Good afternoon, ladies and gentlemen and welcome to the ATN International Q2 2020’s Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Justin Benincasa, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good morning, everyone and thank you for joining us on today’s call to review our second quarter 2020 Results. With me here is Michael Prior, ATN’s Chief Executive Officer. During the call, I will cover the relevant financial information and Michael will provide an update on the business and outlook. And before I turn the call over to Michael for his comments, I would like to point out that the 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 reconciliations to comparable GAAP measures and for further information regarding the factors that may affect our operating results, please refer to our earnings release on our website at atni.com or to the 8-K filing provided to the SEC. I would also like to note that we are in a quiet period with respect to certain FCC related auctions and as such we will not be in a position to answer any questions related to ongoing FCC auctions. And with that, I will turn the call over to Michael.

Thank you, Justin. Extra disclaimers this quarter, always fun. So second quarter results show that ATN is fairly well positioned to weather this ongoing health crisis, but of course we are conscious of the personal and economic toll it is taking on our country and on the communities we serve. Back to quarterly performance, it was really quite good. We have seen demand for communication services remain strong, particularly and not surprisingly from home users of the high-speed internet and we are well-positioned to meet that demand. Our extensive investments in recent years have given us the capacity and reliability that is critical to support our customers and communities. This is about much more than network investment. However, our ability to succeed amidst difficult operating circumstances is due in large part to a sense of urgency and a can-do attitude on the part of our operating teams. So they adapted remarkably well and are continuing to deliver for our customers. Looking forward, we think there is more we can do to improve our operating efficiency, meet demand and win share. We are not waiting for the situation to resolve. We are moving forward in the new environment. I should note that we are well aware that things could get worse, particularly in terms of the local economies where our businesses are located. We are preparing for that likelihood and will further adjust our operations and spending as necessary. And now, let me turn to our individual operating segments starting with International Telecom. Segment revenue for the second quarter here was relatively flat year-on-year, but we reported a significant increase in EBITDA and operating income. Both trends, I think reflect some pandemic impacts. The pandemic caused some downward pressure on mobile revenues, particularly prepaid revenue and overages and roaming. Also, we…

Thank you, Michael Just to cover some of financial numbers. For the second quarter, total consolidated revenues were up slightly over last year at $109.1 million and consolidated EBITDA was $29 million of 19% over the second quarter of 2019. Consistent with the first quarter, the recovery of our US Telecom segment and increased demand for our fixed services and cost savings in the International segment were the primary contributors to the strong year-on-year EBITDA comparisons. Looking at each of the segments and starting with the international – with International Telecom revenues were up – were $80.1 million, up slightly from $79.9 million last year and EBITDA increased 17% to $28.7 million. As Michael noted, the strong EBITDA performance reflected a change in our revenue mix with increased demand for our broadband services and cost reductions across several expense categories. As we noted and released approximately $1 million of the savings were one-time in nature and unrelated to the overall operating cost reductions we saw in the quarter. International Telecom segment capital expenditures in the quarter totaled $9.4 million and $19.9 million year-to-date. We now expect the segment’s full year CapEx to be between $35 million and $40 million approximately $10 million below our original forecast due to project deferrals and delays and we will continue to monitor any potential project delays as we move through the year. In the U.S. Telecom segment revenues were $28.2 million for the quarter, up from $26.4 million a year ago and EBITDA was $7.5 million, up from $7.1 million in the second quarter of 2019. Similar to the first quarter and as Michael noted, these increases were primarily from the CAF II federal support revenue that began midway in the second quarter of 2019 and increases in carrier service revenue as part of…

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

Thanks. Good morning guys.

Good morning, Ric.

I hope my thoughts are with everybody out there, families, employees, yourselves in this COVID-19. We are also glad to hear things are doing well and you are helping the whole situation.

Thank you. We agree. Thank you.

Just one quick one, it looks like maybe the re-categorization of the financials between mobile and fixed and carrier services etcetera might have changed. Can we get those and believe me we have had a lot of earnings, some of it bit blurry-eyed? But if that is true, that it looks like some of the numbers change. Can we get the 2019 quarterly numbers restated also were re-categorized as they are now?

