Good day, ladies and gentlemen, and welcome to the Atlantic Tele-Network Second Quarter Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Justin Benincasa, Chief Financial Officer. Sir, you may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us on our call to review our second quarter results. As usual, with me here is Michael Prior, ATN's President and Chief Executive Officer. During the call, I'll be covering the relevant financial information and also [ph] some of the operational data, and Michael will be providing update on the business. Before I turn the call over to Michael for his comments, I'd like to point out that this call and our press release contains forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results and are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also, in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For details of these measures and reconciliation to comparable GAAP measures and for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at atni.com or to the 8-K filing provided to the SEC. And with that, I'd like [Technical Difficulty]

So, ladies and gentlemen, thank you for standing by. I would now like to turn the call back over to Mr. Justin Benincasa, Chief Financial Officer.

Sorry, we apologize for that. I think something happened in the connection to the line. So I think what we're going to do is, unfortunately, I'm going to bore you one more time with the intro and the cautionary Safe Harbor stuff, and then turn it back over to Michael. And we'll just start over again, folks. So, sorry for those hanging on. So before I turn the call over to Michael again, I'd like to point out that this call and our press release contain forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results and are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also, in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For details of these measures and reconciliations to comparable GAAP measures and for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at atni.com or to the 8-K filing provided to the SEC. And with that said, twice, I'll now turn it back to Michael. So?

All right, thank you, Justin. I wish you all could have heard it the first time, it was awesome. But I will try to make it fresh the second time. So first of all, as an overall view of the quarter, it was clearly a very profitable quarter. It continues many of the positive trends we saw in the first quarter and those include strong profitability in cash flows for our largest segment, U.S. wireless, a stabilized U.S. wireless subscriber base and improved profitability and subscriber growth in the Island Wireless piece of our international operations. Turning to the details. First, I'll start with U.S. wireless retail as usual. To reiterate my comments in the press release, we were certainly pleased to see positive net adds of nearly 5,000 for the quarter. Our team did a great job selling our value proposition in a historically weak quarter for retail sales. In particular, prepaid sales, which really are typically weakest in the industry in the second and third quarters, were quite strong for us. And hence, we see this largely as a result of our opening up a significant new big box distribution channel. Of course, as noted in our release, it will be difficult to repeat the subscriber performance in the third quarter for 2 reasons: First, the third quarter, as mentioned many times, is often the worst quarter for retail sales in this industry. And, second, we will experience a higher percentage of contract expirations in the coming quarters as a result of the large amount of upgrades started in about 2 years ago to deal with the 1-year contract bubble we inherited. On the growth addition side, we added a little over 55,000 subs, that's up from about 39,000 a year ago and that's about even with the first quarter. Prepaid gross adds were about 32,000, a bit more than 125% higher than the second quarter last year and down only slightly off of the seasonally strong first quarter. This substantial increase in prepaid sales year-on-year was due to the launch of our best value plan from late 2011, expanded distribution, particularly the big box channel we referenced, and increased lifeline sales. On a sequential basis, normally, we would see a decline from the first to second quarter in prepaid. Instead, it was essentially level, reflecting our expanded distribution, which was launched in May. Postpaid gross adds were about 23,500, which is down 5% year-on-year, but it's up 5% on a consecutive quarter basis. Despite the improvement, this continues to be a challenging area for us. We feel strongly that our value proposition is compelling and we'll continue to experiment with different marketing strategies to drive -- to try to drive higher sales. The positive response to our value proposition has occurred more quickly on the non-contract [Technical Difficulty]

Ladies and gentlemen, thank you for standing by. I would now like to turn the call back over to Mr. Justin Benincasa. Sir, you may begin.

