applicable to our directors, officers and employees, including our principal executive officer and principal financial and accounting officers (or persons performing similar functions), in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and the rules of the SEC. In the event that we make any changes to, or provide any waivers from, the provisions of our code of ethics applicable to our executive officers and directors, we intend to disclose these events on our website or in a report on Form 8-K within four business days of such event. This code of ethics is available in the “Corporate Governance” section of our website at http://investors.zayo.com/corporate-governance.

Special Note Regarding Forward-Looking Statements

Information contained in this Annual Report that is not historical by nature constitutes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. These forward-looking statements typically include words such as “believes,” “expects,” “plans,” “intends,” “estimates,” “projects,” “could,” “may,” “will,” “should,” or “anticipates” or the negatives thereof, other variations thereon or comparable terminology, or discuss strategy. No assurance can be given that future results expressed or implied by the forward-looking statements will be achieved, and actual results may differ materially from those contemplated by the forward-looking statements. Such statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, those relating to the Company’s financial and operating prospects, current economic trends, future opportunities (including our potential conversion to a REIT), ability to retain existing customers and attract new ones, our acquisition strategy and ability to integrate acquired companies and assets and achieve our planned synergies, outlook of customers, reception of new products and technologies, strength of competition and pricing, completion of the Merger and uncertainty among customers and employees regarding the Merger. Other factors and risks that may affect our business and future financial results are detailed in our SEC filings, including but not limited to those described under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained within this Annual Report. We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as may be required by law.

1718

~~Act~~ Table of 1934 (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. These forward-looking statements typically include words such as “believes,” “expects,” “plans,” “intends,” “estimates,” “projects,” “could,” “may,” “will,” “should,” or “anticipates” or the negatives thereof, other variations thereon or comparable terminology, or discuss strategy. No assurance can be given that future results expressed or implied by the forward-looking statements will be achieved, and actual results may differ materially from those contemplated by the forward-looking statements. Such statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, those relating to the Company’s financial and operating prospects, current economic trends, future opportunities (including ZGH’s potential conversion to a real estate investment trust for U.S. federal income tax purposes), ability to retain existing customers and attract new ones, our acquisition strategy and ability to integrate acquired companies and assets and achieve our planned synergies, outlook of customers, reception of new products and technologies, and strength of competition and pricing. Other factors and risks that may affect our business and future financial results are detailed in our SEC filings, including but not limited to those described under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained within this Annual Report. We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as may be required by law.Contents

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below as well as the other information contained in this Annual Report. If any of the following risks or uncertainties actually occurs, our business, financial condition, results of operations, cash flow and prospects could be materially and adversely affected.

Risks Related to ~~our~~the ~~Business~~Merger

The announcement and pendency of ZGH’s proposed acquisition by Parent could materially adversely affect our business, financial condition, and results of operations.

The announcement and pendency of ZGH’s proposed acquisition by Parent could disrupt our business and create uncertainty about our future, which could have a material and negative impact on our business, financial condition, and results of operations, regardless of whether the acquisition is completed. These risks to our business, all of which could be exacerbated by any delay in the closing of the acquisition, include:

restrictions in the Merger Agreement on the conduct of our business prior to the closing of the acquisition, which prevent us from taking specified actions without the prior consent of Parent, which actions we might otherwise take in the absence of the Merger Agreement;

the attention of our management may be directed towards the closing of the acquisition and may be diverted from our day-to-day business operations, and matters related to the acquisition may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to us;

our customers, suppliers and other third parties may decide not to renew or seek to terminate, change or renegotiate their relationships with us, whether pursuant to the terms of their existing agreements with us or otherwise;

our employees may experience uncertainty regarding their future roles, which might adversely affect our ability to retain, recruit and motivate key personnel; and

potential continued or additional litigation relating to the Merger and the related costs and related risks.

Any of these matters could adversely affect our business, financial condition, results of operations, or business prospects.

The parties may be unable to satisfy the conditions to the closing of ZGH’s acquisition by Parent and the acquisition may not be consummated, and the failure of the acquisition to be completed may adversely affect our business and ZGH’s share price.

Consummation of ZGH’s acquisition by Parent is subject to various closing conditions which have not yet been satisfied, including, among other things, (i) the absence of any legal restraints or prohibitions on the consummation of the Merger, (ii) approval from the Committee on Foreign Investment in the United States (CFIUS), and (iii) receipt of other regulatory approvals. The obligation of each party to consummate the Merger is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions), the other party having performed in all material respects its obligations under the Merger Agreement and the obligation of Parent to consummate the Merger is also conditioned upon ZGH not having suffered a Material Adverse Effect (as defined in the Merger Agreement). These and other conditions to the consummation of the Merger may fail to be satisfied. In addition, satisfying the conditions to the Merger may take longer than ZGH and Parent currently expect. The satisfaction of all of the required conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring. Thus, there can be no assurance that the conditions to the Merger will be satisfied or waived or that the Merger will be consummated.

In addition, the Merger Agreement may be terminated under specified circumstances, including by either party if the merger has not been consummated by May 8, 2020 (or August 8, 2020 under certain circumstances). Failure to

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complete the Merger could adversely affect our business and the market price of ZGH’s common stock in a number of ways, including:

ZGH’s current stock price likely reflects a market assumption that the proposed acquisition will occur, meaning that a failure to complete the proposed transaction could result in a decline in the price of ZGH common stock;

ZGH may be subject to additional legal proceedings related to the Merger or may suffer losses in connection with legal proceedings already instituted related to the Merger;

the failure of the Merger to be consummated may result in negative publicity and a negative impression of ZGH in the investment community;

any disruptions to our business resulting from the announcement and pendency of the Merger, including any adverse changes in our relationships with our customers, vendors and employees, may continue or intensify in the event the Merger is not consummated;

we may not be able to take advantage of alternative business opportunities or effectively respond to competitive pressures;

ZGH may be required to pay a termination fee of approximately $209.7 million if the Merger Agreement is terminated under certain circumstances;

ZGH expects to incur substantial transaction costs in connection with the proposed transaction, whether or not it is completed; and

ZGH may not be entitled to receive a termination payment from Parent in all circumstances where the Merger Agreement is terminated due to Parent’s breach of its obligations under the Merger Agreement.

Litigation challenging the Merger Agreement may prevent the Merger from being consummated at all or within the expected timeframe.

Lawsuits have been filed against ZGH and ZGH’s Board of Directors and may in the future be filed against ZGH, ZGH’s Board of Directors or other parties to the Merger Agreement, challenging ZGH’s acquisition by Parent or making other claims in connection therewith. Such lawsuits may be brought by ZGH’s purported stockholders and may seek, among other things, to enjoin consummation of the Merger. One of the conditions to the consummation of the Merger is that no order will be in effect that prevents, makes illegal or prohibits the consummation of the Merger. As such, if the plaintiffs in such potential lawsuits are successful in obtaining an injunction prohibiting the defendants from completing the Merger on the agreed upon terms, then such injunction may prevent the Merger from becoming effective, or from becoming effective within the expected timeframe.

Risks Related to Our Business

We have historically generated net losses since our inception and could incur losses in the future.

Prior to Fiscal 2017, we ~~have~~had historically generated net losses since our inception and could incur losses in the future. These net losses primarily have been driven by significant depreciation, amortization, interest expense, and stock-based compensation. During Fiscal ~~2018~~2019, we had depreciation and amortization expense of $~~747~~633.4 million, stock-based compensation expense of $96109.73 million, and interest expense of $~~299~~338.87 million. At June 30, ~~2018~~2019, we had $56,~~876~~065.62 million of total debt (including capital lease obligations and before any unamortized discounts, premiums and debt issuance costs). We cannot assure you that we will generate net income in the future.

Since our inception, we have used more cash than we have generated from operations, and we may continue to do so.

Since our inception, we have consistently consumed our entire positive cash flow generated from operating activities with our investing activities. Our investing activities have consisted principally of the acquisition of businesses as well as material additions to property and equipment. We have funded the excess of cash used in investing activities over cash provided by operating activities with proceeds from equity contributions and equity and debt issuances.

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as well as material additions to property and equipment. We have funded the excess of cash used in investing activities over cash provided by operating activities with proceeds from equity contributions and equity and debt issuances.

We intend to continue to invest in expanding our fiber network and our business and pursuing acquisitions that we believe provide an attractive return on our capital. These investments may continue to exceed the amount of cash flow available from operations after debt service requirements. To the extent that our investments exceed our cash flow from operations, we plan to rely on potential future debt or equity issuances, which could increase interest expense or dilute the interest of ZGH stockholders, as well as cash on hand and borrowings under our revolving credit facility. We cannot assure you, however, that we will be able to obtain or continue to have access to sufficient capital on reasonable terms, or at all, to successfully grow our business.

Our revenue is relatively concentrated among a small number of customers, and the loss of any of these customers could significantly harm our business, financial condition, results of operations, and cash flows.

Our largest single customer, based on recurring revenue, accounted for approximately 8% of our revenue during Fiscal ~~2018~~2019, and total revenues from our top ten customers accounted for approximately 29% of our revenue during Fiscal ~~2018~~2019. We currently depend, and expect to continue to depend, upon a relatively small number of customers for a significant percentage of our revenue. Many of these customers are also competitors for some or all of our offerings. Our customer contracts typically have terms of one to twenty or more years. Our customers may elect not to renew these contracts. Furthermore, our customer contracts are terminable for cause if we breach a material provision of such contracts. We may face increased competition and pricing pressure as our customer contracts become subject to renewal. Our customers may negotiate renewal of their contracts at lower rates, for fewer offerings or for shorter terms. Many of our customers are in the telecommunications industry, which is undergoing consolidation. To the extent that two or more of our customers combine, they may be able to use their greater size to negotiate lower prices from us and may purchase fewer offerings from us, especially if their networks overlap. If we are unable to successfully renew our customer contracts on commercially acceptable terms, or if our customer contracts are terminated, our business could suffer.

We are also subject to credit risk associated with the concentration of our accounts receivable from our key customers. If one or more of these customers were to become bankrupt, insolvent or otherwise were unable to pay for the access rights or ~~services~~offerings provided by us, we may incur significant write-offs of accounts receivable or incur impairment charges.

We have numerous customer orders for network expansion to customer sites, including contracts with multiple national wireless carriers to build out our network to additional towers. If we are unable to satisfy new orders or build our network according to contractually specified deadlines, we may incur penalties or suffer loss or delay in the ~~loss~~collection of revenue.

Our customers periodically review their telecommunication infrastructure requirements, and may adjust their plans for the purchase of additional access rights or ~~services~~offerings from us to fit changed market circumstances or strategic priorities. Any such adjustments may affect our sales of new contracts, or the renewal of existing ones, which could impact our revenue growth.

Future acquisitions are a component of our strategic plan, and will include integration and other risks that could harm our business.

We have grown rapidly and intend to continue to acquire complementary businesses and assets, and some of these acquisitions may be large or in new geographic areas where we do not currently operate. This exposes us to the risk that when we evaluate a potential acquisition target we over-estimate the target’s value and, as a result, pay too much for it. We also cannot be certain that we will be able to successfully integrate acquired assets or the operations of the acquired entity with our existing operations. Businesses and assets that we have acquired or may acquire in the future may be subject to unknown or contingent liabilities for which we may have limited or no recourse against the sellers. While we usually require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification is often limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses. As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that we ~~may incur with respect to liabilities associated with acquired properties and entities may exceed our expectations, which may adversely affect our operating results and financial condition.~~

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Inmay ~~addition,~~incur ~~some~~with ~~recently~~respect ~~acquired~~to ~~companies~~liabilities ~~have~~associated ~~had~~with ~~Adjusted~~acquired ~~EBITDA~~properties ~~margins~~and ~~that~~entities ~~were lower than ours, which had a negative impact on our overall Adjusted EBITDA margins. Future acquisitions~~ may ~~also~~exceed ~~have lower Adjusted EBITDA margins. In addition, as a result of~~ our ~~frequent acquisitions~~expectations, ~~research analysts’ valuation models may not take into account current acquisitions, or they may not correctly or timely include the effects of such acquisitions,~~ which may ~~cause~~adversely affect our ~~reported~~operating results toand ~~differ~~financial ~~from their expectations~~condition.

We have previously engaged in and may continue to engage in acquisitions, such as the AboveNet, Allstream and Electric Lightwave acquisitions that are large or include products outside of the traditional communications infrastructure product base, which may present greater challenges to integrate than other acquisitions and may expose us to different or additional business risks. Difficulties with integration could cause material customer disruption and dissatisfaction, which could in turn increase churn and reduce new sales. Additionally, we may not be able to integrate acquired businesses in a manner that permits us to realize the cost synergies we anticipate in the time, manner, or amount we currently expect, or at all. Our actual cost synergies, cost savings, growth opportunities, and efficiency and operational benefits resulting from any acquisition may be lower and may take longer to realize than we currently expect. In addition, some recently acquired companies have had Adjusted EBITDA margins that were lower than ours, which had a negative impact on our overall Adjusted EBITDA margins. Future acquisitions may also have lower Adjusted EBITDA margins. In addition, as a result of our frequent acquisitions, research analysts’ valuation models may not take into account current acquisitions, or they may not correctly or timely include the effects of such acquisitions, which may cause our reported results to differ from their expectations.

We may incur additional debt to assist in the funding of these potential transactions, which may increase our leverage. Further, additional transactions could cause disruption of our ongoing business and divert management’s attention from the management of daily operations to the closing and integration of the acquired business. Acquisitions also involve other operational and financial risks such as:

increased demand on our existing employees and management related to the increase in the size of the business and the possible distraction from our existing business due to the acquisition;

loss of key employees and salespeople of the acquired business;

liabilities of the acquired business, both unknown and known at the time of the consummation of the acquisition;

discovery that the financial statements we relied on to buy a business were incorrect;

expenses associated with the integration of the operations of the acquired business;

the possibility of future impairment, write-downs of goodwill and other intangibles associated with the acquired business;

finding that the offerings and operations of the acquired business do not meet the level of quality of those of our existing offerings and operations; and

determining that the internal controls of the acquired business were inadequate.

We are growing rapidly and may not maintain or efficiently manage our growth.

We have rapidly grown our company through acquisitions of companies and assets as well as expansion of our own network and the acquisition of new users through our own sales efforts. We also intend to continue to grow our company, including through acquisitions, some of which may be large. Users can be reluctant to switch providers of bandwidth infrastructure because it can involve substantial expense and technical difficulty. That can make it harder for us to acquire new users through our own sales efforts. Our expansion may place strains on our management and our operational and financial infrastructure. Our ability to manage our growth will be particularly dependent upon our ability to:

expand, develop, and retain qualified personnel;

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maintain the quality of our offerings;

attract users to switch from their current providers to us in spite of the costs associated with switching providers;

maintain and enhance our system of internal controls to ensure timely and accurate reporting; and

expand our operational information systems in order to support our growth, including integrating new customers without disruption.

If we fail to hire and retain qualified executives, managers and employees, our operating results could be harmed.

Our future success depends on our ability to identify, hire, train and retain executives, managers and employees with real estate, technological, engineering, operational, marketing, sales, administrative and managerial skills. There is a shortage of qualified personnel in several of these fields. We compete with several other companies for this limited pool of potential employees. As our industry increasingly becomes more competitive, it could become especially difficult to attract and retain top personnel with skills that are in high demand. In addition, subject to limited exceptions, none of the members of our management team and other key employees ~~have~~has long-term employment agreements. For all these reasons, there is no assurance that our efforts to recruit and retain qualified personnel will be successful.

We have agreements with customers that are dependent on government funding, which may not be available.

We have contracts with customers that include appropriations clauses that permit the customer to terminate the contract if expected government funding for the project to which the contract relates is unavailable. There is no assurance that the government funding will be available for these contracts and that they will not be terminated.

In recent years the portion of our revenue relating to government-funded programs such as the E-rate program, a program mandated by Congress in 1996 and implemented by the FCC in 1997 in order to make telecommunications and information access and services more affordable for schools and libraries in America, has increased. There can be no assurance that the E-rate program and other such programs will continue or will continue to be funded at current levels in the future.

Access and service level agreements in our customer agreements could subject us to liability or the loss of revenue.

Our contracts with customers typically contain access and service level ~~guarantees~~agreements (including network availability) and delivery date targets, which could enable customers to claim credits and, under certain conditions, terminate their agreements. Our inability to meet our access and service level ~~guarantees~~agreements could adversely affect our revenue. In Fiscal ~~2018~~2019, lost revenue from failure to meet access and service level ~~guarantees~~agreements was approximately $12.58 million. While we typically have carve-outs for force majeure events, many events, such as fiber cuts, equipment failure and third-party vendors being unable to meet their underlying commitments with us, could impact our ability to meet our access and service level agreements.

Any failure of our physical infrastructure or offerings could lead to significant costs and disruptions.

Our business depends on providing customers with highly reliable offerings. The offerings we provide are subject to failure resulting from numerous factors, including:

human error;

power loss;

improper building maintenance by the landlords of the buildings in which our data centers are located;

physical or electronic security breaches;

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fire, earthquake, hurricane, flood, and other natural disasters;

water damage;

the effect of war, terrorism, and any related conflicts or similar events worldwide; and

sabotage and vandalism.

Problems within our network or our data centers, whether within our control or the control of our landlords or other third-party providers, could result in interruptions and/or component damage. As current and future customers increase their power usage in our facilities over time, the remaining available power for future customers could limit our ability to grow our business and increase occupancy rates or network density within our existing facilities. Accordingly, we may not be able to efficiently upgrade or change these systems to meet new demands without incurring significant costs that we may not be able to pass on to our customers. In the past, we have experienced disruptions in our network attributed to component failure and power outages. Although such disruptions have been remedied and the network has been stabilized, there can be no assurance that similar disruptions will not occur in the future. Given the access and service level agreement obligations we typically have in our customer contracts, such disruptions could result in customer credits; however, we cannot assume that our customers will accept these credits as compensation in the future, and we may face additional liability or loss of customers.

We use franchises, licenses, permits, rights-of-way, conduit leases, fiber agreements, and property leases, which could be canceled or not renewed.

We must maintain rights-of-way, franchises, and other permits from railroads, utilities, state highway authorities, local governments, transit authorities, and others to operate our owned fiber network. We cannot be certain that we will be successful in maintaining these rights-of-way agreements or obtaining future agreements on acceptable terms. Some of these agreements are short-term or revocable at will, and we cannot assure you that we will continue to have access to existing rights-of-way after they have expired or terminated. If a material portion of these agreements are terminated or are not renewed, we might be forced to abandon our network sections, which may result in impairment charges. In order to operate our network, we must also maintain fiber leases and IRU agreements that we have with public and private entities. There is no assurance that we will be able to renew those fiber routes on favorable terms, or at all. If we are unable to renew those fiber routes on favorable terms, we may face increased costs or reduced revenues.

In order to expand our network to new locations, we often need to obtain additional rights-of-way, franchises, and other permits. Our failure to obtain these rights in a prompt and cost-effective manner may prevent us from expanding our network, which may be necessary to meet our contractual obligations to our customers and could expose us to liabilities.

If we lose or are unable to renew key real property leases where we have located our POPs, it could adversely affect our offerings and increase our costs, as we would be required to restructure our network and move our POPs.

Our operations, financial performance and liquidity are materially reliant on key suppliers and vendors.

We depend on a limited number of suppliers and vendors for technology and services relating to our network infrastructure. To the extent that proprietary technology of a supplier is an integral component of our network, we may have limited flexibility to purchase key network components from alternative suppliers. We also rely on a limited number of software vendors to support our business management systems. In the event it becomes necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory replacement supplies or services on economically attractive terms, on a timely basis, or at all, which could increase costs or cause disruptions in our solutions.

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We are required to maintain, repair, upgrade, and replace our network and our facilities, the cost of which could materially impact our results and our failure to do so could irreparably harm our business.

Our business requires that we maintain, repair, upgrade, and periodically replace our facilities and portions of our network. This requires management time and capital expenditures. In the event that we fail to maintain, repair, upgrade, or replace essential portions of our network or facilities, it could lead to a material degradation in the level of access and service that we provide to our customers. Portions of our network can be damaged in a number of ways, including by other parties engaged in construction close to our network facilities. In the event of such damage, we will be required to incur expenses to repair the network. We could be subject to significant network repair and replacement expenses in the event a terrorist attack or a natural disaster damages our network. Further, the operation of our network requires the coordination and integration of sophisticated and highly specialized hardware and software. Our failure to maintain or properly operate this can lead to degradations to or interruptions of customer access and services. Our failure to provide proper or satisfactory access or services could result in claims from our customers, early termination of contracts, and damage to our reputation.

properly operate this can lead to degradations to or interruptions of customer access and services. Our failure to provide proper or satisfactory access or services could result in claims from our customers, early termination of contracts, and damage to our reputation.

Our debt level could negatively impact our financial condition, results of operations, cash flows, and business prospects and could prevent us from fulfilling our obligations under our outstanding indebtedness. In the future, we may incur substantially more indebtedness, which could further increase the risks associated with our leverage.

As of June 30, ~~2018~~2019, our total debt (including capital lease obligations and before any unamortized discounts, premiums or debt issuance costs) was $56,~~876~~065.62 million, primarily consisting of the following indebtedness incurred by ~~our~~us ~~subsidiaries, Zayo Group, LLC (“ZGL”)~~ and Zayo Capital, Inc. (“Zayo Capital”): $1,430.0 million of 6.00% senior unsecured notes due 2023 (the “2023 Unsecured Notes”), $900.0 million of 6.375% senior unsecured notes due 2025 (the “2025 Unsecured Notes”), $1,650.0 million of 5.75% senior unsecured notes due 2027 (the “2027 Unsecured Notes”, collectively with the 2023 and 2025 Unsecured Notes, the “Notes”), a $~~493~~488.87 million senior secured term loan facility due 2021, a $1,269.3 million senior secured term loan facility due 2024 (the “Term Loan Facility”), ~~and~~ $~~133~~145.50 million inborrowed ~~capital~~under ~~lease obligations. In addition, ZGL and Zayo Capital have~~ a $450.0 million senior secured revolving credit facility (the “Revolver,” and collectively with the Term Loan Facility, the “Credit Facility”), of which $~~441~~296.95 million was available at June 30, ~~2018~~2019, subject to certain conditions, and $182.2 million in capital lease obligations. Subject to the limitations set forth in the indentures (the “Indentures”) governing the Notes and the agreement governing the Credit Facilities (the “Credit Agreement”), ~~ZGL~~we may incur additional indebtedness (including additional first lien obligations) in the future. If new indebtedness is added to our current levels of indebtedness, the related risks that we now face in light of our current debt level, including our possible inability to service our debt, could intensify. Our level of debt could have important consequences, including the following:

making it more difficult for us to satisfy our obligations under our debt agreements;

requiring us to dedicate a substantial portion of our cash flow from operations to required payments on debt, thereby reducing the availability of cash flow for working capital, capital expenditures, and other general business activities;

limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, and general corporate and other activities;

limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

increasing our vulnerability to both general and industry-specific adverse economic conditions;

placing us at a competitive disadvantage relative to less leveraged competitors; and

preventing us from raising the funds necessary to repurchase the Notes tendered to us upon the occurrence of certain changes of control, which would constitute a default under the Indentures.

Cash payments for interest, net of capitalized interest, which are reflected in our cash flows from operating activities, during the year ended June 30, ~~2018~~2019 were $~~280~~315.2 million, and represented ~~29% of our cash flows from operating activities~~33. Cash payments related to principal payments on our debt obligations (including capital leases) during the year ended June 30, 2018 were $13.4 million (exclusive of our $310.7 million prepayment on our Term Loan Facility), which are reflected in our cash flows from financing activities, and represented 1.4% of our cash flows from ~~operating activities during the period.~~

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operating activities. Cash payments related to principal payments on our debt obligations (including capital leases and the Revolver) during the year ended June 30, 2019 were $141.2 million, which are reflected in our cash flows from financing activities, and represented 14.8% of our cash flows from operating activities during the period.

We may not be able to generate enough cash flow to meet our debt obligations.

Our future cash flow may be insufficient to meet our debt obligations and commitments. Any insufficiency could negatively impact our business. A range of economic, competitive, business, regulatory, and industry factors will affect our future financial performance, and, as a result, our ability to generate cash flow from operations and to pay our debt. Many of these factors, such as economic and financial conditions in our industry and the U.S. or the global economy, or competitive initiatives of our competitors, are beyond our control.

our future financial performance, and, as a result, our ability to generate cash flow from operations and to pay our debt. Many of these factors, such as economic and financial conditions in our industry and the U.S. or the global economy, or competitive initiatives of our competitors, are beyond our control.

If we do not generate enough cash flow from operations to satisfy our debt obligations, we may have to undertake alternative financing plans, such as:

reducing or delaying capital investments;

raising additional capital;

refinancing or restructuring our debt; and

selling assets.

We cannot assure you that we would be able to implement alternative financing plans, if necessary, on commercially reasonable terms, or at all, or that implementing any such alternative financing plans would allow us to meet our debt obligations.

If we are unable to meet our debt service obligations, it would be in default under the terms of the Indentures and the Credit Agreement, permitting acceleration of the amounts due on the Notes and under the Credit Agreement and eliminating our ability to draw on the Revolver. If the amounts outstanding under the Credit Facilities, the Notes, or other future indebtedness were to be accelerated, we could be forced to file for bankruptcy.

Our debt agreements contain restrictions on our ability to operate our business and to pursue our business strategies, and our failure to comply with these covenants could result in an acceleration of our indebtedness.

The Indentures and the Credit Agreement each contain, and agreements governing future debt issuances may contain, covenants that restrict our ability to, among other things:

incur additional indebtedness and issue preferred stock;

pay dividends or make other distributions with respect to any equity interests or make certain investments or other restricted payments;

create liens;

sell or otherwise dispose of assets, including capital stock of subsidiaries;

incur restrictions on the ability of its restricted subsidiaries to pay dividends or make other payments to it;

consolidate or merge with or into other companies or transfer all, or substantially all, of its assets;

engage in transactions with affiliates;

engage in business other than telecommunications; and

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enter into sale and leaseback transactions.

As a result of these covenants, we are limited in the manner in which we may conduct our business, and as a result we may be unable to engage in favorable business activities or finance future operations or capital needs. The ability to comply with some of the covenants and restrictions contained in the Indentures and the Credit Agreement may be affected by events beyond our control. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired.

affected by events beyond our control. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired.

In addition, the Credit Agreement requires us to comply with a maximum secured leverage ratio at the end of any fiscal quarter in the event that usage of the Revolver exceeds 35% of the commitments thereunder. Our ability to comply with this ratio may be affected by events beyond our control. These restrictions limit our ability to plan for or react to market conditions, meet capital needs, or otherwise constrain our activities or business plans. They also may adversely affect our ability to finance our operations, enter into acquisitions, or engage in other business activities that would be in our interest.

A failure to comply with the covenants, ratios, or tests in the Indentures, the Credit Agreement or the agreement governing any future indebtedness could result in an event of default under the Indentures, the Credit Agreement or such agreement governing any future indebtedness, as applicable, which if not cured or waived could have a material adverse effect on our business, financial condition, and results of operations.

An event of default under the Indentures or the agreement governing any future indebtedness could lead to the acceleration of the obligations under the Notes or such future indebtedness, as applicable. An event of default under the Credit Agreement would allow the lenders to declare all borrowings outstanding to be due and payable or to terminate the ability to borrow under the Revolver. If the amounts outstanding under the Credit Facilities, the Notes or other future indebtedness were to be accelerated, we cannot assure that our assets would be sufficient to repay in full the money owed. In such a situation, we could be forced to file for bankruptcy.

Our future tax liabilities are not predictable or controllable. If we become subject to increased levels of taxation, our financial condition and operations could be negatively impacted.

We provide telecommunication infrastructure and related solutions in multiple jurisdictions across the United States, Canada and Europe and are, therefore, subject to multiple sets of complex and varying tax laws and rules. We cannot predict the amount of future tax liabilities to which we may become subject. Any increase in the amount of taxation incurred as a result of our operations or due to legislative or regulatory changes would be adverse to us. In addition, we may become subject to income tax audits by many tax jurisdictions throughout the world. It is possible that certain tax positions taken by us could result in tax liabilities for us. While we believe that our current provisions for taxes are reasonable and appropriate, we cannot assure you that these items will be settled for the amounts accrued or that we will not identify additional exposures in the future.

The Tax Cuts and Jobs Act will have a substantial impact on us.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act significantly changes U.S. tax law by reducing the U.S. corporate income tax rate and making certain changes to U.S. taxation of income earned by foreign subsidiaries, capital expenditures, interest expense and various other items. Although we generally believe the net impact of this Act will be favorable to us, the Act is quite complex and certain of its features are expected to adversely impact us. Our views on the Act’s ultimate impact on us are subject to change as we complete additional analysis, review regulations that will need to be adopted to implement the Act and monitor other future developments related to the Act’s adoption.

We cannot assure you whether, when or in what amounts we will be able to use our net operating losses, or when they will be depleted.

At June 30, ~~2018~~2019, we had approximately $1,~~897~~221.34 million of U.S. federal net operating losses (“NOLs”), which relate primarily to prior acquisitions. Under certain circumstances, these NOLs can be used to offset our future U.S. federal taxable income. If we experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and related Treasury regulations, at a time when our market capitalization is below a certain level, our ability to use the NOLs could be substantially limited. This limit could impact the timing of the usage of the NOLs, thus accelerating cash tax payments or causing NOLs to expire prior to their use, which could affect the ultimate realization of the NOLs.

Transactions that we enter into, as well as transactions by existing or future 5% stockholders that we do not participate in, could cause us to incur such an “ownership change.”

These limitations could cause us not to pursue otherwise favorable acquisitions and other transactions involving our capital stock, or could reduce the net benefits to be realized from any such transactions. Despite this, we expect to use substantially all of these NOLs and certain other deferred tax attributes as an offset to our future U.S. federal taxable income, although the timing of that use will depend upon our future earnings and future tax circumstances. If and when our NOLs are fully utilized, we expect that the amount of our cash flow dedicated to the payment of federal taxes will increase substantially, except to the extent that we convert to a REIT and are successful in qualifying for and maintaining taxation as a REIT.

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use substantially all of these NOLs and certain other deferred tax attributes as an offset to our future U.S. federal taxable income, although the timing of that use will depend upon our future earnings and future tax circumstances. If and when our NOLs are fully utilized, we expect that the amount of our cash flow dedicated to the payment of federal taxes will increase substantially, except to the extent that we convert to a REIT and are successful in qualifying for and maintaining taxation as a REIT.

We may be subject to interest rate risk and increasing interest rates may increase our interest expense.

Borrowings under each of the Credit Facilities bear, and our future indebtedness may bear, interest at variable rates and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash available for servicing our indebtedness would decrease.

The international operations of our business expose us to risks that could materially and adversely affect the business.

We have operations and investments outside of the United States, as well as rights to undersea cable capacity extending to other countries, that expose us to risks inherent in international operations. These include:

general economic, social and political conditions;

the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;

tax rates in some foreign countries may exceed those in the U.S.;

foreign currency exchange rates may fluctuate, which could adversely affect our results of operations and the value of our international assets and investments;

foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions;

difficulties and costs of compliance with foreign laws and regulations that impose restrictions on our investments and operations, with penalties for noncompliance, including loss of licenses and monetary fines;

difficulties in obtaining licenses or interconnection arrangements on acceptable terms, if at all; and

changes in U.S. laws and regulations relating to foreign trade and investment.

We may as part of our expansion strategy increase our exposure to international investments and operations.

On June 23, 2016, the United Kingdom (“U.K.”) held a referendum in which voters approved an exit from the European Union (“E.U.”), commonly referred to as “Brexit.” As a result of the referendum, the British government ~~has~~is ~~begun~~ negotiating the terms of the U.K.’s future relationship with the E.U. Although it is unknown what those terms will be, or whether an agreement will be reached, it is possible that there will be increased regulatory complexities that may adversely affect our operations and financial results.

Our international operations are subject to the laws and regulations of the U.S. and many foreign countries, including the U.S. Foreign Corrupt Practices Act, the Canadian Corruption of Foreign Public Officials Act, U.K. Bribery Act and Privacy Laws.

We are subject to a variety of laws regarding our international operations, including the U.S. Foreign Corrupt Practices Act, the Canadian Corruption of Foreign Public Officials Act and the U.K. Bribery Act of 2010, and regulations issued by U.S. Customs and Border Protection, the U.S. Bureau of Industry and Security, the U.S. Treasury Department’s Office of Foreign Assets Control and various other foreign governmental agencies. We cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. Actual or alleged violations of these laws could lead to enforcement actions and financial penalties that could result in substantial costs.

