Cincinnati Bell 2012 Annual Report Download - page 95

Form 10-K Part I Cincinnati Bell Inc.
The loss of any of the senior management team or attrition among key sales associates could adversely affect
the Company’s business, financial condition, results of operations, and cash flows.
The Company’s success will continue to depend to a significant extent on its senior management team and
key sales associates. Senior management has specific knowledge relating to the Company and the industry that
would be difficult to replace. The loss of key sales associates could hinder the Company’s ability to continue to
benefit from long-standing relationships with customers. The Company cannot provide any assurance that it will
be able to retain the current senior management team or key sales associates. The loss of any of these individuals
could adversely affect the Company’s business, financial condition, results of operations, and cash flows.
Risk Factors Related to Our Investment in CyrusOne
The Company has a significant investment in CyrusOne
On January 24, 2013, the Company completed the IPO of CyrusOne. As a result, the Company now holds
1,890,000 shares of common stock of CyrusOne and 42,586,835 partnership units of CyrusOne LP, the operating
partnership. CyrusOne LP units are exchangeable into common stock of CyrusOne on a one-to-one basis, or cash
at the fair value of a share of CyrusOne common stock, at the option of CyrusOne, commencing January 17,
2014. The Company’s direct and indirect interests in CyrusOne represent a 69% effective economic ownership of
CyrusOne. Prior to the IPO of CyrusOne, there was no active market for CyrusOne’s common stock. Our
investment in CyrusOne is subject to volatility in the market price of its common stock. We may be unable to sell
some or all of our investment in CyrusOne quickly or at all. The fair value of our investment in CyrusOne may
decline which may adversely affect the realization of our investment.
The Company no longer controls the operations of CyrusOne
As of January 24, 2013, CyrusOne is an independent public company which the Company does not control.
As a result, the Company will no longer set the strategies, select the management team, or control the operations
of CyrusOne. CyrusOne may choose to pursue strategies which conflict with our business strategies. The Vice
Chairman of our Board of Directors is also the Chairman of CyrusOne’s Board of Directors. However, if a
conflict of interest develops between the Company and CyrusOne, the CyrusOne Board is required to act for the
benefit of its shareholders.
The Company has executed a non-compete agreement with CyrusOne where we have agreed not to enter
each other’s lines of business, subject to certain exceptions, for a period of four years. CyrusOne may choose to
compete with us after the expiration of this non-compete which could have an adverse effect on our
telecommunications business.
CyrusOne may encounter difficulties in executing its strategic plans for the data center colocation business.
CyrusOne may face potential challenges and difficulties in implementing its data center colocation
expansion plan which may include: identifying and obtaining the use of locations in which it believes there is
sufficient demand for expansion of its data center colocation services; generating sufficient cash flow from
operations or through additional financings to support these expansion plans; construction of world-class data
center facilities on a timely basis; sale of the available data center space to enable appropriate returns; recruiting
and maintaining a motivated work force; and installing and implementing new financial and other systems,
procedures and controls to support a standalone public company and its expansion plan with minimal delays.
These strategic actions could divert management’s attention and strain operational and financial resources.
Due to unforeseen difficulties, CyrusOne may be unable to execute its strategic plans for growing its data center
business. Failure to do so would adversely affect its strategy of becoming a global data center colocation
business, which in turn could have an adverse effect on our financial condition, results of operations, and cash
flows.
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Form 10-K