Edgar Filing: ATLANTIC TELE NETWORK INC /DE

atni_Current folio_10Q

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 September 30, 2015


☐	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

Atlantic Tele-Network, Inc.

(Exact name of registrant as specified in its charter)


Delaware		47-0728886
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

600 Cummings Center

Beverly, MA 01915

(Address of principal executive offices, including zip code)

(978) 619-1300

(Registrant’s telephone number, including area code)

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, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ☐		Accelerated filer ☒

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

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 November 9, 2015, the registrant had outstanding 16,062,167 shares of its common stock ($.01 par value).

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ATLANTIC TELE-NETWORK, INC.

FORM 10-Q

Quarter Ended September 30, 2015


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 December 31, 2014 and September 30, 2015	4

	Condensed Consolidated Income Statements for the Three and Nine Months Ended September 30, 2014 and 2015	5

	Condensed Consolidated Statements of Comprehensive Income for the Nine Months Ended September 30, 2014 and 2015	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2015	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-37

Item 3	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4	Controls and Procedures	38

PART II—OTHER INFORMATION		39

Item 1	Legal Proceedings	39

Item1A	Risk Factors	39

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 5	Other Information	40

Item 6	Exhibits	41

SIGNATURES		42

CERTIFICATIONS

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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 competitive environment in our key markets, demand for our services and industry trends; the outcome of regulatory matters; our continued access to the credit and capital markets; the pace of our network expansion and improvement, including our level of estimated future capital expenditures and our realization of the benefits of these investments; 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) the general performance of our operations, including operating margins, revenues, and the future growth and retention of our subscriber base and consumer demand for solar power; (2) government regulation of our businesses, which may impact our FCC and other telecommunications licenses or our renewables business; (3) economic, political and other risks facing our operations; (4) our ability to maintain favorable roaming arrangements; (5) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; (6) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (7) our ability to find investment or acquisition or disposition opportunities that fit our strategic goals for the Company; (8) increased competition; (9) our ability to operate in the renewable energy industry; (10) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (11) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (12) the occurrence of weather events and natural catastrophes; (13) our continued access to capital and credit markets; (14) our ability to realize the value that we believe exists in our businesses; and (15) our ability to receive requisite regulatory consents and approvals and satisfy other conditions needed to complete our proposed acquisitions . 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, 2014, filed with the SEC on March 16, 2015 and the other reports we file from time to time with the SEC. 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 Atlantic Tele-Network, 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. dollars unless otherwise specifically indicated.

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PART I—FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)


	December 31,		September 30,
	2014		2015
ASSETS
Current Assets:
Cash and cash equivalents	$	326,216	$	397,797
Restricted cash		39,703		797
Accounts receivable, net of allowances of $11.3 million and $10.9 million, respectively		52,873		47,419
Materials and supplies		10,546		9,270
Deferred income taxes		2,588		2,673
Prepayments and other current assets		19,273		20,596
Assets of discontinued operations		175		44
Total current assets		451,374		478,596
Fixed Assets:
Property, plant and equipment		763,417		787,778
Less accumulated depreciation		(393,835)		(421,763)
Net fixed assets		369,582		366,015
Telecommunication licenses, net		44,090		43,622
Goodwill		45,077		45,077
Trade name license, net		417		417
Customer relationships, net		1,496		1,161
Restricted cash		5,475		5,013
Other assets		7,519		6,557
Total assets	$	925,030	$	946,458
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	6,083	$	6,254
Accounts payable and accrued liabilities		61,737		46,127
Dividends payable		4,631		5,150
Accrued taxes		5,667		10,935
Advance payments and deposits		7,898		8,194
Deferred income taxes		213		201
Other current liabilities		16,593		10,433
Liabilities of discontinued operations		1,247		1,293
Total current liabilities		104,069		88,587
Deferred income taxes		30,366		37,694
Other liabilities		19,619		28,738
Long-term debt, excluding current portion		32,794		28,141
Total liabilities		186,848		183,160
Commitments and contingencies (Note 12)
Atlantic Tele-Network, 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; 16,647,334 and 16,802,073 shares issued, respectively, and 15,925,748 and 16,051,111 shares outstanding, respectively		166		166
Treasury stock, at cost; 721,586 and 750,962 shares, respectively		(15,549)		(17,504)
Additional paid-in capital		145,563		151,466
Retained earnings		549,963		548,280
Accumulated other comprehensive loss		(2,921)		(2,892)
Total Atlantic Tele-Network, Inc. stockholders’ equity		677,222		679,516
Non-controlling interests		60,960		83,782
Total equity		738,182		763,298
Total liabilities and equity	$	925,030	$	946,458

