UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2018~~2019


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-12593

ATN INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		~~47-0728886~~
(State or other jurisdiction of incorporation or organization)		47-0728886 (I.R.S. Employer Identification ~~Number)~~No.)
500 Cummings Center, Suite 2450 Beverly, Massachusetts (Address of principal executive offices)	01915 (Zip Code)

~~500 Cummings Center~~

~~Beverly, MA 01915~~

(~~Address of principal executive offices, including zip code)~~

~~(978)~~ 978) 619-1300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	ATNI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒⌧ No ☐

◻

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒⌧ No ☐

◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒⌧		Accelerated filer ☐◻

Non-accelerated filer ☐◻		Smaller reporting company ☐
~~(Do not check if a smaller reporting company)~~		Emerging growth company ☐

IfIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒⌧

As of August ~~8, 2018,~~7, 2019, the registrant had outstanding ~~15,957,354~~16,004,810 shares of its common stock ($.01 par value).

ATN INTERNATIONAL, INC.

FORM 10-Q

Quarter Ended June 30, ~~2018~~2019


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS		3

PART I—FINANCIAL INFORMATION		4

Item 1	Unaudited Condensed Consolidated Financial Statements	4


	Condensed Consolidated Balance Sheets at June 30, ~~2018~~2019 and December 31, ~~2017~~ 2018	4
		4

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, ~~2018~~2019 and ~~2017~~2018	5


	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, ~~2018~~2019 and ~~2017~~2018	6


	Condensed Consolidated Statements of Equity for the Six Months Ended June 30, 2019 and 2018	7

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2018~~2019 and ~~2017~~2018	7
		8

	Notes to Unaudited Condensed Consolidated Financial Statements	8 9

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~31-58~~28-53

Item 3	Quantitative and Qualitative Disclosures About Market Risk	58 53

Item 4	Controls and Procedures	59 54

PART II—OTHER INFORMATION		59 54

Item 1	Legal Proceedings	59 54

~~Item1A~~Item 1A	Risk Factors	59 54

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	60 54

Item 6	Exhibits	61 56

SIGNATURES		62 57

CERTIFICATIONS

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (or the “Report”) contains forward-looking statements relating to, among other matters, our future financial performance and results of operations; the estimated timeline for ~~the rebuilding of our operations and~~increase in revenues from our customers in the ~~U.S.~~US Virgin Islands following ~~the hurricanes; our estimates of total losses due to the hurricanes~~Hurricanes Irma and ~~our estimated costs of restoring hurricane-damaged services; our ability to receive financial support from the government for our rebuild in the U.S. Virgin Islands and the timing of such support;~~Maria (the “Hurricanes”); the competitive environment in our key markets, demand for our services and industry trends; the pace of expansion and improvement of our telecommunications network and renewable energy operations including our level of estimated future capital expenditures and our realization of the benefits of these ~~investments;~~investments and their impact on our customers; the anticipated timing of our build schedule and energy production of our India renewable energy ~~projects~~projects; our pipeline of additional solar capacity; expectations regarding our revenue, expenses and financial performance; our compliance with requirements for certain grants and programs and the anticipated timing of the receipt of funds under such grants and programs; the impact of new accounting pronouncements; our satisfaction of performance obligations; the impact of litigation; the sufficiency of our cash and our expectations regarding capital expenditures; and management’s plans and strategy for the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events or results. Actual future events and results could differ materially from the events and results indicated in these statements as a result of many factors, including, among others, (1) our ability to restore our networks and services to our customers in the U.S. Virgin Islands in an efficient and timely manner and to obtain governmental or other support necessary to fully restore services in the U.S. Virgin Islands; (2) our ability to execute planned network expansions and upgrades in our various markets; (3) the general performance of our operations, including operating margins, revenues, capital expenditures, and the future growth and retention of our major customers and subscriber base and ~~consumer~~commercial and industrial demand for solar power; (4) government regulation of our businesses, which may impact our Federal Communications Commission and other telecommunications licenses or our renewables business; (5) economic, political and other risks facing our operations; (6)(2) our ability to maintain favorable roaming arrangements and satisfy the needs and demands of our major wireless customers; ~~(7)~~(3) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes and cyber security concerns in the telecommunications industry; (4) government regulation of our businesses, which may impact our Federal Communications Commission (“FCC”) and other telecommunications licenses or our renewables business; (5) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (6) our ability to receive financial support from the government for our rebuild in the US Virgin Islands and the timing of such support; (7) economic, political and other risks facing our operations; (8) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (9) our ability to find investment or acquisition or disposition opportunities that fit the strategic goals of the Company; (10) the occurrence of weather events and natural catastrophes; (11) increased competition; ~~(11) our ability to expand our renewable energy business;~~ (12) ~~our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (13)~~ the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; ~~(14) the occurrence of weather events and natural catastrophes; (15)~~(13) our continued access to capital and credit markets; ~~(16)~~and (14) the risk of currency fluctuation for those markets in which we ~~operate; and (17) our ability to realize the value that we believe exists in our businesses.~~operate. These and other additional factors that may cause actual future events and results to differ materially from the events and results indicated in the forward-looking statements above are set forth more fully under Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC on ~~March 1, 2018~~February 28, 2019 as may be updated by our Quarterly Reports on Form 10-Q and the other reports we file from time to time with the SEC. Except as required by law, the Company undertakes no obligation and has no intention to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors that may affect such forward-looking statements.

In this Report, the words “the Company”, “we,” “our,” “ours,” “us” and “ATN” refer to ATN International, Inc. and its subsidiaries. This Report contains trademarks, service marks and trade names that are the property of, or licensed by, ATN and its subsidiaries.

Reference to dollars ($) refer to ~~U.S.~~US dollars unless otherwise specifically indicated.

PART I—FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

June 30,

December 31,


2018

2017


ASSETS

Current Assets:

Cash and cash equivalents

$
167,107

$
207,956

Restricted cash

1,071

833

Short-term investments

1,595

7,076

Accounts receivable, net of allowances of $15.1 million and $15.0 million, respectively

51,365

43,529

Inventory, materials and supplies

7,789

15,398

Prepayments and other current assets

35,386

68,136

Total current assets

264,313

342,928

Fixed Assets:

Property, plant and equipment

1,255,975

1,169,806

Less accumulated depreciation

(553,007)

(526,660)

Net fixed assets

702,968

643,146

Telecommunication licenses, net

95,952

95,952

Goodwill

63,970

63,970

Customer relationships, net

10,403

11,734

Restricted cash

11,949

11,101

Other assets

39,444

36,774

Total assets

$
1,188,999

$
1,205,605

LIABILITIES AND EQUITY

Current Liabilities:

Current portion of long-term debt

$
11,268

$
10,919

Accounts payable and accrued liabilities

115,445

116,133

Dividends payable

2,712

2,724

Accrued taxes

10,238

6,751

Advance payments and deposits

17,727

25,178

Total current liabilities

157,390

161,705

Deferred income taxes

30,755

31,732

Other liabilities

41,612

37,072

Long-term debt, excluding current portion

139,733

144,873

Total liabilities

369,490

375,382

Commitments and contingencies (Note 13)

ATN International, Inc. Stockholders’ Equity:

Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding

—

—

Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,128,694 and 17,102,530 shares issued, respectively, 15,957,537 and 16,025,745 shares outstanding respectively

170

170

Treasury stock, at cost; 1,171,157 and 1,076,785 shares, respectively

(40,268)

(36,110)

Additional paid-in capital

172,170

167,973

Retained earnings

550,872

552,948

Accumulated other comprehensive income

141

3,746

Total ATN International, Inc. stockholders’ equity

683,085

688,727

Non-controlling interests

136,424

141,496

Total equity

819,509

830,223

Total liabilities and equity

$
1,188,999

$
1,205,605


	June 30,		December 31,
	2019		2018
ASSETS
Current Assets:
Cash and cash equivalents	$	145,611	$	191,836
Restricted cash		1,071		1,071
Short-term investments		5,281		393
Accounts receivable, net of allowances of $17.3 million and $16.5 million, respectively		50,524		38,305
Inventory, materials and supplies		6,714		6,305
Prepayments and other current assets		41,028		37,855
Total current assets		250,229		275,765
Fixed Assets:
Property, plant and equipment		1,215,826		1,188,916
Less accumulated depreciation		(602,123)		(562,064)
Net fixed assets		613,703		626,852
Telecommunication licenses, net		93,686		93,686
Goodwill		63,970		63,970
Customer relationships, net		8,277		9,323
Operating lease right-of-use assets		68,587		—
Other assets		48,524		37,708
Total assets	$	1,146,976	$	1,107,304
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	4,688	$	4,688
Accounts payable and accrued liabilities		83,068		80,873
Dividends payable		2,721		2,720
Accrued taxes		8,342		31,795
Current portion of operating lease liabilities		10,021		—
Advance payments and deposits		21,461		20,574
Total current liabilities		130,301		140,650
Deferred income taxes		5,702		10,276
Operating lease liabilities, excluding current portion		58,748		—
Other liabilities		49,206		46,760
Long-term debt, excluding current portion		84,478		86,294
Total liabilities		328,435		283,980
Commitments and contingencies (Note 15)
ATN International, Inc. Stockholders’ Equity:
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding		—		—
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,306,504 and 17,274,215 shares issued, respectively, 16,005,046 and 16,002,699 shares outstanding respectively		172		172
Treasury stock, at cost; 1,301,458 and 1,271,516 shares, respectively		(50,125)		(48,547)
Additional paid-in capital		185,112		181,778
Retained earnings		555,806		563,593
Accumulated other comprehensive income		(1,282)		(1,609)
Total ATN International, Inc. stockholders’ equity		689,683		695,387
Non-controlling interests		128,858		127,937
Total equity		818,541		823,324
Total liabilities and equity	$	1,146,976	$	1,107,304

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2018~~2019 AND ~~2017~~2018

(Unaudited)

(In thousands, ~~except per share amounts)~~Except Per Share Data)


	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
REVENUE:
Wireless	$	46,996	$	50,496	$	88,608	$	101,043
Wireline		59,276		61,269		119,473		109,365
Renewable energy		1,449		6,023		2,939		11,855
Total revenue		107,721		117,788		211,020		222,263
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		27,930		28,257		55,818		54,171
Engineering and operations		19,107		18,409		38,139		36,561
Sales, marketing and customer service		9,874		8,413		19,264		16,974
General and administrative		26,590		26,754		50,405		52,296
Transaction-related charges		28		438		68		465
Depreciation and amortization		21,549		21,913		42,267		43,217
(Gain) Loss on disposition of long-lived assets		(111)		(2,333)		191		(2,049)
Loss on damaged assets and other hurricane related charges, net of insurance recovery		—		184		—		666
Total operating expenses		104,967		102,035		206,152		202,301
Income from operations		2,754		15,753		4,868		19,962
OTHER INCOME (EXPENSE)
Interest income		517		487		1,445		853
Interest expense		(1,263)		(2,327)		(2,544)		(4,532)
Other expenses		(255)		(1,045)		(68)		(1,798)
Other expense, net		(1,001)		(2,885)		(1,167)		(5,477)
INCOME BEFORE INCOME TAXES		1,753		12,868		3,701		14,485
Income tax (benefit) provisions		(274)		2,088		939		6,008
NET INCOME		2,027		10,780		2,762		8,477
Net income attributable to non-controlling interests, net of tax expense of $0.3 million, $0.3 million, $0.7 million and $0.6 million, respectively.		(2,883)		(3,564)		(5,198)		(6,816)
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	(856)	$	7,216	$	(2,436)	$	1,661
NET INCOME (LOSS) PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:
Basic	$	(0.05)	$	0.45	$	(0.15)	$	0.10
Diluted	$	(0.05)	$	0.45	$	(0.15)	$	0.10
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		15,997		15,962		15,986		15,996
Diluted		15,997		16,010		15,986		16,046
DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK	$	0.17	$	0.17	$	0.34	$	0.34

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

Three months ended  June 30,

Six months ended June 30,


2018

2017

2018

2017

REVENUE:

Wireless

$
50,496

$
56,546

$
101,043

$
115,471

Wireline

61,269

61,802

109,365

125,960

Renewable energy

6,023

4,897

11,855

9,929

Total revenue

117,788

123,245

222,263

251,360

OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):

Termination and access fees

28,257

30,922

54,171

63,924

Engineering and operations

18,409

19,378

36,561

39,061

Sales, marketing and customer service

8,413

8,729

16,974

17,765

General and administrative

26,754

26,011

52,296

50,370

Transaction-related charges

438

148

465

826

Depreciation and amortization

21,913

22,254

43,217

44,747

(Gain) loss on disposition of long-lived assets

(2,333)

—

(2,049)

1,111

Loss on damaged assets and other hurricane related charges, net of insurance recovery

184

—

666

—

Total operating expenses

102,035

107,442

202,301

217,804

Income from operations

15,753

15,803

19,962

33,556

OTHER INCOME (EXPENSE)

Interest income

487

347

853

633

Interest expense

(2,327)

(2,153)

(4,532)

(4,469)

Loss on deconsolidation of subsidiary

—

—

—

(529)

Other expenses

(1,045)

(492)

(1,798)

(973)

Other expense, net

(2,885)

(2,298)

(5,477)

(5,338)

INCOME BEFORE INCOME TAXES

12,868

13,505

14,485

28,218

Income tax provisions

2,088

2,596

6,008

5,724

NET INCOME

10,780

10,909

8,477

22,494

Net income attributable to non-controlling interests, net of tax expense of $0.3 million, $0.1 million, $0.6 million, and $0.4 million, respectively.

(3,564)

(5,026)

(6,816)

(9,751)

NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS

$
7,216

$
5,883

$
1,661

$
12,743

NET INCOME PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:

Basic

$
0.45

$
0.36

$
0.10

$
0.79

Diluted

$
0.45

$
0.36

$
0.10

$
0.78

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

15,962

16,195

15,996

16,176

Diluted

16,010

16,274

16,046

16,263

DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK

$
0.17

$
0.34

$
0.34

$
0.68

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Unaudited)

(In thousands)



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Net income	$	2,027	$	10,780	$	2,762	$	8,477
Other comprehensive income (loss):
Foreign currency translation adjustment		263		(2,551)		500		(3,583)
Unrealized gain (loss) on derivatives		(112)		42		(173)		181
Other comprehensive income (loss), net of tax		151		(2,509)		327		(3,402)
Comprehensive income		2,178		8,271		3,089		5,075
Less: Comprehensive income attributable to non-controlling interests		(2,883)		(3,564)		(5,198)		(6,816)
Comprehensive income (loss) attributable to ATN International, Inc.	$	(705)	$	4,707	$	(2,109)	$	(1,741)

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(In Thousands, Except Per Share Data)


									Accumulated		Total
			Treasury		Additional				Other		ATNI		Non-
	Common		Stock,		Paid In		Retained		Comprehensive		Stockholders’		Controlling		Total
	Stock		at cost		Capital		Earnings		Income/(Loss)		Equity		Interests		Equity
Balance, December 31, 2018	$	172	$	(48,547)	$	181,778	$	563,593	$	(1,609)	$	695,387	$	127,937	$	823,324
Purchase of 28,393 shares of common stock		—		(1,578)		—		—		—		(1,578)		—		(1,578)
Stock-based compensation		—		—		3,334		—		—		3,334		—		3,334
Dividends declared on common stock ($0.34 per common share)		—		—		—		(5,351)		—		(5,351)		(3,901)		(9,252)
Repurchase of non-controlling interests		—		—		—		—		—		—		(864)		(864)
Investments made by minority shareholders in consolidated affiliates		—		—		—		—		—		—		488		488
Comprehensive income:
Net income (loss)		—		—		—		(2,436)		—		(2,436)		5,198		2,762
Other comprehensive income		—		—		—		—		327		327		—		327
Total comprehensive income (loss)		—		—		—		—		—		(2,109)		5,198		3,089
Balance, June 30, 2019	$	172	$	(50,125)	$	185,112	$	555,806	$	(1,282)	$	689,683	$	128,858	$	818,541

Balance, December 31, 2017	$	170	$	(36,110)	$	167,973	$	552,948	$	3,746	$	688,727	$	141,496	$	830,223
Issuance of 12,500 shares of common stock upon exercise of stock options		—		—		518		—		—		518		—		518
Purchase of 72,922 shares of common stock		—		(4,158)		—		—		—		(4,158)		—		(4,158)
Stock-based compensation		—		—		3,679		—		—		3,679		—		3,679
Dividends declared on common stock ($0.34 per common share)		—		—		—		(5,428)		—		(5,428)		(12,974)		(18,402)
Repurchase of non-controlling interests		—		—		—		—		—		—		(62)		(62)
Cumulative effect adjustment due to adoption of new accounting pronouncements		—		—		—		1,691		(203)		1,488		1,148		2,636
Comprehensive income:
Net income		—		—		—		1,661		—		1,661		6,816		8,477
Other comprehensive loss		—		—		—		—		(3,402)		(3,402)		—		(3,402)
Total comprehensive income (loss)		—		—		—		—		—		(1,741)		6,816		5,075
Balance, June 30, 2018	$	170	$	(40,268)	$	172,170	$	550,872	$	141	$	683,085	$	136,424	$	819,509

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~

~~FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017 (Unaudited)~~

~~(In thousands)~~

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017
Net income

$
10,780

$
10,909

$
8,477

$
22,494
Other comprehensive income:

Foreign currency translation adjustment

(2,551)

302

(3,583)

2,232
Reclassifications of gains on sale of marketable securities to net income

—

(755)

—

(1,044)
Unrealized gain (loss) on securities

42

(90)

181

(130)
Projected pension benefit obligation, net of tax of $0.0 million, $0.0 million, $0.0 million, and $0.4 million, respectively

—

—

—

513
Other comprehensive income (loss), net of tax

(2,509)

(543)

(3,402)

1,571
Comprehensive income

8,271

10,366

5,075

24,065
Less: Comprehensive income attributable to non-controlling interests

(3,564)

(5,026)

(6,816)

(9,751)
Comprehensive income (loss) attributable to ATN International, Inc.

$
4,707

$
5,340

$
(1,741)

$
14,314

~~The accompanying condensed notes are an integral part of these condensed consolidated financial statements~~.

~~ATN INTERNATIONAL, INC. AND SUBSIDIARIES~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE ~~31,~~30, 2019 AND 2018 ~~AND 2017~~

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2019		2018
Cash flows from operating activities:
Net income	$	2,762	$	8,477
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		42,267		43,217
Provision for doubtful accounts		2,736		2,249
Amortization of debt discount and debt issuance costs		290		393
Stock-based compensation		3,334		3,679
Deferred income taxes		(4,574)		(1,279)
(Gain) loss on disposition of long-lived assets		191		(2,049)
Unrealized (gain) loss on foreign currency		(160)		1,066
Other non-cash activity		11		177
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:
Accounts receivable		(14,886)		(10,605)
Materials and supplies, prepayments, and other current assets		(9,130)		1,254
Prepaid income taxes		5,158		—
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities		10,570		(2,137)
Accrued taxes		(22,011)		1,249
Other assets		251		(1,208)
Other liabilities		1,713		1,554
Net cash provided by operating activities		18,522		46,037
Cash flows from investing activities:
Capital expenditures		(35,273)		(40,594)
Hurricane rebuild capital expenditures		(123)		(66,654)
Hurricane insurance proceeds		—		34,606
Receipt of government grants		—		5,400
Divestiture of businesses, net of transferred cash of $0.0 and $0.3 million, respectively		—		926
Purchase of other investments		(10,000)		(2,000)
Proceeds from sale of assets		—		4,130
Purchase of short-term investments		(5,028)		—
Proceeds from sale of investments		141		5,348
Net cash used in investing activities		(50,283)		(58,838)
Cash flows from financing activities:
Dividends paid on common stock		(5,439)		(5,441)
Distribution to non-controlling interests		(3,878)		(12,836)
Payment of debt issuance costs		(1,340)		—
Principal repayments of term loan		(1,887)		(4,786)
Share repurchases		—		(1,576)
Stock-based compensation share repurchases		(1,578)		(2,084)
Repurchases of non-controlling interests		(861)		(61)
Investments made by minority shareholders in consolidated affiliates		488		—
Net cash used in financing activities		(14,495)		(26,784)
Effect of foreign currency exchange rates on cash and cash equivalents		31		(178)
Net change in cash, cash equivalents, and restricted cash		(46,225)		(39,763)
Total cash, cash equivalents, and restricted cash, beginning of period		192,907		219,890
Total cash, cash equivalents, and restricted cash, end of period	$	146,682	$	180,127
Noncash investing activity:
Transfer from inventory, materials and supplies to property, plant and equipment	$	—	$	6,708
Purchases of property, plant and equipment included in accounts payable and accrued expenses	$	6,356	$	13,266

Six Months Ended June 30,

2018

2017
Cash flows from operating activities:

Net income
$
8,477

$
22,494
Adjustments to reconcile net income to net cash flows provided by operating activities:

Depreciation and amortization

43,217

44,747
Provision for doubtful accounts

2,249

1,906
Amortization and write off of debt discount and debt issuance costs

393

279
Stock-based compensation

3,679

3,786
Unrealized loss on foreign currency

1,066

—
Deferred income taxes

(1,279)

2,379
Loss on equity method investments

—

2,033
(Gain) Loss on disposition of long-lived assets

(2,049)

1,111
Gain on sale of investments

—

(1,055)
Loss on deconsolidation of subsidiary

—

529
Other non-cash activity

177

509
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:

Accounts receivable

(10,605)

(6,062)
Materials and supplies, prepayments, and other current assets

1,254

(6,586)
Prepaid income taxes

—

995
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities

(2,137)

(3,331)
Accrued taxes

1,249

(7,876)
Other assets

(1,208)

2,887
Other liabilities

1,554

6,722
Net cash provided by operating activities

46,037

65,467
Cash flows from investing activities:

Capital expenditures

(40,594)

(78,559)
Hurricane rebuild capital expenditures

(66,654)

—
Hurricane insurance proceeds

34,606

—
Receipt of government grants

5,400

—
Purchase of strategic investments

(2,000)

—
Divestiture of businesses,  net of transferred cash of $0.0 million and $2.1 million, respectively

926

22,597
Purchases of spectrum licenses and other intangible assets, including deposits

—

(36,832)
Proceeds from sale of investments

5,348

2,761
Proceeds from sale of assets

4,130

—
Net cash used in investing activities

(58,838)

(90,033)
Cash flows from financing activities:

Dividends paid on common stock

(5,441)

(10,992)
Proceeds from new borrowings

—

8,571
Distribution to non-controlling interests

(12,836)

(3,373)
Payment of debt issuance costs

—

(326)
Proceeds from stock option exercises

—

274
Principal repayments of term loan

(4,786)

(5,447)
Repurchase of common stock

(3,660)

(2,186)
Acquisition of businesses,  net of acquired cash of  $0.0 million

—

(1,178)
Repurchases of non-controlling interests

(61)

(953)
Investments made by minority shareholders in consolidated affiliates

—

122
Net cash used in provided by financing activities

(26,784)

(15,488)
Effect of foreign currency exchange rates on cash and cash equivalents

(178)

207
Net change in cash, cash equivalents, and restricted cash

(39,763)

(39,847)
Total cash, cash equivalents, and restricted cash, beginning of period

219,890

288,358
Total cash, cash equivalents, and restricted cash, end of period
$
180,127

$
248,511
Noncash investing activity:

Transfer from inventory, materials and supplies to property, plant and equipment
$
6,708

$
—
Purchases of property, plant and equipment included in accounts payable and accrued expenses
$
13,266

$
13,107

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.ORGANIZATION AND BUSINESS OPERATIONS

The Company is a holding company that, directly and through its ~~operating~~ subsidiaries, ~~(i) provides wireless~~owns and ~~wireline~~operates telecommunications ~~services~~businesses in North America, Bermuda, ~~and~~ the Caribbean, ~~(ii) develops, owns~~ and ~~operates commercial distributed generation solar power systems~~a renewable energy business in ~~the United States and India, and (iii) owns and operates terrestrial and submarine fiber optic transport systems in the United States and in the Caribbean.~~India. The Company was incorporated in Delaware in 1987, ~~and~~ began trading publicly in ~~1991.~~1991 and spun off more than a half of its operations to stockholders in 1998. Since that time, the Company has engaged in many strategic acquisitions and investments to help grow its ~~operations.~~operations, using the cash generated from its established operating units to re-invest in its existing businesses and to make strategic investments in earlier stage businesses. The Company ~~actively evaluates~~looks for businesses that offer growth opportunities or potential strategic benefits, but that require additional ~~domestic~~capital investment in order to execute on their business plans. The Company holds controlling positions with respect to some of its investments and ~~international acquisition, divestiture,~~minority positions in others. These strategic investments frequently offer a product and ~~investment opportunities and other strategic transactions~~service development component in addition to the ~~telecommunications, energy-related and other industries that meet~~prospects of generating returns on its ~~return-on-investment and other acquisition criteria.~~invested capital.

The Company ~~offers the following principal services:~~has identified three operating segments to manage and review its operations, and to facilitate investor presentations of its results, as follows:

●

~~Wireless.~~ US Telecom. In the United States, the Company offers wireless and wireline services. The Company offers wholesale wireless voice and data roaming services to national, regional, local and selected international wireless carriers in rural markets located principally in the Southwest and Midwest United States. The Company also provides retail wireless, wireline and wholesale long-distance voice services to telecommunications carriers in the areas in which it offers wireline services.

●

International Telecom. The Company’s international wireless services include voice and data services to retail ~~and wholesale~~ customers in Bermuda, Guyana ~~the U.S. Virgin Islands,~~ and the ~~United States.~~

~~Wireline.~~ US Virgin Islands. The Company’s international wireline services include ~~local telephone~~voice and data services in Bermuda, the Cayman Islands, Guyana and the ~~U.S.~~US Virgin Islands, ~~and the United States. The Company’s wireline services also include~~as well as video services in Bermuda, the Cayman Islands, and the ~~U.S~~US Virgin Islands. ~~The~~In addition, the Company offers wholesale ~~long‑distance~~long-distance voice services to other telecommunications ~~carriers. Through March 8, 2017,~~carriers in the ~~Company also offered facilities‑based integrated voice and data communications services and wholesale transport services to enterprise and residential customers~~countries in ~~New England, primarily Vermont, and in New York State.~~

which it offers international wireline services.

