Good day, ladies and gentlemen, and welcome to the ATN International Fourth Quarter Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. And later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a remainder, this conference is being recorded. I would like to introduce your host for today’s conference Justin Benincasa, Chief Financial Officer. Sir, you may begin.

Great. Thank you, Daren. Good morning everyone and thank you for joining us on our call to review our fourth quarter and full year 2016 results. As usual, with me here is Michael Prior, ATN’s President and Chief Executive Officer. And during the call, I’ll be covering the relevant financial information and Michael will be providing an update on the business and the outlook. 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 the 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 in our website at atni.com or the 8-K filing provided to the SEC. And I’ll turn the call over to Michael for his comments.

All right. Thank you, Justin. Usually you get a better crowd to warm up than the Safe Harbor. But I have to go with that. As usual for the fourth quarter, I’ll begin with some comments on the year. Overall, I think we’re quite pleased with how we are positioned as the year came to a close. In International Telecom, we closed and completed a good part of the critical integration work of two significant acquisitions, leaving us with three similarly sized businesses with fully integrated telecommunications offerings in manageable competitive environment. We have significant scale within each of our main International Telecom market and we are working hard to ensure that the customer experience and the value proposition continue to improve and that these businesses are well positioned for the long-term value creation. In U.S. Telecom, we make great progress on improving operating efficiencies against the backdrop of significant price reductions. That’s helping to ensure consistent and reliable cash flows. There’s more work to be done positioning this segment for the longer-term but we’ve made a good start. In both our international and domestic telecom segments, we also made progress on rationalizing the portfolio and improving overall strategic focus. This includes the sale of small market acquired in the Virgin Islands acquisition and the pending sale of our Northeastern United States wireline operation. In renewable energy, we opened up a new market and potential for growth with the deal we closed with Armstrong Energy Group out of the UK. That resulted in the launch of Vibrant Energy in India. Well, we are – a bit behind on our initial build schedule, we are optimistic about the potential for strong returns in that market and we see the entire segment is producing significant opportunities for investment for both the near…

Thank you, Michael. I’ll cover some of the relevant financial information for the quarter and the year. For the fourth quarter, total consolidated revenues were up 55% to $128.5 million, compared to the prior year period. While consolidated adjusted EBITDA was increased 33% to $34.1 million representing a 27% margin as we integrate the two sizeable telecom acquisition we made during 2016. Our financial results for the quarter were impacted by several organic and acquisition related factors but as Michael mentioned, our revenue performance for the quarter excluding the Sovernet divestiture represented a base from which the model 2017. To review the results by segment, our U.S. Telecom revenues were $39 million down 1% from the prior year period and adjusted EBITDA was up 5% to $16.4 million. While, wireless revenues within the segment declined 5% to $30.9 million in the period. This was mostly offset by increases in our wireline wholesale transport revenues. Performance for the segment was in line with expectations and guidance with revenues totaling $176.7 million and an adjusted EBITDA margin of 48%. We do expect the sale of the U.S. wireline business to be completed in this quarter, which Michael noted will reduce annual revenues in this segment by approximately $22 million. But will have a negligible impact on the year-over-year comparison of adjusted EBITDA. In the International Telecom segment revenues were up slightly against the quarter increasing by 122% significantly I guess, against the quarter, sorry, increasing by 122% or approximately $46.5 million and adjusted EBITDA increased 77% to $21.1 million. These increases from last year’s fourth quarter reflected the impact of our acquisition in Bermuda, which as a reminder closed in early May. And USVI acquisition that closed on July 1. We did incur somewhat higher operating costs in the quarter, associated with…

Thank you. [Operator Instructions] And our first question comes from Ric Prentiss from Raymond James. Your line is open.

Thanks. Good morning guys.

Good morning, Ric.

Good morning, Ric.

A couple, first on the renewable energy side, it was little surprise by the California credit expiring was that something you guys had anticipated. And then I think Justin, you mentioned that the impact in 2017 would be $2 million. Does that compare to 2016 or is that – what that based on.

That’s compared to 2016, yes. So we – it’s a $2 million drop off from 2016 to 2017. And as I said there was a little bit out of period stuff in the fourth quarter. It was something we totally were aware of, prices have been a little bit more front about it though I guess.