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

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ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2015

(Unaudited)

(In thousands, except per share amounts)


	Three months ended September 30,				Nine months ended September 30,
	2014		2015		2014		2015
REVENUE:
U.S. wireless	$	44,306	$	47,047	$	110,153	$	122,993
International wireless		21,557		20,392		67,127		61,787
Wireline		21,531		21,815		64,344		64,497
Renewable energy		—		5,052		—		15,631
Equipment and other		1,999		2,476		6,212		7,545
Total revenue		89,393		96,782		247,836		272,453
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		19,321		21,343		58,188		60,827
Engineering and operations		7,525		10,631		21,508		26,218
Sales and marketing		5,827		5,797		16,499		16,315
Equipment expense		2,924		3,431		8,938		10,093
General and administrative		12,823		15,930		38,596		44,743
Transaction-related charges		(27)		2,536		341		2,852
Depreciation and amortization		12,842		14,590		37,752		43,813
Gain on disposition of long-lived assets		—		—		—		(2,823)
Total operating expenses		61,235		74,258		181,822		202,038
Income from operations		28,158		22,524		66,014		70,415
OTHER INCOME (EXPENSE)
Interest expense, net		(13)		(795)		(220)		(2,153)
Loss on deconsolidation of subsidiary (note 5)		—		—		—		(19,937)
Other income , net		338		53		302		114
Other income (expense), net		325		(742)		82		(21,976)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		28,483		21,782		66,096		48,439
Income taxes		9,569		10,134		22,460		22,655
INCOME FROM CONTINUING OPERATIONS		18,914		11,648		43,636		25,784
INCOME FROM DISCONTINUED OPERATIONS:
Income from discontinued operations, net of tax		—		—		—		390
NET INCOME		18,914		11,648		43,636		26,174
Net income attributable to non-controlling interests, net of tax:		(2,747)		(5,072)		(8,116)		(13,417)
NET INCOME ATTRIBUTABLE TO ATLANTIC TELE-NETWORK, INC. STOCKHOLDERS	$	16,167	$	6,576	$	35,520	$	12,757
NET INCOME PER WEIGHTED AVERAGE BASIC SHARE ATTRIBUTABLE TO ATLANTIC TELE-NETWORK, INC. STOCKHOLDERS:
Continuing operations	$	1.02	$	0.41	$	2.24	$	0.77
Discontinued operations:	$	—	$	—	$	—	$	0.02
Total	$	1.02	$	0.41	$	2.24	$	0.79
NET INCOME PER WEIGHTED AVERAGE DILUTED SHARE ATTRIBUTABLE TO ATLANTIC TELE-NETWORK, INC. STOCKHOLDERS:
Continuing operations	$	1.01	$	0.41	$	2.22	$	0.77
Discontinued operations	$	—	$	—	$	—	$	0.02
Total	$	1.01	$	0.41	$	2.22	$	0.79
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		15,923		16,049		15,890		16,009
Diluted		16,030		16,165		16,001		16,128
DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK	$	0.29	$	0.32	$	0.83	$	0.90

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

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ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015

(Unaudited)

(In thousands)


	Nine months ended September 30,
	2014		2015
Net income	$	43,636	$	26,174
Other comprehensive income:
Foreign currency translation adjustment, net of tax		—		29
Other comprehensive income, net of tax		—		29
Comprehensive income		43,636		26,203
Less: Comprehensive income attributable to non-controlling interests		(8,116)		(13,417)
Comprehensive income attributable to Atlantic Tele-Network, Inc.	$	35,520	$	12,786

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

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ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015

(Unaudited)

(In thousands)


