Press Release

BEVERLY, Mass., Oct 28, 2010 (BUSINESS WIRE) -- Atlantic Tele-Network, Inc. (NASDAQ: ATNI), today reported results for the third quarter and nine months ended September 30, 2010.

Third Quarter 2010 Financial Results

Total revenues for the third quarter were $205.0 million, of which total wireless service revenues represented $173.0 million, or 84%. This significant increase over last year's third quarter total revenues of $66.1 million resulted from the Company's acquisition of certain former Alltel Wireless retail markets, licenses and network assets, which closed on April 26, 2010. U.S. wireless service revenues totaled $158.8 million, or 77% of total revenues, for the quarter. The Company ended the quarter with approximately 1.1 million wireless subscribers across all markets.

Adjusted EBITDA¹ for the 2010 third quarter was $37.8 million as compared to $35.0 million in the third quarter of 2009, an increase of $2.8 million, or 8%. The results for the third quarter of 2010 were impacted by significant costs associated with the transition of the recently acquired Alltel Wireless assets. Specifically, sales and marketing costs in our U.S. Wireless segment included approximately $10.0 million of additional expenses primarily related to an accelerated pace of customer contract renewals and extensions.

Total operating income for the third quarter of 2010 was $13.8 million. Operating income in last year's third quarter was $23.1 million, which included $2.1 million in acquisition-related charges. The decrease in operating income resulted from a $14.2 million increase in depreciation and amortization expenses primarily associated with the acquisition of the Alltel assets, partially offset by the increased operating margin generated by the acquired Alltel properties.

Net income attributable to ATN's stockholders was $6.4 million, or $0.41 per diluted share, as compared to $11.9 million, or $0.78 per diluted share, in the third quarter of 2009.

Commenting on third quarter results, Michael T. Prior, Chief Executive Officer said, "The integration of the Alltel asset acquisition is moving ahead as planned, and we continue to make progress in many areas, while refining our value proposition in these new markets. Revenue and subscriber numbers are broadly in line with our expectations to date, although expenses have been at the high end of those expectations for this quarter. As anticipated, previously-discussed transition initiatives and expenses are causing net attrition as well as higher costs. We expect margins to remain tight and net subscriber losses, particularly prepaid, to continue over the next few quarters. Our ability to drive subscriber additions, control churn and optimize our offerings is constrained by our limited billing and point of sale capabilities during this transition period. By the middle of 2011, however, when we should have much greater ability to tailor our offerings and no longer be burdened by the additional costs and overlaps caused by the transition services agreement that is currently in force, we expect to report more normalized EBITDA margins, net subscriber additions and churn."

Other business highlights in the third quarter included:

• The launch of the Company's new wireless voice and data service in the U.S. Virgin Islands as part of the Island Wireless segment.
• The activation of the Company's new undersea cable to Guyana, which will help to provide high-speed data and internet services to that country, resulting in expected growth in data and internet revenue for the International Integrated Telephony segment.

Third Quarter 2010 Operating Highlights

U.S. Wireless Service Revenues

U.S. wireless service revenues include voice and data services revenues from the Company's prepaid and postpaid retail operations as well as its wholesale roaming operations. Total service revenues from the U.S. wireless businesses amounted to $158.8 million in the third quarter of 2010, compared to $31.8 million in the third quarter of 2009. Total service revenues from the acquired Alltel properties for the quarter were $129.7 million, or the entirety of this increase.

Retail wireless service revenues were $108.8 million for the quarter ended September 30, 2010. The Company did not have a U.S. retail wireless business in the third quarter of 2009. At the end of the 2010 third quarter, the Company had approximately 767,000 U.S. retail subscribers, of which approximately 550,000 were postpaid subscribers and approximately 217,000 were prepaid subscribers. Additional operating data on our U.S. retail wireless business can be found in Table 4.

Wholesale wireless revenues were $50.0 million, an increase of 57% over the $31.8 million reported in the third quarter of 2009. Wholesale revenues from the acquired Alltel properties were $20.9 million, or the entirety of this increase. Data revenues accounted for 27% of wholesale wireless revenues for the quarter, compared to 19% a year earlier.

International Wireless Revenues

International wireless revenues include retail and wholesale voice and data wireless revenues from international operations in Bermuda and the Caribbean. Total revenues from international wireless (which includes revenues from fixed wireless data services) amounted to $14.2 million in the third quarter of 2010, an increase of $2.5 million, or 21%, over $11.7 million reported in the third quarter of 2009. This increase primarily resulted from growth in the number of wireless subscribers in Guyana and expansion in the Caribbean.

Wireline Revenues

Wireline revenues are generated by the Company's wireline operations in Guyana, including international telephone calls into and out of that country, its integrated voice and data operations in New England and its wholesale transport operations in New York State. Total revenues from wireline amounted to $20.8 million in the third quarter of 2010, a decrease of $1.2 million or 5% from $22.0 million reported in the third quarter of 2009. The decline resulted from a $1.7 million decrease in international long distance revenues in Guyana, partially offset by increased data revenue in that country and increased revenues generated by U.S. wireline operations.