Yes. And I guess, if we just look at it – the thing about the renewable energy it was seen as kind of a very stable type of business. And I think I heard Michael say, there is no other subsidy expiring in the next five years.

That’s right.

Okay. So now this kind of creates a new base level. And what was the impact then within fourth quarter on the renewable energy credit that we should look at. Is it just as simple as looking at third quarter to fourth quarter and backing out the $0.5 million out of period?

Yes. I mean there’s a little bit of seasonality and production there. But yes.

Okay. And then on the U.S. – sorry the International Telecom business, you mentioned that there was higher expense and you guys also thought audit fees, billing system conversion. How should we think about that going forward or the audit fees done or the billing system conversion done and the effect that they could have on the results done. And you think you’re returned back, because we’re trying to figure out what caused margins to go from 29% in that segment in third quarter when you have pretty much I thought full operations down to 25%. So just trying to think what’s the better jump off number as we look into 2017?

You know what I would prior to say is there is probably about a $1.5 million of cost in the fourth quarter that was of that nature in the segment.

And I would say, there are other factors too they are going to in the margins for 2017. So, some of it is kind of integration follow-up things that we had to catch up to things we think we can fix. They’re different categories but there’s also – we talked a little bit about some smaller kind of rationalizing we did, well that will bring revenue down a little bit, it will improve margins and it should be positive to cash flows and the rest of the items on the P&L. So I think directionally we still see it where we’ve been talking about, we still see chipping away and continue to improve margins in that segment absent some adverse development.

Right. I think originally you thought kind of mid to high-20’s in the near-term and then getting it up into the 30’s a little more long-term is that still the view.

Yes, yes.

Okay.

And I think. Go ahead, sorry.

All right.

I just going to say, if you looking kind – if you take that second half of the year in total it’s probably the best when you look at margins.

Right, make sense. Thanks. And then last one last from me is on renewables obviously the pacing can vary you mentioned $40 million to $60 million of CapEx in renewables in 2017. What should we think about that level in 2018 you mentioned – telecom drop significantly at 2018, but I would guess renewable might be actually up 2018.

Yes. I sitting here today I would hope it would be up in other words I would hope we’re able to act on the opportunities we see. There’s a couple tricks to that one is in terms of the India business we’re just saying, we still have to make sure that the debt financing – the project financing comes in at the levels within the range we expected. If somehow that and there’s no reason we don’t expect that. But until you have it, we can’t be sure, as long as that happens I think we see continuing to build and rather rapidly. So that’s the probably the biggest factor determining the phase of which we expand. And I think we see a pipeline in terms of the great connections, the land and the customer demand that still in that regional territory we talked about. And then the other thing Ric, to just add to that is we’re always looking at other – the possibilities in the renewable in particular and some of the things we could do will be recorded as M&A almost, so if you’re acquiring developed portfolio and some other things will come through in CapEx if we’re acquiring pipeline like we did in India. And, so that one is a little harder to predict because we’re looking at a number of things.

Right. And you’ve mentioned in your comments that figure $2 million of high margin revenue by 4Q 2017 in India and then rapidly grow in 2018. How should we think about what that could grow in 2018? What kind of return on if you put $40 million to $60 million to work in 2017. I assume not much of that has turned into revenues by the end of 2017? We’re just trying to think through what capital that means as far as return and looking into out of your growth.

Yes. I think we’re not at a point yet where we want to give what that number might be for 2018. I mean if we have – if we’re successful with the project refinance. I think, maybe we can give some more indication then. But that is clearly the – I guess the tip of the iceberg for what we would hope to do in India. So up quite a lot and if we build as planned and unable to finance as planned, you’ll start to see it come through a lot faster in 2018. And so at this point it’s better to talk about that qualitatively. In terms of returns I mean there are more operational and execution risk in India and some currency exposure and things like that. So I think for us, we’ve been targeting from the beginning and still see the potential for returns that are well north of the U.S. and more developed renewable market returns.

And so I guess final question – just that $2 million of quarterly revenue. Does that represent full deployment of that $40 million to $60 million and then earning revenues, I’m just trying to…

No, no that’s closer to what we will spend through maybe the first quarter of this year.