●

Renewable Energy.In ~~the United States,~~India, the Company provides distributed generation solar power to corporate, utility and municipal customers. ~~The~~Through November 6, 2018, the Company also ~~owns and develops projects in India providing~~provided distributed generation solar power ~~to corporate customers.~~

in the United States in Massachusetts, California and New Jersey.

The following chart summarizes the operating activities of the Company’s principal subsidiaries, the segments in which the Company reports its revenue and the markets it served as of June 30, ~~2018:~~2019:


Segment	Services	Markets	Tradenames
~~Segment~~	~~Services~~	~~Markets~~	~~Tradenames~~
~~U.S.~~US Telecom	Wireless	United States (rural markets)	~~Commnet,~~ Choice, Choice NTUA Wireless, Commnet, WestNet, Geoverse
	Wireline	United States	Essextel, Deploycom
International Telecom	Wireline	Bermuda, Cayman Islands, Guyana, ~~U.S.~~US Virgin ~~Islands, Cayman~~ Islands	~~One,~~Fireminds, GTT+, ~~Viya,~~One, Logic, ~~Fireminds~~Viya
	Wireless	Bermuda, Guyana, ~~U.S.~~US Virgin Islands	~~One,~~ GTT+, One, Viya
	Video Services	Bermuda, ~~U.S.~~Cayman Islands, US Virgin ~~Islands, Cayman~~ Islands	Logic, One, Viya ~~Logic~~
RenewableEnergy	Solar	~~United States (Massachusetts, California, and New Jersey),~~ India	~~Ahana Renewables,~~ Vibrant Energy

The Company actively evaluates potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, that meet its return on investment and other criteria. In addition, the Company considers non-controlling investments in earlier stage businesses that it considers strategically relevant, and which may offer long-term growth potential for the Company, either individually, or as research and development businesses that can support the Company’s operating subsidiaries in new product and service development and offerings. The Company provides management, technical, financial, regulatory, and marketing services to its subsidiaries and typically receives a management fee equal to a percentage of their ~~respective revenue. Management fees from subsidiaries are~~revenues, which is eliminated in consolidation. For further information about the Company’s financial segments and geographical information about its operating revenues and assets, see Note 14 to the Consolidated Financial Statements included in this Report.

2. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial information included herein is unaudited; however, the Company believes such information and the disclosures herein are adequate to make the information presented not misleading and reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial position and results of operations for such periods. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Results of interim periods may not be indicative of results for the full year. These condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC on ~~March 1, 2018.~~February 28, 2019.

The condensed consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and certain entities, which are consolidated in accordance with the provisions of the Financial Accounting Standards Board’s (“FASB”) authoritative guidance on the consolidation of variable interest entities, since it is determined that the Company is the primary beneficiary of these entities.

The Company’s effective tax rate for the three months ended June 30, 2018 and 2017 was 16.2% and 19.2%, respectively. The effective tax rate for the three months ended June 30, 2018 was primarily impacted by the following items: (i) a $0.5 million benefit for the release of a capital loss valuation allowance due to a capital gain on a sale of a wireless license, and (ii) the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in jurisdictions where it cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands and India. The effective tax rate for the three months ended June 30, 2017 was impacted by the following items: (i) a benefit for the net capital loss due to the stock sales of our businesses in New England, New York and St. Maarten, and (ii) the mix of income generated among the jurisdictions in which it operates. The Company’s effective tax rate for the six months ended June 30, 2018 and 2017 was 41.5% and 20.3%, respectively. The effective tax rate for the six months ended June 30, 2018 was primarily impacted by the following items: (i) a $0.7 million provision for the intercompany sale of assets from the U.S. to the U.S. Virgin Islands, (ii) a $0.5 million increase (net) in unrecognized tax benefits recognized discretely, (iii) a $0.5 million benefit for the release of a capital loss valuation allowance due to a capital gain on a sale of a wireless license, and (iv) the mix of income generated among the jurisdictions in which it operates along with the exclusion of losses in jurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands and India. The effective tax rate for the six months ended June 30, 2017 was impacted by the following items: (i) a benefit for the net capital loss due to the stock sales of our businesses in New England, New York and St. Maarten, and (ii) the mix of income generated among the jurisdictions in which the Company operates. The Company’s 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. The Company’s 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 it operates. The effective tax rate in 2018 could be affected by adjustments to the provisional amounts recorded under the guidance of SAB 118 for the one-time transition tax and the revaluation of deferred tax assets and liabilities due to the U.S. statutory rate change in 2017 however no change has been recorded as of June 30, 2018. While the Company believes it has 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 application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, the Company could record additional provisions or benefits for U.S. federal, state, and foreign tax matters in future periods as new information becomes available.

Recent Accounting Pronouncements

In May 2014, the ~~Financial~~FASB issued Accounting Standards ~~Board~~Update (“~~FASB”~~ASU”) ~~issued ASU~~ 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), and subsequently issued related updates, (collectively known as “ASC 606”), which provides a single, comprehensive revenue recognition model for all contracts with customers. The revenue standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted this standard on January 1, 2018. Refer to Note 3.3 to the Consolidated Financial Statements in this Report.

In January 2016, the FASB issued ASU 2016-01, ~~“Financial~~��“Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The Company adopted this standard on January 1, 2018. Upon adoption, the Company held $20.1 million of equity investments that dodid not have readily determinable fair values. As a result these investments are measured at cost less impairments, adjusted for observable price changes of similar investments of the same issuer. ~~The Company performs a qualitative impairment assessment of these investments quarterly by reviewing available information.~~ The Company has not adjusted the cost of these investments since acquisition. Upon adoption, the Company held $0.6 million of equity investments with readily determinable fair values and reclassified $0.2 million of unrealized gains on this investment to retained earnings.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and subsequently issued related updates (“ASU 2016-02”), which provide comprehensive lease accounting guidance. The standard requires entities to recognize lease assets and liabilities on the balance sheet as well as disclosure of key information about leasing arrangements. ASU 2016-02 ~~will become~~became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company ~~is in the process of implementing new systems, processes and controls to implement the guidance. The Company will adopt the standard~~adopted ASC 2016-02 on January 1, 2019 ~~by applying~~

utilizing the ~~new lease requirements at~~optional transition method with a cumulative adjustment on the ~~effective~~ date ~~and recognize a cumulative-effect adjustment to the opening balance sheet retained earnings in the period~~ of adoption ~~with no adjustments to~~and not adjusting prior periods. ~~The adoption will result in right~~Refer to ~~use asset and liabilities being recorded on the Company’s balance sheet. The Company is in the process of determining quantitative information related to the impact~~Note 4 of the ~~guidance.~~Condensed Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The Company adopted ASU 2016-09 on January 1, 2017. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. This had no impact on the Company’s historical results. Also as a result of the adoption, the Company changed its policy election to account for forfeitures as they occur rather than on an estimated basis. The change resulted in the Company reclassifying $0.3 million from additional paid-in capital to retained earnings for the net cumulative-effect adjustment in stock compensation expense related to prior periods.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides further clarification on eight cash flow classification issues. The Company adopted this standard on January 1, 2018. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” (“ASU 2016-18”). The amendments in ASU 2016-18 are intended to reduce diversity in practice related to the classification and presentation of changes in restricted cash or restricted cash equivalents on the statement of cash flows. The amendments in ASU 2016-18 require that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard on January 1, 2018.

The Company’s statement of cash flows reports the cash effects during a period of an entity’s operations, its investing transactions, and its financing transactions. The statement of cash flows explains the change during the period in the total cash which includes cash equivalents as well as restricted cash. The Company applies the predominance

principle to classify separately identifiable cash flows based on the nature of the underlying cash flows. Debt prepayment or extinguishment costs are classified as cash outflows from financing activities. Contingent consideration payments made three months or less after a business combination are classified as investing activities and those made after that time are classified as financing activities. Proceeds from the settlement of insurance claims are classified on the basis of the nature of the loss. Prior to January 1, 2018, the Company classified all payments made in a business combination as investing activities and did not include restricted cash in total cash. This change impacted the Company’s cash flows for the six months ended June 30, 2017 as indicated below (amounts in thousands):

Statement of Cash flows - Six months ended June 30, 2017

Reported

Change

Under previous guidance
Net cash provided by operating activities
$
65,467
$
—
$
65,467
Net cash used in investing activities

(90,033)

588

(89,445)
Net cash used in financing activities

(15,488)

1,178

(14,310)
Effect of foreign currency exchange rates on total cash

207

—

207
Net change in total cash
$
(39,847)
$
1,766
$
(38,081)
Total cash, beginning of period

288,358

(18,637)

269,721
Total cash, end of period
$
248,511
$
(16,871)
$
231,640

In October 2016 the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory”. The new standard eliminates all intra-entity sales of assets other than inventory, the exception under current standards that permits the tax effects of intra-entity asset transfers to be deferred until the transferred asset is sold to a third party or otherwise recovered through use. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new standard was effective for the Company on January 1, 2018. There was not a material impact to the Company’s ~~consolidated financial statements~~Consolidated Financial Statements upon adoption.

In January 2017, the FASB issued Accounting Standards Update 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” or (“ASU 2017-04”). The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities. Instead, under the amendments in ASU 2017-04, an entity performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not more than the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard in the third quarter of 2017.

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”. The new guidance requires the service cost component to be presented separately from the other components of net benefit costs. Service cost will be presented with other employee compensation cost within income from operations. The other components of net benefit cost, such as interest cost, expected return on plan assets, amortization of prior service cost and gains or losses are required to be presented in other income. The Company adopted this standard on January 1, 2018.

The Company sponsors pension and other postretirement benefit plans for employees of certain subsidiaries. Net periodic pension expense consists of service cost, interest cost, expected return on plan assets, and amortization of actuarial gains and losses. Service cost is recognized in operating income and all other components of pension expense are recognized in other income inThere was not a material impact to the Company’s Statement of Operations. The Company recognizes a pension or other postretirement plan’s funded status as either an asset or liability in its consolidated balance sheet. Actuarial gains and losses are reported as a component of other comprehensive income and amortized through other income in subsequent periods. Prior to January 1, 2018, all components of pension expense were recognized in operating income. This changeConsolidated Financial Statements upon adoption.

impacted the Company’s Statement of Operations for the three and six months ended June 30, 2017 by increasing operating expenses $40 thousand and $80 thousand, respectively and decreasing other income by the same amount. There was no impact on income before income taxes. The Company elected the practical expedient allowing the use of the amounts disclosed for the various components of net benefit cost in the pension and other postretirement benefit plans footnote as the basis for the retrospective application.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The standard: (a) expands and refines hedge accounting for both financial and non-financial risk components, (b) aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and (c) includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including the adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The ~~guidance related to cash flow and net investment hedges existing at the date of adoption should be applied by means of~~Company adopted this standard on January 1, 2019. There was not a ~~cumulative-effect adjustment~~material impact to the ~~balance sheet as of the beginning of the fiscal year of~~Company’s Consolidated Financial Statements upon adoption. ~~The guidance related to presentation and disclosure should be applied prospectively. The Company is currently assessing the impact of ASU 2017-12 on its consolidated financial statements.~~

In February 2018, the FASB issued ASU 2018-02 “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” (“ASU 2018-02”). The standard gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income that were impacted by the 2017 Tax Cuts and Jobs Act. The guidance is effective for all entities for fiscal years beginning after December 31, 2018 and interim periods within those fiscal years. Early adoption is permitted. The guidance may be applied in the period of adoption or retrospectively to each impacted period. The Company ~~has elected to early adopt ASU 2018-02~~adopted this standard on ~~December 31, 2017 and recorded its impact in the period of adoption.~~January 1, 2018. The impact of the adoption ~~results~~resulted in a $0.8 million reclassification from accumulated other comprehensive income to retained earnings ~~which is~~ offset by an equivalent valuation ~~allowance, with~~allowance. As a result the net impact ~~being~~ of the adoption of this standard was zero.

~~3. Revenue Recognition~~

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). This standard requires entities that are customers in cloud computing arrangements to defer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance. The ~~Company’s significant accounting policies are detailed~~guidance may be applied retrospectively or prospectively to

implementation costs incurred after the date of adoption. ASU 2018-15 is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The Company prospectively adopted this standard in ~~“Note 2 – Summary~~the fourth quarter of ~~Significant Accounting Policies” within Item 8~~2018. The Company had $1.2 million and $2.5 million of ~~our Annual Report on Form 10-K for the year ended~~capitalized implementation costs at December 31, 2017. The Company’s accounting policies are updated as a result of adopting ASC 606 on January 1, 2018. The adoption of ASC 606 impacted the accounting for contract acquisition costs, multiyear retail wireless contracts with promotional discounts,2018 and ~~deferral of certain activation fees as further described below.~~

~~Revenue Recognition~~ ~~– The Company earns revenue from its telecommunication~~June 30, 2019, respectively, and ~~renewable energy operations. The Company recognizes revenue through the following steps:~~

~~Identification of the contract with a customer~~

~~Identification of the performance obligations in the contract~~

~~Determination of the transaction price~~

~~Allocation of the transaction price to the performance obligations in the contract~~

~~Recognize revenue when, or as, we satisfy performance obligations~~

~~Revenue Recognition- Telecommunications~~

Wireless revenue consists of wholesale and retail revenue. Wholesale revenue is generated from providing mobile voice and data services to the customers of other wireless carriers, the provision of network switching services and certain transport services using the Company’s wireless networks. The transaction price of some wholesale revenue contracts includes variable consideration in the form of volume discounts. Management uses its judgment based on projected transaction volumes to estimate the transaction price and to allocate the transaction price to the performance

obligations in the contract. Revenue is recognized over time as the service is rendered to the customer. Retail revenue is generated from providing mobile voice and data services to subscribers as well as roaming services provided to other carriers’ customers roaming into our retail markets. This revenue is recognized over time as the service is rendered. Lastly, wireless revenue includes revenues from equipment sold to customers which is recognized when the equipment is delivered to the customer.

Management considers transactions where customers purchase subsidized or discounted equipment and mobile voice or data services to be a single contract. For these contracts, the transaction price is allocated to the equipment and mobile service based on their standalone selling prices. The standalone selling price is based on the amount the Company charges for the equipment and service to similar customers. Equipment revenue is recognized when the equipment is delivered to customers and service revenue is recognized as service is rendered.

Wireline revenue is generated from access and usage fees for internet, voice and video services charged to subscribers as well as wholesale long-distance voice services provided to telecommunication carriers at contracted rates. Revenue from these contracts is recognized over time as the service is rendered to the customer.

The Company’s wireless and wireline contracts occasionally include promotional discounts such as free service periods or discounted products. If a contract contains a substantive termination penalty, the transaction price is allocated to the performance obligations based on standalone selling price resulting in accelerated revenue recognition and the establishment of a contract asset that will be recognized over the life of the contract. If a contract includes a promotional discount but no substantive termination penalty the discount is recorded in the promotional period and no contract asset it established. The Company’s customers also have the option to purchase additional telecommunication services. Generally, these options are not performance obligations and are excluded from the transaction price because they do not provide the customers with a material right.

The Company may charge upfront fees for activation and installation of some of its products and services. These fees are reviewed to determine if they represent a separate performance obligation. If they are not a separate performance obligation, the contract price associated with them is recognized over the life of the customer. If the fees represent a performance obligation they are recognized when delivered to the customer based on standalone selling price.

~~Sales and use and state excise taxes collected from customers that are remitted to the governmental authorities are reported on a net basis and excluded from the revenues and sales.~~

~~Revenue Recognition-Renewable Energy~~

Revenue from the Company’s Renewable Energy segment is generated from the sale of electricity through power purchase agreements (“PPA’s”) with various customers that generally range from 10 to 25 years. The Company recognizes revenue at contractual PPA rates over time as electricity is generated and simultaneously consumed by the customer. The Company’s Renewable Energy segment also generates revenue from the sale of Solar Renewable Energy Credits (“SRECs”). Revenue is recognized over time as SRECs are sold through long-term purchase agreements at the contractual rate specified in the agreement.

~~Disaggregation~~

The Company's revenue is presented on a disaggregated basis in Note 12 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from wireline, wireless and renewable energy, as well as domestic versus international wireline and wireless services. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

~~Contract Assets and Liabilities~~

The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount. In these contracts the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current asset and the noncurrent portion is included in other assets on our balance sheets. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retail revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including mobile voice and data services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on our balance sheets. Contract assets and liabilities consisted of the following (amounts in thousands):

June 30, 2018

March 31, 2018

$ Change

% Change
Contract asset – current
$
1,434
$
1,309
$
125

10%
Contract asset – noncurrent

568

498

70

14%
Contract liabilities

(9,552)

(9,827)

275

-3%
Net contract liability
$
(7,550)
$
(8,020)
$
470

-6%

The contract asset-current is included in prepayments and other current assets, the contract asset – noncurrent is included in other assets, and the contract liabilities are included in advance payments and deposits on the Company’s balance sheet. The decrease in our net contract liability was due to the timing of customer prepayments and contract billings. In the second quarter of 2018, we recognized revenue of $8.5 million related to our March 31, 2018 contract liability and amortized $0.5$0.1 million of ~~the March 31, 2018 contract asset into revenue. The Company recognized revenue of $0.6 million in the second quarter of 2018 related to performance obligations that~~implementation costs were ~~satisfied or partially satisfied in previous periods.~~

~~Contract Acquisition Costs~~

The Company pays sales commissions to its employees and agents for obtaining customer contracts. These costs are incremental because they would not have been incurred if the contract was not obtained. The Company recognizes an asset for these costs and subsequently amortizes the asset on a systematic basis consistent with the pattern of the transfer of the services to the customer. The amortization period, which is between 2 and 6 years, considers both the original contract period as well as anticipated contract renewals as appropriate. The amortization period also includes renewal commissions when those commissions are not commensurate with new commissions. The Company estimates contract renewals based on its actual renewals in recent periods. When the expected amortization period is one year or less the Company utilizes the practical expedient and expenses the costs as incurred. The June 30, 2018 balance sheet includes current contract acquisition costs of $1.3 million in prepayments and other current assets and long term contract acquisition costs of $0.9 million in other assets. Duringamortized during the three and six months ended June 30, ~~2018 the Company amortized $0.3 million and $0.6 million, respectively, of contract acquisition cost.~~2019.

~~Remaining Performance Obligations~~

Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts that include a promotional discount. The transaction price allocated to unsatisfied performance obligations was $10.6 million at June 30, 2018. The Company expects to satisfy the remaining performance obligations and recognize the transaction price within 24 months. The Company has certain retail, wholesale, and renewable energy contracts where transaction price is allocated to remaining performance obligations. However the company omits these contracts from the disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients.

3. REVENUE RECOGNITION

Impacts of adoption in the current period

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. The Company elected the practical expedient to apply the new guidance only to contracts that were not substantially complete at the adoption date. The cumulative effect of adopting ASC 606 resulted in a contract asset of $1.6 million, of which $1.2 million was recorded in prepayments and other current assets, and $0.4 million was recorded in other assets, a contract liability of $0.2 million recorded in advance payments and deposits, contract acquisition costs of $1.5 million of which $0.9 million was recorded in prepayments and other current assets and $0.6 million was recorded in other assets, and a deferred tax liability of $0.3 million with the offset of $1.5 million recorded to retained earnings and $1.1 million recorded to minority interest.

Contract Assets and Liabilities

The ~~tables below identify changes~~Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount. In these contracts the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’s balance sheet. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retail revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including mobile voice and data services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on its balance sheets. Contract assets and liabilities consisted of the following (in thousands):


	June 30, 2019		December 31, 2018			$ Change	% Change
Contract asset – current	$	2,060	$	1,900	$	160	8	%
Contract asset – noncurrent		710		802		(92)	(11)	%
Contract liabilities		(15,485)		(13,787)		(1,698)	12	%
Net contract liability	$	(12,715)	$	(11,085)	$	(1,630)	15	%

The contract asset – current is included in prepayments and other current assets, the contract asset – noncurrent is included in other assets, and the contract liabilities are included in advance payments and deposits on the Company’s balance sheet. The increase in the Company’s net contract liability was due to the timing of customer prepayments and contract billings. During the six months ended June 30, 2019, the Company recognized revenue of $10.3 million related to its December 31, 2018 contract liability. During the three and six months ended June 30, 2019 the Company amortized $0.4 million and $1.0 million, respectively, of the December 31, 2018 contract asset into revenue. The Company recognized $0.3 million of revenue in the three and six months ended June 30, 2019 related to performance obligations that were satisfied or partially satisfied in previous periods.

Contract Acquisition Costs

The June 30, 2019 balance sheet includes current contract acquisition costs of $1.1 million in prepayments and other current assets and long term contract acquisition costs of $1.4 million in other assets. During the three and six

months ended June 30, 2019, the Company amortized $0.4 million and $0.9 million, respectively, of contract acquisition cost.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts that include a promotional discount. The transaction price allocated to unsatisfied performance obligations was $11.3 million and $12.1 million at June 30, 2019 and December 31, 2018, respectively. The Company expects to satisfy the remaining performance obligations and recognize the transaction price within 24 months. The Company has certain retail, wholesale, and renewable energy contracts where transaction price is allocated to remaining performance obligations. However, the Company omits these contracts from the disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients.

Disaggregation

The Company's revenue is presented on a disaggregated basis in Note 14 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision makers for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from wireline, wireless and renewable energy, as well as domestic versus international wireline and wireless services. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

4. LEASES

The Company’s significant accounting policies are detailed in “Note 2 – Summary of Significant Accounting Policies” within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2018. The Company’s accounting policies are updated as a result of adopting ASU 2016-02 “Leases (Topic 842)” (“ASC 842”) on January 1, 2019. The adoption of ASC 842 impacted the accounting for leases as further described below.

The Company adopted ASC 842 on January 1, 2019, utilizing the optional transition method with a cumulative adjustment on the date of adoption. Under this approach, the guidance was applied to leases that had commenced as of January 1, 2019 with a cumulative effect adjustment as of that date and prior periods were not adjusted. Upon adoption, the Company recognized an operating lease right-of-use (“ROU”) asset of $70.8 million, a short-term lease liability of $8.2 million, and a long-term lease liability of $61.2 million. The adoption had no impact on retained earnings or other components of equity.

The Company elected the package of practical expedients. Under the package of practical expedients, for existing leases, the Company does not reassess: i) whether the arrangement contains a lease; ii) lease classification and; iii) initial direct costs.

The Company determines if an agreement is a lease at inception. Operating leases are included in ROU assets, current portion of operating lease liabilities, and operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property and equipment in the Company’s consolidated balance sheets. To date the Company has prepaid its financing leases. As a result, there is no interest cost, lease liability, or discount rate applicable to financing leases.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The present value is calculated using the Company’s incremental borrowing rate based on the information available at the commencement date, as our leases do not contain an implicit rate. The Company utilized assumptions based on its existing borrowing facilities and other market specific data to determine its incremental borrowing rate. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include renewal options to extend the lease. The Company includes renewal options that are reasonably certain to be exercised in the initial lease term.

When determining whether a renewal option is reasonably certain to be exercised, the Company considers several factors, including the present and anticipated future needs of its customers being serviced by the asset. Lease expense is recognized on a straight-line basis over the lease term. The Company does not separate non-lease components from lease components.

The Company has operating and financing leases for towers, land, corporate offices, retail facilities, and data transport capacity. The lease terms are generally between three and ten years, some of which include additional renewal options.

Supplemental lease information

The components of lease expense were as follows (in thousands):



	Three months ended June 30, 2019		Six months ended June 30, 2019
Operating lease cost:
Operating lease cost	$	4,151	$	7,667
Short-term lease cost		867		1,578
Variable lease cost		288		1,250
Total operating lease cost	$	5,306	$	10,495

Finance lease cost:
Amortization of right-of-use asset	$	586	$	1,179
Variable costs		262		558
Total finance lease cost	$	848	$	1,737

During the six months ended June 30, 2019, the Company paid $3.8 million of operating cash flows, which were included in the measurement of lease liabilities. Also during the six months ended June 30, 2019, the Company recorded $3.3 million of lease liabilities arising from right-of-use assets. At June 30, 2019, finance leases with a cost of $26.0 million and accumulated amortization of $8.3 million were included in property, plant and equipment.

The weighted average remaining lease terms and discount rates as of June 30, ~~2018 and for~~2019 are noted in the ~~three months then ended~~table below:



Weighted average remaining lease term
Operating leases		7.1 years
Financing leases		11.9 years

Weighted average discount rate
Operating leases		5.1%
Financing leases		n/a

Maturities of lease liabilities as ~~a result~~ of ~~the adoption of ASC 606~~June 30, 2019 were as ~~compared to previous revenue guidance (amounts in~~follows (in thousands):


	Operating Leases
2019 (excluding the six months ended June 30, 2019)	$	6,637
2020		13,459
2021		12,162
2022		11,351
2023		10,544
Thereafter		28,236
Total lease payments		82,389
Less imputed interest		(13,620)
Total	$	68,769

Balance Sheet – June 30, 2018

Reported

Change

Under previous guidance
Prepayments and other current assets
$
35,386
$
(2,757)
$
32,629

Total current assets
$
264,313
$
(2,757)
$
261,556

Other assets
$
39,444
$
(1,433)
$
38,011

Total assets
$
1,188,999
$
(4,190)
$
1,184,809

Advance payments and deposits
$
17,727
$
(299)
$
17,428
Accrued taxes

10,238

(142)

10,096

-
Total current liabilities
$
157,390
$
(441)
$
156,949

Deferred income taxes
$
30,755
$
(301)
$
30,454

Total liabilities
$
369,490
$
(742)
$
368,748

Retained earnings
$
550,872
$
(1,967)
$
548,905
Minority interest
$
136,424
$
(1,481)
$
134,943

Total equity
$
819,509
$
(3,448)
$
816,061

Total liabilities and equity
$
1,188,999
$
(4,190)
$
1,184,809

Maturities of lease liabilities as of December 31, 2018 were as follows (in thousands):

Statement of Operations

Three months ended June 30, 2018

Six months ended June 30, 2018

Reported

Change

Under previous guidance

Reported

Change

Under previous guidance
Wireless revenue
$
50,496
$
(204)
$
50,292

$
101,043
$
(337)
$
100,706

Total revenue
$
117,788
$
(204)
$
117,584

$
222,263
$
(337)
$
221,926

Sales, marketing and customer service
$
8,413
$
240
$
8,653

$
16,974
$
618
$
17,592

Total operating expenses
$
102,035
$
240
$
102,275

$
202,301
$
618
$
202,919

Income from operations
$
15,753
$
(444)
$
15,309

$
19,962
$
(955)
$
19,007
Income before taxes

12,868

(444)

12,424

14,485

(955)

13,530
Income tax provision

2,088

(49)

2,039

6,008

(142)

5,866

Net income
$
10,780
$
(395)
$
10,385

$
8,477
$
(813)
$
7,664
Net income attributable to non-controlling interests

(3,564)

154

(3,410)

(6,816)

335

(6,481)
Net income attributable to ATN International, Inc. stockholders
$
7,216
$
(241)
$
6,975

$
1,661
$
(478)
$
1,183


	Operating Leases
2019	$	11,801
2020		12,650
2021		11,491
2022		10,713
2023		9,990
Thereafter		27,325
Total lease payments	$	83,970

As of June 30, 2019, the Company did not have any material operating or finance leases that have not yet commenced.

