Press Releases

Mar 1, 2007

Atlantic Tele-Network Reports 2006 Results

Salem, MA (March 1, 2007) – Atlantic Tele-Network, Inc. (NASDAQ: ATNI) today reported earnings for the quarter and year ended December 31, 2006. For the year ended December 31, 2006, revenue was $155.4 million, an increase of $53.1 million or 52% as compared to revenue of $102.3 million for the year ended December 31, 2005. For the year ended December 31, 2006, earnings were $23.2 million as compared to $13.6 million for the same period in 2005, an increase of $9.6 million or 71%. On a per share basis, earnings increased by 56% to $1.70 per share from $1.09 per share for the year ended December 31, 2005.

Revenue for the quarter was $42.0 million, an increase of $10.6 million or 34% as compared to revenue of $31.4 million for the quarter ended December 31, 2005. Earnings were $6.6 million as compared to $2.9 million for the quarter ended December 31, 2005, an increase of $3.7 million or 128%. On a per share basis, earnings increased by 87% to $0.43 per share from $0.23 per share for the quarter ended December 31, 2005. Excluding the impact of a $2.1 million reserve taken in the fourth quarter of 2005, earnings for the three months and year ended December 31, 2006, increased $1.6 million and $7.5 million, respectively, or 32% and 48%, respectively.

Per share data for the three months and year ended December 31, 2006 were affected by the Company’s sale in the third quarter of 2.6 million shares of the Company’s common stock at $19.00 per share in an underwritten public offering, from which the Company received $46.3 million in net proceeds.

Share and per share amounts for all periods also reflect the effects of the 5-for-2 split of the Company’s common stock, which took place on March 31, 2006.

“Our main objective for the year was to develop new sources of revenue and growth without negatively impacting earnings. Thus far, we have exceeded our goals. This announcement of our full year results for 2006 concludes a very satisfying year” said Michael T. Prior, Chief Executive Officer of Atlantic Tele-Network, Inc. “Our recently added rural wireless business (Commnet) and New England telephone, data and service provider (Sovernet) both had a strong year. In particular, the team at Commnet completed an ambitious expansion of our rural wireless network in the Southwest, while continuing to grow multiple sources of revenue from core voice roaming services for major US carriers, to data roaming and roaming for international carriers. And, we are pleased as well that most of our pre-existing businesses were able to deliver very respectable results for the year. In Guyana, GT&T managed to grow revenues, operating income and profits despite an increase in cellular competition. In 2006, we extended coverage and increased the capacity of our GSM network in Guyana and extended the wireline network to new areas as well. Choice Communications managed to continue to grow revenue and reduce operating losses, reaching our goal of self-funding all cash operating expenses by year-end.”

Mr. Prior added, “Looking ahead, we expect to invest significant additional capital in our U.S. businesses which we believe have attractive opportunities to expand the reach of their networks and add new services. Our main challenge in 2007 appears to be greater competition in Guyana, where the existing nationwide wireless competitor was acquired in late 2006 by a large, aggressive, regional operator. The increased competition is likely to put pressure on our wireless operating margins and market share in Guyana. Overall, we expect to grow consolidated earnings in 2007, but do not think the organic growth will be as strong as in 2006.”

Fourth Quarter 2006 Operating Highlights
As was previously announced, the Company completed the acquisitions of Sovernet, Inc., a Vermont telephone and data services provider, in February 2006 and Commnet Wireless, LLC, a U.S. rural wireless business, in September 2005. The Company’s results reflect Sovernet only since the date of acquisition and consequently Sovernet is not reflected in the Company’s results for the three months or twelve months ended December 31, 2005. The Company’s results for the year ended December 31, 2005 reflect Commnet only from the date of its acquisition in September 2005.

The Company generated the following operating results for the quarter ended December 31, 2006 (unless otherwise indicated, all comparative information is compared against the quarter ended December 31, 2005):

Wireless Revenue Wireless revenue increased by $5.9 million, or 50%, to $17.7 million from $11.8 million. This increase was attributable to the continued expansion of our rural wireless network, along with growth in minutes of use and increases in data and international roaming revenue. Our Commnet subsidiary ended the quarter with a total of 287 base stations, compared to 233 on December 31, 2005. In addition, the increase in wireless revenue also reflects growth of our subscriber base in Guyana. Our wireless customer base in Guyana increased from 228,000 subscribers to 269,000 subscribers, of which 207,000 use GSM service as compared to 102,000 GSM subscribers a year ago and 175,000 at the end of September 2006.

