# ATN International, Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [ATN International, Inc.](/companies/atni.md) (CIK 879585)
- Form: 10-Q
- Filed: 2024-05-10
- Accepted by EDGAR: May 10, 2024, 15:31 ET
- Period: 2024-03-31
- Accession: 0001558370-24-007776
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/879585/000155837024007776/atni-20240331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/879585/000155837024007776/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $172.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $61.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $4.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $11.5m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $1.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$7.9m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.50 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.50 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 15,437,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $23.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $36.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $3.7m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $121.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $56.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $289.7m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $1.78bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $273.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $1.07bn | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $520.8m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $20.5m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-03-31 | $530.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 74,397 characters.

### Overview

We are a leading provider of digital infrastructure and communications services with a focus on rural and remote markets in the United States, and internationally, including Bermuda and the Caribbean region.

We have developed significant operational expertise and resources that we use to augment our capabilities in our local markets. With this support, our operating subsidiaries are able to improve their quality of service with greater economies of scale and expertise than would typically be available in the size markets we operate in. We provide management, technical, financial, regulatory, and marketing services to our operating subsidiaries and typically receive a management fee calculated as a percentage of their revenues, which is eliminated in consolidation. We also actively evaluate investment opportunities and other strategic transactions, both domestic and international, and generally look for those that we believe fit our profile of telecommunications businesses and have the potential to complement our “First-to-Fiber” and “Glass & Steel™” approach in markets while keeping a focus on generating excess operating cash flows over extended periods of time. We use the cash generated from our operations to maintain an appropriate ratio of debt and cash on hand and to fund growth and to fund capital expenditures, to return cash to our stockholders through dividends or stock repurchases, and make strategic investments or acquisitions.

For further information about our financial segments and geographical information about our operating revenues and assets, see Notes 1 and 12 to the Consolidated Financial Statements included in this Report.

As of March 31, 2024, we offered the following types of services to our customers:

- ***Mobile Telecommunications Services***. We offer mobile communications services over our wireless networks and related equipment (such as handsets) to both business and consumer customers.
- ***Fixed Telecommunications Services***. We provide fixed data and voice telecommunications services to business and consumer customers. These services include consumer broadband and high-speed data solutions for businesses. For some markets, fixed services also include video services and revenue derived from support under certain government programs.
- ***Carrier Telecommunication Services.*** We deliver services to other telecommunications providers including the leasing of critical network infrastructure such as tower and transport facilities, wholesale roaming and long distance voice services, site maintenance and international long-distance services.
- ***Managed Services***. We provide information technology services such as network, application, infrastructure and hosting services to both our business and consumer customers to complement our fixed services in our existing markets.

Through March 31, 2024, we identified two operating segments to manage and review our operations and to facilitate investor presentations of our results. These operating segments are as follows:

- ***International Telecom.*** In our international markets, we offer fixed services, mobility services, carrier services and managed services to customers in Bermuda, the Cayman Islands, Guyana and the US Virgin Islands.
- ***US Telecom.*** In the United States, we offer fixed services, carrier services, and managed services to business customers and consumers in Alaska and the western United States. As of March 31, 2024 we provided mobility services to retail customers in the western United States.

The following chart summarizes the operating activities of our principal subsidiaries, the segments in which we reported our revenue and the markets we served as of March 31, 2024:

|  |  |  |
| --- | --- | --- |
| ​ ​ ​ ​ ​ | ​ | ​ ​ ​ ​ ​ |
| **International Telecom** | **​** | **US Telecom** |
| **Services** **Markets** **​** **Tradenames** |  | **Services** **Markets** **​** **Tradenames** |
| Mobility Services ​ Bermuda, Guyana, US Virgin Islands ​ One, GTT, Viya | ​ | Mobility Services United States (rural markets) ​ Choice, Choice NTUA Wireless |
| Fixed Services ​ Bermuda, Cayman Islands, Guyana, US Virgin Islands ​ One, Logic, GTT, Viya | ​ | Fixed Services ​ United States ​ Alaska Communications, Commnet, Choice, Choice NTUA Wireless, Sacred Wind Communications, Ethos, Deploycom |
| Carrier Services ​ Bermuda, Guyana, US Virgin Islands ​ One, Essextel, GTT, Viya | ​ | Carrier Services ​ United States ​ Alaska Communications, Commnet, Sacred Wind Communications |
| Managed Services ​ Bermuda, Cayman Islands, US Virgin Islands, Guyana ​ Fireminds, One, Logic, GTT, Viya, Brava | ​ | Managed Services United States ​ Alaska Communications, Choice |

### Carrier Managed Services

In July 2019, we entered into a Network Build and Maintenance Agreement with AT&T Mobility, LLC (“AT&T”) that we subsequently amended through March 31, 2024 (the “FirstNet Agreement”). In connection with the FirstNet Agreement, we are building a portion of AT&T’s network for the First Responder Network Authority (“FirstNet”) in or near our current operating areas in the western United States. Pursuant to the FirstNet Agreement and subject to certain limitations contained therein, all cell sites must be completed and accepted within a specified period of time. Since the inception of the project through March 31, 2024, we have recorded $73.2 million in construction revenue and expect to record approximately $9.0 million in additional construction revenue and related costs as sites are completed. We expect to substantially complete the build by the end of 2024 with the remainder to be completed in early 2025. Revenues from construction are expected to have minimal impact on operating income.

Following acceptance of a cell site, AT&T will own the cell site and we will assign to AT&T any third-party tower lease applicable to such cell site. If the cell site is located on a communications tower we own, AT&T will pay us pursuant to a separate lease agreement for an initial term of eight years. In addition to building the network, we will provide ongoing equipment and site maintenance and high-capacity transport to and from these cell sites for an initial term ending in 2031.

On May 10, 2023, we entered into a Carrier Managed Services Master Agreement (the “Agreement”) with Cellco Partnership d/b/a Verizon Wireless (“Verizon”), pursuant to which we will provide a variety of network, infrastructure and technical services that will help deliver next generation wireless services to Verizon’s subscribers in our current operating area in the southwestern United States.

Pursuant to the Agreement and subject to certain limitations contained therein, we will upgrade our wireless service in specific areas and provide services to Verizon for an initial term ending in 2030.

Following acceptance of a cell site, we will continue to own the cell site. In addition to building the network, we will provide ongoing equipment and site maintenance and high-capacity transport to and from these cell sites for an initial term ending in 2030.

With respect to each of our FirstNet and Verizon agreements, our carrier partners will continue to use our wholesale domestic mobility network for roaming services at a fixed rate per site during the construction period until such time as the cell site is completed. Thereafter, revenue from the maintenance, leasing and transport services provided is expected to generally offset revenue from wholesale mobility roaming services.

### Universal Service Fund and Other Domestic Funding Programs

We recognize revenue from several government funded programs including the USF, a subsidy program managed by the Federal Communications Commission (“FCC”), and the Alaska Universal Service Fund (“AUSF”), a similar program managed by the Regulatory Commission of Alaska (the “RCA”). USF funds are disbursed to telecommunication providers through four programs: the High Cost Program; the Low Income Program (“Lifeline Program”); the Schools and Libraries Program (“E-Rate Program”); and the Rural Health Care Support Program. Our International Telecom segment receives $5.5 million of legacy frozen high cost support funding in the US Virgin Islands. This funding expires on December 31, 2025.

We also recognize revenue from the Connect America Fund Phase II program (“CAF II”) which offers subsidies to carriers to expand broadband coverage in designated areas. Under CAF II, our US Telecom segment will receive an aggregate of $27.7 million annually through December 2025 and an aggregate of $8.0 million annually from January 2026 through July 2028.

We also recognize revenue from the FCC’s Affordable Connectivity Program (“ACP”) and the Emergency Connectivity Fund (“ECF”). The ACP provides eligible low-income consumers with a monthly subsidy for broadband connectivity and the ECF provides schools and libraries with subsidies for broadband connectivity. Funding under the ACP and ECF programs is set to expire in the second quarter of 2024.

We were awarded approximately $22.7 million over 10 years to provide broadband and voice coverage to over 10,000 households in the United States (not including Alaska) under the 2020 Rural Digital Opportunity Fund Phase I Auction (“RDOF”). During the three months ended March 31, 2024 and 2023, we recorded $0.1 million and $0.6 million of revenue from the RDOF program, respectively.

