Good day, ladies and gentlemen, and welcome to the Atlantic Tele-Network 2014 Q1 Earning Conference Call and Webcast. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Justin Benincasa, Chief Financial Officer. Sir, you may begin.

Great. Thank you, operator. Good morning, everyone, and thank you for joining us on our call to review our first quarter 2014 results. With me here is Michael Prior, ATN's President and Chief Executive Officer. And as usual, during the call, I will be covering the relevant financial information and certain operational data, and Michael will be providing an 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 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 on these measures and reconciliation to comparable GAAP measures, and for 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 I'll turn the call over to Michael for his comments on the quarter.

Thank you, Justin. Good morning, everyone. As usual, I will start with some highlights for what's proved to be an excellent quarter for ATN. Starting with U.S. wireless, U.S. wireless had a very strong quarter, showing promising returns on the capital we have spent over the past year in order to expand our mobile broadband coverage and capacity. That being said, as we noted in the press release, we use the word exceptional deliberately. We don't expect to see year-on-year growth rates in this segment at anywhere near these levels in subsequent quarters this year. And there are other areas of strength as well, improving margins and revenue growth at a number of our smaller wireless properties and revenue growth in U.S. wireline. So let me get into few more specifics after that, starting again with U.S. wireless. The U.S. wireless generated 34% revenue growth in the quarter. The driver of this increase, as we noted, was markedly higher data traffic volumes. And digging a little deeper into that, the growth in data volumes was due to a combination of 3 factors: first, upgrading our capacities and 3G capabilities; two, expanding our coverage in a number of sites and service; and third, the general industry trend of higher usage for customer -- data usage, that is. I'll put some hard numbers to that. Megabytes billed expanded by about 115% year-on-year, and we increased our 3G base stations and service from approximately 20 last year to 220 this year. On the other end of the spectrum, sorry for that pun, voice minutes declined by 7% from a year ago. And as we said, we expect the data traffic increase to be largely offset in coming quarters due to expected declines in the rates we receive from carriers per megabyte. And therefore,…

Okay. Thank you, Michael. For the quarter, total company revenues were up 16% to $75.2 million, which reflects year-over-year growth across most of our businesses. Revenues in Guyana were reduced by approximately $450,000 due to approximately 2.5% devaluation in the local currency, which is the first since 2004. Adjusted EBITDA for the quarter increased 23% to $28.2 million, and our adjusted EBITDA margin was 38%. In addition to the strong performance of our domestic wholesale business, overall margins have been helped by our Island Wireless segment, which has continued to post margin expansion over the last several quarters as we have grown subscribers and revenues. Moving down the income statement, this quarter's operating income was $16.2 million, up 35% from the same quarter in 2013. Operating expenses this quarter included $1.1 million of noncash stock-based compensation expense compared to $0.8 million in last year's first quarter. Net income from continuing operations for the quarter was $7.8 million or $0.49 per share compared to $0.31 per share reported in the first quarter of last year. Looking at the balance sheet, in March 31, we ended the quarter with cash and cash equivalents of $411 million, which includes almost $59 million of restricted cash, which is primarily related to the indemnity escrow account as part of the Alltel sale agreement. This quarter's cash, ending cash balances now fully reflect all the tax payments related to the Alltel sale. Capital expenditures for the quarter totaled $8.7 million, which approximately $5.3 million was incurred by our U.S. wireless wholesale business and $2.2 million was incurred by our international telephony segment. We expect capital expenditures for the full year 2014 to be similar to 2013 levels at $65 million to $70 million, and roughly half that total will be allocated to our domestic wholesale roaming business, again, comparable to what we spent in 2013. As we previously mentioned, we've been investing in both technology and network expansion in this segment, and we remain confident that we'll continue to see solid returns on our investments. Some additional operating data for the quarter. We ended the quarter with 605 wholesale-only base stations in our U.S. wireless territories. We believe the wholesale-only number is a better metric for this business as it doesn't include any base stations related to the smaller retail operations within this segment. The 605 reported this quarter compares to 598 wholesale-only base stations at the end of last quarter and 567 a year ago. International wireless subscribers totaled 323,000 at the end of the quarter, and our U.S. wireless segment business customers decreased 8% from a year ago to approximately 2,600 customers. Internationally -- International, I should say, fixed lines ended 2013 at approximately 157,000 access lines and DSL subscribers ended at 38,000, which is up 20% from a year ago. And that -- with that, operator, I'd like to turn the call back to you for questions.