Yes, I think we did correct the original one on that, but I will find out where that went. I thought we file that Ric already, but let me check on that. I thought it was out there.

Okay. Yes, just because it looked like our 2Q numbers were matching up, but, yes, if you just check on that, that would be great. More importantly, Michael and I apologize I was on an earnings call it went long, but in the prepared or in the press release you talked about your concern about the economic impact that long delays in a return to tourism and travel could affect your international markets. When would you typically see that because to be blunt in 2Q, you came in quite strong, things were better than we had thought they would be. So, as you think about a potential concern on travel and tourism, what kind of seasonality or quarter, should we think that might manifest itself?

Well, in our markets, they have different high periods. So, we have the sort of more southerly latitude Caribbean markets have its more concentrated in the winter and early spring. So, mostly, first quarter, some a little second and a little fourth. And then in a place like Bermuda, it’s actually between second and third quarters, is most of it and so some of that would have been already. And the different economies are different – have different impacts from tourism. They – all the island economies, as I said, had some real impacts from tourism, but it’s more significant in a place like the U.S. Virgin Islands [Technical Difficulty] it doesn’t have the same financial service and other side of the economy to the extent [indiscernible] came in. So, what would – what has happened so far though is businesses do have some short [indiscernible] and some ability to adapt and wait and in some cases, particularly in the U.S. markets, including U.S. territories the federal government of course help bridge that. So just the concern is that if it extends and if they are forward – and if they are looking forward to a prolonged period where they won’t see the traffic, then they may make further adjustments down to their business, reducing jobs, reducing their own purchasing and economic activity and so there can be a ripple effect. And we did see, as I noted in my comments, we did see aspects of this in the financial crisis and the recession that followed it, it took a period of time. It didn’t take things to zero by any means, but it had an impact.

Okay. One other quick one, Justin, you mentioned a one-time $1 million benefit, what was that related to?

There, I would call them like either one-time credits we got – we got power credit for example. It was one of them. And then so and so somewhere they – we resolved the few disputes that we had outstanding. So they are just not going to be recurring. So I want to point them out.

Okay.

And Ric just to follow-up on the – we filed an 8-K/A on June 8 with the – with correcting those 2019 quarters.

Okay, alright. We will double check all those inputs. And then for quite a while obviously you guys have been making some investment into new businesses, always with the illusion that at some point you will be able to share with us some more thoughts, COVID-19 maybe has changed some of the timelines, but how are those businesses doing? What was the burn rate in the quarter? And when do you think we will be able to get some more insight into what the opportunity set might be for those new businesses?

Yes, I will cover the burn – the burn rate was the what – it was $1.8 million on those companies, which is just is slightly up, call it a couple of 100,000 over a year ago. And now I will let Michael talk about the current status.

Yes, I think in terms of the ones that run through the top part of our income statement, I think you saw – you can see in the segment information that our managed services investment is picking up steam and doing well. And I think it has definitely more room to run, quite a bit more room to run, so – and it was timely really for the pandemic and the demands of our commercial and government customers. So that’s positive. On the other side of the sort of consolidated piece of those kinds of businesses you have the in-building business, the Geoverse. It’s still – it’s still early for what we are trying to do, which is not DAS, it’s a true active neutral host environments of next generation. So, as a whole, it’s still early. We are getting momentum. We are getting places to build out that was slowed a bit by the pandemic. Sales activity was slowed and owners of real estate have obviously paused, particularly in some of the sectors hardest hit by hospitality and commercial. But we are still very invested in that and believe the opportunity is significant. And we have seen things too, like the commercial customers coming to us for solutions using a connectivity – our connectivity platform as a way to do tracking and things like that to enable safer usage of facility. So, we are very positive there, but early. And then on the balance sheet side of it, two-thirds of that number is really represented by our investment in Australian Tower Co. and neutral host provider and that initially got off to a little bit of a slow start, but it is also picking up very positive momentum lately, winning build suits and pursuing larger opportunities. So, so we feel pretty good about it, but it’s – that’s I guess that’s probably all in there.

Thanks for the color. I hope you guys stay well.

Alright, thanks. And you too.