Statement of Comprehensive Loss

Three months ended June 30, 2018

Six months ended June 30, 2018

Reported

Change

Under previous guidance

Reported

Change

Under previous guidance
Net income
$
10,780
$
(395)
$
10,385

$
8,477
$
(813)
$
7,664
Other comprehensive loss, net of tax

(2,509)

-

(2,509)

(3,402)

-

(3,402)
Comprehensive loss

8,271

(395)

7,876

5,075

(813)

4,262
Less: Comprehensive income attributable to non-controlling interests

(3,564)

154

(3,410)

(6,816)

335

(6,481)
Comprehensive income (loss) attributable to ATN International, Inc.
$
4,707
$
(241)
$
4,466

$
(1,741)
$
(478)
$
(2,219)

Statement of Cash Flows - Six months ended June 30, 2018

Reported

Change (1)

Under previous guidance
Net income
$
8,477
$
(813)
$
7,664

Materials and supplies, prepayments and other current assets
$
1,254
$
(681)
$
573
Accrued taxes

1,249

142

1,391
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities

(2,137)

68

(2,069)
Other assets
$
(1,208)
$
(342)
$
(1,550)

~~(1)~~

~~The adoption of ASC 606 had no impact on operating cash flows, investing cash flows, financing cash flows or net change in total cash.~~

4.5. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates relate to the allowance for doubtful accounts, useful lives of the Company’s fixed and finite-lived intangible assets, allocation of purchase price to assets acquired and liabilities assumed in business combinations, fair value of indefinite-lived intangible assets, goodwill, assessing the impairment of assets, revenue, and income taxes. Actual results could differ significantly from those estimates.

5.6. IMPACT OF HURRICANES IRMA AND MARIA

During September 2017, the US Virgin Islands economy, the Company’s ~~operations~~customer base and ~~customers~~its operations in the ~~U.S.~~US Virgin Islands were severely impacted by Hurricanes Irma and Maria (collectively, the “Hurricanes”). Both the Company’s wireless and wireline networks and commercial operations were severely damaged by these ~~storms. As~~storms and as a result of the significant damage to the ~~Company’s~~ wireline network and the lack of consistent commercial power in the territory, the Company was unable to provide most of its wireline services, which ~~comprise~~comprised the majority of its revenue in this business, ~~since~~from mid-September 2017 through a majority of 2018. The Company received insurance recoveries of $34.6 million in February 2018 to aid its recovery from the ~~Hurricanes and through much~~impact of the first six months of 2018. Accordingly, revenue generated by the Company’s U.S. Virgin Islands operations decreased by $3.0 million and $16.2 million during the three and six months ended June 30, 2018 as compared to 2017 as a result of the Hurricanes and an additional $1.2 and $2.3 million for the three and six months ended June 30, 2018 as a result of the Company’s August 2017 sale of its operations in the British Virgin Islands. However, the second quarter of 2018 was positively impacted by the recognition of $8.2 million in revenue funded the additional receipt of high-cost Universal Service Funds. Hurricanes.

During the six months ended June 30, 2019 and June 30, 2018, the Company spent $0.1 million and $66.7 million, ~~restoring~~respectively, for network restoration and ~~adding~~ resiliency ~~to its network which~~enhancements that allowed ~~it to reconnect roughly two-thirds~~the reconnection of ~~the~~a significant majority of affected households and ~~three-quarters of~~ businesses as of the period end. The Company expects that the work it will do to restore its wireline network ~~restoration work will be~~is substantially complete, ~~by the end of the third quarter of 2018. However,~~however, returning the Company’s revenue to pre-Hurricane levels

may take significant time as a result of population movements, the negative economic impact the Hurricanes had on the ~~market,~~local economy, and ~~it’s~~the Company’s subscriber base’s future appetite for continued wireline services.

7. DISPOSITIONS, PLATFORM AND MINORITY INVESTMENTS

~~6. DISPOSITIONS~~

Dispositions

~~International Telecom~~

Renewable Energy

~~Disposition~~

On ~~August 18, 2017, the Company completed the sale of the Viya cable operations located in the British Virgin Islands. The Company did not recognize a gain or loss on the transaction.~~

~~On January 3, 2017, the Company completed the sale of the Viya cable operations located in St. Maarten for $4.8 million and recognized a gain of $0.1 million on the transaction.~~

The results of the British Virgin Islands and St. Maarten operations are not material to the Company’s historical results of operations. Since the dispositions do not relate to a strategic shift in its operations, the historical results and financial position of the operations are presented within continuing operations.

~~U.S. Telecom~~

~~Disposition~~

~~On March 8, 2017,~~November 6, 2018, the Company completed the sale of its ~~integrated voice~~US solar business that owned and ~~data communications and wholesale transport businesses~~managed distributed generation solar power projects operated under the Ahana name in ~~New England~~Massachusetts, California and New ~~York for consideration~~Jersey (the “US Solar Operations”) to CleanCapital Holdco 4, LLC. The transaction had a total value of ~~$25.9~~approximately $122.6 million, which included a cash purchase price of $65.3 million and the assumption of approximately $57.3 million in debt, and is subject to certain other post-closing adjustments (the ~~“Sovernet~~“US Solar Transaction”). The ~~consideration included $20.9~~Company is finalizing working capital adjustments. Approximately $6.5 million of ~~cash, $3.0 million of receivables, and $2.0 million of contingent consideration. The $3.0 million of receivables are~~the purchase price is being held in escrow ~~to satisfy working capital adjustments in favor~~for a period of twelve months after the ~~acquirer, to fund certain capital expenditure projects related to the assets sold and~~closing to secure the Company’s indemnification obligations. The contingent consideration represents the fair value of future payments related to certain operational milestones of the disposed assets. The value of the contingent consideration was up to $4.0 million based on whether or not the operational milestones were achieved by December 31, 2017.obligation. The table below identifies the assets and liabilities transferred ~~(amounts in~~(in thousands):


Consideration Received	$	65,286
Assets and liabilities disposed
Cash		3,049
Accounts receivable		1,248
Prepayments and other current assets		801
Property, plant and equipment		94,678
Restricted cash		8,407
Other assets		38
Current portion of long-term debt		(6,992)
Accounts payable and accrued liabilities		(938)
Accrued taxes		586
Long-term debt, excluding current portion		(48,038)
Net assets disposed		52,839

Consideration less net assets disposed		12,447

Transaction costs		(2,133)

Gain	$	10,314

Consideration Received
$
25,926

Assets and liabilities disposed

Cash

1,821

Accounts receivable

1,696

Inventory

639

Prepaid

1,034

Property, plant and equipment

25,294

Other assets

288

Accounts payable and accrued liabilities

(1,718)

Advance payments and deposits

(1,897)

Net assets disposed

27,157

Consideration less net assets disposed

(1,231)

Transaction costs

(1,156)

Loss
$
(2,387)

~~Prior to the closing~~The Company allocated $1.1 million of the ~~Sovernet Transaction,~~gain to non-controlling interests within the consolidated income statement. During the year ended December 31, 2018, the Company repurchased non-controlling interests from minority shareholders in a Sovernet subsidiary for $0.7 million. The non-controlling interest had a book value of zero. Additionally the Company recorded a loss on deconsolidation of $0.5 million.

~~The Company~~ incurred ~~$1.2~~$2.1 million of transaction related charges pertaining to legal, accounting and consulting services associated with the ~~Sovernet Transaction, of which $0.6~~ ~~million were incurred during~~transaction. The US Solar Operations do not qualify as a discontinued operation because the ~~year ended December 31, 2017. Since the Sovernet Transaction does~~disposition did not ~~relate to~~represent a strategic shift ~~in our~~that would have a major effect on the Company’s operations ~~the historic results~~ and financial ~~position of the operations are presented within continuing operations.~~

Subsequent to close of the Sovernet Transaction, management continually monitored and assessed the probability of earning the contingent consideration. In September 2017, based on progress toward achieving the operational milestones, and the December 31, 2017 deadline under which to do so, management determined that earning the contingent consideration was unlikely.results. As a result, the ~~fair value~~historical results are included in continuing operations.

Platform Investments

US Telecom

During the second quarter of 2018, the ~~contingent consideration was reduced~~Company invested in a new platform, based inthe United States, to ~~zero. The amount was recorded as a loss~~develop in-building wireless network technology that enables building owners to capitalize on ~~disposition of assets within operating income~~the growing demand for better indoor wireless solutions. Also during the ~~year ended December 31, 2017. The disposed assets did not achieve~~second quarter of 2018, the ~~operational milestones by~~Company provided funding for another new platform, based in the ~~December 31, 2017 deadline.~~ United States, seeking to “build to suit” large-scale fiber networks to serve the telecommunications and content provider industries in need of lower latency long haul fiber transit services. Both of these investments are consolidated in the Company’s results.

7.8. FAIR VALUE MEASUREMENTS

In accordance with the provisions of fair value accounting, a fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability and defines fair value based upon an exit price model.

The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:


Level 1		Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 assets and liabilities include money market funds, debt and equity securities and derivative contracts that are traded in an active exchange market.

Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than ~~exchange‑traded~~exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes corporate obligations and ~~non‑exchange~~non-exchange traded derivative contracts.

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments and intangible assets that have been impaired whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

2017

Assets and liabilities of the Company measured at fair value on a recurring basis as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 are summarized as follows (in thousands):


			June 30, 2019
			Significant Other
	Quoted Prices in		Observable		Unobservable
	Active Markets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Certificates of deposit	$	—	$	380	$	—	$	380
Money market funds		2,335		—		—		2,335
Short term investments		5,280		—		—		5,280
Other investments		—		—		10,000		10,000
Interest rate swap		—		(43)		—		(43)
Total assets and liabilities measured at fair value	$	7,615	$	337	$	10,000	$	17,952


			June 30, 2018
			Significant Other
	Quoted Prices in		Observable
	Active Markets		Inputs

							December 31, 2018
									Significant Other
							Quoted Prices in		Observable
							Active Markets		Inputs
Description	(Level 1)		(Level 2)		Total		(Level 1)		(Level 2)		Total
Certificates of deposit	$	—	$	380	$	380	$	—	$	380	$	380
Money market funds		23,440		—		23,440		2,266		—		2,266
Short term investments		382		1,213		1,595		393		—		393
Commercial paper		—		11,997		11,997		—		13,972		13,972
Interest rate swap		—		237		237		—		140		140
Total assets and liabilities measured at fair value	$	23,822	$	13,827	$	37,649	$	2,659	$	14,492	$	17,151

December 31, 2017




Significant Other


Quoted Prices in

Observable

Active Markets

Inputs

Description

(Level 1)

(Level 2)

Total

Certificates of deposit

$
—

$
391

$
391

Money market funds

2,894

—

2,894

Short term investments

555

6,521

7,076

Commercial paper

—

49,954

49,954

Interest rate swap

—

52

52

Total assets and liabilities measured at fair value

$
3,449

$
56,918

$
60,367

Certificate of Deposit

As of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, this asset class consisted of a time deposit at a financial institution denominated in ~~U.S.~~US dollars. The asset class is classified within Level 2 of the fair value hierarchy because the fair value was based on observable market data.

Money Market Funds

As of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, this asset class consisted of a money market portfolio that comprises Federal government and ~~U.S.~~US Treasury securities. The asset class is classified within Level 1 of the fair value hierarchy because its underlying investments are valued using quoted market prices in active markets for identical assets.

Short Term Investments and Commercial Paper

As of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, these asset classes consisted of short term foreign and ~~U.S.~~US corporate bonds, equity securities, and commercial paper. Corporate bonds and commercial paper are classified within Level 2 of the fair value hierarchy because the fair value is based on observable market data. Equity securities are classified within Level 1 because fair value is based on quoted market prices in active markets for identical assets. The Company held equity securities with a fair value of ~~$0.4~~$0.2 million at June 30, ~~2018 and net income~~2019, unchanged from December 31, 2018.

Other Investments

In the first quarter of 2019, the Company made an investment in an early-stage venture through the acquisition of a convertible debt instrument for $10 million. The Company elected to fair value the ~~three months then ended included $0.1 million~~investment upon acquisition. There was no change in the fair value of ~~losses on these securities.~~ the investment at June 30, 2019.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturities of these financial instruments. The fair value of the interest rate swap is measured using Level 2 inputs. During the six months ended June 30, 2019, there were no changes in fair value of the investment.

At June 30, ~~2018,~~2019, the Company holds ~~$22.1~~$23.1 million of equity securities consisting of non-controlling investments in privately held companies. These investments, over which the Company does not have the ability to exercise significant influence, are without readily determinable fair values. The investments are measured at cost, less any impairment, adjusted for observable price changes of similar investments of the same issuer. Fair value is not estimated for these investments if there are no identified events or changes in circumstances that may have an effect on the fair value of the investment. The carrying value of the strategic investments was $~~22.1~~ ~~million and $20.1~~$23.1 million at ~~June 30, 2018 and~~ December 31, ~~2017, respectively.~~2018. As of June 30, ~~2018~~2019 no impairments or price adjustments were recorded on the investments. ~~Strategic~~These investments are included with other assets on the consolidated balance sheets.

The fair value of long-term debt is estimated using Level 2 inputs. At June 30, 2019, the fair value of long-term debt, including the current portion, was $89.7 million and its book value was $90.0 million. At December 31, 2018, the fair value of long-term debt, including the current portion, was $~~154.2~~ $91.6 million and its book value was $~~151.0~~ $91.0 million. ~~At December 31, 2017,~~

9. LONG-TERM DEBT

On April 10, 2019, the ~~fair value of long-term debt, including the current portion, was $159.2~~ ~~million~~Company entered into a Third Amendment and ~~its book value was $155.8~~ ~~million.~~

~~8. LONG-TERM DEBT~~

~~The Company has a credit facility~~Confirmation Agreement (the “2019 Credit Facility”), with CoBank, ACB and athe same syndicate of ~~other~~ lenders ~~to provide~~as the 2014 Credit Facility, as defined below. The 2019 Credit Facility provides for a ~~$225~~$200 million revolving credit facility ~~(the “Credit Facility”)~~ that includes (i) up to ~~$10~~$75 million ~~under the Credit Facility~~ for standby or trade letters of credit and (ii) up to ~~$25 million under the Credit Facility for letters of credit that are necessary or desirable to qualify for disbursements from the FCC’s mobility fund and (iii) up to~~ $10 million under a swingline sub-facility. Upon the closing of the 2019 Credit Facility, approximately $8.0 million of performance letters of credit were issued and remain outstanding and undrawn as of June 30, 2019. The 2019 Credit Facility matures on April 10, 2024.

Amounts ~~the Company may borrow~~borrowed under the 2019 Credit Facility bear interest at a rate equal to, at ~~its~~the Company’s option, either (i) the ~~London Interbank Offered Rate (LIBOR)~~LIBOR (as defined in the 2019 Credit Facility) plus an applicable margin ranging between ~~1.50%~~1.25% to ~~1.75%~~2.25% or (ii) a base rate plus an applicable margin ranging from ~~0.50%~~0.25% to ~~0.75%~~1.25%. 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 higher of (x) the ~~one-week~~ LIBOR for an interest period of one month and (y) the ~~one-month LIBOR;~~LIBOR for an interest period of one week; (ii) the ~~federal funds effective rate~~Federal Funds Effective Rate (as defined in the 2019 Credit Facility) plus 0.50% per annum; and (iii) the ~~prime rate~~Prime Rate (as defined in the 2019 Credit Facility). The applicable margin is determined based on the ~~ratio~~Total Net Leverage Ratio (as ~~further~~ defined in the 2019 Credit Facility) ~~of the Company’s indebtedness to EBITDA.~~. Under the terms of the 2019 Credit Facility, the Company must also pay a fee ranging from ~~0.175%~~0.150% to ~~0.250%~~0.375% of the average daily unused portion of the 2019 Credit Facility over each calendar quarter.

On January 11, 2016, the Company amended the Credit Facility to increase the amount the Company is permitted to invest in “unrestricted” subsidiaries of the Company, which are not subject to the covenants of the Credit Facility, from $275.0 million to $400.0 million (as such increased amount shall be reduced from time to time by the aggregate amount of certain dividend payments to the Company’s stockholders).The Amendment also provides for the incurrence by the Company of incremental term loan facilities, when combined with increases to revolving loan commitments under the Credit Facility, in an aggregate amount not to exceed $200.0 million, which facilities shall be subject to certain conditions, including pro forma compliance with the total net leverage ratio financial covenant under the Credit Facility.

~~The~~2019 Credit Facility contains customary representations, warranties and covenants, including a financial covenant that imposes a maximum ratio of indebtedness to EBITDA as well as 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 Company’s investments in “unrestricted” subsidiaries and certain dividend payments to the Company’s stockholders are not limited unless the Total Net Leverage Ratio is equal to or greater than 1.75 to 1.0. The Total Net Leverage Ratio is measured each fiscal quarter and is required to be less than or equal to 2.75 to 1.0. In ~~addition,~~ the event of a Qualifying Acquisition (as defined in the 2019 Credit Facility), the Total Net Leverage Ratio increases to 3.25 to 1.0 for the subsequent three fiscal quarters.

The 2019 Credit Facility ~~contains~~also provides for the incurrence by the Company of incremental term loan facilities, when combined with increases to revolving loan commitments, in an aggregate amount not to exceed $200 million (the “Accordion”). Amounts borrowed under the Accordion are also subject to proforma compliance with a net leverage ratio financial ~~covenant that imposes a maximum ratio of indebtedness to EBITDA.~~ covenant.

As of June 30, ~~2018,~~2019, the Company was in compliance with all of the financial covenants, had no outstanding borrowings and, net of the $8.0 million of outstanding performance letters of credit, and had $192.0 million of availability under the 2019 Credit Facility.

~~As of June 30, 2018,~~Prior to entering into the 2019 Credit Facility, the Company had ~~no borrowings~~a $225 million revolving credit facility (the “2014 Credit Facility) with CoBank, ACB and a syndicate of other lenders that provided for (i) up to $10 million for standby or trade letters of credit, (ii) up to $25 million for letters of credit that were necessary or desirable to qualify for disbursements from the FCC’s mobility fund and (iii) up to $10 million under a swingline sub-facility. The 2014 Credit Facility had a maturity date of December 31, 2019. The 2014 Credit Facility also provided for the incurrence by the Company of incremental term loan facilities, when combined with increases to revolving loan commitments, in an aggregate amount not to exceed $200 million.

Amounts borrowed under the 2014 Credit ~~Facility.~~

~~Ahana Debt~~

On December 24, 2014, in connection with the Ahana Acquisition, the Company assumed $38.9 million in long-term debt (the “Original Ahana Debt”). The Original Ahana Debt included multiple loan agreements with banks thatFacility bore interest at ~~rates~~a rate equal to, at the Company’s option, either (i) the LIBOR plus an applicable margin ranging between ~~4.5%~~1.50% to 1.75% or (ii) a base rate plus an applicable margin ranging from 0.50% to 0.75%. 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) the one-week LIBOR and ~~6.0%, matured at various times between 2018~~(y) the one-month LIBOR; (ii) the federal funds effective rate (as defined in the 2014 Credit Facility) plus 0.50% per annum; and ~~2023 and were secured by~~

~~certain solar facilities. Repayment~~(iii) the prime rate (as defined in the 2014 Credit Facility). The applicable margin was determined based on the ratio (as further defined in the 2014 Credit Facility) of the ~~Original Ahana Debt was being made in cash on~~Company’s indebtedness to EBITDA. Under the terms of the 2014 Credit Facility, the Company also paid a ~~monthly basis until maturity.~~fee ranging from 0.175% to 0.250% of the average daily unused portion of the 2014 Credit Facility over each calendar quarter.

The Original Ahana Debt also included a loan from Public Service Electric & Gas (the “PSE&G Loan”). The PSE&G Loan bears interest at 11.3%, matures in 2027, and is secured by certain solar facilities. Repayment of the Original Ahana Debt with PSE&G can be made in either cash or SRECs, at the Company’s discretion, with the value of the SRECs being fixed at the time of the loan’s closing. Historically, the Company has made all repayments of the PSE&G Loan using SRECs.

On December 19, 2016, Ahana’s wholly owned subsidiary, Ahana Operations, issued $20.6 million in aggregate principal amount of 4.427% senior notes due 2029 (the “Series A Notes”) and $45.2 million in aggregate principal amount of 5.327% senior notes due 2031 (the “Series B Notes” and collectively with the Series A Notes and the PSE&G Loan, the “Ahana Debt”). Interest and principal are payable semi-annually, until the respective maturity dates of March 31, 2029 (for the Series A Notes) and September 30, 2031 (for the Series B Notes). Cash flows generated by the solar projects that secure the Series A Notes and Series B Notes are only available for payment of such debt and are not available to pay other obligations or the claims of the creditors of Ahana or its subsidiaries. However, subject to certain restrictions, Ahana Operations holds the right to the excess cash flows not needed to pay the Series A Notes and Series B Notes and other obligations arising out of the securitizations. The Series A Notes and Series B Notes are secured by certain assets of Ahana and are guaranteed by certain of its subsidiaries.

A portion of the proceeds from the issuances of the Series A Notes and Series B Notes was used to repay the Original Ahana Debt in full except for the PSE&G Loan which remained outstanding after the refinancing.

~~The Series A Notes and the Series B Notes contain~~2014 Credit Facility contained customary representations, warranties and ~~certain affirmative and negative~~ covenants, ~~which limit~~including a financial covenant that imposed a maximum ratio of indebtedness to EBITDA as well as 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 ~~Series A Notes and Series B Notes are~~Company’s investment in “unrestricted” subsidiaries plus the aggregate amount of certain dividend payments to the Company’s stockholders was limited to $400 million. Amounts borrowed under the Accordion were also subject to financial covenants that impose 1) a maximum debt service coverage ratio and 2) a maximum ratio of the present value of Ahana’s future cash flow to the aggregate principal amounts of all outstanding obligations. These financial covenants are tested semi-annually for Ahana Operations on a consolidated basis and on an individual basis for certain subsidiaries. Both the Series A Notes and Series B Notes may be redeemed at any time, in whole or part, subject to a make-whole premium. As of June 30, 2018, the Company was inpro-forma compliance with ~~all of the~~a net leverage ratio financial ~~covenants of the Series A Notes and the Series B Notes.~~covenant.

The Company capitalized $2.8 million of fees associated with the Series A Notes and Series B Notes which is recorded as a reduction to the debt carrying amount and will be amortized over the life of the notes. Viya Debt

~~As of June 30, 2018, $2.1~~ ~~million of the Original Ahana Debt and $58.6 million of the Series A Notes and Series B Notes remained outstanding, and $2.6~~ ~~million of the capitalized fees remain unamortized.~~

~~One Communications Debt~~

In connection with the acquisition of One Communications on May 3, 2016, the Company assumed $35.4 million in debt (the “One Communications Debt”) in the form of a loan from HSBC Bank Bermuda Limited. The One Communications Debt was scheduled to mature in 2021, was bearing interest at the three-month LIBOR rate plus a margin of 3.25%, and had repayment being made quarterly. The One Communications Debt contained customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that limited the maximum ratio of indebtedness less cash to annual operating cash flow.

On May 22, 2017, the Company amended and restated the One Communications Debt to increase the original facility to $37.5 million. The amended and restated debt is scheduled to mature on May 22, 2022 and bears interest at the three month LIBOR rate plus an applicable margin rate ranging between 2.5% to 2.75% paid quarterly. The amended and restated One Communications Debt contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and financial covenants

that limit the ratio of tangible net worth to long term debt and total net debt to EBITDA and require a minimum debt service coverage ratio (net cash generated from operating activities plus interest expense less net capital expenditures to debt repayments plus interest expense). The Company was in compliance with its covenants as of June 30, 2018

As a condition of the amendment and restatement of the One Communications Debt agreement, within 90 days of the refinance date the Company is required to enter into a hedging arrangement with a notional amount equal to at least 30% of the outstanding loan balance and a term corresponding to the maturity of the One Communications Debt. In July 2017, we entered into an amortizing interest rate swap. This swap has been designated as a cash flow hedge, has an original notional amount of $11.0 million, has an interest rate of 1.874%, and expires in March 2022.

In connection with the amendment and restatement of the One Communications Debt agreement, the Company increased the limit of its overdraft facility from $5.0 million to $10.0 million. This facility has an interest rate of three month LIBOR plus 1.75%.

