ATN International, Inc 17th Annual Midwest IDEAS Conference

Okay, we're going to go ahead and get started with the next presentation. First off, I want to say thank you everyone for joining us here today. My name is Joe Noyons, I'm with Three Part Advisors. Up next, we have one of our investor relations clients, ATN International, which is traded on the NASDAQ under the symbol ATNI. Essential critical infrastructure for the telecom space. It has a pretty nice opportunity in the near to medium term for continued EBITDA margin expansion, improved operating cash flow. We had a recent transaction that really provided a lot of strength in the balance sheet and some flexibility going forward to focus on shareholder returns. Presenting on behalf of the company today is going to be the CEO, Naji Khoury, and the CFO, Carlos Doglioli.

Hi. Good morning, everyone. Thank you for the introduction. I am the CEO of the company. I just started a couple months ago. A bit later on, you'll hear from Carlos, our CFO, and if we meet again a bit later on a one-on-one, you'll also meet Michele, our head of IR. Let me just get to the bottom very quickly. Very exciting opportunity, and hopefully by the time you leave, you feel the same way. Our offices are outside Boston, north of Boston, in Beverly. A company in business for a very long time, approaching 40 years, but more than 2,000 employees spread across different market. We had a good run on the stock, if you follow us closely from the past few months, and I think we closed close to $30 yesterday.

I think what I like about our story is, one, it's quite diverse and the opportunities are quite significant, organically and inorganically. As we go through the presentation, I'm going to talk about the U.S. segment, and I'm going to talk about the international segment. Okay. Same business. We're a telecom providers, fixed and mobile enterprise, and carrier, and household and consumer, but in different market, very different dynamic as well. All right. If we look at the operating segment, the way we divide it, as I explained, by the U.S. and international. If you look at the revenue growth and the revenue distribution, it's quite almost equal between U.S. and international. When you split it between the business and household, you realize it's a 50/50 split between the two, and you wonder, have you capped your opportunities?

You're going to see as I go through the deck, that it's actually completely reversed in each of the segment. In the U.S. segment, we are dominant on the enterprise and have not penetrated well the consumer business, versus on the international side, we've done really well on the household, but we have opportunity on the enterprise. But when you put them together, math is math, you get a 50% roughly between the two. Our revenue is sitting at about $728 million. We did guide for this year, and you'll hear from Carlos, and we're on a good track. Our adjusted EBITDA is $190 million, and we guided as well for this year, about $183 million to $193 million. If you normalize 2025, you remove about $12 million worth of revenue and cost that we no longer have because of the tower sales that we had explained.

It's quite a growth from year over year. All right. If you follow us and you had a chance to go through our second quarter close, in which Carlos will go in a bit more detail, I'll tell you why I'm excited about the second quarter. First, we grew both segment on the U.S. and international. We had growth on both segment. Second, obviously, we did close the tower sale. It was $268 million cash in the bank, and there's still more coming as of the second close. We also announced a spectrum sale of about $41 million. We expect that to close in next year. So our balance sheet is extremely strong. Right. Your next question might be, what are you going to do with all that capital? My answer is very simple. I need dry powder. We're thinking through our strategy.

We're thinking what we're going to do with it. We're not ready yet to commit what we're going to do with it. We did commit to doing a share buyback. The board approved to double the size from 15 to 30. We're doing this. I think that should give you confidence that management is confident, the board is confident that we are undervalued and there is opportunity in that space. So for me, it's super critical that we do things right and we are very disciplined in our next step. In terms of. Now, digging a bit deeper on each segment, and you're going to see through the opportunity, I'm going to use the word optimize. The reason I'm using it and being very careful is that, yes, there is room to optimize the way we operate the business.

When I say optimize, it's not only about cost structure, it's about understanding what the consumer want and understanding how the consumer sees us, which is typically not the way ATN has run this operation for the past many years. So I'm changing this, and initial results are promising, right? If you look at those key metrics, 273,000 home we pass in the Caribbean, right? We're improving, we're adding homes sequentially as well as year over year. If you do our penetration, 135 divide by 273, you get to a fairly healthy number. But there's still room to growth because many of these markets are not yet fully penetrated, okay? Including, for example, Guyana, which I'm very excited and we'll talk a bit more about it.