Okay, that’s really helpful. We’re just looking that CapEx number and the revenue number trying to justify and reconciliate…

Yes. No that would – that CapEx numbers mostly new revenue, new cash flow.

Great. I appreciate it. Thanks guys.

Sure.

And our next question comes from Barry Sine from Drexel Hamilton. Your line is open.

Good morning, gentleman.

Good morning, Barry.

A couple of questions on capital spending, if you don’t mind, if you can start out with the domestic telecom sector, you gave the CapEx guidance for telecom both domestic and international combined. I don’t know if you were able to break that out domestically. And if you could talk about domestically what do you have in the pipeline for 2017 capital spending. Are there a significant number of cell sites additions and is there anything on the pipeline? I know you’ve talked in the past about perhaps going back to the carriers and discussing 4G upgrade, any of that in the pipeline?

So I guess, let me try to get your questions in order – back in Barry, if we’ve missed some of it. We have – there’s a mix of projects we have going on. There are some projects which are in the nature of expansion that we think will bring additional revenue an example of that would be the wireless upgrade in the Virgin Islands. We’re putting a very strong at least, we expect very strong 4G LTE network enhanced coverage capacity et cetera. And we think in plan to try to realize on that with growth in market share and revenue and cash flows. At Cayman in a similar we’re building fiber passing new homes, penetrating further into those homes passed. And so we see some growth of that. On the other hand there are – some of that’s through to in Guyana. On the other hand there are some spends in both U.S. Telecom and in places like Bermuda that we think are going to be more in the nature of preserving or continuing to generate existing revenues and cash flows. And the problem with being in small market is that can be very lumpy. So we have a fair amount going through now in those markets, but we think it will level out quite a bit and we still think those are good investments despite not creating necessarily revenue growth. So Barry jump in if you have – if I miss some of that.

In the split, Barry I can help a little on your comment or question on the split of that. So last year, if you talked about the telecom just to keep the math simple, the telecom segments that $100 million right, we did the $32 million in the U.S. and $63 million in the international. We did another $100 million it would definitely be lower in the U.S. and more in the international. But there’s still as pretty good chunk in the U.S. as well. But it’s down off of that, we’re thinking we’ll be down off of the $30 million this year though.

Okay. And maybe we can get in a little bit more in terms of where you are on 4G LTE upgrade. So if U.S. to domestic, Bermuda, USVI and Guyana and what are your 4G LTE upgrade, and where do you stand, and what’s the plan?

In the U.S. we’re fairly far long in upgrading most of our network in Bermuda. We’re pretty far long but there’s more to come in 2017 as we highlighted. In the Virgin Islands that built as I talked about that we expect to be completed late in the third quarter is also will bring us to 4G LTE. And so what’s really left is Guyana, and Guyana for now is a 3G plus. So often been marketed it is 4G but not LTE market right now. But we’re looking at that and some of that is dependent on government spectrum releases.

Okay. And then another way to slice and dice CapEx, if we could talk about from an expected IRR standpoint or do you have a different one for the U.S. versus International Telecom and it’s so what are they?

Different IRR.

IRR expectations for capital spending in U.S. versus…

Yes. I’m not going to give you market by market and we don’t that. But we do look at that, we look at with every spend we have what we think the risk is and what the rewards are and markets that are seen is safer or less volatile we can have a lower return requirement than one we see as higher risk. I will say that, I don’t think any of those markets are particularly high risk. I think the nature of those businesses are they’re providing very critical infrastructure and service in those markets, partly why we like the sector. And we don’t operate in a lot of markets with hyper competitive or rationally competitive environment. So I think, we tend to look at them similarly, part of running a telecommunication service businesses, you have to continue to invest in your network and it doesn’t always go according to plan sometimes the industry is moving faster and you’ve got to invest faster. And sometimes it’s little slower. So that’s kind of the surround and how we look at it. A lot of – which you look at, is these are have been in many cases for us. We’ve been in the some of these markets for at least 25 years and others 18 and so on. I think, we think they’re long-term cash flow markets but you have to continue to invest in your network, you have to continue to find ways to surprise and delight your customers frankly.