The U.S. Foreign Corrupt Practices Act, the Canadian Corruption of Foreign Public Officials Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity with more frequent and aggressive investigations and enforcement proceedings by both the Department of Justice and the U.S. Securities and Exchange Commission, increased enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. We have created and implemented a program for compliance with anti-bribery laws. Because our anti-bribery internal control policies and procedures have only recently been implemented, we may have increased exposure to reckless or criminal acts committed by our employees or third-party intermediaries. Violations of these anti-bribery laws may result in criminal or civil sanctions, which could have a material adverse effect on our business, financial condition, results of operations and liquidity.28

~~Additionally,~~Table ~~privacy requirements in the EU are stricter than in the US. These requirements include rules restricting the flow~~ of data across borders, the General Data Protection Regulation and other data privacy requirements. These restrictions may cause companies to localize data, decline to make use of services provided by our customers in the US, and otherwise impact the use of our offerings. Notwithstanding the existence of programs such as the Privacy Shield program in place between the US and EU, European companies and individuals may be reluctant to use US companies, which could negatively impact our business.Contents

manner in which existing laws might be administered or interpreted. Actual or alleged violations of these laws could lead to enforcement actions and financial penalties that could result in substantial costs.

The U.S. Foreign Corrupt Practices Act, the Canadian Corruption of Foreign Public Officials Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity with more frequent and aggressive investigations and enforcement proceedings by both the Department of Justice and the U.S. Securities and Exchange Commission, increased enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. We have created and implemented a program for compliance with anti-bribery laws. Because our business activities in foreign countries have grown, we may have increased exposure to reckless or criminal acts committed by our employees or third-party intermediaries. Violations of these anti-bribery laws may result in criminal or civil sanctions, which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

Additionally, privacy requirements in the EU are stricter than in the U.S. These requirements include rules restricting the flow of data across borders, the General Data Protection Regulation and other data privacy requirements. These restrictions may cause companies to localize data, decline to make use of services provided by our customers in the U.S., and otherwise impact the use of our offerings. Notwithstanding the existence of programs such as the Privacy Shield program in place between the U.S. and EU, European companies and individuals may be reluctant to use U.S. companies, which could negatively impact our business.

Our international operations expose us to currency risk.

We conduct a portion of our business using the British Pound Sterling, Canadian Dollar and the Euro. Appreciation of the U.S. Dollar adversely affects our consolidated revenue. Since we tend to incur costs in the same currency in which those operations realize revenue, the effect on operating income and operating cash flow is largely mitigated. However, if the U.S. Dollar were to appreciate significantly, future revenues, operating income and operating cash flows could be materially affected.

We may be vulnerable to security breaches that could disrupt our operations and adversely affect our business.

Despite security measures and business continuity plans, our information technology networks and infrastructure may be vulnerable to damage, disruptions, or shutdowns due to unauthorized access, computer viruses, cyber-attacks, distributed denial of service, and other security breaches. An attack on or security breach of our network could result in interruption or cessation of access and services, our inability to meet our access and service level commitments, and potentially compromise customer data transmitted over our network. We cannot guarantee that our security measures will not be circumvented, resulting in network failures or interruptions that could impact our network availability and have a material adverse effect on our business, financial condition, and results. We may be required to expend significant resources to protect against such threats. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, and we could lose customers. Any such events could result in legal claims or penalties, disruption in operations, misappropriation of sensitive data, damage to our reputation, and/or costly response measures, which could adversely affect our business. Although we maintain insurance coverage that may, subject to policy terms and conditions (including self-insured deductibles, coverage restrictions and monetary coverage caps), cover certain aspects of our cyber risks, such insurance coverage may be unavailable or insufficient to cover our losses.

27We may be subject to litigation that could have a substantial, adverse impact on our business.

~~coverage~~ From ~~caps)~~time to time, ~~cover~~we ~~certain~~are ~~aspects~~subject ofto ~~our~~litigation, ~~cyber~~including ~~risks~~claims related to employment, ~~such~~commercial ~~insurance~~transactions, ~~coverage~~construction and real estate. Irrespective of its merits, litigation may be ~~unavailable~~both orlengthy ~~insufficient~~and disruptive to ~~cover~~our operations and could cause significant expenditure and diversion of management attention. While we do not view any of our ~~losses~~current litigation to be material, current or future litigation could have a material adverse effect on our financial position and operating results, on the trading price of our securities and on our ability to access the capital markets.

~~We may be subject to litigation that could have a substantial, adverse impact on our business~~ 29

~~From~~Table ~~time to time we are subject to litigation, including claims related to employment, commercial transactions, construction and real estate. Irrespective~~ of its merits, litigation may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. While we do not view any of our current litigation to be material, current or future litigation could have a material adverse effect on our financial position and operating results, on the trading price of our securities and on our ability to access the capital markets. Contents

If we are unable to renew collective bargaining agreements on satisfactory terms, or we experience strikes, work stoppages or labor unrest, our business could suffer.

Certain of the employees that we acquired in our Allstream acquisition are covered by collective bargaining agreements. There can be no assurance that such agreements will be renewed on terms favorable to us. If we are unable to renew such agreements on satisfactory terms, our labor costs could increase, which would affect our profit margins. Further, changes in governmental regulations relating to labor relations, or otherwise in our relationship with our employees, including our unionized employees, may result in strikes, lockouts or other work stoppages, any of which could have an adverse effect on our business, results of operations and financial condition.

Volatility in the equity markets, interest rates or other factors could substantially increase our pension costs.

We sponsor defined benefit pension plans for certain of our Canadian employees. The difference between plan obligations and assets, or the funded status of the plans, significantly affects the net periodic benefit costs of our pension plans and the ongoing funding requirements of those plans. Among other factors, changes in interest rates, mortality rates, early retirement rates, investment returns, minimum funding requirements and the market value of plan assets can affect the level of plan funding, cause volatility in the net periodic pension cost and increase our future funding requirements. Legislative and other governmental regulatory actions may also increase funding requirements for our pension plans’ benefits obligation.

A significant increase in our pension benefit obligations or funding requirements could have a negative impact on our ability to invest in the business and adversely affect our financial condition and results of operations.

Lapses in disclosure controls and procedures or internal control over financial reporting could materially and adversely affect our operations, profitability or reputation.

Management identified material weaknesses in our internal control over financial reporting in ~~Fiscal~~our fiscal year ending June 30, 2016 that were remediated during Fiscal 2017. There can be no assurance ~~that~~ our disclosure controls and procedures will be effective in the future or that we will not experience a material weakness or significant deficiency in internal control over financial reporting. Any such lapses or deficiencies may materially and adversely affect our business, operating results or financial condition, may result in restatement of our consolidated financial statements, restrict our ability to access the capital markets, require us to expend significant resources to correct the lapses or deficiencies, expose us to regulatory or legal proceedings, including litigation brought by private individuals, subject us to fines, penalties or judgments, harm our reputation, or otherwise cause a decline in investor confidence and our stock price.

Risks Related to Our Industry

We could face increased competition from companies in the telecommunications and media industries that currently do not focus on bandwidth infrastructure.

Many of our competitors in the bandwidth infrastructure space are other focused bandwidth infrastructure providers that offer bandwidth infrastructure on a regional or local basis. In some cases, we also compete with communications service providers who also own certain infrastructure assets and make them available to customers as an infrastructure offering. These communication service providers include ILECs, such as AT&T, Verizon, and CenturyLink, and cable television companies, such as Comcast and Cox.

28 Some of these competitors have greater financial, managerial, sales and marketing, and research and development resources than we do and are able to promote their brands with significantly larger budgets. Most of them are also our customers. If ILECs and cable television companies focus on providing bandwidth infrastructure, it could have a material adverse effect on us. A few of these competitors also have significant fiber assets that they principally employ in the provision of their communications offerings. If any of these competitors with greater resources and/or significant fiber assets chose to focus those resources on bandwidth infrastructure, our ability to compete in the bandwidth infrastructure industry could be negatively impacted. To the extent that communication service providers, cable television companies, and other media companies choose to distribute their content over their own networks that

~~infrastructure offering. These communication service providers include ILECs, such as AT&T, Verizon, and CenturyLink, and cable television companies, such as Comcast and Cox.~~ 30

~~Some~~Table of these competitors have greater financial, managerial, sales and marketing, and research and development resources than we do and are able to promote their brands with significantly larger budgets. Most of them are also our customers. If ILECs and cable television companies focus on providing bandwidth infrastructure, it could have a material adverse effect on us. A few of these competitors also have significant fiber assets that they principally employ in the provision of their communications services. If any of these competitors with greater resources and/or significant fiber assets chose to focus those resources on bandwidth infrastructure, our ability to compete in the bandwidth infrastructure industry could be negatively impacted. To the extent that communication service providers, cable television companies, and other media companies choose to distribute their content over their own networks that could reduce demand for our offerings. Additionally, significant new entrants into the bandwidth infrastructure industry would increase supply, which could cause prices for our offerings to decline.Contents

could reduce demand for our offerings. Additionally, significant new entrants into the bandwidth infrastructure industry would increase supply, which could cause prices for our offerings to decline.

Consolidation among companies in the telecommunications and cable television industries could further strengthen our competitors and adversely impact our business.

The telecommunications and cable television industries are intensely competitive and continue to undergo significant consolidation. There are many reasons for consolidation in these industries, including the desire for communications and cable television companies to acquire network assets in regions where they currently have no or insufficient amounts of owned network infrastructure. The consolidation within the industry may cause customers to disconnect from us and move to their own networks, or consolidate buying with other bandwidth infrastructure providers. Additionally, consolidation in the industry could further strengthen our competitors, give them greater financial resources and geographic reach, and allow them to put additional pressure on prices for bandwidth infrastructure.

Certain of our offerings and facilities are subject to regulation that could change or otherwise impact us in an adverse manner.

Communications offerings and facilities are subject to domestic and international regulation at the federal, state, and local levels. These regulations affect our business and our existing and potential competitors. Our electronic communications offerings and electronic communications facilities in Europe, Canada and elsewhere are subject to regulatory oversight by national communications regulators, such as the United Kingdom’s Office of Communications (“Ofcom”) and France’s Autorité de Régulation des Communications Électroniques et des Postes (“ARCEP”). In addition, in the United States, both the FCC and the state public utility commissions or similar regulatory authorities (“State PUCs”) typically require us to maintain licenses, file periodic reports, pay various regulatory fees and assessments, and otherwise comply with their regulations. Similarly, in Canada, we are subject to the rules and oversight of the Canadian Radio-Television and Telecommunications Commission (“CRTC”), the Minister of Innovation Science and Economic Development, as well as the laws and regulations of other federal and provincial bodies. Such compliance can be costly and burdensome and may affect the way we conduct our business. Delays in receiving required regulatory approvals (including approvals relating to acquisitions, investments, or financing activities or for interconnection agreements with other carriers), the enactment of new and adverse international or domestic legislation or regulations (including those pertaining to broadband initiatives and net-neutrality), or the denial, modification or termination by a regulator of any approval or authorization, could have a material adverse effect on our business. Further, the current regulatory landscape is subject to change through judicial review of current legislation and rulemaking by the FCC, Ofcom, ARCEP, CRTC and other domestic, foreign, and international rulemaking bodies. These bodies regularly consider changes to their regulatory framework and fee and other obligations. Changes in current regulation or determinations that we have not complied with existing regulations and obligations may make it more difficult to obtain the approvals necessary to operate our business, significantly increase the regulatory fees and other assessments to which we are subject, subject us to potential enforcement proceedings or audits that could result in fines or other penalties where noncompliance has occurred, or have other adverse effects on our future operations in the United States, Canada and/or Europe. Elimination or relaxation of regulatory rights and protections could harm our business, results of operations and financial condition. In Canada, ILECs had been mandated by the CRTC to provide access to its local loops to third party service providers, including Zayo, at regulated rates. On June 5, 2018, the CRTC granted forbearance from regulation of local loops to an ILEC from which we currently access unbundled local loops. We must now either obtain access to such local loops pursuant to commercial agreement with such ILEC or migrate to alternative sources. If we are unable to reach agreement with the ILEC, or reach agreement with alternative sources, or to reach agreements on economic terms, our business, results of operations and financial condition will be negatively impacted.

from regulation of local loops to an ILEC from which we currently access unbundled local loops. We must now either obtain access to such local loops pursuant to commercial agreement with such ILEC or migrate the services to alternative sources . If we are unable to reach agreement with the ILEC, or reach agreement with alternative sources, or to reach agreements on economic terms, our business, results of operations and financial condition will be negatively impacted.

We may be liable for the material that content providers distribute over our network.

Although we believe our liability for third party information stored on or moved through our network is limited, the liability of private network operators is affected both by changing technology and evolving legal principles. As a private network provider, we could be exposed to legal claims relating to third party content stored or moved through our network. Such claims could involve, among others, allegations of defamation, invasion of privacy, copyright infringement, or aiding and abetting restricted activities such as online gambling or pornography. If we decide to implement additional measures to reduce our exposure to these risks, or if we are required to defend ourselves against these kinds of claims, our operating results and financial condition could be negatively affected.

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implement additional measures to reduce our exposure to these risks, or if we are required to defend ourselves against these kinds of claims, our operating results and financial condition could be negatively affected.

Unfavorable general global economic conditions could negatively impact our operating results and financial condition.

Unfavorable general global economic conditions could negatively affect our business. Although it is difficult to predict the impact of general economic conditions on our business, these conditions could adversely affect the affordability of, and customer demand for, our offerings, and could cause customers to delay or forgo purchases of our offerings. One or more of these circumstances could cause our revenue to decline. Also, our customers may not be able to obtain adequate access to credit, which could affect their ability to purchase our offerings or make timely payments to us. The current economic conditions, including federal fiscal and monetary policy actions, may lead to inflationary conditions in our cost base, particularly in our lease and personnel related expenses. This could harm our margins and profitability if we are unable to increase prices or reduce costs sufficiently to offset the effects of inflation in our cost base. For these reasons, among others, if challenging economic conditions persist or worsen, our operating results and financial condition could be adversely affected.

Disruptions in the financial markets could affect our ability to obtain debt or equity financing or to refinance our existing indebtedness on reasonable terms or at all.

Disruptions in the financial markets could impact our ability to obtain debt or equity financing, or lines of credit, in the future as well as impact our ability to refinance our existing indebtedness on reasonable terms or at all, which could affect our strategic operations and our financial performance and force modifications to our operations.

Changes in our usage patterns or industry practice could result in increasing peering costs for our IP network.

Peering agreements with other ISPs have allowed us to access the Internet and exchange data with these providers. In most cases, we peer with these ISPs on a payment-free basis, referred to as settlement-free peering. We plan to continue to leverage this settlement-free peering. If other providers change the terms upon which they allow settlement-free peering or if changes in Internet usage patterns, including the ratio of inbound to outbound traffic, cause us to fall below the criteria that these providers use in allowing settlement-free peering, the costs of operating our Internet backbone will likely increase. Any increases in costs could have an adverse effect on our margins and our ability to compete in the IP market.

Terrorism and natural disasters could adversely impact our business.

The ongoing threat of terrorist activity and other acts of war or hostility have had, and may continue to have, an adverse effect on business, financial and general economic conditions. Effects from these events and any future terrorist activity, including cyber terrorism, may, in turn, increase our costs due to the need to provide enhanced security, which would adversely affect our business and results of operations. Terrorist activity could damage or destroy our Internet infrastructure and may adversely affect our ability to attract and retain customers, raise capital, and operate and maintain our network access points. We are particularly vulnerable to acts of terrorism because of our large data center presence in New York. We are also susceptible to other catastrophic events such as major natural disasters, extreme weather, fires, or similar events that could affect our headquarters, our other offices, or our network, infrastructure, or equipment, all of which could adversely affect our business.

New York. We are also susceptible to other catastrophic events such as major natural disasters, extreme weather, fires, or similar events that could affect our headquarters, our other offices, or our network, infrastructure, or equipment, all of which could adversely affect our business.

Rapid changes in technology could affect our ability to compete for business customers.

The technology used ~~enable~~in ~~deliver~~delivering communications ~~services~~offerings has changed rapidly in the past and will likely continue to do so in the future. If we are unable to keep up with such changes ~~make~~made available by next generation technology, we may not be able to offer competitive offerings to our business customers. This could adversely affect our ability to compete for business customers, which, in turn, would adversely affect our results of operations and financial condition.

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Risks Related to a Possible REIT Conversion

Although we have completed the first phase of our investigation on the advisability and feasibility of a conversion of ZGH to a ~~real estate investment trust for U.S. federal income tax purposes (a “~~REIT”), we can provide no assurance that ZGH will ultimately pursue a REIT conversion or whether any such conversion will be successful.

In May 2018, we announced that weZGH completed the first phase of ~~our~~their investigation on the advisability and feasibility of a conversion of ZGH to a REIT. In order to successfully convert ZGH to a REIT, there are significant implementation and operational complexities we would need to satisfy, including completing internal reorganizations and realignment of business segments, modifying accounting, financial systems and reporting, receiving ZGH stockholder approvals and making any required ZGH stockholder payouts, and possibly obtaining a private letter ruling, or PLR, from the ~~Internal Revenue Service (“~~IRS”). The timing and outcome of many of these conditions are beyond our control. In particular, if a favorable PLR is necessary or desirable to effect ZGH’s REIT conversion, we cannot provide assurance that the IRS will ultimately provide ZGH with such a PLR or when it might do so.

At the conclusion of ~~our~~the investigation and preparations for converting to a REIT, ZGH’s board of directors may decide not to convert to ZGH to a REIT, or to delay such a conversion, if itthey ~~determines~~determine in its sole discretion that a REIT conversion is not in the best interests of us or ZGH stockholders or because it identifies alternatives that it believes could create stockholder value more effectively than conversion to a REIT. In addition, Parent has review and consent rights pursuant to the Merger Agreement over any future REIT election by ZGH, as well as over possible steps toward converting to a REIT, and Parent may or may not be amendable to such election or such steps. Thus, we can provide no assurance that ZGH will ultimately pursue a REIT conversion or whether any such conversion will be successful.

If ZGH converts to a REIT, it may, nevertheless, not qualify or remain qualified for taxation as a REIT.

If ZGH converts to a REIT, we plan to operate in a manner consistent with the REIT qualification rules. However, we cannot provide assurance that ZGH will, in fact, qualify for taxation as a REIT or that ZGH will remain so qualified. Qualification for taxation as a REIT involves the application of highly technical and complex provisions of the ~~U.S. Internal Revenue~~ Code ~~of 1986, as amended (the “Code”),~~ to our operations as well as various factual determinations concerning matters and circumstances not entirely within our control. There are limited judicial or administrative interpretations of applicable REIT provisions. Changes in legislation, federal tax rules and interpretations thereof could also prevent ZGH from remaining qualified for taxation as a REIT or realizing the benefits for us and ZGH stockholders of qualifying for taxation as a REIT.

If ZGH fails to qualify for taxation as a REIT in any taxable year after conversion to a REIT, and is not then entitled to relief under the Code, we will be subject to U.S. federal and state income tax on taxable income at regular corporate income tax rates with respect to each such taxable year for which the statute of limitations remains open. In addition, we will be subject to monetary penalties for the failure. Failing to qualify for taxation as a REIT in any year following a REIT conversion would significantly reduce our net earnings and cash flow because of our additional tax liability and the penalties for the years involved, which could significantly impact our financial condition.

If ZGH converts to a REIT, it may not realize the anticipated benefits to stockholders, including the achievement of significant tax savings for us and regular distributions to ZGH stockholders.

If ZGH converts to a REIT, we cannot provide assurance that ZGH stockholders will experience benefits attributable to qualification and taxation as a REIT, including the ability to reduce corporate level federal and state income taxes through distributions to ZGH stockholders and to make regular distributions to ZGH stockholders. The realization of the anticipated benefits to ZGH stockholders will depend on numerous factors, many of which are outside our control. In addition, future cash distributions to ZGH stockholders will depend on cash flows, as well as the impact of alternative, more attractive investments as compared to such distributions. Further, changes in legislation or the federal and state tax rules could adversely impact the benefits of qualifying for taxation as a REIT.

~~If ZGH converts to a REIT, complying with REIT qualification requirements may limit flexibility or cause us to forego otherwise attractive opportunities.~~33

ToTable ~~qualify ZGH for taxation as a REIT, we must satisfy tests concerning, among other things, the sources~~ of our income, the nature and diversification of our assets, the amounts we distribute to ZGH for distribution to ZGH stockholders and the ownership of ZGH common stock. For example, under the Code, no more than 20% of the value of the assets of a REIT may be represented by securities of one or more of TRSs, and similar rules apply to other nonqualifying assets. These limitations may affect our ability to make large investments in other non-REIT qualifying operations or assets. In addition, in order to maintain qualification for taxation as a REIT, ZGH will be required to distribute at least 90% of REIT taxable income annually, determined without regard to the dividends paid deduction and excluding any net capital gains. Even if ZGH maintains qualification for taxation as a REIT, we will be subject to U.S. federal income tax at regular corporate income tax rates for undistributed REIT taxable income, as well as U.S. federal income tax at regular corporate income tax rates for income recognized by TRSs. Because of these ZGH distribution requirements, which will in turn require us to make distributions to ZGH, we will likely not be able to fund future capital needs and investments from operating cash flow. As such, compliance with REIT tests may hinder our ability to make certain attractive investments, including the purchase of significant nonqualifying assets and the material expansion of non-real estate activities.Contents

If ZGH converts to a REIT, complying with REIT qualification requirements may limit flexibility or cause us to forgo otherwise attractive opportunities.

To qualify ZGH for taxation as a REIT, ZGH must satisfy tests concerning, among other things, the sources of income, the nature and diversification of assets, the amounts we distribute to ZGH for distribution to ZGH stockholders and the ownership of ZGH common stock. For example, under the Code, no more than 20% of the value of the assets of a REIT may be represented by securities of one or more TRSs. Similar rules apply to other nonqualifying assets. These limitations may affect our ability to make large investments in other non-REIT qualifying operations or assets. In addition, in order to maintain qualification for taxation as a REIT, ZGH will be required to distribute at least 90% of REIT taxable income annually, determined without regard to the dividends paid deduction and excluding any net capital gains. Even if ZGH maintains qualification for taxation as a REIT, ZGH will generally be subject to U.S. federal and state income tax at regular corporate income tax rates for undistributed REIT taxable income, as well as U.S. federal and state income tax at regular corporate income tax rates for income recognized by TRSs. Because of these ZGH distribution requirements, which will in turn require us to make distributions to ZGH, we will likely not be able to fund future capital needs and investments from operating cash flow. As such, compliance with REIT tests may hinder our ability to make certain attractive investments, including the purchase of significant nonqualifying assets and the material expansion of non-real estate activities.

If ZGH converts to a REIT, we may restructure or issue debt or raise equity to satisfy conversion costs and the requirement that ZGH distribute accumulated earnings and profits.

Depending on the size and timing of any cash outlays and any required distribution of accumulated earnings and profits associated with a possible conversion to a REIT, we or ZGH may restructure or issue debt and/or issue equity to fund these disbursements, even if the then-prevailing market conditions are not favorable for these transactions. Whether ZGH issues equity, at what price and amount and other terms of any such issuances will depend on many factors, including alternative sources of capital, then existing leverage, need for additional capital, market conditions and other factors beyond its control. If ZGH raises additional funds through the issuance of equity securities or debt convertible into equity securities, the percentage of stock ownership by existing ZGH stockholders may be reduced. In addition, new equity securities or convertible debt securities could have rights, preferences, and privileges senior to those of current ZGH stockholders, which could substantially decrease the value of ZGH securities owned by them. Depending on the share price it is able to obtain, ZGH may have to sell a significant number of shares in order to raise the capital deemed necessary to execute our long-term strategy, and ZGH stockholders may experience dilution in the value of their shares as a result. Furthermore, satisfying any conversion costs and any required distribution of accumulated earnings and profits may increase the financing needed to fund capital expenditures, future growth and expansion initiatives. As a result our indebtedness could increase. See “Risks Related to ~~our~~Our Business” for further information regarding our substantial indebtedness.

There are uncertainties relating to the costs associated with implementing a possible REIT conversion.

Our estimates of any tax and other costs to convert ZGH to a REIT may not be accurate, and such costs may actually be higher than our estimates due to unanticipated outcomes in the process of obtaining a PLR, changes in our business support functions and support costs, the unsuccessful execution of internal planning, including restructurings and cost reduction initiatives, or other factors.

Restrictive loan covenants could prevent ZGH from satisfying REIT distribution requirements.

If ZGH converts to a REIT, restrictions in our credit facility and our indentures may prevent ZGH from satisfying REIT distribution requirements, which would prevent ZGH from qualifying for taxation as a REIT. If we are unable to renegotiate our credit facility and our indentures to remove certain applicable restrictions and if these limits prevent ZGH from distributing 100% of REIT taxable income, we would be subject to federal and state corporate income tax, and potentially a nondeductible excise tax, on the retained amounts. See “Risks Related to ~~our~~Our Business” for further information on our restrictive loan covenants.

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ZGH has no experience operating as a REIT, which may adversely affect our business, financial condition or results of operations if ZGH converts to a REIT.

ZGH has no experience operating as a REIT and our senior management has no experience operating a REIT. Our pre-REIT operating experience may not be sufficient to prepare usZGH to ~~successfully~~ operate successfully as a REIT. If ZGH converts to a REIT, its inability to operate successfully as a REIT, including the failure to maintain qualification for taxation as a REIT, could adversely affect our business, financial condition or results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal properties are our fiber optic network and its component assets. We own a majority of the communications equipment required for operating the network and our business. ~~As of June 30, 2018, we own or lease approximately 128,910 route miles or 11,867,276 fiber miles.~~ We provide colocation and interconnection offerings utilizing our own data centers located within major carrier hotels and other strategic buildings in 50 51 locations throughout the United States, Canada and Europe. We generally do not own the buildings where we provide our colocation interconnection offerings; ~~however~~ rather, ~~the~~we ~~zColo group manages approximately 1,034,000 square feet of~~ manage licensable colocation space. See “Item 1. Business” for additional discussion related to our network and colocation properties.

We lease our corporate headquarters in Boulder, Colorado as well as regional offices and sales, administrative and other support offices. Our corporate headquarters ~~located~~are at located at 1821 30th Street, Unit A, Boulder, Colorado ~~is approximately 42,000 square feet~~. We ~~lease properties to locate the POPs necessary to operate our network.~~ Office space is leased in the markets where we maintain our network ~~and generally averages 17,000 square feet~~. Each of our business units utilize these facilities. The majority of our leases have renewal provisions at either fair market value or a stated escalation above the last year of the current term. We also lease properties to locate the POPs necessary to operate our network.

ITEM 3. LEGAL PROCEEDINGS

In the ordinary course of business, we are from time to time party to various litigation matters ~~that~~ we believe are incidental to the operation of our business. We record an appropriate provision when the occurrence of loss is probable and can be reasonably estimated. We cannot estimate with certainty our ultimate legal and financial liability with respect to any such pending litigation matters, and it is possible one or more of them could have a material adverse effect on us. However, we believe ~~that~~ the outcome of any such pending litigation matters will not have a material adverse effect upon our results of operations, our consolidated financial condition, or our liquidity.

We accrue for a loss related to contingencies when a loss from such claims is probable and the amount of loss can be reasonably estimated. In determining whether a loss from a claim is probable and the loss can be reasonably estimated, we review and evaluate our litigation matters in light of potentially relevant factual and legal developments. If we determine an unfavorable outcome is not probable or the amount of loss cannot be reasonably estimated, we do not accrue for a potential litigation loss. In those situations, we disclose an estimate or range of the reasonably possible losses, if such estimates can be made. At this time, we do not believe that it is possible to estimate the reasonably possible losses or a range of reasonably possible losses related to the matters described below.

Following the filing of the ZGH preliminary proxy statement on June 3, 2019, the following complaints were filed in the United States District Court for the District of Delaware against ZGH and its directors: on June 7, 2019, a purported ZGH stockholder filed a putative class action complaint, captioned Scarantino v. Zayo Group Holdings, Inc., et al., Case No. 1:19-cv-01068-RGA; on June 12, 2019, a purported ZGH stockholder filed a complaint, captioned Klein v. Zayo Group Holdings, Inc., et al., Case No. 1:19-cv-01085-RGA; on June 17, 2019, a purported ZGH stockholder filed a putative class action complaint, captioned Duggan v. Zayo Group Holdings, Inc., et al., Case No. 1:19-cv-01112-RGA; and on June 18, 2019, a purported ZGH stockholder filed a putative class action complaint, captioned, Dixon v. Zayo Group Holdings, Inc., et al., Case No. 1:19-cv-01123-UNA. The complaints assert claims for violations of Section 14(a) of the Exchange Act and SEC Rule 14a-9 against ZGH and its directors, and claims for violations of Section 20(a)

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of the Exchange Act against the ZGH directors. The complaint captioned Duggan v. Zayo Group Holdings, Inc., et al., Case No. 1:19-cv-01112-RGA also asserts a claim for violations of 17 C.F.R. §244.100 against ZGH and its directors. The complaints allege, among other things, that ZGH and its directors disseminated an allegedly false and materially misleading proxy statement. The complaints seek, among other things, to enjoin the merger, a declaration that the proxy statement violated federal securities laws, unspecified damages, and an award of attorneys’ and experts’ fees.

On June 17, 2019, a purported ZGH stockholder filed a complaint, captioned Graves v. Zayo Group Holdings, Inc., et al., Case No. 1:19-cv-01747-KLM, and on June 21, 2019, another purported ZGH stockholder filed a complaint, captioned Karels v. Zayo Group Holdings, Inc., et al., Case No. 1:19-cv-01809-MEH, against ZGH and its directors in the United States District Court for the District of Colorado. The complaints assert claims for violations of Section 14(a) and SEC Rule 14a-9 against ZGH and its directors, and claims for violations of Section 20(a) of the Exchange Act against the ZGH directors. The complaints allege, among other things, that ZGH and its directors disseminated an allegedly false and materially misleading proxy statement. The complaints seek, among other things, to enjoin the merger, unspecified damages, and an award of attorneys' and experts' fees.

On June 18, 2019, another purported ZGH stockholder filed a putative class action complaint, captioned Saroop v. Zayo Group Holdings, Inc., et al., Case No. 2019CV30601, against ZGH and its directors in the District Court of Boulder County, Colorado. The complaint asserts a claim for breach of fiduciary duty against ZGH and its directors. The complaint alleges, among other things, that the directors breached their fiduciary duties in connection with the merger due to certain deal protection provisions in the merger agreement and potential conflicts of interest, and disseminated a materially misleading proxy statement. The complaint seeks, among other things, to enjoin the merger, a declaration that the merger was entered into in breach of fiduciary duty, rescission and invalidation of the merger agreement or other agreements entered into in connection with or in furtherance of the merger, and an award of attorneys’ and experts’ fees.

The defendants believe each of these federal cases are without merit and intend to vigorously defend against them.

ZGH also received five demands from ZGH stockholders pursuant to 8 Del. C. §220 seeking corporate books and records for, among other things, the purported purpose of investigating whether the board of directors breached their fiduciary duties in connection with the merger. ZGH rejected all five of these demands, which prompted three of the stockholders to file complaints against us to enforce their Section 220 rights. These cases, all of which seek the books and records demanded in the respective letters are captioned as follows: Teamsters Local 237 Additional Security Benefit Fund, et al. v. Zayo, C.A. No. 2019-0572-VCMR (July 25, 2019); Massachusetts Laborers' Annuity Fund v. Zayo Group Holdings, Inc., C.A. No. 2019-0573-VCMR; and Waterhouse v. Zayo Group Holdings, Inc., C.A. No. 2019-0589-VCMR (July 31, 2019). ZGH intends to vigorously defend against these actions.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders of Our Common Stock

We are a wholly-owned subsidiary of Zayo Group Holdings, Inc., a public company listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “ZAYO”. There is no public or private trading market for the equity of Zayo Group, LLC.

Dividend Policy

No dividends have been declared or paid on our shares of common stock. Unless ZGH converts to a REIT and is successful in qualifying for and maintaining taxation as a REIT, we currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business, and therefore we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon our financial condition, results of operations, cash flows, capital requirements, and other factors ~~that~~ our board of directors deems relevant, including requirements necessary to qualify for and maintain taxation as a REIT if ZGH converts to a REIT. In addition, our Credit Agreement and the Indentures governing our Notes contain restrictions on the ability to pay dividends or make other distributions with respect to any equity interests. Our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred securities.

Issuer Purchases of Equity Securities

None.

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ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected historical consolidated financial information for Zayo Group, LLC for the periods and as of the dates indicated. The selected historical consolidated financial information ~~for Zayo Group, LLC~~ as of and for the years ended June 30, 2019, 2018, 2017, 2016, ~~2015,~~ and ~~2014~~2015 is derived from, and qualified by reference to, our audited consolidated financial statements and should be read in conjunction with such audited consolidated financial statements and related notes and “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report. These historical results are not necessarily indicative of the results to be expected in the future.

