ATN International, Inc. Q2 FY2025 earnings call

• Revenue declined 1% year-over-year due to wind down of subsidy programs. Adjusted EBITDA decreased 6%, but net cash from operations rose 2% to ~$60 million.
• Board of Directors approved a 15% increase in quarterly dividend to $0.275 per share.
• In International segment, postpaid subscribers grew 4% year-over-year, data plan purchases/consumption rose 25% year-over-year, mobile churn rates declined over 5% for two consecutive quarters. High-speed data ARPU and subscriber churn improved 3% year-over-year.
• In U.S. segment, demand for carrier services like backhaul is strong, consumer broadband subscriber base grew >10% this quarter, seeing positive trends in ARPU. Moving forward with over $300 million in broadband infrastructure initiatives backed by government funding, with over half slated for completion in 2025.
• Restructuring and reorganization charges of $4.9 million in the quarter, with $1.4 million in International and $2.4 million in Domestic segments.

International segment: Q2 revenues were essentially flat at approximately $95 million, with growth in fiber and fiber-fed services offset by decline in legacy technology services and lower mobility equipment sales. Adjusted EBITDA for the segment was essentially flat at $33.3 million. Domestic segment: Second quarter revenues were $86.4 million, down 1.7% year-over-year. Adjusted EBITDA for the quarter was $18.3 million, down 16.7% compared with the same quarter last year, primarily due to revenue performance and timing of certain expenses.

• Reaffirming 2025 outlook: Expect revenue in line with 2024 of $725 million (excluding construction revenue), adjusted EBITDA essentially flat with last year's $184 million.
• Net capital expenditures between $90 million and $100 million, down from $110.3 million in 2024.
• Net debt ratios to remain flat to year-end 2024 with slight potential improvement exiting the year.
• Expect residual reorganization and restructuring expenses in third quarter as organizational transitions complete, but at a lower level than second quarter.

Q: What was the impact of the BBB bill on ATN? Any impact on cash taxes or other aspects?

A: At this point, it hasn't had an impact. Given jurisdictions and tax positions, not expecting short-term impact. Looking into it but current read is no short-term impact.

Q: How is the fiber race in the U.S. impacting ATN in terms of competition or access to labor and materials?

A: Policies to expedite permitting are helpful, especially for building on Bureau of Land Management land. As for labor supply and materials, not seeing tightness yet as people are coming to ATN for work, but could be a constraint if things move forward.

Q: Have you looked into converting the fiber portion of the business into a REIT structure?

A: To this point, not something ATN has looked at. There are other mechanisms like asset-backed securitization, but not a REIT perspective yet.

Q: In U.S. markets, when might we see inflection of growth in fiber-led newer services offsetting declines in legacy services?

A: In transition stage in U.S. market. Optimistic with fiber builds progress, demand from carriers increasing, better execution in sales organizations. Expect improvements in second half of 2025. Year-to-date CapEx in U.S. is significant with $42 million plus ~$46 million in reimbursable capital spend. Hopeful demand will lift and working diligently to deliver.

Q: Internationally on the mobile side, has competitive dynamics changed on the prepaid side?

A: Still competitive pressures exist. Initial new entrant in largest market has normalized to a degree. Focus is on improving quality of subscriber base, seeing good trends in data consumption, contract expansion in mature markets. Competitive pressures still there, especially on prepaid, but happy with progress and in #1/#2 positions in most markets, so it's a defense play going forward.