All right, actually, it's Michael Prior. All right, sorry, everybody, about this. Something's wrong with our office line so since we're mostly on the wireless industry, we're dialing in like a cell phone and on a cell phone. So, I'm told that we got through gross adds and I'm going to start back with customer churn. And we may have covered some of that, but I want to turn to that now. So, with respect to customer churn, postpaid subscriber churn improved both year-on-year from 2.42% to 2.18%, and on a consecutive quarter basis from 2.41% to 2.18%. Blended subscriber churn showed similarly positive gains from 3.3 -- sorry, 3.73% a year ago to 2.9% this quarter. This marks a significant improvement in churn, but as discussed, an increase in contract expirations as we work through the 1-year contract bubble, will likely put upward pressure on this number going forward. That's the other factors. Overall, subscriber ARPU went in the other direction. From $49.36 in the prior quarter to $47.63 this quarter. As we mentioned last quarter, the first quarter had some out-of-period ETC pickup, so this was not unexpected. Postpaid ARPU is essentially flat. $53.96 for this quarter, compared to $54.15 in the first quarter. In addition to the ETC pickup, a decline in overall subscriber ARPU is largely the result of an increase in our prepaid subscribers, which carry a lower ARPU than average postpaid subscribers. Going forward, the general dynamic on ARPU we are seeing is a continued decline in voice usage, which has been offset by increases in the take up of data services. We also see some degradation in ARPU from long-time customers who migrate down to newer and less-expensive plans. On smartphone adoption, we ended the quarter with about 38% of our postpaid base…

Thank you, Michael. Interesting, we're in the telecom business, but. Revenues for the quarter totaled $185.3 million, which was a decrease of $8.5 million or 4% from the same quarter in 2011. Consistent with last quarter, this resulted primarily from the decline in the U.S. wireless retail revenues due to subscriber attrition in 2011, which was partially offset by an increase in our international wireless revenues. Total wireless revenues for the quarter were $155.9 million or 84% of total revenues and our U.S. wireless service revenues were $135.6 million or 73% of total revenues. Adjusted EBITDA was $49.7 million, up $17.7 million or 55% over the same period last year. Included in this quarter's operating expense of $162.2 million was non-cash stock-based compensation expense of $0.8 million. Our U.S. wireless segment accounted for 85% of adjusted EBITDA and 73% of operating expenses. Moving down to net income. Earnings for the quarter were $10.5 million or $0.68 per share, compared to $1.8 million or $0.12 per share reported in the second quarter of last year. Our effective tax rate for the quarter was 40%, compared to 44% a year ago, reflecting a change in the mix of income among our various tax jurisdictions. Turning to the balance sheet. As of June 30, we had cash balances of almost $80 million, total debt outstanding of $280 million, which leaves us with a leverage multiple of approximately 1.5x and 1x on a net debt basis. Net cash provided by operating activities was $58 million and $0.6 million in the quarter, which included an $11.5 million tax refund for an NOL carryback. Capital expenditures totaled $13.2 million for the quarter and $32.3 million year-to-date. For the quarter, approximately $7.9 million was incurred by our U.S. wireless segment and $1.6 million by our international telephony segment. For full year 2012, we lowered our forecast for capital expenditures to be between $80 million and $95 million. This is primarily a result of the delay in certain capital projects, which have shifted some of our forecasted expenditures to 2013. Of the $80 million to $95 million forecast, the U.S. wireless segment is expected to account for $45 million to $55 million. Some additional operational data for the quarter. We ended the quarter with 784 roam-only base stations. In our wholesale wireless business, MOUs were up 5% from last quarter, but down 19% from Q2 of last year. Data traffic was up 20% from the first quarter and 9% from the same period last year. In international wireless, we ended the quarter with a total of approximately 325,000 subscribers of which 287,000 were prepaid. In our U.S. wireline segment, business lines increased 60% -- 16%, sorry, from a year ago and 8% from the first quarter, ending the quarter at approximately 53,000 lines. Internationally, access lines remained relatively flat at approximately 150,000 access lines. And with that, I'm going to take my chance and throw it back to the operator, and see how this goes, so.

Operator, if you're there, we are ready for questions.

[Operator Instructions] Our first question comes from the line of Rick Prentiss with Raymond James.

First question, on the margins side. Pleasantly surprised, particularly in the U.S. and in the Islands area. It looked like service margins for U.S. wireless were above 30%, what are your thoughts as far as where that could head? I know you said seasonally, 2Q might not -- or 3Q might not be as strong versus 2Q on the wholesale, high-margin business. But just trying to think over the medium and long-term, where are margins going to be settling out?

