ATN International Eyes Growth, Margin Gains After $268M Tower Sale

ATN International NASDAQ: ATNI outlined plans to pursue customer growth, margin improvement and disciplined capital allocation following the initial closing of its U.S. tower portfolio sale, which generated $268 million in cash proceeds.

President and CEO Naji Khoury, who said he joined the company a few months ago, described ATN as a telecommunications provider with operations divided between U.S. and international markets. The company provides fixed and mobile services to enterprise, carrier, household and consumer customers, and has more than 2,000 employees across its markets. Khoury said ATN’s revenue totals approximately $728 million and adjusted EBITDA is approximately $190 million. The company has guided for adjusted EBITDA in a range of $183 million to $193 million for the year. He added that, after normalizing for roughly $12 million of revenue and costs no longer associated with the tower sales, the outlook represents year-over-year growth.

Second-quarter results reflected operating momentum in both the U.S. and international segments. Revenue grew nearly 2%, while adjusted EBITDA increased nearly 9% from a year earlier and total adjusted EBITDA margin expanded 170 basis points. Operating income was $240 million, including a $230 million gain related to the tower sale. The initial closing of the tower portfolio transaction provided $268 million in proceeds, of which ATN used $68 million to repay outstanding borrowings under its CoBank revolving facility. At the end of the second quarter, ATN had $513 million of outstanding debt, a leverage ratio of 0.91 times and $240 million of undrawn capacity.

The company also announced a spectrum sale valued at about $41 million that it expects to close next year. While ATN has increased its share repurchase authorization from $15 million to $30 million, management is still evaluating the best use of its capital. “I need a bit of time to figure out if I put a dollar back in the buyback, what is my return versus investing it into the network or into organic, inorganic growth,” Khoury said. “We’re going through that exercise today, and we’re very disciplined about it.” ATN increased its quarterly dividend 5.5% to $0.29 per share and has maintained an uninterrupted quarterly dividend since 1999.

ATN’s U.S. and international businesses have roughly equal revenue contributions, while the combined business is approximately split evenly between business and household customers. However, the mix differs by segment: ATN is more established in enterprise services in the U.S. and has greater consumer exposure internationally. In the Caribbean, ATN passes 273,000 homes and serves 135,000 customers. Fixed broadband is a key part of the international business, where competition is limited in many markets and fiber deployment is supporting customer growth and higher-speed offerings. Guyana is a major growth opportunity, according to Khoury. He said the country has experienced significant infrastructure investment following oil and gas discoveries and has been growing GDP at approximately 20% year over year. ATN is the incumbent fixed-network provider in Guyana, has upgraded much of its network from copper to fiber and is about three-fourths through its fiber buildout there. In the Cayman Islands, ATN is expanding its fiber network and expects to reach full island coverage after building out the East Side over th...