All of the programs are subject to certain operational and reporting compliance requirements. We believe we are in compliance with these requirements as of March 31, 2024.

### Construction Grants

We have also been awarded construction grants to build network connectivity for eligible communities. The funding of these grants, used to reimburse us for our construction costs, is generally distributed after we incur reimbursable costs. Completion deadlines begin in 2024 and once these projects are constructed, we are obligated to provide service to the participants. We expect to meet all requirements associated with these grants. As of March 31, 2024, we were awarded $100.1 million of construction grants.

During the three months ended March 31, 2024, we disbursed capital expenditures of $3.4 million under these programs and received reimbursement of $1.9 million. These cash flows are classified as investing activities in our statement of cash flows.

In addition, we partner with tribal governments to obtain grants under various government grant programs including, but not limited to, the Tribal Broadband Connectivity Program (“TBCP”) and the Rural Development Broadband ReConnect Program (“ReConnect”). These programs are administered by United States government agencies to deploy broadband connectivity in certain underserved areas. We were identified as a sub recipient of grants under these programs totaling $192.6 million as of March 31, 2024. Through March 31, 2024, we have received $10.4 million of funding under these programs and spent $10.1 million on construction obligations. These amounts are recorded as operating cash flows in the company’s statement of cash flows.

### Replace and Remove Program

On July 15, 2022, we were notified that we were an approved participant in the Federal Communication Commission’s Secure and Trusted Communications Networks Reimbursement Program (the “Replace and Remove Program”), designed to reimburse providers of communications services for reasonable costs incurred in the required removal, replacement, and disposal of covered communications equipment or services, that have been deemed to pose a national security risk, from their networks. Pursuant to the Replace and Remove Program, we were allocated up to approximately $207 million in reimbursement amounts to cover documented and approved costs to remove and securely destroy all prohibited communications equipment and services in our U.S. networks and replace such equipment. The Replace and Remove Program requires that we complete the project no later than one year from submitting our initial reimbursement request, or by July 2024. In April 2024, the FCC granted our request to extend the program’s completion deadline to the first quarter of 2025. At this time, we anticipate that we will be able to meet the deadlines and requirements of the program.

We have incurred total expenditures of $80.7 million related to this project, of which $16.3 million were incurred in 2024. Of these total expenditures, $61.0 million were classified as capital.

At March 31, 2024, $33.4 million of capital expenditures were accrued and unpaid. We expect to be reimbursed for all amounts spent within the next twelve months. During the three months ended March 31, 2024 we have received $14.4 million of reimbursement under the program, of which $5.8 million was classified as operating cash inflows and $8.6 million was classified as investing cash inflows in our statement of cash flows.

### Selected Segment Financial Information

The following represents selected segment information for the three months ended March 31, 2024 and 2023 (in thousands):

*For the Three Months Ended March 31, 2024*

| ​ ​ ​ ​ Revenue Communication Services | ​ ​ ​ ​ ​ | ​ ​ ​ ​ International Telecom ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ US Telecom ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Corporate and Other (1) ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Mobility - Business | ​ | $4,808 | ​ | $74 | ​ | $— | ​ | $4,882 |
| Mobility - Consumer | ​ | ​ 21,229 | ​ | ​ 764 | ​ | ​ — | ​ | ​ 21,993 |
| Total Mobility | ​ | ​ 26,037 | ​ | ​ 838 | ​ | ​ — | ​ | ​ 26,875 |
| Fixed - Business | ​ | ​ 18,532 | ​ | ​ 34,965 | ​ | ​ — | ​ | ​ 53,497 |
| Fixed - Consumer | ​ | ​ 42,789 | ​ | ​ 22,919 | ​ | ​ — | ​ | ​ 65,708 |
| Total Fixed | ​ | 61,321 | ​ | 57,884 | ​ | — | ​ | 119,205 |
| Carrier Services | ​ | ​ 3,574 | ​ | ​ 30,052 | ​ | ​ — | ​ | ​ 33,626 |
| Other | ​ | 818 | ​ | 744 | ​ | — | ​ | 1,562 |
| Total Communication Services Revenue | ​ | ​ 91,750 | ​ | ​ 89,518 | ​ | ​ — | ​ | ​ 181,268 |
| Construction | ​ | ​ — | ​ | ​ 1,586 | ​ | ​ — | ​ | ​ 1,586 |
| Other | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Managed Services | ​ | ​ 1,309 | ​ | ​ 2,631 | ​ | ​ — | ​ | ​ 3,940 |
| Total Other Revenue | ​ | ​ 1,309 | ​ | ​ 2,631 | ​ | ​ — | ​ | ​ 3,940 |
| Total Revenue | ​ | ​ 93,059 | ​ | ​ 93,735 | ​ | ​ — | ​ | ​ 186,794 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Operating income (loss) | ​ | 11,685 | ​ | 597 | ​ | (7,708) | ​ | 4,574 |

*For the Three Months Ended March 31, 2023*

| ​ ​ ​ ​ Revenue Communication Services | ​ ​ ​ ​ ​ | ​ ​ ​ ​ International Telecom ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ US Telecom ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Corporate and Other (1) ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Mobility - Business | ​ | $3,575 | ​ | $172 | ​ | $— | ​ | $3,747 |
| Mobility - Consumer | ​ | ​ 22,532 | ​ | ​ 987 | ​ | ​ — | ​ | ​ 23,519 |
| Total Mobility | ​ | ​ 26,107 | ​ | ​ 1,159 | ​ | ​ — | ​ | ​ 27,266 |
| Fixed - Business | ​ | ​ 17,113 | ​ | ​ 36,320 | ​ | ​ — | ​ | ​ 53,433 |
| Fixed - Consumer | ​ | ​ 41,778 | ​ | ​ 22,582 | ​ | ​ — | ​ | ​ 64,360 |
| Total Fixed | ​ | 58,891 | ​ | 58,902 | ​ | — | ​ | 117,793 |
| Carrier Services | ​ | ​ 3,690 | ​ | ​ 32,084 | ​ | ​ — | ​ | ​ 35,774 |
| Other | ​ | 400 | ​ | 75 | ​ | — | ​ | 475 |
| Total Communication Services Revenue | ​ | ​ 89,088 | ​ | ​ 92,220 | ​ | ​ — | ​ | ​ 181,308 |
| Construction | ​ | ​ — | ​ | ​ 590 | ​ | ​ — | ​ | ​ 590 |
| Other | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Managed Services | ​ | ​ 1,320 | ​ | ​ 2,556 | ​ | ​ — | ​ | ​ 3,876 |
| Total Other Revenue | ​ | ​ 1,320 | ​ | ​ 2,556 | ​ | ​ — | ​ | ​ 3,876 |
| Total Revenue | ​ | ​ 90,408 | ​ | ​ 95,366 | ​ | ​ — | ​ | ​ 185,774 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Operating income (loss) | ​ | 13,825 | ​ | (4,342) | ​ | (8,847) | ​ | 636 |

(1) Reconciling items refer to corporate overhead costs and consolidating adjustments.

A comparison of our segment results for the three months ended March 31, 2024 and 2023 is as follows:

*International Telecom.* Revenues within our International Telecom segment increased $2.7 million, or 3.0%, to $93.1 million from $90.4 million for the three months ended March 31, 2024 and 2023, respectively, as a result of network upgrades and expansions as well as improved customer care and marketing strategies which led to an increase in mobile and fixed subscribers including an increase in the number of homes passed by high-speed data solutions which allowed us to migrate legacy copper customers to more durable fiber services.

Operating expenses within our International Telecom segment increased by $4.8 million, or 6.3%, to $81.4 million from $76.6 million for the three months ended March 31, 2024 and 2023, respectively. The increase was primarily to support this segment’s revenue growth offset by the impact of certain cost reduction programs that were implemented in previous periods.

As a result, our International Telecom segment’s operating income decreased $2.1 million, or 15.2%, to $11.7 million from $13.8 million for the three months ended March 31, 2024 and 2023, respectively.

*US Telecom.* Revenue within our US Telecom segment decreased by $1.7 million, or 1.8%, to $93.7 million from $95.4 million for the three months ended March 31, 2024 and 2023, respectively, primarily as a result of delays in the delivery of certain carrier service projects partially offset by an increase in construction revenue related to the FirstNet Transaction.