Well, I could take a step there. I think this quarter is likely to be at the high end of what we believe is kind of a sustainable range with quarters like the fourth quarter being probably amongst the lowest. Obviously, the gross adds and handset subsidies, as well any fluctuations in the wholesale probably could impact that though.

And then in the Islands, pretty dramatic improvement there. You pointed to Bermuda, also some adds on some of the other islands. Can you update us as far as what that trend line looks like for margins and EBITDA levels kind of coming from the islands?

Yes. And I'm not sure we have predicted trend at this point, but I think what you're seeing there is the Bermuda synergies from the merger that is really most for the impact and we think we've really captured the main synergies -- the significant synergies. So what could improve margins from here is really growth, top line growth and subscriber growth, and some of the smaller ones. And I think over time, that definitely has the potential to push those margins up, but it'll be slow, I suspect, from an overall basis.

Is this level we saw in 2Q, kind of the new stable area?

Yes. And I think we expect. So there is some seasonality because of the ups and downs of the roaming side, but I think it's pretty close.

And that area is a little more kind of in the winter -- if it's not the U.S., is it a trend of roamings higher in 2 and 3Q, Bermuda, I would assume, is a little higher holiday time and winter time?

No, actually, it's a mix. So, Bermuda is highest from middle of spring to fall because it's not that warm in the winter and the Caribbean properties are the reverse there. And they're all relatively weak from a tourist visit level and in the middle of the fall, that's -- maybe Bermuda's the strongest there.

Are they -- wear the Bermuda shorts [ph]?

Yes, there you go [ph].

And then a final question, and I'll circle back in if there's time. What percent of your base upgraded in the quarter? We've seen an industry trend this quarter where it seemed light as far as what percent of postpaid customers upgraded. And maybe if you can give us, if you have those numbers, a little history over like the last several quarters?

Yes. I don't have those at hand. But we'll look and see and if we want to do something we'll get back on this call to that. But maybe we'll take the next question, unless you have another one, Rick?

Our next question comes from the line of Barry McCarver with Stephens.

I recall years ago that the Walmart relationship, I believe, was the single biggest driver for prepaid for Alltel back in the day. Now that you're back in that relationship, can you give us a little more color on what it did for you in the quarter? And would you -- is that kind of fully ramped up or is there kind of more to come in the next couple of quarters?

Yes, well, without giving precise numbers, it's not fully ramped up because it was not a full quarter of Walmart. Although, when you initially launch anywhere, there's a little added excitement and sort of a boost. So it could go up from here, but we're not predicting something dramatic at this point. We're very pleased and we're happy, and I think they're happy, so.

Okay. And then, in terms of -- you talked a little bit about a churn and what it could look like next quarter. Can you give us an idea of the magnitude of the base of the subscribers that's coming up for renewal in 3Q? Just trying to get our hands around kind of what the bookends of churn could look like, going forward.

Welcome, without giving a number, Barry, I think that what we're talking about is we had that initial situation where we were dealing with high, very high contract expirations. And in addressing that and renewing people, and as well as new adds and getting them on 2-year contracts, we kind of created a receding wave. So the impact shouldn't be as significant as it was the first time around and it will be less so 2 years from now, but we'll be a little off of the real steady-state mix from contract expirations for a little while. So I mean, I'm not going to try to predict the precise number because there's a number of factors as you know, that impact churn.

Okay. And then just lastly, any update on kind of your outlook or appetite for additional acquisitions or maybe spectrum purchases?

Yes. To take the first, first, we always have an appetite for acquisition, it certainly is more muted when we're dealing with integration and transition and we're through all that. And we also are careful on our balance sheet, but we have a pretty rapidly delevering situation, a strong balance sheet. So if the opportunities are there that meet all of our parameters, we'll look at them. And that's really always going to be the case. As far as spectrum, yes, I mean, we look at that, and we always -- there's -- spectrum is strategic and as data grows, it's more and more valuable in order to expand your operations. So we do look at that. We haven't made any significant purchases because we also have to be realistic about pricing.

Our next question comes from the line of Hamed Khorsand with BWS Financial.