The ~~Company capitalized $0.3 million of fees associated with the One Communications Debt, which is recorded as a reduction to the debt carrying amount and will be amortized over the life of the debt.~~

~~As of June 30, 2018, $33.8~~ ~~million of the One Communications Debt was outstanding, there were no borrowings under the overdraft facility, and $0.3~~ ~~million of the capitalized fees remain unamortized.~~

~~Viya Debt~~ ~~(formerly Innovative Debt)~~

~~On July 1, 2016, the~~ Company, and certain of its subsidiaries, have entered into a $60.0 million loan agreement (the “Viya Debt”) with Rural Telephone Finance Cooperative (“~~RFTC”~~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% 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 Company’s Viya subsidiaries and is guaranteed by the Company. ~~Earlier in 2018,~~With RTFC’s consent, the Company ~~began funding~~funded the restoration of Viya’s network, following the Hurricanes, through an intercompany loan arrangement ~~which exceeded certain limitations~~with a $75.0 million limit. The Company was not in compliance with the Net Leverage Ratio covenant for the year ending December 31, 2018 and received a waiver from the RTFC on Viya incurring additional debt. RTFC consented to these intercompany advances and increased the intercompany debt limit to $50.0 million. Subsequent to the end of the second quarter end, RTFC increased the limit to $75.0 million at the Company’s request due to an increase in the on-going restoration and resiliency costs.February 25, 2019.

The Company 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 ~~will be~~is being amortized over the life of the loan.

As of June 30, ~~2018,~~2019, $60.0 million of the Viya Debt remained outstanding and $~~0.7~~$0.6 million of the rate lock fee was unamortized.

One Communications Debt

The Company has an outstanding loan from HSBC Bank Bermuda Limited (the “One Communications Debt”) which is scheduled to mature on May 22, 2022 and bears interest at the one-month LIBOR plus a margin ranging between 2.5% to 2.75% paid quarterly.

The One Communications Debt contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and financial covenants that limit the ratio of tangible net worth to long term debt and total net debt to EBITDA and require a minimum debt service coverage ratio (as defined in the One Communications Debt agreement). The Company was in compliance with its covenants as of June 30, 2019.

~~9. GOVERNMENT GRANTS~~As a condition of the One Communications Debt, the Company was required to enter into a hedging arrangement with a notional amount equal to at least 30% of the outstanding loan balance and a term corresponding to the term of the One Communications Debt. As such, the Company entered into an amortizing interest rate swap that has been designated as a cash flow hedge, which had an original notional amount of $11.0 million, has an interest rate of 1.874%, and expires in March 2022. As of June 30, 2019, the swap has an unamortized notional amount of $8.7 million.

The Company capitalized $0.3 million of fees associated with the One Communications Debt which are being amortized over the life of the debt and are recorded as a reduction to the debt carrying amount.

As of June 30, 2019, $30.0 million of the One Communications Debt was outstanding, there were no borrowings under an overdraft facility, and $0.2 million of the capitalized fees remained unamortized.

Ahana Debt

On November 6, 2018, the Company consummated the US Solar Transaction which included the transfer of the Ahana Debt to the purchaser. Prior to the US Solar Transaction, the Company’s US solar operations issued $20.6 million in aggregate principal amount of 4.427% senior notes due in 2029 (the “Series A Notes”) and $45.2 million in aggregate principal amount of 5.327% senior notes due in 2031 (the “Series B Notes”). These operations also issued a note to Public Service Electricity and Gas which bore interest at 11.3% due in 2027 (the “PSE&G Loan” and collectively with the Series A Notes and Series B Notes, the “Ahana Debt”).

For the Series A Notes and Series B Notes, interest and principal were payable semi-annually, until their respective maturity dates, and were secured by certain US solar assets and guaranteed by certain subsidiaries.

Repayment of the PSE&G Loan could have been made in either cash or SRECs at the Company’s discretion, with the value of the SRECs being fixed at the time of the loan’s closing. Historically, the Company has made all repayments of the PSE&G Loan using SRECs.

The Company capitalized $2.8 million of fees associated with the Ahana Debt which were recorded as a reduction to the debt carrying amount and amortized over the life of the notes.

10. GOVERNMENT GRANTS

Universal Service Fund

The Universal Service Fund (“USF”) is a ~~system of subsidies and fees~~subsidy program managed by the ~~Federal Communications Commission’s (“FCC”).~~FCC. USF funds are disbursed to telecommunication providers through four programs: the ~~Connect America Fund; Lifeline;~~High Cost Program; Low Income Program; Schools and Libraries Program (“E-Rate”); and Rural Health Care ~~Support. We participate~~Program. The Company participates in each of these programs as further described below. All of the ~~Connect America Fund; Lifeline, E-Rate~~funding programs are subject to certain operational and ~~Rural Health Care Support programs.~~ reporting compliance requirements. The Company believes it is in compliance with all applicable requirements.

The FCC’s Mobility Funds and ~~High Cost Support programs~~Connect America Funds are administered through the ~~Connect America Fund.~~FCC’s USF High Cost Program. The ~~High-Cost Support~~High Cost program subsidizes telecommunications services in rural and remote areas.

The FCC

created the Phase I Mobility Fund (“Phase I Mobility Fund”), a one-time award meant to support wireless coverage in underserved geographic areas in the United States.

The Company received $21.1 million of Phase I Mobility Fund support to ~~our~~its wholesale wireless business (the “Mobility Funds”) ~~by expanding~~to be used to expand voice and broadband networks in certain geographic areas in order to offer either 3G or 4G service. Of these funds, ~~$7.2~~$7.2 million was recorded as an offset to the cost of the property, plant, and equipment associated with these projects and, consequentially, a reduction of future depreciation expense. The remaining ~~$13.9~~$13.9 million received ~~offsets~~offset operating expenses from inception of ~~which $13.4 million has been recorded to date and $0.5 million is recorded within current liabilities in our consolidated balance sheet as~~the program through part of ~~June 30,~~the third quarter of 2018. The Mobility Funds projects and their operating results are included within ~~our U.S.~~the Company’s US Telecom segment. As part of the receipt of the Mobility Funds, the Company committed to comply with certain additional FCC construction and other requirements. ~~The balance sheet presentation is based on~~If the ~~timing of the expected usage of~~requirements are not met, the funds ~~which will reduce future operations expenses through the expiration of the arrangement in July 2018.~~ may be subject to claw back provisions. The Company currently expects to comply with all applicable requirements related to these funds.

During the three and six month periods ended June 30, 2019, the Company recorded $4.1 million and $8.2 million, respectively, of revenue from the High Cost Program in its International Telecom segment. During the three and six months periods ended June 30, 2018, the Company recorded ~~$4.1~~$4.1 million and ~~$8.3~~$8.2 million, respectively, of revenue from the High Cost ~~Support~~Program in its International Telecom ~~segment for U.S. Virgin Islands operations.~~segment. Also, during the three and six month periods ended June 30, 2019, the Company recorded $0.3 million and $0.6 million of High Cost Program revenue in its US Telecom segment. During the three and six months periods ended June 30, 2018, the Company recorded ~~$0.3 million~~$0.3 and $0.6 million, respectively, of revenue from the High Cost ~~Support revenue~~Program in its US Telecom segment. The Company is subject to certain operational, reporting and construction requirements as a result of this funding and ~~we believe~~the Company believes that ~~we are~~it is in compliance with all of these requirements. In addition, the Company ~~received~~recorded revenue of $8.2 million ofduring the three and six months ended June 30, 2018, from additional funding authorized by the FCC ~~for network restoration~~ following the Hurricanes.

In August 2018, the Company was awarded $79.9 million over 10 years under the Connect America Fund Phase II Auction. The funding requires the Company to provide fixed broadband and voice services to certain eligible areas in the United States. The Company is subject to operational and reporting requirements under the program. The Company determined the award is a revenue grant, and as a result will record the funding as revenue upon receipt. The Company recorded $1.5 million of revenue in the three and six months ended June 30, 2019 from the Connect America Fund Phase II program.

The E-Rate program provides discounted telecommunication access to eligible schools and libraries. The E-Rate program (i) awards ~~providers grants~~special construction funding to build network connectivity for eligible participants, and (ii) pays for discounted recurring charges for eligible broadband services. The ~~grants are~~special construction funding is used to reimburse construction costs and is distributed upon completion of a project. As of June 30, ~~2018,~~2019, the Company was awarded approximately $15.4 million of E-Rate grants with construction completion obligations between June 2019 and June 2020. Once these projects are constructed the Company is obligated to provide service to the E-Rate program participants. The Company is in various stages of constructing the networks and has not received any of the funds. The Company expects to meet all requirements associated with these grants.

The Company also receives funding to provide discounted telecommunication services to eligible customers under the E-Rate, Lifeline, and Rural Health Care Support Programs. During the three and six months ended June 30, ~~2018~~2019, the ~~company~~Company recorded revenue of ~~$2.1~~$1.6 million, and $3.2 million, respectively, in the aggregate from these programs. During the three and six months ended June 30, 2018, the Company recorded revenue of $2.1 million, and $4.3 million, respectively, in the aggregate from these programs. The Company is subject to certain operational and reporting requirements under the above mentioned programs and it believes that it is in compliance with all of these requirements.

Tribal Bidding Credit

As part of the broadcast television spectrum incentive auction, the FCC implemented a tribal lands bidding credit to encourage deployment of wireless services utilizing 600 ~~Mhz~~MHz spectrum on the lands of federally recognized tribes. The Company received a bidding credit of $7.4 million under this program in ~~the first quarter of~~ 2018. A portion of these funds will be used to offset network capital costs and a portion will be used to offset the costs of supporting the networks. The Company’s current estimate is that it will use $5.4 million to offset capital costs and, consequently, ~~a reduction in~~reduce future depreciation expense and $2.0 million to offset the cost of supporting the network which will reduce future operating expense. The credits are subject to certain requirements, including deploying service by January 2021 and meeting minimum coverage metrics. If the requirements are not met the funds may be subject to claw back provisions. The Company currently expects to comply with all applicable requirements related to these funds.

11. RETIREMENT PLANS

The Company has noncontributory defined benefit pension plans for eligible employees in its International Telecom segment who meet certain eligibility criteria. The Company also has a noncontributory defined medical, dental, vision, and life benefit plan for eligible employees in its International Telecom segment who meet certain eligibility criteria. The Company recorded the net periodic benefit cost identified below (in thousands):


	Three months ended
	June 30, 2019				June 30, 2018
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Operating expense
Service cost	$	447	$	37	$	448	$	37
Non-operating expense
Interest cost		841		40		819		40
Expected return on plan assets		(1,263)		—		(1,208)		—
Actuarial gain/ loss		7		(17)		30		(17)
Net periodic pension expense	$	32	$	60	$	89	$	60


	Six months ended
	June 30, 2019				June 30, 2018
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Operating expense
Service cost	$	895	$	74	$	897	$	74
Non-operating expense
Interest cost		1,682		80		1,639		80
Expected return on plan assets		(2,527)		—		(2,418)		—
Actuarial gain/ loss		15		(34)		61		(34)
Net periodic pension expense	$	65	$	120	$	179	$	120

The Company is not required to make contributions to its pension and postretirement benefit plans. However, the Company periodically evaluates whether to make discretionary contributions. No contributions were made during the six months ended June 30, 2019 and 2018.

2523

12. INCOME TAXES

~~10. EQUITY~~

The Company’s effective tax rate for the three months ended June 30, 2019 and 2018 was (15.6%) and 16.2%, respectively. The effective tax rate for the three months ended June 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the U.S. Virgin Islands and India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) $1.1 million benefit from the reversal of unrecognized tax positions due to statute expiration, net interest expense on unrecognized tax positions and , (ii) $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure.

~~Stockholders’ equity~~

The Company’s effective tax rate for the three months ended June 30, 2018 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the U.S. Virgin Islands and India where the Company cannot benefit from those losses as ~~follows (in thousands):~~required by ASC 740-270-30-36(a), in addition to a $0.5 million discrete benefit for the release of a capital loss valuation allowance due to a capital gain on a sale of a wireless license.

Six months ended June 30,

2018

2017

ATN

Non-Controlling

ATN

Non-Controlling

Total


International, Inc.

Interests

Total Equity

International, Inc.

Interests

Equity

Equity, beginning of period

$
688,727

$
141,496

$
830,223

$
677,055

$
132,114

$
809,169

Stock-based compensation

3,679

—

3,679

3,764

—

3,764

Comprehensive income:

0

Net income

1,660

6,817

8,477

12,743

9,751

22,494

Projected pension benefit obligation

—

—

—

513

—

513

Unrealized (gain) loss on securities

181

—

181

(130)

—

(130)

Reclassifications of gains on sale of marketable securities to net income

—

—

—

(1,044)

—

(1,044)

Foreign Currency translation adjustment

(3,583)

—

(3,583)

2,232

—

2,232

Total comprehensive income (loss)

(1,742)

6,817

5,075

14,314

9,751

24,065

Issuance of common stock upon exercise of stock options

498

—

498

401

—

401

Dividends declared on common stock

(5,407)

—

(5,407)

(10,951)

—

(10,951)

Distributions to non-controlling interests

—

(12,975)

(12,975)

—

(3,491)

(3,491)

Investments made by non-controlling interests

—

—

—

—

123

123

Loss on deconsolidation of subsidiary

—

—

—

—

529

529

Change in accounting method- adoption of ASU 2016-09

—

—

—

110

—

110

Change in accounting method- adoption of ASU 2014-09

1,488

1,147

2,635

—

—

—

Repurchase of non-controlling interests

—

(61)

(61)

(670)

(285)

(955)

Purchase of treasury stock

(4,158)

—

(4,158)

(2,314)

—

(2,314)

Equity, end of period

$
683,085

$
136,424

$
819,509

$
681,709

$
138,741

$
820,450

The Company’s effective tax rate for the six months ended June 30, 2019 and 2018 was 25.4% and 41.5%, respectively. The effective tax rate for the six months ended June 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the U.S. Virgin Islands and India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) $0.6 million benefit from the reversal of unrecognized tax positions due to statute expiration, net interest expense on unrecognized tax positions and , (ii) $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure.

The effective tax rate for the six months ended June 30, 2018 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the U.S. Virgin Islands and India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) $0.5 million interest expense on unrecognized tax benefits, (ii) $0.7 million provision for the intercompany sale of assets from the U.S. to the U.S. Virgin Islands, and (iii) $0.5 million benefit for the release of a capital loss valuation allowance due to a capital gain on a sale of a wireless license.

~~11.~~The Company’s 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. The Company’s 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 the Company operates. While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from the Company’s accrued positions as a result of uncertain and complex application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, the Company could record additional provisions or benefits for US federal, state, and foreign tax matters in future periods as new information becomes available.

13. NET INCOME (LOSS) PER SHARE

For the three and six months ended June 30, 2019 and 2018, ~~and 2017, outstanding stock options were~~ the ~~only potentially dilutive securities. The reconciliation from~~calculation of basic toand diluted weighted average shares of common stock outstanding isdoes not include 48,000 shares and 50,000 shares, respectively, relating to stock options as ~~follows (in thousands):~~

Three months ended  June 30,

Six months ended June 30,


2018

2017

2018

2017

Basic weighted-average shares of common stock outstanding

15,962

16,195

15,996

16,176

Stock options

48

79

50

87

Diluted weighted-average shares of common stock outstanding

16,010

16,274

16,046

16,263

the effects of those options were anti-dilutive.

~~12.~~14. SEGMENT REPORTING

The Company has the following three reportable and operating segments: i) ~~U.S.~~US Telecom, ii) International Telecom, and iii) Renewable Energy.

The following tables provide information for each operating segment (in thousands):


For the Three Months Ended June 30, 2018

	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated

For the Three Months Ended June 30, 2019											For the Three Months Ended June 30, 2019

												US		International		Renewable		Corporate and
												Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	28,582	$	21,914	$	—	$	—	$	50,496		$	25,656	$	21,340	$	—	$	—	$	46,996
Wireline		1,702		59,567		—		—		61,269			757		58,519		—		—		59,276
Renewable Energy		—		—		6,023		—		6,023			—		—		1,449		—		1,449
Total Revenue		30,284		81,481		6,023		—		117,788			26,413		79,859		1,449		—		107,721
Depreciation and amortization		6,835		11,794		1,899		1,385		21,913			5,551		13,606		638		1,754		21,549
Non-cash stock-based compensation		—		20		29		2,054		2,103			—		11		—		2,017		2,028
Operating income (loss)		7,841		15,571		1,927		(9,586)		15,753			1,521		11,057		167		(9,991)		2,754


For the Three Months Ended June 30, 2017

	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated

For the Three Months Ended June 30, 2018											For the Three Months Ended June 30, 2018

												US		International		Renewable		Corporate and
												Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	34,921	$	21,625	$	—	$	—	$	56,546		$	28,582	$	21,914	$	—	$	—	$	50,496
Wireline		2,057		59,745		—		—		61,802			1,702		59,567		—		—		61,269
Renewable Energy		—		—		4,897		—		4,897			—		—		6,023		—		6,023
Total Revenue		36,978		81,370		4,897		—		123,245			30,284		81,481		6,023		—		117,788
Depreciation and amortization		6,246		13,134		1,830		1,044		22,254			6,835		11,794		1,899		1,385		21,913
Non-cash stock-based compensation		—		8		29		2,061		2,098			—		20		29		2,054		2,103
Operating income (loss)		13,147		10,765		846		(8,955)		15,803			7,841		15,571		1,927		(9,586)		15,753


For the Six Months Ended June 30, 2019

	US		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	46,093	$	42,515	$	—	$	—	$	88,608
Wireline		1,813		117,660		—		—		119,473
Renewable Energy		—		—		2,939		—		2,939
Total Revenue		47,906		160,175		2,939		—		211,020
Depreciation and amortization		11,149		26,621		1,253		3,244		42,267
Non-cash stock-based compensation		—		21		—		3,313		3,334
Operating income (loss)		(2,006)		24,935		(16)		(18,045)		4,868

2725

For the Six Months Ended June 30, 2018











U.S.

International

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
Revenue

Wireless

$
55,983

$
45,060

$
—

$
—

$
101,043
Wireline

2,800

106,565

—

—

109,365
Renewable Energy

—

—

11,855

—

11,855
Total Revenue

58,783

151,625

11,855

—

222,263
Depreciation and amortization

13,348

23,465

3,673

2,731

43,217
Non-cash stock-based compensation

—

48

57

3,574

3,679
Operating income (loss)

13,065

21,211

3,863

(18,177)

19,962


For the Six Months Ended June 30, 2017

	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated

For the Six Months Ended June 30, 2018											For the Six Months Ended June 30, 2018

												US		International		Renewable		Corporate and
												Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	72,623	$	42,848	$	—	$	—	$	115,471		$	55,983	$	45,060	$	—	$	—	$	101,043
Wireline		8,148		117,812		—		—		125,960			2,800		106,565		—		—		109,365
Renewable Energy		—		—		9,929		—		9,929			—		—		11,855		—		11,855
Total Revenue		80,771		160,660		9,929		—		251,360			58,783		151,625		11,855		—		222,263
Depreciation and amortization		12,797		26,250		3,284		2,416		44,747			13,348		23,465		3,673		2,731		43,217
Non-cash stock-based compensation		—		138		57		3,591		3,786			—		48		57		3,574		3,679
Operating income (loss)		28,533		20,691		2,287		(17,955)		33,556			13,065		21,211		3,863		(18,177)		19,962

(1)

Corporate and Other items refer to corporate overhead costs and consolidating adjustments

Selected balance sheet data for each of ~~our~~the Company’s segments as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 consists of the following (in thousands):

U.S.

International

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
June 30, 2018

Cash, Cash equivalents, and Investments

$
16,241

$
49,882

$
12,403

$
90,176

$
168,702
Total current assets

43,413

97,603

18,077

105,220

264,313
Fixed assets, net

92,435

442,854

150,022

17,657

702,968
Goodwill

35,269

25,421

3,280

—

63,970
Total assets

195,587

611,654

184,255

197,503

1,188,999
Total current liabilities

44,618

79,484

12,378

20,910

157,390
Total debt

—

92,774

58,227

—

151,001
December 31, 2017

Cash, Cash equivalents, and Investments

$
19,585

$
110,700

$
8,120

$
76,627

$
215,032
Total current assets

40,975

190,396

18,060

93,497

342,928
Fixed assets, net

99,462

367,485

158,447

17,752

643,146
Goodwill

35,269

25,421

3,280

—

63,970
Total assets

200,142

629,007

192,406

184,050

1,205,605
Total current liabilities

41,248

91,887

14,754

13,816

161,705
Total debt

—

94,577

61,215

—

155,792



	US		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
June 30, 2019
Cash, Cash equivalents, and Investments	$	22,925	$	38,403	$	22,522	$	67,042	$	150,892
Total current assets		52,278		95,437		40,129		62,385		250,229
Fixed assets, net		72,501		474,185		44,309		22,708		613,703
Goodwill		35,269		25,421		3,280		—		63,970
Total assets		222,110		657,062		88,683		179,121		1,146,976
Total current liabilities		34,464		73,671		1,465		20,701		130,301
Total debt		—		89,166		—		—		89,166
December 31, 2018
Cash, Cash equivalents, and Investments	$	19,118	$	32,390	$	62,678	$	78,043	$	192,229
Total current assets		36,801		75,304		80,553		83,107		275,765
Fixed assets, net		78,102		482,770		45,599		20,381		626,852
Goodwill		35,269		25,421		3,280		—		63,970
Total assets		172,634		622,454		130,427		181,789		1,107,304
Total current liabilities		15,783		82,575		3,465		38,827		140,650
Total debt		—		90,970		12		—		90,982


	Capital Expenditures

		US		International		Renewable		Corporate and
Six months ended June 30,		Telecom		Telecom (2)		Energy		Other (1)		Consolidated
2019	$	6,368	$	23,692	$	817	$	4,519	$	35,396
2018		7,266		95,520		1,388		3,074		107,248

Capital Expenditures













U.S.

International

Renewable

Corporate and

Six months ended June 30,

Telecom

Telecom

Energy

Other (1)

Consolidated

2018

$
7,266

$
95,520
(2)
$
1,388

$
3,074

$
107,248

2017

12,602

37,129

25,535

3,293

78,559

(1)

Corporate and other items refer to corporate overhead costs and consolidating adjustments

(2)

Includes $0.1 million and $66.7 million of expenditures during the six months of 2019 and 2018, respectively, used to rebuild the Company’s damaged networks in the ~~U.S.~~US Virgin Islands which ~~was~~were impacted by the Hurricanes. These expenditures were financed, in part, by the ~~$34.6~~$34.6 million of insurance proceeds the Company received during the first quarter of 2018.

~~13.~~15. COMMITMENTS AND CONTINGENCIES

Regulatory and Litigation Matters

The Company and its subsidiaries are subject to certain regulatory and legal proceedings and other claims arising in the ordinary course of business, some of which involve claims for damages and taxes that are substantial in amount. The Company believes that, except for the items discussed below, for which the Company is currently unable to predict the final outcome, the disposition of proceedings currently pending will not have a material adverse effect on the Company’s financial position or results of operations.

The Company’s Guyana subsidiary, ~~GT&T,~~GTT, holds a license to provide domestic fixed services and international voice and data services in Guyana on an exclusive basis until December 2030. Since 2001, the Government of Guyana has stated its intention to introduce additional competition into Guyana’s telecommunications sector. In connection therewith, the Company and ~~GT&T~~GTT have met on several occasions with officials of the Government of Guyana to discuss potential modifications of ~~GT&T’s~~GTT’s exclusivity and other rights under the existing agreement and license. On July 18, 2016, the Guyana Parliament passed telecommunications legislation, and on August 5, 2016, the legislation was signed into law ~~and~~that introduces material changes to many features of Guyana’s existing telecommunications regulatory regime with the intention of creating a more competitive market. The legislation does not have the effect of terminating the Company’s exclusive license. Instead the legislation as passed requires the Minister of Telecommunications to conduct further proceedings and issue implementing orders to enact the various provisions of the legislation, including the issuance of competing licenses. The Company cannot predict the manner in which or when the legislation will be implemented by the Minister of Telecommunications.

In January 2018 the Government of Guyana and the Company met to discuss modifications of the Company’s exclusivity rights and other rights under its existing agreement and license. Those discussions are on-going, however, there can be no assurance that those discussions will be concluded before the Government issues new licenses contemplated by the legislation or at all, or that such discussions will satisfactorily address the Company’s contractual exclusivity rights. Although the Company believes that it would be entitled to damages or other compensation for any involuntary termination of its contractual exclusivity rights, it cannot guarantee that the Company would prevail in a proceeding to enforce its rights or that its actions would effectively halt any unilateral action by the Government.

Historically, ~~GT&T~~GTT has been subject to other litigation proceedings and disputes in Guyana that, while not conclusively resolved, to the Company’s knowledge have not been the subject of discussions or other significant activity in the last five years. It is possible, but the Company believes unlikely, that these disputes, as discussed below, may be

revived. The Company believes that none of these additional proceedings would, in the event of an adverse outcome, have a material impact on the Company’s consolidated financial position, results of operation or liquidity.

In a letter dated September 8, 2006, the National Frequency Management Unit (“NFMU”) agreed that total spectrum fees in Guyana should not increase for the years 2006 and 2007. However, that letter implied that spectrum fees in 2008 and onward may be increased beyond the amount ~~GT&T~~GTT agreed to with the Government. ~~GT&T~~GTT has objected to the NFMU’s proposed action and reiterated its position that an increase in fees prior to development of an acceptable methodology would violate the Government’s prior agreement. In 2011, ~~GT&T~~GTT paid the NFMU $2.6 million representing payments in full for 2008, 2009 and 2010. However, by letter dated November 23, 2011, the NFMU stated that it did not concur with ~~GT&T’s~~GTT’s inference that the amount was payment in full for the specified years as it was NFMU’s continued opinion that the final calculation for spectrum fees was not agreed upon and was still an outstanding issue. By further letter dated November 24, 2011, the NFMU further rejected a proposal that was previously submitted jointly by ~~GT&T~~GTT and another communications provider that outlined a recommended methodology for the calculation of these fees. The NFMU stated that it would prepare its own recommendation for consideration by the Minister of Telecommunications, who would decide the matter. ~~GT&T~~GTT has paid undisputed spectrum fees according to the methodology used for its 2011 payments, and has reserved amounts payable according to this methodology. ~~There have been limited further discussions on this subject and GT&T~~GTT has not had the opportunity to ~~review~~have significant discussions with the NFMU on the matter and is not aware whether the NFMU has made any recommendation ~~made by the NFMU~~ to the Minister.

