Good morning. My name is Sia, and I will be your conference operator today. I would like to welcome everyone to the ATN International Q1 2021 Earnings Conference Call and Webcast. I will now turn the conference over to Justin Benincasa, Chief Financial Officer. Please proceed, sir.

Great. Thank you, everyone, and good morning, and thanks for joining us on our call to review our first quarter 2021 results. With me here is Michael Prior, ATN's Chief Executive Officer. And during the call, I'll cover the relevant financial information and Michael will provide an update on the business and outlook. Before I turn the call over to Michael for his comments, I'd like to point out that this call and our press release contain forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results, and are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliation to comparable GAAP measures and for further information regarding the factors that may affect our future operating results, we would refer you to our earnings release on our website.

Okay. Thank you, Justin. Good morning, all. So this quarter was largely in line with the trends and expectations we discussed just two months ago. Our most important revenue drivers in International Telecom, broadband and mobile subscriber levels continued to show strength, even as we await economic activity recovery from pandemic restrictions. However, the quarter showed we have some more work to do on the cost side of the equation. As expected, activity and related expense has picked up in several areas of our U.S. Telecom operations, particularly the FirstNet build and other infrastructure builds, and private network development efforts. Meanwhile, the Alaska Communications acquisition, which we announced at the start of the quarter, continues to move promisingly towards close. The partial exit from our Indian renewable energy business was completed in January, freeing up resources to focus on communication services businesses closer to home. Now I'll turn to some more detail on the individual operating segments, starting with International Telecom. Fixed data subscribers in this segment increased by about 9% year-on-year as we continue to see growth in this base every quarter. Our past and ongoing investments in our network and service quality have enabled us to capture underlying demand. Mobile subscribers also increased by 9% year-on-year. This was the third consecutive quarter of good growth in this metric. As you can see in the information in our press release, we saw year-on-year growth in both post-paid and pre-paid subscribers. We credit better retail and marketing strategies for these share gains. Video subscribers continue to decline though with some recent signs of leveling off and voice subscribers remained steady. Expenses rose faster than revenue for this segment year-on-year. While some of that was new regulatory fees and some of it more a one-time in nature, we are implementing cost reduction initiatives in several markets, and we will be working hard to bring expense levels down over the next few quarters. Conditions in these markets are still fairly difficult as the overall economic activity remains historically low due to the pandemic. Roaming, both inbound and outbound, revenues from hospitality customers, and other commercial customers all continue to feel some negative impacts. So we would expect to see a pickup in revenue as travel restrictions ease and the vaccination rollout drives increased tourist travel. In U.S. Telecom, we start to see a more significant impact of the FirstNet construction inflows and outflows. We delivered a lot of sites in the first quarter and expect that pace to continue throughout the year and into the first half of 2022 in accordance with our obligations. In addition to the important FirstNet activity, our engineering and operational teams are very busy with middle-mile fiber builds, expansion of our broadband network, and private network trials and deployments. Much of the middle-mile fiber and broadband activity is related to public-private partnership solutions with federal, state, and local subsidy programs helping to make these investments financially sound for us. We have a lot of experience in that realm, and we are closely examining the recently passed and proposed federal infrastructure programs to see where we might be part of the solution to identified areas of the digital divide. Our private network capabilities also can be part of that solution. As mentioned briefly on the February call, Geoverse partnered with other providers to win a bid to build out two midsized cities with a neutral host wireless network to support both local education and municipal services. Financially, results for U.S. Telecom were in line with the transition phase we spoke about last quarter, which we expect to last throughout the year. Operational and capital spending has increased as we ramp up our capabilities in several areas and pursue growth opportunities. Of course, this segment will look very different following the close of the Alaska Communications deal. To illustrate the impact, if you added ACS' most recently reported quarterly results, which were for the fourth quarter of last year, revenue reported for this segment would be over $100 million for the quarter with adjusted EBITDA of roughly $20 million. And of course, we are hoping to do better than that. On that front, we're very pleased that Alaska Communications' shareholders voted to approve our acquisition of the company on March 12, and we look forward to gaining regulatory approvals in coming months. In the meantime, we've been working with Alaska Communications' management team to identify opportunities to gain revenue synergies and potentially accelerate execution of their business strategy. While still early in the process, we have identified several stage 1 priorities, including the opportunity to accelerate growth of the company's fiber-based revenues, the expansion of anchor tenant fiber builds, and cross-selling next-generation managed services and private network solutions. The teams are also hard at work on the blocking and tackling of integration planning, including opportunities for cost efficiencies. So more to come on both fronts. But for now, I'll turn it back over to you, Justin.