Year Ended June 30,

2018

2017

2016

2015

2014

2019

2018 (1)

2017 (1)

2016 (1)

2015 (1)

(in millions)

Consolidated Statements of Operations Data

Revenue

2,~~604~~578.0

2,~~199~~602.85

12,~~721~~220.73

1,~~347~~721.17

1,~~129~~347.71

Operating costs and expenses

2,~~179~~057.17

12,~~826~~179.03

1,~~481~~844.43

1,~~177~~481.84

1,~~066~~178.1

Operating income

~~424~~520.93

~~373~~423.82

~~240~~376.30

~~169~~240.3

63169.60

Other expenses, net

(~~296~~345.90)

(~~269~~296.79)

(~~308~~269.07)

(~~333~~308.10)

(~~200~~333.41)

Income/(loss) before income taxes

128.0

104.1

(67.7)

(163.8)

(136.8)

Income/(loss) from operations before income taxes

175.3

126.3

106.3

(67.7)

(164.1)

Provision/(benefit) for income taxes

2325.43

1820.47

819.52

(8.7)5

40(8.38)

Net income/(loss)

~~104~~150.60

85105.76

~~(76~~87.2)1

(~~155~~76.12)

(~~177~~155.13)

Consolidated Balance Sheet Data (at period end):

Cash and cash equivalents

~~256~~185.04

~~220~~256.0

~~170~~220.10

~~308~~170.01

~~297~~308.40

Property and equipment, net

5,~~447~~808.29

5,~~016~~427.06

45,~~079~~016.50

34,~~299~~079.25

23,~~822~~299.42

Total assets

9,~~212~~332.24

89,~~727~~205.83

68,~~720~~727.08

6,~~094~~720.0

46,~~980~~094.90

Long-term debt and capital lease obligations, including current portion

56,~~828~~026.69

5,~~639~~828.36

45,~~136~~639.03

34,~~701~~136.40

3,~~178~~701.94

Total member's equity

1,~~476~~328.48

1,~~395~~487.16

1,~~203~~405.83

1,~~194~~212.16

~~401~~1,194.31

(1) On July 1, 2018, the Company adopted the requirements of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASC 606”). Results for the years ended June 30, 2018 and 2017 shown above have been retrospectively adjusted to reflect the adoption of ASC 606. Results for the years ended June 30, 2016 and 2015 and cash and cash equivalents, property and equipment, net, total assets, long-term debt and capital lease obligations, including the current portion as of June 30, 2017, 2016 and 2015 shown above have not been adjusted for the adoption of ASC 606. Total member’s equity has been retrospectively adjusted to reflect the adoption of ASC 606 as of June 30, 2018, 2017 and 2016. See Note 2 – Basis of Presentation in our consolidated financial statements and Note 15 – Revenue and Contract Costs for additional disclosure on the Company’s adoption of ASC 606 and its impact on the consolidated financial statements.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Information contained or incorporated by reference in this Annual Report on Form 10-K (this “Annual Report”), and in other filings by Zayo Group ~~Holdings~~, ~~Inc.~~LLC (the “Company,” “we” or “us”) with the ~~Securities and Exchange Commission (the “~~SEC”) that is not historical by nature constitutes “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and can be identified by the use of forward-looking terminology such as “believes,” “expects,” “plans,” “intends,” “estimates,” “projects,” “could,” “may,” “will,” “should,” or “anticipates,” or the negatives thereof, other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that future results expressed or implied by the forward-looking statements will be achieved, and actual results may differ materially from those contemplated by the forward-looking statements. Such statements are based on our current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, those relating to our financial and operating prospects, current economic trends, future opportunities, ability to retain existing customers and attract new ones, our acquisition strategy and ability to integrate acquired companies and assets, outlook of customers, reception of new products and technologies, strength of competition and pricing, completion of the Merger and uncertainty among customers and employees regarding the Merger, and potential organizational strategies that we may opt to pursue in the future, such as our potential REIT conversion including our ability to successfully combine our divisions and the feasibility and timing of any REIT conversion. Other factors and risks that may affect our business and future financial results are detailed in our SEC filings, including, but not limited to, those described under “Item 1A: Risk Factors” and in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as may be required by law.

The following discussion and analysis should be read together with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report.

Amounts presented in this Item 7 are rounded. As such, rounding differences could occur in period-over-period changes and percentages reported throughout this Item 7.

In May 2018, weZGH announced ~~that~~they we completed the first phase of ~~our~~an investigation on the advisability and feasibility of a conversion to a ~~real~~REIT ~~estate investment trust~~ for U.S. federal income tax purposes ~~(a “REIT”)~~. Please see “Evaluation and Preparation for Potential REIT Conversion” in the below “Overview”.”

On November 7, 2018, ZGH announced plans to separate into two publicly traded companies- one to focus on providing communications infrastructure and another to leverage infrastructure to provide solutions for enterprise customers- with the core tenets of the plan being simplification of the business and a focus on a communications infrastructure business. In February 2019, ZGH announced that while the tenets of this plan remain intact, they no longer believed it is in the shareholders’ best interest for the separation to include a public spin.

On May 8, 2019, ZGH, Parent and Merger Sub entered into the Merger Agreement to be acquired by the Consortium. Upon the close of the Merger, we will operate as a privately-held company. Parent and Merger Sub were formed by the Consortium. Please see “Significant Merger Development” in the below “Overview”.

Overview

Introduction

We are a large and ~~fast~~ growing provider of access to bandwidth infrastructure in the United States (“U.S.”), Europe and Canada. Our products and offerings enable our customers’ mission-critical, high-bandwidth applications, such as cloud-based computing, video, mobile, social media, machine-to-machine connectivity, and other bandwidth-intensive applications. Our key products and offerings include leased dark fiber, fiber to cellular towers and small cell sites, dedicated wavelength connections, Ethernet, IP connectivity, cloud-based computing and storage products and other high-bandwidth offerings. We provide access to our bandwidth infrastructure and other offerings over a unique set of dense metro, regional, and long-haul fiber network sections and through our interconnect-oriented data center facilities. Our fiber network sections and data center facilities are critical components of the overall physical network architecture of the Internet and private networks. Our customer base includes some of the largest and most sophisticated users of bandwidth infrastructure, such as wireless service carriers; telecommunications service carriers; financial services companies; social networking, media, and web content companies; education, research, and healthcare institutions; and governmental agencies. We typically provide customers with access to our bandwidth infrastructure solutions for a fixed monthly recurring fee under contracts that vary between one and twenty years in length. We operate our business with a unique focus on capital allocation and financial performance with the ultimate goal of maximizing equity value for our stockholders. Our core values center on partnership, alignment, and transparency with our three primary constituent groups – employees, customers, and stockholders.

We are a wholly-owned subsidiary of Zayo Group Holdings, Inc., a Delaware corporation (“ZGH”), which prior to October 16, 2014, was wholly owned by Communications Infrastructure Investments, LLC, a Delaware limited liability company (“CII”).39

On Table ~~October 22, 2014, ZGH completed an initial public offering (“IPO”)~~ of ~~shares of its common stock, which were listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “ZAYO”. We are headquartered in Boulder, Colorado.~~Contents

~~Our~~dedicated ~~fiscal~~wavelength ~~year~~connections, ~~ends~~Ethernet, ~~June 30~~IP ~~each year~~connectivity, cloud-based computing and westorage ~~refer~~products and other high-bandwidth offerings. We provide access to ~~the~~our ~~fiscal~~bandwidth ~~year~~infrastructure ~~ended~~and ~~June 30,~~other ~~2018~~offerings asover ~~“Fiscal~~a ~~2018~~unique set of dense metro,” regional, and long-haul fiber network sections and through our interconnect-oriented data center facilities. Our fiber network sections and data center facilities are critical components of the ~~fiscal~~overall ~~year~~physical ~~ended~~network ~~June~~architecture 30of the Internet and private networks. Our customer base includes some of the largest and most sophisticated users of bandwidth infrastructure, ~~2017~~such as ~~“Fiscal~~wireless ~~2017~~service carriers; telecommunications service carriers; financial services companies; social networking,” media, and web content companies; education, research, and healthcare institutions; and governmental agencies. We typically provide customers with access to our bandwidth infrastructure solutions for a fixed monthly recurring fee under contracts that vary between one and twenty or more years in length. We operate our business with a unique focus on capital allocation and financial performance with the ~~fiscal~~ultimate ~~year~~goal ~~ended~~of ~~June~~maximizing 30equity value for our stockholders. Our core values center on partnership, ~~2016~~alignment, asand ~~“Fiscal~~transparency ~~2016~~with our three primary constituent groups – employees, customers, and stockholders.”

We are a wholly-owned subsidiary of Zayo Group Holdings, Inc., a Delaware corporation, which prior to October 16, 2014, was wholly owned by Communications Infrastructure Investments, LLC, a Delaware limited liability company (“CII”).

On October 22, 2014, ZGH completed an initial public offering (“IPO”) of shares of its common stock, which were listed on the NYSE under the ticker symbol “ZAYO.” We are headquartered in Boulder, Colorado.

Our fiscal year ends June 30 each year, and we refer to the fiscal year ended June 30, 2019 as “Fiscal 2019,” the fiscal year ended June 30, 2018 as “Fiscal 2018,” and the fiscal year ended June 30, 2017 as “Fiscal 2017.”

Reportable Segments and our Strategic Product Groups

We use the management approach to determine the segment financial information that should be disaggregated and presented. The management approach is based on the manner by which management has organized the segments within the Company for making operating decisions, allocating resources, and assessing performance. With the continued increase in our scope and scale, ~~effective~~during ~~April~~the 1,fourth ~~2018,~~quarter ~~our chief~~of ~~operating~~Fiscal ~~decision~~2019, ~~maker ("~~our CODM"), who is our Chief Executive Officer, implemented certain organizational changes to the management and operation of the business that directly impact how the CODM makes resource allocation decisions and manages the Company. The ~~change~~changes in structure had the impact of ~~re-aligning~~ combining our ~~existing~~ ~~Strategic~~legacy ~~Product~~Fiber ~~Groups~~Solutions, ~~(“SPGs”)~~Transport, ~~within our~~and ~~existing~~Enterprise Networks segments~~. The~~ ~~changes~~into ina ~~structure~~single ~~also~~new ~~resulted~~segment, inZayo ~~changes~~Networks, inand ~~how~~re-aligning ~~the~~our ~~Company~~Cloud ~~measures~~and ~~the~~Cybersecurity ~~relative~~SPG ~~burden~~from ~~each~~our ~~segment~~legacy ~~bears~~Enterprise ofNetworks ~~indirect~~segment ~~and~~to ~~corporate~~our ~~related~~zColo ~~costs,~~segment. These ~~and~~changes ~~in adjustments~~ to ~~intercompany~~our ~~pricing~~existing ~~which~~reportable ~~more~~segments ~~closely~~have ~~align to~~been ~~third~~recast ~~party~~for ~~pricing~~all onprior ~~the~~period ~~products~~financial and ~~offerings~~operating ~~which~~metrics ~~are~~presented ~~exchanged~~in ~~between~~this ~~our~~Annual ~~SPGs~~Report for comparability. ~~See~~Our ~~Note~~four ~~16-Segment~~reportable ~~Reporting,~~segments inare ~~our~~described below.

36Zayo Networks. Our Zayo Networks segment provides access to bandwidth infrastructure. This includes our Fiber, Layer 2/3 and Transport solutions. Within the Fiber business, Zayo provides access to mobile infrastructure (fiber-to-the-tower and small cell). Our mobile infrastructure solutions permit direct fiber connections to cell towers, small cells, hub sites and mobile switching centers. Fiber solutions customers include carriers and other communication service providers, internet service providers, wireless service providers, major media and content companies, large enterprises and other companies that have the expertise to run their own fiber optic networks or require interconnected technical space. The contract terms for fiber solutions customers tend to range from three to twenty or more years. Our Layer 2/3 line of business provides connectivity and telecommunications solutions to medium and large enterprises. Our offerings within Layer 2/3 include Ethernet, IP, Transit Offerings, Wide Area Networking products, Media Networks and CloudLink. Solutions range from point-to-point data connections to multi-site managed networks to international outsourced IT infrastructure environments. The contract terms for Layer 2/3 solutions tend to range from one to five years. Our Transport line of business provide access to lit communications bandwidth infrastructure using customer-accessed optronics to light the fiber and, and our customers pay for access based on the amount and type of bandwidth they require. We target customers who require a significant amount of bandwidth across their networks. Transport customers include carriers, content providers, financial services companies, healthcare, government entities, education institutions and other medium and large enterprises. The contract terms in this segment tend to range from two to five years.

consolidated financial statements for further description of the changes. Where practicable, changes to all prior period financial and operational metrics have been recasted in our Annual Report for comparability. We have six reportable segments as described below: 40

~~Fiber~~Table ~~Solutions. Through the Fiber Solutions segment, we provide access to raw bandwidth infrastructure to customers that require control~~ of their internal networks. These solutions include dark fiber, dedicated lit network sections and mobile infrastructure (fiber-to-the-tower and small cell). Dark fiber is a physically separate and secure, private platform for dedicated bandwidth. We lease dark fiber pairs (usually 2 to 12 total fibers) to our customers, who “light” the fiber using their own optronics. Our mobile infrastructure solutions permit direct fiber connections to cell towers, small cells, hub sites, and mobile switching centers. Fiber Solutions customers include carriers and other communication service providers, Internet service providers, wireless service providers, major media and content companies, large enterprises, and other companies that have the expertise to run their own fiber optic networks or require interconnected technical space. The contract terms in the Fiber Solutions segment tend to range from three to twenty years.Contents

~~Transport~~Zayo Colocation (“zColo”). The ~~Transport~~zColo segment provides ~~access~~data tocenter ~~lit~~and ~~bandwidth~~cloud infrastructure solutions ~~over~~to ~~our~~a ~~metro~~broad range of enterprise, ~~regional~~carrier, cloud and ~~long-haul~~content ~~fiber~~customers. ~~network~~Our ~~sections.~~offerings ~~The~~within this segment ~~uses~~include ~~customer-accessed~~the ~~optronics~~provision toof ~~light~~colocation ~~the fiber~~space, power and ~~our~~interconnection ~~customers~~offerings ~~pay~~in ~~for~~North ~~access~~America ~~based~~and onWestern ~~the~~Europe. ~~amount~~Solutions ~~and~~range ~~type~~in ofsize ~~bandwidth~~from ~~they~~single ~~require~~cabinet solutions to 1MW+ data center infrastructure environments. ~~The~~Our ~~offerings~~data ~~within~~centers ~~this~~also ~~segment~~support ~~include~~networking ~~Wavelengths,~~components ~~Ethernet~~for the purpose of aggregating and accommodating customers’ data, ~~SONET~~voice, internet and ~~wholesale~~video IPtraffic. WeThe ~~target~~contract ~~customers~~terms ~~who~~in ~~require~~this asegment ~~significant~~tend ~~amount~~to ofrange ~~bandwidth~~from ~~across~~two ~~their~~to ~~networks~~five years. Our ~~Transport~~Cloud ~~customers~~and ~~include~~Cybersecurity ~~carriers,~~SPG ~~content~~is ~~providers,~~included ~~financial~~in ~~services~~the ~~companies,~~zColo ~~healthcare,~~segment. ~~government~~The ~~entities~~Cloud and Cybersecurity SPG combines private cloud, ~~education~~public ~~institutions~~cloud and ~~other~~managed ~~medium~~offerings ~~and~~in ~~large~~order ~~enterprises.~~to ~~The~~provide ~~contract~~its ~~terms~~customers insecure ~~this~~infrastructure ~~segment~~as ~~tend~~a toservice ~~range~~(IaaS), ~~from~~which ~~two~~enables toon-demand ~~five~~scaling ~~years~~and virtual computing in hybrid environments.

Enterprise Networks. The Enterprise Networks segment provides connectivity and lit bandwidth telecommunication solutions to medium and large enterprises. Our offerings within this segment include Internet, wide area networking products, managed products and cloud-based computing and storage products. Solutions range from point-to-point data connections to multi-site managed networks to international outsourced IT infrastructure environments. The contract terms in the Enterprise Networks segment tend to range from one to ten years.

Zayo Colocation (zColo). The Colocation segment provides data center infrastructure solutions to a broad range of enterprise, carrier, cloud, and content customers. Our offerings within this segment include the provision of colocation space, power and interconnection offerings in North America and Western Europe. Solutions range in size from single cabinet solutions to 1MW+ data center infrastructure environments. Our data centers also support a large component of networking components for the purpose of aggregating and accommodating customer’s data, voice, Internet, and video traffic. The contract terms in this segment tend to range from two to five years.

Allstream. The Allstream segment provides Cloud VoIP and Data Solutions. This includes a full range of local voice offerings allowing business customers to complete telephone calls in their local exchange, as well as make long distance, toll-free and related calls. Unified Communications is the integration of real-time communication services such as telephony (including Cloud-based IP telephony), instant messaging and video conferencing with non-real-time communication services, such as integrated voicemail and e-mail. Allstream also provides customers with comprehensive telecommunications services including Ethernet, and IP/MPLS VPN Solutions.

Other. ~~Our~~ The Other segment is primarily comprised of Zayo Professional Services ~~(“ZPS”)~~. ZPS provides network and technical resources to customers who wish to leverage ~~our~~the Company’s expertise in designing, acquiring and maintaining a network ~~sections~~. The contract terms typically run for one year for a fixed recurring monthly fee in the case of network and on an hourly basis for technical resources (usage revenue). ZPS also generates revenue via telecommunication equipment sales.

Evaluation and Preparation for Potential REIT Conversion

On May 3, 2018, weZGH announced ~~that~~they we completed the first phase of ~~our~~the investigation on the advisability and feasibility of a conversion of ZGH to a ~~real~~REIT ~~estate investment trust~~ for U.S. federal income tax purposes. (As part of the current phase of the evaluation and preparation for a “potential conversion to a REIT”), ZGH began a direct dialogue with the IRS in an effort to obtain clarity and support for their position, and ZGH is seeking a PLR from the IRS that addresses, among other things, whether our revenues from dark and lit fiber satisfy applicable REIT income tests. ZGH Wesubmitted the PLR request to the IRS in July 2018, but the IRS may not provide a response until later in 2019 or beyond or may not respond at all. ZGH’s ultimate decision to convert to a REIT may depend upon a favorable PLR from the IRS.

37Also, we have begun to execute various organizational changes that are required for ZGH to operate as a REIT, including the adoption of amendments to our organizational documents that, among other things, impose certain stock ownership limitations and transfer restrictions, the realignment of our business segments to clearly delineate the leasing of network assets from ancillary services and, in particular, the separation and potential divestiture or deconsolidation of our Allstream business segment. These organizational changes are not expected to result in any changes to our reportable segments.

~~have~~ If, ~~begun~~following ~~the~~our ~~next~~current phase of ~~our~~ evaluation and preparation, ~~for~~we adecide ~~potential~~to ~~conversion~~convert ZGH to a REIT. Asand ~~part~~are ofsuccessful ~~these~~in ~~efforts~~qualifying ZGH for taxation as a REIT, then we ~~have~~will ~~begun~~generally abe ~~direct~~permitted ~~dialogue~~to ~~with~~deduct from federal income taxes the Udividends that ZGH pays to its stockholders.S. ~~Internal~~The ~~Revenue~~income ~~Service~~represented ~~(“IRS”)~~by insuch andividends ~~effort~~would tonot ~~obtain~~be ~~clarity~~subject ~~and~~to ~~support~~federal ~~for~~income ~~our~~taxation ~~position,~~at ~~and~~the ~~ZGH~~entity islevel ~~seeking~~but awould ~~private~~be ~~letter~~taxed, ~~ruling~~if ~~(“PLR”)~~at ~~from~~all, at the ~~IRS~~stockholder level. ~~Also~~Nevertheless, wethe ~~have~~income ~~begun~~of toZGH’s ~~execute~~domestic ~~the~~TRS, ~~organizational~~which ~~changes~~will hold our U.S. operations that ~~are~~may ~~required~~not ~~for~~be ~~ZGH~~REIT-compliant, towill ~~operate~~be subject, as ~~a REIT~~applicable, ~~including~~to ~~the~~federal ~~realignment~~and ofstate corporate income tax. Likewise, our ~~business~~foreign ~~segments~~subsidiaries will continue to ~~clearly~~be ~~delineate~~subject ~~the~~to ~~leasing~~foreign ofincome ~~network~~taxes ~~assets~~in ~~from~~jurisdictions ~~ancillary~~in ~~services~~which ~~and,~~they inhold ~~particular~~assets or conduct operations, ~~the~~regardless ~~separation~~of ~~and~~whether ~~potential~~held ~~divestiture~~or conducted through TRSs or ~~deconsolidation~~through ofentities ~~our~~that ~~Allstream~~are ~~business~~disregarded ~~segment~~from us for U.S. ~~These~~federal ~~organization~~income ~~changes~~tax dopurposes. ~~not~~Also, ~~result~~we inwill be subject to a separate corporate income tax on any ~~changes~~gains recognized during a specified period (generally five years) following the REIT conversion that are attributable to ~~our~~“built-in” ~~reportable~~gains ~~segments~~with respect to the assets that we own on the date ZGH converts to a REIT.

~~If,~~The ~~following~~ability ~~our current phase~~ of ~~evaluation and preparation, we make a definitive decision to convert~~ ZGH to aqualify ~~REIT and are successful in qualifying ZGH~~ for taxation as a REIT, we will ~~generally~~depend beupon ~~permitted~~our tocompliance ~~deduct~~with ~~from~~various ~~federal~~requirements ~~income~~following ~~taxes~~ the ~~dividends~~REIT ~~that~~conversion, ~~ZGH~~including ~~pays~~requirements torelated ~~its stockholders. The income represented by such dividends would not be subject~~ to ~~federal income taxation at~~ the ~~entity~~nature ~~level but would be taxed, if at all, at the stockholder level. Nevertheless, the income~~ of ~~ZGH’s domestic taxable REIT subsidiaries (each, a “TRS”), which will hold~~ our U.S. operations that may not be REIT-compliant, will be subject, as applicable, to federal and state corporate income tax. Likewise, our foreign subsidiaries will continue to be subject to foreign income taxes in jurisdictions in which they hold assets ~~or conduct operations~~, regardless of whether held or conducted through TRSs or through entities that are disregarded from us for U.S. federal income tax purposes. Also, we will be subject to a separate corporate income tax on any gains recognized during a specified period (generally 5 years) following the ~~REIT~~sources ~~conversion~~of ~~that are attributable to “built-in” gains with respect to the assets that are owned by us on the date ZGH converts to a REIT.~~

The ability of ZGH to qualify for taxation as a REIT will depend upon our continuing compliance following the REIT conversion with various requirements, including requirements related to the nature of our assets, the sources of our income and the distributions to ZGH stockholders. If ZGH fails to qualify for taxation as a REIT, we will be subject to federal income tax at regular corporate income tax rates. Even if ZGH qualifies for taxation as a REIT, we may be subject to certain federal, state, local and foreign taxes on income and property. In particular, while state income tax regimes often parallel the federal income tax regime for REITs described above, many states do not completely follow federal rules and some may not follow them at all.41

~~The~~Table ~~current phase~~ of our evaluation and preparation includes ZGH seeking a PLR from the IRS. ZGH submitted a PLR request to the IRS in July 2018, but the IRS may not provide a response until 2019 or later or may not respond at all.Contents

our income and the distributions to ZGH stockholders. If ZGH fails to qualify for taxation as a REIT, we will be subject to federal and state income tax at regular corporate income tax rates in the same manner as we are currently taxed. Even if ZGH qualifies for taxation as a REIT, we may be subject to certain federal, state, local and foreign taxes on income and property. In particular, while state income tax regimes often parallel the federal income tax regime for REITs described above, many states do not completely follow federal rules and some may not follow them at all.

Significant Merger Development

On May 8, 2019, ZGH, Parent and Merger Sub entered into a Merger Agreement to be acquired by the Consortium. Upon the close of the Merger, ZGH will operate as a privately-held company. Parent and Merger Sub were formed by the Consortium.

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions of the Merger Agreement, (i) Merger Sub will be merged with and into ZGH, with ZGH as the surviving and continuing corporation in the Merger and a wholly owned subsidiary of Parent, and (ii) at the effective time of the Merger, each of ZGH’s outstanding shares of Common Stock (other than Common Stock owned by Parent, Merger Sub or any wholly owned subsidiary of Parent or Merger Sub or held in ZGH treasury, all of which shall be canceled without any consideration being exchanged therefore or shares of ZGH Common Stock held by holders who have made a valid demand for appraisal in accordance with Section 262 of the Delaware General Corporation Law) will be converted into the right to receive an amount equal to $35.00 per share in cash.

The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, which has been filed as Exhibit 2.1 hereto.

Factors Affecting Our Results of Operations

Business Acquisitions

We were founded in 2007 with the investment thesis of building a bandwidth infrastructure platform to take advantage of the favorable Internet, data, and wireless growth trends driving the ongoing demand for access to bandwidth infrastructure, and to be an active participant in the consolidation of the industry. These trends have continued in the years since our founding, despite volatile economic conditions, and we believe ~~that~~ we are well positioned to continue ~~to capitalize on those trends. We have built a significant portion of our network and product offerings through 45 acquisitions through June 30, 2018.~~

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to capitalize on those trends. We have built a significant portion of our network and product offerings through 45 acquisitions through June 30, 2019.

As a result of the growth of our business from these acquisitions and the capital expenditures and increased debt used to fund those investing activities, our results of operations for the respective periods presented and discussed herein are not comparable.

38Fiscal 2018 Acquisitions

Recent Acquisitions

Neutral Path Communications

On April 17, 2018, we acquired substantially all of the assets of Neutral Path Communications and Near North Partners (collectively, “Neutral Path”) for $33.3 million, which is net of cash acquired and also ~~includes~~included an estimate for a contingent payment based on sales performance through June 30, 2018. The purchase price is subject to net working capital and certain post-closing adjustments. As of June 30, 2018 $4.0 million of the purchase consideration is being held in escrow pending the expiration of the indemnification adjustment period. The all-cash acquisition was funded with cash on hand and was considered an asset purchase for U.S. federal income tax purposes.

Neutral Path is a long haul infrastructure provider, providing access to a fiber network section in the Midwest. The transaction added 452 owned route miles, plus additional leased route miles, to our extensive North American network, including a unique high-count fiber route from Minneapolis to Omaha. The fiber footprint ~~provides~~augments usour network with three owned diverse fiber routes out of Minneapolis, Chicago and Omaha.

The results of the acquired Neutral Path business are included in our operating results beginning April 17, 2018.

McLean Data Center

On April 4, 2018, we acquired McLean Data Center, ~~(“McLean”)~~ a privately owned data center for an insignificant amount. The acquisition was considered an asset purchase for U.S. federal income tax purposes and a business combination for accounting purposes. The Company assumed an operating lease obligation and certain assets, such as cash, structural components, equipment and customer contracts equipment and customer contracts.

Spread Networks

On February 28, 2018, we acquired Spread Networks, LLC (“Spread Networks”), a privately-owned telecommunications provider that owns and ~~operates~~offers access to a 825-mile, high-fiber count long haul route connecting New York and Chicago, for net purchase consideration of $130.5 million, net of cash acquired~~, subject to certain post-closing adjustments~~. ~~As of June 30, 2018, $0.6 million of the purchase consideration is being held in escrow pending the expiration of the indemnification adjustment period.~~ The all-cash acquisition was funded with cash on hand and debt and was considered an asset purchase for U.S. federal income tax purposes.

The route connects 755 Secaucus Road in Secaucus, New Jersey and 1400 Federal Boulevard in Carteret, New Jersey to 350 Cermak Road in Chicago, Illinois, with additional connectivity to be enabled by Zayo’s existing network. Zayo plans to use the acquired assets to provide a low-latency wavelength route from Seattle to New York.

The results of the acquired Spread Networks business are included in our operating results beginning February 28, 2018.

Optic Zoo Networks

On January 18, 2018, we acquired Vancouver, BC Canada-based Optic Zoo Networks for net purchase consideration of CAD $30.9 million (or $24.8 million), net of cash acquired~~, subject to certain post-closing adjustments~~. Optic Zoo Networks owns and provides access to high-capacity fiber in Vancouver. ~~As of June 30, 2018, CAD $3.1 million (or $2.4 million), of the purchase consideration is being held in escrow pending the expiration of the indemnification adjustment period.~~ The acquisition was funded with cash on hand and was considered a stock purchase for U.S. federal income tax purposes.

The transaction strengthens Zayo’s position in Vancouver and Western Canada, adding 103 route miles and more than 100 on-net buildings to Zayo’s Vancouver footprint.

The results of the acquired Optic Zoo Networks business are included in our operating results beginning January 18, 2018.

3943

~~KIO~~Table ~~Networks~~of ~~US Data Centers~~Contents

On May 1, 2017, we completed the $11.9 million cash acquisition of Castle Access, Inc.’s (d/b/a “KIO Networks US”) San Diego, California data centers. The two data centers, located at 12270 World Trade Drive and 9606 Aero Drive, total more than 100,000 square feet of space and two megawatts (MW) of critical IT power, with additional power available. The acquisition was funded with cash on hand and was considered a stock purchase for U.S. federal income tax purposes.Disposition

~~The~~Scott-Rice ~~results~~Telephone ~~of the acquired KIO Networks US business are included in our operating results beginning May 1, 2017~~Co.

On July 31, 2018, we completed the sale of Scott-Rice Telephone Co. (“SRT”), a Minnesota incumbent local exchange carrier, for $42.2 million to Nuvera Communications, Inc. (formerly New Ulm Telecom, Inc.). As of June 30, 2019, $3.2 million of purchase consideration was held in escrow. We recognized a pre-tax gain of $5.5 million on the sale, which is included in other income, net in the consolidated statements of operations. We acquired SRT as part of our March 1, 2017 purchase of Electric Lightwave Parent, Inc. and it was included as part of the Allstream segment. SRT had a pre-tax net loss of $1.6 million for the year ended June 30, 2018 and pre-tax net income of $2.9 million from when it was acquired in March 1, 2017 through June 30, 2017.

On March 1, 2017, we acquired Electric Lightwave Parent, Inc. (“Electric Lightwave”), an infrastructure and telecom provider serving 35 markets in the western U.S., for net purchase consideration of $1,426.6 million, net of cash acquired, subject to certain post-closing adjustments. The acquisition was funded through debt and cash on hand. 44

~~The~~Table ~~acquisition added 8,100 route miles~~ of long haul fiber and 4,000 miles of dense metro fiber across Denver, Minneapolis, Phoenix, Portland, Seattle, Sacramento, San Francisco, San Jose, Salt Lake City, Spokane and Boise, with on-net connectivity to more than 3,100 enterprise buildings and 100 data centers.Contents

The results of the acquired Electric Lightwave business are included in our operating results beginning March 1, 2017.

Santa Clara Data Center

On October 3, 2016, we acquired a data center in Santa Clara, California (the “Santa Clara Data Center”), for net purchase consideration of $11.3 million. The net purchase consideration, which was valued using a discounted cash flow method, will be paid in ten quarterly payments of $1.3 million, beginning in the December 2016 quarter. As of June 30, 2018, the remaining consideration to be paid was $3.8 million.

The Santa Clara Data Center, located at 5101 Lafayette Street, includes 26,900 total square feet and three MW of critical IT power. The facility also includes high-efficiency power and cooling infrastructure, seismic reinforcement and proximity to our long haul dark fiber routes between San Francisco and Los Angeles.

The results of the acquired Santa Clara Data Center business are included in our operating results beginning October 3, 2016.

Summary of Business Acquisitions

The table below summarizes the dates and purchase prices (which are net of cash acquired and include assumption of debt and capital leases) of all acquisitions and asset purchases through June 30, ~~2018~~2019.