Operating expenses within our US Telecom segment decreased $6.6 million, or 6.6%, to $93.1 million from $99.7 million for the three months ended March 31, 2024 and 2023, respectively, as a result of certain cost reduction programs that were implemented in previous periods partially offset by an increase in transport costs and costs associated with project-related revenues.

As a result of the above, our US Telecom segment’s operating income (loss) increased by $4.9 million to income of $0.6 million from a loss of $4.3 million for the three months ended March 31, 2024 and 2023, respectively.

The following represents a year over year discussion and analysis of our results of operations for the three months ended March 31, 2024 and 2023 (in thousands):

| ​ ​ ​ ​ ​ REVENUE: | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Three Months Ended March 31, 2024 ​ | ​ ​ ​ | ​ ​ ​ ​ 2023 ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Amount of Increase (Decrease) ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Percent Increase (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Communication services | ​ | $181,268 | ​ | $181,308 | ​ | $(40) |  | (0.0)% |
| Construction | ​ | ​ 1,586 | ​ | ​ 590 | ​ | ​ 996 |  | 168.8 ​ |
| Other | ​ | 3,940 | ​ | 3,876 | ​ | 64 |  | 1.7 ​ |
| Total revenue | ​ | 186,794 | ​ | 185,774 | ​ | 1,020 |  | 0.5 ​ |
| OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated): | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Cost of communications services and other | ​ | 80,390 | ​ | 79,040 | ​ | 1,350 |  | 1.7 ​ |
| Cost of construction revenue | ​ | ​ 1,570 | ​ | ​ 588 | ​ | ​ 982 |  | 167.0 ​ |
| Selling, general and administrative | ​ | 61,315 | ​ | 61,348 | ​ | (33) |  | (0.1) ​ |
| Stock-based compensation | ​ | ​ 1,909 | ​ | ​ 1,778 | ​ | ​ 131 | ​ | 7.4 ​ |
| Transaction-related charges | ​ | ​ 19 | ​ | 13 | ​ | 6 |  | 46.2 ​ |
| Restructuring charges | ​ | 1,190 | ​ | 2,887 | ​ | (1,697) |  | (58.8) ​ |
| Depreciation and amortization | ​ | 34,340 | ​ | 36,404 | ​ | (2,064) |  | (5.7) ​ |
| Amortization of intangibles from acquisitions | ​ | ​ 1,980 | ​ | ​ 3,247 | ​ | ​ (1,267) |  | (39.0) ​ |
| Gain on disposition of long-lived assets | ​ | ​ (493) | ​ | ​ (167) | ​ | ​ (326) |  | 195.2 ​ |
| Total operating expenses | ​ | 182,220 | ​ | 185,138 | ​ | (2,918) |  | (1.6) ​ |
| Income from operations | ​ | 4,574 | ​ | 636 | ​ | 3,938 |  | 619.2 ​ |
| **OTHER INCOME (EXPENSE):** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest income | ​ | 445 | ​ | 182 | ​ | 263 |  | 144.5 ​ |
| Interest expense | ​ | ​ (11,520) | ​ | ​ (8,807) | ​ | ​ (2,713) |  | 30.8 ​ |
| Other income | ​ | 172 | ​ | 194 | ​ | (22) |  | (11.3) ​ |
| Other income (expense), net | ​ | (10,903) | ​ | (8,431) | ​ | (2,472) |  | 29.3 ​ |
| **LOSS BEFORE INCOME TAXES** | ​ | (6,329) | ​ | (7,795) | ​ | 1,466 |  | (18.8) ​ |
| Income tax expense (benefit) | ​ | 1,619 | ​ | (740) | ​ | 2,359 |  | (318.8) ​ |
| **NET LOSS** | ​ | (7,948) | ​ | (7,055) | ​ | (893) |  | 12.7 ​ |
| Net loss attributable to noncontrolling interests, net of tax: | ​ | 1,633 | ​ | 1,170 | ​ | 463 |  | 39.6 ​ |
| **NET LOSS ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS** | ​ | $(6,315) | ​ | $(5,885) | ​ | $(430) |  | 7.3% |

### Communications Services Revenue

**Mobility Revenue.** Our Mobility revenue consists of retail revenue generated within both our International Telecom and US Telecom segments by providing retail mobile voice and data services over our wireless networks as well as through the sale and repair services of related equipment, such as handsets and other accessories, to our retail subscribers.

Mobility revenue decreased by $0.4 million, or 1.5%, to $26.9 million for the three months ended March 31, 2024 from $27.3 million for the three months ended March 31, 2023. Mobility revenue from consumer customers decreased by $1.5 million partially offset by an increase in Mobility revenue from business customers of $1.1 million.

The decrease in Mobility revenue, within our segments, consisted of the following:

- *International Telecom*. Within our International Telecom segment, Mobility revenue decreased by $0.1 million, or 0.4%, to $26.0 million for the three months ended March 31, 2024 from $26.1 million for the three months ended March 31, 2023. This decrease was primarily related to a decrease in the demand for voice services partially offset by an increase in the demand for data services. Mobility revenue from consumer customers decreased $1.3 million partially offset by an increase in Mobility revenue from business customers of $1.2 million.
- *US Telecom.* Mobility revenue within our US Telecom segment decreased by $0.4 million, or 33.3%, to $0.8 million from $1.2 million for the three months ended March 31, 2024 and 2023, respectively. Substantially all of the decrease related to a decrease in revenue from consumers within our retail operations due to a reduction in subscribers as we continue to put more emphasis on other revenue sources within this segment.

Mobility revenue within our International Telecom segment may increase as a result of continued network upgrades and our marketing efforts to increase the number of our subscribers. However, increased competition and regulatory changes within our international markets may limit that revenue growth. We expect that Mobility revenue within our US Telecom segment will decrease over time as we put more emphasis on other revenue sources within that segment.

**Fixed Revenue.** Fixed revenue is primarily generated by broadband, voice, and video service revenues provided to retail and business customers over our wireline networks. Fixed revenue within our US Telecom segment also includes awards from the Connect America Fund Phase II and Emergency Connectivity Fund programs in the western United States and Alaska, as well as revenue from the Alaska Universal Service Fund. Within our International Telecom segment, Fixed revenue also includes funding under the FCC’s High Cost Program in the US Virgin Islands.

Fixed revenue increased by $1.4 million, or 1.2%, to $119.2 million from $117.8 million for the three months ended March 31, 2024 and 2023, respectively. Of this increase, $0.1 million and $1.3 million relate to increases in revenue from business and consumer customers, respectively. The increase in Fixed revenue, within our segments, consisted of the following:

- *International Telecom*. Within our International Telecom segment, Fixed revenue increased by $2.4 million, or 4.1%, to $61.3 million from $58.9 million for the three months ended March 31, 2024 and 2023, respectively. Of this increase, $1.0 million and $1.4 million relate to increases in revenue from consumer and business customers, respectively. This increase was a result of network upgrades and expansions which led to an increase in subscribers and the number of homes passed by high-speed data solutions which allowed us to migrate legacy copper customers to more durable fiber services. ​
- *US Telecom*. Fixed revenue within our US Telecom segment decreased by $1.0 million, or 1.7%, to $57.9 million from $58.9 million for the three months ended March 31, 2024 and 2023, respectively. Revenue

from business customers decreased by $1.4 million as a result of a decrease in revenue generated from government programs. This decrease in revenue from business customers was partially offset by an increase in revenue from consumer customers of $0.3 million.

Fixed revenue within our International Telecom segment may continue to increase as we continue to add subscribers to our fiber and fiber-fed data solutions deployed to expand and enhance our network reach. We expect the popularity of video and audio streaming, the demand for cloud services and smart home, business and city solutions to increase the demand for broadband and other data services from consumers, businesses and governments. However, such increases may be offset by a decrease in demand for our services due to subscribers using alternative methods to receive video and audio content.

Within our US Telecom segment, we expect Fixed revenue to decrease in the short term as the COVID-19 related Emergency Connectivity Fund program was discontinued beyond the first quarter of 2024. Over time, we expect these decreases to be partially offset by increases in other business revenue in Alaska and our western United States operations, as we further deploy fiber and fiber-fed broadband access to both consumers and businesses.