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

I have a couple of questions. First, obviously, a pretty impressive margin expansion in the islands. Historically, I think the seasonality, though, could get even higher in the next 2 quarters and come back down in the higher seasonal selling quarter, fourth quarter. Are you expecting to see a traditional kind of -- with the margins up in 1Q, that they could go up again 2Q, 3Q, the seasonality?

I think most of that seasonality, Ric, is really in the quarter we just ended, right? So -- but I do think, though, as we've grown revenues, I think we still could see margin expansion in the sense that we kind of now, as we grow revenues, we're able to convert those down into profit at a much faster pace just because we've kind of gotten over the fixed cost hurdles.

If you look back like in '13, obviously, it's a mixture of different islands at different stages of their life cycle. I think last year, on a service revenue basis, islands went from like 29.5% to 33% to 38% down to 27% throughout the year. So I was just thinking we might see some pickup in 2Q, 3Q.

Well, I mean, one aspect, it's true, the fourth quarter is generally, that has more of the negative seasonality. So what you had is there's a mix. Bermuda is an example of one where the second and third quarter tend to be stronger. And that's the bigger one. But then in some of the other markets, the first quarter is stronger. So as the mix shift, as we grow revenues in some of those other markets, it will mute that seasonality a little, I think.

Okay. And then the second question, you mentioned the wholesale-only base stations. As you think through the budget for this year, CapEx budget, how much are the base station purchasing CapEx and how much is going to the wholesale business versus the small retail business?

Most of it is going to the wholesale business, predominantly. If you -- we kind of talked about in the past, I think, if you take in that $65 million to $70 million, you're calling half of that is related to wholesale, the lion's share of that half has been really focused on the wholesale business. The retail...

You mean, U.S. wireless versus wholesale.

U.S. wireless, wholesale, yes. So the retail business is a nice add-on but not a lot of capital investment.

Okay. And then final question on the U.S. wholesale business. You mentioned that, obviously, it's strong in the first quarter but price cuts coming so that the future quarters should be flat to slightly positive year-over-year growth rate on the revenue line. What should we think about on the cost line? Because you have been adding more base stations, probably more backhaul with the 3G.

Yes, I mean, I think you're right. The costs are higher. The operating costs are higher with related to data traffic than voice for the reasons you've said. It's mainly backhaul, that's the main difference. And there can be increased power rents, too, as you add more up on the power.

I mean, you can see that somewhat already in the year-over-year termination and access charges in there.

And is the expectation that with 220 3G base stations now out of 605 wholesale, that, that number will continue to go up as part of the CapEx spending, you said, continuing not just adding sites but increasing on 3G?

Yes, absolutely. That's our expectation.

And our next question comes from the line of Barry McCarver with Stephens Incorporated.

Following along the lines on the U.S. wireless business, can you give us a little more color on how the rest of the year is going to roll out, and in trying to be a little bit more specific on the pricing that you are talking about in order to remain competitive and keep those superior [ph] relationships, are we near any breakpoints? Or is that something that just kind of have to wait for it to come?

Yes, I -- well, we're obviously, not going to give out specific pricing, but I think that it's -- we definitely see some areas of significant price declines, because otherwise, you wouldn't be offsetting growth rates of 34%. You wouldn't -- it would be hard to put a big dent in that without a fairly significant price declines. And I think that really from there, it really depends on volume. So if volumes continue to grow, we'll have to continue to figure out ways to lower prices.

But nothing specific on the quarter, just roll out through the year?

Nothing -- well, I think we think it will probably impact the next 2 quarters and then there could be some countering in terms of the continued build benefiting by the fourth quarter.

Okay. That's helpful. And then on the international wireless business, we've seen pretty nice sequential revenue, very steady growth up until this quarter, it pulled back a bit. Can you talk about what's going on there on the revenue line?

Say that again, Barry, I missed the very first part.

For international wireless, sequentially, revenue was down. That's been up for 8 quarters in a row, pretty steady, slow growth. Why was it down in 1Q?

