ATN International, Inc.

Good afternoon, ladies and gentlemen, and welcome to the ATN International Fourth Quarter 2019 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touchtone telephone. As a reminder, this conference call might be recorded. I would now like to turn the conference over to your host, Mr. Justin Denincasa, Chief Financial Officer, sir.

Thank you, May. Good morning, everyone, and thank you for joining us on our call to review our fourth quarter and full year 2019 results. As usual with me here is Michael Prior, ATN's Chief Executive Officer, and I will, during this call, I'll be covering the relevant financial information, and Michael will provide an update on the business and outlook. Before I turn the call over to Michael for his comments, I'd like to point out that this call and our 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 details on these measures and reconciliations to comparable gap measures and for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at atni.com or to the 8K filing provided to the SEC. And with that, I'll turn the call over to Michael for his comments.

All right. Thanks, Justin. Good morning, everyone. Well, our operating units continued the positive performance of the third quarter, and as a result, the second half of 2019 was a major improvement over the first half, and we expect these tailwinds to carry over into 2020. International Telecom posted another solid revenue increase and even stronger EBITDA growth, and we believe there is room for improvement in competitive performance. U.S. Telecom was a very similar story to the third quarter as more progress was made on solidifying wholesale revenues while we work on developing growth opportunities in other areas. Unfortunately, this progress was not reflected in our reported earnings per share. Based on market developments and the year-end review, we concluded that we needed to write off the goodwill of our India renewable energy business Thank you. Thank you. As I said, our largest segment continues to perform well. Revenue and EBITDA were up both year-on-year and on a consecutive quarter basis. We are reaping the advantages of the substantial network investments from previous years, particularly in fixed data services for consumers and businesses. Operating margins are getting stronger, and capital expenditures for the segment were $120 million lower for 2019 than 2018 for an annual capital intensity of about 13% for this segment. While planned and expected, the benefit to free cash flow was important, and outside of opportunistic growth investments, we would expect 2020 to follow suit. The acquisitions we made in 2016 and the investments that followed have added valuable scale to the segment, which we can see in the operating margin Margin, and save for the rather large hiccup of the 2017 hurricanes, they're also producing the cash flows we expected. Where we've had less success is in growing mobile revenue and subscribers. For the quarter, we ended up with roughly 284,000 mobile subs, which is down from about 300,000 a year ago. And while this had a negligible impact on wireless revenue as the losses were mostly in the low end of ARPU subs, We are determined to reverse that trend this year. And video subs, as in many markets, continued to decline about 8% year-on-year, as did voice subscribers, though at a lower rate. Data subscribers, of course, were the key here and ended the quarter and the year just shy of 130,000, which represents an increase of roughly 8% year-on-year. Looking forward, while we have room to continue to grow data subscribers and broadband households, we think the larger opportunity is in enterprise data services, where we see potential in multiple markets. Moving to U.S. telecom, boy, first thing to notice is what a difference a half year makes. While not as good as the unusually strong third quarter, which benefited from seasonal factors, Results for this segment this quarter were well above results from the fourth quarter 2018 and the quarterly performance from the first half of 2019. And we have a lot going on in this segment. We are working hard on the large and complex requirements of our piece of the first net build-out, and we are continuing to focus attention on growth initiatives both in and outside of wholesale. We've touched on most of these before, but they include enterprise, high-speed data services, neutral host opportunities in our traditional rural operating areas, and private LTE solutions elsewhere. Broadly speaking, I would divide these opportunities into those that are focused on building networks and providing services to wholesale and retail customers in rural areas, and those that are focused on the in-building or enterprise on-site market for secure carrier class wireless connectivity. In some cases, we're more in a build and position mode and in others, we are in a straightforward customer acquisition mode. We will look to provide more detail as these things develop over the course of 2020. And with respect to private LTE, I know we've had questions from investors about that, so to just give a little more color, We are going after this through our Geoverse subsidiary, and Geoverse has begun deploying into several verticals and is also partnering with multiple players interested in taking advantage of its network layer solution. What we see is the next stage of industry development of in-building and enterprise solutions is still early in its development. but we and many other participants expect things to move fairly quickly in 2020 and certainly 2021 with the advancement of the CBRS and 5G technology ecosystems and as building owners and occupants realize there is a much more powerful, secure, and reliable solution than Wi-Fi available. In renewable energy, while the revenue was relatively immaterial on a consolidated basis, The team was busy pursuing two large builds for top-tier corporate off-takers, and we hope these activities lead to a larger contribution as we get deeper into 2020. And as noted in our press release, we have invested approximately $32 million over the past three years in four early-stage companies with telecom technology or services business models. In rough order of investment size, these include an international communications tower and neutral host company, two wireless technology companies, and a developer of a new satellite antenna technology. While these companies feature still in relatively early stages of development, we are optimistic about creating shareholder value here, both through financial returns and through the contribution in some cases of technologies or solutions that leads to other business success at ATM. We've also made controlling investments in several other businesses, including a private LTE and building company, a managed and cloud services business, and a long-haul fiber initiative. The managed services business, FireMinds, is growing nicely for a young company and is contributing to the product set of both our international and U.S. telecom businesses. The fiber business is in protracted discussions with customers in what unsurprisingly is proving to be a long sales cycle business. The in-building company, Geoverse, which I just discussed, has developed a strong solution and positive momentum. So to summarize for the quarter, I think the key takeaways are while operating income and net income were negatively impacted by some impairments and other losses related to certain of our minority and overseas investments, Our largest businesses performed well, and we were able to continue the positive momentum in our telecom segments through year end. And our visibility is quite a bit better today than it was a year ago. We like where these businesses are right now, and we expect continued positive comparisons as we move into 2020. and with that, I'll hand it back to you, Justin.