**Carrier Services Revenue.** Carrier Services revenue is generated by both our International Telecom and US Telecom segments. Within our International Telecom segment, Carrier Services revenue includes international long-distance services, roaming revenues generated by other carriers’ customers roaming into our retail markets, transport services and access services provided to other telecommunications carriers. Within our US Telecom segment, Carrier Services revenue includes services provided under the FirstNet Agreement and Verizon Carrier Managed Services Agreement, wholesale roaming revenues, the provision of network switching services, tower lease revenue and other services provided to other carriers.

Carrier Services revenue decreased by $2.2 million, or 6.1%, to $33.6 million from $35.8 million for the three months ended March 31, 2024 and 2023, respectively. The decrease, within our segments, consisted of the following:

- *International Telecom.* Within our International Telecom segment, Carrier Services revenue decreased by $0.1 million, or 2.7%, to $3.6 million, from $3.7 million for the three months ended March 31, 2024 and 2023, respectively, primarily as a result of a decrease in roaming revenues in some of our international markets.
- *US Telecom*. Carrier Services revenue within our US Telecom segment decreased by $2.0 million, or 6.2%, to $30.1 million from $32.1 million, for the three months ended March 31, 2024 and 2023, respectively, as a result of delays in the delivery of certain carrier service projects.

Within our International Telecom segment, Carrier Services revenue may continue to increase if international travel continues to increase. Such increases, however, may be partially offset by a decrease within our international long-distance business in Guyana as consumers seek to use alternative technology services to place long-distance calls.

Within our US Telecom segment, Carrier Services revenue may increase as a result of recent carrier service management contracts.

**Other Communications Services Revenue.** Other Communications Services revenue includes miscellaneous services that the operations within our International Telecom segment provide to retail subscribers and project-related revenue generated within our US Telecom segment. Other Communications Services revenue increased by $1.1 million to $1.6 million from $0.5 million for the three months ended March 31, 2024 and 2023, respectively, primarily as a result of $0.2 million and $0.7 million of non-recurring project-related revenue being recognized within our International Telecom and US Telecom segments, respectively, during the three months ended March 31, 2024.

We expect that other communications services revenue will decline to previously reported levels as the project-related fiber deployment engineering services revenue, reported during the quarter ended March 31, 2024, is not expected to continue subsequent to the completion of that project.

### Construction Revenue

Construction revenue represents revenue generated within our US Telecom segment for the construction of network cell sites related to the FirstNet Agreement. During the three months ended March 31, 2024 and 2023, Construction revenue increased to $1.6 million from $0.6 million, respectively, as a result of an increase in the number of sites completed during 2024 as compared to 2023. We expect to substantially complete the build by the end of 2024 with the remainder to be completed in early 2025.

### Other Revenue

**Managed Services Revenue.** Managed Services revenue is generated within both our International and US Telecom segments and includes network, application, infrastructure, and hosting services.

Managed Services revenue remained consistent at $3.9 million for the three months ended March 31, 2024 and 2023. Managed Services revenue within both our International Telecom and US Telecom segments remained consistent at $1.3 million and $2.6 million, respectively.

Managed Services revenue may increase in both our US and International Telecom segments as a result of our continued effort to sell certain Managed Services solutions to both our consumer and business customers in all of our markets.

### Operating Expenses

**Cost of communication services and other.** Cost of communication services and other are charges that we incur for voice and data transport circuits (in particular, the circuits between our Mobility sites and our switches), internet capacity, video programming costs, access fees we pay to terminate our calls, telecommunication spectrum fees and direct costs associated within our managed services businesses. These costs also include expenses associated with developing, operating, upgrading and supporting our telecommunications networks, including the salaries and benefits paid to employees directly involved in the development and operation of those businesses, as well as credit loss allowances and the cost of handsets and customer resale equipment incurred by our retail businesses.

Cost of communication services and other increased by $1.4 million, or 1.8%, to $80.4 million from $79.0 million for the three months ended March 31, 2024 and 2023, respectively. The net increase in cost of communication services and other, within our segments, consisted of the following:

- *International Telecom.* Within our International Telecom segment, cost of communication services and other remained consistent at $34.2 million for the three months ended March 31, 2024 and 2023. This segment incurred an increase in its cost of communication services and other expenses to support this segment’s revenue growth offset by the impact of certain cost reduction programs that were implemented in previous periods.
- *US Telecom*. Cost of communication services and other within our US Telecom segment increased by $1.3 million, or 2.9%, to $46.4 million from $45.1 million for the three months ended March 31, 2024 and 2023, respectively. Such increase was primarily related to increases in transport costs as well as costs associated with the increase in project-related revenues.

Cost of communication services in both our International and US Telecom segments may increase as a result of product mix with an expected increase in fixed revenue and as a result of continued inflationary pressure.

**Cost of construction revenue.** Cost of construction revenue includes the expenses incurred in connection with the construction of and the delivery to AT&T of cell sites in accordance with our FirstNet Agreement. During the three months ended March 31, 2024 and 2023, cost of construction revenue increased to $1.6 million from $0.6 million as a result of an increase in the number of sites completed during 2024 as compared to 2023. We expect to substantially complete the build by the end of 2024 with the remainder to be completed in early 2025.

**Selling, general and administrative expenses.** Selling, general and administrative expenses include salaries and benefits we pay to sales personnel, customer service expenses and the costs associated with the development and implementation of our promotional and marketing campaigns. Selling, general and administrative expenses also include salaries, benefits and related costs for general corporate functions including executive management, finance and administration, legal and regulatory, facilities, information technology and human resources as well as internal costs associated with our performance of due-diligence and integration related costs associated with acquisition activities.

Selling, general and administrative expenses remained consistent at $61.3 million for the three months ended March 31, 2024 and 2023. The changes in selling, general and administrative expenses, within our segments, consisted of the following:

- *International Telecom*. Within our International Telecom segment, our selling, general and administrative expenses increased by $1.9 million, or 6.9%, to $29.6 million from $27.7 million for the three months ended March 31, 2024 and 2023, respectively. This increase was incurred within most of our international markets primarily as a result of an increase in our sales and marketing costs needed to support the expansion of our subscriber base. ​
- *US Telecom*. Selling, general and administrative expenses decreased within our US Telecom segment by $1.5 million, or 5.6%, to $25.4 million from $26.9 million, for the three months ended March 31, 2024 and 2023, respectively. This decrease was primarily related to certain cost savings programs initiated in recent periods. ​
- *Corporate Overhead.* Selling, general and administrative expenses within our corporate overhead decreased by $0.4 million, or 6.0%, to $6.3 million from $6.7 million, for the three months ended March 31, 2024 and 2023, respectively, primarily related to a reduction in professional fees.

Selling, general and administrative expenses may increase in our International Telecom segment to support our expanded operations. Within the US Telecom segment, we expect an increase as a result of our network expansions in Alaska and the southwest US. Our Corporate Overhead segment may also experience an increase in these expenses to support expanding operations. In addition, selling, general, and administrative expenses may increase as a result of continued inflationary pressure, issues facing the global supply chain and geopolitical uncertainty.

**Stock-based compensation.** Stock-based compensation represents a non-cash expense related to the amortization of grants of equity awards to employees and directors.

Stock-based compensation for the three months ended March 31, 2024 and 2023 was $1.9 million and $1.8 million, respectively.

**Transaction-related charges.** Transaction-related charges include the external costs, such as legal, tax, accounting and consulting fees directly associated with acquisition and disposition-related activities, which are expensed as incurred. Transaction-related charges also include certain internal personnel costs incurred as a result of the completion of an acquisition or disposition. Transaction-related charges do not include employee salary and travel-related expenses, incurred in connection with acquisitions or dispositions or any integration-related costs.

We incurred a nominal amount of transaction-related charges during the three months ended March 31, 2024 and 2023.

**Restructuring expenses.** In order to reduce costs to improve our cost structures and improve profitability, we incurred certain reduction in force costs totaling $1.2 million within our International Telecom segment during the three months ended March 31, 2024.

**Depreciation and amortization expenses.** Depreciation and amortization expenses represent the depreciation and amortization charges we record on our property and equipment.

