{
  "docId": "019dd923-622c-750b-8b9a-6238ed4ba0d1",
  "docSlug": "5402c37b0a60",
  "documentTitle": "GTT Communications, Inc. (GTT)",
  "authorId": "60_Wolfpack_Research",
  "authorName": "Wolfpack Research",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-06-06 00:00:00",
  "orientation": "portrait",
  "aspectRatio": 0.77272725,
  "pageNumber": 12,
  "pageCount": 33,
  "prevPage": 11,
  "nextPage": 13,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "overcrowded",
  "nDataPoints": 8,
  "notes": "Includes a quote from a competitor regarding industry standards for fiber depreciation.",
  "elementsJson": [
    "headline_text",
    "bar_chart_vertical",
    "paragraph",
    "quote_block"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b9a-6238ed4ba0d1/12",
  "deckHref": "/decks/019dd923-622c-750b-8b9a-6238ed4ba0d1",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-6238ed4ba0d1.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-6238ed4ba0d1#slide-12",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "~50% decrease post-Interoute",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-0398-7399-b329-6dbcc76e60b0",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.498,
        "w": 0.763,
        "x": 0.118,
        "y": 0.143
      },
      "kind": "chart",
      "text": "GTT Quarterly Depreciation as a % of Net PP&E",
      "attrs": null,
      "subkind": "bar-vertical",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "2fe79d07-f22d-446d-bed8-78f54e2750cc",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "Quarterly Depreciation as a % of Net PP&E: 50%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-0398-7399-b329-76119cd3d58b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.09,
        "w": 0.868,
        "x": 0.118,
        "y": 0.816
      },
      "kind": "paragraph",
      "text": "Interoute showed $522 million in PP&E on its Q1 2018 balance sheet. Approximately two months later, when GTT performed its initial fair value assessment of these same assets, GTT marked up the value of Interoute's PP&E by nearly 100%, to $1.014 billion. GTT also assigned an initial carrying value of $580 million to Interoute's customer lists – which appear on GTT's balance sheet as an intangible asset.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "54b0f4f0-a46b-45fa-904e-93bdbca57968",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.054,
        "w": 0.868,
        "x": 0.118,
        "y": 0.641
      },
      "kind": "paragraph",
      "text": "We believe GTT extended the depreciation period of its fiber assets and continued to extend the amortization period for its acquired customer lists in 2018 in order to reduce its depreciation and amortization expense.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "783ae22a-eea7-4f61-ae38-d330464f9e81",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.018,
        "w": 0.763,
        "x": 0.118,
        "y": 0.111
      },
      "kind": "paragraph",
      "text": "Once again, the effect of these adjustments is massive, as shown in the chart below:",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7afe1632-b1ac-4ecf-b7a4-b637be4ab314",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.018,
        "w": 0.868,
        "x": 0.118,
        "y": 0.782
      },
      "kind": "paragraph",
      "text": "GTT was already extremely aggressive in its initial valuations of Interoute's assets.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "da6c1a06-2fc3-4232-a3ed-382421d61c08",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.036,
        "w": 0.868,
        "x": 0.118,
        "y": 0.52
      },
      "kind": "paragraph",
      "text": "As part of our due diligence, we asked one of GTT's largest competitors about this depreciation period. He told us that, while fiber can last 40 years:",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "e4c466f2-b803-44be-9d5d-fe99879f6d97",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.054,
        "w": 0.809,
        "x": 0.177,
        "y": 0.571
      },
      "kind": "quote",
      "text": "No one else in the industry uses a 40-year depreciation. The industry standard for pretty much everyone, from AT&T to Verizon to CenturyLink to Cogent is generally 20 years. Sometimes 15 but most cases 20.",
      "attrs": null,
      "subkind": "pull-quote",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "317f3647-4457-4a6a-8d3b-4da660c6e1ec",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "No one else in the industry uses a 40-year depreciation. The industry standard for pretty much everyone, from AT&T to Verizon to CenturyLink to Cogent is generally 20 years. Sometimes 15 but most cases 20. — GTT's largest competitor",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd953-0398-7399-b329-711e3e33ba5c",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.018,
        "w": 0.203,
        "x": 0.783,
        "y": 0.923
      },
      "kind": "source-note",
      "text": "Page 12 of 33",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "63d01bb9-acb0-4766-912f-10f1a08ce0b5",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.018,
        "w": 0.447,
        "x": 0.118,
        "y": 0.748
      },
      "kind": "title",
      "text": "Purchase Price Allocation Adjustments",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "9412d88d-d34a-4c4a-9050-040a2a1a9de7",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "c505f6f3-1d23-43a0-9079-f61127910d46",
      "evidence": "The slide explicitly claims aggressive valuation and manipulation of depreciation to reduce expenses.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 20,
      "from": 4,
      "beatId": "5aa0fabb-1510-45fb-80eb-9e740851cb61",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Monster",
      "beatSlug": "overcoming-monster-the-monster",
      "evidence": "The document presents a series of contradictions and manipulations in GTT's financials, highlighting the 'monster' of manipulated growth",
      "position": 0,
      "confidence": 0.8,
      "parentBeatName": "Hook",
      "parentBeatSlug": "hook"
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}