ATN International, Inc. (ATNI)
is a leading provider of digital infrastructure and communications services, with a focus on rural and remote markets in the United States and the Caribbean region. The company has a rich history spanning over three decades, during which it has evolved from a regional telecommunications provider to a diversified digital infrastructure powerhouse.
Business Overview
Founded in 1987 and headquartered in Beverly, Massachusetts, ATN International started as a mobile and fixed-line telecommunications operator in Bermuda and the U.S. Virgin Islands. Over the years, the company has strategically expanded its footprint, both domestically and internationally, through a series of acquisitions and organic growth initiatives. Today, ATN International operates in two primary segments: International Telecom and US Telecom, offering a comprehensive suite of services that include mobile, fixed, carrier, and managed solutions.
ATN has developed significant operational expertise and resources that it uses to augment its capabilities in its local markets. This support allows the company's operating subsidiaries to improve their quality of service with greater economies of scale and expertise than would typically be available in the size markets they operate in. ATN provides management, technical, financial, regulatory, and marketing services to its operating subsidiaries and typically receives a management fee calculated as a percentage of their revenues, which is eliminated in consolidation.
The company actively evaluates investment opportunities and other strategic transactions, both domestic and international, that fit its profile of telecommunications businesses. In 2006, ATN entered the Guyana market through the acquisition of a majority stake in Guyana Telephone & Telegraph Company (GTT), marking a significant milestone in its international expansion strategy. Over the years, the company has faced various regulatory and legal challenges in Guyana, including disputes regarding spectrum fees and tax assessments, which it has navigated through legal proceedings.
In 2019, ATN entered into a Network Build and Maintenance Agreement with AT&T Mobility, LLC to build a portion of the FirstNet network for the First Responder Network Authority in the western United States. This project involved construction and service performance obligations, which the company has been executing on. Additionally, in 2023, the company amended its roaming agreement and entered into a carrier management services agreement with Verizon Wireless, further diversifying its carrier service offerings.
International Telecom Segment
The International Telecom segment serves customers in Bermuda, the Cayman Islands, Guyana, and the U.S. Virgin Islands, providing a diverse array of services, including mobile, fixed broadband, carrier, and managed services. This segment has been a consistent performer for ATN, delivering steady revenue growth and margin expansion in recent years. In 2024, the International Telecom segment's revenue increased by nearly 2% to $377.5 million, and its adjusted EBITDA grew by 9.7% year-over-year.
The International Telecom segment offers mobile telecommunications services, including retail mobile voice and data services to both business and consumer customers over its wireless networks, as well as selling and repairing related equipment like handsets and accessories. Fixed telecommunications services include broadband, voice, and video services delivered to retail and business customers over ATN's wireline networks. The carrier services segment generates revenue from international long-distance services, roaming, transport services, and access services provided to other telecommunication carriers. The managed services business provides network, application, infrastructure, and hosting services.
US Telecom Segment
The US Telecom segment, on the other hand, has faced a more challenging landscape, primarily due to the conclusion of the Emergency Connectivity Fund (ECF) and Affordable Connectivity Program (ACP) government initiatives, which had contributed a significant portion of the segment's revenue. Additionally, the company has been transitioning its US business away from legacy technologies and consumer service offerings towards enterprise and carrier-driven fiber-based revenue streams. This strategic shift, while impacting short-term revenue, is expected to position the US Telecom segment for long-term stability and higher-margin growth.
In 2024, the US Telecom segment's revenue declined by 10% to $351.6 million, and its adjusted EBITDA decreased by 20% year-over-year. However, the company has taken proactive steps to streamline operations, optimize its portfolio, and bring in experienced leadership to drive efficiency and growth in this evolving market.
The US Telecom segment offers fixed telecommunications services, carrier services, and managed services to business customers and consumers in Alaska and the western United States. This includes broadband, voice, and video services as well as wholesale roaming, network switching, tower leasing, and other services provided to other carriers. The segment previously provided retail mobile services in the western US but is now focusing more on other revenue sources in that market.
One of ATN International's key strengths is its ability to secure government funding to accelerate fiber expansion in its US markets. The company and its partners have been awarded more than $370 million in government grants, which will support fiber deployments in key markets. These investments enable network expansion with lower capital intensity, creating long-term optionality for growth and reinforcing ATN's role as a critical provider of broadband infrastructure, particularly in underserved areas.
Financials
Financially, ATN International has maintained a prudent capital allocation strategy, with a focus on driving operational efficiency and enhancing shareholder value. In 2024, the company generated $129.2 million in net cash from operating activities, up from $111.6 million in the previous year. This strong cash flow performance was driven by improvements in working capital and gains realized from asset dispositions.
For the most recent fiscal year (2023), ATN reported revenue of $762.22 million, net income of -$14.54 million, operating cash flow of $111.63 million, and free cash flow of -$51.67 million. In the most recent quarter (Q3 2024), revenue was $178.45 million, down 6.6% year-over-year, with a net income of -$32.69 million (-$2.26 per share). The decrease in revenue was primarily due to the conclusion of the Emergency Connectivity Fund and Affordable Care Program in the US Telecom segment, as well as lower construction revenue.
In the first nine months of 2024, ATN generated total revenue of $548.5 million, with $282.7 million coming from the International Telecom segment and $265.8 million from US Telecom. Fixed services revenue was the largest contributor at $346.7 million, followed by carrier services at $100.0 million and mobility services at $82.0 million. The company also reported $12.9 million in managed services revenue and $2.6 million in construction revenue related to building cell sites for the FirstNet network.
Liquidity
The company's net debt ratio is expected to remain in line with the prior year, with a slight potential improvement by the end of 2025. ATN International remains committed to bringing down its leverage closer to 2x over the medium term, further strengthening its financial position.
As of 2023, ATN's debt-to-equity ratio was 1.21, with cash and cash equivalents of $49.23 million. The company had $100.9 million available under the 2023 CoBank Revolving Loan as of Q3 2024. The current ratio and quick ratio both stood at 0.96 as of 2023.
Strategic Priorities
Looking ahead, ATN International's strategic priorities for 2025 include stabilizing the US Telecom segment and continuing to expand margins in its International Telecom segment. The company expects modest international revenue growth, while the domestic segment will continue its transition towards a more competitive position anchored in enterprise and carrier services.
ATN International's adjusted EBITDA for 2025 is expected to be essentially flat with 2024, as the company focuses on solidifying the foundation of its business for future opportunities. Capital expenditures are anticipated to be in the range of $90 million to $100 million, net of reimbursements, as the company moderates its capital intensity after the completion of its three-year investment cycle.
For 2025, ATN expects full-year revenue to be in line with 2024, excluding construction revenues. In the first quarter of 2025, the company anticipates adjusted EBITDA to be relatively flat to slightly down compared to Q1 2024, with restructuring and reorganization charges similar to the prior year. ATN expects a more consistent linear improvement in their results as the year progresses, with the second half of 2025 contributing the majority of their annual results.
Despite the challenges faced in its US Telecom segment, ATN International's strategic focus on fiber-centric digital infrastructure, enterprise and carrier solutions, and prudent capital allocation positions the company for long-term success. By leveraging government grants, optimizing operations, and expanding its high-margin international business, ATN International is well-equipped to navigate the evolving telecommunications landscape and deliver sustainable value for its shareholders.
The telecommunications industry is expected to see moderate growth, with the global telecom services market forecasted to grow at a CAGR of 4-6% from 2023 to 2028, driven by increasing demand for high-speed internet, 5G deployment, and growth in enterprise services. ATN International's diverse portfolio of services and strategic focus on underserved markets position it well to capitalize on these industry trends.