Great. Thanks, Michael. For the quarter, total consolidated revenues were $124.5 million, up 12% from last year's reported total of $110.9 million. $12.3 million of the revenue increase was associated with the FirstNet construction project, and the remainder represented a modest uptick in revenue in the international segment. Consolidated adjusted EBITDA for the quarter was $24.7 million versus $29.9 million in the first quarter of 2020, and I'll speak more about that decrease in a moment. I wanted to note that we slightly restructured the presentation of our operating expenses on our consolidated P&L to better align with industry standards and in preparation for the consolidation of Alaska Communications when the acquisition closes. We're now combining termination and access fees with engineering and operations into cost of services and putting together our sales, marketing, customer service, and general administrative expenses to form selling and general and administrative costs. Looking at each of the segments and starting with International Telecom. Revenues were $83.8 million, up from $82.3 million last year, and adjusted EBITDA was $26.9 million compared to $27.8 million. As Michael mentioned, segment revenues benefited from broadband and mobile subscribers growth in several markets, but we did incur higher operating expenses in the quarter, which led to a modest decline in adjusted EBITDA. We also took advantage of the opportunity to purchase additional shares in our One Communications subsidiary, which is our Bermuda and Cayman Island company, this quarter and now own approximately 77% of the outstanding equity. Capital expenditures in the quarter were $10.5 million for the segment. In the U.S. Telecom segment, revenues were $40.3 million for the quarter, up from $27.3 million a year ago. And as I noted earlier, this includes $12.3 million of construction revenue related to the FirstNet project. As a reminder, we anticipate completing an additional 50% of the $85 million project this year, which will bring us to approximately 65% completion at year-end. The decline in adjusted EBITDA for the segment to $4.6 million from $8.1 million last year was due to the anticipated higher operating costs we discussed last quarter. Specifically, we had higher fixed costs associated with the completion of the CARES Act funded build-out of our rural broadband in advance of driving additional revenues in FirstNet sites coming online as we shift from historically providing predominantly wholesale roaming services to more lease income and maintenance services. Additionally, we've increased spending on sales efforts and product development in our early stage private network business. We will experience lower year-on-year EBITDA comparisons in the segment until the completion of the Alaska Communications transaction. Capital expenditures in the quarter were reported at $14.9 million, but I would note that $6.2 million of that is reimbursable to ATN through various government grants as we footnoted in the segment table within our press release. Consolidated net income for the quarter was $2.7 million or $0.17 per share, which includes a $2.5 million write-up of one of our minority investments. Also included in operating expenses for the quarter was $1.3 million of noncash stock-based compensation expense. The effective tax rate for the quarter was approximately 6.4%, reflecting our forecasted jurisdictional mix of income and tax rates in our markets. Moving to the balance sheet. On March 31, total cash was $91 million and total debt outstanding was $72 million. I should point out that as part of the FirstNet contract, we agreed to a structured repayment schedule for each of the completed sites. This is presented on our balance sheet starting this quarter as customer receivable for $23.4 million. In combination with the structured repayment schedule, we've entered into an arrangement with one of our banks to monetize that receivable through a separate financing agreement that is backed only by that customer receivable. This is presented on our balance sheet this quarter as customer receivable credit facility for $10.8 million. There is a few months delay between the site acceptance and the drawing on the credit facility, but as we get closer to completing the build in 2022, the receivable balance and the credit facility balance should closely align.

At this time, we would like to open the call up for questions.

First, thanks for giving the International EBITDA percent ownership, that does help. So I appreciate that number on the press release. Talking about regulatory stuff, obviously, a lot going on. Can you expand a little bit about where you see the infrastructure bill headed and what it might mean for you guys? But also the Emergency Broadband Benefit, is there anything there that might be applicable for you guys?