Acquisition	Date	Acquisition Cost
		(in millions)
Memphis Networx	July 31, 2007	$	9.2
PPL Telecom	August 24,2007		46.3
Indiana Fiber Works	September 28, 2007		22.6
Onvoy	November 7, 2007		70.0
Voicepipe	November 7, 2007		2.8
Citynet Fiber Networks	February 15, 2008		99.2
Northwest Telephone	May 30, 2008		5.2
CenturyTel Tri-State Markets	July 22, 2008		2.7
Columbia Fiber Solutions	September 30, 2008		12.1
CityNet Holdings Assets	September 30, 2008		3.4
Adesta Assets	September 30, 2008		6.4
Northwest Telephone California	May 26, 2009		0.0
FiberNet	September 9, 2009		96.6
AGL Networks	July 1, 2010		73.7
Dolphini Assets	September 20, 2010		0.2
American Fiber Systems	October 1, 2010		114.1
360networks	December 1, 2011		317.9
MarquisNet	December 31, 2011		13.6
Arialink	May 1 2012		17.1
AboveNet	July 2, 2012		2,210.0
FiberGate	August 31, 2012		118.3
USCarrier	October 1, 2012		16.1
FTS	December 14, 2012		109.7
Litecast	December 31, 2012		22.2
Core NAP	May 31, 2013		7.1
Corelink	August 1, 2013		1.9
Access	October 1, 2013		40.1
FiberLink	October 2, 2013		43.1
CoreXchange	March 4, 2014		17.2
Geo	May 16, 2014		292.3
Neo	July 1, 2014		73.9
Colo Facilities Atlanta	July 1, 2014		51.9
IdeaTek Systems	January 1, 2015		52.7
Latisys	February 23, 2015		677.8
Viatel	December 31, 2015		102.7
Stream Dallas Data Center	December 31, 2015		16.6
Allstream	January 15, 2016		297.6
Clearview	April 1, 2016		18.3
Santa Clara Data Center	October 3, 2016		11.3
Electric Lightwave	March 1, 2017		1,426.6
KIO Networks US Data Centers	May 1, 2017		11.9
Optic Zoo Networks	January 18, 2018		24.8
Spread Networks	February 28, 2018		130.5
McLean Data Center	April 4, 2018		—
Neutral Path Communications	April 17, 2018		33.3
Less portion allocated to the discontinued operations of Onvoy, LLC			(62.3)
Less portion allocated to the disposition of Onvoy, LLC			(62.3)
Total		$	6,658.7
Less portion allocated to the disposition of SRT			(42.2)
Total		$	6,616.5

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We completed each of the acquisitions described above, with the exception of Voicepipe and Corelink, with cash raised through combinations of equity issuances and the incurrence of debt. We acquired Voicepipe from certain existing CII equity holders in exchange for CII preferred units, and we acquired Corelink with a combination of cash and CII preferred units.

Substantial Indebtedness

As of June 30, ~~2018~~2019 and June 30, ~~2017~~2018, long-term debt was as follows:

Date of

Outstanding as of

Issuance or mostrecent amendment

Maturity

InterestPayments

Interest Rate

June 30,2018

June 30, 2017

Issuance or MostRecent Amendment

Maturity

InterestPayments

Interest Rate

June 30, 2019

June 30, 2018

(in millions)

Term Loan Facility due 2021

Jan 2017

Jan 2021

Monthly

LIBOR +2.00%

~~493~~488.87

~~498~~493.8

B-2 Term Loan Facility

Feb 2018

Jan 2024

Monthly

LIBOR +2.25%

1,269.3

1,~~429~~269.93

6.00% Senior Unsecured Notes

Jan & Mar 2015

Apr 2023

Apr/Oct

6.00%

1,430.0

6.375% Senior Unsecured Notes

May 2015 & Apr 2016

May 2025

May/Nov

6.375%

900.0

5.75% Senior Unsecured Notes

Jan, Apr & Jul 2017

Jan 2027

Jan/Jul

5.75%

1,650.0

1,~~350~~650.0

Total obligations

5,743.1

5,608.7

Revolving Loan Facility

Jan/Apr 2019 (1)

Jul 2020 (2)

Monthly

LIBOR +1.75%

145.0

—

Unamortized premium/(discounts), net

11.6

(3.2)

Total obligations

5,883.0

5,743.1

Unamortized debt issuance costs

(59.6)

(67.8)

Unamortized premium, net

11.9

11.6

Carrying value of debt

5,695.1

5,537.7

Unamortized debt issuance costs

(50.2)

(59.6)

Carrying value of debt

5,844.7

5,695.1

Less current portion

(5.0)

Total long-term debt, less current portion

5,~~690~~839.17

5,~~532~~690.71

(1) The ~~weighted~~most ~~average~~recent ~~interest~~borrowings ~~rates~~under ~~(including margins) on~~ the ~~Term~~Revolving Loan Facility ~~were~~occurred ~~approximately~~in ~~4.3%~~January ~~and~~2019 ~~3.4% at June 30, 2018~~ and ~~June~~the ~~30,~~most ~~2017,~~recent ~~respectively.~~amendment ~~Interest rates~~ on ~~Company’s senior secured revolving credit facility (“~~the ~~Revolver”) as~~Revolving ofLoan ~~June~~Facility ~~30,~~was ~~2018 and June 30, 2017 remained consistent at approximately 3.8%. As of June 30, 2018, no amounts were outstanding under the Revolver. Standby letters of credit were outstanding~~ in ~~the~~April ~~amount of $8~~2019.~~1 million as of June 30, 2018, leaving $441.9 million available under the Revolver, subject to certain conditions.~~

(2)

The earliest possible maturity date under the Extension Amendment No. 1 entered into on April 3, 2019. See Note 7 – Long-term Debt to the consolidated financial statements for further details.

The weighted average interest rates (including margins) on the Term Loan Facility were approximately 4.6% and 4.3% at June 30, 2019 and June 30, 2018, respectively. The weighted average interest rate on our senior secured revolving credit facility (“the Revolver”) was approximately 4.2% as of June 30, 2019. The interest rate on the Revolver was approximately 3.8% as of June 30, 2018, and there were no borrowings outstanding under the Revolver as of such date. As of June 30, 2019, $145.0 million was outstanding under the Revolver. Standby letters of credit were outstanding in the amount of $8.5 million as of June 30, 2019, leaving $296.5 million available under the Revolver, subject to certain conditions.

Substantial Capital Expenditures

During Fiscal ~~2018~~2019, ~~2017~~2018, and ~~2016~~2017, we invested $~~789~~786.9 million, $~~835~~789.59 million, and $~~704~~835.1 5 million, respectively, in capital expenditures primarily to expand our fiber network to support new customer contracts. We expect to continue to make significant capital expenditures in future periods.

Background for Review of Our Results of Operations

Revenue

Our revenue is comprised predominately of monthly recurring revenue (“MRR”). MRR is related to an ongoing offering that is generally fixed in price and paid by the customer on a monthly basis. We also report monthly amortized revenue (“MAR”), which represents the amortization of previously collected upfront charges to customers. Upfront charges are typically related to indefeasible rights of use (“IRUs”) structured as pre-payments rather than monthly recurring payments (though we structure IRUs as both prepaid and recurring, largely dependent on the customers’ preference) and installation fees. The last category of revenue we report is other revenue. Usage revenue represents charges to customers for variable contracts. Other revenue primarily includes credits and adjustments, termination revenue, construction contribution payments, and component sales.

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Our consolidated reported revenue in any given period is a function of our beginning revenue under contract and the impact of organic growth and acquisition activity. Our organic activity is driven by net new sales (“bookings”), gross installed revenue (“installs”) and churn processed (“churn”) as further described below.

Net New Sales. Net new sales (“bookings”) represent the dollar amount of orders, to be recorded as MRR and MAR upon installation, in a period that have been signed by the customer and accepted by our product offering delivery organization. The dollar value of bookings is equal to the monthly recurring price ~~that~~ the customer will pay for the offerings and/or the monthly amortized amount of the revenue ~~that~~ we will recognize for those offerings. To the extent a booking is cancelled by the customer prior to the offerings being originated, it is subtracted from the total bookings number in the period that it is cancelled. Bookings do not immediately impact revenue until the solutions are installed (gross installed revenue).

offerings. To the extent a booking is cancelled by the customer prior to the offerings being originated, it is subtracted from the total bookings number in the period that it is cancelled. Bookings do not immediately impact revenue until the solutions are installed (gross installed revenue).

Gross Installed Revenue. Installs are the amount of MRR and MAR for offerings that have been installed, tested, accepted by the customer, and have been recognized in revenue during a given period. Installs include new offerings, price increases, and upgrades.

Churn Processed. Churn is any negative change to MRR and MAR. Churn includes disconnects, negative price changes, and disconnects associated with upgrades or replacement offerings. For each period presented, disconnects associated with attrition and upgrades or replacement offerings are the drivers of churn, accounting for more than 75% of negative changes in MRR and MAR, while price changes account for less than 25%. Monthly churn is also presented as a percentage of MRR and MAR (“churn percentage”).

Given the size and amount of acquisitions we have completed, we have estimated the revenue growth rate associated with our organic activity in each period reported. Our estimated organic growth rate is calculated as if acquisitions closed during the periods presented were closed on the first day of the earliest period presented within this Annual Report. In calculating this pro-forma growth figure, we add the revenue recorded by the acquired companies (including estimated purchase accounting adjustments) for the reporting periods prior to the date of inclusion in our results of operations, and then calculate the growth rate between the two reported periods. The estimated pro-forma revenue growth rates are not necessarily indicative of either future results of operations or results that might have been achieved had the acquisitions been consummated on the first day of the earliest period presented. As we conduct operations outside of the U.S. and have historically acquired companies with functional currencies other than the U.S. dollar (“USD”), the estimated pro-forma revenue growth rates may not adequately reflect operational performance as a result of changes in foreign currency exchange rates.

We have foreign subsidiaries that enter into contracts with customers and vendors in currencies other than the USD—, principally the British pound sterling (“GBP”) and Canadian dollar (“CAD”) and to a lesser extent the Euro. Changes in foreign currency exchange rates impact our revenue and expenses each period. The comparisons excluding the impact of foreign currency exchange rates assume exchange rates remained constant at the comparative period rate.

Operating Costs and Expenses

Our operating costs and expenses consist of network expense (“Netex”), compensation and benefits expenses, network operations expense (“Netops”), stock-based compensation expense, other expenses, and depreciation and amortization.

Netex consists of third-party network costs resulting from our leasing of certain network facilities, primarily leases of circuits and dark fiber, from third parties to augment our owned infrastructure, for which we are generally billed a fixed monthly fee. Netex also includes colocation facility costs for rent and license fees paid to the landlords of the buildings in which our colocation business operates, along with the utility costs to power those facilities. While increases in demand for our offerings will drive additional operating costs in our business, consistent with our strategy of leveraging our owned infrastructure assets, we expect to primarily utilize our existing network infrastructure or build new network infrastructure to meet the demand. In limited circumstances, we will augment our network with additional infrastructure or offerings from third-party providers. Third-party network costs include the upfront cost of the initial installation of such infrastructure. Such costs are included in operating costs in our ~~condensed~~ consolidated statements of operations over the respective contract period.

Compensation and benefits expenses include salaries, wages, incentive compensation and benefits. Employee-related costs that are directly associated with network construction and location installations (and development of business support systems) are capitalized and amortized to operating costs and expenses. Compensation and benefits expenses related to the departments attributed to generating revenue are included in our operating costs line item while compensation and benefits expenses related to the sales, product, and corporate departments are included in our selling, general and administrative expenses line item of our condensed consolidated statements of operations.47

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~~Netops~~Compensation ~~expense~~and ~~includes~~benefits ~~all~~expenses ofinclude ~~the~~salaries, ~~non-personnel~~wages, incentive compensation and benefits. Employee-related ~~expenses~~costs ofthat ~~operating~~are ~~and~~directly ~~maintaining~~associated ~~our~~with network ~~infrastructure,~~construction ~~including~~and ~~contracted~~location ~~maintenance~~installations ~~fees,~~(and ~~right-~~development of~~-way~~ ~~costs,~~business ~~rent~~support ~~for~~systems) ~~cellular~~are ~~towers~~capitalized and ~~other~~amortized ~~places~~to ~~where~~operating ~~fiber~~costs isand ~~located,~~expenses. ~~pole~~Compensation ~~attachment fees,~~ and ~~relocation~~benefits expenses. ~~Such~~related ~~costs~~to the departments attributed to generating revenue are included in our operating costs line item while compensation and benefits expenses related to the sales, product, and corporate departments are included in our ~~condensed~~selling, general and administrative expenses line item of our consolidated statements of operations.

~~Stock-based~~Netops ~~compensation~~ expense isincludes ~~included,~~all ~~based~~of on the ~~responsibilities~~non-personnel related expenses of ~~the~~operating ~~awarded~~and ~~recipient~~maintaining our network infrastructure, inincluding ~~either~~contracted ~~our~~maintenance ~~operating~~fees, right-of-way costs, orrent ~~selling~~for cellular towers and other places where fiber is located, ~~general~~pole attachment fees, and ~~administrative~~relocation expenses. Such costs are included in ~~our~~operating ~~condensed~~costs in our consolidated statements of operations.

Stock-based compensation expense is included, based on the responsibilities of the awarded recipient, in either our operating costs or selling, general and administrative expenses in our consolidated statements of operations.

Other expenses include expenses such as property tax, franchise fees, colocation facility maintenance, travel, office expense and other administrative costs. Other expenses are included in both operating costs and selling, general and administrative expenses depending on their relationship to generating revenue or association with sales and administration.

Transaction costs include expenses associated with professional services (i.e. legal, accounting, regulatory, etc.) rendered in connection with acquisitions or disposals (including spin-offs), travel expense and severance expense incurred that are associated with acquisitions or disposals, and other direct expenses incurred that are associated with signed and/or closed acquisitions or disposals and unsuccessful acquisitions or disposals. Transaction costs are included in “Selling, general and administrative expenses” in the consolidated statements of operations.

Results of Operations

Refer to “Item 6. Selected Financial Data” for additional financial information for the indicated periods.

Year Ended June 30, 2019 Compared to the Year Ended June 30, 2018

Revenue


	For the Year Ended June 30,
	2019		2018		$ Variance		% Variance
		(in millions)
Segment and consolidated revenue:
Zayo Networks		1,896.7		1,808.8		87.9	5	%
zColo		269.9		290.7		(20.8)	(7)	%
Allstream		381.7		479.9		(98.2)	(20)	%
Other		29.7		23.1		6.6	29	%
Consolidated	$	2,578.0	$	2,602.5	$	(24.5)	(1)	%

Our total revenue decreased by $24.5 million, or 1%, to $2,578.0 million for the year ended June 30, 2019, from $2,602.5 million for the year ended June 30, 2018.

We estimate that the period-over-period pro-forma organic revenue decreased by approximately 2%. Our pro-forma revenue decline was primarily driven by churn that exceeded installs at our Allstream segment and by changes in exchange rates. The average exchange rate of the GBP against the USD weakened by 3.9%, the average exchange rate of the Euro against the USD weakened by 4.4%, and the average exchange rate of the CAD against the USD weakened by 4.1% during the year ended June 30, 2019 as compared to the year ended June 30, 2018. Normalizing our estimated pro-forma organic revenue to exclude the impact of foreign currency exchange rate fluctuations, we estimate that Fiscal 2019 pro-forma organic revenue would have decreased by $20.9 million compared to Fiscal 2018 pro forma organic revenue.

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During the year ended June 30, 2019, the Company recognized net installs of $5.4 million as compared to $6.5 million during the year ended June 30, 2018, excluding Allstream.

Zayo Networks. Revenue from our Zayo Networks segment increased by $87.9 million, or 5%, to $1,896.7 million from $1,808.8 million, for the years ended June 30, 2019 and 2018, respectively. The increase was primarily a result of organic growth.

zColo. Revenue from our zColo segment decreased by $20.8 million, or 7%, to $269.9 million from $290.7 million for the years ended June 30, 2019 and 2018. The decrease was due to lower net installs.

Allstream. Revenue from our Allstream segment decreased by $98.2 million, or 20%, to $381.7 million from $479.9 million for the years ended June 30, 2019 and 2018. The decrease was due to increased churn.

Other. Revenue from our Other segment increased by $6.6 million, or 29%, to $29.7 million for Fiscal 2019 from $23.1 million for Fiscal 2018, respectively. The increase is attributable to an increase in component sales during Fiscal 2019.

The following table reflects the stratification of our revenues during these periods. The substantial majority of our revenue continued to come from recurring payments from customers under contractual arrangements.


	For the Year Ended June 30,
	2019				2018
		(in millions)
Monthly recurring revenue	$	2,302.3	90	%	$	2,337.9	90	%
Amortization of deferred revenue		152.1	6	%		136.3	5	%
Usage revenue		61.3	2	%		74.7	3	%
Other revenue		62.3	2	%		53.6	2	%
Total Revenue	$	2,578.0	100	%	$	2,602.5	100	%

Operating Costs and Expenses


	For the Year Ended June 30,
	2019		2018		$ Variance		% Variance
		(in millions)
Segment and consolidated operating costs and expenses:
Zayo Networks		1,354.2		1,406.2		(52.0)	(4)	%
zColo		288.7		284.4		4.3	2	%
Allstream		388.3		466.1		(77.8)	(17)	%
Other		26.5		22.6		3.9	17	%
Consolidated	$	2,057.7	$	2,179.3	$	(121.6)	(6)	%

Our operating costs decreased by $121.6 million, or 6%, to $2,057.7 million for Fiscal 2019 from $2,179.3 million for Fiscal 2018.

Zayo Networks. Zayo Networks operating costs decreased by $52.0 million, or 4%, to $1,354.2 million for Fiscal 2019 from $1,406.2 million for Fiscal 2018. The decrease in operating costs and expenses was primarily a result of a $91.9 million decrease in depreciation and amortization attributable to a change in the estimated useful lives of fiber optic network assets from 20 years to 33 years, partially offset by increases of $15.8 million in Netex and Netops costs, $12.4 million in stock-based compensation $6.5 million in compensation and benefits, $4.4 million in other operating costs and $0.8 million in transaction costs.

zColo. zColo operating costs increased by $4.3 million, or 2%, to $288.7 million for Fiscal 2019 from $284.4 million for Fiscal 2018. The increase in operating costs and expenses was primarily a result of increases of $3.9 million in stock-based compensation, $2.1 million in compensation and benefits, $2.1 million in transaction costs and $1.5 million in depreciation and amortization expense, partially offset by a decrease of $4.6 million in other operating costs and $0.7 million in Netex and Netops costs.

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Allstream. Allstream operating costs decreased by $77.8 million, or 17%, to $388.3 million for Fiscal 2019 from $466.1 million for Fiscal 2018. The decrease in operating costs and expenses was primarily a result of decreases in Netex and Netops of $44.9 million, depreciation and amortization of $21.4 million, compensation and benefits of $6.2 million, transaction costs of $4.4 million and $3.5 million in stock-based compensation, partially offset by an increase of $2.6 million in other operating costs.

Other. Other operating costs increased by $3.9 million, or 17%, to $26.5 million for Fiscal 2019 from $22.6 million for Fiscal 2018. The increase is attributable to an increase in revenue associated with component sales.

The table below sets forth the components of our operating costs and expenses during the years ended June 30, 2019 and 2018:


	For the Year Ended June 30,
	2019		2018		$ Variance		% Variance
		(in millions)
Netex	$	499.7	$	522.0	$	(22.3)	(4)	%
Compensation and benefits expenses		325.9		324.6		1.3	*
Network operations expense		289.7		290.6		(0.9)	*
Other expenses		182.7		180.3		2.4	1	%
Transaction costs		17.0		18.6		(1.6)	(9)	%
Stock-based compensation		109.3		96.7		12.6	13	%
Depreciation and amortization		633.4		746.5		(113.1)	(15)	%
Total operating costs and expenses	$	2,057.7	$	2,179.3	$	(121.6)	(6)	%

* Not meaningful

Netex. Our Netex decreased by $22.3 million, or 4%, to $499.7 million for Fiscal 2019 from $522.0 million for Fiscal 2018. The decrease in Netex was primarily due to revenue churn in our Allstream segment.

Compensation and Benefits Expenses. Compensation and benefits expenses increased by $1.3 million to $325.9 million for Fiscal 2019 from $324.6 million for Fiscal 2018. The increase is primarily related to an increase in headcount for Fiscal 2019 over Fiscal 2018.

Network Operations Expenses. Network operations expenses decreased by $0.9 million to $289.7 million for Fiscal 2019 from $290.6 million for Fiscal 2018. The decrease is primarily related to a slight reduction in network maintenance and restoration expenses.

Other Expenses. Other expenses increased by $2.4 million, or 1%, to $182.7 million for Fiscal 2019, from $180.3 million for Fiscal 2018. The increase is primarily related to an increase in bad debt expense.

Transaction Costs. Transaction costs decreased by $1.6 million, or 9%, to $17.0 million for Fiscal 2019 from $18.6 million for Fiscal 2018. Transaction costs decreased due to our decreased acquisition activity largely offset by transaction costs related to the Merger.

Stock-Based Compensation. Stock-based compensation expense increased by $12.6 million, or 13%, to $109.3 million for Fiscal 2019 from $96.7 million for Fiscal 2018. The increase is due to an increased number of grants in Fiscal 2019 compared to Fiscal 2018.

Depreciation and Amortization. Depreciation and amortization expense decreased by $113.1 million, or 15%, to $633.4 million for Fiscal 2019 from $746.5 million for Fiscal 2018. The decrease is primarily attributable to a change in the estimated useful lives of fiber optic network assets from 20 years to 33 years, partially offset by depreciation from capital expenditures and our Fiscal 2018 acquisitions.

Table of Contents

Total Other Expense, Net

The table below sets forth the components of our total other expense, net for the years ended June 30, 2019 and 2018.


	For the Year Ended June 30,
	2019		2018		$ Variance		% Variance
		(in millions)
Interest expense	$	(338.7)	$	(299.8)	$	(38.9)	(13)	%
Loss on extinguishment of debt		—		(4.9)		4.9	100	%
Foreign currency (loss)/gain on intercompany loans		(14.1)		5.4		(19.5)		*
Other income, net		7.8		2.4		5.4		*
Total other expenses, net	$	(345.0)	$	(296.9)	$	(48.1)	(16)	%

* Not meaningful

Interest expense. Interest expense increased by $38.9 million, or 13%, to $338.7 million from $299.8 million for the years ended June 30, 2019 and 2018, respectively. The increase was primarily a result of an increase in debt from the comparative period, which was primarily used to fund repurchases of ZGH common stock, in addition to higher LIBOR rates.

Loss on extinguishment of debt. Loss on extinguishment of debt was nil for the year ended June 30, 2019 as compared to $4.9 million for the year ended June 30, 2018. The Fiscal 2018 loss on extinguishment of debt includes a non-cash expense associated with the write-off of unamortized debt issuance costs and the issuance discounts on the portion of the Credit Agreement, as amended, that was deemed to have been extinguished as well as the portion extinguished through early prepayment. The loss on extinguishment of debt also includes certain fees paid to third parties involved in the second repricing of the Credit Agreement. See Note 7 – Long-term Debt to the consolidated financial statements.

Foreign currency gain/(loss) on intercompany loans. We recorded a foreign currency loss on intercompany loans of $14.1 million for Fiscal 2019, compared to $5.4 million gain for Fiscal 2018. During Fiscal 2019, we had intercompany loans between our U.S., UK and Canadian legal entities, which were established to fund our international acquisitions. As of June 30, 2019 our largest intercompany loans are denominated in GBP. Our Canadian intercompany loans were extinguished during Fiscal 2019. As the intercompany loans are recorded as an intercompany receivable at our U.S. entities, strengthening of the USD over a foreign currency results in a foreign currency loss on intercompany loans and the weakening of the USD over a foreign currency results in a gain on intercompany loans. The Fiscal 2019 non-cash loss was driven primarily by the strengthening of the USD compared to the GBP period-over-period.

Provision for Income Taxes

Income tax expense increased over the prior year by $4.6 million, or 22% to $25.3 million for Fiscal 2019, from $20.7 million for Fiscal 2018. Our provision for income tax included both the current provision and a provision for deferred income tax expense resulting from timing differences between tax and financial reporting accounting bases.

On December 22, 2017, the U.S. federal government enacted a tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, previously known as Tax Cuts and Jobs Act of 2017 (“U.S. Tax Reform”). U.S. Tax Reform reduced the U.S. corporate tax rate from 35% to 21%, created a territorial tax system with a one-time mandatory repatriation tax on previously deferred foreign earnings, and changed business-related deductions and credits.

U.S. Tax Reform had a material impact on the comparison of our effective tax rate and the expected income tax expense at the statutory rate for Fiscal 2018 as compared with Fiscal 2019.

The following table reconciles our expected tax provision based on the statutory U.S. federal income tax rate applied to our earnings before income tax to our actual provision for income taxes:

Table of Contents


	For the Year Ended June 30,
	2019		2018
		(in millions)
Applicable statutory rate		21%		28%
Expected provision at the statutory rate	$	36.8	$	35.4
Increase/(decrease) due to:
Stock-based compensation		6.6		3.8
State income taxes, net of federal benefit		4.7		3.2
Change in statutory tax rate, outside U.S.		(1.4)		7.4
Change in uncertain tax benefits		11.8		3.1
Foreign tax rate differential		4.4		(2.4)
U.S. Tax Reform		7.2		22.1
Change in valuation allowance		(38.7)		(49.3)
Other, net		(6.1)		(2.6)
Provision for income taxes	$	25.3	$	20.7

The effective tax rate for Fiscal 2019 was positively impacted by reversing the valuation allowances on the deferred tax assets of certain foreign subsidiaries. The effective tax rate was negatively impacted by increasing the uncertain tax benefit reserve. Prior period amounts were reclassified for comparability with the Fiscal 2019 presentation.

Some U.S. Tax Reform provisions became effective during Fiscal 2019. As of June 30, 2019, the following provisions are not expected to have a material impact on tax expense: Global Intangible Low-Taxed Income, Base Erosion and Anti-abuse Tax, and the interest expense limitations. The executive compensation limitations had an impact and are included in stock compensation on the rate reconciliation. The Company continues to evaluate the impact of U.S. Tax Reform as more information and guidance becomes available.

Year Ended June 30, 2018 Compared to the Year Ended June 30, 2017

Revenue

	For the Year Ended June 30,
	2018		2017		$ Variance		% Variance
		(in millions)
Segment and consolidated revenue:
Fiber Solutions	$	842.0	$	725.4	$	116.6	16	%
Zayo Networks		1,808.8		1,621.1		187.7	12	%
Transport		670.4		614.3		56.1	9	%
zColo		290.7		263.3		27.4	10	%
Enterprise Networks		350.4		310.2		40.2	13	%
zColo		238.2		214.0		24.2	11	%
Allstream		479.9		314.3		165.6	53	%
Other		23.1		21.6		1.5	7	%
Consolidated	$	2,~~604~~602.05	$	2,~~199~~220.83	$	~~404~~382.2	1817	%

Our total revenue increased by $~~404~~382.2 million, or 1817%, to $2,~~604~~602.05 million for the year ended June 30, 2018, from $2,~~199~~220.83 million for the year ended June 30, 2017. The increase in revenue was driven by our Fiscal 2018 and 2017 acquisitions as well as organic growth.

We estimate that the period-over-period pro-forma organic revenue growth was approximately 10.32%. Our pro-forma revenue growth was primarily driven by net installs ~~that exceeded churn~~ over the course of both periods as a result of the continued strong demand for bandwidth infrastructure access broadly across our network territory and our customer verticals partially offset by changes in exchange rates. The average exchange rate of the GBP against the USD strengthened by 6%, the average exchange rate of the Euro against the USD strengthened by 9%, and the average exchange rate of the CAD against the USD strengthened by 5% during the year ended June 30, 2018 as compared to the year ended June 30, 2017. Normalizing our estimated pro-forma organic revenue growth to exclude the impact of foreign currency exchange rate fluctuations, we estimate that Fiscal 2018 pro-forma organic revenue would have been negatively impacted by $32.3 million.

4452

~~Additional~~Table ~~underlying~~of ~~revenue drivers included:~~Contents

· During ~~Bookings~~the ~~increased~~year ~~period-over-period~~ended ~~from~~June ~~$26.9~~30, ~~million~~2018, tothe ~~$33.0~~Company ~~million~~recognized innet ~~combined~~installs ~~MRR~~of ~~and MAR, excluding Allstream~~$6.5 ~~The~~million ~~total~~as ~~contract~~compared ~~value~~to ~~associated~~$7.1 ~~with~~million ~~bookings~~during ~~for~~ the year ended June 30, ~~2018 was approximately $2~~2017,~~016.0~~ ~~million,~~ excluding Allstream.

· Zayo ~~During~~Networks. Revenue ~~the~~from ~~year~~our ~~ended~~Zayo ~~June~~Networks ~~30,~~segment ~~2018,~~increased ~~the~~by ~~Company~~$187.7 ~~recognized~~million, ~~net~~or ~~installs~~12%, ofto $61,808.58 million asfrom ~~compared to~~ $71,621.1 million, ~~during~~for the ~~year~~years ended June 30, 2018 and 2017, ~~excluding~~respectively. ~~Allstream~~The increase was a result of both organic and acquisition related growth.

· zColo. Revenue ~~Monthly~~from ~~churn~~our ~~percentage~~zColo ~~remained~~segment ~~consistent~~increased ~~between~~by ~~the~~$27.4 million, ~~two~~or ~~periods~~10%, atto 1$290.2%7 million from $263.3 million for the years ended June 30, ~~excluding~~2018 ~~Allstream~~and 2017, respectively. The increase was a result of both organic and acquisition related growth.

~~Fiber Solutions~~Allstream. Revenue from our ~~Fiber~~Allstream ~~Solutions~~ segment increased by $~~116~~165.6 million, or 1653%, tofrom $~~842~~314.03 million ~~from~~to $~~725~~479.49 million, for the years ended June 30, 2018 and 2017~~, respectively~~. The increase was primarily a result of acquiring ~~both~~Electric ~~organic~~Lightwave ~~and~~on ~~acquisition~~March ~~related~~1, ~~growth~~2017.

~~Transport~~ Other. Revenue from our ~~Transport~~Other segment increased by $~~56.~~1.5 million, or 97%, to $~~670~~23.41 million from $~~614~~21.36 million, for the years ended June 30, 2018 and 2017, respectively. The ~~increase~~Other ~~was~~segment arepresented ~~result~~approximately 1% of ~~both~~our ~~organic~~total ~~and~~revenue ~~acquisition~~during ~~related~~the ~~growth~~year ended June 30, 2018.

Enterprise Networks. Revenue from our Enterprise Networks segment increased by $40.2 million, or 13%, to $350.4 million from $310.2 million for the years ended June 30, 2018 and 2017. The increase was a result of both organic and acquisition related growth.

zColo. Revenue from our zColo segment increased by $24.2 million, or 11%, to $238.2 million from $214.0 million for the years ended June 30, 2018 and 2017. The increase was a result of both organic and acquisition related growth.

Allstream. Revenue from our Allstream segment increased by $165.6 million, or 53%, to $479.9 million from $314.3 million for the years ended June 30, 2018 and 2017. The increase was primarily a result of acquiring Electric Lightwave on March 1, 2017.

Other. Revenue from our Other segment increased by $1.5 million, or 7%, to $23.1 million from $21.6 million, for the years ended June 30, 2018 and 2017, respectively. The Other segment represented less than 1% of our total revenue during the year ended June 30, 2018.

	For the Year Ended June 30,
	2018				2017
		(in millions)
Monthly recurring revenue (1)	$	2,337.9	90	%	$	1,973.2	90	%
Monthly recurring revenue	$	2,337.9	90	%	$	1,973.2	89	%
Amortization of deferred revenue		~~137~~136.83	5	%		~~117~~116.65	5	%
Usage revenue		74.7	3	%		72.1	3	%
Other revenue (1)		53.6	2	%		36.9	2	%
Other revenue		53.6	2	%		58.5	3	%
Total Revenue	$	2,~~604~~602.05	100	%	$	2,~~199~~220.83	100	%

(1) Prior period amounts were reclassified for comparability with the 2018 presentation.

Operating Costs and Expenses

	For the Year Ended June 30,
	2018		2017		$ Variance		% Variance
	(in millions)	~~(in millions)~~
Segment and consolidated operating costs and expenses:
Fiber Solutions	$	551.7	$	560.3	$	(8.6)	(2)	%
Zayo Networks		1,406.2		1,319.9		86.3	7	%
Transport		636.9		558.4		78.5	14	%
zColo		284.4		255.7		28.7	11	%
Enterprise Networks		268.6		238.1		30.5	13	%
Allstream		466.1		249.7		216.4	87	%
zColo		232.1		200.5		31.6	16	%
Allstream		467.2		249.7		217.5	87	%
Other		22.6		19.0		3.6	19	%
Consolidated	$	2,179.13	$	1,~~826~~844.03	$	~~353~~335.10	1918	%

Our operating costs increased by $~~353~~335.10 million, or 1918%, to $2,179.13 million for Fiscal 2018 from $1,~~826~~844.0 3 million for Fiscal 2017. The increase in consolidated operating costs was primarily due to the impact from our Fiscal 2018 and 2017 acquisitions and the organic growth of our network footprint.