Local Telephone and Data Revenue Local telephone and data revenue increased $3.8 million, or 51%, to $11.2 million from $7.4 million. Of this increase, $3.6 million was attributable to the addition of Sovernet. Excluding that contribution, local telephone and data revenue generated by our Guyana and Virgin Islands operations increased by $0.2 million, or 3%. Access lines at GT&T increased from approximately 113,000 to 121,000, or 7%, as we continued to extend the wireline infrastructure to additional communities. In the Virgin Islands, our broadband wireless subscriber base grew by more than 146% over the year, contributing to the increase in revenues.

International Long Distance Revenue and Other Revenue International long distance revenue, all of which is generated by our GT&T subsidiary, was $12.2 million during 2006, an increase of $0.8 million, or 7%, from $11.4 million in 2005. Inbound minutes represented 86% of international traffic for the quarter. Other revenue increased primarily as a result of a 16% increase in television subscribers in our Virgin Islands operations.

Operating Expenses Operating expenses increased by $8.1 million, or 40%, from $20.1 million to $28.2 million for 2005 and 2006, respectively. Of the $8.1 million increase, $3.0 million is attributable to the addition of Sovernet. Excluding Sovernet, operating expenses increased $5.1 million. Of the $5.1 million, $1.7 million is attributable to increased sales and marketing efforts at GT&T to encourage our TDMA subscribers to convert to GSM handsets and to re-position ourselves against our changing competition. A further $1.8 million is related to increased engineering and operations costs associated with expanding our networks and an increase in termination and access fees from year over year traffic growth at both GT&T and Commnet. The balance of the increase in operating expenses is predominantly a result of increased depreciation and amortization expense and additional overhead costs to support our growth.

Operating Income Operating income increased by $2.5 million, or 22%, from $11.3 million to $13.8 million. Of the $2.5 million increase, $0.6 million is attributable to the addition of Sovernet. The balance primarily reflects the growth in our rural wireless and Virgin Islands businesses.

Bermuda Digital Communications Equity in the earnings from BDC, our Bermuda affiliate, declined from $0.6 million for 2005 to $0.5 million for 2006. This decline was due to a decrease in revenue and increased marketing and handset expenses to maintain our share of a maturing market. Wireless subscribers were down slightly from December 31, 2005, although we maintained our position as the largest of the three competitive cellular providers in Bermuda.

Conference Call Information
Atlantic Tele-Network will host a conference call tomorrow, March 2, 2007 at 10:00 a.m. Eastern time (ET) to discuss its fourth quarter results for 2006. 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: (800) 946-0713 and International: (719) 457-2642, access code 8472275. A replay of the call will be available from 1:00 p.m. (ET) March 2, 2007 until 11:59 p.m. (ET) on March 8, 2007. The replay dial-in numbers are US/Canada: (888) 203-1112 and International: (719) 457-0820, access code 8472275.

About Atlantic Tele-Network
Atlantic Tele-Network, Inc. (NASDAQ:ATNI) is a telecommunications company with corporate offices in Salem, Massachusetts and St. Thomas, U.S. Virgin Islands. Its principal subsidiaries include: Guyana Telephone and Telegraph Company, Limited, which is the national telephone service provider for all local, long-distance and international service, as well as the largest cellular service provider, in the Cooperative Republic of Guyana; Commnet Wireless, LLC, which provides voice and data wireless roaming services for U.S. and international carriers in rural areas throughout the United States; Sovernet, Inc., which provides wireline voice and data services to businesses and homes across Vermont; and Choice Communications, LLC, which provides wireless television and wireless broadband services, as well as dial-up internet services in the U.S. Virgin Islands. The Company also owns 44% of Bermuda Digital Communications Ltd., which, under the Cellular One name, is the largest provider of cellular voice and data services in Bermuda.

Cautionary Language Concerning Forward-Looking Statements

This news release contains forward-looking statements relating to, among other matters, the future financial performance and results of operations of the Company, including the relative contributions of Commnet and Sovernet; demand for our services and industry trends; the pace of our network expansion and improvement, including 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) significant political and regulatory risk facing our exclusive license to provide local exchange and long distance telephone services in Guyana; (2) any significant decline in the price or volume of international long distance calls to Guyana; (3)increased competition affecting our businesses; (4) the regulation of rates that GT&T may charge for local wireline telephone service; (5) significant tax disputes between GT&T and the Guyanese tax authorities; (6) a significant portion of our U.S. wireless revenue is derived from a small number of customers; (7)our failure to maintain favorable roaming arrangements; (8)economic, political and other risks facing our foreign political operations; (9) regulatory changes affecting our businesses; (10)rapid and significant technological changes in the telecommunications industry; (11)our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (12) loss of any key members of management; (13) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (14) dependence of our wireless and wireline revenues on the reliability and performance of our network infrastructure; (15) the occurrence of severe weather and natural catastrophes; (16)our economic interest in our Bermuda affiliate may be reduced in 2008; and (17) our inability to realize the value that we believe exists in businesses that we acquire. 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, 2005, which is on file with the SEC. 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.