A couple of questions for you. First off, talking about this U.S. retail business on the subscripts and the subscribers. Can you talk about what can you do to counter some of those losses? I mean, are you expecting these subscribers to go off your network purely because they're disgruntled or they don't like your phone choices? Can you just talk about that a little bit?

You're talking about -- I want to make sure I understand your question. Are you talking about the disconnects we have in a month in any given time on a postpaid tie [ph], is that your question? Or generally, or?

No, no. I'm talking about generally, regarding Q3, in your commentary about expecting a roll off in subscribers. And I just wanted to get how you're going to counter that.

No, I think -- look, I think industry-wise, the churn is highest amongst people coming off contract, that's just the fact of life for every carrier that I'm aware of in any situation. So it's not a reflection of the fact that we think there's a weak value proposition, it's just historically been the case. But in a way [ph], it's not a huge percentage, but it's significant enough to note that when people are coming to the end of contract, coming off contract, they switch at a higher rate that people, certainly people on contract, of course, and also people who have been off contract for a long period. So that's just statistics we're really seeing, I think almost everyone in the industry is seeing. So if you see the contract expirations going up, you expect your disconnects to go up.

I understand. I was asking more about what the game plan is, so you can counter that loss.

Well, we do everything you normally do, so plus. So you make sure your value proposition is very fresh. You make [ph] everything from the quality of your service, the quality of your customer care, your pricing and your devices. And you look at all those things. The button that you can push most quickly to deal with these things tend to be in devices, promotions and other sales tools, and I think we have a strong offering for customers. So it's getting that message to them. And I think if we have any weakness, we're, like all of the regional carriers, we're weaker than the large ones on devices.

Okay. My other question was on the U.S. roaming side, I thought the carrier loss, as I work through your numbers, can you just comment on how Q3 will be no growth, from a seasonal standpoint?

Yes. I didn't say no growth. So let me clarify that if that's what we would take away [ph]. I don't think we'll see growth at the same level. It could be flattish. It could be up a little. It's a little hard to predict roaming. There's only -- there are movements that are hard to predict. But the reason we are saying that is there's been some areas that have seen some overbuild activity and we're just looking at the trends and saying it's probably not going to have the uptick it did last year.

Okay. Are you putting a CapEx behind that business longer or expanding how many base stations you have?

We're not doing any significant base station comparison. There's small things and there are always some upgrades capacity, technology and that sort of thing. But there's nothing significant. Operator, before you go to the next question, just to answer the question we had before, from Raymond James. The smartphone percentage of postpaid upgrades was 59% in the second quarter.

And our your next question comes from the line of Chris King with Stifel, Nicolaus.

2 kind of minor ones, I guess, in the grand scheme of things. But just wanted to double check on the termination and access fee line item, which took a nice step down sequentially. Just was wondering if there was any kind of rate reduction in there we should be thinking about from a one-time perspective or a usage slow down that would have impacted that number a little bit? And then second question was just wanted to get an update, I know you guys have been in the news a little bit in Guyana from the international long-distance monopoly there, and Digicel challenging that based on the court ruling. Just kind of wanted to get your latest thoughts on that process and where that stands.

Sure. All right, so in the first question, the decline in termination access fees is really a result of a lot of good work on the U.S. wireless side. We've gone out, one of the areas we addressed. Though we're looking at going into this year to improve margins for our backhaul cost, really. And so we went after that and we are still going after that. So it's not a onetime thing. I don't know how much room for improvement there is last, because as an opposing factor, you have growth and capacity needs from data growth, but we think that's a cost savings we've captured that will stay. And on the Guyana side. Yes, just for everybody's benefit, if they haven't followed the news, we had a lower court case involving an ISP resulting in a ruling that said our exclusive right in international was not valid. We sought and got a stay of that -- of any effect of that decision pending appeal. We disagree strongly with the reasoning behind the decision and we feel good about our chances on appeal. But in the meantime, as soon as this happened, our competitor down there, the wireless competitor, Digicel, launched international services immediately without an international license, without getting the rates approved by the Public Utilities Commission which is required in Guyana. And both we and the government reached out to stop that, which they did. So that was a matter of a few days between one and the other. And press reports are interesting because they report that they were offering reduced prices and we stopped them. In fact, I think the prices were reduced to the places that people barely ever call and they were in fact, higher to some of the places people call most, like parts of North America. So, we think it was just a gambit by our competitor. And we still are in the same position we've always been in. And we thought, over and over about it, which is that we are -- been waiting to work with the government towards new regulatory scheme, which would include the end of our exclusivity and we're sincere in saying that, and we're waiting to have that happen.