Depreciation and amortization expenses decreased by $2.1 million, or 5.8%, to $34.3 million from $36.4 million for the three months ended March 31, 2024 and 2023, respectively. The net decrease in depreciation and amortization expenses, within our segments, consisted primarily of the following:

- *International Telecom*. Depreciation and amortization expenses increased within our International Telecom segment by $1.9 million, or 13.4%, to $16.1 million from $14.2 million, for three months ended March 31, 2024 and 2023, respectively. Increases were incurred in all of our international markets as a result of recent capital expenditures used to expand and upgrade our network operations.
- *US Telecom*. Depreciation and amortization expenses decreased within our US Telecom segment by $3.4 million, or 15.8%, to $18.1 million from $21.5 million, for the three months ended March 31, 2024 and 2023, respectively, primarily as a result of certain assets becoming fully depreciated in recent periods. ​
- *Corporate Overhead*. Depreciation and amortization expenses decreased within our corporate overhead by $0.6 million, or 85.7%, to $0.1 million from $0.7 million, for the three months ended March 31, 2024 and 2023, respectively, primarily as a result of certain assets becoming fully depreciated in recent periods.

We expect depreciation and amortization expenses to decrease within our US Telecom segments as some of our tangible and intangible assets we acquired are now fully depreciated.

**Amortization of intangibles from acquisitions.** Amortization of intangibles from acquisitions include the amortization of customer relationships and trade names related to our completed acquisitions.

Amortization of intangibles from acquisitions decreased by $1.2 million to $2.0 million from $3.2 million for the three months ended March 31, 2024 and 2023, respectively, as a result of certain intangible assets becoming fully amortized in recent periods.

We expect that amortization of intangibles from acquisitions will decrease as such costs continue to amortize.

**Gain on disposition of assets**. During the three months ended March 31, 2024, we recorded a gain on the disposition of assets of $0.5 million primarily relating to the previously completed disposition of our renewable energy assets.

During the three months ended March 31, 2023, we recorded a gain on the disposition of long-lived assets of $0.2 million within our US Telecom segment.

**Interest income.** Interest income represents interest earned on our cash, cash equivalents, restricted cash and short-term investment balances. Interest income was $0.4 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively.

**Interest expense.** We incur interest expense on the 2023 CoBank Credit Facility, the Alaska Credit and Term Facilities, the FirstNet Receivables Credit Facility, the GTT Credit Facilities, the Sacred Wind Term Debt and the Viya Debt. In addition, interest expense includes commitment fees, letter of credit fees and the amortization of debt issuance costs.

Interest expense increased to $11.5 million from $8.8 million for the three months ended March 31, 2024 and 2023, respectively, as additional interest expense was incurred as a result of an increase in borrowings under our credit facilities and a year-over-year increase in the term SOFR rate on all floating-rate borrowings under those facilities.

Interest expense may increase in future periods as a result of increases in interest rates and future borrowings.

**Other income (expenses).** For the three months ended March 31, 2024, other income (expenses) was $0.2 million of income primarily related to certain employee benefit plans partially offset by losses on foreign currency transactions.

For the three months ended March 31, 2023, other income (expenses) was $0.2 million of income primarily related to gains from our noncontrolling investments.

**Income taxes.** Our effective tax rate for the three months ended March 31, 2024 and 2023 was (25.6%) and 9.5%, respectively.

We recorded an income tax expense of $1.6 million in relation to a pretax loss of $6.3 million for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2024 was primarily impacted by the following items: (i) the mix of income generated among the jurisdictions in which we operate, (ii) net expense related to valuation allowances placed on certain deferred tax assets that are not expected to be realizable based on the weight of positive and negative evidence, (iii) forecasted tax impact of global intangible low-taxed income (“GILTI”) inclusion, and (iv) discrete items including expense of $1.5 million to record an uncertain tax position for the current year, and expense of $0.7 million for interest on uncertain tax positions for prior years.

We recorded an income tax benefit of $0.7 million in relation to a pretax loss of $7.8 million for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2023 was primarily impacted by the following items: (i) the mix of income generated among the jurisdictions in which we operate, (ii) a net increase related to valuation allowances placed on certain deferred tax assets and (iii) discrete items including $0.6 million of expense for interest on unrecognized tax positions.

Our effective tax rate is based upon estimated income before provision for income taxes for the year, composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for potential tax consequences, benefits and/or resolutions of tax contingencies. Our consolidated tax rate will continue to be impacted by any transactional or one-time items in the future and the mix of income in any given year generated among the jurisdictions in which we operate. While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from our accrued positions as a result of uncertain and complex applications of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgments by management. Accordingly, we could record additional provisions or benefits for US federal, state, and foreign tax matters in future periods as new information becomes available.

**Net income attributable to noncontrolling interests, net of tax.** Net income attributable to noncontrolling interests, net of tax reflected an allocation of $1.6 million and $1.2 million of losses generated by our less than wholly owned subsidiaries for the three months ended March 31, 2024 and 2023, respectively. Changes in net income attributable to noncontrolling interests, net of tax, within our segments, consisted of the following:

- *International Telecom*. Within our International Telecom segment, net income attributable to noncontrolling interests, net of tax decreased by $0.4 million, or 22.2%, to an allocation of $1.4 million of income from an allocation of $1.8 million of income for the three months ended March 31, 2024 and 2023, respectively, primarily as a result of decreased profitability at certain less than wholly owned subsidiaries and an increase in our ownership in certain international markets.
- *US Telecom.* Within our US Telecom segment, net losses attributable to noncontrolling interests, net of tax increased by $0.1 million, or 3.3%, to an allocation of losses of $3.1 million from an allocation of losses of $3.0

million for the three months ended March 31, 2024 and 2023, respectively, as a result of increased losses at our less than wholly owned subsidiaries within this segment.

**Net loss attributable to ATN International, Inc. stockholders.** Net loss attributable to ATN International, Inc. stockholders was $6.3 million for the three months ended March 31, 2024 as compared to $5.9 million for the three months ended March 31, 2023.

On a per diluted share basis, net loss was $0.50 per diluted share for the three months ended March 31, 2024 as compared to $0.44 per diluted share for the three months ended March 31, 2023. Such per share amounts were negatively impacted by accrued preferred dividends of $1.3 million and $1.0 million for the three months ended March 31, 2024 and 2023, respectively.

### Regulatory and Tax Issues

We are involved in a number of regulatory and tax proceedings. A material and adverse outcome in one or more of these proceedings could have a material adverse impact on our financial condition and future operations. For discussion of ongoing proceedings, see Note 13 to the Consolidated Financial Statements in this Report.

### Liquidity and Capital Resources

Historically, we have met our operational liquidity needs and have funded our capital expenditures and acquisitions through a combination of cash-on-hand, internally generated funds, proceeds from dispositions, borrowings under our credit facilities and seller financings. We believe our current cash, cash equivalents, short term investments and availability under our current credit facilities will be sufficient to meet our cash needs for at least the next twelve months for working capital needs and capital expenditures.

*Total liquidity.* As of March 31, 2024, we had approximately $69.2 million in cash, cash equivalents, and restricted cash. Of this amount, $30.0 million was held by our foreign subsidiaries and is indefinitely invested outside the United States. In addition, we had approximately $541.3 million of debt, net of unamortized deferred financing costs, as of March 31, 2024. How and when we deploy our balance sheet capacity, including the availability under our various credit facilities (as further described below), will figure prominently in our longer-term growth prospects and stockholder returns.

### Uses of Cash

*Acquisitions and investments.* We have historically funded our acquisitions with a combination of cash-on-hand, borrowings under our credit facilities as well as equity investor and seller financings.

We continue to explore opportunities to expand our telecommunications business or acquire new businesses in the United States, the Caribbean and elsewhere. Such acquisitions may require external financing. While there can be no assurance as to whether, when or on what terms we will be able to acquire any such businesses or make such investments, such acquisitions may be completed through the issuance of shares of our capital stock, payment of cash or incurrence of additional debt. From time to time, we may raise capital ahead of any definitive use of proceeds to allow us to move more quickly and opportunistically if an attractive investment materializes.

