Thank you all for standing by and welcome to the ATN International Q3 2020 Earnings Conference Call and Webcast. I’ll now hand the call over to your host, Chief Financial Officer, Mr. Justin Benincasa. Sir, you may begin.

Great. Thanks, Jesse. Good morning, everyone and thank you for joining us on our call today to review our third quarter 2020 results. Here with me is Michael Prior, ATN’s Chief Executive Officer. During the call, I will cover the relevant financial information and Michael will be providing an update on the business and outlook. Before I turn the call over to Michael for his comments, I would like to point out that this call and the press release contain forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results and are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also, in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For detail on these measures and reconciliation to comparable GAAP measures and for further information regarding these factors that may affect our future operating results, I would refer you to our earnings release on our website at atni.com or the 8-K filing provided to the SEC. Also, we are now in a quiet period with respect to certain SEC related auctions, including the Rural Digital Opportunity Fund, RDOF and we will not be in a position to answer questions related to these proceedings. And with that, I will turn the call over to Michael for his comments.

Alright. Thank you, Justin and good morning everyone. Our results for the third quarter are substantively very similar to the second quarter demonstrating the strength and resilience of our core telecom services businesses. Cash flow from our largest segment continued to improve on the back of good subscriber trends, productivity improvements, and cost controls. That said we are not satisfied with the status quo. For example, we have much more that we can do that we need to do and that we are doing to improve our retail businesses and deliver an even more positive experience for our customers. Further, we continue to pursue the development of new platforms and services both within and outside of our historical territories. Relevant to both the pursuit of growth and the strength of current operations, I wanted to say that I am grateful for the dedication and ambition of our people. I see folks across multiple businesses and markets driving hard to create great experiences for customers and pursuing ambitious strategic goals. I am fortunate to be part of this company. And moving to the segment information, starting with International Telecom, as noted, we saw strong double-digit year-on-year growth and EBITDA for this segment and 9 months in, the pace of our cash flow generation is ahead of last year, which in itself was quite good. As with the second quarter, this represents generally strong demand for our services and a particularly good job of spending controls in nearly all markets. Also, consistent with the past quarter was the continued expansion of fixed line data subscribers. Our program of heavy investment, particularly in 2017 and 2018, is paying off and we continue to expand the reach of our fiber network and improved resiliency, capacity and speeds. Broadband subscribers for the segment totaled roughly…

Alright. Thank you, Michael. For the third quarter, total consolidated revenues were down 3% over last year at $111.7 million and consolidated EBITDA was $31.1 million, down 5% over the third quarter 2019. Consistent with the first half of the year, and as Michael noted, our International Telecom segment has continued to show improved profitability, offsetting much of the straight-line revenue impact that was anticipated this quarter in the U.S. segment. Looking at each of the segments and starting with International Telecom, revenues were $82.5 million, up slightly from $81.3 million last year and EBITDA increased 19% to $29.7 million. Year-to-date EBITDA growth for the segment was 13% on modest revenue growth highlighting our ability to pivot quickly to gain operating efficiencies in many of our international markets. As we noted in the release, in October, we purchased an additional 10% of One Communications our Bermuda Cayman Islands Company, which brings our total ownership to approximately 70%. We expect this to be accretive to overall company earnings beginning in the fourth quarter, since our 2016 merger to form One Communications. The businesses performed well across several key metrics. We significantly expanded our network footprint in the Cayman Islands. We have grown subscribers in both markets, expanded EBITDA margin by 8 percentage points, and expanded free cash flow. Capital expenditures for International Telecom segment were $8.5 million in the third quarter and $28.4 million year-to-date. We still expect the segments CapEx to be in the $35 to $40 million range this year. U.S. Telecom segment revenues were $28.1 million for the quarter, consistent with this year’s second quarter, but down 15% from a year ago. EBITDA was $8 million, down from $13.7 million in the third quarter of 2019. As I mentioned, over the last several quarters we’ve expected very little…

Thank you, speakers. Participants, we will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Ric Prentiss of Raymond James. Sir, your line is now open

Thanks. Good morning, guys.