I think some of that might have been related to the fourth quarter had a kind of a blip in the Guyana market, too. So I think if you looking at it compared to the fourth quarter in Guyana, that was kind of a onetime event in the fourth quarter that we had. So that might -- that's probably -- I think other than that, it's been fairly steady.

Yes, and I think the year-on-year trend is more accurate.

Yes, last quarter, yes, we had some onetime events.

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

Just want to ask you, what I'm trying to understand here on the islands side is that sequentially, revenue was only up about $600,000. So what's the scale or what's driving the profit margin, because it seems out of proportion with the revenue increase?

It's just -- as Justin said earlier, it's a couple of things. So over the fourth quarter, you do have a benefit of the seasonality roaming, which will boost profit margin. So when you're comparing first to fourth, that's a factor in those markets. And then the other point, though, as Justin noted, is that in the number of these areas we're kind of cresting above fixed cost. So we've got some smaller operations there where we're really starting to go above that line where every dollar of revenue kind of disproportionately falls to EBITDA. And that's really what's doing it overall. That's the trend overall.

Okay. And then the -- on the U.S. wholesale side, do you still think there's enough opportunity to expand that business further?

Yes, I think we think that there is opportunity in the near term. I mean, as we said at the end of the year, we talked about this year, going forward, we saw opportunities. We didn't expect quite the jump we saw this quarter, and as we talked about, we had some -- there's always a little bit of lumpiness in this business, a little bit of step function with the way pricing works, but we're continuing to build, and we wouldn't be building if we didn't think there's opportunity.

Yes. I mean, we did not build that much in 2010 and '11, and I think -- or -- yes, '10, '11. And then last year and this year, we see good opportunities so...

Okay. As far as the build schedule, where -- when should we see the biggest amount of CapEx spend there? Or is it just going to be you...

It's lumpy. I don't know if you can -- it's just lumpy. It's kind of the -- traditionally, this quarter is always a slow start, but it's usually the next couple of quarters and then the fourth quarter, so as the weather picks up, et cetera, so...

Yes, second -- to be more specific, I think, second and third quarter should be significant, at least in that segment.

Okay. And my last question, was there any update on your 2 stimulus projects in the U.S.?

No, I mean, we have no specific update there.

[Operator Instructions] Our next question comes from Ric Prentiss of Raymond James.

A couple of follow-up questions, if I could. We've got -- auctions are all in the news these days, with both the AWS-3 auction coming up this year and then the broadcast auction sometime middle, maybe slipping to fall of '15. What are your current spectrum positions? And what are your thoughts about participating in those auctions, particularly as the FCC is trying to, I think, take care of smaller operators in these auctions?

Yes, I think we've been very involved and, at least, active observers of that process and involved as well. In some of the really rural areas we are in, I think, we provide a very good industry-wide shared infrastructure service. And to continue to do that, we definitely need to augment spectrum over time. So we're very interested in that. And we have enough spectrum to do what we're doing today, but no carrier feels that that's adequate, given the growth in data. And these areas are so sparse that techniques such as self-splitting, which for those on the call who don't know what that means, it just means splitting the traffic between multiple sites, adding additional site, because you don't have the spectrum [ph] capacity. That's harder to justify in most of these areas. It just could turn the model upside down. So getting spectrum is definitely important to us. And we've picked up spectrum here and there over the years. But we look at these auctions very carefully to see if there's opportunity for us.

And also safe to say the broadcast auction, being low-frequency, might be more of interest than the AWS in the mid-frequency bands?

Well, yes. I mean, the low frequency is better in these very, very broad and sparsely populated areas. It's generally better. But I wouldn't discount the value of AWS, too. I mean, that also has value.

Okay. And then, Masa from SoftBank was at the CCA meetings not that long ago, talking about how he wants to work with the regional carriers and smaller carriers to fill in his whitespace, but some of that also implies the need to spend on 4G. Can you just update us on what the CCA is looking at? I know you're very involved there, and what it might mean for you guys?

Well, I mean, I think they're -- different carriers have different positions there, and I don't want to speak to anything really specific or private to Sprint. But I think the kind of natural view there is if you look at Sprint, they're looking at their coverage, particularly in rural areas and seeing significant gaps. And so I think they're talking to a lot of the carriers there about solutions. And so CCA is really just trying to, I think, as an organization, help -- has members help each other where it makes sense and kind of put people together. And I don't think, if you look at it out there, there's people with Verizon, I guess, that's on a plan they did with some of the carriers in rural LTE. AT&T has done some stuff with carriers. I mean, I think a lot of they're -- so it makes sense to me that Sprint would look to do that at some point.