~~Fiber~~Zayo ~~Solutions~~Networks. ~~Fiber~~ Zayo ~~Solutions~~Networks operating costs ~~decreased~~increased by $886.63 million, or 27%, to $~~551~~1,406.72 million for Fiscal 2018 from $~~560~~1,319.39 million for Fiscal 2017. The ~~decrease~~increase in operating costs and expenses was primarily a result of aincreases of $1938.74 million ~~decrease~~ in depreciation and amortization, ~~primarily~~$30.9 asmillion ain ~~result~~Next ofand aNetops ~~change~~costs, $26.0 million in ~~the~~compensation ~~estimated~~and ~~useful~~benefits, ~~lives~~and of$10.1 ~~fiber~~million ~~optic~~in ~~network~~other ~~assets~~operating ~~from~~costs 20largely ~~years~~due to 33our ~~years,~~Fiscal ~~$8.8~~2018 ~~million~~and inFiscal ~~Netex~~2017 acquisitions and ~~Netops~~additional costs ~~and~~associated ~~$5.4~~with ~~million~~the inorganic ~~stock-based~~growth ~~compensation~~of our network, partially offset by ~~increases~~a of $1517.30 million decrease in stock-based compensation and ~~benefits,~~a $8.2 ~~million in other operating costs and $1~~.81 million decrease in transaction costs.

Transport. Transport operating costs increased by $78.5 million, or 14%, to $636.9 million for Fiscal 2018 from $558.4 million for Fiscal 2017. The increase in operating costs and expenses was primarily a result of increases in depreciation and amortization of $42.7 million, $39.9 million in Netex and Netops costs, $6.3 million in compensation and benefits and $2.6 million in other operating expenses as a result of Fiscal Year 2017 acquisitions and organic growth of our network, partially offset by decreases of $11.2 million in stock-based compensation and $1.8 million in transaction costs.53

~~Enterprise~~Table Networks. Enterprise Networks operating costs increased by $30.5 million, or 13%, to $268.6 million for Fiscal 2018 from $238.1 million for Fiscal 2017. The increase in operating costs and expenses was primarily a result of increases in depreciation and amortization of $12.7 million, Netex and Netops costs of $16.5 million, $2.6 million in other operating expenses and $0.5 million in compensation and benefits as a result of acquisitions and organic growth of our network, partially offset by a decrease of $1.8 million in transaction costs.Contents

zColo. zColo operating costs increased by $3128.67 million, or 1611%, to $~~232~~284.14 million for Fiscal 2018 from $~~200~~255.57 million for Fiscal 2017. The increase in operating costs and expenses was primarily a result of increases of $2321.90 million in depreciation and amortization expense, $6.8 million in other operating costs, $4.2 million in Netex and Netops costs, partially offset by a $2.74 million decrease in ~~other~~stock-based ~~operating~~compensation, ~~costs~~a ~~and~~ $10.36 million decrease in compensation and benefits costs, ~~partially~~and ~~offset by~~ a ~~decrease of~~ $20.73 million decrease in ~~stock-based~~transaction ~~compensation~~costs.

Allstream. Allstream operating costs increased by $~~217~~216.54 million, or 87%, to $~~467~~466.21 million for Fiscal 2018 from $249.7 million for Fiscal 2017. The increase in operating costs and expenses was primarily a result of increases in Netex and Netops of $103.7 million, depreciation and amortization of $79.5 million, compensation and benefits of $2423.86 million, ~~and~~ other operating expenses of $7.85 million, ~~as a result of acquisitions and organic growth of our network as well as~~ stock based compensation of $1.7 million and $0. 4 million of transaction costs.

Other. Other operating costs increased by $3.6 million, or 19%, to $22.6 million for Fiscal 2018 from $19.0 million for Fiscal 2017. The increase was directly attributed to an increase in revenue associated with component sales.

The table below sets forth the components of our operating costs and expenses during the years ended June 30, 2018 and 2017:

	For the Year Ended June 30,
	2018		2017		$ Variance		% Variance
		(in millions)
Netex	$	522.0	$	~~418~~437.86	$	~~103~~84.24	2519	%
Compensation and benefits expenses		~~323~~324.56		273.68		4950.98	1819	%
Network operations expense		290.6		244.7		45.9	19	%
Other expenses		180.3		147.4		32.9	22	%
Transaction costs		18.6		20.5		(1.9)	(9)	%
Stock-based compensation		96.7		114.1		(17.4)	(15)	%
Depreciation and amortization		~~747~~746.45		606.92		140.53	23	%
Total operating costs and expenses	$	2,179.13	$	1,~~826~~844.03	$	~~353~~335.10	1918	%

Netex. Our Netex increased by $~~103~~84.24 million, or 2519%, to $522.0 million for Fiscal 2018 from $~~418~~437.86 million for Fiscal 2017. The increase in Netex was primarily due to our Fiscal 2018 and Fiscal 2017 acquisitions, partially offset by cost savings, as planned network related synergies were realized.

Compensation and Benefits Expenses. Compensation and benefits expenses increased by $4950.98 million, or 1819%, to $~~323~~324.56 million for Fiscal 2018 from $273.68 million for Fiscal 2017. The increase in compensation and benefits expenses reflected the increase in average headcount for Fiscal 2018 compared to Fiscal 2017 largely due to employees added through the Electric Lightwave acquisition in March 2017.

Network Operations Expenses. Network operations expenses increased by $45.9 million, or 19%, to $290.6 million for Fiscal 2018 from $244.7 million for Fiscal 2017. The increase inprincipally ~~compensation~~reflected the organic and ~~benefits~~inorganic growth of our network assets and the related expenses of operating that expanded network. The increase principally reflected the ~~increase~~organic inand ~~average~~inorganic ~~headcount~~growth ~~for~~of ~~Fiscal~~our ~~2018~~network ~~compared~~assets toand ~~Fiscal~~the ~~2017~~related ~~largely~~expenses ~~due~~of operating that expanded network. Our total network route miles increased 4% to ~~employees~~approximately ~~added~~129,000 ~~through~~miles ~~the~~at ~~ELI~~June ~~Acquisition~~30, in2018 ~~March~~from approximately 124,000 miles at June 30, 2017.

~~Network~~Other ~~Operations~~ Expenses. ~~Network~~ Other ~~operations~~ expenses increased by $4532.9 million, or 1922%, to $~~290~~180.63 million for Fiscal 2018, from $~~244~~147.7 4 million for Fiscal 2017. The increase ~~principally~~was ~~reflected~~primarily the ~~organic~~result ~~and inorganic growth~~ of ~~our~~additional ~~network assets and the related~~ expenses ofattributable ~~operating that expanded network. Our total network route miles increased approximately 4%~~ to ~~128,910~~our ~~miles~~Fiscal ~~at June 30,~~ 2018 ~~from~~and ~~123,841 miles at June 30,~~ 2017 acquisitions.

Other Expenses. Other expenses increased by $32.9 million, or 22%, to $180.3 million for Fiscal 2018, from $147.4 million for Fiscal 2017. The increase was primarily the result of additional expenses attributable to our Fiscal 2018 and 2018 acquisitions.

Transaction Costs. Transaction costs decreased by $1.9 million, or 9%, to $18.6 million for Fiscal 2018 from $20.5 million for Fiscal 2017. The transaction costs recorded during the periods relate to direct costs associated with our Fiscal 2018 and 2017 acquisitions.

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Stock-Based Compensation. Stock-based compensation expense decreased by $17.4 million, or 15%, to $96.7 million for Fiscal 2018 from $114.1 million for Fiscal 2017. The decrease in stock-based compensation expense was primarily driven by the remaining tranches of our pre-IPO common unit grants becoming fully vested during our 2017 fiscal year and by a decrease in the number of Part B awards granted.

Depreciation and Amortization. Depreciation and amortization expense increased by $140.53 million, or 23%, to $~~747~~746.45 million for Fiscal 2018 from $606.92 million for Fiscal 2017. The increase was primarily a result of depreciation related to increased capital expenditures and increased depreciation and amortization expense associated with our Fiscal 2018 and 2017 acquisitions, including $18.6 million resulting from recording revised fair value estimates of intangible assets and property and equipment associated with the Electric Lightwave acquisition, of which $6.2 million relates to previous reporting periods.

Total Other Expense, Net

The table below sets forth the components of our total other expense, net for the years ended June 30, 2018 and 2017.

	For the Year Ended June 30,
	2018		2017		$ Variance		% Variance
		(in millions)
Interest expense	$	(299.8)	$	(241.5)	$	(58.3)	(24)	%
Loss on extinguishment of debt		(4.9)		(18.2)		13.3	73	%
Foreign currency gain/(loss) on intercompany loans		5.4		(10.3)		15.7		*
Other income, net		2.4		0.3		2.1		*
Total other expenses, net	$	(296.9)	$	(269.7)	$	(27.2)	(10)	%
Total other expense, net	$	(296.9)	$	(269.7)	$	(27.2)	(10)	%

* Not meaningful

Interest expense. Interest expense increased by $58.3 million, or 24%, to $299.8 million from $241.5 million for the years ended June 30, 2018 and 2017, respectively. The increase was primarily a result of an increase in debt from the comparative period resulting from incremental debt raised to fund our acquisitions in addition to increasing LIBOR rates.

Loss on extinguishment of debt. Loss on extinguishment of debt was $4.9 million for the year ended June 30, 2018 as compared to $18.2 million for the year ended June 30, 2017. The Fiscal 2018 loss on extinguishment of debt includes a non-cash expense associated with the write-off of unamortized debt issuance costs and the issuance discounts on the portion of the Credit Agreement, as amended, that was deemed to have been extinguished as well as the portion extinguished through early prepayment. The loss on extinguishment of debt also includes certain fees paid to third parties involved in the second repricing of the Credit Agreement. See Note 7 – Long-~~Term~~term Debt to the consolidated financial statements.

Foreign currency gain/ (loss) on intercompany loans. We recorded a foreign currency gain on intercompany loans of $5.4 million for Fiscal 2018, compared to a $10.3 million loss for Fiscal 2017. We have intercompany loans between our U.S., UK and Canadian legal entities, which were established to fund our international acquisitions. As the loans are recorded as an intercompany receivable at our U.S. entities, strengthening of the USD over a foreign currency results in a foreign currency loss on intercompany loans and the weakening of the USD over a foreign currency results in a gain on intercompany loans. This non-cash gain was driven by the strengthening of the USD over the GBP period-over-period and the related impact on intercompany loans entered into by foreign subsidiaries with functional currency in GBP.

Provision for Income Taxes

Income tax expense increased over the prior year by $51.05 million, toor an8% ~~expense~~to of $2320.47 million for Fiscal 2018, from ~~an expense of~~ $1819.42 million for Fiscal 2017. Our provision for income tax included both the current provision and a provision for deferred income tax expense resulting from timing differences between tax and financial reporting accounting bases.

~~U.S.~~Table ~~Tax Reform has a material impact on the comparison~~ of ~~our effective tax rate and the expected income tax expense at the statutory rate for Fiscal 2018 and increased the effective tax rate.~~ Contents

48U.S. Tax Reform has a material impact on the comparison of our effective tax rate and the expected income tax expense at the statutory rate for Fiscal 2018 as compared to Fiscal 2017.

The following table reconciles anour expected tax provision based on athe statutory U.S. federal income tax rate applied to our earnings before income tax to our actual provision for income taxes, prior period amounts were reclassified for comparability with the Fiscal 2019 presentation:

	~~For the Year Ended June 30,~~	For the Year Ended June 30,
	~~2018~~	2018		~~2017~~	2017
		~~(in millions)~~	(in millions)
Expected provision at the statutory rate	$	35.9		$	36.4
Applicable statutory rate			28%			35%
Increase/(decrease) due to:
Expected provision at the statutory rate		$	35.4		$	37.2
Stock-based compensation		3.8			(11.7)
Increase/(decrease) due to:
State income taxes, net of federal benefit		3.2			2.9
Stock-based compensation			3.8			(11.7)
Transaction costs not deductible for U.S. federal income tax purposes		0.4			1.9
State income taxes, net of federal benefit			3.2			2.9
Change in statutory tax rate, non-U.S.		7.4			(1.4)
Change in statutory tax rate, outside U.S.			7.4			(1.4)
Change in valuation allowance		(49.3)			(10.2)
Change in uncertain tax benefits			3.1			—
State NOL expirations		6.1			—
Foreign tax rate differential			(2.4)			(3.9)
U.S. Tax Reform		~~22.1~~	22.1		—	—
Foreign tax rate differential		(2.4)			(3.9)
Change in valuation allowance			(49.3)			(10.2)
Other, net		~~(3.8)~~	(2.6)		~~4.4~~	6.3
Provision for income taxes	$	~~23.4~~$	20.7	$	~~18.4~~$	19.2

Some U.S. Tax Reform provisions are effective for years beginning after December 31, 2017, which would be our fiscal-year ending on June 30, 2019, including the tax on global intangible low taxed income, Base Erosion and Anti-abuse Tax, interest expense limitations, and executive compensation limitations. We continue to evaluate these and other impacts of U.S. Tax Reform as more information and guidance becomes available.

Year Ended June 30, 2017 Compared to the Year Ended June 30, 2016

Revenue

	For the Year Ended June 30,
	2017		2016		$ Variance		% Variance
		(in millions)
Segment and consolidated revenue:
Fiber Solutions	$	725.4	$	648.8	$	76.6	12	%
Transport		614.3		522.6		91.7	18	%
Enterprise Networks		310.2		228.4		81.8	36	%
zColo		214.0		195.4		18.6	10	%
Allstream		314.3		106.2		208.1		*
Other		21.6		20.3		1.3	6	%
Consolidated	$	2,199.8	$	1,721.7	$	478.1	28	%

* Not meaningful

Our total revenue increased by $478.1 million, or 28%, to $2,199.8 million for the year ended June 30, 2017, from $1,721.7 million for the year ended June 30, 2016. The increase in revenue was driven by our Fiscal 2016 and 2017 acquisitions as well as organic growth.

We estimate that the period-over-period pro-forma organic revenue declined by 0.9%. Our pro-forma revenue decline was primarily driven by declining revenue from the voice businesses acquired in our Fiscal 2016 and 2017 acquisitions. Offsetting this pro-forma decline was organic growth resulting from installs that exceeded churn over the course of both periods as a result of the continued strong demand for bandwidth infrastructure access broadly across our network territory and our customer verticals offset by changes in exchange rates. The average exchange rate of the GBP against the USD strengthened by 14.5%, the average exchange rate of the Euro against the USD strengthened by 1.8%, and the average exchange rate of the CAD against the USD strengthened by 0.3%. Normalizing our estimated pro-forma

organic revenue growth to exclude the impact of foreign currency exchange rate fluctuations, we estimate that Fiscal 2018 pro-forma organic revenue would have been negatively impacted by $14.9 million.

Additional underlying revenue drivers included:

· Bookings increased period-over-period from $26.6 million to $26.9 million in combined MRR and MAR, excluding Allstream. The total contract value associated with bookings for the year ended June 30, 2017 was approximately $1,490.0 million, excluding Allstream.

· During the year ended June 30, 2017, the Company recognized net installs of $7.1 million as compared to $9.0 million during the year ended June 30, 2016, excluding Allstream.

· Monthly churn percentage between the two periods increased to 1.2% from 1.1%, excluding Allstream.

Fiber Solutions. Revenue from our Fiber Solutions segment increased by $76.6 million, or 12%, to $725.4 million from $648.8 million, for the years ended June 30, 2017 and 2016, respectively. The increase was a result of both organic and acquisition related growth.

Transport. Revenue from our Transport segment increased by $91.7 million, or 18%, to $614.3 million from $522.6 million for the years ended June 30, 2017 and 2016, respectively. The increase was a result of both organic and acquisition related growth.

Enterprise Networks. Revenue from our Enterprise Networks segment increased by $81.8 million, or 36%, to $310.2 million from $228.4 million for the years ended June 30, 2017 and 2016, respectively. The increase was a result of both organic and acquisition related growth.

zColo. Revenue from our zColo segment increased by $18.6 million, or 10%, to $214.0 million from $195.4 million for the years ended June 30, 2017 and 2016, respectively. The increase was a result of both organic and acquisition related growth.

Allstream. Revenue from our Allstream segment increased by $208.1 million to $314.3 million from $106.2 million for the years ended June 30, 2017 and 2016. The increase was a result of acquiring the Allstream business on January 15, 2016 and Electric Lightwave on March 1, 2017.

Other. Revenue from our Other segment increased by $1.3 million, or 6%, to $21.6 million from $20.3 million, for the years ended June 30, 2017 and 2016, respectively. The Other segment represented approximately 1% of our total revenue during the year ended June 30, 2017.

	For the Year Ended June 30,
	2017				2016
		(in millions)
Monthly recurring revenue (1)	$	1,973.2	90	%	$	1,546.0	90	%
Amortization of deferred revenue		117.6	5	%		92.5	5	%
Usage revenue		72.1	3	%		45.9	3	%
Other revenue (1)		36.9	2	%		37.3	2	%
Total Revenue	$	2,199.8	100	%	$	1,721.7	100	%

(1) 2017 amounts were reclassified for comparability with the 2018 presentation.

Operating Costs and Expenses

	For the Year Ended June 30,
	2017		2016		$ Variance		% Variance
	(in millions)
Segment and consolidated operating costs and expenses:
Fiber Solutions	$	560.3	$	474.0	$	86.3	18	%
Transport		558.4		492.1		66.3	13	%
Enterprise Networks		238.1		196.5		41.6	21	%
zColo		200.5		192.1		8.4	4	%
Allstream		249.7		108.5		141.2		*
Other		19.0		18.2		0.8	4	%
Consolidated	$	1,826.0	$	1,481.4	$	344.6	23	%

* Not meaningful

Our operating costs increased by $344.6 million, or 23%, to $1,826.0 million for Fiscal 2017 from $1,481.4 million for Fiscal 2016. The increase in consolidated operating costs was primarily due to increased costs as a result of Fiscal 2017 and Fiscal 2016 acquisitions, and the organic growth of our network footprint, partially offset by a $41.8 million decrease in stock-based compensation.

Fiber Solutions. Fiber Solutions operating costs increased by $86.3 million, or 18%, to $560.3 million for Fiscal 2017 from $474.0 million for Fiscal 2016. The increase in operating costs and expenses was primarily a result of a $93.1 million increase in depreciation and amortization as well as our Fiscal 2017 and Fiscal 2016 acquisitions and additional costs associated with the organic growth of our network, partially offset by a $17.8 million decrease in stock-based compensation.

Transport. Transport operating costs increased by $66.3 million, or 13%, to $558.4 million for Fiscal 2017 from $492.1 million for Fiscal 2016. The increase in operating costs and expenses was primarily a result of our Fiscal 2017 and Fiscal 2016 acquisitions and organic growth of our network.

Enterprise Networks. Enterprise Networks operating costs increased by $41.6 million, or 21%, to $238.1 million for Fiscal 2017 from $196.5 million for Fiscal 2016. The increase in operating costs and expenses was primarily a result of Fiscal 2017 and 2016 acquisitions and organic growth of our network.

zColo. zColo operating costs increased by $8.4 million, or 4%, to $200.5 million for Fiscal 2017 from $192.1 million for Fiscal 2016. The increase in operating costs and expenses was primarily a result of Fiscal 2017 and 2016 acquisitions.

Allstream. Allstream operating costs increased by $141.2 million to $249.7 million for Fiscal 2017 from $108.5 million for Fiscal 2016. The increase in operating costs and expenses was primarily a result of acquiring the Allstream business on January 15, 2016 and Electric Lightwave on March 1, 2017.

Other. Other operating costs increased by $0.8 million, or 4%, to $19.0 million for Fiscal 2017 from $18.2 million for Fiscal 2016 as a result of increased revenue from equipment sales.

The table below sets forth the components of our operating costs and expenses during the years ended June 30, 2017 and 2016:

	For the Year Ended June 30,
	2017		2016		$ Variance		% Variance
		(in millions)
Netex	$	418.8	$	283.0	$	135.8	48	%
Compensation and benefits expenses		273.6		216.8		56.8	26	%
Network operations expense		244.7		194.5		50.2	26	%
Other expenses		147.4		93.4		54.0	58	%
Transaction costs		20.5		21.5		(1.0)	(5)	%
Stock-based compensation		114.1		155.9		(41.8)	(27)	%
Depreciation and amortization		606.9		516.3		90.6	18	%
Total operating costs and expenses	$	1,826.0	$	1,481.4	$	344.6	23	%

* Not meaningful

Netex. Our Netex increased by $135.8 million, or 48%, to $418.8 million for Fiscal 2017 from $283.0 million for Fiscal 2016. The increase in Netex was primarily due to our Fiscal 2017 and Fiscal 2016 acquisitions, partially offset by cost savings, as planned network related synergies were realized.

Compensation and Benefits Expenses. Compensation and benefits expenses increased by $56.8 million, or 26%, to $273.6 million for Fiscal 2017 from $216.8 million for Fiscal 2016.

The increase in compensation and benefits expenses reflected the increase in headcount from 3,224 for Fiscal 2016 to 3,794 for Fiscal 2017 to support our growing business, including employees retained from businesses acquired during Fiscal 2017 and 2016.

Network Operations Expenses. Network operations expenses increased by $50.2 million, or 26%, to $244.7 million for Fiscal 2017 from $194.5 million for Fiscal 2016. The increase principally reflected the organic and inorganic growth of our network assets and the related expenses of operating that expanded network. Our total network route miles increased approximately 10% to 123,841 miles at June 30, 2017 from 112,660 miles at June 30, 2016.

Other Expenses. Other expenses increased by $54.0 million, or 58%, to $147.4 million for Fiscal 2017, from $93.4 million for Fiscal 2016. The increase was primarily the result of additional expenses attributable to our Fiscal 2016 and 2017 acquisitions.

Transaction Costs. Transaction costs decreased by $1.0 million, or 5%, to $20.5 million for Fiscal 2017 from $21.5 million for Fiscal 2016. The transaction costs recorded during the periods relate to direct costs associated with completing our Fiscal 2017 and 2016 acquisitions.

Stock-Based Compensation. Stock-based compensation expense decreased by $41.8 million, or 27%, to $114.1 million for Fiscal 2017 from $155.9 million for Fiscal 2016. The decrease in stock-based compensation expense was primarily driven by the remaining tranches of our pre-IPO common unit grants of CII becoming fully vested in the quarter ended December 31, 2016.

Prior to our IPO, we recognized changes in the fair value of the CII common units through increases or decreases in stock-based compensation expense and adjustments to the related stock-based compensation liability. This liability was impacted by changes in the estimated value of the common units, number of vested common units, and distributions made to holders of the common units. In connection with our IPO, we re-measured the fair value of the common units at the offering date based on various projections involving future stock performance, vesting and forfeitures. The fair value of unvested common units on the offering date is recognized as stock-based compensation expense ratably over the remaining vesting period.

Depreciation and Amortization. Depreciation and amortization expense increased by $90.6 million, or 18%, to $606.9 million for Fiscal 2017 from $516.3 million for Fiscal 2016. The increase was primarily a result of depreciation related to increased capital expenditures and increased depreciation and amortization expense associated with our Fiscal 2016 and 2017 acquisitions.

Total Other Expense, Net

The table below sets forth the components of our total other expense, net for the years ended June 30, 2017 and 2016.

	For the Year Ended June 30,
	2017		2016		$ Variance		% Variance
		(in millions)
Interest expense	$	(241.5)	$	(220.1)	$	(21.4)	(10)	%
Loss on extinguishment of debt		(18.2)		(33.8)		15.6	46	%
Foreign currency loss on intercompany loans		(10.3)		(53.8)		43.5	81	%
Other income/(expense), net		0.3		(0.3)		0.6		*
Total other expenses, net	$	(269.7)	$	(308.0)	$	38.3	12	%

* Not meaningful

Interest expense. Interest expense increased by $21.4 million, or 10%, to $241.5 million from $220.1 million for the years ended June 30, 2017 and 2016, respectively. The increase was primarily a result of an increase in debt from the comparative period resulting from incremental debt raised to fund our acquisitions of Allstream and Electric Lightwave. Partially offsetting the increase in interest expense was a benefit resulting from downward repricing of the interest rates on our previous indebtedness.

Loss on extinguishment of debt. Loss on extinguishment of debt decreased to a $18.2 million loss for the year ended June 30, 2017 from a loss of $33.8 million for the year ended June 30, 2016. The $18.2 million loss on extinguishment of debt in Fiscal 2017 represents a non-cash expense associated with the write-off of unamortized debt issuance costs and the issuance discounts on the portion of the Credit Agreement, as further amended, which was deemed to have been extinguished as well as the portion extinguished through early prepayment. The loss on extinguishment of debt also includes certain fees paid to third parties involved in the Incremental Amendment. These expenses were recorded as a loss on extinguishment of debt during Fiscal 2017.

Foreign currency loss on intercompany loans. Foreign currency loss on intercompany loans decreased to $10.3 million loss for Fiscal 2017 from $53.8 million for Fiscal 2016. This non-cash loss was driven by the strengthening of the USD against the GBP period over period and the related impact on intercompany loans entered into by foreign subsidiaries in their functional currency.

Provision for Income Taxes

Income tax expense increased over the prior year by $9.9 million, to $18.4 million for Fiscal 2017, from $8.5 million for Fiscal 2016. Our provision for income tax included both the current provision and a provision for deferred income tax expense resulting from timing differences between tax and financial reporting accounting bases.

The tax rate for the year ended June 30, 2017 was lower than the statutory rate due to the positive impact of stock-based compensation expense related to excess tax benefit of vested RSUs and reversal of valuation allowances recorded on certain foreign subsidiaries.

The tax rate for the year ended June 30, 2017 was negatively impacted by stock-based compensation expense related to the common units of CII of $3.7 million. The quarter ended December 31, 2016, was the final period for stock-based compensation expense associated with the common units of CII.

The following table reconciles our expected tax provision based on the statutory U.S. federal income tax rate applied to our earnings before income tax to our actual provision for income taxes:

	For the Year Ended June 30,
	2017		2016
		(in millions)
Expected provision/(benefit) at the statutory rate	$	36.4	$	(23.8)
Increase/(decrease) due to:
Stock-based compensation		(11.7)		27.9
State income taxes, net of federal benefit		2.9		(2.1)
Transaction costs not deductible for U.S. federal income tax purposes		1.9		1.5
Change in statutory tax rate		(1.4)		(3.6)
Change in valuation allowance		(10.2)		2.8
Foreign tax rate differential		(3.9)		2.7
Other, net		4.4		3.1
Provision/(benefit) for income taxes	$	18.4	$	8.5

Adjusted EBITDA

We define Adjusted EBITDA as earnings/(loss) from operations before interest, income taxes, depreciation and amortization (“EBITDA”) adjusted to exclude acquisition or disposal-related transaction costs, losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains /(losses) on intercompany loans, gains/(losses) on business dispositions and non-cash income /(loss) on equity and cost method investments. We use Adjusted EBITDA to evaluate operating performance, and this financial measure is among the primary measures used by management for planning and forecasting for future periods. We believe ~~that~~ the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by management and facilitates comparison of our results with the results of other companies that have different financing and capital structures.

We also monitor Adjusted EBITDA because our subsidiaries have debt covenants that restrict their borrowing capacity that are based on a leverage ratio, which utilizes a modified EBITDA, as defined in our Credit Agreement and the indentures governing our outstanding Notes. The modified EBITDA is consistent with our definition of Adjusted EBITDA; however, it includes the pro forma Adjusted EBITDA of and expected cost synergies from the companies acquired by us during the quarter for which the debt compliance certification is due.

Adjusted EBITDA results, along with other quantitative and qualitative information, are also utilized by management and our compensation committee for purposes of determining bonus payouts to employees.

Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under accounting principles generally accepted in the United States (“GAAP”). For example, Adjusted EBITDA:

does not reflect capital expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments;

does not reflect changes in, or cash requirements for, our working capital needs;

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does not reflect the significant interest expense, or the cash requirements necessary to service the interest payments, on our debt; and

does not reflect cash required to pay income taxes.

Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies because all companies do not calculate Adjusted EBITDA in the same fashion.