*Cash used in investing activities.* Cash used in investing activities decreased by $17.1 million to $35.7 million from $52.8 million for the three months ended March 31, 2024 and 2023, respectively. This year-over-year decrease was the result of a decrease in capital expenditures of $14.6 million, partially offset by an increase in reimbursable capital expenditures of $11.3 million. Actual reimbursements of previously reported capital expenditures increased $10.0 million during the three months ended March 31, 2024 as compared to the same period of 2023. In addition, the three months ended March 31, 2024 includes $3.7 million of proceeds from the sale of certain assets within our International Telecom segment.

*Working Capital.* Historically, we have internally funded our working capital needs. Pursuant to the FirstNet Agreement, AT&T has the option to repay construction costs, with interest, over an eight-year period. To fund the working capital needs created by AT&T’s option to extend its payment terms, we completed the Receivables Credit Facility, as discussed below, on March 26, 2020.

For the three months ended March 31, 2024 and 2023, we spent approximately $49.5 million and $52.7 million, respectively, on capital expenditures relating to our telecommunications networks and business support systems of which $13.5 million and $2.1 million, respectively, are reimbursable under various government programs. The following notes our capital expenditures, by operating segment, for these periods (in thousands):

| ​ ​ ​ ​ Three months ended March 31, | ​ ​ ​ ​ ​ | ​ ​ Capital Expenditures ​ ​ International ​ Telecom | ​ ​ ​ ​ | ​ ​ ​ ​ US ​ Telecom | ​ ​ ​ ​ | ​ ​ ​ ​ Corporate and ​ Other (1) | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Consolidated |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| 2024 | ​ | $16,915 | ​ | $31,233 | ​ | $1,341 | ​ | $49,489 |
| 2023 | ​ | ​ 21,464 | ​ | ​ 31,261 | ​ | ​ — | ​ | ​ 52,725 |

(1) Corporate and other items refer to corporate overhead costs and consolidating adjustments.

We are continuing to invest in our telecommunication networks along with our operating and business support systems in many of our markets. For the year ended December 31, 2024, such investments are expected to total approximately $100 million to $110 million, net of reimbursable amounts, and will primarily relate to network expansion and upgrades which are expected to further drive subscriber and revenue growth in future periods.

*Income taxes.* We have historically used cash-on-hand to make payments for income taxes. Our policy is to allocate capital where we believe we will get the best returns and to date has been to indefinitely reinvest the undistributed earnings of our foreign subsidiaries. As we continue to reinvest our remaining foreign earnings, no additional provision for income taxes has been made on the accumulated earnings of foreign subsidiaries.

*Dividends.* For the three months ended March 31, 2024, our Board of Directors declared $3.7 million of dividends to our stockholders which includes a $0.24 per share dividend declared on March 18, 2024 and paid on April 5, 2024. We have declared quarterly dividends since the fourth quarter of 1998.

*Stock Repurchase Plan.* On December 14, 2023, our Board of Directors authorized the repurchase of up to $25.0 million of our common stock, from time to time, on the open market or in privately negotiated transactions (the “2023 Repurchase Plan”). The 2023 Repurchase Plan replaced the previously approved 2016 Repurchase Plan and, as of March 31, 2024, had $24.9 million available to repurchase shares of our common stock. We repurchased $0.1 million and $1.4 million of our common stock during the three months ended March 31, 2024 and 2023, respectively.

### Sources of Cash

*Cash provided by operations.* Cash provided by operating activities was $23.2 million for the three months ended March 31, 2024 as compared to $16.0 million for the three months ended March 31, 2023. The increase of $7.2 million was primarily related to an increase in the change in operating assets and liabilities, primarily related to our accounts payable and accrued expenses.

*Cash provided by financing activities.* Cash provided by financing activities decreased by $18.4 million to $19.6 million from $38.0 million for the three months ended March 31, 2024 and 2023, respectively. This decrease was primarily related to the decrease in borrowings, net of repayments, under our credit facilities of $19.5 million partially offset by the $0.8 million increase in cash used for the repurchase of our common stock (including shares repurchased from employees to satisfy certain tax withholding obligations as well as repurchases under our Stock Repurchase Plans as discussed below).

### 2023 CoBank Credit Facility

On July 13, 2023, we, along with certain of our subsidiaries as guarantors, entered into a new Credit Agreement with CoBank, ACB and a syndicate of other lenders (as may be amended from time to time, the “2023 CoBank Credit Facility”).

The 2023 CoBank Credit Facility provides for a five-year $170 million revolving credit facility (the “2023 CoBank Revolving Loan”) and a six-year $130 million term loan facility (the “2023 CoBank Term Loan”). We may use (i) up to $25 million under the 2023 CoBank Credit Facility for letters of credit, and (ii) up to $20 million under a swingline sub-facility. Upon the closing of the 2023 CoBank Credit Facility, we drew all of the 2023 CoBank Term Loan and approximately $13.6 million of the 2023 CoBank Revolving Loan. These borrowings were used to repay $139.5 million of debt outstanding under the 2019 CoBank Credit Facility at close.

The 2023 CoBank Term Loan must be repaid in quarterly principal payments in the amounts set forth below, with the outstanding principal balance maturing on July 13, 2029. The 2023 CoBank Revolving Loan may be repaid at any time on or prior to its maturity on July 13, 2028. All amounts outstanding under the 2023 CoBank Credit Facility will be due and payable upon the earlier of the maturity date or the acceleration of the loans and commitments upon an event of default.

|  |  |
| --- | --- |
| ​ | ​ |
| **2023 CoBank Term Loan Quarterly Payment Dates** | **2023 CoBank Term Loan Quarterly Repayments** |
| December 31, 2023 – June 30, 2025 | $812,500 (2.5% per annum) |
| September 30, 2025 – June 30, 2026 | $1,625,000 (5% per annum) |
| September 30, 2026 – June 30, 2029 | $2,437,500 (7.5% per annum) |

Amounts borrowed under the 2023 CoBank Credit Facility bear interest at a rate equal to, at our option, either (i) the secured overnight financing rate as administered by the Federal Reserve Bank of New York (SOFR) plus an applicable margin ranging between 2.00% to 3.75% for the 2023 CoBank Term Loan or 1.75% to 3.50% for Revolving Loans or (ii) a base rate plus an applicable margin ranging from 1.00% to 2.75% for the Term Loan or 0.75% to 2.50% for the 2023 CoBank Revolving Loans. Swingline loans will bear interest at the base rate plus the applicable margin for base rate loans. The base rate is equal to the higher of (i) 1.00% plus the one-month SOFR rate (ii) the federal funds effective rate (as defined in the 2023 CoBank Credit Agreement) plus 0.50% per annum; and (iii) the prime rate (as defined in the 2023 CoBank Credit Agreement). The applicable margin is determined based on the ratio (as further defined in the 2023 CoBank Credit Agreement) of our maximum Total Net Leverage Ratio. Under the terms of the 2023 CoBank Credit Agreement, we must also pay a fee ranging from 0.25% to 0.50% on the average daily unused portion of the 2023 CoBank Credit Facility over each calendar quarter.

The 2023 CoBank Credit Agreement contains a financial covenant (as further defined in the 2023 CoBank Credit Agreement) that imposes a maximum Total Net Leverage Ratio, as well as customary representations, warranties and covenants, including covenants limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. The maximum Total Net Leverage Ratio is measured each fiscal quarter and is required to be less than or equal to 3.25 to 1.0. The 2023 CoBank Credit Agreement provides for events of default customary for credit facilities of this type, including but not limited to non-payment, defaults on other debt, misrepresentation, breach of covenants, representations and warranties, insolvency and bankruptcy.

We capitalized $4.2 million of fees associated with the 2023 CoBank Credit Facility which are being amortized over the life of the debt and $3.7 million were unamortized as of March 31, 2024.

We had $128.4 million outstanding under the 2023 CoBank Term Loan as of March 31, 2024. Under the 2023 CoBank Revolving Loan, we had $60.8 million outstanding and $109.2 million of availability as of March 31, 2024. We were in compliance with all financial covenants as of March 31, 2024.

In October 2023, we entered a two year, forward starting 1-month floating to fixed SOFR interest rate swap agreement. The swap was effective November 13, 2023 in a non-amortizing notional amount of $50.0 million, has a fixed SOFR rate of 4.896% and matures on November 13, 2025.

