ATN International, Inc.

Thank you all for standing by, and welcome to the ATN International Q3 2020 Earnings Conference call and webcast. All lines have been placed on mute to prevent any additional noise until the question and answer session. To ask a question over the phone by that time, you may press the star key followed by the number one. 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 Pryor, ATN's Chief Executive Officer. During the call, I'll cover the relevant financial information. Michael will be providing 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 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 reconciliations, to comparable gap 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 8K 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 will not be in a position to answer questions related to these proceedings. And with that, I'll turn the call over to Michael for his comments.

All right. 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'm 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'm 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 in EBITDA for this segment, And nine 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 improve resiliency, capacity, and speeds. Broadband subscribers for the segment totaled roughly 138,000 at quarter end compared to 125,000 from a year ago, a roughly 10% growth rate. A positive development this quarter that we are working to turn into a trend is a pickup in mobile subscribers with approximately 289,000 at the end of the quarter against 276,000 in the second quarter and 285,000 a year ago. We think there is room to run, but we will need to continue to improve our execution, especially in the area of sales and marketing. We're adding new retail locations and programs in the current quarter to invest further in this effort. and we are expanding the use of new subscriber management tools, including the use of AI. And video subscribers declined at an 8% annual rate, similar to the second quarter. While the percentage decline is pretty significant, the impact on profitability is minor. Also consistent with the second quarter, we saw a slight increase in voice subscribers at about a 2% annual rate as customers continue to add bundled offerings. In terms of pandemic impacts, there was nothing new here in the results, and we were starting to see limited signs of tourism recovering in some markets. We continue to monitor the situation carefully and are preparing in case the pandemic causes macroeconomic conditions to decline further. In other news, as reported in our release, we increased our ownership stake in One Communications, our Bermuda and Cayman Islands subsidiary. Justin will cover this further. But I'll just note that we are believers in this business, and together the team and our outlook is as long and as positive as our experience, having made the original investment in the predecessor company more than 20 years ago with multiple larger follow-on investments, all yielding very good results to date. Investors may also have seen the news in Guyana where the government passed new telecom legislation that among other things, formally ends our exclusivity in international voice and data and local fixed line services. I'm not going to say a lot about this while we're in discussions and considering our options, except to note that the government had long failed to act against open and notorious unlicensed activity by our competitors. So we do not see this as a major change in the market at this point. We do believe the competitive environment there will tighten. but also that the overall market will experience significant growth. We will continue to put most of our attention on delivering a great experience for customers. Control what you can control. Moving to U.S. telecom, as highlighted last quarter, the year-on-year comparisons were not favorable this quarter as a result of some contract restructuring and the accounting related to that. But, as also expected, the results were broadly consistent with the second quarter. And I mentioned ambitions at the outset, and the team here is certainly committed to moving to the next hit level. The strategy remains to grow revenues and cash flows outside of our legacy neutral host carrier services revenue. We're looking to do that in a number of ways. One, growing our private networks business known to the market as GeoVerse. Second, growing rural broadband revenues. And third, growing our fiber-based services to carriers, and commercial and governmental customers. While we did not break these items out individually, we made progress in all three of these areas despite pandemic limitations that impacted certain sales and strategic activities. More to do and more to come. In other developments for the segment, we were successful in obtaining licenses across a wide range of areas in the recently concluded CBRS PAL auction, This activity and investment are part of our efforts in several areas to further develop the platform and services. We also worked with our partners in the Navajo Nation to win nearly $20 million in CARES Act funding to support the build of more than 100 additional wireless broadband sites. We are committed to complete the build by year end, and our team is doing a tremendous job towards reaching that ambitious goal. which will have substantial real-world impacts for families, students, and educators across a large section of Navajo lands. We have had a long and successful partnership with the Navajo Tribal Utility Authority and our teams are justifiably proud of their achievements and the momentum created by this latest win. In renewable energy, The pandemic-related factory and mill shutdowns in India were reversed during the third quarter, leading to a recovery for this segment from the second quarter. In addition, repairs and operational improvements led to better production. However, the annual comparisons are negatively impacted by currency movements and pandemic-related delays in settlement. So, in summary, we are pleased with the resilience and discipline of our operations. Year-to-date results from our international telecom businesses represent a significant yield on past investments, and we see additional opportunities to grow in many of our markets and build on our substantial asset portfolio. In the U.S. telecom segment, we continue to focus on new strategies to leverage our assets and capabilities to drive growth, and we look forward to updating you on our progress in quarters to come. And that's it for me. Back to you, Justin.