In November 2007, Caribbean Telecommunications Limited (“CTL”) filed a complaint in the U.S. District Court for the District of New Jersey against GT&T and ATN claiming breach of an interconnection agreement for domestic cellular services in Guyana and related claims. CTL asserted over $200 million in damages. GT&T and ATN moved to dismiss the complaint on procedural and jurisdictional grounds. On January 26, 2009, the court granted the motions to dismiss the complaint on the grounds asserted. In November 2009 and again in April 2013, CTL filed and then abandoned a similar claim against GT&T and the Public Utility Commission in the High Court of Guyana. CTL once more filed a similar claim against the Company in December 2017, seeking damages of $25 million; however, this matter was dismissed in May 2018. CTL made an untimely filing for an appeal thereafter, which the court has not yet ruled on.

On May 8, 2009, a ~~GT&T~~GTT competitor, Digicel, filed a lawsuit in Guyana challenging the legality of ~~GT&T’s~~GTT’s exclusive license rights under Guyana’s constitution. Digicel initially filed this lawsuit against the Attorney General of ~~Guyana on~~Guyana. On May 13, 2009, ~~GT&T~~GTT petitioned to intervene in the suit in order to oppose Digicel’s claims and ~~GT&T’s~~GTT’s petition was granted on May 18, 2009. ~~GT&T~~GTT filed an answer to the charge on June 22, 2009. The case remains pending. The Company believes that any legal challenge to ~~GT&T’s~~GTT’s exclusive license rights granted in 1990 is without merit and the Company intends to defend vigorously against such legal challenge.

~~GT&T~~

GTT has filed several lawsuits in the High Court of Guyana asserting that, despite its denials, Digicel is engaged in international bypass in violation of ~~GT&T~~’sGTT’s exclusive license rights, the interconnection agreement between the parties, and the laws of Guyana. ~~GT&T~~GTT is seeking injunctive relief to stop the illegal bypass activity and money damages. Digicel filed counterclaims alleging that ~~GT&T~~GTT has violated the terms of the interconnection agreement and Guyana laws. These suits, filed in 2010 and 2012, have ~~yet~~been consolidated with Digicel’s constitutional challenge described above which is expected to proceed to trial ~~and it remains uncertain as to when a trial date may be set.~~ ~~GT&T~~in the second half of 2019. GTT intends to prosecute these matters vigorously.

~~GT&T~~GTT is also involved in several legal claims regarding its tax filings with the Guyana Revenue Authority dating back to 1991 regarding the deductibility of intercompany advisory fees as well as other tax assessments. The Company maintains that any liability ~~GT&T~~GTT might be found to have with respect to the disputed tax assessments, totaling $44.1 million, would be offset in part by the amounts necessary to ensure that ~~GT&T’s~~GTT’s return on investment was no less than ~~15%~~15% per annum for the relevant periods. The Company believes that some adverse outcome is probable and has accordingly accrued $5.0 million as of June 30, ~~2018~~2019 for these matters.

~~14. PLATFORM INVESTMENTS~~

~~During the third quarter of 2017, the Company completed its investment in a managed services and technology business based in Bermuda.~~

During the second quarter of 2018, the Company established a new platform, based in the United States, to develop in-building wireless network technology which enables building owners to capitalize on the growing demand for better indoor wireless solutions. Also during the second quarter of 2018, the Company established a new platform, based in the United States, to further develop large scale fiber networks to serve the telecommunications and content provider industries with network infrastructure to develop network solutions.

~~15. SUBSEQUENT EVENTS~~

In July 2018, the Company completed the previously disclosed sale of approximately 100 cell sites. The Company received no additional cash proceeds at closing from the sale and expects to record a gain on the sale of approximately $15 million in the third quarter of 2018.

On August 1, 2018 the IRS issued proposed regulations under Sec. 965 relating to the one time transition tax imposed as of December 31, 2017. The Company is still analyzing the regulations to determine what if any impact they may have on amounts it recorded in the 2017 financial statements.

~~On August 7, 2018, the FCC authorized, approximately, an additional $7.3 million in funding to the Company for network restoration and hardening following the Hurricanes.~~

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion and analysis of our financial condition and results of operations that follows are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions. This discussion should be read in conjunction with our condensed consolidated financial statements herein and the accompanying notes thereto, and our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 (our ~~“2017~~“2018 Annual Report on Form 10-K”), and in particular, the information set forth therein under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Overview

We are a holding company that, directly and through ~~our operating~~its subsidiaries, ~~(i) provides wireless~~owns and ~~wireline~~operates telecommunications ~~services~~businesses in North America, Bermuda, ~~and~~ the Caribbean, ~~(ii) develops, owns~~ and ~~operates commercial distributed generation solar power systems~~a renewable energy business in ~~the United States and India, and (iii) owns and operates terrestrial and submarine fiber optic transport systems in the United States and in the Caribbean.~~India. We were incorporated in Delaware in 1987, began trading publicly in 1991 and spun off more than a half of our operations to stockholders in 1998. Since that time, we have engaged in many strategic acquisitions and investments to help grow our ~~operations.~~operations, using the cash generated from our established operating units to re-invest in our existing businesses and to make strategic investments in earlier stage businesses. We ~~actively evaluate~~look for businesses that offer growth opportunities or potential strategic benefits, but that require additional ~~domestic~~capital investment in order to execute on their business plans. We hold controlling positions with respect to some of our investments and ~~international acquisition, divestiture,~~minority positions in others. These strategic investments frequently offer a product and ~~investment opportunities and other strategic transactions~~service development component in addition to the ~~telecommunications, energy-related and other industries that meet~~prospect of generating returns on our ~~return-on-investment and other acquisition criteria.~~invested capital. For a discussion of the risks involved in our investment strategy, ~~and risks involved,~~ see “Risk Factors—We are actively evaluating investment, acquisition and other strategic opportunities, which may affect our long-term growth ~~prospects~~.prospects.” in our ~~2017~~2018 Annual Report on Form 10-K.

3128

We ~~offer the following principal services:~~have identified three operating segments to manage and review our operations, and to facilitate investor presentations of our results, as follows:

●

~~Wireless.~~ US Telecom. In the United States, we offer wireless and wireline services. We offer wholesale wireless voice and data roaming services to national, regional, local and selected international wireless carriers in rural markets located principally in the Southwest and Midwest United States. We also provide retail wireless, wireline and wholesale long-distance voice services to telecommunications carriers in the areas in which we offer wireline services.

●

International Telecom. Our international wireless services include voice and data services to retail ~~and wholesale~~ customers in Bermuda, Guyana ~~the U.S. Virgin Islands,~~ and the ~~United States.~~

~~Wireline.~~ US Virgin Islands. Our international wireline services include ~~local telephone~~voice and data services in Bermuda, the Cayman Islands, Guyana and the ~~U.S.~~US Virgin Islands, ~~and the United States. Our wireline services also include~~as well as video services in Bermuda, the Cayman Islands, and the ~~U.S~~US Virgin Islands. WeIn addition, we offer wholesale ~~long‑distance~~long-distance voice services to other telecommunications ~~carriers. Through March 8, 2017,~~carriers in the countries in which we also offered facilities‑based integrated voice and data communications services and wholesale transport services to enterprise and residential customers in New England, primarily Vermont, and in New York State.

offer international wireline services.

●

Renewable Energy. In ~~the United States,~~India, we provide distributed generation solar power to corporate, utility and municipal customers. WeThrough November 6, 2018, we also ~~own and develop projects in India providing~~provided distributed generation solar power ~~to corporate customers.~~

in the United States in Massachusetts, California and New Jersey.

The following chart summarizes the operating activities of our principal subsidiaries, the segments in which we report our revenue and the markets we served as of June 30, ~~2018:~~2019:


Segment	Services	Markets	Tradenames
~~Segment~~	~~Services~~	~~Markets~~	~~Tradenames~~
~~U.S.~~US Telecom	Wireless	United States (rural markets)	~~Commnet,~~ Choice, Choice NTUA Wireless, Commnet, WestNet, Geoverse
	Wireline	United States	Essextel, Deploycom
International Telecom	Wireline	Bermuda, Cayman Islands, Guyana, ~~U.S.~~US Virgin ~~Islands, Cayman~~ Islands	~~One,~~Fireminds, GTT+, ~~Viya,~~One, Logic, ~~Fireminds~~Viya
	Wireless	Bermuda, Guyana, ~~U.S.~~US Virgin Islands	~~One,~~ GTT+, One, Viya
	Video Services	Bermuda, ~~U.S.~~Cayman Islands, US Virgin ~~Islands, Cayman~~ Islands	Logic, One, Viya ~~Logic~~
RenewableEnergy	Solar	~~United States (Massachusetts, California, and New Jersey),~~ India	~~Ahana Renewables,~~ Vibrant Energy

We actively evaluate potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, that meet our return on investment and other criteria. In addition, we consider non-controlling investments in earlier stage businesses that we consider strategically relevant, and which may offer long-term growth potential for us, either individually, or as research and development businesses that can support our operating subsidiaries in new product and service development and offerings. We provide management, technical, financial, regulatory, and marketing services to our subsidiaries and typically receive a management fee equal to a percentage of their revenues, which is eliminated in consolidation. For further information about our financial segments and geographical information about our operating revenues and assets see ~~Note 12~~Notes 1 and 14 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Dispositions

~~Impact of Hurricanes Irma and Maria~~Renewable Energy (US Operations)

During September 2017, our operations and customers in the U.S. Virgin Islands were severely impacted by Hurricanes Irma and Maria (collectively, the “Hurricanes”). Both our wireless and wireline networks and commercial operations were severely damaged by these storms. As a result of the significant damage to our wireline network and the lack of consistent commercial power in the territory, we were unable to provide most of our wireline services, which comprise the majority of revenue in this business, since the Hurricanes and through much of the first six months of 2018. Accordingly, revenue generated by our U.S. Virgin Islands operations decreased by $3.0 million and $16.2 million during the three and six months ended June 30, 2018 as compared to 2017 as a result of the Hurricanes and an additional $1.2 and $2.3 million for the three and six months ended June 30, 2018 as a result of our August 2017 sale of our operations in the British Virgin Islands. However, the second quarter of 2018 was positively impacted by the recognition of $8.2 million in revenue funded by the additional receipt of high-cost Universal Service Funds.

During the six months ended June 30, 2018, we spent $66.7 million restoring and adding resiliency to our network which allowed us to reconnect roughly two-thirds of the households and three-quarters of businesses as of the period end. We expect that our network restoration work will be substantially complete by the end of the third quarter of 2018. However, returning our revenue to pre-Hurricane levels may take significant time as a result of population movements, the economic impact the Hurricanes had on the market, and our subscriber base’s appetite for continued wireline services.

~~Dispositions~~

~~International Telecom~~

On ~~August 18, 2017, we completed the sale of the Viya cable operations located in the British Virgin Islands. We did not recognize a gain or loss on the transaction.~~

~~On January 3, 2017, we completed the sale of the Viya cable operations located in St. Maarten for $4.8 million and recognized a gain of $0.1 million on the transaction.~~

The results of the British Virgin Islands and St. Maarten operations are not material to our historical results of operations. Since the dispositions do not relate to a strategic shift in our operations, the historical results and financial position of the operations are presented within continuing operations.

~~U.S. Wireline Business~~

~~On March 8, 2017,~~November 6, 2018, we completed the sale of our ~~integrated voice~~US Solar Operations business that owned and ~~data communications and wholesale transport businesses~~managed distributed generation solar power projects operated under the Ahana name in ~~New England~~Massachusetts, California and New ~~York for consideration of $25.9 million (the “Sovernet~~Jersey

(the “US Solar Transaction”). The ~~consideration~~US Solar Transaction had a total value of approximately $122.6 million, which included ~~$20.9~~a cash purchase price of $65.3 million and the assumption of approximately $57.3 million in debt, and is subject to certain other post-closing adjustments. Approximately $6.5 million of ~~cash, $3.0 million of receivables, and $2.0 million of contingent consideration. The $3.0 million of receivables are~~the purchase price will be held in escrow ~~to satisfy working capital adjustments in favor~~for a period of twelve months after the ~~acquirer, to fund certain capital expenditure projects related to the assets sold and~~closing to secure our indemnification obligations.

The ~~contingent consideration represents~~operations sold in connection with the ~~fair value~~US Solar Transaction do not qualify as discontinued operations because the disposition does not represent a strategic shift that has a major effect on our operations and financial results.

Platform Investments

During the second quarter of ~~future payments related~~2018, we invested in a new platform, based inthe United States, to develop in-building wireless network technology that enables building owners to capitalize on the growing demand for better indoor wireless solutions. Also during the second quarter of 2018, we provided funding for another new platform, based in the United States, seeking to “build to suit” large-scale fiber networks to serve the telecommunications and content provider industries in need of lower latency long haul fiber transit services. Both of these investments are consolidated in our results in our US Telecom segment.

Strategic Transactions

In July 2019, we entered into a Network Build and Maintenance Agreement (the “FirstNet Agreement”) with AT&T Mobility, LLC (“AT&T”) to build a portion of AT&T’s network for the First Responder Network Authority (“FirstNet”) as well as a commercial wireless network in or near its current operating area in the Southwestern United States (the “FirstNet Transaction”). Pursuant to the FirstNet Agreement and subject to certain ~~operational milestones~~limitations contained therein, all cell sites must be completed and accepted within a specified period of time. We expect to recognize construction revenue of approximately $75.0-80.0 million over the ~~disposed assets. The value~~next two years that will be mainly offset by construction cost as sites are completed. Revenues from construction are expected to have minimal impact on operating income.

Following acceptance of a cell site, AT&T will own the ~~contingent consideration was up~~cell site and we will assign to ~~$4.0 million based~~AT&T any third-party tower lease applicable to such cell site. If the cell site is located on ~~whether or not~~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 ~~operational milestones were achieved by December 31, 2017. In September 2017, based on progress toward achieving~~network, we will provide ongoing equipment and site maintenance and high capacity transport to and from these cell sites for an initial term ending 2029.

AT&T will continue to use our wholesale domestic wireless network for roaming services at a fixed rate per site during the ~~operational milestones,~~construction period until such time as the cell site is transferred to AT&T. Thereafter, revenue from the maintenance, leasing and ~~the December 31, 2017 deadline under which~~transport services provided to ~~do so, management determined that earning the contingent consideration was unlikely. As a result the fair value of the contingent consideration was reduced~~AT&T is expected to ~~zero. The amount was recorded as a loss on disposition of assets within~~offset revenue from wholesale wireless roaming services. We expect overall operating income ~~during~~contributions from the ~~year ended December 31, 2017.~~FirstNet Transaction to benefit second half of 2019 results and to have a relatively steady impact from 2020 onwards.

Universal Service Fund

programs: the ~~Connect America Fund; Lifeline; Schools and Libraries Program (“E-Rate”);~~High Cost Program; Low Income Program; E-Rate; and Rural Health Care ~~Support.~~Program. We participate in each of these programs as further described below. All of the ~~Connect America Fund; Lifeline, E-Rate,~~funding programs are subject to certain operational and ~~Rural Health Care Support programs.~~ reporting compliance requirements and if the requirements are not met, the funds may be subject to claw back provisions. We believe we are in compliance will all applicable requirements.

The FCC’s Mobility Funds and ~~High Cost Support programs~~Connect America Funds are administered through the ~~Connect America Fund.~~FCC’s USF High Cost Program. The High-Cost ~~Support program~~Program subsidizes telecommunications services in rural and remote ~~areas. The FCC created~~areas and the Phase I Mobility Fund ~~(“Phase I Mobility Fund”),~~is a one-time award meant to support wireless coverage in underserved geographic areas in the United States. The Connect America Fund Phase II Auction is a program that requires us to provide fixed broadband and voice services to certain eligible areas in the United States.

During the three and six month periods ended June 30, 2019, we recorded $4.1 million and $8.2 million, respectively, of revenue from the High Cost Program in our International Telecom segment. During the three and six months periods ended June 30, 2018, we recorded $4.1 million and $8.2 million, respectively, of revenue from the High Cost Program in our International Telecom segment. Also, during the three and six month periods ended June 30, 2019, we recorded $0.3 million and $0.6 million of High Cost Program revenue in our US Telecom segment. During the three and six months periods ended June 30, 2018, we recorded $0.3 million and $0.6 million, respectively, of revenue from the High Cost Program in our US Telecom segment. In addition, we recorded revenue of $8.2 million during the three and six months ended June 30, 2018, from additional USF funding authorized by the FCC following the Hurricanes.

We ~~have~~ received $21.1 million of Phase I Mobility Fund support to our wholesale wireless business (the “Mobility Funds”) ~~by expanding~~to be used to expand voice and broadband networks in certain geographic areas in order to offer either 3G or 4G service. Of these funds, $7.2 million was recorded as an offset to the cost of the property, plant, and equipment associated with these projects and, consequentially, a reduction of future depreciation expense. The remaining $13.9 million received ~~offsets~~offset operating expenses from inception of ~~which $13.4 million has been recorded to date and $0.5 million is recorded within current liabilities in our consolidated balance sheet as~~the program through part of ~~June 30,~~the third quarter of 2018. The Mobility Funds projects and ~~their~~related operating results are included within our ~~U.S.~~US Telecom segment. ~~As part~~

In August 2018, we were awarded $79.9 million over 10 years under the Connect America Fund Phase II Auction, to be used to provide fixed broadband and voice services to certain eligible areas in the United States. We recorded $1.5 million of the receipt of the Mobility Funds, we committed to comply with certain additional FCC construction and other requirements. The balance sheet presentation is based on the timing of the expected usage of the funds which will reduce future operations expenses through the expiration of the arrangementrevenue in ~~July 2018.~~

~~During~~ the three and six months ended June 30, ~~2018, we recorded $4.1 million and $8.3 million, respectively, of revenue~~2019 from ~~High Cost Support in its International Telecom segment for U.S. Virgin Islands operations. Also, during~~ the three and six months ended June 30, 2018, we recorded $0.3 million and $0.6 million, respectively, of High Cost Support revenue in its US Telecom segment. We are subject to certain operational, reporting and construction requirements as a result of this funding and we believe that we are in compliance with all of these requirements. In addition, we received $8.2 million of additional funding authorized by the FCC for network restoration following the Hurricanes.Connect America Fund Phase II program.

The E-Rate program provides discounted telecommunication access to eligible schools and libraries. The E-Rate program (i) awards ~~providers grants~~special construction funding to build network connectivity tofor eligible participants, and (ii) pays for discounted recurring charges for eligible broadband services. The ~~grants are~~special construction funding is used to reimburse construction costs and is distributed upon completion of a project. As of June 30, ~~2018,~~2019, we were awarded approximately $15.4 million of E-Rate grants with construction completion obligations between June 2019 and June 2020. Once these projects are constructed we are obligated to provide service to the E-Rate program participants. We are in various stages of constructing the networks and have not received any of the funds. ~~We expect to meet all requirements associated with these grants.~~

We also receive funding to provide discounted telecommunication services to eligible customers under the E-Rate, Lifeline, and Rural Health Care Support Programs. During the three and six months ended June 30, 2019, we recorded revenue of $1.6 million, and $3.2 million, respectively, in the aggregate from these programs. During the three and six months ended June 30, 2018, ~~the company~~we recorded revenue of $2.1 million, and $4.3 million, respectively, in the aggregate from these programs. We are subject to certain operational and reporting requirements under the above mentioned programs and we believe that we are in compliance with all of these requirements.

On August 7, 2018, the FCC authorized, approximately, an additional $7.3 million in funding to us for network restoration and hardening following the Hurricanes. In addition, in a July 6, 2018 Notice of Proposed Rulemaking, the FCC has proposed to adopt a new, long-term high-cost support mechanism in the U.S. Virgin Islands through a program called the Connect USVI Fund. Through the Connect USVI Fund, the FCC proposed to distribute over a period of years in the U.S. Virgin Islands $186.5 million of fixed-network support and $4.4 million of mobile-network support. The FCC’s proposed Connect USVI Fund effectively would replace the current Mobility Fund and High-Cost Support funding in the U.S. Virgin Islands. The FCC has sought comment on how to distribute the Connect USVI Fund support, and we, through our U.S. Virgin Islands affiliates, have proposed that the fixed-network support and a portion of the mobile-network support be allocated to our U.S. Virgin Islands affiliates. The outcome of this proceeding, however, is unclear at this time, and it is possible that the total amount of High-Cost Support and/or Mobility Fund support received by our U.S. Virgin Islands affiliates may be increased, reduced or unchanged.

Tribal Bidding Credit

As part of the broadcast television spectrum incentive auction, the FCC implemented a tribal lands bidding credit to encourage deployment of wireless services utilizing 600 ~~Mhz~~MHz spectrum on the lands of federally recognized tribes. We received a bidding credit of $7.4 million under this program in ~~the first quarter of~~ 2018. A portion of these funds will be used to offset network capital costs and a portion will be used to offset the costs of supporting the networks. Our current estimate is that weit will use $5.4 million to offset capital costs and, consequently, ~~a reduction in~~reduce future depreciation expense and $2.0 million to offset the cost of supporting the network which will reduce future operating expense. The credits are subject to certain requirements, including deploying service by January 2021 and meeting minimum coverage metrics. If the requirements are not met the funds may be subject to claw back provisions. We currently expect to comply with all applicable requirements related to these funds.

~~Platform Investments~~Impact of Hurricanes

During September 2017, the US Virgin Islands economy, our customer base and our operations were severely impacted by Hurricanes Irma and Maria (collectively, the “Hurricanes”). Both our wireless and wireline networks and commercial operations were severely damaged by these storms and as a result of the significant damage to the wireline network and the lack of consistent commercial power in the territory, we were unable to provide most of our wireline

services, which comprise the majority of our revenue in this business, from mid-September 2017 and through a majority of 2018. We received insurance recoveries of $34.6 million in February 2018 to aid our recovery from the impact of the Hurricanes.

During the ~~third quarter of 2017, we completed our investment in a managed services~~six months ended June 30, 2019 and ~~technology business based in Bermuda.~~

~~During the second quarter of~~June 30, 2018, we ~~established~~spent $0.1 million and $66.7 million, respectively, for network restoration and resiliency enhancements that allowed the reconnection of a ~~new platform, based in~~significant majority of affected households and businesses. We expect that our wireline network restoration work is complete, however, returning our revenue to pre-Hurricane levels may take significant time as a result of population movements, the ~~United States, to develop in-building wireless network technology which enables building owners to capitalize~~economic impact the Hurricanes had on the ~~growing demand~~market, and our subscriber base’s future appetite for better indoor wireless solutions. Also during the second quarter of 2018, we established a new platform, based in the United States, to further develop large scale fiber networks to serve the telecommunications and content provider industries with network infrastructure to develop network solutions.continued wireline services.

Selected Segment Financial Information

The following represents selected segment information for the ~~quarters~~three months ended June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):


For the Three Months Ended June 30, 2019

	US		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	25,656	$	21,340	$	—	$	—	$	46,996
Wireline		757		58,519		—		—		59,276
Renewable Energy		—		—		1,449		—		1,449
Total Revenue		26,413		79,859		1,449		—		107,721

Operating income (loss)		1,521		11,057		167		(9,991)		2,754



For the Three Months Ended June 30, 2018	For the Three Months Ended June 30, 2018											For the Three Months Ended June 30, 2018

		U.S.		International		Renewable		Corporate and
		Telecom		Telecom		Energy		Other (1)		Consolidated

													US		International		Renewable		Corporate and
													Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless		$	28,582	$	21,914	$	—	$	—	$	50,496		$	28,582	$	21,914	$	—	$	—	$	50,496
Wireline			1,702		59,567		—		—		61,269			1,702		59,567		—		—		61,269
Renewable Energy			—		—		6,023		—		6,023			—		—		6,023		—		6,023
Total Revenue			30,284		81,481		6,023		—		117,788			30,284		81,481		6,023		—		117,788


Operating income (loss)			7,841		15,571		1,927		(9,586)		15,753			7,841		15,571		1,927		(9,586)		15,753

For the Three Months Ended June 30, 2017











U.S.

International

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
Revenue

��

Wireless

$
34,921

$
21,625

$
—

$
—

$
56,546
Wireline

2,057

59,745

—

—

61,802
Renewable Energy

—

—

4,897

—

4,897
Total Revenue

36,978

81,370

4,897

—

123,245

Operating income (loss)

13,147

10,765

846

(8,955)

15,803

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

~~A quarter over quarter summary of our segment results is as follows:~~

~~U.S. Telecom.~~ Revenues within our U.S. Telecom segment decreased by $6.7 million, or 18.1%, to $30.3 million from $37.0 million for the three months ended June 30, 2018 and 2017, respectively. Of this decrease, $6.4 million was attributable to our wholesale wireless operations which were subject to previously agreed reduced wholesale roaming rates and revenue caps with certain carrier customers. The impact of the reduced roaming rates and revenue caps were partially offset by the increase in the number of our base stations and the increase in data traffic volumes. However, given the structure of the Company’s roaming arrangements as revised in 2017, the Company does not expect continued increase in traffic volumes or base stations to materially offset the decline in wholesale roaming revenue as compared to 2017 levels. Partially offsetting this decrease in our wireless business was a $0.1 million increase in revenue from our retail wireless business. Our wireline operations reported a decline in traffic volumes within our wholesale long-distance services resulting in a decrease in revenues of $0.6 million in that business.

~~Operating expenses~~US Telecom. Revenue within our ~~U.S.~~US Telecom segment decreased ~~$1.4~~by $3.9 million, or ~~5.9%~~12.9%, to ~~$22.5~~$26.4 million from ~~$23.9~~$30.3 million for the three months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~This decrease in operating expenses was primarily related to certain cost reduction measures throughout the segment’s operations.~~

~~As a result of the above,~~Revenue within our ~~U.S. Telecom segment’s operating income~~wireless operations decreased ~~$5.3~~by $2.9 million, or ~~40.5%~~10.1%, to ~~$7.8~~$25.7 million from ~~$13.1~~$28.6 million for the three months ended June 30, 2019 and 2018, respectively. This decrease was attributable to a decline in revenues in our wholesale wireless operations with $1.8 million of this decrease relating to the July 2018 sale of 100 cell sites and ~~2017, respectively.~~$2.6 million resulting from a reduction in wholesale traffic. These decreases were partially offset by the recognition of an additional $1.5 million in revenue from the Connect America Fund II award which began this quarter. Revenue from our retail wireless operations remained unchanged at $4.6 million for the three months ended June 30, 2019 and 2018.