Good morning.

Couple of questions. First, Michael, you called out the CBRS auction where you guys were successful, I think it was about $20 million in bids. Have you paid that completely within the quarter and then there was a possibility that it might slip some of it into October 1, but also can you talk to us about what you see as the addressable market and what kind of capital you might put to work with that spectrum?

Yes. I’ll let Justin respond on the financial side. But in terms of the timing of the spend, but on the strategy, I would just say, it’s a mix of deployment in rural areas. Obviously, you can see from those licenses, and private networks, support of our private networks business, which is already been utilizing CBRS, and I think also within it small amount added to the Virgin Islands spectrum holdings. And we did, Ric, we did pay for it fully in the quarter.

Okay. And when you think about the CapEx that you might put to work to support the spectrum purchases, any way for us to think about the addressable market, how you might deploy capital, what kind of return on capital of the projects be involved?

I can’t speak to specifics because of other proceedings and things, but I can say that when we – as always, when we buy spectrum, we buy because we believe we have potential use, and we may or may not in the end, in the short-term, sometimes we have turned around and swapped spectrum or sold spectrum. If we can’t put it to use, but the actual use of it, we run through our filter like everything else. So can we earn a reasonable return for the cost of building it out, what do we think the risks that are associated with that? So, this will be no different. But beyond that, I can’t really get into specifics.

Okay. And the private network at Geoverse, is that mostly in building type items are emerging?

Yes. Our CapEx type things, a lot of the interest level we see is beyond simply in a specific building.

Yes, okay, I don’t know, that’s okay. Next question, looks like you did some stock buyback in the quarter. Can you talk to us a little bit about your stock buyback program, how you execute it, is it set up like a 10b5 type plan? What are your thoughts as far as putting capital work in the stock buyback?

Yes. We – in the history, I think you know this, and investors bought, we’ve been very opportunistic in it, not looking to put a certain amount to work and if you’re given period but more looking to move. We had been frustrated in the past by long no trade windows. So we did in fact put some of our authority to put in place a 10b5 type plan, which we’ve more or less fully utilized at this point. But we do think that the useful mechanism because of the fairly large gyrations in our stock.

And do you report it? I don’t recall seeing, but do you report out in the queues how many shares you bought or is it just how many dollars, trying to keep track of what kind of average price you’re getting?

I’m not entirely sure. Let me find that out. I’m not sure if we put the dollars in the shares are not, but we will answer before the call is over.

Okay, that would be great. I think it’s just always a nice indication of where you put it to work and it obviously shows confidence in the stock price when the gyrations do happen. Goodness knows this has been a gyration year, one or the other things happening. And the final question – yes, go ahead.

So we do, do both shares in dollars, I just was told.

In the 10-Q?

In the 10-Q.

Do you know when you’re going to file the 10-Q for this quarter?

I think around the fifth, is my understanding.

Okay. And final here in questions for me is, on the islands, obviously as COVID hit there was concerns about what it might mean for tourism, what it might mean for the employees that support tourism that are your customers, how should we think about what you’re seeing? You mentioned some tourism recovery in some of the markets. How should we think about what you think, obviously, COVID’s still unclear? What you should be thinking about in 4Q as we look into ‘21 as far as impacts on mobile, on fixed, on your business as well as your consumer areas?

