Climate Change Data

Environmental Metrics

Social Achievements

• Company-wide campaign to support the United Way, which raised over $150,000 in 2013.

Climate Goals & Targets

Environmental Challenges

• Failures in critical back-office systems and IT infrastructure or a breach of cyber security systems.
• Significant capital expenditures required to upgrade network and other facilities.
• Reliance on several material agreements to operate the business.
• Extensive governmental regulation.
• Reduction by the HPUC or the FCC of the rates charged to customers.
• Increasing competition in all areas of the business.
• Inability to adapt to technological changes in the telecommunications industry.
• Uncertainty in the successful delivery of new services.
• Dependence on economic conditions in Hawaii.
• Small and geographically concentrated customer base in Hawaii.
• Labor shortages or increased labor costs in Hawaii.
• Potential adverse tax consequences from an ownership change.
• Significant indebtedness in relation to equity.

Mitigation Strategies

• Technology and information security processes and disaster recovery plans to mitigate cyber security risks.
• Funding capital expenditures with operating cash flows and funds available under credit facilities.
• Efforts to conserve cash and improve liquidity, including expense management and improving operating results.
• Retention and acquisition programs, bundling of services, and improving customer service capability to improve customer retention and growth.
• Continued enhancement and expansion of broadband network to offer new products and services.
• Focus on enhancing customer experience.
• Actions to address potential increase in retirements of experienced union employees.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Social Achievements

• Through employee and company giving, we once again ranked as a top contributor to the Aloha United Way, and our employees volunteered thousands of hours of community service.

Climate Goals & Targets

Environmental Challenges

• failures in our critical back office systems and IT infrastructure; breach of our data security systems; increases in the amount of capital expenditures required to execute our business plan; the loss of certain outsourcing agreements, or the failure of any third party to perform under these agreements; adverse changes to applicable laws and regulations; the failure to adequately adapt to technological changes in the telecommunications industry, including changes in consumer technology preferences; adverse economic conditions in Hawaii; the availability of lump sum distributions under our union pension plan; limitations on the ability to utilize net operating losses due to an ownership change under Internal Revenue Code Section 382; the inability to service our indebtedness; limitations imposed on our business from restrictive covenants in our credit agreements; and severe weather conditions and natural disasters.

Mitigation Strategies

• We seek to detect and to prevent all security breaches, but, in some cases, we might be unaware of an incident or its magnitude and effect. Significant security failures could result in the theft, loss, damage, unauthorized use or publication of our intellectual property and/or confidential business information; the theft, loss, damage, unauthorized use or publication of our customers’ personally identifiable information, intellectual property and/or confidential business information; or the unauthorized use or disabling of our network elements. While we have technology and information security processes and disaster recovery data breach plans in place to mitigate these risks and respond to any incidents, there is no assurance these measures will be adequate.
• We have made and expect to continue to make material capital expenditures in connection with improvements to our network and other facilities.
• We manage our capital expenditures to optimize returns through disciplined planning and targeted investment of capital. Our strategy will be to continue to make strategic investments in our business in order to position us for long-term growth.
• We strive to maintain a disciplined approach to managing operating expenses and capital spending. Our focus on driving operational improvements in our business has resulted in cost savings, and we continue to identify initiatives that we believe will further improve our cost structure. In addition, we continue to review and renegotiate contracts with key IT and outsource suppliers, which has led to additional cost savings.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• severe weather conditions and natural disasters

Environmental Metrics

Social Achievements

• Employee support for our United Way campaign continues to grow each year. Many Hawaiian Telcom employees give of their time and talents through mentorship, community service and board service to countless non-profit organizations statewide.

Climate Goals & Targets

Environmental Challenges

• Failures in our critical back office systems and IT infrastructure; breach of our data security systems; increases in the amount of capital expenditures required to execute our business plan; the loss of certain outsourcing agreements, or the failure of any third party to perform under these agreements; adverse changes to applicable laws and regulations; the failure to adequately adapt to technological changes in the telecommunications industry, including changes in consumer technology preferences; adverse economic conditions in Hawaii; the availability of lump sum distributions under our union pension plan; limitations on the ability to utilize net operating losses due to an ownership change under Internal Revenue Code Section 382; the inability to service our indebtedness; limitations imposed on our business from restrictive covenants in our credit agreements; severe weather conditions and natural disasters; network disruptions or other delays or interruptions of service; and failure to renegotiate programming contracts with television content providers.

Mitigation Strategies

• We seek to effectively prevent, detect and respond to all cyberattacks...We have technology and information security processes and cyber-attack plans in place to mitigate these risks and respond to any incidents...
• We manage our capital expenditures to optimize returns through disciplined planning and targeted investment of capital. Our strategy will be to continue to make strategic investments in our business in order to position the Company for long-term growth.
• We continue to review and renegotiate contracts with key IT and outsource suppliers, which has led to additional cost savings.
• We are continuing retention and acquisition programs, and are increasingly focusing efforts on bundling of services. We have instituted various “saves” campaigns designed to focus on specific circumstances where we believe customer churn is controllable.
• We are intensifying our efforts relative to developing tools and training to enhance our customer service capability to improve customer retention and growth.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• severe weather conditions and natural disasters

Environmental Metrics

Social Achievements

• Employees contributed thousands of hours of community service.

Climate Goals & Targets

Environmental Challenges

• Increasing competition in all areas of business.
• Severe weather conditions and natural disasters.
• Failures in critical back-office systems and IT infrastructure.
• Network disruptions.
• Reliance on material outsourcing agreements.
• Extensive governmental regulation.
• Inability to adapt to technological changes.
• Inability to license or enforce intellectual property rights.
• Failure to renegotiate programming contracts.
• Geographic concentration of operations in Hawaii.
• Limitations on ability to use NOL carryforwards.
• Significant amount of indebtedness.

Mitigation Strategies

• Investing in network enhancements and expansion.
• Implementing improvements in customer contact center systems.
• Adopting the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
• Focusing on improving operating results and revenue enhancement activities.
• Improving operating profitability and capital efficiencies.
• Renegotiating contracts with key IT and outsource suppliers.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather conditions and natural disasters