Revenue within our wireline operations decreased by $0.9 million, or 52.9%, to $0.8 million from $1.7 million for the three months ended June 30, 2019 and 2018, respectively, as a result of a decrease in traffic volumes within our wholesale long-distance services.

~~International Telecom.~~ ~~Revenues within our International Telecom segment increased slightly to $81.5 million~~

3632

from $81.4 million for the three months ended June 30, 2018 and 2017, respectively. This was the result of an increased in revenues in most of our international markets partially offset by a $3.0 million decrease in revenue within our U.S. Virgin Islands operations as a result of the Hurricanes and the sale of our operations in the British Virgin Islands. These decreases within the U.S. Virgin Islands were partially offset by $8.2 million in additional funding from the Universal Service Fund and increases with our other international markets.

Operating expenses within our US Telecom segment increased $2.4 million, or 10.7%, to $24.9 million from $22.5 million for the three months ended June 30, 2019 and 2018, respectively. This increase in operating expenses was primarily related to the completion of the Phase I Mobility Fund support in 2018 which was recorded as a $1.5 million offset to expenses during the three months ended June 30, 2018, and the addition of our new in-building wireless network and large-scale fiber network business.

As a result of the above, our US Telecom segment’s operating income decreased $6.3 million, or 80.8%, to $1.5 million from $7.8 million for the three months ended June 30, 2019 and 2018, respectively.

International Telecom. Revenues within our International Telecom segment decreased $1.6 million, or 2.0%, to $79.9 million from $81.5 million for the three months ended June 30, 2019 and 2018, respectively, as our second quarter 2018 revenues included $8.2 million of additional non-recurring USF funding to help support our US Virgin Island operations, which were partially offset by an increase in broadband revenues in many of our international telecom businesses, including our operations in the US Virgin Islands as their operations became more normalized following the impact of the Hurricanes.

Operating expenses within our International Telecom segment ~~decreased~~increased by ~~$4.7~~$2.9 million, or ~~6.7%~~4.4%, to ~~$65.9~~$68.8 million from ~~$70.6~~$65.9 million for the three months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~This decrease~~The increase was primarily the result of ~~a $6.4 million decrease~~increased expenses in ~~expenses within our U.S.~~the US Virgin Islands as their operations ~~as we continue to restore services and operations impacted by~~become more normalized following the ~~Hurricanes as well as~~impact of the sale of our operations in the British Virgin Islands. We expect operating expenses in our International Telecom segment to increase to 2017 levels as we are able to restore service to our U.S. Virgin Islands operations.Hurricanes.

As a result, our International Telecom segment’s operating income ~~increased $4.8~~decreased $4.5 million, or ~~44.4%~~28.8%, to ~~$15.6~~$11.1 million from ~~$10.8~~$15.6 million for the three months ended June 30, 2019 and 2018, respectively.

Renewable Energy. Revenue within our Renewable Energy segment decreased $4.6 million, or 76.7%, to $1.4 million from $6.0 million for the three months ended June 30, 2019 and ~~2017, respectively.~~
2018, respectively, primarily as a result the US Solar Transaction.

~~Renewable Energy.~~ Revenues within our Renewable Energy segment increased $1.1 million, or 22.4%, to $6.0 million from $4.9 million for the three months ended June 30, 2018 and 2017, respectively, primarily as a result of the increase in revenue from our newly completed solar power plants in India partially offset by a decrease in revenue in our U.S. operations as a result of the expiration of certain incentive energy credits from the state of California.

Operating expenses within our Renewable Energy segment ~~remained consistent at~~decreased by $2.9 million, or 70.7%, to $1.2 million from $4.1 million for the three months ended June 30, 2019 and 2018, ~~and 2017.~~respectively, primarily related to the US Solar Transaction.

As a result of the above, our Renewable Energy segment’s operating income ~~increased~~decreased by ~~$1.1~~$1.7 million, or ~~137.5%~~89.5%, to ~~$1.9~~$0.2 million from ~~$0.8~~income of $1.9 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

3733

The following represents a ~~quarter over quarter~~quarter-over-quarter discussion and analysis of our results of operations for the ~~quarters~~three months ended June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):



	Three Months Ended				Amount of		Percent
	June 30,				Increase		Increase
	2018		2017		(Decrease)		(Decrease)


									Three Months Ended				Amount of		Percent
									June 30,				Increase		Increase
									2019		2018		(Decrease)		(Decrease)
REVENUE:
Wireless	$	50,496	$	56,546	$	(6,050)	(10.7)	%	$	46,996	$	50,496	$	(3,500)	(6.9)	%
Wireline		61,269		61,802		(533)	(0.9)			59,276		61,269		(1,993)	(3.3)
Renewable Energy		6,023		4,897		1,126	23.0			1,449		6,023		(4,574)	(75.9)
Total revenue		117,788		123,245		(5,457)	(4.4)			107,721		117,788		(10,067)	(8.5)
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		28,257		30,922		(2,665)	(8.6)			27,930		28,257		(327)	(1.2)
Engineering and operations		18,409		19,378		(969)	(5.0)			19,107		18,409		698	3.8
Sales, marketing and customer services		8,413		8,729		(316)	(3.6)			9,874		8,413		1,461	17.4
General and administrative		26,754		26,011		743	2.9			26,590		26,754		(164)	(0.6)
Transaction-related charges		438		148		290	195.9			28		438		(410)	(93.6)
Depreciation and amortization		21,913		22,254		(341)	(1.5)			21,549		21,913		(364)	(1.7)
(Gain) loss on disposition of long-lived assets		(2,333)		—		(2,333)	(100.0)			(111)		(2,333)		2,222	95.2
Loss on damaged assets and other hurricane related charges		184		—		184	100.0			—		184		(184)	100.0
Total operating expenses		102,035		107,442		(5,407)	(5.0)			104,967		102,035		2,932	2.9
Income from operations		15,753		15,803		(50)	(0.3)			2,754		15,753		(12,999)	(82.5)
OTHER INCOME (EXPENSE):
Interest income		487		347		140	40.3			517		487		30	6.2
Interest expense		(2,327)		(2,153)		(174)	8.1			(1,263)		(2,327)		1,064	45.7
Other income (expense)		(1,045)		(492)		(553)	112.4
Other expense										(255)		(1,045)		790	75.6
Other expense, net		(2,885)		(2,298)		(587)	25.5			(1,001)		(2,885)		1,884	65.3
INCOME BEFORE INCOME TAXES		12,868		13,505		(637)	(4.7)			1,753		12,868		(11,115)	(86.4)
Income tax expense		2,088		2,596		(508)	(19.6)
Income tax expense (benefit)										(274)		2,088		(2,362)	(113.1)
NET INCOME		10,780		10,909		(129)	(1.2)			2,027		10,780		(8,753)	(81.2)
Net income attributable to non-controlling interests, net of tax:		(3,564)		(5,026)		1,462	(29.1)			(2,883)		(3,564)		681	19.1
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	7,216	$	5,883	$	1,333	22.7	%
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS									$	(856)	$	7,216	$	(8,072)	(111.9)	%

Wireless revenue.Our wireless revenue consists of wholesale revenue generated within our ~~U.S.~~US Telecom segment and retail revenue generated within both our ~~U.S.~~US Telecom and International Telecom segments. Within our International Telecom segment, wireless revenue is generated in Bermuda and the Caribbean (including the ~~U.S.~~US Virgin Islands).

Wholesale wireless revenue. Our ~~U.S.~~US Telecom segment generates wholesale wireless revenue from providing mobile voice and data services to the customers of other wireless carriers, the provision of network switching services and certain transport services using our wireless networks. Wholesale wireless revenue is primarily driven by the number of sites and base stations we operate, the amount of voice and data traffic from the subscribers of other carriers that each of these sites generates and the rates we are paid from our carrier customers for carrying that traffic ~~and~~as well as tower rental income. Beginning in the third quarter of 2019, wholesale wireless revenue in our US Telecom segment will also include revenues received pursuant to our FirstNet Transaction with AT&T.

The most significant competitive factor we face in our ~~U.S.~~US Telecom’s wholesale wireless business is the extent to which our carrier customers choose to roam on our networks or elect to build or acquire their own infrastructure in a market, reducing or eliminating their need for our services in those markets. ~~Occasionally,~~In the past, we have entered into buildout projects with existing carrier customers to help the customer accelerate the buildout of a given area. Pursuant to these arrangements, we agree to incur the cost of building and operating a network in a newly designated area meeting specified conditions. In exchange, the carrier agrees to lease us spectrum in that area and enter into a contract with

specific pricing and terms. Historically, these arrangements have differed from our FirstNet Transaction and have typically ~~have~~ included a purchase right in favor of the carrier to purchase that portion of the network for a predetermined price, depending on when the right to purchase is

exercised. ~~During~~In July 2018, we completed the ~~previously disclosed~~ sale of approximately 100 cell sites which, ~~generated approximately $1.9 million of revenue during the second quarter of 2018,~~ under one of these ~~arrangements.~~arrangements, generated approximately $1.8 million of wholesale wireless revenue during the three months ended June 30, 2018. We received no additional cash proceeds at closing as the cash proceeds were previously received and deferred under our revenue arrangement. ~~We expect to record a gain on the sale of approximately $15 million in the third quarter of 2018.~~

Retail wireless revenue. Both our ~~U.S.~~US Telecom and International Telecom segments generate retail wireless revenues by providing mobile voice and data services to our subscribers. Retail wireless revenues also include roaming revenues generated by other carriers’ customers roaming into our retail markets and wireless equipment sales, primarily handsets and data modems, as well as real estate rental income.

Wireless revenue decreased by ~~$6.0~~$3.5 million, or ~~10.7%~~6.9%, to $47.0 million for the three months ended June 30, 2019 from $50.5 million for the three months ended June 30, ~~2018 from $56.5 million for the three months ended June 30, 2017.~~2018. The decreases in wireless revenue, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Wireless revenue within our ~~U.S.~~US Telecom segment decreased by ~~$6.3~~$2.9 million, or ~~18.1%~~10.1%, to ~~$28.6~~$25.7 million from ~~$34.9~~$28.6 million, for the three months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Wholesale~~This decrease represented a decrease in wholesale wireless revenue ~~decreased by $6.4~~of $2.9 million, or ~~26.7%~~12.1%, to ~~$24.0~~$21.1 million from ~~$30.4~~$24.0 million for the three months ended June 30, 2019 and 2018, ~~and 2017, respectively, as a result~~respectively. Of this decrease in wholesale wireless revenue, $1.8 million was related to the July 2018 sale of 100 cell sites with $2.6 million resulting from a reduction in wholesale ~~roaming rates~~ ~~and the impact of contractual revenue caps with certain carrier customers. The effect of the decrease in roaming rates and revenue caps was~~ traffic. These decreases were partially offset by ~~growth~~the recognition of an additional $1.5 million in ~~data traffic volumes as a result of capacity and technology upgrades to~~revenue from the Connect America Fund II award which began this quarter. Wireless revenue within our ~~network and the increase in the number of base stations to 1,121from 1,041 as of June 30, 2018 and 2017, respectively. Our U.S. Telecom’s~~US Telecom segment’s retail ~~wireless~~ operations ~~reported a slight increase in wireless revenues of $0.1 million, or 2.2%, to~~remained unchanged $4.6 ~~million from $4.5~~ million for the three months ended June 30, ~~2018~~2019 and ~~2017, respectively.~~

2018.

●

International Telecom. Within our International Telecom segment, wireless revenue ~~increased~~decreased by ~~$0.3~~$0.6 million, or ~~1.4%~~2.7%, to $21.3 million for the three months ended June 30, 2019 from $21.9 million for the three months ended June 30, ~~2018 from $21.6 million for the three months ended June 30, 2017. Increases~~2018. This decrease was primarily related to a decrease in roaming revenues within most of our ~~International Telecom~~ markets ~~were partially offset by~~and a decrease in ~~the U.S. Virgin Islands which were negatively impacted by the Hurricanes.~~

equipment revenues in some of our markets.

We expect ~~wholesale~~that wireless ~~revenues~~revenue within our ~~U.S.~~US Telecom segment ~~to continue to decline and margins to contract~~will increase in the near term as a result of ~~previously disclosed contracts that significantly reduce rates~~revenues from the FirstNet transaction and ~~impose revenue caps as well as~~ the July 2018 sale of 100 cell sites which generated $1.9 million of revenue during the three months ended June 30, 2018. While we expect that wholesale data volumes will continue to increase due to increased demand combined with our increased capacity, we do not expect to significantly expand our footprint and expect that our reduced rates and revenue caps will mostly prevent us from realizing any revenue increase resulting from increased data volumes or additional base stations. As such, we expect that capital expenditures in this segment will be significantly less going forward. While we are facing lower revenue as a result of the renegotiated roaming arrangements, weConnect America Fund II award. We believe that maintaining roaming and other strategic arrangements favorable to our carrier customers allows us to preserve ~~wholesale~~ revenue for a longer period of time while creating potential for a ~~long‑lived~~long-lived shared infrastructure solution for carriers in areas they may consider to be non-strategic. As such, we expect that capital expenditures in this segment related to our traditional wholesale wireless business model will be significantly lower going forward.

We expect wireless revenues within our International Telecom segment to ~~increase~~remain consistent as we invest in upgrading our networks and service offerings. Growth in revenue from anticipated subscriber growth in certain markets, however, may be ~~somewhat~~ offset by a decline in roaming revenues due to lower negotiated roaming rates received from our carrier customers. Roaming revenues in these markets are also subject to seasonality and can fluctuate between quarters.

Wireline revenue. Wireline revenue is generated by our ~~U.S.~~US Telecom and International Telecom segments. Within our ~~U.S.~~US Telecom segment, wireline revenue is generated by our wholesale long-distance voice services to telecommunications carriers. Within our International Telecom segment, wireline revenue is generated in Bermuda and the Caribbean (including the ~~U.S.~~US Virgin Islands) and includes internet, voice, and video service revenues as well as revenues from our new managed services and technology business.

Wireline revenue decreased by ~~$0.5~~$2.0 million, or ~~0.9%~~3.3%, to ~~$61.3~~$59.3 million from ~~$61.8~~$61.3 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~decreases~~changes in wireline revenue, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Wireline revenue ~~decreased~~ within our ~~U.S.~~US Telecom segment ~~by $0.4~~decreased $0.9 million, or ~~19.0%~~52.9%, to ~~$1.7~~ $0.8

million from ~~$2.1~~$1.7 million for the three months ended June 30, ~~2018~~2019 and ~~2017, respectively,~~2018 as a result of ~~decreased~~a decrease in traffic ~~volume~~volumes within our wholesale ~~long distance voice services operations.~~

long-distance services.

●

International Telecom. Within our International Telecom segment, wireline ~~remained consistent at~~revenue decreased by $1.1 million, or 1.8%, to $58.5 million from $59.6 million, for the three months ended June 30, 2019 and 2018, ~~and 2017.~~ ~~Our U.S. Virgin Islands operations reported a decrease in wireline revenues of $2.2 million~~respectively, as a result of the ~~extensive damage caused by the Hurricanes as well as the August 2017 sale of our British Virgin Islands operations. These decreases within the U.S. Virgin Islands were partially offset by~~three months ended June 30, 2018 including $8.2 million inof additional non-recurring funding from the Universal Service Fund ~~and increases with~~to help support our ~~other~~US Virgin Island operations partially offset by an increase in broadband revenues in many of our international ~~markets.~~

telecom businesses including our operations in the US Virgin Islands as their operations become more normalized following the impact of the Hurricanes.

Within our International Telecom segment, we anticipate that wireline revenue may ~~continue to show decreases~~increase in the ~~near-term,~~next few quarters as ~~compared to 2017, due to~~our operations within the ~~continued~~US Virgin Islands become more normalized following the impact of the Hurricanes. However, returning revenues to levels reported prior to the Hurricanes will take longer, or may never occur, as a result of the damage caused by the Hurricanes to the economy of the US Virgin Islands and ~~the time necessary to rebuild~~ our ~~wireline network to service our customers~~customer base in ~~the U.S. Virgin Islands.~~that market. In all of our international markets we may incur a decline in video revenues as a result of subscribers using alternative methods to receive video content. We anticipate that wireline revenue from our international ~~long‑distance~~long-distance business in Guyana will continue to decrease as consumers seek to use alternative technology services to place calls, as well as a result of the loss of market share should we cease to be the exclusive provider of domestic fixed and international ~~long‑distance~~long-distance service in Guyana, whether by reason of the Government of Guyana implementing recently-passed legislation or new regulations or the lack of enforcement of our exclusive rights. While the loss of our exclusive rights will likely cause an immediate reduction inour wireline revenue, over the longer term such declines may be offset by increased revenue from ~~data~~broadband services to consumers and enterprises in Guyana or an increase in regulated local calling rates in ~~Guyana, an increase in wholesale transport services and large enterprise and agency sales in the United States.~~Guyana. We currently cannot predict when or if the Government of Guyana will take any action to implement such legislation or any other action that would otherwise affect our exclusive rights in Guyana. See Note 1315 to the ~~Unaudited Condensed~~ Consolidated Financial Statements included in this Report.

Renewable energy revenue. In the United States, renewable energy revenue represents revenue from the sale of electricity through domestic long-term (10 to 25 year) power purchase agreements (“PPAs”), the sale of SRECs which have a contract term of up to ten years. Internationally, For 2019, renewable energy revenue includes the generation of power through ~~PPA’s~~Power Purchase Agreements (“PPAs”) from our solar plants in ~~India and consulting fees.~~India. Our PPAs, which are typically priced at or below local retail electricity rates and allow our customers to secure electricity at predictable and stable prices over the duration of their long-term ~~contract. As such, our PPAs~~contract, provide us with high-quality contracted cash ~~flows which will continue over their average remaining life.~~flows. In the United States, and until the sale of those operations on November 6, 2018, renewable energy revenue represented revenue from the sale of electricity through PPAs and the sale of Solar Renewable Energy Credits (“SRECs”). During the three months ended June 30, 2018, our renewable energy operations within the United States generated $4.5 million of revenue.

Renewable energy revenue ~~increased $1.1~~decreased by $4.6 million, or ~~23.0%~~75.9%, to ~~$6.0~~$1.4 million from ~~$4.9~~$6.0 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, primarily as a result of ~~a $1.5 million increase in revenue from our newly completed solar power plants in India partially offset by a $0.4 million~~the impact of the US Solar Transaction.

We expect that renewable energy will decrease in ~~our U.S. operations~~future periods as compared to 2018 as a result of the ~~expiration of certain performance-based incentive credits from the state of California.~~

~~We expect that~~US Solar Transaction. However, our renewable energy revenue ~~within~~in India may have moderate growth in 2019 as additional solar plants in India became operational at the United States will remain fairly consistent in the near term but will continue to decline in the longer term as the SRECs continue to expire. Internationally, we expect that renewable energy will remain fairly consistent through the remainderend of 2018.

Termination and access fee expenses. Termination and access fee expenses are charges that we pay for voice and data transport circuits (in particular, the circuits between our wireless sites and our switches), internet capacity, video programming costs, other access fees we pay to terminate our calls, telecommunication spectrum fees and direct costs associated with our managed services and technology business and Renewable Energy segment. Termination and access fees also include the cost of handsets and customer resale equipment incurred by our retail businesses.

Termination and access fees decreased by ~~$2.7~~$0.4 million, or ~~8.6%~~1.4%, to ~~$28.3~~$27.9 million from ~~$30.9~~$28.3 million for the three months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Decreases~~Net decreases in termination and access fees, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Termination and access fees within our ~~U.S.~~US Telecom segment decreased by ~~$0.6~~$0.1 million, or ~~5.6%~~1.0%, to ~~$10.1million~~$10.0 million from ~~$10.7~~$10.1 million, for the three months ended June 30, 2019 and 2018, ~~and 2017, respectively,~~respectively. This decrease was primarily ~~as a~~the result of a de~~crease in traffic volume within our wholesale long-distance voice services business.~~

reduction of $1.1 million related to the sale of approximately 100 cell

sites during July 2018 partially offset by the completion of the Phase I Mobility Fund support in 2018 which recorded $1.5 million as an offset to expenses during the three months ended June 30, 2018.

●

International Telecom. Within our International Telecom segment, termination and access fees decreased by ~~$2.1~~$0.8 million, or ~~10.0%~~4.3%, to ~~$18.8~~$18.0 million from ~~$20.9~~$18.8 million, for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. This decrease was ~~primarily caused~~ the result of certain cost reduction programs and lower equipment sales in some of our markets. This decrease, however, was partially offset by a ~~$2.7~~$0.9 million ~~reduction~~increase in television programming and other variable costs ~~which~~that were not incurred within our US Virgin Islands operations during 2018 as a result of the impact of the ~~Hurricanes and~~Hurricanes.

●

Renewable Energy. During the ~~sale~~three months ended June 30, 2018, we recorded $0.4 million of ~~our operations in the British Virgin Islands. The decreases were partially offset by the costs incurred by our new managed services and technology business.~~

~~Renewable Energy. Termination~~termination and access fees within our ~~Renewable Energy~~renewable energy segment. As a result of the US Solar Transaction, no termination and access fees were recorded to this segment ~~increased slightly to $0.4 million from $0.3 million~~ for the three months ended June 30, ~~2018 and 2017, respectively.~~

2019.

WeIn our International Telecom and Renewable Energy segments, we expect that termination and access fee expenses will remain fairly consistent as a percentage of revenues in future ~~periods.~~periods, however, the FirstNet Transaction is expected to increase such expenses in our US Telecom segment.

Engineering and operations expenses. Engineering and operations expenses include the expenses associated with developing, operating and supporting our expanding telecommunications networks and renewable energy operations, including the salaries and benefits paid to employees directly involved in the development and operation of our networks and renewable energy operations.

Engineering and operations expenses ~~decreased~~increased by ~~$1.0~~$0.7 million, or ~~5.0%~~3.8%, to ~~$18.4~~$19.1 million from ~~$19.4~~$18.4 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The net ~~decrease~~increase in engineering and operations, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Engineering and operations expenses ~~remained consistent at~~increased within our US Telecom segment by $0.3 million, or 8.8%, to $3.7 million from $3.4 million, ~~within our U.S. Telecom segment~~ for the three months ended June 30, 2019 and 2018, respectively, primarily as a result of an increase in these expenses in our wireless business and ~~2017.~~

our new in-building wireless network and large-scale fiber network businesses.

●

International Telecom. Within our International Telecom segment, engineering and operations expenses ~~decreased~~increased by $0.8 $0.4 million, or ~~5.1%~~2.7%, to ~~$14.9~~$15.3 million from ~~$15.7~~$14.9 million, for the three months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. This ~~decrease~~increase was primarily related to increases in consulting costs in all of our international markets partially offset by a $0.9 million decrease in our ~~U.S.~~US Virgin ~~Islands~~Island operations ~~which were impacted by~~as it continues to normalize from the ~~Hurricanes as well as decreases in~~impact of the Hurricanes.

●

Corporate Overhead. Engineering expenses within our ~~other International Telecom markets which experienced operational efficiencies during~~corporate overhead remained consistent at $0.2 million for the ~~quarter.~~

three months ended June 30, 2019 and 2018.

~~Upon the completion of the restoration of~~In our ~~network in the U.S. Virgin Islands,~~International Telecom and Renewable Energy segments, we expect that engineering and operations expenses will ~~increase and then~~ remain fairly consistent as a percentage of ~~revenues.~~revenues; however we expect such expenses to increase in our US Telecom segment during the build period of the FirstNet Transaction.

Sales and marketing expenses. Sales and marketing expenses include salaries and benefits we pay to sales personnel, customer service expenses, sales commissions and the costs associated with the development and implementation of our promotion and marketing campaigns.

Sales and marketing expenses ~~decreased~~increased by ~~$0.3~~$1.5 million, or ~~3.6%~~17.4%, to ~~$8.4~~$9.9 million from ~~$8.7~~$8.4 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The net ~~decrease~~increase in sales and marketing expenses, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Sales and marketing expenses ~~decreased~~increased within our ~~U.S.~~US Telecom segment by ~~$0.5~~$0.7 million, or ~~41.7%~~

100.0%, to ~~$0.7~~$1.4 million from ~~$1.2~~$0.7 million, for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, primarily as a result of our new in-building wireless network and large-scale fiber network businesses partially offset by a ~~decrease~~reduction in ~~promotions and advertising within the~~our U.S. retail operations as a result of ~~our wireless business.~~

certain cost reduction measures.

●

International Telecom. Within our International Telecom segment, our sales and marketing expenses increased by ~~$0.2~~$0.8 million, or ~~2.7%~~10.4%, to $8.5 million from $7.7 million ~~from $7.5 million~~ for the three months ended June 30, 2019 and 2018, ~~and 2017. A decrease~~respectively. The increase was incurred in most of ~~$0.4 million~~our international markets including in ~~our U.S.~~the US Virgin Islands as those operations ~~caused by~~continued to normalize from the impact of the ~~Hurricanes was offset by increases in our other International Telecom markets.~~

Hurricanes.

We expect sales and marketing expenses to remain fairly consistent as a percentage of revenues in the longer term but these expenses may increase in the next several quarters to help support the operations that were impacted by the Hurricanes.

General and administrative expenses. General and administrative expenses 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. General and administrative expenses also include internal costs associated with our performance of due-diligence in connection with acquisition activities.

General and administrative expenses ~~increased~~decreased by ~~$0.8~~$0.2 million, or ~~3.1%~~0.6%, to ~~$26.8~~$26.6 million from ~~$26.0~~$26.8 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Net ~~increases~~decreases in general and administrative expenses, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. General and administrative expenses increased by $0.6 million, or 15.8%, to $4.4 million from $3.8 million primarily as a result of the addition of our new in-building wireless network and large-scale fiber network businesses.