Okay. And then that’s very helpful. And then a similar question on the renewables capital spending expected return on investment. You’ve guided to $40 million to $60 million of capital spending and you’ve given the $2 million but that’s just a sliver of early revenue from some of that spending. What you’re thinking in an expectation as you spend that money for getting a return on investment in the international renewables business.

Well, again I sort of answer that question. I think the return on investment put it in terms of payback it should be faster in that market that in the U.S. we still see those as very nice long-term assets. Once you build needed infrastructure power plant the same as I needed network. It should have very long-term potential. But we think that the payback will be faster of course. We want – you aim for a new one, you wouldn’t invest in and develop the new market like that without expecting higher returns in part because stuff happens. Right so if not a lot of bad stuff happens the returns will be very strong; if the small amount happens they’ll still be good.

And then just last question. On international renewables, I think you’ve also said that once projects are completed, there’s an opportunity to increase returns by leveraging up and you can put pretty significant leverage on those operations and that would increase the return on equity investment.

That’s right. And I think it – I think there’s more than that, if you look around at the renewable business what we see ultimately if we’re able to get to a certain scale is there’s a lot of sort of mezzanine equity, different elements, different structures going in. So that the original development sponsor equity can benefit as well from promote if you will. And so I think down the line, it’s not just about refinancing with project debt. It’s also about attracting equity investors who are happy to invest in infrastructure with steady returns.

Okay. Those are my questions. Thank you very much, gentlemen.

Sure.

And our next question comes from Hamed Khorsand from BWS Financial. Your line is open.

Hi, good morning.

Good morning, Hamed.

So the first question I had was on the U.S. wireless side. Given that far mostly 4G now, how much more is there work to do and how much incremental data revenue can you generate out of that business going forward.

Hamed there’s – I don’t have a precised figure for you in terms of the – how much work is left to do. I would say we’re more than halfway through that. Okay, Justin said it’s probably three quarters. In terms of incremental revenue, I think in the short-term we don’t see much. We think it was kind of table stakes. And I think the incremental revenue could come in the longer-term from some of the things we’re doing to kind of deepen our footprint and find other revenue streams. But from the point of view of the national carrier customers, they’re all in cost control mode, very serious cost control mode. And so if they want add a capacity or capabilities beyond a certain level then we’d have to have conversation about how to get a return on that. But at this level, I think what we’re doing to this to date is really to maintain existing streams.

And just a follow-up on that. Is there more areas to expand with that business or is it more of annuity kind of business the wireless.

I think, if you look at the history of our owning this business which is 11 years and that this was had been going on for more than few years before that. There have been these plateaus before. And then we found potential for growth from there. I think we still are optimistic that there will be potential for growth. But it’s hard to sit here and bang the table on it until it’s really in front of us. So I guess the conservative way to think about it is more as a more in the annuity camp but that’s not, we certainly far continue to chase potential to grow this platform and believe in the mid-term there is certainly that potential.

Okay. And then the other topic, I wanted to ask you about was in Guyana, just given the – what’s gone on there economically or what could occur there economically. Do you need to expand that business further or is it or are you – do you have enough wireline capacity there and wireless capacity there if their economy does expand given the oil reserves fund.

I mean, look I think the oil is there, there’s quite a lot of already pickup in activity it does seem serious. So we do expect a macroeconomic lift it might probably pretty small in the current year. But I think it should build and that should very much help the telecommunications demand. And we have been for a while continuing every build we do – we do in a fairly robust way we’ve been building fiber to cell sites form the beginning from a long time ago. So all our – we have very good capacity on the backhaul to the mobile network we invested a lot and it continue to invest undersea capacity and redone in routing and we’ve invested in upgrading the core of the network. So we can deliver more sophisticated services to enterprise. So I think we’re pretty well positioned, some of it will require further investment if the demand is truly there. But I think there’s benefit just from a general increase in ARPU’s particularly on the mobile side that we see is very possible. Again, I wouldn’t want to say it’s likely to happen in the short-term but I think we see that direction.

Okay Thank you.

Yes.

Thank you. And at this time I’m showing no further questions.

We have nothing else operator. So with that, we’ll sign off. And thank you everybody and talk to you in a few months.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program, you may now disconnect. Everyone have a great day.