And your next question comes from the line of Greg Burns with Sidoti & Company. Please go ahead, sir.

Good morning. So, a couple of follow-ups pertaining to Geoverse and just hoping to better understand that business and the opportunity there. So could you just talk about why an enterprise or a building operator or maybe a construction company might want to deploy this type of service as opposed to maybe just using Wi-Fi or some other connectivity like, what is the benefit of a Geoverse private LTE type of service over other solutions?

Sure. With the deployment will – is utilizing some of the technologies that are coming around 5G and so that means you can deliver many more connected devices said one time, lower latency when compared to Wi-Fi. The other thing when you compared to Wi-Fi is it, it’s a much more secure, it’s a carrier-grade, carrier-class protocol which is inherently much more secure than the Wi-Fi environment. So, that’s and then the last part is it also integrates with connectivity to the macrocellular environment, right so in-building coverage. So it’s really a combination of all of that and being able to put out a much more robust and secure platform to take advantage of what we are increasingly seeing is people really building solutions for that and we think those solutions are going to run over that type of platform increasingly rather than Wi-Fi.

Okay. And then could you just help me understand how Geoverse that deploys the service was the model there. Are they building out infrastructure or is it a site-by-site case and from a customer’s perspective, how does the economic model work? Is there a capital – upfront capital expenditure and the recurring service, is all bundled? Could you just maybe talk about that a little bit.

Sure, I can talk about a little bit, but let me caveat it to say that in terms of, particularly the last part in terms of the economic models, I would say it’s early innings. And I think that will evolve. So I don’t think we can speak with certainty as that the way it will work. What we feel strong about is there is a value proposition, and we understand the building owners and tenants understand that value proposition and increasingly are looking at it. So, that’s sort of my answer on the pricing model. The second – the first part, we are doing two things, really. The one of the key things we provide, which we call the GeoCore is a network platform that makes all the connectivity work right. And that we have some cases where we are partnering with folks who have the ability and want to deploy the fixed infrastructure on-site and they – but they want to connect it and have our platform basically operate, have us operate the network platform and connected to other providers and devices and so on. So that’s we call that network as a service, and I think there is, there is a lot of interest in that and there is a lot of discussion about that, but we are also doing and have done build-outs where we – we are happy to build it out ourselves soup to nuts a turnkey solution for our customer, basically a completely connected environment where we build out the wireless nodes and connect them to that platform. So both we are open to both and for some partners, they want to own that. They may have a lower cost of capital and they want to invest in that and for others, they would just assume we do all of that.

Okay. And I guess it sounded like the pandemic is maybe slow. It’s the ability to sell some of these newer solutions, but when – is there a point where maybe more investment will be required or how should we think about the investment requirements of early-stage start-up business like this that maybe starts to gain some traction. Now at what point might you need to commit more capital to this business?

Success I think success drives that right. There is not that there is no preparation capital and we have already invested significant capital and developing the capabilities of the product and technical capabilities developing strategic relationships and customer relationships and things like that, but success is really going to be the main driver. So contracts to connect to either on the NASH front or builds and of course the build side if we are doing more complete turnkey, complete network delivery that will require more capital, but we think that is not, we are not concerned about that. We would, that we think that’d be a nice situation because we think we have plenty of access to lower cost of capital to do that. So I think just follow the news, I think the industry generally, not just us bigger the sort of larger momentum and builds I think are most likely in 2021 and beyond. It could pick up a little steam in 2020. But we are still in somewhat of a restricted environment and we are still early on some of the technology adoption.

Great, thank you.

Yes.

And your next question comes from the line of Allen Klee with National SEC Corp. Please go ahead.

Yes, hi. My apologies because I joined late if this was asked, but Justin if you could clarify two little financial things on the cash flow statement. What was the purchase of intangible assets and strategic investments under cash flow from investments? And then well so you were repurchasing some of your non-controlling interest of the tune of close to $4 million. Could you just explain those two items? Thank you.

The latter one is actually subsidiaries. Yes our subs buying back some of their own stock right for minorities.

Yes. And the first one, Allen unfortunately I can’t tell you we are subject to confidentiality restrictions on that and we will hope to share further information next quarter.