●

International Telecom. General and administrative expenses increased within our International Telecom segment by $0.5 million, or ~~15.2%~~3.8%, to ~~$3.8~~$13.5 million from ~~$3.3~~$13.0 million, for the three months ended June 30, ~~2018~~2019 and ~~2017, respectively, primarily to support our wireless operations and our new in-building and large scale fiber network businesses.~~

~~International Telecom. General and administrative expenses decreased within our International Telecom segment by $0.4 million, or 3.0%, to $13.0 million from $13.4 million, for the three months ended June 30,~~ 2018, ~~and 2017,~~ respectively. The ~~decrease~~increase was primarily related to a ~~$1.3~~$0.9 million ~~decrease within our U.S.~~increase in the US Virgin Islands ~~operations as it continues~~relating to ~~recover~~its recovery efforts from the ~~impact of the~~ Hurricanes~~. This decrease was~~ partially offset by ~~increases~~decreases in our other international telecom markets ~~including our new managed services and technology business.~~

as a result of certain cost reduction measures.

●

Renewable Energy. General and administrative expenses within our Renewable Energy segment ~~remained consistent at~~decreased by $1.2 million, or 66.7%, to $0.6 million from $1.8 million for the three months ended June 30, 2019 and 2018, ~~and 2017.~~

respectively. This decrease was primarily related to the US Solar Transaction.

●

Corporate Overhead. General and administrative expenses ~~increased~~ within our corporate overhead ~~by $0.5 million, or 6.6%, to~~remained consistent at $8.1 ~~million from $7.6~~ million, for the three months ended June 30, ~~2018~~2019 and ~~2017, respectively, primarily related~~2018. Certain cost reduction measures were partially offset by increased information technology expenditures to ~~an increase in professional fees, in order to support~~further enhance our ~~expanding operations.~~

cyber and network security.

We expect general and administrative expenses to increase over the next several quarters ~~to help support~~as our operations within the ~~repair and restoration~~US Virgin Islands become more normalized following the impact of ~~our networks in our International Telecom segment which were impacted by~~ the Hurricanes. We also expect to incur additional general and administrative expenses to support our new ~~managed services and technology business, our new~~ in-building ~~telecom~~wireless network operations and our new ~~large scale~~large-scale fiber network ~~business.~~platform as well as to further enhance our cyber network security.

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 do not include internal costs, such as employee salary and travel-related expenses, incurred in connection with acquisitions or dispositions or any integration-related costs.

We incurred ~~$0.4 million and $0.1 million~~a nominal amount of ~~transaction‑related~~transaction-related charges during the three months ended June 30, 2019 and approximately $0.4 million during the three months ended June 30, 2018 ~~and 2017, respectively. The 2018 transaction-related charges relate~~related to our ~~2018 investments in our newly established~~new in-building wireless network and ~~large scale~~large-scale fiber network platforms.

Depreciation and amortization expenses. Depreciation and amortization expenses represent the depreciation and amortization charges we record on our property and equipment and on certain intangible assets.

Depreciation and amortization expenses decreased by ~~$0.3~~$0.4 million, or ~~1.5%~~1.8%, to ~~$21.9~~$21.5 million from ~~$22.3~~$21.9 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Net decreases in depreciation and amortization expenses, within our segments, consisted primarily of the following:

●

US Telecom. Depreciation and amortization expenses decreased within our US Telecom segment by $1.2 million, or 17.6%, to $5.6 million from $6.8 million, for the three months ended June 30, 2019 and 2018, respectively, primarily as a result of the completion of the previously disclosed sale of approximately 100 cell sites within our US wireless operations.

~~U.S.~~●

International Telecom. Depreciation and amortization expenses increased within our ~~U.S.~~International Telecom segment by ~~$0.6~~$1.8 million, or ~~9.7%~~15.3%, to ~~$6.8~~$13.6 million from ~~$6.2~~$11.8 million, for the three months ended June 30, 2019 and 2018, ~~and 2017, respectively,~~respectively. This increase was recognized throughout all of our international markets as a result of ~~certain wireless~~upgrades and expansions to this segment’s network ~~expansions~~assets including the network repairs and ~~upgrades.~~

~~International Telecom. Depreciation and amortization expenses decreased within our International Telecom segment by $1.3 million, or 9.9%, to $11.8 million from $13.1 million, for~~resiliency enhancements in the ~~three months ended June 30, 2018 and 2017, respectively.~~ ~~This decrease was primarily related to a $2.1 million reduction in depreciation expense in our~~ U.S. Virgin Islands ~~market on assets~~ which were ~~damaged and written off as a result of the Hurricanes partially offset~~impacted by the ~~expansion and upgrades of our network assets in other International Telecom markets.~~

Hurricanes.

●

Renewable Energy. Depreciation and amortization expenses within our Renewable Energy segment ~~increased~~decreased by ~~$0.1~~$1.3 million, or ~~5.6%~~68.4%, to $0.6 million from $1.9 million ~~from $1.8 million~~for the three months ended June 30, 2019 and 2018, respectively, primarily as a result of ~~capital expenditures primarily related to~~ the ~~construction of our solar operations in India.~~

US Solar Transaction.

●

Corporate Overhead. Depreciation and amortization expenses increased by $0.4 million or ~~40.0%~~28.6% to ~~$1.4~~$1.8 million from ~~$1.0~~$1.4 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, as a result of certain ~~tangible~~ assets being placed into service.

We expect depreciation expense to increase ~~as we rebuild our networks in the International Telecom segment which were impacted by the Hurricanes and~~ as we acquire more tangible assets to expand or upgrade our other telecommunications networks ~~and~~or build or acquire solar power generating ~~facilities.~~assets.

~~(Gain) loss~~Gain on disposition of long-lived assets.During the three months ended June 30, 2019, we recorded a gain of $0.1 million on the disposition of miscellaneous long-lived assets within our US wireless operations. During the three months ended June 30, 2018, we recorded a gain ~~on the disposition of long-lived assets~~ of $2.3 million ~~primarily as a result of~~on the sale of certain ~~telecommunication~~telecommunications licenses within our ~~U.S.~~US wireless operations.

Loss on damaged assets and other ~~hurricane related charges, net of insurance recovery.~~ Hurricane-related charges. During September 2017, the economy, our customer base and our operations ~~and customers~~ in the ~~U.S.~~US Virgin Islands were severely impacted by the Hurricanes. ~~Both our wireless and wireline networks and commercial operations were severely damaged by these storms.~~

During the three months ended June 30, 2018, we incurred $0.2 million in expenses associated with the procurement of continued building maintenance, security services, the supply of alternative power and related professional fees.

Interest income. Interest income represents interest earned on our cash, cash equivalents, restricted cash and short term investment balances.

Interest income ~~increased to~~remained consistent at $0.5 ~~million from $0.3~~ million for the three months ended June 30, 2019 and 2018 ~~and 2017, respectively. The increase was primarily related to an increase~~as the decrease in ~~the return on~~ our cash, cash equivalents and ~~marketable securities~~short-term investments was offset by higher returns on those balances.

Interest expense. Interest expense decreased by $1.0 million, or 45.7%, to $1.3 million from $2.3 million for the three months ended June 30, 2019 and June 30, 2018, respectively, primarily as ~~compared~~a result of the US Solar Transaction and the effects of the amendment to our credit facilities which was completed in April 2019.

During the ~~previous year.~~

~~Interest expense.~~ ~~We incur~~three months ended June 30, 2019, we incurred interest expense on the Viya Debt and the One Communications ~~and Ahana debt~~Debt as well as commitment fees, letter of credit fees and the amortization of debt issuance costs ~~and interest incurred~~ on

our outstanding credit facilities. ~~For information about our Viya, One Communications and Ahana debt, see Note 8 of the Consolidated Financial Statements included in this report.~~

~~Interest expense increased by $0.2 million to $2.3 million from $2.2 million for~~During the three months ended June 30, 2018, ~~and 2017, respectively. The increase~~we also incurred $0.8 million of interest expense on the Ahana Debt which was ~~primarily~~assumed by the ~~result~~acquirer in November 2018 as a part of the ~~increase in the One Communications debt which was refinanced in May 2017.~~US Solar Transaction.

Other income (expense), net. Other income (expense), net represents miscellaneous non-operational income we earned and expenses we incurred. For the three months ended June 30, 2019 and 2018, other income (expense) was an expense of $0.3 million and an expense of $1.0 million, respectively, which was primarily related to ~~losses~~a net loss on foreign currency transactions. For the three months ended June 30, 2017, other income (expense) was an expense of $0.5 million which was primarily related to the loss on an equity method investment in our Aruba operations of $1.9 million offset by a gain on the sale of marketable securities of $0.8 million and net gains on foreign currency transactions of $0.6 million.

Income taxes.Our effective tax rate for the three months ended June 30, 2019 and 2018 was (15.6%) and ~~2017 was~~ 16.2% ~~and 19.2%~~, respectively. The effective tax rate for the three months ended June 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in the U.S. Virgin Islands and India where we cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) $1.1 million benefit from the reversal of unrecognized tax positions due to statute expiration, net interest expense on unrecognized tax positions and (ii) $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure.

Our effective tax rate for the three months ended June 30, 2018 was primarily impacted by the ~~following items: (i)~~mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in the U.S. Virgin Islands and India where we cannot benefit from those losses as required by ASC 740-270-30-36(a), and a $0.5 million discrete benefit for the release of a capital loss valuation allowance due to a capital gain on a sale of a wireless license, and (ii) the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in jurisdictions where we cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands and India. The effective tax rate for the three months ended June 30, 2017 was impacted by the following items: (i) a benefit for the net capital loss due to the stock sales of our businesses in New England, New York and St. Maarten, and (ii) the mix of income generated among the jurisdictions in which we operate. license.

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. The effective tax rate in 2018 could be affected by adjustments to the provisional amounts recorded under the guidance of SAB 118 for the one-time transition tax and the revaluation of deferred tax assets and liabilities due to the U.S. statutory rate change in 2017 however no change has been recorded as of June 30, 2018. 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 application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, we could record additional provisions or benefits for ~~U.S.~~US federal, state, and foreign tax matters in future periods as new information becomes available.

Net income attributable to non-controlling interests, net of tax.Net income attributable to non-controlling interests reflected an allocation of ~~$3.6~~$2.9 million and ~~$5.0~~$3.6 million of income generated by our less than wholly-owned subsidiaries for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, a decrease of ~~$1.5~~$0.7 million, or ~~29.1%~~19.1%. ~~Changes~~Net decreases in net income attributable to non-controlling interests, net of tax, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Net income attributable to non-controlling interests, net of tax decreased by ~~$1.0~~$0.2 million, or ~~55.6%~~25.0%, to ~~$0.8~~$0.6 million from ~~$1.8~~$0.8 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, primarily as a result of decreased profitability at ~~certain~~a less than wholly owned ~~subsidiaries~~subsidiary within our ~~U.S.~~US wireless ~~retail~~ operations.

●

International Telecom. Net income attributable to non-controlling interests, net of tax decreased by ~~$0.4~~$0.3 million, or ~~13.3%~~11.5%, to ~~$2.6~~$2.3 million from ~~$3.0~~$2.6 million, primarily as a result of decreased profitability in ~~our~~a less than wholly owned ~~subsidiaries~~subsidiary within our international operations.

●

Renewable Energy. As a result of the US Solar Transaction, no allocation of income or losses, relating to our US operations, was recorded to non-controlling interests during the three months ended June 30, 2019. Net income attributable to non-controlling interests, net of tax ~~remained consistent at~~was $0.2 million ~~for~~relating to our US operations during the three months ended June 30, ~~2018 and 2017.~~

2018.

Net income (loss) attributable to ATN International, Inc. stockholders. Net income (loss) attributable to ATN International, Inc. stockholders was ~~$7.2~~a loss of $0.9 million and ~~$5.9~~income of $7.2 million for the three months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively.

On a per diluted share basis, net income (loss) per diluted share was ~~$0.45~~a loss of $0.05 and ~~$0.36~~income of $0.45 per diluted share for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

Selected Segment Financial Information

The following represents selected segment information for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):


For the Six Months Ended June 30, 2018

	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated


For the Six Months Ended June 30, 2019											For the Six Months Ended June 30, 2019

												US		International		Renewable		Corporate and
												Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	55,983	$	45,060	$	—	$	—	$	101,043		$	46,093	$	42,515	$	—	$	—	$	88,608
Wireline		2,800		106,565		—		—		109,365			1,813		117,660		—		—		119,473
Renewable Energy		—		—		11,855		—		11,855			—		—		2,939		—		2,939
Total Revenue		58,783		151,625		11,855		—		222,263			47,906		160,175		2,939		—		211,020


Operating income (loss)		13,065		21,211		3,863		(18,177)		19,962			(2,006)		24,935		(16)		(18,045)		4,868



For the Six Months Ended June 30, 2017

	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated

For the Six Months Ended June 30, 2018											For the Six Months Ended June 30, 2018

												US		International		Renewable		Corporate and
												Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	72,623	$	42,848	$	—	$	—	$	115,471		$	55,983	$	45,060	$	—	$	—	$	101,043
Wireline		8,148		117,812		—		—		125,960			2,800		106,565		—		—		109,365
Renewable Energy		—		—		9,929		—		9,929			—		—		11,855		—		11,855
Total Revenue		80,771		160,660		9,929		—		251,360			58,783		151,625		11,855		—		222,263


Operating income (loss)		28,533		20,691		2,287		(17,955)		33,556			13,065		21,211		3,863		(18,177)		19,962

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

~~A year~~US Telecom. Revenue within our US Telecom segment decreased by $10.9 million, or 18.5%, to ~~date comparison~~$47.9 million from $58.8 million for the six months ended June 30, 2019 and 2018, respectively.

Revenue within our ~~segment results is~~wireless operations decreased by $9.9 million, or 17.7%, to $46.1 million from $56.0 million for the six months ended June 30, 2019 and 2018, respectively. This decrease was attributable to a decline in revenues in our wholesale wireless operations, with $4.2 million of this decrease relating to the July 2018 sale of 100 cell sites, and $7.2 million of this decrease resulting from a reduction in wholesale traffic. These decreases were partially offset by the recognition of $1.5 million in revenue from the Connect America Fund II award which began in 2019. Revenue from our retail wireless operations remained unchanged at $8.9 million for the six months ended June 30, 2019 and 2018.

Revenue within our wireline operations decreased $1.0 million, or 35.7%, to $1.8 million from $2.8 million for the six months ended June 30, 2019 and 2018, respectively, as ~~follows:~~a result of a decrease in traffic volumes within our wholesale long-distance services.

~~U.S. Telecom.~~ Revenues within our U.S. Telecom segment decreased by $22.0 million, or 27.2%, to $58.8 million from $80.8 million for the six months ended June 30, 2018 and 2017, respectively. Of this decrease, $16.4 million was attributable to our wholesale wireless operations which were subject to previously agreed reduced wholesale roaming rates and revenue caps with certain carrier customers. This decrease in our wholesale wireless revenues was partially offset by the increase in the number of our base stations and the increase data traffic volumes, however, given the structure of the Company’s roaming arrangements as revised in 2017, the Company does not expect continued increase in traffic volumes or base stations to materially offset the decline in wholesale roaming revenue as compared to 2017 levels. In addition, revenue from our retail wireless business decreased $0.2 million as a result of decreased subscribers and traffic volumes. Our wireline operations reported a $5.7 million decrease in revenues as a result of the Sovernet Transaction which resulted in a decrease of $4.2 million and a decline in our wholesale long distance services of $1.5 million.

Operating expenses within our ~~U.S.~~US Telecom segment ~~decreased $6.6~~increased $2.1 million, or ~~12.6%,~~4.6 %, to $47.8 million from $45.7 million ~~from $52.3million~~ for the six months ended June 30, 2019 and 2018, respectively. This increase in operating expenses was primarily related to the completion of the Phase I Mobility Fund support in 2018 which was recorded as a $3.0 million

offset to expenses during the six months ended June 30, 2018 and ~~2017, respectively. This decrease in operating expenses was primarily related to~~ the ~~impact~~addition of ~~the Sovernet Transaction.~~our new in-building wireless and large-scale fiber network business.

As a result of the above, our ~~U.S.~~US Telecom segment’s operating income decreased ~~$15.4~~$15.1 million, or ~~54.0%~~115.3%, to ~~$13.1~~a loss of $2.0 million from ~~$28.5~~income of $13.1 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

~~International Telecom.~~ Revenues within our International Telecom segment decreased $9.1million, or 5.7%, to $151.6 million from $160.7 million for the six months ended June 30, 2018 and 2017, respectively. This decrease was the result of a $16.2 million decrease in revenue within our U.S. Virgin Islands operations as a

International Telecom. Revenues within our International Telecom segment increased $8.6 million, or 5.7%, to $160.2 million from $151.6 million for the six months ended June 30, 2019 and 2018, respectively, as a result of an increase in broadband revenues in many of our international telecom markets partially offset by the previously received $8.2 million of additional non-recurring funding from the Universal Service Fund during the six months ended June 30, 2018, to help support our US Virgin Island operations recover from the impact of the Hurricanes.

result of the Hurricanes as well as the sale of our operations in the British Virgin Islands. These decreases were partially offset by a $7.1 million increase in revenue in our other international telecom markets including our new managed services and technology business.

Operating expenses within our International Telecom segment ~~decreased~~increased by ~~$9.5~~$4.8 million, or ~~6.8%~~3.7%, to ~~$130.4~~$135.2 million from ~~$139.9~~$130.4 million for the six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~This decrease~~The increase was primarily the result of ~~a $13.7 million decrease~~increased expenses in ~~expenses within our U.S.~~the US Virgin Islands as their operations ~~as we continue to restore service impacted by~~become more normalized following the ~~Hurricanes as well as~~impact of the ~~sale of our operations in the British Virgin Islands.~~Hurricanes.

As a result, our International Telecom segment’s operating income increased ~~$0.5~~$3.8 million, or ~~2.4%~~17.9%, to ~~$21.2~~$25.0 million from ~~$20.7~~$21.2 million for the six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively.

~~Renewable Energy.~~ Revenues within our Renewable Energy segment increased $2.0 million, or 20.2%, to $11.9 million from $9.9 million for the six months ended June 30, 2018 and 2017, respectively, primarily as a result of the increase in revenue from our newly completed solar power plants in India partially offset by a decrease in revenue in our U.S. operations as a result of the expiration of certain incentive energy credits from the state of California and adverse weather conditions in the northeast United States.

Operating expenses within our Renewable Energy segment increased $0.4 million, or 5.3%, to $8.0 million from $7.6 million for the six months ended June 30, 2018 and 2017, respectively, as we continued construction of certain solar power plants in India.

~~As a result,~~

Renewable Energy. Revenue within our Renewable Energy ~~segment’s operating income increased by $1.6~~segment decreased $9.0 million ~~or 69.6%,~~ to ~~$3.9~~$2.9 million from ~~$2.3~~$11.9 million for the six months ended June 30, 2019 and 2018, respectively, primarily as a result the US Solar Transaction.

Operating expenses within our Renewable Energy segment decreased by $2.8 million, or 35.0%, to $5.2 million from $8.0 million for the six months ended June 30, 2019 and ~~2017, respectively.~~2018, respectively, primarily related to the US Solar Transaction.

As a result of the above, our Renewable Energy segment’s operating income decreased by $3.9 million to a nominal loss compared to income of $3.9 million for the six months ended June 30, 2018.

4642

The following represents a year over year discussion and analysis of our results of operations for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):


	Six Months Ended				Amount of		Percent
	June 30,				Increase		Increase
	2018		2017		(Decrease)		(Decrease)


									Six Months Ended				Amount of		Percent
									June 30,				Increase		Increase
									2019		2018		(Decrease)		(Decrease)

REVENUE:
Wireless	$	101,043	$	115,471	$	(14,428)	(12.5)	%	$	88,608	$	101,043	$	(12,435)	(12.3)	%
Wireline		109,365		125,960		(16,595)	(13.2)			119,473		109,365		10,108	9.2
Renewable Energy		11,855		9,929		1,926	19.4			2,939		11,855		(8,916)	(75.2)
Total revenue	$	222,263	$	251,360	$	(29,097)	(11.6)	%		211,020		222,263		(11,243)	(5.1)
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		54,171		63,924		(9,753)	(15.3)			55,818		54,171		1,647	3.0
Engineering and operations		36,561		39,061		(2,500)	(6.4)			38,139		36,561		1,578	4.3
Sales, marketing and customer services		16,974		17,765		(791)	(4.5)			19,264		16,974		2,290	13.5
General and administrative		52,296		50,370		1,926	3.8			50,405		52,296		(1,891)	(3.6)
Transaction-related charges		465		826		(361)	(43.7)			68		465		(397)	(85.4)
Depreciation and amortization		43,217		44,747		(1,530)	(3.4)			42,267		43,217		(950)	(2.2)
(Gain) loss on disposition of long-lived assets		(2,049)		1,111		(3,160)	(284.4)			191		(2,049)		2,240	109.3
Loss on damaged assets and other hurricane related charges, net of insurance recovery		666		—		666	100.0			—		666		(666)	100.0
Total operating expenses	$	202,301	$	217,804	$	(15,503)	(7.1)	%		206,152		202,301		3,851	1.9
Income from operations	$	19,962	$	33,556	$	(13,594)	(40.5)	%		4,868		19,962		(15,094)	(75.6)
OTHER INCOME (EXPENSE):
Interest income		853		633		220	34.8			1,445		853		592	69.4
Interest expense		(4,532)		(4,469)		(63)	1.4			(2,544)		(4,532)		1,988	43.9
Loss on deconsolidation of subsidiary		—		(529)		529	(100.0)
Other expense										(68)		(1,798)		1,730	96.2
Other expense, net		(1,798)		(973)		(825)	84.8			(1,167)		(5,477)		4,310	78.7
Other income (expense), net	$	(5,477)	$	(5,338)	$	(139)	2.6	%
INCOME BEFORE INCOME TAXES		14,485		28,218		(13,733)	(48.7)			3,701		14,485		(10,784)	(74.4)
Income tax expense		6,008		5,724		284	5.0			939		6,008		(5,069)	(84.4)
NET INCOME		8,477		22,494		(14,017)	(62.3)			2,762		8,477		(5,715)	(67.4)
Net income attributable to non-controlling interests, net of tax:		(6,816)		(9,751)		2,935	(30.1)			(5,198)		(6,816)		1,618	23.7
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	1,661	$	12,743	$	(11,082)	(87.0)	%
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS									$	(2,436)	$	1,661	$	(4,097)	(246.7)	%

Wireless revenue.Wireless revenue decreased by ~~$14.4~~$12.4 million, or ~~12.5%~~12.3%, to ~~$101.0~~$88.6 million for the six months ended June 30, ~~2018~~2019 from ~~$115.5~~$101.0 million for the six months ended June 30, ~~2017.~~2018. The decreases in wireless revenue, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Wireless revenue within our ~~U.S.~~US Telecom segment decreased by ~~$16.6~~$9.9 million, or ~~22.9%~~17.7%, to ~~$56.0~~$46.1 million from ~~$72.6~~$56.0 million, for the six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Wholesale~~This decrease represented a decrease in wholesale wireless revenue ~~decreased by $16.5~~of $9.9 million, or ~~26.0%~~21.0%, to ~~$47.0~~$37.2 million from ~~$63.5~~$47.1 million for the six months ended June 30, 2019 and 2018, ~~and 2017, respectively, as~~respectively. Of this decrease in wholesale wireless revenue, $4.2 million was related to the July 2018 sale of 100 cell sites with the remaining decrease a result of a reduction in wholesale ~~roaming rates~~ ~~and the impact of contractual revenue caps with certain carrier customers. The effect of the decrease in roaming rates and revenue caps was~~traffic partially offset by ~~growth~~the recognition of an additional $1.5 million in ~~data traffic volumes as a result of capacity and technology upgrades to our network and~~revenue from the ~~increase~~Connect America Fund II Award which began in ~~the number of base stations to 1,121 from 1,041 as of June 30, 2018 and 2017, respectively. Our U.S. Telecom’s~~2019. Wireless revenue within our US Telecom segment’s retail operations ~~reported a decrease in wireless revenues of $0.3 million, or 3.3%, to~~remained unchanged at $8.9 ~~million from $9.2~~ million for the six months ended June 30, ~~2018~~2019 and ~~2017, respectively, as a result of a decrease in subscribers and traffic volumes.~~

2018.

●

International Telecom. Within our International Telecom segment, wireless revenue ~~increased~~decreased by ~~$2.3~~$2.6 million, or ~~5.4%~~5.8%, to $42.5 million for the six months ended June 30, 2019 from $45.1 million for the six months ended

June 30, ~~2018 from $42.8 million for the six months ended June 30, 2017.~~2018. This ~~increase~~decrease was primarily related to ~~an increase~~a $1.5 million decrease in roaming revenues within ~~our U.S.~~the US Virgin Islands ~~operations~~ as a result of ~~our carrying the wireless traffic of~~fewer customers from other ~~carriers’ networks~~carriers that were ~~also negatively~~ impacted by the Hurricanes ~~partially offset by the effects~~roaming on usour network during 2018 and a reduction in equipment revenues in some of the ~~Hurricanes.~~

markets.

Wireline revenue. Wireline revenue ~~decreased~~increased by ~~$16.6~~$10.1 million, or ~~13.2%~~9.2%, to ~~$109.4~~$119.5 million from ~~$126.0~~$109.4 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~decreases~~net increases in wireline revenue, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Wireline revenue ~~decreased~~ within our ~~U.S.~~US Telecom segment ~~by $5.7~~decreased $1.0 million, or ~~70.4%~~35.7%, to ~~$2.8~~$1.8 million from ~~$8.1~~$2.8 million for the six months ended June 30, 2019 and 2018 ~~and 2017, respectively, primarily due to the Sovernet Transaction which resulted in~~as a ~~$4.2 million reduction in wireline revenue. The remainder~~result of ~~the decrease relates to~~ a decrease in traffic ~~volume~~volumes within our wholesale long-distance ~~voice services operations.~~

services.