[Operator Instructions] And our next question comes from the line of Rick Prentiss with Raymond James.

A couple of follow-up questions. First, Michael, you were talking about backhaul costs. Can you update us as far as what percent of your U.S. wireless business retail side has fiber backhaul to the cell sites, do you know?

No, I don't know. I don't know it off the top of my head, but it's one of those things we're looking at in preparing, at some point, to go the 4G. That's one of the things you have to look at. And you have to look at it even if you don't go 4G. But it's even to really capture the benefits of something like LTE, you really have to go to an ethernet backhaul for both [ph]. So, I think we have a lot to do still on that, but I don't know the percentage.

Yes. So, that naturally is [ph] -- next question ...

And by the way, it's fiber -- I mean, microwaves can deliver that for you, as you know.

Leads naturally to the next question is can you give us an update on your thoughts on LTE? It's quite prevalent in the advertising in the major markets. We're expecting the iPhone 5 to come out in the fall with LTE. Are we creating more buzz? What's the competitive situation as far as LTE in your markets from the competitors and what are your thoughts as far as when you need to deploy it, times to deploy, costs, kind of the whole LTE update?

Sure. I think -- we think, we will need to deploy LTE, we think we haven't made a definitive to it [ph] commitment, but we think we will start to deploy in areas sometime in 2013. Standing here today, that would be my prediction and that's part of the why our CapEx number is lower for the year, because we don't see a significant expenditures on that this year. And I think our competitor, our main competitor is bringing LTE, in some of the areas has already -- that's Verizon. And I think they will continue. So I think we will continue to be competing in more and more areas with an LTE offering. So that is important. We want to be fully competitive there. And also, when we look at the cost of adding capacity, 3G capacity, at some level, it's not much more costly to go to LTE. And so that's another driver in looking very seriously at it.

Is there a thought that it would probably be a multiyear project? Should we think about $10 per covered pop kind of as a ballpark number as a placeholder over the bill period?

I think, over a long period of time, it might be higher because you've got -- if you really figure in all the cost including, as we talked about ethernet backhaul, some IT things. I think it could be north of that, but I think it will be over an extended period. I mean I think there are areas where it'll -- we would come later, and so, it would be over a period of time.

And a final, kind of all interrelated question is in Telus, one of the other regional operators, reported numbers and actually, had quite a large amount of iPhone sales. What are your thoughts on -- does the iPhone makes sense in your markets? Is it hurting you on the postpaid churn and share of adds? Just kind of as you think through the iPhone phenomenon given that we'd probably will see a new iPhone refresh in the fall with LTE.

Yes, I think it is probably hurting us. I'm sure it's hurting us on the postpaid side. Any time you don't have a device a lot of people want, and certainly, that's true with the iPhone without stating the obvious then you're hurting yourself a little bit or more. And certainly, we are, without speaking any specific device, we're continually looking at that. We're looking at how we can have a very strong device lineup and limit the amount of people we lose for that reason, and also improve the amount of people we go out and get for that reason. So I think we've got some -- its improving even this quarter, our device lineup. But we don't have the iPhone, so that is a weakness.

It is expected they continue to bring out new iterations of the iPhone, the older iterations becomes less expensive to the carriers and yet, some customers might be happy with a 4 or 4S, even as the 5 comes out.

I think that's a consideration. I mean, I think you've -- I mean, I don't know enough yet because I don't know what the 5 what it will look like and what the consumer reaction will be, but if you look at what's happened in the last few generations, that's often been the case.

And I'm not showing any further questions at this time. I'd like to turn the call back to management for closing remarks.

Okay. Well, I don't have any closing remarks, I'm just glad the phone lines stayed up for a few minutes at the end. I thank you, all, for your patience, and we'll talk to you next quarter.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.