ATLANTIC TELE-NETWORK, INC.

Unaudited Condensed Consolidated Balance Sheet

As of December 31, 2005 and 2006

(in Thousands)

 

 

 

 

 

December 31,

 

December 31,

2005

2006

Assets

 

 

 

Cash and Cash Equivalents

$ 26,493

 

$ 60,543

Other Current Assets

22,179

 

30,596

 

 

 

 

Total Current Assets

48,672

 

91,139

 

 

 

 

Fixed Assets, net

125,709

 

138,573

Goodwill and Other Intangible Assets, net

40,277

 

59,733

Other Assets

19,173

 

13,169

 

 

 

 

Total Assets

$ 233,831

 

$ 302,614

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current Liabilities (excluding current portion of long term debt)

$ 33,962

 

$ 35,041

 

 

 

 

Long Term Debt (including current portion)

55,750

 

50,000

Other Liabilities

6,469

 

12,846

 

 

 

 

Total Liabilities

96,181

 

97,887

 

 

 

 

Minority Interests

21,940

 

25,539

 

 

 

 

Stockholders’ Equity

115,710

 

179,188

 

 

 

 

Total Liabilities and Stockholders’ Equity

$ 233,831

 

$ 302,614

 

 

 

 


ATLANTIC TELE-NETWORK, INC.

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, Except per Share Data)

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2005

2006

 

2005

2006

Revenue:

 

 

 

 

 

 

Wireless

 

$ 11,786

$ 17,697

 

$ 25,964

$ 61,946

Local Telephone and Data

 

7,357

11,183

 

27,926

43,103

International Long Distance

 

11,449

12,151

 

45,439

46,663

Other Revenues

 

790

963

 

2,952

3,646

 

 

 

 

 

 

 

Total Revenue

 

31,382

41,994

 

102,281

155,358

 

Operating Expenses:

 

 

 

 

 

 

Termination and Access Fees

 

3,535

5,408

 

7,941

22,687

Internet and Programming

 

678

933

 

2,601

3,504

Engineering and Operations

 

4,262

5,654

 

15,136

19,691

Sales, Marketing and Customer Services

 

1,772

3,760

 

6,457

10,088

General and Administrative

 

4,851

5,729

 

15,624

21,767

Depreciation and Amortization

 

4,886

6,477

 

17,110

24,510

Non-Cash Stock Based Compensation

 

119

213

 

420

822

 

 

 

 

 

 

 

Total Operating Expenses

 

20,103

28,174

 

65,289

103,069

 

 

 

 

 

 

 

Operating Income

 

11,279

13,820

 

36,992

52,289

 

Other Income (Expense):

 

 

 

 

 

 

Interest Income (Expense), net

 

(865)

(266)

 

(688)

(2,147)

Other Income (Expense)

 

(1,775)

106

 

(630)

725

 

 

 

 

 

 

 

Other Expense, net

 

(2,640)

(160)

 

(1,318)

(1,422)

 

 

 

 

 

 

 

Income Before Income Taxes, Minority Interests and
Equity in Earnings of Unconsolidated Affiliates

 

8,639

13,660

 

35,674

50,867

Income Taxes

 

5,159

6,234

 

20,801

25,210

 

 

 

 

 

 

 

Income Before Minority Interests and Equity in Earnings

of Unconsolidated Affiliates

 

3,480

7,426

 

14,873

25,657

Equity in Earnings of Unconsolidated Affiliates

 

763

457

 

3,043

2,467

Minority Interests

 

(1,354)

(1,306)

 

(4,318)

(4,919)

 

 

 

 

 

 

 

Net Income

 

$ 2,889

$ 6,577

 

$ 13,598

$ 23,205

 

 

 

 

 

 

 

Net Income Per Share

 

 

 

 

 

 

Basic

 

$ 0.23

$ 0.44

 

$ 1.09

$ 1.71

Diluted

 

$ 0.23

$ 0.43

 

$ 1.09

$ 1.70

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

Basic

 

12,435

15,095

 

12,465

13,568

Diluted

 

12,480

15,247

 

12,488

13,672

Atlantic Tele-Network, Inc.
Michael T. Prior
Chief Executive Officer
978-619-1300

Justin D. Benincasa
Chief Financial Officer
978-619-1300