I think, first to start on tourism, we don’t have any inside baseball view, but what I am told by people in the markets we’re in is– I think the general feeling is the worst has passed and they expect build up from here, and they’ve certainly seen some return and there’s different reasons. But if you think about where we are, where we have tourism, the Virgin Islands is interesting because it’s a U.S. territory. So that makes it more attractive to people who might go to other territories. They’re even not allowed to go as a U.S. traveler or are concerned about it, the restrictions. Then Bermuda and Cayman are both seen as playing COVID very, very safe and conservative. So they’re attracting higher end in particular, some of the first sort of movement back. But there is still– it’s certainly– it’s still definitely depressed there’s still– like in the Virgin Islands, there still some big hotels that are not open and the cruise ships are not out there which do contribute to those economies and so I think when we look at it, it’s possible we’ve seen the worst, but if this lingers long and the sort of various support businesses are out of work or under depressed returns for long, that’s going to mean more people are struggling and that can have a ripple effect. So I wouldn’t say we feel like, “Okay, we’re definitely free and clear now.” That’s the best way I can say it. I think as long as things aren’t severe, I think it’s been proven, both in our business and other people’s businesses that the services we offer are absolutely seen as essential services. So, otherwise, we expect the demand to continue to be steady

Okay. Thanks guys. Stay well for you, your employees and everyone.

Yes, thank you. Yes and you as well.

Our next question is from the line of Mr. Greg Burns of Sidoti. Sir, your line is now open.

Good morning.

Hi.

In terms of the mobile, I know international business has anything changed in that market to give you confidence to start maybe investing a little bit more there and driving growth, or is it just a function of, maybe your focus or attention was in other parts of the business, and now you’re re-circling back on the mobile side?

I think most of our investments have been made. The networks are in great shape extremely competitive, and there is always some ongoing investment in that, but that’s not really the trigger, there is some investment I referenced in my prepared remarks in the retail side and a couple of markets. But that’s not huge. It’s really been a matter of putting in a couple of markets, putting the right tools and strategy in place, and I think we are seeing some signs that there is a lot of work. It is starting to pay off. Like everybody, we like to see it recur to be confident and we’re certainly not going to let our foot off the gas because we see additional opportunity there. So it remains an area of focus and an area we’re targeting to create some growth.

Okay, thanks. And then the equity, the 10% equity in One Communications, what was the purchase price for that?

We haven’t disclosed that Greg. So…

We don’t usually at that deal.

But we would say it’s a good value to us.

Okay. And what was the trigger for that purchase? Did they approach you? You approached them or do you have options to maybe acquire the remaining balance? What’s the structure of the ownership stakes there?

Yes. It’s – I don’t think we can speak to the future stake, partly because of Bermuda market restrictions and sensitivities. But we were approached, party we knew well and it was a situation of a portfolio need on their side. So this is a financial investor, not a strategic.

Okay, thank you.

Our next question is from the line of Allen Klee of National Securities. Sir, your line is now open.

Good morning. For your emerging investments, can you tell us how much of a drag they were on your earnings for the quarter and thoughts on when that could start to turn positive EBITDA?

I will let Michael talk to the EBITDA piece moving forward. On the – we spent about $1.5 million on them in the quarter. So there is a bit of an EBITDA drag.

I assume by Justin’s answer, he is answering the ones that are going through our P&L as opposed to minority, any minority investments. But it’s interesting because, for example, I will give you an example Allen, probably the biggest piece of that is investment in private network and scaling up that business in the early stages of successful growth there. It could be increased costs right, but we would hope that there will be also increased visibility of the value generation at the same time. But we are not really thinking about it as a near-term EBITDA situation. We are focused on building a platform that can be a significant contributor to ATN and for years to come.

Thank you. We know there is a lot of infrastructure funds that are looking for acquisitions and paying up for assets which might be making it harder for you guys trying to do that. Could you talk maybe about anything you have seen in the market of kind of valuations and maybe how we could think about how that might imply the value of what you have?