Reconciliations from segment and consolidated Adjusted EBITDA to net income/(loss) are as follows:

	For the year ended June 30, 2018
	For the Year Ended June 30, 2019
	Fiber Solutions		Transport		Enterprise Networks		zColo		Allstream		Other		Corp/ Eliminations		Total
	Zayo Networks		zColo		Allstream		Other		Corp/ Eliminations		Total
		(in millions)
Segment and consolidated Adjusted EBITDA	$	1,087.5	$	125.0	$	64.8	$	5.8	$	—	$	1,283.1
Segment and consolidated Adjusted EBITDA	$	673.2	$	230.3	$	148.2	$	120.3	$	114.0	$	5.0	$	—	$	1,291.0
Interest expense		(276.7)		(44.7)		(16.4)		—		(0.9)		(338.7)
Interest expense		(166.0)		(50.1)		(29.3)		(38.5)		(16.1)		—		0.2		(299.8)
Provision for income taxes		—		—		(6.9)		—		(18.4)		(25.3)
Provision for income taxes		—		—		—		—		22.8		—		(46.2)		(23.4)
Depreciation and amortization expense		(442.8)		(119.7)		(69.0)		(1.8)		(0.1)		(633.4)
Depreciation and amortization expense		(337.7)		(167.4)		(47.0)		(101.7)		(90.4)		(1.8)		(1.4)		(747.4)
Transaction costs		(12.4)		(4.0)		(0.6)		—		—		(17.0)
Transaction costs		(5.5)		(3.7)		(3.1)		(1.2)		(5.0)		—		(0.1)		(18.6)
Stock-based compensation		(88.2)		(19.6)		(1.0)		(0.5)		—		(109.3)
Stock-based compensation		(38.4)		(25.6)		(16.3)		(11.2)		(4.5)		(0.7)		—		(96.7)
Foreign currency loss on intercompany loans		—		—		—		—		(14.1)		(14.1)
Loss on extinguishment of debt		—		—		—		—		—		—		(4.9)		(4.9)
Gain on business disposition		—		—		5.5		—		—		5.5
Foreign currency gain on intercompany loans		—		—		—		—		—		—		5.4		5.4
Non-cash loss on investments		(0.8)		—		—		—		—		(0.8)
Non-cash loss on investments		(0.9)		0.1		—		0.1		—		(0.3)		—		(1.0)
Net income/(loss)	$	266.6	$	(63.0)	$	(23.6)	$	3.5	$	(33.5)	$	150.0
Net income/(loss)	$	124.7	$	(16.4)	$	52.5	$	(32.2)	$	20.8	$	2.2	$	(47.0)	$	104.6

	For the year ended June 30, 2017
	For the Year Ended June 30, 2018
	Fiber Solutions		Transport		Enterprise Networks		zColo		Allstream		Other		Corp/ Eliminations		Total
	Zayo Networks		zColo		Allstream		Other		Corp/ Eliminations		Total
	(in millions)
Segment and consolidated Adjusted EBITDA	$	1,026.0	$	142.3	$	115.0	$	5.0	$	—	$	1,288.3
Segment and consolidated Adjusted EBITDA	$	570.4	$	223.0	$	127.9	$	107.1	$	83.3	$	5.1	$	—	$	1,116.8
Interest expense		(241.7)		(42.2)		(16.1)		—		0.2		(299.8)
Interest expense		(135.7)		(48.2)		(19.1)		(32.0)		(7.1)		—		0.6		(241.5)
Provision for income taxes		—		—		22.8		—		(43.5)		(20.7)
Provision for income taxes		—		—		—		—		—		—		(18.4)		(18.4)
Depreciation and amortization expense		(534.7)		(118.2)		(90.4)		(1.8)		(1.4)		(746.5)
Depreciation and amortization expense		(357.4)		(124.7)		(34.3)		(77.8)		(10.9)		(1.8)		—		(606.9)
Transaction costs		(11.6)		(1.9)		(5.0)		—		(0.1)		(18.6)
Transaction costs		(3.7)		(5.5)		(4.9)		(1.8)		(4.6)		—		—		(20.5)
Stock-based compensation		(75.8)		(15.7)		(4.5)		(0.7)		—		(96.7)
Stock-based compensation		(43.8)		(36.8)		(16.3)		(13.9)		(2.8)		(0.5)		—		(114.1)
Loss on extinguishment of debt		—		—		—		—		(4.9)		(4.9)
Loss on extinguishment of debt		—		—		—		—		—		—		(18.2)		(18.2)
Foreign currency gain on intercompany loans		—		—		—		—		5.4		5.4
Foreign currency loss on intercompany loans		—		—		(0.1)		—		—		—		(10.2)		(10.3)
Non-cash loss on investments		(0.7)		0.1		—		(0.3)		—		(0.9)
Non-cash loss on investments		(1.1)		—		—		—		—		—		(0.1)		(1.2)
Net income/(loss)	$	161.5	$	(35.6)	$	21.8	$	2.2	$	(44.3)	$	105.6
Net income/(loss)	$	28.7	$	7.8	$	53.2	$	(18.4)	$	57.9	$	2.8	$	(46.3)	$	85.7

	For the year ended June 30, 2016
	For the Year Ended June 30, 2017
	Fiber Solutions		Transport		Enterprise Networks		zColo		Allstream		Other		Corp/ Eliminations		Total
	Zayo Networks		zColo		Allstream		Other		Corp/ Eliminations		Total
	(in millions)
Segment and consolidated Adjusted EBITDA	$	904.6	$	125.2	$	83.3	$	5.1	$	—	$	1,118.2
Segment and consolidated Adjusted EBITDA	$	504.0	$	208.4	$	100.6	$	99.5	$	17.9	$	4.5	$	—	$	934.9
Interest expense		(199.8)		(35.2)		(7.1)		—		0.6		(241.5)
Interest expense		(129.6)		(45.1)		(17.1)		(28.4)		—		—		0.1		(220.1)
Provision for income taxes		—		—		—		—		(19.2)		(19.2)
Provision for income taxes		—		0.2		0.2		—		(0.4)		—		(8.5)		(8.5)
Depreciation and amortization expense		(496.3)		(97.2)		(10.9)		(1.8)		—		(606.2)
Depreciation and amortization expense		(264.2)		(119.0)		(41.4)		(75.8)		(14.1)		(1.8)		—		(516.3)
Transaction costs		(13.7)		(2.2)		(4.6)		—		—		(20.5)
Transaction costs		(3.0)		(6.5)		(5.2)		(1.1)		(5.7)		—		—		(21.5)
Stock-based compensation		(92.8)		(18.1)		(2.8)		(0.4)		—		(114.1)
Stock-based compensation		(61.5)		(52.4)		(22.0)		(19.1)		(0.4)		(0.5)		—		(155.9)
Loss on extinguishment of debt		—		—		—		—		(18.2)		(18.2)
Loss on extinguishment of debt		—		—		—		—		—		—		(33.8)		(33.8)
Foreign currency loss on intercompany loans		(0.1)		—		—		—		(10.2)		(10.3)
Foreign currency gain/(loss) on intercompany loans		0.3		0.3		0.2		—		0.3		—		(54.9)		(53.8)
Non cash loss on investment		(1.0)		—		—		—		(0.1)		(1.1)
Non cash loss on investment		(1.3)		—		—		—		—		—		0.1		(1.2)
Net income/(loss)	$	100.9	$	(27.5)	$	57.9	$	2.9	$	(47.1)	$	87.1
Net income/(loss)	$	44.7	$	(14.1)	$	15.3	$	(24.9)	$	(2.4)	$	2.2	$	(97.0)	$	(76.2)

Liquidity and Capital Resources

Our primary sources of liquidity have been cash provided by operations, equity offerings, and incurrence of debt. Our principal uses of cash have been for acquisitions, capital expenditures, working capital, ~~and~~ debt service ~~requirements. We anticipate that our principal uses of cash in the future will be for acquisitions, capital expenditures, working capital, and debt service.~~

We have financial covenants under the indentures governing the 6.00% senior unsecured notes due 2023 (the “2023 Unsecured Notes”), the 6.375% senior unsecured notes due 2025 (the “2025 Unsecured Notes”) and the 5.75% Senior Notes due 2027 (the “2027 Unsecured Notes” and collectively with the 2023 and 2025 Unsecured Notes, the “Notes”) and our amended and restated credit agreement governing our senior secured term loan facility and revolving credit facility (the “Credit Agreement”) that, under certain circumstances, restrict our ability to incur additional indebtedness. The indentures governing the Notes limit any increase in ZGL’s secured indebtedness (other than certain forms of secured indebtedness expressly permitted under such indentures) to a pro forma secured debt ratio of 4.50 times ZGL’s previous quarter’s annualized modified EBITDA (as defined in the indentures), and limit ZGL’s incurrence of 57

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~~additional~~requirements ~~indebtedness~~and torepurchases ~~a total indebtedness ratio~~ of ~~6.00~~ZGH ~~times~~common ~~the previous quarter’s annualized modified EBITDA~~stock. ~~The~~ ~~Credit~~We ~~Agreement~~anticipate ~~also~~our ~~contains a covenant, applicable only to the Revolver, that ZGL maintain a senior secured leverage ratio below 5.25:1.00 at any time when the aggregate~~ principal ~~amount~~uses of ~~loans~~cash ~~outstanding~~in ~~under~~ the ~~Revolver~~future iswill ~~greater~~be ~~than~~for ~~35% of the commitments under the Revolver. The Credit Agreement also requires ZGL and its subsidiaries to comply with customary affirmative and negative covenants~~acquisitions, ~~including~~capital ~~covenants restricting the ability of ZGL and its subsidiaries~~expenditures, ~~subject~~working ~~to specified exceptions~~capital, to incur additional indebtedness, make additional guaranties, incur additional liens on assets, or dispose of assets, pay dividends, or make other distributions, voluntarily prepay certain other indebtedness, enter into transactions with affiliated persons, make investments and ~~amend~~debt ~~the terms of certain other indebtedness~~service. The Credit Agreement contains customary events of default, including among others, non-payment of principal, interest, or other amounts when due, inaccuracy of representations and warranties, breach of covenants, cross default to certain other indebtedness, insolvency or inability to pay debts, bankruptcy, or a change of control.

AsWe ofhave ~~June~~financial ~~30,~~covenants ~~2018~~under the indentures governing the 6.00% senior unsecured notes due 2023, wethe ~~had~~6.375% ~~$256~~senior unsecured notes due 2025, the 5.075% ~~million~~Senior inNotes ~~cash~~due 2027 and ~~cash~~our ~~equivalents~~amended and arestated ~~working~~credit ~~capital~~agreement ~~surplus~~governing ofour ~~$5.2~~senior ~~million~~secured term loan facility and revolving credit facility that, ofunder ~~which~~certain ~~$35~~circumstances, restrict our ability to incur additional indebtedness.7 ~~million~~The ~~relates~~indentures governing the Notes limit any increase in ZGL’s secured indebtedness (other than certain forms of secured indebtedness expressly permitted under such indentures) to ~~net~~a ~~assets~~pro ~~held~~forma ~~for~~secured ~~sale~~debt ratio of 4.50 ~~Cash~~times ~~and~~ZGL’s ~~cash~~previous ~~equivalents~~quarter’s ~~consist~~annualized ofmodified ~~amounts~~EBITDA ~~held~~(as defined in ~~bank~~the ~~accounts~~indentures), and ~~highly-liquid~~limit UZGL’s incurrence of additional indebtedness to a total indebtedness ratio of 6.S.00 ~~treasury~~times ~~money~~the ~~market~~previous ~~funds~~quarter’s annualized modified EBITDA. The WeCredit ~~have~~Agreement also contains a ~~current~~covenant, ~~deferred~~applicable ~~revenue~~only ~~balance~~to ~~of $164.4~~the ~~million~~Revolver, that weZGL ~~will~~maintain bea ~~recognizing~~senior assecured ~~revenue~~leverage ~~over~~ratio below 5.25:1.00 at any time when the ~~next~~aggregate ~~twelve~~principal ~~months~~amount of loans outstanding under the Revolver is greater than 35% of the commitments under the Revolver. The ~~actual~~Credit ~~cash~~Agreement ~~outflows~~also ~~associated~~requires ZGL and its subsidiaries to comply with ~~fulfilling~~customary ~~this~~affirmative ~~deferred~~and ~~revenue~~negative ~~obligation~~covenants, ~~during~~including covenants restricting the ~~next~~ability ~~twelve~~of ~~months~~ZGL ~~will~~and beits ~~significantly~~subsidiaries, ~~less~~subject ~~than~~to ~~the June~~specified 30exceptions, ~~2018 current~~to ~~deferred~~incur ~~revenue~~additional ~~balance.~~indebtedness, ~~Additionally~~make additional guaranties, asincur additional liens on assets, or dispose of ~~June~~assets, 30pay dividends, ~~2018~~or make other distributions, wevoluntarily ~~had~~prepay ~~$441.9 million~~certain ~~available~~other ~~under~~indebtedness, ~~our~~enter ~~Revolver~~into transactions with affiliated persons, ~~subject~~make toinvestments and amend the terms of certain ~~conditions~~other indebtedness. The ~~Accordingly~~Credit Agreement contains customary events of default, weincluding ~~believe~~among ~~that~~others, wenon-payment ~~have~~of ~~sufficient~~principal, ~~resources~~interest, toor ~~fund~~other ~~our~~amounts ~~obligations~~when due, inaccuracy of representations and ~~foreseeable~~warranties, ~~liquidity~~breach ~~requirements~~of incovenants, ~~the~~cross ~~near~~default ~~term~~to ~~and~~certain ~~for~~other ~~the~~indebtedness, ~~foreseeable~~insolvency ~~future~~or inability to pay debts, bankruptcy, or a change of control.

~~Our~~As ~~capital~~of ~~expenditures~~June ~~decreased~~30, by2019, we had $45185.64 million, orin ~~5%,~~cash ~~during~~and ~~the~~cash ~~year~~equivalents ~~ended~~and ~~June~~a ~~30,~~working ~~2018~~capital asdeficit ~~compared~~of to$167.0 ~~the~~million. ~~year~~Cash ~~ended~~and ~~June~~cash ~~30,~~equivalents ~~2017,~~consist toof ~~$789.9~~amounts ~~million~~held ~~from~~in ~~$835.5~~bank ~~million~~accounts and highly-liquid U.S. ~~Although~~treasury wemoney ~~had~~market funds. We have a ~~decrease~~current indeferred ~~the~~revenue ~~period,~~balance weof $174.9 ~~expect~~million tothat ~~continue~~we towill ~~invest~~be inrecognizing ~~our~~as ~~network~~revenue ~~for~~over the ~~foreseeable~~next ~~future~~twelve months. AsThe ofactual ~~June~~cash ~~30,~~outflows ~~2018,~~associated wewith ~~were~~fulfilling ~~contractually~~this ~~committed~~deferred ~~for~~revenue ~~$509.4~~obligation ~~million~~during ofthe ~~capital~~next ~~expenditures~~twelve ~~for~~months ~~construction~~will ~~materials~~be ~~and~~significantly ~~purchases~~less ofthan ~~property~~the June ~~and~~30, ~~equipment~~2019 current deferred revenue balance. ADuring ~~majority~~the ofyear ~~these~~ended ~~capital~~June ~~expenditure~~30, ~~commitments~~2019, ~~are~~we ~~expected~~drew to$275.0 bemillion ~~satisfied~~under inour ~~the~~Revolver ~~next~~and ~~twelve~~paid ~~months~~down $130.0 ~~These~~million. ~~capital~~As ~~expenditures~~of June 30, ~~however~~2019, ~~are~~we ~~expected~~had to$296.5 ~~primarily~~million beavailable ~~success-based;~~under ~~that~~our isRevolver, insubject ~~most~~to ~~situations~~certain conditions. Accordingly, we ~~will~~believe ~~not~~we ~~invest~~have ~~the~~sufficient ~~capital~~resources ~~until~~to wefund ~~have~~our anobligations ~~executed~~and ~~customer~~foreseeable ~~contract~~liquidity ~~that~~requirements ~~supports~~in the ~~investment~~near term and for the foreseeable future.

AsOur ~~part~~capital ofexpenditures ~~our~~decreased ~~corporate~~by ~~strategy,~~$3.0 wemillion ~~continue~~during tothe beyear ~~regularly~~ended ~~involved~~June in30, ~~discussions~~2019 ~~regarding~~as ~~potential~~compared ~~acquisitions~~to ofthe ~~companies~~year ~~and~~ended ~~assets~~June 30, ~~some~~2018, ofto ~~which~~$786.9 ~~may~~million befrom ~~quite~~$789.9 ~~large~~million. WeAlthough ~~expect~~we tohad ~~fund~~a ~~such~~slight ~~acquisitions~~decrease ~~with~~in ~~cash~~the ~~from operations~~period, ~~debt~~we ~~issuances~~expect ~~(including~~to ~~available~~continue ~~borrowings~~to ~~under~~invest in our ~~$450~~network for the foreseeable future.0 ~~million~~As ~~Revolver),~~of ~~equity~~June ~~contributions~~30, ~~and~~2019, ~~available~~we ~~cash~~were oncontractually ~~hand~~committed for $471.1 Wemillion ~~regularly~~of ~~assess~~capital ~~our~~expenditures ~~projected~~for ~~capital~~construction ~~requirements~~materials toand ~~fund~~purchases ~~future~~of ~~growth~~property inand ~~our~~equipment. ~~business,~~A ~~repay~~majority ~~our~~of ~~debt~~these ~~obligations,~~capital ~~and~~expenditure ~~support~~commitments ~~our~~are ~~other~~expected ~~general~~to ~~corporate~~be ~~and~~satisfied ~~operational~~in ~~needs,~~the ~~and~~next wetwelve ~~regularly~~months. ~~evaluate~~These ~~our~~capital ~~opportunities~~expenditures, however, are expected to ~~raise~~primarily ~~additional~~be ~~capital.~~success-based; Asthat ~~market~~is, ~~conditions~~in ~~permit~~most situations, we ~~may~~will ~~refinance~~not ~~existing~~invest ~~debt,~~the ~~issue~~capital ~~new~~until ~~debt~~we ~~securities~~have ~~through~~an ~~the~~executed ~~capital~~customer ~~markets,~~contract orthat ~~obtain~~supports ~~additional~~the ~~bank~~investment. ~~financing~~For tomore ~~fund~~information on our ~~projected~~contractual ~~capital~~commitments ~~requirements~~refer orto ~~provide~~our ~~additional~~Contractual ~~liquidity~~Cash Obligations table below.

As part of our corporate strategy, we continue to be regularly involved in discussions regarding potential acquisitions of companies and assets, some of which may be quite large. We expect to fund such acquisitions with cash from operations, debt issuances (including available borrowings under our $450.0 million Revolver), equity offerings, and available cash on hand. We regularly assess our projected capital requirements to fund future growth in our business, repay our debt obligations, and support our other general corporate and operational needs, and we regularly evaluate our opportunities to raise additional capital. As market conditions permit, we may refinance existing debt, issue new debt or equity securities through the capital markets, or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity.

Cash Flows

We believe ~~that~~ our cash flows from operating activities, in addition to cash and cash equivalents currently on-hand, will be sufficient to fund our operating activities and capital expenditures for the foreseeable future, and in any event for ~~at least the next 12 to 18 months. Given the generally volatile global economic climate, no assurance can be given that this will be the case.~~

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at least the next 12 to 18 months. Given the generally volatile global economic climate, no assurance can be given that this will be the case.

We regularly consider acquisitions and additional strategic opportunities, including large acquisitions, which may require additional debt or equity financing.

56The following table sets forth components of our cash flow for the years ended June 30, 2019, 2018 and 2017.

The following table sets forth components of our cash flow for the years ended June 30, 2018, 2017 and 2016.


	Year Ended June 30,
	2019		2018		2017
	(in millions)
Net cash provided by operating activities	$	951.1	$	971.2	$	909.8
Net cash used in investing activities	$	(747.9)	$	(966.8)	$	(2,270.3)
Net cash (used in)/provided by financing activities	$	(275.2)	$	35.6	$	1,411.3

	Year Ended June 30,
	2018		2017		2016
	(in millions)
Net cash provided by operating activities	$	971.1	$	909.8	$	714.0
Net cash used in investing activities	$	(966.8)	$	(2,270.3)	$	(1,141.6)
Net cash provided by financing activities	$	35.6	$	1,411.3	$	291.7

Net Cash Flows Provided By Operating Activities

Net cash flows provided by operating activities ~~increased~~decreased by $6120.31 million to $~~971~~951.1 million from $~~909~~971.82 million during the years ended June 30, ~~2018~~2019 and ~~2017~~2018, respectively.

Net cash flows provided by operating activities during the year ended June 30, ~~2018~~2019 include the net income of $~~104~~150.60 million, plus the add backs of non-cash items deducted in the determination of net income, principally depreciation and amortization of $~~747~~633.4 million, stock-based compensation expense of $96109.73 million, ~~and the~~ deferred income taxes of $221.02 million, ~~partially offset by~~ foreign currency ~~gain~~loss on intercompany loans of $514.41 million and non-cash interest expense of $10.3 million. Additions to deferred revenue of $~~212~~193.81 million during the period were largely offset by amortization of deferred revenue of $~~137~~152.81 million. Cash flow during the period was reduced by the net change in working capital components of $9013.07 million.

Net cash flows from operating activities during the year ended June 30, ~~2017~~2018 include the net income of $85102.79 million, plus the add backs of non-cash items deducted in the determination of net income, principally depreciation and amortization of $~~606~~746.95 million, stock-based compensation expense of $~~114~~96.17 million, ~~foreign currency~~ loss on ~~intercompany loans of $10.3 million, loss on~~ extinguishment of debt of $184.29 million, non-cash interest expense of $9.68 million, and the deferred tax expense of $1222.63 million, partially offset by foreign currency gain on intercompany loans of $5.4 million. Also contributing to the cash provided by operating activities were additions to deferred revenue of $~~200~~212.58 million, less amortization of deferred revenue of $~~117~~136.63 million. Cash flow during the period was reduced by the net change in working capital components of $3589.40 million.

The decrease in net cash flows from operating activities during the year ended June 30, 2019 as compared to the year ended June 30, 2018 is primarily a result of lower revenues and increased cash paid for interest, net of capitalized interest.

Net cash flows from operating activities increased by $61.4 million to $971.2 million from $909.8 million during the years ended June 30, 2018 and 2017, respectively.

Net cash flows from operating activities during the year ended June 30, 2017 include the net income of $87.1 million, plus the add backs of non-cash items deducted in the determination of net income, principally depreciation and amortization of $606.2 million, stock-based compensation expense of $114.1 million, foreign currency loss on intercompany loans of $10.3 million, loss on extinguishment of debt of $18.2 million, non-cash interest expense of $9.6 million, and the deferred tax expense of $13.4 million. Also contributing to the cash provided by operating activities were additions to deferred revenue of $200.5 million, less amortization of deferred revenue of $116.5 million. Cash flow during the period was reduced by the net change in working capital components of $37.9 million.

The increase in net cash flows from operating activities during the year ended June 30, 2018 as compared to the year ended June 30, 2017 is primarily a result of additional earnings from organic growth and synergies realized from our Fiscal 2018 and Fiscal 2017 acquisitions.

~~Net cash flows from operating activities increased by $195.8 million to $909.8 million from $714.0 million during the years ended June 30, 2017 and 2016, respectively.~~59

~~Net~~Table ~~cash flows from operating activities during the year ended June 30, 2016 include the net loss~~ of $76.2 million, plus the add backs of non-cash items deducted in the determination of net loss, principally depreciation and amortization of $516.3 million, stock-based compensation expense of $155.9 million, foreign currency loss on intercompany loans of $53.8 million and non-cash interest expense of $11.9 million, partially offset by the deferred tax benefit of $2.8 million. Also contributing to the cash provided by operating activities were additions to deferred revenue of $184.0 million, less amortization of deferred revenue of $111.5 million. Cash flow during the period was reduced by the net change in working capital components of $48.4 million.Contents

The increase in net cash flows from operating activities during the year ended June 30, 2017 as compared to the year ended June 30, 2016 is primarily a result of additional earnings from organic growth and synergies realized from our Fiscal 2016 and Fiscal 2017 acquisitions.

Cash Flows Used In Investing Activities

WeDuring ~~used~~the year ended June 30, 2019, our principal use of cash infor investing activities ofwas $~~966~~786.89 million, ~~$2,270.3~~in ~~million~~additions to property and equipment. This was partially offset by $~~1,141~~39.60 million ~~during~~in ~~the~~proceeds ~~years~~from ~~ended~~the ~~June~~sale ~~30,~~of ~~2018~~SRT, ~~2017~~net ~~and~~of ~~2016,~~cash ~~respectively~~held in escrow.

During the year ended June 30, 2018, our principal uses of cash for investing activities were $789.9 million in additions to property and equipment and $176.9 million in net cash paid for acquisitions.

During the year ended June 30, 2017, our principal uses of cash for investing activities were $835.5 million in additions to property and equipment and $1,434.8 million in net cash paid for acquisitions, largely driven by our acquisition of Electric Lightwave.

~~During~~Cash ~~the~~Flows ~~year~~(Used ~~ended June 30, 2016, our principal uses of cash for investing activities were $704.1 million~~ in)/Provided ~~additions~~By toFinancing ~~property and equipment and $437.5 million in net cash paid for acquisitions.~~ Activities

~~Cash~~Our ~~Flows~~cash ~~Provided~~flows Byused ~~Financing~~for ~~Activities~~financing activities during the year ended June 30, 2019 are primarily comprised of $402.5 million in purchases of our common stock, $130.0 million in payments on the Revolver, $6.2 million in capital lease payments, $5.0 million in principal payments on our long-term debt, $3.8 million in payments on the Santa Clara acquisition financing agreement, $2.0 million for other financing outflows and $0.7 million in payments for debt issuance costs. These movements were offset by $275.0 million in borrowings under the Revolver.

Our ~~net~~ cash flows provided by financing activities ~~was~~during the year ended June 30, 2018 are primarily comprised of $35462.68 million in debt proceeds, $1net of discounts,~~411.3~~ related to the issuance of $300 million incremental 5.75% Senior Unsecured Note due 2027 and an additional $~~291~~150 million tranche of the Company’s existing term loan. These proceeds were partially offset by $310.7 million ~~during~~for the ~~years~~partial ~~ended~~pre-payment ~~June~~of 30the Company’s term loan, ~~2018~~$93.5 million cash paid for ZGH stock repurchases, ~~2017~~$8.4 million in principal payments on capital lease obligations, $5.3 million related to payments for the Santa Clara acquisition financing arrangement and ~~2016~~other, ~~respectively~~$5.0 million of scheduled principal payments on our term loan, and $4.3 million in payment of debt issuance costs.

Our cash flows provided by financing activities during the year ended June 30, ~~2018~~2017 are primarily comprised of $~~462~~3,865.8 million in debt proceeds, from ~~net~~the refinancing of ~~discounts,~~our ~~related~~term toloan ~~the~~and ~~issuance~~our of $~~300~~650 million Electric ~~incremental~~Lightwave ~~5.75%~~Incremental ~~Senior~~Term ~~Unsecured~~Loan, ~~Note~~net ~~due~~of ~~2027~~discounts, and anour ~~additional~~aggregate $~~150~~1,350.0 million ~~tranche~~issuances of ~~the~~2027 ~~Company’s~~Unsecured ~~existing~~Notes, ~~term~~net ~~loan. These~~of ~~proceeds were~~ premiums, partially offset by $~~310~~2,408.78 million ~~for~~of ~~the~~principal ~~partial~~payments and early pre-payment ofon ~~the Company’s~~ long-term ~~loan~~debt, $936.56 million ~~cash paid for stock repurchases, $8.4 million~~ in principal payments on capital lease obligations, ~~$5.3 million related to payments for the Santa Clara acquisition financing arrangement~~ and ~~other,~~ $535.~~0 million of scheduled principal payments on our term loan, and $~~4.3 million in payment of debt issuance costs.

Our cash flows provided by financing activities during the year ended June 30, 2017 are primarily comprised of $3,865.8 million in debt proceeds from the refinancing of our term loan and our $650 million Electric Lightwave Incremental Term Loan, net of discounts and our aggregate $1,350.0 million issuances of 2027 Unsecured Notes, net of premiums, partially offset by $2,408.8 million of principal payments and early pre-payment on long-term debt, $6.6 million in principal payments on capital lease obligations, and $35.4 million in payment of debt issuance costs.

Our cash flows provided by financing activities during the year ended June 30, 2016 are primarily comprised of $929.3 million in aggregate proceeds from our $400 million Incremental Amendment to our term loan facility and $550 million issuance of additional 2025 Unsecured Notes, net of discounts. These were partially offset by $81.1 million in contributions to parent for common stock repurchases, $535.0 million of principal payments on long-term debt, $4.9 million in principal payments on capital lease obligations, and $4.2 million in payment of debt issuance costs.

Contractual Cash Obligations

The following table represents a summary of our estimated future payments under contractual cash obligations as of June 30, ~~2018~~2019 for continuing operations. Changes in our business needs, cancellation provisions, changing interest rates and other factors may result in actual payments differing from these estimates. We cannot provide certainty regarding the timing and amounts of these future payments.

		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	For the Years Ended June 30,
		(in millions)
		Total		2020		2021 - 2021		2023 - 2024		Thereafter
Long-term debt (principal and interest)		$	7,783.9	$	319.8	$	1,106.9	$	2,017.9	$	4,339.3
	(in millions)
Operating leases			434.1		93.7		149.1		76.6		114.7
Long-term debt (principal and interest)		$	7,633.9	$	324.4	$	1,236.7	$	3,183.1	$	2,889.7
Obligations for capital expenditures			509.4		509.4		—		—		—
Capital leases (principal and interest)			270.8		20.1		40.3		39.4		171.0
Other purchase obligations			290.8		173.5		52.5		19.1		45.7
Operating leases			658.3		128.1		190.7		123.7		215.8
Capital leases (principal and interest)			204.0		15.4		29.0		29.3		130.3
Obligations for capital expenditures			471.1		471.1		—		—		—
Total		$	9,222.2	$	1,111.8	$	1,337.5	$	2,142.9	$	4,630.0
Other purchase obligations			348.0		83.9		124.8		82.8		56.5
Total		$	9,382.1	$	1,027.6	$	1,592.5	$	3,429.0	$	3,333.0

58Table of Contents

Our operating leases and obligations for capital expenditures include expected payments for our operating facilities, network costs and capacity, structural components, communications equipment, and maintenance obligations. Our obligations for capital expenditures are primarily success-based, meaning that before we commit resources to expand our network, we have a signed customer contract that will provide us with an attractive return on the required capital. The contractual long-term debt payments, above, include an estimate of future interest expense based on the interest rates in effect on our floating rate debt obligations as of the most recent balance sheet date.

Cash payments for interest, net of capitalized interest, which are reflected in our cash flows from operating activities, during the year ended June 30, ~~2018~~2019 were $~~280~~315.2 million and represents 2933.1% of our cash flows from operating activities. We also made cash payments related to principal payments on our long-term debt and capital lease obligations of $13141.42 million ~~(exclusive of payments of $310.7 million related to our July 2017 term loan partial repayment)~~, which are reflected in our cash flows ~~from~~used in financing activities, and represented 114.48% of our cash flows from operating activities during the period.

Off-Balance Sheet Arrangements

We do not have any special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support and we do not engage in leasing, hedging, or other similar activities that expose us to any significant liabilities that are not (i) reflected on the face of the ~~condensed~~ consolidated financial statements, (ii) disclosed in Note 14-Commitments and Contingencies to the ~~condensed~~ consolidated financial statements, or in the Future Contractual Obligations table included above.

Recently Issued Accounting Pronouncements

In February 2018, the Financial Accounting Standards Board (“FASB”) issued ~~Accounting~~ ~~Standards Update (“~~ASU”), Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02), which allows companies to reclassify the income tax effects resulting from tax bill, H.R.1, from accumulated other comprehensive income to retained earnings. The standard also requires certain new disclosures regardless of the election. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (fiscal year ending June 30, 2020 “Fiscal 2020” for us), with early adoption permitted. We do not expect ASU 2018-02 to have a material impact on our consolidated financial statements.

InOn ~~March~~January 26, 2017, the FASB issued ASU 2017-0704, ~~Compensation~~ –Simplifying ~~Retirement Benefits (Topic 715): Improving~~ the ~~Presentation~~Test offor ~~Net~~Goodwill ~~Periodic~~Impairment ~~Pension Cost and Net Periodic Postretirement Benefit Cost. This~~ (ASU ~~requires~~2017-04), anwhich ~~employer~~simplifies ~~to report~~ the ~~service~~impairment ~~cost~~testing ~~component~~for ofgoodwill ~~net~~by ~~periodic~~changing ~~pension~~the ~~cost~~measurement ~~and~~for ~~net~~goodwill ~~periodic~~impairment. ~~postretirement~~Under ~~cost in~~ the ~~same~~new ~~line~~guidance, ~~item in~~ the ~~statement~~recognition of ~~operations~~an asimpairment ~~other~~charge ~~compensation~~is ~~costs~~calculated ~~arising~~based ~~from~~on ~~services~~the ~~rendered~~amount by which the ~~related~~carrying ~~employees~~amount ~~during~~exceeds the ~~period.~~reporting ~~The~~unit’s ~~other~~fair ~~net~~value, ~~cost~~which ~~components~~could ~~are required to~~ be ~~presented~~different infrom the ~~statement~~amount ofcalculated ~~operations~~under ~~separately from~~ the ~~service~~current ~~cost~~method ~~component~~using ~~and~~the ~~outside~~implied afair ~~subtotal~~value of ~~income~~the ~~from~~goodwill; ~~operations. Additionally~~however, the ~~line~~loss ~~item~~recognized ~~used~~should innot ~~the~~exceed ~~statement of operations to present~~ the ~~other~~total ~~net~~amount ~~cost~~of ~~components~~goodwill ~~must~~allocated beto ~~disclosed~~that inreporting ~~the~~unit. The ~~notes~~standard tois ~~the~~effective for ~~financial~~fiscal ~~statements.~~years, ~~This~~and ~~ASU~~interim isperiods ~~effective~~within ~~for~~those fiscal years, beginning after December 15, ~~2017~~2019 (fiscal year ending June 30, 2021 “Fiscal ~~2019~~2021” for us), ~~and~~with ~~interim~~early ~~periods~~adoption ~~within~~permitted. ~~those~~The ~~fiscal~~provisions ~~years,~~of ~~and~~ASU ~~must~~2017-04 bewould ~~applied~~not onhave aaffected ~~retrospective~~our ~~basis.~~last Wegoodwill doimpairment ~~not~~assessment, ~~expect~~but ~~ASU~~no ~~2017-07~~assurance tocan ~~have~~be aprovided ~~material~~that ~~impact~~the onsimplified ~~its~~testing ~~consolidated~~methodology ~~financial~~will ~~statements~~not affect our goodwill impairment assessment in the future.

In ~~August~~February 2016, the FASB issued ASU 2016-1502, ~~Statement~~ Leases. ofThe ~~Cash~~new ~~Flows~~guidance (supersedes existing guidance on accounting for leases in Topic ~~230):~~840 ~~Classifications~~and ofis ~~Certain~~intended ~~Cash~~to ~~Receipts~~increase the transparency and ~~Cash~~comparability ~~Payments~~of accounting for lease transactions. ~~The~~ ~~new~~ASU ~~standard~~2016-02 ~~provides~~requires ~~guidance~~most ~~for~~leases ~~eight~~to ~~changes~~be ~~with~~recognized ~~respect~~on the balance sheet. Lessees will need to ~~how~~recognize ~~cash~~a ~~receipts~~right-of-use asset and ~~cash~~a lease liability for virtually all leases. The liability will be equal to the present value of lease payments. ~~are~~The ~~classified~~asset inwill be based on the liability, subject to adjustment, such as for initial direct costs. For income statement ofpurposes, ~~cash~~the ~~flows~~FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting remains similar to the current model but updated to align with certain changes to the ~~objective~~lessee ofmodel ~~reducing~~and ~~diversity~~the innew ~~practice~~revenue recognition standard (ASC 606). ASU 2016-02 will require both quantitative and qualitative disclosures regarding key information about leasing arrangements. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (Fiscal 2020 for us).