●

International Telecom. Within our International Telecom segment, wireline revenue ~~decreased~~increased by ~~$10.9~~$11.1 million, or ~~9.3%~~10.4%, to $117.7 million from $106.6 million, for the six months ended June 30, 2019 and 2018, respectively, primarily as a result of an increase in broadband revenues in many of our international telecom markets partially offset by $8.2 million of additional non-recurring funding from ~~$117.8 million, for~~the Universal Service Fund, received during the six months ended June 30, 2018, ~~and 2017, respectively.~~ ~~This decrease was the result of a $15.8 million decrease in revenue within~~to help support our ~~U.S.~~US Virgin ~~Islands~~Island operations ~~which were impacted by the Hurricanes and a $2.3 million decrease~~recover from the ~~August 2017 sale~~impact of ~~our operations in~~ the ~~British Virgin Islands. These decreases were partially offset by a $4.9 million increase in revenue in our other International Telecom markets.~~

Hurricanes.

Renewable energy revenue.Renewable energy revenue ~~increased $1.9~~decreased by $9.0 million, or ~~19.4%~~75.6%, to ~~$11.9~~$2.9 million from ~~$9.9~~$11.9 million for the ~~six~~three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, primarily as a result of by the ~~increase in revenue from our newly completed solar power plants in India partially offset by a $0.6 million decrease in our U.S. operations as a result~~impact of the ~~expiration of certain incentive energy credits from the state of California and adverse weather conditions in the northeast United States.~~ US Solar Transaction.

Termination and access fee expenses. Termination and access fees ~~decreased~~increased by ~~$9.8~~$1.6 million, or ~~15.3%~~3.0%, to ~~$54.2~~$55.8 million from ~~$63.9~~$54.2 million for the six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Decreases~~Net increases in termination and access fees, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Termination and access fees within our ~~U.S.~~US Telecom segment ~~decreased~~increased by ~~$3.8~~$1.0 million, or ~~16.0%~~5.2%, to ~~$19.1~~$20.1 million from ~~$21.9~~$19.1 million, for the six months ended June 30, 2019 and 2018, respectively. This increase was primarily the result of the completion of the Phase I Mobility Fund support in 2018 which recorded $3.0 million as an offset to expenses during the six months ended June 30, 2018 ~~and 2017, respectively. Of this decrease, $2.2~~partially offset by a reduction of $2.1 million ~~was~~ related to the ~~effects~~sale of ~~the Sovernet Transaction within our wireline operations. Additionally, a decrease in traffic volume within our wholesale long-distance voice services business resulted in a decrease in termination and access fees of $1.4 million within that business.~~approximately 100 cell sites during July 2018.

●

International Telecom. Within our International Telecom segment, termination and access fees ~~decreased~~increased by ~~$5.6~~$1.0 million, or ~~13.5%~~2.9%, to ~~$34.5~~$35.5 million from ~~$41.4~~$34.5 million, for the six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Substantially all of~~Of this ~~decrease~~increase, $3.1 million was caused by ~~a reduction~~an increase in television programming and other variable costs ~~which~~that were not incurred within our US Virgin Islands operations during 2018 as a result of the impact of the Hurricanes ~~and the sale of our operations in the British Virgin Islands. These decreases were~~ partially offset by ~~the costs incurred by our new managed services and technology business.~~

reductions in other international markets as a result of certain cost reduction measures.

●

Renewable Energy. Termination and access fees within our Renewable Energy ~~increased slightly~~decreased $0.4 million, or 57.1%, to ~~$0.7~~$0.3 million from ~~$0.6~~$0.7 million for the six months ended June 30, 2019 and 2018, ~~and 2017, respectively.~~

respectively, as a result of the US Solar Transaction.

Engineering and operations expenses. Engineering and operations expenses ~~decreased~~increased by ~~$2.5~~$1.5 million, or ~~6.4%~~4.1%, to ~~$36.6~~$38.1 million from ~~$39.1~~$36.6 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The net ~~decrease~~increase in engineering and operations, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Engineering and operations expenses ~~decreased~~increased within our ~~U.S.~~US Telecom segment by ~~$0.9~~$1.0 million, or ~~12.7%~~16.1%, to ~~$6.2~~$7.2 million from ~~$7.1million,~~$6.2 million, for the six months ended June 30, 2019 and 2018, ~~and 2017,~~

respectively, primarily as a result of ~~the Sovernet Transaction, which resulted in~~ a ~~decrease of~~ $0.6 million increase in these expenses in our wireless business and ~~operating efficiencies~~$0.3 million of aggregate expenses incurred within our new in-building wireless network and large-scale fiber network businesses.

●

International Telecom. Within our International Telecom segment, engineering and operations expenses ~~decreased~~increased by ~~$1.5~~$0.6 million, or ~~4.8%~~2.0%, to ~~$29.9~~$30.5 million from ~~$31.4~~$29.9 million, for the six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. This ~~decrease~~increase was primarily related to ~~a decrease~~expenses within our new managed services and technology platform partially offset by operational efficiencies in some of our ~~U.S. Virgin Islands operations which were impacted by the Hurricanes and our other~~ international ~~markets which experienced operational efficiencies.~~

markets.

●

Corporate Overhead. Engineering and operations expenses within our corporate overhead remained consistent at $0.4 million.

Sales and marketing expenses. Sales and marketing expenses ~~decreased~~increased by ~~$0.8~~$2.3 million, or ~~4.5%~~13.5%, to ~~$17.0~~$19.3 million from ~~$17.8~~$17.0 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~net decrease~~increases in sales and marketing expenses, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. Sales and marketing expenses ~~decreased~~increased within our ~~U.S.~~US Telecom segment by ~~$1.0~~$1.1 million, or ~~41.7%~~78.6%, to ~~$1.4~~$2.5 million from ~~$2.4~~$1.4 million, for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, primarily as a result of our new in-building wireless network and large-scale fiber network businesses partially offset by a ~~decrease~~reduction in ~~promotions and advertising within the~~our U.S. retail operations as a result of ~~our wireless business of $0.8 million and a~~certain cost reduction ~~of $0.1 million relating to the effects of the Sovernet Transaction.~~measures.

●

International Telecom. Within our International Telecom segment, our sales and marketing expenses increased by ~~$0.2~~$1.4 million, or ~~1.3%~~9.0%, to ~~$15.5~~$16.9 million from ~~$15.3~~$15.5 million for the six months ended June 30, 2019 and 2018, ~~and 2017.~~respectively. The increase ~~reported from most~~was incurred in all of our international markets ~~was partially offset by a decrease of $1.3 million~~including in ~~our U.S.~~the US Virgin Islands as those operations ~~caused by~~continued to normalize from the impact of the Hurricanes.

General and administrative expenses. General and administrative expenses ~~increased~~decreased by $1.9 million, or 3.8%, to ~~$52.3~~$50.4 million from ~~$50.4~~$52.3 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Net ~~increases~~decreases in general and administrative expenses, within our segments, consisted of the following:

●

~~U.S.~~US Telecom. General and administrative expenses increased by ~~$0.6~~$1.5 million, or ~~8.8%~~20.3%, to ~~$7.4~~$8.9 million from ~~$6.8~~$7.4 million primarily to support our wireless operations ~~partially offset by a $0.5 million impact~~and the addition of ~~the Sovernet Transaction.~~

our new in-building wireless network and large-scale fiber network businesses

●

International Telecom. General and administrative expenses ~~increased~~decreased within our International Telecom segment by $0.5 million, or ~~3.5%~~1.9%, to ~~$26.3~~$25.8 million from ~~$25.8~~$26.3 million, for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~increase~~decrease was primarily related to cost reduction measures within our ~~new~~ managed services and technology ~~business partially offset by a decrease in our U.S. Virgin Islands operations as it continues to recover from the impact of the Hurricanes.~~

platform businesses.

●

Renewable Energy. General and administrative expenses within our Renewable Energy segment ~~remained consistent at~~decreased by $2.3 million, or 65.7%, to $1.3 million from $3.5 million for the six months ended June 30, 2019 and 2018, ~~and 2017.~~

respectively. This decrease was primarily related to the US Solar Transaction.

●

Corporate Overhead. General and administrative expenses ~~increased~~ within our corporate overhead decreased by ~~$0.8~~$0.6 million, or ~~5.6%~~4.0%, to ~~$15.1~~$14.5 million from ~~$14.3~~$15.1 million, for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, primarily related to ~~an increase in professional fees, in order~~certain cost reduction measures offset partially by information technology expenditures to ~~support~~further enhance our ~~expanding operations.~~

cyber and network security.

Transaction-related charges. We incurred ~~$0.5 million and $0.8 million~~a nominal amount of ~~transaction‑related~~transaction-related charges during the six months ended June 30, 2019 and approximately $0.5 million during the six months ended June 30, 2018 ~~and 2017, respectively. The 2018 transaction-related charges were in connection with~~primarily related to our new in-building wireless network technology and ~~large scale~~large-scale fiber network ~~businesses. Substantially all of the 2017 expenses were related to the Sovernet Transaction.~~platforms..

Depreciation and amortization expenses. Depreciation and amortization expenses decreased by ~~$1.5~~$1.0 million, or ~~3.4%~~2.2%, to ~~$43.2~~$42.3 million from ~~$44.7~~$43.2 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Net increases or decreases in depreciation and amortization expenses, within our segments, consisted primarily of the following:

●

US Telecom. Depreciation and amortization expenses decreased within our US Telecom segment by $2.2

million, or 16.5%, to $11.1 million from $13.3 million, for the six months ended June 30, 2019 and 2018, respectively, as a result of the completion of the previously disclosed sale of approximately 100 cell sites within our US wireless operations.

~~U.S.~~●

International Telecom. Depreciation and amortization expenses increased within our ~~U.S.~~International Telecom segment by ~~$0.5~~

$3.1 million, or ~~3.9%~~13.2%, to ~~$13.3~~$26.6 million from ~~$12.8~~$23.5 million, for the six months ended June 30, 2019 and 2018, ~~and 2017, respectively,~~respectively. This increase was recognized throughout all of our international markets as a result of ~~certain wireless~~upgrades and expansions to this segment’s network ~~expansions~~assets including the network repairs and ~~upgrades partially offset by~~resiliency enhancements in the ~~effects of the Sovernet Transaction which reduced depreciation and amortization expenses by $0.6 million.~~

~~International Telecom~~. Depreciation and amortization expenses decreased within our International Telecom segment by $2.8 million, or 10.6%, to $23.5 million from $26.3 million, for the six months ended June 30, 2018 and 2017, respectively. ~~This decrease was primarily related to a $4.3 million reduction in depreciation expense within our~~ U.S. Virgin Islands ~~market on assets~~ which were ~~damaged and written off as a result of the Hurricanes partially offset~~impacted by the ~~expansion and upgrades of our network assets in other International Telecom markets.~~

Hurricanes.

●

Renewable Energy. Depreciation and amortization expenses within our Renewable Energy segment ~~increased~~decreased by ~~$0.4~~$2.4 million, or ~~12.1%~~64.9%, to ~~$3.7~~$1.3 million from ~~$3.3 million as a result of capital expenditures primarily related to the construction of our solar operations in India.~~

~~Corporate Overhead. Depreciation and amortization expenses increased by $0.3 million or 12.5% to $2.7 million from $2.4~~$3.7 million, for the six months ended June 30, 2019 and 2018, respectively, primarily as a result of the US Solar Transaction.

●

Corporate Overhead. Depreciation and ~~2017,~~amortization expenses increased by $0.5 million or 18.5% to $3.2 million from $2.7 million for the six months ended June 30, 2019 and 2018, respectively, as a result of certain tangible assets being placed into service.

~~(Gain) loss~~Loss on disposition of long-lived assets. During the six months ended June 30, 2019, we recorded a loss of $0.2 million on the disposition of miscellaneous long-lived assets within our US wireless and renewables operations. During the six months ended June 30, 2018, we recorded a gain on the disposition of long-lived assets of $2.0 million as a result of a ~~$2.4~~$2.3 million gain on the sale of certain telecommunication licenses within our U.S. wireless operations segment partially offset by the disposal of miscellaneous assets also within our U.S. wireless operations. ~~During the six months ended June 30, 2017, we recorded a loss of $1.1 million in connection with the Sovernet Transaction.~~

Loss on damaged assets and other ~~hurricane related charges, net of insurance recovery.~~ ~~During September 2017, our operations and customers in the U.S. Virgin Islands were severely impacted by the Hurricanes.~~ Hurricane-related charges. During the six months ended June 30, 2018, we incurred $0.7 million in expenses associated with the procurement of continued building maintenance, security services, the supply of alternative power and related professional fees.

Interest income. Interest income increased $0.5 million to $1.4 million from $0.9 million for the six months ended June 30, 2019 and 2018, respectively. The decrease in our cash, cash equivalents and short-term investments was offset by higher returns on those balances.

Interest expense. Interest expense decreased by $2.0 million, or 44.4%, to $2.5 million from ~~$0.6~~$4.5 million for the three months ended June 30, 2019 and June 30, 2018, respectively, primarily as a result of the US Solar Transaction and the effects of the April 2019 amendment to our credit facilities.

During the six months ended June 30, 2019, we incurred interest expense on the Viya Debt and the One Communications Debt as well as commitment fees, letter of credit fees and the amortization of debt issuance costs on our outstanding credit facilities. During the six months ended June 30, 2018, ~~and 2017, respectively. The increase~~we also incurred $1.7 million of interest expense on the Ahana Debt which was ~~primarily related to an increase~~assumed by the acquirer in November 2018 as a part of the ~~return on our cash, cash equivalents and marketable securities as compared to the previous year.~~US Solar Transaction.

~~Interest expense.~~ ~~Interest expense remained consistent at $4.5 million for~~Other income (expense), net. For the six months ended June 30, ~~2018 and 2017 as a result~~2019, other income (expense) was an expense of ~~a decrease~~$0.1 million which was primarily related to $0.3 million in ~~the Ahana debt due to the semi-annual repayments of such debt~~losses on foreign currency transactions partially offset by ~~the increase~~$0.2 million of income recognized in ~~the One Communications debt which was refinanced in May 2017.~~

~~Loss on deconsolidation of subsidiary.~~ ~~During the six months ended June 30, 2017, we recorded a $0.5 million loss on the deconsolidation~~connection with some of our ~~U.S. Wireline operations upon the completion of the Sovernet Transaction.~~

~~Other income (expense), net.~~employee benefit plans. For the six months ended June 30, 2018, other income (expense) was an expense of $1.8 million which was primarily related to ~~losses~~a net loss on foreign currency transactions. For the six months ended June 30, 2017, other income (expense) was an expense of $1.1 million which was primarily related to a loss on our equity method investment in our Aruba operations of $1.9 million partially offset by a gain on the sale of marketable securities of $0.8 million.

Income taxes.Our effective tax rate for the six months ended June 30, 2019 and 2018 was 25.4% and ~~2017 was~~ 41.5% ~~and 20.3%~~, respectively. The effective tax rate for the six months ended June 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in the U.S. Virgin Islands and India where we cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) $0.6 million benefit from the reversal of unrecognized tax positions due to statute expiration, net interest expense on unrecognized tax positions and (ii) $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure.


	June 30,		December 31,
	2018		2017
ASSETS
Current Assets:
Cash and cash equivalents	$	167,107	$	207,956
Restricted cash		1,071		833
Short-term investments		1,595		7,076
Accounts receivable, net of allowances of $15.1 million and $15.0 million, respectively		51,365		43,529
Inventory, materials and supplies		7,789		15,398
Prepayments and other current assets		35,386		68,136
Total current assets		264,313		342,928
Fixed Assets:
Property, plant and equipment		1,255,975		1,169,806
Less accumulated depreciation		(553,007)		(526,660)
Net fixed assets		702,968		643,146
Telecommunication licenses, net		95,952		95,952
Goodwill		63,970		63,970
Customer relationships, net		10,403		11,734
Restricted cash		11,949		11,101
Other assets		39,444		36,774
Total assets	$	1,188,999	$	1,205,605
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	11,268	$	10,919
Accounts payable and accrued liabilities		115,445		116,133
Dividends payable		2,712		2,724
Accrued taxes		10,238		6,751
Advance payments and deposits		17,727		25,178
Total current liabilities		157,390		161,705
Deferred income taxes		30,755		31,732
Other liabilities		41,612		37,072
Long-term debt, excluding current portion		139,733		144,873
Total liabilities		369,490		375,382
Commitments and contingencies (Note 13)
ATN International, Inc. Stockholders’ Equity:
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding		—		—
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,128,694 and 17,102,530 shares issued, respectively, 15,957,537 and 16,025,745 shares outstanding respectively		170		170
Treasury stock, at cost; 1,171,157 and 1,076,785 shares, respectively		(40,268)		(36,110)
Additional paid-in capital		172,170		167,973
Retained earnings		550,872		552,948
Accumulated other comprehensive income		141		3,746
Total ATN International, Inc. stockholders’ equity		683,085		688,727
Non-controlling interests		136,424		141,496
Total equity		819,509		830,223
Total liabilities and equity	$	1,188,999	$	1,205,605


	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
REVENUE:
Wireless	$	50,496	$	56,546	$	101,043	$	115,471
Wireline		61,269		61,802		109,365		125,960
Renewable energy		6,023		4,897		11,855		9,929
Total revenue		117,788		123,245		222,263		251,360
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		28,257		30,922		54,171		63,924
Engineering and operations		18,409		19,378		36,561		39,061
Sales, marketing and customer service		8,413		8,729		16,974		17,765
General and administrative		26,754		26,011		52,296		50,370
Transaction-related charges		438		148		465		826
Depreciation and amortization		21,913		22,254		43,217		44,747
(Gain) loss on disposition of long-lived assets		(2,333)		—		(2,049)		1,111
Loss on damaged assets and other hurricane related charges, net of insurance recovery		184		—		666		—
Total operating expenses		102,035		107,442		202,301		217,804
Income from operations		15,753		15,803		19,962		33,556
OTHER INCOME (EXPENSE)
Interest income		487		347		853		633
Interest expense		(2,327)		(2,153)		(4,532)		(4,469)
Loss on deconsolidation of subsidiary		—		—		—		(529)
Other expenses		(1,045)		(492)		(1,798)		(973)
Other expense, net		(2,885)		(2,298)		(5,477)		(5,338)
INCOME BEFORE INCOME TAXES		12,868		13,505		14,485		28,218
Income tax provisions		2,088		2,596		6,008		5,724
NET INCOME		10,780		10,909		8,477		22,494
Net income attributable to non-controlling interests, net of tax expense of $0.3 million, $0.1 million, $0.6 million, and $0.4 million, respectively.		(3,564)		(5,026)		(6,816)		(9,751)
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	7,216	$	5,883	$	1,661	$	12,743
NET INCOME PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:
Basic	$	0.45	$	0.36	$	0.10	$	0.79
Diluted	$	0.45	$	0.36	$	0.10	$	0.78
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		15,962		16,195		15,996		16,176
Diluted		16,010		16,274		16,046		16,263
DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK	$	0.17	$	0.34	$	0.34	$	0.68


Statement of Cash flows - Six months ended June 30, 2017

		Reported		Change		Under previous guidance
Net cash provided by operating activities	$	65,467	$	—	$	65,467
Net cash used in investing activities		(90,033)		588		(89,445)
Net cash used in financing activities		(15,488)		1,178		(14,310)
Effect of foreign currency exchange rates on total cash		207		—		207
Net change in total cash	$	(39,847)	$	1,766	$	(38,081)
Total cash, beginning of period		288,358		(18,637)		269,721
Total cash, end of period	$	248,511	$	(16,871)	$	231,640


		June 30, 2018		March 31, 2018		$ Change	% Change
Contract asset – current	$	1,434	$	1,309	$	125	10%
Contract asset – noncurrent		568		498		70	14%
Contract liabilities		(9,552)		(9,827)		275	-3%
Net contract liability	$	(7,550)	$	(8,020)	$	470	-6%


Balance Sheet – June 30, 2018
		Reported		Change		Under previous guidance
Prepayments and other current assets	$	35,386	$	(2,757)	$	32,629

Total current assets	$	264,313	$	(2,757)	$	261,556

Other assets	$	39,444	$	(1,433)	$	38,011

Total assets	$	1,188,999	$	(4,190)	$	1,184,809

Advance payments and deposits	$	17,727	$	(299)	$	17,428
Accrued taxes		10,238		(142)		10,096
						-
Total current liabilities	$	157,390	$	(441)	$	156,949

Deferred income taxes	$	30,755	$	(301)	$	30,454

Total liabilities	$	369,490	$	(742)	$	368,748

Retained earnings	$	550,872	$	(1,967)	$	548,905
Minority interest	$	136,424	$	(1,481)	$	134,943

Total equity	$	819,509	$	(3,448)	$	816,061

Total liabilities and equity	$	1,188,999	$	(4,190)	$	1,184,809


		Statement of Operations

		Three months ended June 30, 2018						Six months ended June 30, 2018

		Reported		Change		Under previous guidance		Reported		Change		Under previous guidance
Wireless revenue	$	50,496	$	(204)	$	50,292	$	101,043	$	(337)	$	100,706

Total revenue	$	117,788	$	(204)	$	117,584	$	222,263	$	(337)	$	221,926

Sales, marketing and customer service	$	8,413	$	240	$	8,653	$	16,974	$	618	$	17,592

Total operating expenses	$	102,035	$	240	$	102,275	$	202,301	$	618	$	202,919

Income from operations	$	15,753	$	(444)	$	15,309	$	19,962	$	(955)	$	19,007
Income before taxes		12,868		(444)		12,424		14,485		(955)		13,530
Income tax provision		2,088		(49)		2,039		6,008		(142)		5,866

Net income	$	10,780	$	(395)	$	10,385	$	8,477	$	(813)	$	7,664
Net income attributable to non-controlling interests		(3,564)		154		(3,410)		(6,816)		335		(6,481)
Net income attributable to ATN International, Inc. stockholders	$	7,216	$	(241)	$	6,975	$	1,661	$	(478)	$	1,183


		Statement of Comprehensive Loss

		Three months ended June 30, 2018						Six months ended June 30, 2018

		Reported		Change		Under previous guidance		Reported		Change		Under previous guidance
Net income	$	10,780	$	(395)	$	10,385	$	8,477	$	(813)	$	7,664
Other comprehensive loss, net of tax		(2,509)		-		(2,509)		(3,402)		-		(3,402)
Comprehensive loss		8,271		(395)		7,876		5,075		(813)		4,262
Less: Comprehensive income attributable to non-controlling interests		(3,564)		154		(3,410)		(6,816)		335		(6,481)
Comprehensive income (loss) attributable to ATN International, Inc.	$	4,707	$	(241)	$	4,466	$	(1,741)	$	(478)	$	(2,219)


Statement of Cash Flows - Six months ended June 30, 2018

		Reported		Change (1)		Under previous guidance
Net income	$	8,477	$	(813)	$	7,664

Materials and supplies, prepayments and other current assets	$	1,254	$	(681)	$	573
Accrued taxes		1,249		142		1,391
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities		(2,137)		68		(2,069)
Other assets	$	(1,208)	$	(342)	$	(1,550)


Consideration Received	$	25,926

Assets and liabilities disposed
Cash		1,821
Accounts receivable		1,696
Inventory		639
Prepaid		1,034
Property, plant and equipment		25,294
Other assets		288
Accounts payable and accrued liabilities		(1,718)
Advance payments and deposits		(1,897)
Net assets disposed		27,157

Consideration less net assets disposed		(1,231)

Transaction costs		(1,156)

Loss	$	(2,387)


	December 31, 2017
			Significant Other
	Quoted Prices in		Observable
	Active Markets		Inputs
Description	(Level 1)		(Level 2)		Total
Certificates of deposit	$	—	$	391	$	391
Money market funds		2,894		—		2,894
Short term investments		555		6,521		7,076
Commercial paper		—		49,954		49,954
Interest rate swap		—		52		52
Total assets and liabilities measured at fair value	$	3,449	$	56,918	$	60,367


						(d)
						Maximum
						Number (or
					(c)	Approximate
			(b)		Total Number of	Dollar Value) of
	(a)		Average		Shares Purchased	Shares that May
	Total Number		Price		as Part of Publicly	be Purchased
	of Shares		Paid per		Announced Plans	Under the Plans or
Period	Purchased		Share		or Programs	Programs
April 1, 2018 — April 30, 2018	668	(1)	$	63.67	—	$	39,266,945
May 1, 2018 — May 31, 2018	30,427			51.82	30,427	$	37,690,086
June 1, 2018 — June 30, 2018	—			—	—	$	37,690,086


							(d)
							Maximum
							Number (or
						(c)	Approximate
			(b)			Total Number of	Dollar Value) of
	(a)		Average			Shares Purchased	Shares that May
	Total Number		Price			as Part of Publicly	be Purchased
	of Shares		Paid per			Announced Plans	Under the Plans or
Period	Purchased		Share			or Programs	Programs
April 1, 2019 — April 30, 2019	151	(1)	$	59.29	(1)	—	$	37,690,086
May 1, 2019 — May 31, 2019	—			—		—	$	37,690,086
June 1, 2019 — June 30, 2019	—			—		—	$	37,690,086

	(1)
		~~(1)~~ Represents shares purchased on April 13, ~~2018~~2019 from our executive officers and other employees who tendered these shares to ~~the Company~~us to satisfy their ~~cost to exercise stock options and~~ tax withholding obligations incurred in connection with ~~the exercise of stock options and~~ the vesting of restricted stock awards at such date. These shares were not purchased under the ~~plan~~ 2016 Repurchase Plan discussed above. The price paid per share was the closing price per share of our ~~Common Stock~~common stock on the Nasdaq Stock Market on the date those shares were purchased.



31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer pursuant to 18 ~~U.S.C.~~USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer pursuant to 18 ~~U.S.C.~~USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

10.1*101.INS		~~Consent and Waiver between Rural Telephone Finance Cooperative, Caribbean Asset Holdings, LLC and DTR Holdings, LLC, dated August 3, 2018.~~Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.INS*		~~XBRL Instance Document~~

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL


	ATN International, Inc.

Date: August ~~8, 2018~~7, 2019	/s/ Michael T. Prior
	Michael T. Prior
	President and Chief Executive Officer

Date: August ~~8, 2018~~7, 2019	/s/ Justin D. Benincasa
	Justin D. Benincasa
	Chief Financial Officer