### 2019 CoBank Credit Facility

On April 10, 2019, we entered into a credit facility, with CoBank, ACB and a syndicate of other lenders (as amended, the “2019 CoBank Credit Facility”). The 2019 CoBank Credit Facility provided for a $200 million revolving credit facility that included (i) up to $75 million for standby or trade letters of credit and (ii) up to $10 million under a swingline sub-facility. In connection with the execution of the 2023 CoBank Credit Facility, as defined above, outstanding borrowings under the 2019 CoBank Credit Facility were repaid in full.

Amounts borrowed under the 2019 CoBank Credit Facility bore interest at a rate equal to, at our option, either (i) the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging between 1.25% to 2.25% or (ii) a base rate plus an applicable margin ranging from 0.25% to 1.25%. Swingline loans bore interest at the base rate plus the applicable margin for base rate loans. The base rate was equal to the higher of (i) 1.00% plus the higher of (x) LIBOR for an interest period of one month and (y) LIBOR for an interest period of one week; (ii) the Federal Funds Effective Rate (as defined in the 2019 CoBank Credit Facility) plus 0.50% per annum; and (iii) the Prime Rate (as defined in the 2019 CoBank Credit Facility). The applicable margin was determined based on the Total Net Leverage Ratio (as defined in the 2019 CoBank Credit Facility). Under the terms of the 2019 CoBank Credit Facility, we also paid a commitment fee ranging from 0.150% to 0.375% of the average daily unused portion of the 2019 CoBank Credit Facility over each calendar quarter.

### Letter of Credit Facility

On November 14, 2022, we entered into a General Agreement of Indemnity to issue performance Standby Letters of Credit on behalf of us and our subsidiaries. As of March 31, 2024, $32.4 million of Standby Letters of Credit had been issued under this agreement.

### Alaska Credit Facility

On July 22, 2021, Alaska Communications entered into a Credit Agreement (the “Alaska Credit Facility”) with Fifth Third Bank, National Association, as Administrative Agent, and a syndicate of lenders to provide a $35.0 million revolving facility (the “Alaska Revolving Facility”) and a $210.0 million initial term loan facility (the “Alaska Term Loan”).

On December 23, 2022, Alaska Communications entered into a First Amendment Agreement (the “ACS Amendment”). The ACS Amendment amends the Alaska Credit Facility to increase its Revolving Credit Commitment from $35.0 million to $75.0 million and Term Loan Commitment from $210.0 million to $230.0 million. As a part of the transaction, the Term Loan commitment was fully funded as the outstanding Revolving Credit Commitment balance was transferred.

As of March 31, 2024, Alaska Communications had drawn $40.0 million on its Revolving Credit Commitment and had $35.0 million available to draw. The Term Loan balance was $227.1 million and principal payments commenced in the fourth quarter of 2023. Both facilities mature on July 22, 2026.

In addition to the above changes, the ACS Amendment replaced the calculation of interest from an applicable margin applied to LIBOR with the same applicable margin applied to the Secured Overnight Financing Rate (“SOFR”) plus a 10-basis point adjustment.

Alaska Communications capitalized $7.3 million of fees associated with the Alaska Credit Facility which are being amortized over the life of the debt and $3.5 million were unamortized as of March 31, 2024.

The Alaska Credit Facility also provides for incremental facilities up to an aggregate principal amount of the greater of $70.0 million and Alaska Communications’ trailing twelve-month Consolidated EBITDA (as defined in the Alaska Credit Facility).

The key terms and conditions of the Alaska Credit Facility include the following:

- Amounts outstanding bear an interest rate of the forward-looking SOFR rate with a one-month interest period, plus the SOFR Spread Adjustment of 10 basis points, plus a margin ranging from 3.00% to 4.00% based on Alaska Communications’ Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) or an alternate base rate may be selected at a margin that is 1% lower than the counterpart SOFR margin;
- Principal repayments are due quarterly and commenced in the fourth quarter of 2023 in amounts as follows: from the fourth quarter of 2023 through the third quarter of 2024, $1.4 million; and from the fourth quarter of 2024 through the third quarter of 2026, $2.9 million. The remaining unpaid balance is due on the final maturity date;
- Alaska Communications is required to maintain financial ratios as defined in the Alaska Credit Facility, including (a) a maximum Consolidated Net Total Leverage Ratio of 4.00 to 1, stepping down to 3.75 to 1 beginning with the second quarter of 2024; and (b) a minimum Consolidated Fixed Charge Coverage Ratio of not less than 1.25 to 1; and
- The Alaska Credit Facility is non-recourse to us and is secured by substantially all of the personal property and certain material real property owned by Alaska Communications.

Alaska Communication’s interest rate swap, which had been designated as a cash flow hedge with an interest rate of 1.6735%, expired on June 30, 2022. In November 2023, Alaska Communications entered two forward starting 1-month floating to fixed SOFR interest rate swap agreements. The total non-amortizing notional amount of the agreements is $200.0 million, with fixed SOFR rates of 4.8695% and 4.8980% and both agreements mature on June 30, 2025.

### Alaska Term Facility

On June 15, 2022, Alaska Communications Systems Holdings, the parent company of Alaska Communications, entered into a secured lending arrangement with Bristol Bay Industrial, LLC (the “Alaska Term Facility”).

The Alaska Term Facility provided for a secured delayed draw term loan in an aggregate principal amount of up to $7.5 million and the proceeds were used to pay certain invoices from a contractor for work performed in connection with a fiber build. Interest on the Alaska Term Facility accrues at a fixed rate of 4.0% and scheduled quarterly payments of principal commenced on March 31, 2023. The Alaska Term Facility matures on June 30, 2024.

The Alaska Term Facility contains events of default customary for facilities of this type.

As of March 31, 2024, Alaska Communications Systems Holdings had $5.3 million outstanding and no available borrowings under the Alaska Term Facility.

### FirstNet Receivables Credit Facility

On March 26, 2020, Commnet Finance, a wholly owned subsidiary of Commnet Wireless, entered into a receivables credit facility with us, Commnet Wireless, and CoBank, ACB (the “Receivables Credit Facility”).

The Receivables Credit Facility provides for a senior secured delayed draw term loan in an aggregate principal amount of up to $75.0 million and the proceeds may be used to acquire certain receivables from Commnet Wireless. The receivables to be financed and sold under the Receivables Credit Facility, which provide the loan security, relate to the obligations of AT&T under the FirstNet Agreement.

On December 19, 2023, CoBank amended the Receivables Credit Facility and extended the delayed draw period to December 31, 2024.

The maturity date for each loan will be set by CoBank and will match the weighted average maturity of the certain receivables financed.

Interest on the loans accrue at a fixed annual interest rate to be quoted by CoBank.

The Receivables Credit Facility contains customary events of termination, representations and warranties, affirmative and negative covenants and events of default customary for facilities of this type.

As of March 31, 2024, Commnet Wireless had $48.4 million outstanding, of which $7.6 million was current, and $11.3 million of availability under the Receivables Credit Facility. Commnet Wireless capitalized $0.8 million in fees associated with the Receivables Credit Facility which are being amortized over the life of the debt and $0.5 million were unamortized as of March 31, 2024.

### GTT Credit Facilities

On October 12, 2022, GTT received approval from Republic Bank (Guyana) Limited for a $2.9 million term facility and a $5.7 million overdraft facility (the “GTT Credit Facilities”) subject to the approval from the Minister of Finance at the Bank of Guyana, which was received on March 31, 2023.

The GTT Credit Facilities are secured by real estate assets and carry a fixed interest rate of 7.5% which will be reviewed by the bank from time to time and subject to change at the bank’s discretion. The term facility is repayable over five years in equal monthly installments of principal and interest, commencing one month after funds are advanced. The overdraft facility will expire on October 31, 2024.

As of March 31, 2024, there were no outstanding amounts under the GTT Credit Facilities.

### Sacred Wind Term Debt

In connection with the Sacred Wind acquisition completed on November 7, 2022, we assumed $31.6 million of term debt (the “Sacred Wind Term Debt”) with the United States of America acting through the Administrator of the

Rural Utilities Service (“RUS”). The loan agreements are dated as of October 23, 2006 and March 17, 2016. RUS provides financial assistance in the form of loans under the Rural Electrification Act of 1936 to furnish or improve telecommunications and/or broadband services in rural areas.