I don't have more details to share, but we are closely monitoring the situation and evaluating all the programs. The outcome of the infrastructure bill is not entirely clear at this moment, although we do believe there is bipartisan support for investments in communications infrastructure. There are some questions regarding how it will impact existing programs, such as the second part of RDOF, and whether it will be incorporated. We are considering both federal direct funding and state funding as well. The amounts being discussed are substantial and exceed those of the rural digital opportunity fund, which indicates their significance. We have experience participating in similar programs and are carefully assessing them. We are identifying areas where we believe we can contribute effectively.

Any thoughts on how long the timing takes to kind of shake out this? D.C. is always a tough one to peg that way, but any thoughts about how long it takes to bake this cake?

On the infrastructure front, especially regarding transportation and communications infrastructure, there appears to be considerable bipartisan support based on our discussions with various stakeholders. While it's difficult to predict the outcome of smaller initiatives, there is a clear divide with larger legislation. Many individuals are advocating for improvements in digital infrastructure, as the pandemic highlighted significant disparities in access, particularly affecting distance learning and various community needs. I remain optimistic that we will see progress and reach an agreement in the coming months regarding the path forward.

Right. Okay. And as you think about Alaska coming on board hopefully, how does your early view of that fit into the infrastructure bill, EBB opportunities there as well?

For sure. I mean, there are significant opportunities there. And one of the things we hope to do is to give the team there the resources to pursue those things more proactively than in the past. And there's no doubt there's going to be builds there and there'll be opportunities that we think we can participate in that will make sense for us.

Okay. And on Alaska, you mentioned now kind of middle '21, a couple of months hopefully we get through the process. As you think about a closing timeline, I know T-Mobile historically likes to always close something on the first of the month, the first or second month of a quarter, doesn't like to do intermonth, doesn't like to do the third month of the quarter. As you think about when Alaska might close, would you close it on any day like 'let's get going on this'? Or how should we think about timing?

My general attitude is to get things done. Justin, do you want to add to that?

Yes, just to add, the deal is about four days away from approval. I'm not sure how much flexibility we have with that. However, I think our overall approach is...

Yes, we close when you can close. I believe we’re prepared. We have experience with this. The teams have been working on this, and it's different from many private deals or overlapping competitive situations that involve antitrust concerns. We have the capacity to address the specifics in advance and be well-prepared.

Great. And you touched on private networks a couple of times. Can you help us understand sizing, timing, winning of kind of private network transactions and what it might mean to your business? And I assume CBRS fits into this as well.

I missed the first part. Ric, can you repeat the question?

Yes. So you've mentioned private networks a couple of times. Can you help us kind of size what you think the addressable market is, the timing of approaching in that market? When it's going to take to win? Just to kind of help think about what the magnitude of what you're looking at might mean for you guys.

Yes. I prefer not to specify the total addressable market as there are varying figures based on different measures. However, the market we are targeting is significantly important to us if we achieve success. We believe there is considerable potential. Our approach to private networks has increasingly focused on a channel partner strategy, in contrast to previous methods seen in areas like DAS, which often involved one-off builds. We are collaborating with other providers of comprehensive technology solutions related to private networks and edge computing, aiming to engage across various segments. We are actively engaged in pursuing opportunities within municipal, state, and local education sectors, as well as exploring partnerships in other areas. While I cannot specify a total addressable market at this moment, I believe there is considerable potential if we can effectively execute our strategy and establish ourselves as a leader. It's important to note that we are still in the early stages. Conversations with others in the industry, including potential competitors backed by private equity, suggest that the sector experienced a slowdown in 2020, but there are indications it is beginning to recover. However, there is still progress to be made, and that is the best update I can provide at this time.

The next question will come from Greg Burns with Sidoti Company.

I would like to follow up on the previous comment about seeing some positive signs in the private network business. Can you provide more details on what those signs are or what the pipeline looks like? Is it expanding? Are the discussions with customers becoming more positive or constructive? What observations give you confidence in that area of the business?

It's really mainly the channel partner side that I spoke about earlier, Greg. We are in discussions with some significant players who have ambitions around solutions across a lot of real estate. I think we are very encouraged by what people perceive and the value we provide to the solution with our overarching network platform being a part of that. What gives me optimism is that the partners we are engaging with are significant prospective partners, not just small players. They are larger companies looking for major solutions. Other potential partners and customers would not allocate their resources unless they believed this opportunity was forthcoming. So these are the indicators we are observing.