And they're not a very large customer of you guys today, I don't think.

No, they're not.

But could get bigger over the next couple of years? I'm just trying to gauge, it did seem like, in the meeting with Sprint yesterday at their New York event, and they definitely are interested in looking at that roaming cost and the roaming provisioning in the whitespace, as they call it.

Yes, I think if they get really strategic about it, honestly, the big 2 carriers, to my mind, have been much more strategic about using roaming as a kind of a shared infrastructure solution, where, as I've said in my remarks, it doesn't really help them strategically to have network in areas where there are really very few subscribers. And so if they can spread the cost out across the industry, it makes a lot of sense to spend your money in places where it's going to make changes in market share or drive new revenue streams. So I view it as -- I mean, I think it's a breath of fresh air that Sprint is getting to that point too, and they're saying, look, we can -- this is -- we got to have strategic priorities. And that's the way I look at it, not being privy to their inside thinking. And we would definitely like to be part of the solution. I mean, the more we can put on it, the more attractive we can make the solution because then we can find ways to further lower the cost. And it's the same I talked about earlier, as we're able to get more traffic, we'll find ways to lower the cost and make it even more attractive.

Makes sense. But 4G LTE in your markets is still out a couple of years, do you think, as far as timing?

Well, it's hard to pick -- predict exact timing. It could happen faster than we would've thought a short time ago. But, as you know and as we said before, it really depends on the Tier 1 carriers wanting it. When they want it, we will build it.

All right. And final question on the M&A side. As you look at the different possibilities out there, is it possible that an opportunity with negative EBITDA but good turnaround potential would be of interest to you?

I think we don't look at -- I think yes is the short answer because we're really not that focused on what's the immediate pop from an investment. We're focused on long-term returns. And if we believe we're going to have strong returns on invested capital, and to do that we have to have a few kind of a trough first, it's really all part of the investment, if you think about it that way. So sure, that could work.

Our next question comes from Colin King of Kirr, Marbach & Co.

Just curious. On the $33 million in cash taxes paid during the quarter, how much of that was tied to the Alltel transaction?

Most of it, probably. Probably in the $25 million range.

Okay, great. And then just one more. Going back to that fiber expansion in New York and Vermont, did that have any contribution in the quarter? And do you guys have any expectations for that 1 or 2 years down the road?

Yes, I think it did have a contribution. It's small overall, but it did contribute. And the fiber business, what's very attractive about it is the long-term earnings potential and -- but the numbers don't jump initially. It's a slow build, and it's a long tail one would hope and expect. So we do have good expectations for it down the line to be a growing contributor.

Yes, and what I could probably add to that, too, is that as those networks came online last quarter, this quarter, so did a lot of the cost of those networks as we're ramping up revenues. So they contributed on the revenue side, but they also contributed to the wireless cost that are now online, [indiscernible] costs to run those networks so...

And our last question comes from the line of Sergey Dluzhevskiy of Gabelli & Company.

Could you update us again on your primary interest areas as far as potential M&A opportunities? And also, was there anything changed in those kind of areas of interest? Did you have any new sectors that you're interested in there based on your discussions and based on the disconnects that you mentioned with the sellers?

Yes, Sergey, it is evolving, and so you're right to ask that, that way. I mean, so as we look at -- we look at specific opportunities we get close to, and that may just mean if it doesn't work out, we may continue to look at very closely related things in some areas. And in some areas, I wouldn't say we're there yet, but we may eventually form the opinion that it's just not a good area for us to invest in at the time. And that -- if that's the decision, that could be because we don't like pricing or as we grow in understanding the sector, we start to be less enamored of the prospect over time. And so I would say it's evolving. I don't think there's anything significant to update at this point in terms of the areas we're looking at. We're -- same geographies we've talked about before and same types of businesses with an emphasis on infrastructure that we think has nice long-term cash flow and earnings potential.

I'm not showing any further questions at this time. I would like to turn the call over back to Mr. Benincasa for closing remarks.

No further remarks, everyone. Thank you, everybody, and we'll talk to you in the summer. Take care.

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