The Sacred Wind Term Debt is secured by substantially all assets of Sacred Wind and an underlying mortgage to the United States of America. These mortgage notes are to be repaid in equal monthly installments covering principal and interest beginning after date of issue and expiring by 2035.

The Sacred Wind Term Debt contains certain restrictions on the declaration or payment of dividends, redemption of capital stock or investment in affiliated companies without the consent by the RUS noteholders. The agreements also contain a financial covenant which Sacred Wind was not in compliance with as of December 31, 2021. Sacred Wind submitted a corrective action plan to comply with the financial covenant as of December 31, 2025. On May 5, 2022, Sacred Wind’s corrective action plan was accepted by the RUS. As of March 31, 2024, we were in compliance with that corrective action plan.

As of March 31, 2024, $27.4 million was outstanding under the Sacred Wind Term Debt. Of that amount, $3.3 million was current and $24.1 million was long term.

The mortgage notes carry fixed interest rates ranging from 0.88% to 5.0%.

### Viya Debt

We, and certain of our subsidiaries, have entered into a $60.0 million loan agreement (the “Viya Debt”) with Rural Telephone Finance Cooperative (“RTFC”). The Viya Debt agreement contains customary representations, warranties, and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that limits the maximum ratio of indebtedness to annual operating cash flow to 3.5 to 1.0 (the “Net Leverage Ratio”). This covenant is tested on an annual basis at the end of each fiscal year. Interest is paid quarterly at a fixed rate of 4.0% per annum and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt may be subject to a fee under certain circumstances. The debt is secured by certain assets of the Viya subsidiaries and is guaranteed by us.

We paid a fee of $0.9 million in 2016 to lock the interest rate at 4% per annum over the term of the Viya Debt. The fee was recorded as a reduction to the Viya Debt carrying amount and is being amortized over the life of the loan.

As of March 31, 2024, $60.0 million of the Viya Debt remained outstanding and $0.2 million of the rate lock fee was unamortized.

On May 5, 2022, RTFC agreed to amend the Net Leverage Ratio to 7.0 to 1.0 through the maturity date of July 1, 2026. The Ratio is tested annually, and we were in compliance with the Net Leverage Ratio as of December 31, 2023.

### Debt Maturity

The table below summarizes the annual maturities of our debt instruments (amounts in thousands):

| ​ ​ ​ Amounts Maturing During | ​ ​ ​ ​ US Telecom | ​ ​ ​ ​ | ​ ​ ​ ​ International Telecom | ​ ​ ​ ​ | ​ ​ ​ ​ Corporate and Other | ​ ​ ​ ​ | ​ ​ ​ ​ Total Debt | ​ ​ Customer Receivable Credit Facility |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| April 1, 2024 through December 31, 2024 | $13,549 | ​ | $— | ​ | $2,438 | ​ | $15,987 | $5,644 |
| Year ending December 31, 2025 | ​ 14,969 | ​ | ​ — | ​ | ​ 4,875 | ​ | ​ 19,844 | ​ 7,830 |
| Year ending December 31, 2026 | ​ 253,469 | ​ | ​ 60,000 | ​ | ​ 8,125 | ​ | ​ 321,594 | ​ 8,192 |
| Year ending December 31, 2027 | ​ 3,723 | ​ | ​ — | ​ | ​ 9,750 | ​ | ​ 13,473 | ​ 8,572 |
| Year ending December 31, 2028 | ​ 3,858 | ​ | ​ — | ​ | ​ 9,750 | ​ | ​ 13,608 | ​ 8,973 |
| Thereafter | ​ 10,192 | ​ | ​ — | ​ | ​ 154,257 | ​ | ​ 164,449 | ​ 9,221 |
| Total | ​ 299,760 | ​ | ​ 60,000 | ​ | ​ 189,195 | ​ | ​ 548,955 | ​ 48,432 |
| Debt Discounts | ​ (3,764) | ​ | ​ (224) | ​ | ​ (3,676) | ​ | ​ (7,664) | ​ (455) |
| Book Value as of March 31, 2024 | $295,996 | ​ | $59,776 | ​ | $185,519 | ​ | $541,291 | $47,977 |

### Factors Affecting Sources of Liquidity

*Internally generated funds.* The key factors affecting our internally generated funds are demand for our services, competition, regulatory developments, economic conditions in the markets where we operate our businesses and industry trends within the telecommunications industry.

*Restrictions under Credit Facility.* Our 2023 CoBank Credit Facility contains customary representations, warranties and covenants, including covenants limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes.

In addition, the 2023 CoBank Credit Facility contains a financial covenant that imposes a maximum ratio of indebtedness to EBITDA. As of March 31, 2024, we were in compliance with all of the financial covenants of the 2023 CoBank Credit Facility.

*Capital markets.* Our ability to raise funds in the capital markets depends on, among other things, general economic conditions, the conditions of the telecommunications industry, our financial performance, the state of the capital markets and our compliance with SEC requirements for the offering of securities. In August 2022, we filed a new “universal” shelf registration statement with the SEC, to register potential future offerings of up to $300 million of our securities.

### Foreign Currency

We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies, primarily the Guyana Dollar, to US Dollars at the appropriate rates as of the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in rates are recognized in foreign currency translation adjustment, a component of accumulated other comprehensive income on our balance sheet. Income statement accounts are translated using the monthly average exchange rates during the year. Monetary assets and liabilities denominated in a currency that is different from a reporting entity’s functional currency must first be remeasured from the applicable currency to the legal entity’s functional currency. The effect of this remeasurement process is reported in other income within our income statement. During each of the three months ended March 31, 2024 and 2023, we recorded $0.2 million in losses on foreign currency transactions. We will continue to assess the impact of our exposure to the Guyana Dollar.

### Inflation

Several of our markets have experienced an increase in operating costs, some of which we believe, is attributable to inflation. If inflation continues or worsens, it could negatively impact our Company by increasing our operating expenses. Inflation may lead to cost increases in multiple areas across our business, for example, rises in the prices of raw materials and manufactured goods, increased energy rates, as well as increased wage pressures and other expenses related to our employees. In particular, where we have agreed to undertake infrastructure build-outs on a fixed budget for our carrier customers or by accepting government grants, inflation may result in build costs that exceed our original budget given the long delays experienced in procuring equipment and materials due to global supply chain delays. To the extent that we are unable to pass on these costs through increased prices, revised budget estimates, or offset them in other ways, they may impact our financial condition and cash flows.

### Recent Accounting Pronouncements

Refer to Note 2.

### Critical Accounting Estimates

There were no changes to critical accounting estimates from those disclosed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” of our Annual Report on Form 10-K for the year ended December 31, 2023.

## Market risk

As filed, 1,896 characters.

*Translation and Remeasurement.* We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies, primarily the Guyana Dollar, to US Dollars at the appropriate rates as of the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in rates are recognized in foreign currency translation adjustment, a component of accumulated other comprehensive income on our balance sheet. Income statement accounts are translated using the monthly average exchange rates during the year.

Monetary assets and liabilities denominated in a currency that is different from a reporting entity’s functional currency must first be remeasured from the applicable currency to the legal entity’s functional currency. The effect of this remeasurement process is reported in other income on our income statement.

*Employee Benefit Plans.* We sponsor pension and other postretirement benefit plans for employees of certain subsidiaries. Net periodic pension expense is recognized in our income statement. We recognize a pension or other postretirement plan’s funded status as either an asset or liability in our consolidated balance sheet. Actuarial gains and losses are reported as a component of other comprehensive income and amortized through other income in subsequent periods.

*Interest Rate Sensitivity.* As of March 31, 2024, we had $206.3 million of variable rate debt outstanding, which is subject to fluctuations in interest rates. Our interest expense may be affected by changes in interest rates. We believe that a 100-basis-point change in the interest rates on our variable rate debt would result in a $2.1 million change in our annual interest expense. We may have additional exposure to fluctuations in interest rates if we again borrow amounts under our revolver loans within our credit facilities.

## Controls and procedures

As filed, 2,084 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024. Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 518 characters.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed under Part I, Item 1A “Risk Factors” of our 2023 Annual Report on Form 10-K. The risks described herein and in our 2023 Annual Report on Form 10-K, as amended, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Filed May 10, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-007776. Last ingested by Listed: Nov 3, 2026, 21:22 ET. No prices; not investment advice.