Okay. What percent of your international EBITDA does the One Communications subsidiary contribute?

Yes. We don't provide specific details, Greg. However, they all represent a significant part of it and are essential to that segment. We don't really separate that information.

Has there been any change in the FCC support that you're receiving in the U.S. Virgin Islands? Is there any update on that?

No, no. Still ongoing discussions and waiting to see what's next.

Okay. But that change hasn't been reflected in this quarter's results?

No. No. No.

Okay. Any time line on when some final decision might be made where that will start to impact the P&L?

There are several layers of decisions that need to be made, and we're currently in discussions about that. I believe some decisions will definitely be reached in the next few months, possibly even this quarter, but I prefer not to delve into the specifics of the conversations. We anticipate that the situation will develop further, and we will have a clearer outcome and timelines in the next quarter or so.

We do have a follow-up from Ric Prentiss with Raymond James.

A couple of follow-ups if I could. Justin, you were talking about the CapEx in the U.S. and how the $14.9 million includes about $6.2 million reimbursable. What's the timeframe of how that gets reimbursed? And how will you report that? Will you report it as net CapEx? Or how should we think about that?

Yes. That's why I mentioned it, Ric, because we can't report it as net CapEx. Some of it has already been received and spent, while some is still forthcoming. We are trying to indicate in our cash flow statement what CapEx spending we have already received or are expecting to receive. However, the receipt of the funds is recorded elsewhere in the cash flow statement. I wanted to combine them, but the constraints wouldn't allow it. That's why the specific number will continue to come up.

And I appreciate that. Shakespeare seemed to suggest accounts instead of lawyers. Regarding FirstNet, I think I heard you mention that you expect a 50% increase to reach $85 million, but I thought I read in your press release that you're planning to go from 30% to 65% by the end of the year?

Yes. We achieved about 15% last year and are targeting another 50% this year. We exceeded a quarter of that 50% in the first quarter. By the end of the year, we expect to be approximately 65% complete.

Got it. That makes sense. Yes, okay. And will it still be finished by the end of the second quarter of 2022?

Yes, that's still the rough midyear estimate.

Okay. And was not any explicit guidance in the press release? Previously, you've given some CapEx guidance. Obviously, Alaska you used to give a lot of guidance. How should we think about guidance based on the Alaska deal around the corner here and what you might do going forward?

We are always cautious about providing extensive profit and loss guidance. However, we will assist people in understanding what the Alaska situation entails, even though it's public information. We will certainly provide guidance on capital expenditures. I haven't updated anything regarding CapEx since we shared that guidance a couple of months ago. You can expect at least some CapEx guidance to be released alongside updates from Alaska and other segments.

I believe that next quarter will be a good time to discuss in more detail our plans and expectations for ACS.

Okay. That makes sense. And how should we think about the tax implication? You mentioned the effective tax rate in the quarter. What does Alaska do to cash taxes as well as book taxes?

On a cash tax basis, Alaska is beneficial for us due to some net operating losses there. Looking at a consolidated basis and comparing to 2021, we would be slightly above this quarter at around 6%. We believe our effective tax rate will remain in the 6% to 10% range through the profit and loss statement, and from a cash tax perspective, it will be advantageous for us.

Yes, makes sense. One other one I thought of. Do you report how much of the CapEx was FirstNet?

Given our initial guidance, we indicated that the U.S. contribution was between 40% to 50%. A significant portion of this is related to FirstNet, which accounts for approximately $25 million to $30 million. This funding is tied to infrastructure such as towers and backhaul that we will ultimately own. It can be confusing because the sites we are constructing and transferring to AT&T are not part of our capital expenditures; that expenditure belongs to them. However, we handle the construction. The capex for us consists of the towers and backhaul which we retain, making it substantial.

If you provide the actual spending figures, it represents a significant amount. Are you detailing how much was spent in the fourth quarter of last year and the first quarter of this year specifically for FirstNet? This spending clearly differs from more conventional expenditures.

Yes. No. I think, yes, that's a good point. We probably could do some of that.

And at this time, there are no further questions. I'd like to turn the conference back over to management for any closing remarks.

No closing remarks, everybody. Thanks for joining, and we'll see you in a quarter.

Ladies and gentlemen, thank you for participating in today's conference call. You may all disconnect.