Reportable Operating Segments

The Company has four reportable segments: i) U.S. Wireless, ii) International Integrated Telephony, which generates its revenues and has its assets located in Guyana, iii) U.S. Wireline and iv) Island Wireless, which generates its revenues and has its assets located in Bermuda and the Caribbean. Financial data on our reportable operating segments for the three months ended September 30, 2010 are as follows:

Balance Sheet and Cash Flow Highlights

Cash and cash equivalents at September 30, 2010 were $61.8 million. Long term debt was $250.8 million. For the nine months ended September 30, 2010, net cash provided by operating activities was $100.3 million and capital expenditures were $91.6 million. The Company expects full year 2010 capital expenditures to be approximately $130 to $140 million, of which $85 to $95 million is expected to be incurred by the U.S. Wireless segment.

In the third quarter, the Company increased the available borrowings under its existing credit facility by $75 million, bringing the total credit facility to $375 million, which will allow the Company to fund planned capital expenditures and growth initiatives.

Conference Call Information

Atlantic Tele-Network will host a conference call tomorrow, Friday, October 29, 2010 at 11:00 a.m. Eastern Time (ET) to discuss its third quarter results for 2010. The call will be hosted by Michael Prior, President and Chief Executive Officer, and Justin Benincasa, Chief Financial Officer. The dial-in numbers are US/Canada: 877-734-4582 and International: 678-905-9376, conference ID 20293601. A replay of the call will be available from 3:00 p.m. (ET) October 29, 2010 until 11:59 p.m. (ET) November 5, 2010. The replay dial-in numbers are US/Canada: 800-642-1687 and International: 706-645-9291, access code 20293601.

About Atlantic Tele-Network

Atlantic Tele-Network, Inc. (NASDAQ:ATNI), headquartered in Beverly, Massachusetts, provides telecommunications services to rural, niche and other under-served markets and geographies in the United States, Bermuda and the Caribbean. Through our operating subsidiaries, we provide both wireless and wireline connectivity to residential and business customers, including a range of mobile wireless solutions, local exchange services and broadband internet services and are the owner and operator of terrestrial and submarine fiber optic transport systems. For more information, please visit www.atni.com.

Cautionary Language Concerning Forward Looking Statements

This press release contains forward-looking statements relating to, among other matters, our future financial performance and results of operations; the competitive environment in our key markets, demand for our services and industry trends; the outcome of regulatory matters; our continued access to the credit and capital markets; the pace of our network expansion and improvement, including our level of estimated future capital expenditures and our realization of the benefits of these investments; and management's plans and strategy for the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events or results. Actual future events and results could differ materially from the events and results indicated in these statements as a result of many factors, including, among others, (1) our ability to operate a large scale retail wireless business in the United States and integrate these operations into our existing operations; (2) the general performance of our U.S. operations, including operating margins, and the future retention and turnover of the our subscriber base; (3) our ability to maintain favorable roaming arrangements; (4) increased competition; (5) economic, political and other risks facing our foreign operations; (6) the loss of certain FCC and other licenses and other regulatory changes affecting our businesses; (7) rapid and significant technological changes in the telecommunications industry; (8) any loss of any key members of management; (9) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure and retail wireless business; (10) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (11) the occurrence of severe weather and natural catastrophes; (12) the current difficult global economic environment, along with difficult and volatile conditions in the capital and credit markets; and (13) our ability to realize the value that we believe exists in businesses that we may or have acquired. These and other additional factors that may cause actual future events and results to differ materially from the events and results indicated in the forward-looking statements above are set forth more fully under Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 16, 2010, and the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010, filed with the SEC on May 10, 2010. The Company undertakes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors that may affect such forward-looking statements.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this news release also contains non-GAAP financial measures. Specifically, ATN has presented Adjusted EBITDA and ARPU measures. Adjusted EBITDA is defined as net income attributable to ATN, Inc. stockholders before interest, taxes, depreciation and amortization, acquisition related charges, other income, bargain purchase gain, net income attributable to non-controlling interests, and equity in earnings of unconsolidated affiliates. ARPU, or monthly average revenue per subscriber/unit, is computed by dividing total retail service revenues per period by the weighted average number of subscribers with service during that period, and then dividing that result by the number of months in the period. The Company believes that the inclusion of these non-GAAP financial measures helps investors to gain a meaningful understanding of the Company's core operating results and enhance comparing such performance with prior periods, without the distortion of the recent increased expenses associated with the Alltel transaction. ATN's management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods. The non-GAAP financial measures included in this news release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Reconciliations of the non-GAAP financial measures used in this news release to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying tables to, this news release.

¹ See Table 5 for reconciliation of Net Income to Adjusted EBITDA.

SOURCE: Atlantic Tele-Network, Inc.

Atlantic Tele-Network, Inc.
Michael T. Prior, 978-619-1300
Chief Executive Officer
or
Justin D. Benincasa, 978-619-1300
Chief Financial Officer

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