Atlantic Tele-Network, Inc. (NASDAQ: ATNI), today reported results for the second quarter ended June 30, 2011 and announced the completion of the migration of its U.S. Wireless customer base to its own information technology systems and platforms.
“This was a period of significant accomplishment for ATN, as we completed the transition of our Alltel customers to our own operating platform, billing system and customer care centers in late July,” said Michael Prior, Chief Executive Officer. “The completion of this conversion allows us to eliminate the overlapping expenses incurred under our Transition Services Agreement (“TSA”) with Verizon that have negatively affected our results over the past several quarters. As anticipated, second quarter operating results included the largest expenses of our transition program, but resulted in only a modest sequential decline in margins for the period due to growth and cost efficiencies in other areas. We were also pleased to see continued improvement in many of our retail wireless operating metrics, including ARPU and churn, particularly on the postpaid side.
“While the residual impact of TSA payments and overlapping transition expenses incurred in July will affect our third quarter of 2011 costs, with the transition now complete we expect U.S. Wireless segment margins to progressively improve in the second half of this year.”
Second Quarter 2011 Financial ResultsTotal revenues for the second quarter were $193.8 million, compared to $164.7 million for the second quarter of 2010. The 18% increase over last year’s second quarter total revenues resulted primarily from the inclusion of a full quarter’s operations of the former Alltel wireless assets that the Company acquired on April 26, 2010. Total wireless service revenues represented $166.0 million, or 86% of total revenue. U.S. Wireless service revenues were $147.3 million, or 76% of total revenues, for the quarter. Adjusted EBITDA 1 for the 2011 second quarter was $32.0 million compared to $37.4 million in the 2010 second quarter and $35.4 million in the 2011 first quarter. Consistent with the past several quarters, second quarter 2011 U.S. Wireless segment results were impacted by significant costs associated with the transition of the acquired Alltel wireless assets. The Company estimates that duplicate transition-related expenses and the net impact of other one-time items were approximately $14.8 million in the second quarter as compared to $9.3 million in the first quarter of 2011. The Company estimates that these Alltel transition costs will be in the range of $5 million to $6 million during the third quarter of 2011, representing the last period in which the Company will incur these costs. Total operating income was $6.3 million compared to $7.8 million in last year’s second quarter and $10.4 million in the 2011 first quarter. Second quarter 2011 operating income included a $6.8 million increase in depreciation and amortization expenses over the prior year’s second quarter and $0.3 million in acquisition-related charges. Last year’s second quarter operating income included $11.0 million in acquisition-related charges due to the completion of the acquisition of Alltel wireless assets. Net income attributable to ATN’s stockholders was $1.8 million, or $0.12 per diluted share, as compared to $24.8 million, or $1.60 per diluted share, in the second quarter of 2010 and $4.5 million, or $0.29 per share in the 2011 first quarter. Second quarter 2010 net income included a bargain purchase gain, net of taxes, of $27.0 million related to the Company’s acquisition of former Alltel Wireless assets.
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