~~The~~ASU ~~standard is effective for fiscal years~~2016-02, ~~and~~as ~~interim~~amended ~~periods~~by ~~within~~ASU ~~those~~No. ~~fiscal years~~2018-11, ~~beginning~~Targeted ~~after December 31~~Improvements, ~~2017~~requires ~~(Fiscal~~lessees ~~2019~~and ~~for~~lessors ~~us), with early adoption permitted. We do not plan~~ to ~~early~~recognize ~~adopt,~~and ~~nor~~measure doleases weat ~~expect~~ the ~~adoption~~beginning of ~~this~~the ~~new~~earliest ~~standard~~period topresented ~~have~~using aone ~~material~~of ~~impact~~two onmodified ~~our~~retrospective ~~consolidated financial statements.~~

On March 30, 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes five aspects of the accounting for share-based payment award transactions that will affect public companies, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of

employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. We early-adopted ASU 2016-09 effective July 1, 2016. Excess tax benefits for share-based payments are now recognized against income tax expense rather than additional paid-in capital and are included in operating cash flows rather than financing cash flows. The recognition of excess tax benefits has been applied prospectively and prior periods have not been adjusted. We had $15.6 million of excess tax benefits for the year ended June 30, 2017. In addition, we elected to change our accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative effect adjustment to accumulated deficit of $1.7 million as of July 1, 2016. Amendments related to minimum statutory tax withholding requirements and the classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes have been adopted prospectively and did not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases. The new guidance supersedes existing guidance on accounting for leases in Topic 840 and is intended to increase the transparency and comparability of accounting for lease transactions. ASU 2016-02 requires most leases to be recognized on the balance sheet. Lessees will need to recognize a right-of-use asset and a lease liability for virtually all leases. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting remains similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard (ASU 2014-09). The ASU will require both quantitative and qualitative disclosures regarding key information about leasing arrangements. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (Fiscal 2020 for us). Early adoption is permitted. The standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We established a project team and commenced an initial impact assessment process. To date, we have reviewed a sample of lessee and lessor arrangements and made preliminary assessments of the impact this standard will have on our consolidated financial statements. Although we are still assessing the impact of this standard, we expect the new guidance to significantly increase the reported assets and liabilities on our consolidated balance sheets. There are currently no plans to early adopt ASU 2016-02.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), which replaces numerous requirements in U.S. GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model for recognizing revenue from certain contracts with customers. The core principle of the new standard is that a company should recognize revenue to depict the transfer of 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. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and addressed accounting for costs to acquire and fulfill contracts. The standard will not impact the manner in which we account for revenue arrangements accounted for as leases. The standard will not impact the manner in which we account for revenue arrangements accounted for as leases. Effective July 1, 2018, we adopted the requirements of ASC 606 and will use the full retrospective transition method. The full retrospective transition method required us to restate each prior reporting period presented. We are the process of implementing internal controls and system functionality to enable the preparation of financial information post adoption.

The adoption of ASC 606 will have an impact on the manner in which we recognize revenue associated with dark fiber sales that include the transfer of title to certain network assets, which prior to ASC 606 have been considered a sale of real estate or integral equipment. Until June 30, 2018, we have deferred the recognition of revenue on the sale of network infrastructure assets that were considered to be integral equipment if we has a substantial continuing involvement in the transferred asset. The consideration received in this type of arrangement has historically been amortized to revenue ratably over the period in which we have a substantial continuing involvement in the transferred asset. Under ASC 606 the asset transferred in this type of arrangement will be derecognized from the balance sheet and the amount of the transaction price attributable to the asset being sold will be recognized upon customer acceptance. This change will have an estimated impact of (decreasing)/ increasing the revenue as reported by us during the years ended June 30, 2018 and 2017 by ($1.5) million and $20.5 million, respectively. The retrospective adoption of ASC 606 will also result in increasing the previously reported operating costs during the year ended June 30, 2017 by $18.8

million, which represents the net book value of assets transferred to customers in these types of arrangements during Fiscal 2017.

The assets transferred in these real estate sales have historically been included in the caption “property and equipment, net” on our balance sheet. Upon the adoption of ASC 606, the net book value of these assets of $19.6 million will be removed from our condensed consolidated balance sheet. We will also derecognize from our June 30, 2018 balance sheet $1.5 million and $20.5 million in related deferred revenue, current and non-current, respectively, which represented the unamortized consideration received on these arrangements.

An additional impact from the adoption of ASC 606 will be the accounting for the incremental costs of acquiring new service contracts including certain compensation expense with internal sales representatives. Under ASC 606, we will capitalize these incremental costs of obtaining customer contracts and amortize the expense over the relevant contract term. In addition, we will assess our deferred contract cost asset for impairment on a periodic basis. Prior to the adoption of ASC 606, compensation paid to internal sales representatives for obtaining new service contracts has been expensed as incurred. We expect the impact of the retrospective adoption of ASC 606 will result in increasing the selling, general and administrative expenses as reported during the years ended June 30, 2018 and 2017 by $1.1 million and $0.2 million, respectively. Additionally, we expect an increase to the as reported caption titled “Other current assets” and “Other assets” on the consolidated balance sheet as of June 30, 2018 of $7.1 million and $5.7 million, respectively, to reflect the deferred cost of acquiring service contracts that will be recognized in future periods over the relevant contract term.

The table below presents the expected impact the full retrospective adoption of ASC 606 will have on our statement of operations for the years ended June 30, 2018 and 2017 and each of the quarters of Fiscal 2018:

	Fiscal Year ended				Quarter Ended (unaudited)
	June 30, 2018		June 30,2017		September 30,2017		December 31,2017		March 31,2018		June 30,2018
Revenue	$	(1.5)	$	20.5	$	(0.4)	$	(0.4)	$	(0.4)	$	(0.3)
Operating costs		—		18.8		—		—		—		—
Selling, general and administrative expenses		1.1		0.2		(0.2)		0.6		(0.3)		1.0
Depreciation and amortization		(0.9)		(0.7)		(0.3)		(0.3)		(0.2)		(0.1)
Provision for income taxes		(2.7)		0.8		—		(2.5)		—		(0.2)
Net income		1.0		1.4		0.1		1.8		0.1		(1.0)

The table below presents the expected impact the full retrospective adoption of ASC 606 will have on our consolidated balance sheet for the year ended June 30, 2018:

	As of June 30, 2018
	As Reported		Effect of Adoption		As Adjusted
Assets
Other current assets	$	22.6	$	7.1	$	29.7
Property and equipment, net	$	5,447.2	$	(19.6)	$	5,427.6
Other assets	$	170.0	$	5.6	$	175.6
Liabilities
Deferred revenue, current	$	164.4	$	(1.5)	$	162.9
Deferred revenue, non-current	$	1,096.8	$	(20.5)	$	1,076.3
Deferred income taxes, net	$	143.2	$	3.9	$	147.1
Stockholders' equity
Accumulated deficit	$	(377.2)	$	11.2	$	(366.0)

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approaches. An entity may choose to use either (1) the effective date or (2) the beginning of the earliest comparative period presented in the financial statements at the date of initial application. We will apply the transition requirements at the July 1, 2019 effective date by showing a cumulative effect adjustment in the first quarter of 2020, rather than restating any prior periods. In addition, we will elect the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, we will exclude short-term leases (term of 12 months or less) from the balance sheet presentation and will account for non-lease and lease components in a contract as a single lease component for most asset classes. We also elected the land easements practical expedient which permits us to carry forward our historical accounting treatment for agreements existing on the adoption date.

We are in the process of implementing a new lease accounting system and related internal controls to meet the requirements of ASU 2016-02. While we are still evaluating the effect that ASU 2016-02 will have on our consolidated balance sheet, we expect to record significant right-of-use assets and corresponding lease liabilities upon adoption. We do not expect our adoption of ASU 2016-02 will have a material impact on our consolidated statement of operations or cash flows.

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical results which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate these estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

We have accounting policies that involve estimates such as the allowance for doubtful accounts, revenue reserves, useful lives of long-lived assets, fair value of our restricted stock units issued as compensation, accruals for estimated tax and legal liabilities, accruals for exit activities associated with real estate leases, accruals for customer disputes and valuation allowance for deferred tax assets. We have identified the policies below, which require the most significant judgments and estimates to be made in the preparation of our consolidated financial statements, as critical to our business operations and an understanding of our results of operations.

Revenue

Revenue is recognized at the amount ~~expected~~probable to be ~~realized~~collected, which includes billing and performance adjustments. During each reporting period, we make estimates for potential future credits to be issued in respect of current revenue related to performance interruptions and customer disputes, which are recorded as a reduction in revenue. We analyze historical credit activity when evaluating our credit reserve requirements. We reserve for known performance interruptions as incurred. We review customer disputes and reserve for those we believe to be valid claims, which is recorded as a reduction of revenue. The determination of the customer dispute credit reserve involves significant judgment, estimations and assumptions.

We defer recognition of revenue until cash is collected on certain components of revenue, principally contract termination charges and late fees, as collectability is not reasonably assured until receipt of the cash based on our historical experience.

Stock-Based Compensation

We account for our stock-based compensation as either liability or equity awards based on the terms of the grant agreement. We account for forfeitures as they occur versus estimating forfeitures. We generally recognize stock-based awards to employees and independent directors based on their grant-date fair values, with no consideration for future forfeitures. We recognize the fair value of outstanding awards as a charge to operations over the vesting period.

In October 2014, our Board of Directors adopted the 2014 Performance Compensation Incentive Program (“PCIP”). The PCIP includes incentive cash compensation and equity (in the form of restricted stock units or “RSUs”). Grants of RSUs under the PCIP plan are made quarterly for all participants. The PCIP went into effect on October 16, 2014.

Under the Part B component of the PCIP, participants, who include members of our senior management team, are awarded quarterly grants of RSUs. The number of the RSUs earned by the participants is based on our stock price performance over a four fiscal quarter measurement period, and Part B RSUs cliff vest based upon continued employment at the end of the measurement period. The existence of a vesting provision that is associated with the performance of our stock price is a market condition, which affects the determination of the grant date fair value. Upon vesting, RSUs convert to shares of our common stock.

The grant date fair value of Part B awards issued during a given period are expensed over the performance period. The grant date fair value is estimated utilizing a Monte Carlo simulation, which uses randomly generated stock-price paths through a Geometric Brownian Motion stock price simulation. This simulation provides a stochastic projection of the ten-day average closing stock price ending on the vesting date (i.e., end of performance period), the total stock price performance over the performance period, and the number of common shares to be issued at the vesting date. Various assumptions are utilized in the valuation method, including the target stock price performance ranges and respective

~~share~~ Table ~~payout percentages, our historical stock price performance and volatility, peer companies’ historical volatility and an appropriate risk-free rate. The aggregate future value~~ of the grant under each simulation is calculated using the estimated per share value of the common stock at the end of the restriction period multiplied by the number of common shares projected to be granted at the vesting date. The present value of the aggregate grant is then calculated under each simulation resulting in a distribution of potential present values. The average of this present value distribution equals the fair value of the grant.Contents

In October 2014, we adopted the 2014 Performance Compensation Incentive Program (“PCIP”). The PCIP includes incentive cash compensation and equity (in the form of restricted stock units or “RSUs”). Grants of RSUs under the PCIP plan are made quarterly for all participants. The PCIP went into effect on October 16, 2014.

Under the Part B component of the PCIP, participants, who include members of our senior management team, are awarded quarterly grants of RSUs. The number of the RSUs earned by the participants is based on ZGH’s stock price performance over a four fiscal quarter measurement period, and Part B RSUs cliff vest based upon continued employment at the end of the measurement period. The existence of a vesting provision that is associated with the performance of ZGH’s stock price is a market condition, which affects the determination of the grant date fair value. Upon vesting, RSUs convert to shares of ZGH’s common stock.

Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are also awarded quarterly grants of RSUs under the same provisions as other Part B participants outlined above. However, beginning with the grant during the three months ended December 31, 2018, in the case of the CEO, and beginning with the grant during the three months ended March 31, 2019, in the case of the CFO, awards are subject to additional vesting criteria that are based on ZGH’s stock performance subsequent to the end of the measurement period. In order for the CEO and CFO to receive the maximum award, ZGH’s stock price must remain at or above the ending measurement period price for the six months subsequent to the end of the performance period.

The grant date fair value of Part B awards issued during a given period are expensed over the performance period. The grant date fair value is estimated utilizing a Monte Carlo simulation. This simulation estimates the ten-day average closing stock price ending on the vesting date, the stock price performance over the performance period, and the number of common shares to be issued at the vesting date. Various assumptions are utilized in the valuation method, including the target stock price performance ranges and respective share payout percentages, our historical stock price performance and volatility, peer companies’ historical volatility and an appropriate risk-free rate. The aggregate future value of the grant under each simulation is calculated using the estimated per share value of the common stock at the end of the restriction period multiplied by the number of common shares projected to be granted at the vesting date. The present value of the aggregate grant is then calculated under each simulation resulting in a distribution of potential present values. The fair value is then calculated based on the average of the potential present values.

Property and Equipment

We record property and equipment acquired in connection with a business combination at their estimated fair values on the acquisition date. See “Critical Accounting Policies and Estimates: Acquisitions—Purchase Price Allocation.” Purchases of property and equipment are stated at cost, net of depreciation. Major improvements are capitalized, while expenditures for repairs and maintenance are expensed when incurred. Costs incurred prior to a capital project’s completion are reflected as construction-in-progress and are part of network infrastructure assets. Depreciation begins once the property and equipment is available and ready for use. Certain internal direct labor costs of constructing or installing property and equipment are capitalized. Capitalized direct labor reflects a portion of the salary and benefits of certain field engineers and other employees that are directly related to the construction and installation of network infrastructure assets. We have contracted with third party contractors for the construction and installation of the majority of our fiber network. Interest costs are capitalized for all assets that require a period of time to get them ready for their intended use. Depreciation and amortization is provided on a straight-line basis over the estimated useful lives of the assets, with the exception of leasehold improvements, which are amortized over the lesser of the estimated useful lives or the term of the lease.

We perform periodic internal reviews to estimate useful lives of our property and equipment. Due to rapid changes in technology and the competitive environment, selecting the estimated economic life of telecommunications property and equipment requires a significant amount of judgment. Our internal reviews primarily consider industry benchmarking but also consider input from our network personnel regarding actual usage, physical wear and tear, replacement history, and assumptions regarding the benefits and costs of implementing new technology that factor in the need to meet our financial objectives. We completed a review in March 2018 and revised our estimated useful lives for fiber optic network assets, from its previous estimate of a range of fifteen years to twenty years to a revised estimate of thirty-three years, and revised our estimated useful lives for owned buildings from its historical estimate of thirty-nine years to a revised estimate of forty-five years. In determining the change in estimated useful lives, management, with input from its engineering team, utilized quantitative and qualitative analysis, including historical usage patterns and retirements, industry benchmarks and review of published data sources. The change in estimated useful lives of the fiber optic network assets and owned buildings was accounted for as a change in accounting estimate on a prospective basis effective March 1, 2018.

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input from its engineering team, utilized quantitative and qualitative analysis, including historical usage patterns and retirements, industry benchmarks and review of published data sources. The change in estimated useful lives of the fiber optic network assets and owned buildings was accounted for as a change in accounting estimate on a prospective basis effective March 1, 2018.

Estimated useful lives of our property and equipment in years are as follows:

			Estimatedusefullives
			(in years)
Land			N/A
Buildings - leasehold and site improvements			15 to 45
Furniture, fixtures and office equipment			3 to 7
Computer hardware			3 to 5
Software			3
Machinery and equipment			5 to 7
Components, machinery and equipment			5 to 7
Fiber optic equipment			8
Fiber optic components and equipment			8
Circuit switch equipment			10
Circuit switch components and equipment			10
Packet switch equipment			5
Packet switch components and equipment			5
Fiber optic network			33
Construction in progress			N/A

From time to time, we are required to replace or re-route existing fiber due to structural changes such as construction and highway expansions, which is defined as a “relocation.” In such instances, we fully depreciate the remaining carrying value of network infrastructure removed or rendered unusable, and capitalize the new fiber and associated construction costs of the relocation placed into service. To the extent that the relocation does not require the replacement of segments of our network, and only involves the act of moving our existing network infrastructure, as-is, to another location, the related costs are expensed as incurred.

WeAt ~~periodically~~least annually we evaluate the recoverability of our long-lived assets and evaluate such assets for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Impairment is determined to exist if the estimated future undiscounted cash flows are less than the carrying value of such assets. We consider various factors to determine if an impairment test is necessary. The factors include: consideration of the overall economic climate, technological advances with respect to equipment, our strategy, and capital planning. Since our inception, no event has occurred nor has there been a change in the business environment that would trigger an impairment test for our property and equipment assets.

Income Taxes

We are required to estimate the amount of tax payable or refundable for the current year and the deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and income tax basis of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards, using enacted tax rates in effect for each taxing jurisdiction in which we operate for the year in which those temporary differences are expected to be recovered or settled. This process requires our management to make assessments regarding the timing and probability of the ultimate tax impact of such items.

Our deferred tax assets arise from a variety of sources, the most significant being tax losses that can be carried forward to be utilized against taxable income in future years, deferred revenue and expenses recognized in our income statement ~~of operations~~ but disallowed in our tax return until the associated cash flow occurs.

We record a valuation allowance to reduce our deferred tax assets to the amount that is expected to be recognized. The amount of deferred tax assets recorded on our consolidated balance sheets is influenced by management’s assessment of our future taxable income with regard to relevant business plan forecasts, the reversal of deferred tax balances, and reasonable tax planning strategies. At each balance sheet date, existing assessments are reviewed and, if necessary, revised to reflect changed circumstances. In a situation where recent losses have been incurred, the relevant accounting standards require us to weigh the objective evidence of the recent losses more heavily than subject evidence of projected taxable income. It is reasonably possible that the Company may reverse the valuation allowance recorded on certain foreign subsidiaries’ deferred tax assets in the near future.

InTable ~~connection with several~~ of our acquisitions, we have acquired significant U.S. net operating loss carry forwards (“NOLs”). The Tax Reform Act of 1986 contains provisions that limit the utilization of NOLs if there has been an “ownership change” as described in Section 382 of the Code.Contents

~~Upon~~reviewed ~~acquiring~~and, aif ~~company~~necessary, ~~that~~revised ~~has~~to ~~NOLs,~~reflect wechanged ~~prepare~~circumstances. anIn ~~assessment~~a tosituation ~~determine~~where ifrecent welosses have abeen ~~legal~~incurred, ~~right~~the relevant accounting standards require us to ~~use~~weight the ~~acquired~~objective ~~NOLs.~~evidence Inof ~~performing~~the ~~this~~recent ~~assessment~~losses wemore ~~follow~~heavily ~~the~~than ~~regulations~~subject ~~within~~evidence ~~the~~of ~~Code~~projected ~~Section 382:~~taxable ~~Net~~income. ~~Operating~~It ~~Loss~~is ~~Carryovers~~reasonably ~~Following~~possible ~~Changes~~we inmay ~~Ownership.~~reverse ~~Any~~the ~~disallowed~~valuation ~~NOLs~~allowance ~~acquired~~recorded ~~are~~on ~~written~~certain ~~off~~foreign subsidiaries’ deferred tax assets in ~~purchase~~the ~~accounting~~near future.

In connection with several of our acquisitions, we have acquired significant U.S. NOLs. The Tax Reform Act of 1986 contains provisions that limit the utilization of NOLs if there has been an “ownership change” as described in Section 382 of the Internal Revenue Code.

Upon acquiring a company that has NOLs, we prepare an assessment to determine if we have a legal right to use the acquired NOLs. In performing this assessment we follow the regulations within the Internal Revenue Code Section 382: Net Operating Loss Carryovers Following Changes in Ownership. Any disallowed NOLs acquired are written off in purchase accounting.

A valuation allowance is required for deferred tax assets if, based on available evidence, it is more-likely-than-not that all or some portion of the asset will not be realized due to the inability to generate sufficient taxable income in the period and/or of the character necessary to utilize the benefit of the deferred tax asset. When evaluating whether it is more-likely-than-not that all or some portion of the deferred tax asset will not be realized, all available evidence, both positive and negative, that may affect the realizability of deferred tax assets is identified and considered in determining the appropriate amount of the valuation allowance. We continue to monitor our financial performance and other evidence each quarter to determine the appropriateness of our valuation allowance. If we are unable to meet our taxable income forecasts in future periods we may change our conclusion about the appropriateness of the valuation allowance, which could create a substantial income tax expense in our consolidated statement of operations in the period such change occurs.

As of June 30, ~~2018~~2019, we had a$1,221.4 ~~cumulative~~million of U.S. federal NOL carry ~~forward~~forwards. ~~balance~~We ofused approximately $~~1,897~~406.39 million. ~~During~~during ~~the~~Fiscal ~~year~~2019 ~~ending~~to ~~June~~offset ~~30,~~increased ~~2018,~~profitability. We ~~the~~have ~~Company~~completed ~~generated~~several ~~approximately~~acquisitions ~~$245.5~~in ~~million~~which ofwe ~~NOL’s~~acquired ~~mostly~~net ~~due~~operating toloss ~~accelerated~~ tax ~~depreciation~~attributes as ~~provided~~part byof ~~U.S.~~the ~~Tax Reform~~purchase. These ~~Our~~acquisitions, ~~NOL carry forwards~~however, ifwere ~~not~~considered ~~utilized~~a to"change ~~reduce~~in ~~taxable~~ownership” ~~income~~within inthe ~~future~~meaning ~~periods,~~of ~~will~~Section ~~expire~~382 inof ~~various~~the ~~amounts~~Internal ~~beginning~~Revenue inCode ~~2019~~ and, ~~ending~~as ina ~~2037.~~result, Assuch aNOL ~~result~~carry offorwards ~~Internal~~are ~~Revenue~~subject ~~Service~~to ~~regulations~~an annual limitation, wereducing ~~are~~the ~~currently~~amount ~~limited~~available to ~~utilizing~~offset aincome ~~maximum~~tax ofliabilities ~~$1,352.8~~absent ~~million~~the oflimitation. Currently ~~acquired~~available U.S. NOL carry forwards ~~during~~as ~~Fiscal~~of ~~2018.~~June ~~However~~30, to2019 ~~the~~are ~~extent~~approximately ~~that~~$874.2 wemillion. An doadditional ~~not utilize~~ $~~1,352~~166.80 million ofwill ~~our~~become ~~acquired~~available ~~NOL~~for ~~carry~~use ~~forwards~~ during a fiscal year, ~~the~~ended ~~difference~~June ~~between~~30, ~~the~~2020. $1Our NOL carryforwards,~~352.8~~ ~~million~~if ~~maximum~~not ~~usage~~utilized ~~and~~to ~~the~~reduce ~~actual~~taxable ~~NOLs~~income ~~usage~~in isfuture ~~carried~~periods, ~~over~~will toexpire ~~the~~in ~~next~~various ~~calendar~~amounts ~~year~~beginning in 2020 and ending in 2038. Of our $1,~~897~~221.34 million NOL carry forwards balance, $1,~~462~~032.72 million of these NOL carry forwards were acquired. in acquisitions.

As of June 30, ~~2018~~2019, we had approximately $~~384~~345.39 million of foreign jurisdiction net operating loss carry forwards, primarily in ~~Canada,~~Belgium ~~the United Kingdom~~ and France. ~~The~~Some ~~majority of these~~ foreign NOLs have a valuation allowance reducing the value of the corresponding deferred tax asset in the financial statements due to recent losses. During fiscal year June 30, 2019, valuation allowances of $33.0 million were released in the United Kingdom as a result of corporate restructuring offering an enhanced ability to utilize those NOLs against future taxable income. It is reasonably possible that we may reverse the valuation allowance recorded on certain foreign subsidiaries’ deferred tax assets in the near future.

As of June 30, ~~2018~~2019, we had tax-effected state net operating loss carry forwards of approximately $5233.81 million, which are subject to limitations on their utilization and have various expiration dates ~~2019~~beginning 2020 through ~~2037~~2038. ~~The~~We ~~Company~~believe ~~believes that only~~ $5031.50 million of this balance will be utilized and have provided a valuation allowance for the remainder.

Goodwill and Purchased Intangibles

Intangible assets arising from business combinations, such as acquired customer contracts and relationships (collectively “customer relationships”), are initially recorded at fair value. We amortize customer relationships primarily over an estimated life of ten to twenty years using the straight-line method, as this method approximates the timing in which we expect to receive the benefit from the acquired customer relationship assets. Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination.

We review goodwill and indefinite-lived intangible assets for impairment at least annually in April or whenever facts and circumstances indicate that their carrying amounts may not be recoverable.

Our goodwill impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative assessment includes consideration of the overall financial performance of the reporting units, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity- and reporting unit-specific events. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgments and estimates. If it is determined under the qualitative assessment that it is

~~more~~ Table ~~likely than not that the fair value~~ of a reporting unit is less than its carrying value, then we would recognize an impairment charge for the amount by which the reporting unit’s carrying amount exceeds that fair value, up to but not exceeding the reporting unit’s goodwill.Contents

We review goodwill and indefinite-lived intangible assets for impairment at least annually in April or whenever facts and circumstances indicate that their carrying amounts may not be recoverable.

Our impairment assessment for indefinite-lived intangible assets involves comparing the estimated fair value of indefinite-lived intangible assets to their respective carrying values. To the extent the carrying value of indefinite-lived intangible assets exceeds the fair value, we will recognize an impairment loss for the difference.

Intangible assets with finite useful lives are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We recorded no impairment charges for goodwill or intangibles during the years ended June 30, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017.

Acquisitions – Purchase Price Allocation

The application of acquisition accounting requires ~~that~~ we make fair value determinations as of the applicable valuation date. In making these determinations, we are required to make estimates and assumptions that affect the recorded amounts, including, but not limited to, expected future cash flows, market comparables and discount rates, replacement costs of property and equipment and the amounts to be recovered in future periods from acquired deferred tax assets. To assist us in making these fair value determinations, we may engage third-party valuation specialists who generally assist us in the fair value determination of identifiable assets such as customer relationships, property and equipment and any other significant assets or liabilities. Our estimates in this area impact, among other items, the amount of depreciation and amortization and income tax expense or benefit that we report. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk consists of changes in interest rates from time to time and market risk arising from changes in foreign currency exchange rates that could impact our cash flows and earnings.

As of June 30, ~~2018~~2019, we had outstanding $1,430.0 million of 2023 Unsecured Notes, $900.0 million of 2025 Unsecured Notes, $1,650.0 million of 2027 Unsecured Notes, a balance of $~~493~~488.87 million on our Term Loan Facility due 2021, a balance of $1,269.3 million on our Term Loan Facility due 2024, $145.0 million on our Revolver and $~~133~~182.52 million of capital lease obligations. As of June 30, ~~2018~~2019, we had $~~441~~296.95 million available for borrowing under our Revolver, subject to certain conditions.

Based on current market interest rates for debt of similar terms and average maturities and based on recent transactions, we estimate the fair value of our Notes to be $34,~~986~~067.57 million as of June 30, ~~2018~~2019. Our 2023 Unsecured Notes, 2025 Unsecured Notes, and 2027 Unsecured Notes accrue interest at fixed rates of 6.00%, 6.375%, and 5.75% respectively.

Both our Revolver and our Term Loan Facility accrue interest at floating rates subject to certain conditions. ~~The~~Our ~~Company’s~~ Term Loan Facility accrues interest at variable rates based upon the one month, three month or nine month LIBOR plus i) a spread of 2.0% on ~~the~~our ~~Company’s~~ $500.0 million tranche (which has a LIBOR floor of 0.0%) and ii) a spread of 2.25% on ~~its~~our B-2 Term Loan tranche (which has a LIBOR floor of 1.00%). Our Revolver accrues interest at variable rates based upon LIBOR plus a spread of 1.00% to 1.75% depending on our leverage ratio. As of June 30, ~~2018~~2019, the weighted average interest rates (including margin) on the Term Loan Facility and our Revolver were approximately 4.3% and 3.8%, respectively. A hypothetical increase in the applicable interest rate on our Term Loan Facility of one percentage point would increase our annualized interest expense on the Term Loan Facility by approximately 24% or $17.5 million, based on the applicable interest rate as of June 30, 2018. Historically, this impact was limited as a result of the applicable interest rate being below the minimum 1.0% LIBOR floor on our Term Loan Facility tranche that matures on January 19, 2024.

In August 2012, we entered into interest rate swap agreements with an aggregate notional value of $750.0 million and a maturity date of June 30, 2017. The contracts state that we pay a 1.67% fixed rate of interest for the term of the agreements, beginning June 30, 2013. The counterparties pay to us the greater of actual LIBOR or 1.25%. We entered

~~into~~ Table ~~the swap arrangements to reduce the risk~~ of ~~increased interest costs associated with potential future increases in LIBOR rates. As of June 30, 2017, the interest rate swap agreements have expired and were not replaced.~~Contents

interest rates (including margin) on the Term Loan Facility and our Revolver were approximately 4.6% and 4.2%, respectively. A hypothetical increase in the applicable interest rate on our Term Loan Facility and Revolver of one percentage point would increase our annualized interest expense on the Term Loan Facility and Revolver by approximately 21% or $19.0 million, based on the applicable interest rate as of June 30, 2019. Historically, this impact was limited as a result of the applicable interest rate being below the minimum 1.0% LIBOR floor on our Term Loan Facility tranche that matures on January 19, 2024.

We are exposed to the risk of changes in interest rates if it is necessary to seek additional funding to support the expansion of our business and to support acquisitions. The interest rate that we may be able to obtain on future debt financings will be dependent on market conditions.

We have exposure to market risk arising from foreign currency exchange rates. During the year ended June 30, ~~2018~~2019, our foreign activities accounted for approximately 2321% of our consolidated revenue. We monitor foreign markets and our commitments in such markets to assess currency and other risks. A one percent change in foreign exchange rates would change consolidated revenue by approximately $5.93 million for the year ended June 30, ~~2018~~2019. To date, we have not entered into any hedging arrangement designed to limit exposure to foreign currencies. To the extent our level of foreign activities is expected to increase, through further acquisition and/or organic growth, we may determine that such hedging arrangements would be appropriate and will consider such arrangements to minimize our exposure to foreign exchange risk.

We do not have any material commodity price risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the information set forth beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation as of the last day of the period covered by this Annual Report on Form 10-K, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms. Such controls include those designed to ensure that information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, ~~2018~~2019, our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Our internal control over financial reporting is a process designed by management, under the supervision of our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~Our~~Table ~~management, led by our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness~~ of internal control over financial reporting as of June 30, 2018, using the criteria set forth in Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013 Framework). Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of June 30, 2018. KPMG LLP, the Company’s independent registered public accounting firm, has audited the Company’s internal control over financial reporting, as stated in their report, which is included herein. Contents

effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, led by our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of internal control over financial reporting as of June 30, 2019, using the criteria set forth in Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013 Framework). Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of June 30, 2019.

Changes in Internal Controls over Financial Reporting

Management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, whether any changes in our internal control over financial reporting that occurred during our last fiscal year have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management continues to implement changes in the accounting and technology areas as a result of our Sarbanes Oxley compliance program. Such changes have included but are not limited to formalizing existing and establishing new internal controls, implementation of technology solutions, and hiring additional accounting and technology personnel.

~~Management~~ Beginning ~~implemented both~~July ~~a new enterprise resource planning system and a billing management system during the year ended June 30~~1, 2018., ~~The~~we ~~new~~adopted ~~systems~~Accounting ~~are~~Standards ~~expected~~Update to2014-09, ~~enhance~~Revenue ~~the~~from ~~overall~~Contracts ~~system~~with ofCustomers. ~~internal~~We ~~control over financial reporting through further automation and integration of business processes and were not~~ implemented ininternal ~~response~~controls to ~~any~~ensure ~~identified~~we ~~deficiency~~adequately orevaluated ~~material~~our ~~weakness~~contracts, intrained ~~the~~applicable ~~Company’s~~personnel ~~internal control over financial reporting. The implementations are significant in scale~~ and ~~complexity~~properly ~~and~~assessed ~~significantly affect certain accounting functions. Both during~~ the ~~implementation of the two~~ new ~~systems,~~accounting ~~and~~standard ~~afterwards,~~related ~~the Company modified certain of its internal controls~~ to ~~verify~~revenue ~~its~~recognition ~~controls~~in ~~were~~our ~~designed~~consolidated ~~and operating effectively for all key~~ financial ~~reporting assertions~~statements.

Management implemented both a new enterprise resource planning system and a billing management system during the year ended June 30, 2019. The new systems are expected to enhance the overall system of internal control over financial reporting through further automation and integration of business processes and were not implemented in response to any identified deficiency or a material weakness in our internal control over financial reporting. The implementations are significant in scale and complexity and significantly affect certain accounting functions. Both during the implementation of the two new systems, and afterwards, we modified certain of our internal controls to verify our controls were designed and operating effectively for all key financial reporting assertions.

Other than the internal controls related to items referenced above there were no changes in our internal control over financial reporting that occurred during the fourth quarter of Fiscal 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10. DIRECTOR, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

We have omitted this information pursuant to General Instruction I.

ITEM 11. EXECUTIVE COMPENSATION

We have omitted this information pursuant to General Instruction I.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

We have omitted this information pursuant to General Instruction I.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

We have omitted this information pursuant to General Instruction I.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

We first engaged KPMG LLP (“KPMG”) to be our independent registered public accounting firm in May 2012. The aggregate fees billed or allocated to us for the years ended June 30, ~~2018~~2019 and ~~2017~~2018 for professional accounting services, including KPMG's audit of our annual consolidated financial statements, are set forth in the table below.