Sure. I think a couple of things to remark on there, and I think we touched on this a little bit last quarter or the quarter before, but maybe I can expand upon it. The first is we certainly watch those deals, we have seen those deals and we are aware of them and I would say they would imply a much higher value in our view on our assets than the market is currently giving them. If you look at – they are really starting to invest in, we of course have wholesale operations, fiber operations, and towers and various things like that. But we also have bulk of our revenue right now is coming from the retail side and you start to see the infra funds more and more in the US and internationally, invest in retail operations. Home broadband, fiber-based is a lot of their liking and high-speed services, and you look at those prices and they’re much above what the market appears to be valuing as of today, that’s noteworthy. The second thing I would say is the first part of your question. We have shifted really last year and accelerated this year from– we saw that competing against some of the low cost of capital investors for the types of telecom assets we have, so we have proven established businesses and this didn’t make sense. We, in the past have done a lot of those on a GAAP approach, get in at a good value, grow the platform, and have benefit of both. Both boost to return and it’s really hard to get in at a value that works for our cost of capital in those types of businesses,. But what we believe is that we can provide a good role and harness that interest of capital to get into this business because we have a heck of a platform, and also a lot of experience in pooling complex assets, difficulty there is pooling them together and making strong recurring cash flow businesses out of them. So we think there is a great deal upside for us and continue to develop our platforms, both existing platforms, and new platforms, and then looking to partner with some of those low-cost capital providers to fund additional investment and additional growth. So that’s really our focus right now.

This might be the same question but asking it a little differently. If we look at your businesses, International, I believe has a nice growth outlook, you have stabilized U.S. telecom and renewables is just not material today. You are generating good free cash flow, you had a record quarter, and your balance sheet is under-leveraged. So you have this question of, what can you do with your cash to improve your growth outlook on a meaningful level versus kind of modest incremental, how do you think about that?

Yes, it is somewhat the same side of the previous question, but I think the way we think about that is we can use that capability to develop our platforms further and that can be very meaningful. I think if we are going to take value and overall cash flow production to the next level. That’s what we need to do, and we are very focused on that. We are looking at that In both of our telecom segments and I referenced a number of the ways we are doing that in my prepared remarks.

Okay. Thank you.

Sure.

[Operator Instructions] Our next question is from the line of Hamed Khorsand of BWS. Your line is now open.

Hey, good morning.

Good morning

Just a question on the termination and access fees, there was a dip this quarter, is that sustainable or was that related just to COVID and data flow?

I would say, some of that’s sustainable, some of it’s related, right. It’s hard to pinpoint it. There certain things, we’re getting some brakes on programming cost, but then there’s a lot of things we’ve done in there, like I said, to pivot our OpEx quickly and take them down and we think they are sustainable.

And lower roaming by our customers certainly impacts that number.

Yes. You got lower handset sales you have lower cost of sale too, usually down there as well.

Okay. And then on the international mobile subscriber side, are you conceding on pricing to capture new subscribers or is it just more of promotions and advertisements?

It’s more the latter, but it’s also retail, it’s also, as I said subscriber management using tools to better manage on the prepaid side, the subscriber base, and top-ups and things like that. I think there is also attractiveness in the markets of our bundled offerings and how we can deliver value that way.

Is there a market that’s still bothering you on the international side?

Every market we expect to do better. I don’t really want to single it out now particularly.

Okay, Then on the FirstNet contract with the deliveries happening, what would the timing of the capturing revenue for the backhaul be, would it be immediate?

It will be – pretty much, pretty much. Once we turn a site over it flips into capturing it immediately. Yes. So I guess the answer is yes.

Okay, that’s it from me. Thank you.

Anyone else, operator?

Our next question is again from the line of Allen Klee of National Securities. Your line is now open.

Yes, hi. Can you just remind us on the FirstNet contract, there is going to be a time period where you’re constructing it out and you’re not making any margin on that. But once you are done with that, what will we compare this to, to think about what the potential margin profile of the business could be and where the potential growth or think of it as stability, or how to think about the top line and the bottom line for that business once we get to that point. Thank you.

I would say on the top line is a lateral move from where we have flipped from a roaming revenue to a backhaul in lease revenue. But I would say that probably, it’s a little more of a compressed margin, once we’re up, once we flip over on that, not material, but it will definitely– we have more expenses to deliver that service than we do to deliver our wholesale service.

Thank you.

Anyone else, operator?

No further questions on queue.

Okay, we thank everybody. Thanks for the quarter and we will see you after year end.

Take care.

And that concludes today’s conference. Thank you all for participating. You may now disconnect.