The mobile story is a different story that you are used to in the U.S., where most of the subscribers are postpaid, and the opposite in our part of the world, it's the other way around. Again, that's an opportunity as consumer have more disposable income, they switch from a prepaid to postpaid, they have a more expensive device, and so on. So there's an opportunity there. Our consumer revenue in that part of the world is 70%. There goes the switch between enterprise and fixed. So there is room to grow on enterprise, not only to change the percentage, because there is actually an adjustable market that we can go after. So these are the charts. I'm not sure you can see them if it's too small, but you can download the deck later. If you're going to meet, we can give you a copy.

This is our trajectory. There is a bit of up and down. We lost a bit of government subsidy, for example, in Virgin Island, that has impacted our numbers and has guided a bit lower for this current year as well. If you focus a bit on the right-hand side, you look at our margin, and it has been improving little over little, quarter over quarter, and I still think there is room to improve it. There is room to improve it. It probably cannot get to 50% EBITDA margin, but can it get closer to 40? Probably it could. This is not only about cutting costs, but doing things more efficiently, keeping the customers in mind as well. I will go through each market in a second, so I will give you a flavor of how we operate in each market.

This is the split, on the right-hand side, consumer versus business. On your left-hand side, you will see as well, the split between mobile, fixed, and carrier. Our revenue is dominated by fixed, that is broadband. What is exciting about that part is that our competition is very limited in those markets. The market structure are in our favor. This is not a three, four-player market. On the mobile, it is a bit more competitive. For example, in Virgin Islands, we have three players. In Bermuda, we have, I would say, two and a half player. In Guyana, we have almost three players. In Cayman, we do not have mobile.

The competitive dynamic is different in the mobile side, but on the fixed, our anchor is a fiber deployment, and it is working in terms of growth, in terms of ability to serve the customers, and ability to offer very high speed as well. Now, give me a chance to go through each market for a second, and I will tell you, hopefully, you will get a good understanding of how we are thinking. If you look at Guyana for a second, I am not sure how familiar you are with that country. With the recent oil and gas discovery since maybe four or five years ago, it is growing at about 20% GDP year-over-year. It is probably the only country in the world that is growing at that rate. That is injecting a significant amount of infrastructure investment into the country, road, hospital, schools, business are coming in.

We are the incumbent player in Guyana. It is a fiber network that we have upgraded from copper to fiber. We are three-fourths into the country with fiber. We have a very solid mobile network. We are number two in that space. We are number one on the fixed side. So household is growing, income is growing, penetration is growing, everything is heading in the right direction. We are in a very good position to be able to capture that growth. It obviously requires some investment, but it is definitely paying off. When it comes to Cayman, we are the attacker, we are the challenger. It is a fiber network that we are building. We build almost the entire island. We are still left with the east side of the island, which we expect to build in the next year and a half, and we will have 100% coverage.

We're taking share from the incumbent, and we're winning. The moment we go in, we get 20, 30, 40% penetration in our fiber footprint, even though our competitor also has fiber. But our product and our pricing and our service is much more desirable. Bermuda, stable market. It's delivering great margin, high ARPU. It's an HFC network, very fiber deep. It's a great mobile network, and I consider it to be definitely the market that has been delivering consistent revenue and EBITDA. The Virgin Island, it has gone through a bit up and down. It needs a bit of investment on the side of the network. We're going to go from an HFC to a fiber network over time.

It's going to take a bit of time, but it's an area that we need to sort of disconnect from the power grid, which is very unstable, unfortunately. There we have a mobile network, and we are number 3 out of 3 players in the market. Moving to the U.S. side. If you focus quickly on the big number of 251,000 homes, these are the homes we pass between Alaska and the Southwest, the four-corner region, between our fiber build-out and our fixed wireless coverage. If you look at the number at the bottom, you ask yourself, "Hey, what are you doing? You only have 6,000 customers of a footprint of 251." This is where the opportunity lies. Our commercial strategy has not delivered in the past. We made some changes. We're working through the changes. We made some recent change in our Alaska CEO.