	June 30,
	2018		2017
	2019		2018
	(in millions)
Audit Fees	$	3.7	$	4.43
Audit Related Fees		0.32		—0.3
Tax Fees		0.12		0.31
Total	$	4.1	$	4.7

For purposes of the preceding table, the professional fees are classified as follows:

Audit fees — These are fees billed for the fiscal years shown for professional services performed for the audit of the Company’s consolidated financial statements for that year, comfort letters, consents and reviews of interim/quarterly financial information. Audit fees for each year shown include amounts that have been billed to us through ~~August~~September 244, ~~2018~~2019 and any additional amounts that are expected to be billed to us thereafter.

Audit-related fees — These are fees billed for assurance and related services and foreign statutory audits that are traditionally performed by our independent certified public accounting firm.

Tax fees — These are fees billed for all professional services by professional staff of our independent registered public accounting firm’s tax division except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice. Tax compliance involves preparation of original and amended tax returns, refund claims and tax payment services. Tax planning and tax advice encompass a diverse range of subjects, including assistance with tax audits and appeals, tax advice related to mergers, acquisitions and dispositions, and requests for rulings or technical advice from taxing authorities.

Audit Committee Pre-Approval Policy and Procedures.

It is the policy of the Audit Committee, as set forth in the Audit Committee Charter, to pre-approve, consistent with the requirements of the federal securities laws, all auditing services and permissible non-audit services provided to the Company by its independent registered public accounting firm. The Audit Committee has established policies and procedures for the pre-approval of audit, audit related, tax, and permissible other services to be provided to the Company by its independent registered public accounting firm. The Audit Committee has delegated to the chair of the Audit Committee the authority to pre-approve audit-related and non-audit services not prohibited by law to be performed by our independent registered public accounting firm and associated fees up to a maximum of $100,000 per engagement, per additional category of services, or in excess of pre-approved budgeted levels for the specified service, provided that the chair shall report any decisions to pre-approve services and fees to the full Audit Committee at its next regular

~~related~~ Table toof ~~mergers, acquisitions and dispositions, and requests for rulings or technical advice from taxing authorities.~~Contents

Audit Committee Pre-Approval Policy and Procedures. It is the policy of the Audit Committee, as set forth in the Audit Committee Charter, to pre-approve, consistent with the requirements of the federal securities laws, all auditing services and permissible non-audit services provided to the Company by its independent registered public accounting firm. The Audit Committee has established policies and procedures for the pre-approval of audit, audit related, tax, and permissible other services to be provided to the Company by its independent registered public accounting firm. The Audit Committee has delegated to the chair of the Audit Committee the authority to pre-approve audit-related and non-audit services not prohibited by law to be performed by our independent registered public accounting firm and associated fees up to a maximum of $100,000 per engagement, per additional category of services, or in excess of pre-approved budgeted levels for the specified service, provided that the chair shall report any decisions to pre-approve services and fees to the full Audit Committee at its next regular meeting. The Company provides quarterly reporting to the Audit Committee regarding services performed by and fees paid to its independent registered public accounting firm. Audit fees for Fiscal ~~2018~~2019 and Fiscal ~~2017~~ 2018 included $4.1 million and $4.7 million, respectively, for services related to SEC filings, including comfort letters and consents. All fees listed in the table above were pre-approved by the Audit Committee.

The Audit Committee must review and pre-approves all audit and non-audit services provided by KPMG, LLP, our independent registered public accounting firm. The Chief Financial Officer can approve the engagement of KPMG LLP for any of these previously pre-approved services up to $50,000. The Audit Committee Chairman can approve the engagement of KPMG LLP for any of these previously pre-approved services up to $100,000. For any approvals of engagement by the CFO and Audit Committee Chairman, the Audit Committee subsequently ratifies those approvals.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Documents Filed as Part of this Annual Report

1. Financial Statements

Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets at June 30, 2018 and 2017		F-2
Consolidated Balance Sheets at June 30, 2019 and 2018		F-2
Consolidated Statements of Operations for the Years Ended June 30, 2018, 2017 and 2016		F-3
Consolidated Statements of Operations for the Years Ended June 30, 2019, 2018 and 2017		F-3
Consolidated Statements of Comprehensive Income/(Loss) for the Years Ended June 30, 2018, 2017 and 2016		F-4
Consolidated Statements of Comprehensive Income for the Years Ended June 30, 2019, 2018 and 2017		F-4
Consolidated Statements of Members’ Equity for the Years Ended June 30, 2018, 2017 and 2016		F-5
Consolidated Statements of Members’ Equity for the Years Ended June 30, 2019, 2018 and 2017		F-5
Consolidated Statements of Cash Flows for the Years Ended June 30, 2018, 2017 and 2016		F-6
Consolidated Statements of Cash Flows for the Years Ended June 30, 2019, 2018 and 2017		F-6
Notes to Consolidated Financial Statements		F-7

Schedules not indicated above have been omitted because of the absence of the condition under which they are required or because the information called for is shown in the consolidated financial statements or in the notes thereto.

2. Exhibits

The Exhibits required by this item are listed in the Exhibit Index. Each management contract and compensatory plan or arrangement is denoted with a “+” in the Exhibit Index.

Financial statements and financial statement schedules required to be filed for the registrant under Items 8 or 15 are set forth following the index page at page F-1. Exhibits filed as a part of this report are listed below. Exhibits incorporated by reference are indicated in parentheses.

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EXHIBIT INDEX

Exhibit No.		Description of Exhibit
2.1**		Agreement and Plan of Merger, dated as of ~~November~~May 298, ~~2016~~2019, ~~by and~~ among ~~Zayo~~Front ~~Group,~~Range ~~LLC~~TopCo, ~~ZELMS,~~ Inc., ~~Electric~~Front ~~Lightwave~~Range ~~Parent~~BidCo, Inc., and ~~Fortis~~Zayo ~~Advisors~~Group ~~LLC~~Holdings, asInc. ~~the Equityholder Representative~~ (incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K/A filed with the SEC on ~~March~~May 79, ~~2017~~2019, File No. ~~333~~001-~~169979~~36690).
3.1**		Certificate of Formation of Zayo Group, LLC, as amended (incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-4 filed with the SEC on July 12, 2012, File No. 333-182643).
3.2**		Amended and Restated Operating Agreement of Zayo Group, LLC (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed with the SEC on December 9, 2014, File No. 333-169979).
4.1**		Indenture, dated as of January 23, 2015, among Zayo Group, LLC, Zayo Capital, Inc., the guarantors party thereto and The Bank of New York Mellon Trust Company N.A., as trustee (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed with the SEC on January 23, 2015, File No. 333‑169979).
4.2**		Indenture, dated as of May 6, 2015, between Zayo Group, LLC, Zayo Capital, Inc., the guarantors party thereto and The Bank of New York Mellon Trust Company N.A., as trustee (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed with the SEC on May 7, 2015, File No. 333-169979).
4.3**		Indenture, dated as of January 27, 2017, among Zayo Group, LLC, Zayo Capital, Inc., the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed with the SEC on April 11, 2017, File No. 333-169979).
10.1**		Amendment and Restatement Agreement, dated as of May 6, 2015, by and among Zayo Group, LLC, Zayo Capital, Inc., the guarantors party thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent for the term loan facility, and SunTrust Bank, as administrative agent for the revolving loan facility whereby that certain Credit Agreement, dated as of July 2, 2012, as amended, will be amended and restated in its entirety in the form of that certain First Amended and Restated Credit Agreement, by and among Zayo Group, LLC and Zayo Capital, Inc., as borrowers, the guarantors party thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc. and SunTrust Bank (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on May 7, 2015, File No. 333-169979).
10.2**		Incremental Amendment to Amended and Restated Credit Agreement, dated as of January 15, 2016, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on January 15, 2016, File No. 333-169979).
10.3**		Repricing Amendment to Amended and Restated Credit Agreement, dated as of July 22, 2016, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on July 25, 2016, File No. 333-169979).
10.4**		Incremental Amendment No. 2 to Amended and Restated Credit Agreement dated as of January 19, 2017, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on January 25, 2017, File No. 333-169979).

Exhibit No.		Description of Exhibit
10.5**		Repricing Amendment No. 2 to Amended and Restated Credit Agreement, dated as of July 20, 2017, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on July 21, 2017, File No. 333-169979).
10.6**		Repricing Amendment No. 3 to Amended and Restated Credit Agreement, dated as of December 22, 2017, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on December 22, 2017, File No 333-169979).
10.7**		Incremental Amendment No. 3 to Amended and Restated Credit Agreement, dated as of February 26, 2018, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on February 26, 2018, File No. 333-169979).
10.8**+		2014 Stock Incentive Plan (as amended on August 23, 2016) (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).
10.9**+		Grant Notice for 2014 Stock Incentive Plan – Restricted Stock Unit Award (Part A Awards) (incorporated by reference to Exhibit 10.3 of our AnnualQuarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).
10.10**+		Grant Notice for 2014 Stock Incentive Plan – Restricted Stock Unit Award (Part B Awards) (incorporated by reference to Exhibit 10.4 of our Quarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).
10.11**+		Grant Notice for 2014 Stock Incentive Plan – Restricted Stock Unit Award (Non-Employee Director Awards) (incorporated by reference to Exhibit 10.25 of Zayo Group Holdings, Inc.’s Annual Report on Form 10-K filed with the SEC on September 18, 2015, File No. 001-36690).
10.12**+		Employment Agreement, dated as of July 27, 2016, by and between Zayo Group, LLC and John F. Waters, Jr. (incorporated by reference to Exhibit 10.5 of our Quarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).
10.13**+		Grant Notice for 2014 Stock Incentive Plan—Restricted Stock Unit Award (One-time Sign-On RSUs for John F. Waters, Jr.) (incorporated by reference to Exhibit 10.6 of our Quarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).
10.14**+		Employment Agreement, dated as of March 31, 2017, by and between Zayo Group, LLC and Andrew Crouch (incorporated by reference to Exhibit 10.3 of our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2017, File No. 333-169979).
10.15**+		Employment Agreement, dated as of September 11, 2017, by and between Zayo Group, LLC and Matt Steinfort (incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q filed with the SEC on November 7, 2017, File No. 333-169979.
10.16**+		Executive Severance Agreement dated November 27, 2017, by and between Zayo Group, LLC and Daniel P. Caruso (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on November 29, 2017, 333-169979).

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Exhibit No.		Description of Exhibit
10.5**		Repricing Amendment No. 2 to Amended and Restated Credit Agreement, dated as of July 20, 2017, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on July 21, 2017, File No. 333-169979).

10.6**		Repricing Amendment No. 3 to Amended and Restated Credit Agreement, dated as of December 22, 2017, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on December 22, 2017, File No 333-169979).

10.7**		Incremental Amendment No. 3 to Amended and Restated Credit Agreement, dated as of February 26, 2018, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on February 26, 2018, File No. 333-169979).

10.8**		Extension Amendment No. 1 to Amended and Restated Credit Agreement, dated as of April 3, 2019, by and among Zayo Group, LLC, Zayo Capital, Inc., Morgan Stanley Senior Funding, Inc., as term facility administrative agent, SunTrust Bank, as revolving facility administrative agent, and the other lenders signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on April 4, 2019, File No. 333-169979).
10.9**+		2014 Stock Incentive Plan (as amended on August 23, 2016) (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).

10.10**+		Revised Grant Notice for 2014 Stock Incentive Plan – Restricted Stock Unit Award (Part A Awards) (incorporated by reference to Exhibit 10.3 of our Quarterly Report on Form 10-Q filed with the SEC on February 8, 2019, File No. 333-169979).

10.11**+		Revised Grant Notice for 2014 Stock Incentive Plan—Restricted Stock Unit Award (Part B Awards) (incorporated by reference to Exhibit 10.4 of our Quarterly Report on Form 10-Q filed with the SEC on February 8, 2019, File No. 333-169979).

10.12*+		Revised Grant Notice for 2014 Stock Incentive Plan – Restricted Stock Unit Award (Part B Awards – CEO and CFO

10.13**+		Revised Grant Notice for 2014 Stock Incentive Plan—Restricted Stock Unit Award (Non-Employee Director Awards) (incorporated by reference to Exhibit 10.6 of our Quarterly Report on Form 10-Q filed with the SEC on February 8, 2019, File No. 333-169979).

10.14**+		Grant Notice for 2014 Stock Incentive Plan – Restricted Stock Unit Award (Part A Awards for Highly Compensated Employees) (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q filed with the SEC on May 9, 2019, File No. 333-169979).

10.15**+		Employment Agreement, dated as of July 27, 2016, by and between Zayo Group, LLC and John F. Waters, Jr. (incorporated by reference to Exhibit 10.5 of our Quarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).

10.16**+		Grant Notice for 2014 Stock Incentive Plan—Restricted Stock Unit Award (One-time Sign-On RSUs for John F. Waters, Jr.) (incorporated by reference to Exhibit 10.6 of our Quarterly Report on Form 10-Q filed with the SEC on November 9, 2016, File No. 333-169979).

Exhibit No.		Description of Exhibit
21.1		Omitted pursuant to General Instruction I of Form 10-K.
31.1*		Certification of Chief Executive Officer of the Registrant, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
31.2*		Certification of Chief Financial Officer of the Registrant, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
32*		Certification of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Label Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

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Exhibit No.		Description of Exhibit

10.17**+		Amended and Restated Employment Agreement, dated as of October 23, 2018, by and between Zayo Group, LLC and Matt Steinfort (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on October 23, 2018, File No. 333-169979).

10.18**		First Amendment to Amended and Restated Employment Agreement dated December 5, 2018, by and between Zayo Group, LLC and Matt Steinfort (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on December 5, 2018, File No. 333-169979).

10.19**+		Executive Severance Agreement dated November 27, 2017, by and between Zayo Group, LLC and Daniel P. Caruso (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on November 29, 2017, File No. 333-169979).


21.1		Omitted pursuant to General Instruction I of Form 10-K.

31.1*		Certification of Chief Executive Officer of the Registrant, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

31.2*		Certification of Chief Financial Officer of the Registrant, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

32*		Certification of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Schema Document

101.CAL*		XBRL Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Label Linkbase Document

101.PRE*		XBRL Presentation Linkbase Document

* Filed or furnished herewith

** Incorporated herein by reference

+ Management contract and/or compensatory plan or arrangement

Table of Contents

Signatures

Pursuant to the requirements of Section 13 or 15(d) 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, this ~~24th~~4th day of ~~August~~September, ~~2018~~ 2019.


ZAYO GROUP, LLC

By:		/s/ Matt Steinfort
		Matt Steinfort Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Dan Caruso	Chief Executive Officer, Director	~~August~~September 244, ~~2018~~2019
Dan Caruso	(principal executive officer)
/s/ Matt Steinfort	Chief Financial Officer	~~August~~September 244, ~~2018~~2019
Matt Steinfort	(principal financial and accounting officer)
/s/ Philip Canfield	Director	August 24, 2018
/s/ Rick Connor	Director	September 4, 2019
Philip Canfield
/s/ Rick Connor	Director	August 24, 2018
Rick Connor
/s/ Don Gips	Director	August 24, 2018
/s/ Scott Drake	Director	September 4, 2019
Scott Drake
/s/ Don Gips	Director	September 4, 2019
Don Gips
/s/ Steven Kaplan	Director	~~August~~September 244, ~~2018~~2019
Steven Kaplan
/s/ Cathy Morris	Director	~~August~~September 244, ~~2018~~2019
Cathy Morris
/s/ Nina Richardson	Director	August 24, 2018
/s/ Linda Rottenberg	Director	September 4, 2019
Nina Richardson
/s/ Linda Rottenberg	Director	August 24, 2018
Linda Rottenberg
/s/ Emily White	Director	August 24, 2018
/s/ Yancey Spruill	Director	September 4, 2019
Yancey Spruill
/s/ Emily White	Director	September 4, 2019
Emily White

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Member and Board of Directors
Zayo Group, LLC:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Zayo Group, LLC and subsidiaries (the Company) as of June 30, ~~2018~~2019 and ~~2017~~2018, the related consolidated statements of operations, comprehensive income~~/(loss)~~, member’s equity, and cash flows for each of the years in the three‑year period ended June 30, ~~2018~~2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, ~~2018~~2019 and ~~2017~~2018, and the results of its operations and its cash flows for each of the years in the three‑year period ended June 30, ~~2018~~2019, in conformity with U.S. generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue from contracts with customers effective July 1, 2018, due to the adoption of ASC Topic 606, Revenue Recognition – Revenue from Contracts with Customers.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. ~~Our~~The ~~audits~~Company ~~included~~is ~~performing~~not ~~procedures~~required to ~~assess~~have, ~~the~~nor ~~risks~~were ofwe ~~material~~engaged ~~misstatement of the consolidated financial statements, whether due~~ to ~~error or fraud~~perform, ~~and~~an ~~performing~~audit ~~procedures~~of ~~that~~its ~~respond~~internal tocontrol ~~those~~over ~~risks~~financial reporting. ~~Such~~As ~~procedures~~part ~~included~~of ~~examining~~our audits, onwe aare ~~test~~required ~~basis,~~to ~~evidence~~obtain ~~regarding~~an ~~the~~understanding ~~amounts~~of ~~and~~internal ~~disclosures~~control inover ~~the consolidated~~ financial ~~statements.~~reporting ~~Our~~but ~~audits~~not ~~also~~for ~~included evaluating~~ the ~~accounting~~purpose ~~principles~~of ~~used~~expressing ~~and~~an ~~significant~~opinion ~~estimates~~on ~~made~~the byeffectiveness ~~management,~~of ~~as well as evaluating~~ the ~~overall~~Company’s ~~presentation~~internal ofcontrol ~~the~~over ~~consolidated~~ financial ~~statements~~reporting. WeAccordingly, ~~believe~~we ~~that~~express ~~our~~no ~~audits~~such ~~provide a reasonable basis for our~~ opinion.

We Our ~~have~~audits ~~served~~included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the ~~Company’s~~overall ~~auditor~~presentation ~~since~~of ~~2012~~the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

~~Denver,~~We ~~Colorado~~have served as the Company’s auditor since 2012.

~~August~~Denver, 24ColoradoSeptember 4, ~~2018~~2019

F-1

Table of Contents

ZAYO GROUP, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions)

	June 30,		June 30,
	2018		2017
	2019		2018
Assets
Current assets
Cash and cash equivalents	$	~~256~~185.04	$	~~220~~256.0
Trade receivables, net of allowance of $11.1 and $9.5 as of June 30, 2018 and June 30, 2017, respectively		235.6		191.6
Trade receivables, net of allowance of $17.6 and $11.1 as of June 30, 2019 and June 30, 2018, respectively		177.0		235.6
Prepaid expenses		7465.13		6874.31
Other current assets		1856.78		3425.18
Assets held for sale		~~41.8~~—		—41.8
Total current assets		~~626~~484.25		~~514~~633.03
Property and equipment, net		5,~~447~~808.29		5,~~016~~427.06
Intangible assets, net		1,~~212~~118.18		1,~~188~~212.61
Goodwill		1,~~719~~706.16		1,~~840~~719.21
Deferred income taxes, net		3724.68		2737.36
Other assets		~~170~~190.02		~~141~~175.76
Total assets	$	9,~~212~~333.28	$	89,~~727~~205.83
Liabilities and member's equity
Current liabilities
Accounts payable	$	4573.97	$	7245.49
Accrued liabilities		~~315~~314.18		~~329~~315.21
Accrued interest		7273.61		6372.56
Current portion of long-term debt		5.0		5.0
Capital lease obligations, current		1110.90		811.09
Deferred revenue, current		~~164~~174.49		~~146~~162.09
Liabilities associated with assets held for sale		~~6.1~~—		—6.1
Total current liabilities		~~621~~651.05		~~624~~619.15
Long-term debt, non-current		5,~~690~~839.17		5,~~532~~690.71
Capital lease obligation, non-current		~~121~~172.62		93121.6
Deferred revenue, non-current		1,~~096~~148.81		~~989~~1,076.73
Deferred income taxes, net		~~148~~138.58		40152.24
Other long-term liabilities		5754.87		5257.48
Total liabilities		78,~~735~~005.80		7,~~332~~717.7
Commitments and contingencies (Note 14)
Member's equity
Member's interest		1,~~876~~576.62		1,~~879~~876.06
Accumulated other comprehensive (loss)/income		(15.5)		5.4
Accumulated other comprehensive loss		(23.9)		(15.5)
Accumulated deficit		(~~384~~223.75)		(~~489~~373.35)
Total member's equity		1,~~476~~328.48		1,~~395~~487.16
Total liabilities and member's equity	$	9,~~212~~333.28	$	89,~~727~~205.83

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

F-2

Table of Contents

ZAYO GROUP, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions)

	Year Ended June 30,
	2018		2017		2016
	2019		2018		2017
Revenue	$	2,~~604~~578.0	$	2,~~199~~602.85	$	12,~~721~~220.73
Operating costs and expenses
Operating costs (excluding depreciation and amortization and including stock-based compensation—Note 11)		~~941~~915.93		~~782~~941.9		~~578~~801.7
Selling, general and administrative expenses (including stock-based compensation—Note 11)		~~489~~509.80		~~436~~490.29		~~386~~436.4
Depreciation and amortization		~~747~~633.4		~~606~~746.95		~~516~~606.32
Total operating costs and expenses		2,~~179~~057.17		12,~~826~~179.03		1,~~481~~844.43
Operating income		~~424~~520.93		~~373~~423.82		~~240~~376.30
Other expenses
Interest expense		(~~299~~338.87)		(~~241~~299.58)		(~~220~~241.15)
Loss on extinguishment of debt		~~(4.9)~~—		(184.29)		(3318.82)
Foreign currency gain/(loss) on intercompany loans		5.4		(10.3)		(53.8)
Foreign currency (loss)/gain on intercompany loans		(14.1)		5.4		(10.3)
Other income/(expense), net		2.4		0.3		(0.3)
Other income, net		7.8		2.4		0.3
Total other expenses, net		(~~296~~345.90)		(~~269~~296.79)		(~~308~~269.07)
Income/(loss) from operations before income taxes		128.0		104.1		(67.7)
Income from operations before income taxes		175.3		126.3		106.3
Provision for income taxes		2325.43		1820.47		819.52
Net income/(loss)	$	104.6	$	85.7	$	(76.2)
Net income	$	150.0	$	105.6	$	87.1

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

F-3

Table of Contents

ZAYO GROUP, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~/(LOSS)~~

(in millions)

	Year Ended June 30,
	2018		2017		2016
	2019		2018		2017
Net income/(loss)	$	104.6	$	85.7	$	(76.2)
Net income	$	150.0	$	105.6	$	87.1
Foreign currency translation adjustments, net of tax		(7.42)		2(7.14)		122.41
Defined benefit pension plan adjustments, net of tax		(131.52)		(113.25)		—(1.2)
Comprehensive income/(loss)	$	83.7	$	86.6	$	(63.8)
Comprehensive income	$	141.6	$	84.7	$	88.0

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

F-4

Table of Contents

ZAYO GROUP, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY

(in millions)

	Member's Interest		Accumulated Other Comprehensive (Loss)/Income		Accumulated Deficit		Total Member'sEquity
Balance at June 30, 2015	$	1,699.1	$	(7.9)	$	(497.1)	$	1,194.1
Balance at June 30, 2016	$	1,772.6	$	4.5	$	(564.5)	$	1,212.6
Stock-based compensation		152.9		—		—		152.9
Foreign currency translation adjustment		—		12.4		—		12.4
Capital distribution to parent		(81.1)		—		—		(81.1)
Other		1.7		—		—		1.7
Net loss		—		—		(76.2)		(76.2)
Balance at June 30, 2016	$	1,772.6	$	4.5	$	(573.3)	$	1,203.8
Stock-based compensation		104.7		—		—		104.7
Cumulative effect adjustment resulting from adoption of ASU 2016-09 (Note 2)		1.7		—		(1.7)		—
Cumulative effect adjustment resulting from adoption of ASU 2016-09		1.7		—		(1.7)		—
Foreign currency translation adjustment		—		2.1		—		2.1
Defined benefit pension plan adjustments		—		(1.2)		—		(1.2)
Defined benefit pension plan adjustment		—		(1.2)		—		(1.2)
Net income		—		—		8587.71		8587.71
Balance at June 30, 2017	$	1,879.0	$	5.4	$	(~~489~~479.31)	$	1,~~395~~405.13
Stock-based compensation		91.1		—		—		91.1
Foreign currency translation adjustment		—		(7.4)		—		(7.4)
Capital distribution to parent		(93.5)		—		—		(93.5)
Defined benefit pension plan adjustments		—		(13.5)		—		(13.5)
Net income		—		—		~~104~~105.6		~~104~~105.6
Balance at June 30, 2018	$	1,876.6	$	(15.5)	$	(~~384~~373.75)	$	1,~~476~~487.46
Stock-based compensation		102.1		—		—		102.1
Foreign currency translation adjustment		—		(7.2)		—		(7.2)
Capital distribution to parent		(402.5)				—		(402.5)
Defined benefit pension plan adjustments		—		(1.2)		—		(1.2)
Net income		—		—		150.0		150.0
Balance at June 30, 2019	$	1,576.2	$	(23.9)	$	(223.5)	$	1,328.8

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

F-5

Table of Contents

ZAYO GROUP, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Year Ended June 30,
	2018		2017		2016
	2019		2018		2017
Cash flows from operating activities
Net income/(loss)	$	104.6	$	85.7	$	(76.2)
Net income	$	150.0	$	105.6	$	87.1
Adjustments to reconcile net income/(loss) to net cash provided by operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		~~747~~633.4		~~606~~746.95		~~516~~606.32
Loss on extinguishment of debt		~~4.9~~—		184.29		3318.82
Non-cash interest expense		9.8		9.6		11.9
Gain on sale of SRT		(5.5)
Stock-based compensation		96.7		114.1		155.9
Non-cash interest expense		10.3		9.8		9.6
Amortization of deferred revenue		(137.8)		(117.6)		(111.5)
Stock-based compensation		109.3		96.7		114.1
Foreign currency (gain)/loss on intercompany loans		(5.4)		10.3		53.8
Amortization of deferred revenue		(152.1)		(136.3)		(116.5)
Excess tax benefit from stock-based compensation		—		—		(7.9)
Foreign currency loss/(gain) on intercompany loans		14.1		(5.4)		10.3
Deferred income taxes		221.02		1219.63		(213.8)4
Provision for bad debts		510.12		35.71		3.97
Non-cash loss on investments		1.0.8		10.29		1.21
Changes in operating assets and liabilities, net of acquisitions
Trade receivables		~~(48~~44.1)0		(748.21)		1(7.92)
Accounts payable and accrued liabilities		7(14.61)		57.26		~~(36~~5.0)2
Additions to deferred revenue		~~212~~193.81		~~200~~212.58		~~184~~200.05
Other assets and liabilities		(4943.56)		(3348.42)		(1435.39)
Net cash provided by operating activities		~~971~~951.1		~~909~~971.82		~~714~~909.08
Cash flows from investing activities
Purchases of property and equipment		(~~789~~786.9)		(~~835~~789.59)		(~~704~~835.15)
Cash paid for acquisitions, net of cash acquired		~~(176.9)~~—		(~~1,434~~176.89)		(~~437~~1,434.58)
Net cash used in investing activities		(966.8)		(2,270.3)		(1,141.6)
Proceeds from sale of SRT, net of cash held in escrow		39.0		—		—
Net cash used in investing activities		(747.9)		(966.8)		(2,270.3)
Cash flows from financing activities
Proceeds from debt		~~462~~275.80		~~3,865~~462.8		~~929.~~3,865.8
Principal payments on long-term debt		(~~315~~135.70)		(~~2,408~~315.87)		(~~535~~2,408.08)
Payment of early redemption fees on debt extinguished		—		—		(20.3)
Principal payments on capital lease obligations		(6.2)		(8.4)		(6.6)
Principal payments on capital lease obligations		(8.4)		(6.6)		(4.9)
Payment of debt issue costs		(0.7)		(4.3)		(35.4)
Payment of debt issue costs		(4.3)		(35.4)		(4.2)
Payments to repurchase ZGH common stock		(402.5)		(93.5)		—
Payments to repurchase ZGH common stock		(93.5)		—		(81.1)
Cash paid for Santa Clara acquisition financing arrangement and other		(5.8)		(5.3)		(3.7)
Excess tax benefit from stock-based compensation		—		—		7.9
Net cash (used in)/provided by financing activities		(275.2)		35.6		1,411.3
Cash paid for Santa Clara acquisition financing arrangement and other		(5.3)		(3.7)		—
Net cash flows		(72.0)		40.0		50.8
Net cash provided by financing activities		35.6		1,411.3		291.7
Effect of changes in foreign exchange rates on cash		(2.0)		(3.9)		(0.9)
Net cash flows		39.9		50.8		(135.9)
Net (decrease)/ increase in cash, cash equivalents and restricted cash		(74.0)		36.1		49.9
Effect of changes in foreign exchange rates on cash		(3.9)		(0.9)		(2.0)
Cash, cash equivalents and restricted cash, beginning of period		260.6		224.5		174.6
Net increase/(decrease) in cash and cash equivalents		36.0		49.9		(137.9)
Cash, cash equivalents and restricted cash, end of period	$	186.6	$	260.6	$	224.5
Cash and cash equivalents, beginning of year		220.0		170.1		308.0
Supplemental information:
Cash and cash equivalents, end of period	$	256.0	$	220.0	$	170.1
Cash paid for interest, net of capitalized interest	$	315.2	$	280.2	$	195.6
Supplemental disclosure of non-cash investing and financing activities:
Cash paid for income taxes		7.0		20.3		13.1
Cash paid for interest, net of capitalized interest	$	280.2	$	195.6	$	228.5
Non-cash purchases of equipment through capital leasing		55.4		22.1		12.0
Cash paid for income taxes		20.3		13.1		14.0
Non-cash purchases of equipment through nonmonetary exchange		49.2		17.1		12.8
Non-cash purchases of equipment through capital leasing		22.1		12.0		7.6
Increase/ (decrease) in accounts payable and accrued expenses for purchases of property and equipment		33.0		(32.2)		16.9
Non-cash purchases of equipment through nonmonetary exchange		17.1		12.8		50.6
(Decrease)/increase in accounts payable and accrued expenses for purchases of property and equipment		(32.2)		16.9		25.7


Reconciliation of cash, cash equivalents, and restricted cash:	June 30, 2019		June 30, 2018		June 30, 2017
Cash and cash equivalents	$	185.4	$	256.0	$	220.0
Restricted cash included in other assets		1.2		4.6		4.5
Total cash, cash equivalents and restricted cash	$	186.6	$	260.6	$	224.5

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

F-6

Table of Contents

ZAYO GROUP, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED STATEMENTS

(1) ORGANIZATION AND DESCRIPTION OF BUSINESS

Business

Zayo Group, LLC, a Delaware limited liability company, was formed on May 4, 2007, and is the operating parent company of a number of subsidiaries engaged in providing access to bandwidth infrastructure. Zayo Group, LLC and its subsidiaries are collectively referred to as “Zayo Group” or the “Company.” The Company is a wholly-owned subsidiary of Zayo Group Holdings, Inc. (“ZGH”). Headquartered in Boulder, Colorado, the Company provides communication infrastructure solutions, including fiber and bandwidth connectivity, colocation and cloud infrastructure to businesses primarily in the United States (“U.S.”), Canada and Europe. The Company provides its products and offerings through ~~six~~four segments:

· ~~Fiber~~Zayo ~~Solutions~~Networks, including dark fiber, ~~and~~ mobile infrastructure solutions, Ethernet, wavelength, wholesale IP, SONET solutions, private lines and dedicated Internet.

· ~~Transport~~Zayo Colocation (“zColo”), including ~~Ethernet,~~provision ~~wavelength,~~of ~~wholesale~~colocation ~~IP,~~space and ~~SONET~~power ~~solutions~~and interconnection offerings and cloud-based computing offerings.

· Enterprise Networks, including private lines, dedicated Internet and cloud-based computing and storage products.

· Colocation, including provision of colocation space and power and interconnection offerings.

Allstream, including Cloud VoIP and Data Solutions.

Other offerings, including Zayo Professional Services (“ZPS”).

Significant Merger Development

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions of the Merger Agreement, (i) Merger Sub will be merged with and into ZGH (the “Merger”), with ZGH surviving and continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Parent, and (ii) at the effective time of the Merger, each outstanding share of common stock of ZGH, par value $0.001 per share (“Common Stock”) (other than Common Stock owned by Parent, Merger Sub or any wholly owned subsidiary of Parent or Merger Sub or held in the treasury of ZGH, all of which shall be cancelled without any consideration being exchanged therefore shares of ZGH Common Stock held by holders who have made a valid demand for appraisal in accordance with Section 262 of the Delaware General Corporation Law) will be converted into the right to receive an amount equal to $35.00 per share in cash (the “Merger Consideration”).

Filing Compare · ZAYO GROUP LLC