Okay, thank you.

[Operator Instruction] And your next question is from the line of Hamed Khorsand with BWS Financial. Please go ahead.

Hi. So first question I had was related to your comments around the International segment. Are you seeing actual disconnects related to the hospitality right now or is this just a warning of what could happen if this is a prolonged kind of tourist depression?

Both, I think really, we did see some, I mean most of the, we would say the strata’s of the condominium complex hospitality there disconnect. Some of those are not as higher profit margin as our residential customers, but we did in the quarter.

And do you have any comment and to the situation that’s going on in Guyana and does that affect any of your business right now? And the political realm what’s gone up?

Yes, it feels like more craziness politically and a lot of places, but it’s just, it’s an unfortunate situation there. There’s been, as – I think we talked about it last quarter, but there’s been contested issues around the election and the U.S., and the UK government and others have questioned it and spoken out quite forcefully about it. And the government there has its own position in response to it. So it’s definitely, I would say it’s inhibited some of the really bad in the pandemic and to some extent that the severe oil pipe track it changed in the first quarter, but I would put that is the smallest of factors has definitely inhibited the sort of more rapid ramp-up of investment and economic activity in Guyana we expected. And I will add, I still expect that I think it will come, it’s just hard to look at the math and not see it coming.

Have you changing your business strategy in Guyana of last quarter and I think the last couple of quarters actually, you guys have been talking about trying to re-strategize the go-to-market strategy, as far as getting new subscribers and grow in the mobile market there?

We have, we are working on that. We are not performing the way we want to in that piece of business. In other areas, we have done quite well. But towards that thing, I think we have made some moves that will be helpful. We expect to be helpful, time will tell and then there is more we are working on. So but I hate to, to promise too much there. My view is let’s see it, let’s see actual objectives gains. So we are – that’s hopefully to come.

And lastly, given the delays in construction, do you think you will have any towers in the U.S. for the FirstNet network up anytime in the second half of the year?

I think we are going to. We will have some of it in the later in the year, yes.

Okay.

So we definitely will. So we are probably a couple of quarters behind where we thought we would be.

You would generate some sort of revenue from that beyond just to construction, correct?

We would, we would, but in the short – in the meantime we collect wholesale, roaming revenues on it. So it doesn’t necessarily lead to additional revenue once we flip the tower over.

Okay, understood. Thank you.

And we have a follow-up question from the line of Ric Prentiss with Raymond James. Please go ahead.

Thanks and my first call ended early so far today, but wanted to wonder what’s the M&A environment out there looking like, you guys obviously have a large cash balance. COVID-19 kind of whacked us all in the face, But have investors, have sellers changed their opinion or is there opportunities out there, what’s the M&A world looking like?

I think it’s early in terms of sellers really changing, except in some businesses that are in real distress, and some of those are not attractive to us either. But the other thing that’s still happening, I still see a fair amount of low cost of capital for InfraCo, infra fund type money active in that in the market that we like, and the types of business models we like. So we are increasingly talking to some of those folks and trying to figure out how we work together because I think there is opportunity for us to be a real value-added operating and investment partner there. So I think that will take a little time, but that’s really where the environment is. It’s not been- there has not been some significant reset of values down that I have seen, and in some cases may be in the opposite direction because of a flight to safety.

Okay. And also FCC has an upcoming auction in the Rural Digital Opportunity Fund. We won’t talk spectrum since you can’t talk that side of it, but what are your thoughts about that with the RDOF or RuDOF how you want to pronounce it, opportunities might be?

Yes, I don’t think, Ric, I don’t think we can talk about that either, other than to say that – other than say we are registered.

And what’s the timeline? Is that still October for the auctions to started, probably can talk to that though?

I believe so. That’s the last I heard was, things have been moving on a couple of fronts, but that’s- if my latest understanding is correct then that’s right.

Okay, alright. Good, thanks guys.

Yes.

And I am showing no further questions at this time, I would like to turn the call back to management for closing remarks.

Alright. Thank you, operator and thanks everybody. Appreciated the well-wishes and we extend them to all of you. Thanks.

Take care, everyone.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day. You may all disconnect.