	Nine months ended September 30,
	2014		2015
Cash flows from operating activities:
Net income	$	43,636	$	26,174
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		37,752		43,813
Provision for doubtful accounts		1,313		711
Amortization and write off of debt discount and debt issuance costs		72		424
Stock-based compensation		3,381		3,832
Income from discontinued operations, net of tax		—		(390)
Gain on disposition of long-lived assets		—		(2,823)
Loss on deconsolidation of subsidiary		—		19,937
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Accounts receivable, net		(7,830)		3,832
Materials and supplies, prepayments, and other current assets		(1,921)		(5,563)
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities		1,444		399
Accrued taxes		(18,401)		27,684
Other		(3,785)		(5,485)
Net cash provided by operating activities of continuing operations		55,661		112,545
Net cash provided by (used in) operating activities of discontinued operations		(4,612)		566
Net cash provided by operating activities		51,049		113,111
Cash flows from investing activities:
Capital expenditures		(41,699)		(46,031)
Acquisition of business (Note 4)		—		(11,968)
Change in restricted cash		38,707		39,368
Proceeds from disposition of long-lived assets (Note 5)		1,371		5,873
Net cash used in investing activities of continuing operations		(1,621)		(12,758)
Net cash used in investing activities of discontinued operations		—		—
Net cash used in investing activities		(1,621)		(12,758)
Cash flows from financing activities:
Dividends paid on common stock		(12,873)		(13,920)
Distribution to minority stockholders		(7,932)		(11,363)
Payment of debt issuance costs		—		(30)
Proceeds from stock option exercises		610		1,686
Principal repayments of term loan		—		(4,482)
Purchase of common stock		(1,355)		(1,568)
Repurchases of non-controlling interests		(59)		—
Investments made by minority shareholders in consolidated affiliates		—		905
Net cash used in financing activities of continuing operations		(21,609)		(28,772)
Net cash used in financing activities of discontinued operations		—		—
Net cash used in financing activities		(21,609)		(28,772)
Net change in cash and cash equivalents		27,819		71,581
Cash and cash equivalents, beginning of period		356,607		326,216
Cash and cash equivalents, end of period	$	384,426	$	397,797

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

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ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.ORGANIZATION AND BUSINESS OPERATIONS

The Company is a holding company that, through its operating subsidiaries, (i) provides wireless and wireline telecommunications services in North America, Bermuda and the Caribbean, (ii) owns and operates commercial distributed generation solar power systems in the United States, and (iii) owns and operates terrestrial and submarine fiber optic transport systems in the United States and the Caribbean, respectively.

The Company offers the following principal services:

Wireless. In the United States, 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 offers wireless voice and data services to retail customers in Guyana, Bermuda, and in other smaller markets in the Caribbean and the United States.

Wireline. The Company’s local telephone and data services include its operations in Guyana and the mainland United States. The Company is the exclusive licensed provider of domestic wireline local and long-distance telephone services in Guyana and international voice and data communications into and out of Guyana. The Company also offers facilities-based integrated voice and data communications services and wholesale transport services to enterprise and residential customers in New England, primarily in Vermont, and in New York State. In addition, the Company offers wholesale long-distance voice services to telecommunications carriers.

Renewable Energy. In the United States, the Company provides distributed generation solar power to corporate, utility and municipal customers 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 September 30, 2015:


Services	Segment	Markets	Tradenames
Wireless	U.S. Wireless	United States (rural markets)	Commnet, Choice
	Island Wireless	Aruba, Bermuda, Turks and Caicos (through March 23, 2015), U.S. Virgin Islands	Mio, CellOne, Islandcom (through March 23, 2015), Choice
	International Integrated Telephony	Guyana	Cellink
Wireline	International Integrated Telephony	Guyana	GT&T
	U.S. Wireline	United States (New England and New York State)	Sovernet, ION, Essextel
Renewable Energy	Renewable Energy	United States (Massachusetts, California, and New Jersey)	Ahana Renewables

The Company is actively evaluating potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, that meet its return‑on‑investment and other criteria. 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 and which the Company believes approximates the level of effort provided for such services. Management fees from subsidiaries are eliminated in consolidation. For information about the Company’s business segments and geographical information about its revenue, operating income and long‑lived assets, see Note 11 to the Unaudited Condensed Consolidated Financial Statements.

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Beginning with the first quarter of 2016, the Company anticipates re-presenting its operating segments as follows: i) Domestic Telecom, consisting of the Company’s current U.S. Wireless and U.S. Wireline segments, ii) International Telecom, consisting of the Company’s current Island Wireless and International Integrated Telephony segments, and iii) Renewable Energy, consisting of the Company’s current Renewable Energy segment.

The pending acquisitions, as described in Note 4, will be included within the International Telecom segment upon the completion of those acquisitions.

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 2014 Annual Report on Form 10-K.

The 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.

Certain reclassifications have been made in the prior period financial statements to conform the Company’s consolidated income statements to how management analyzes its operations in the current period. These changes did not impact operating income. For the three months ended September 30, 2014 the aggregate impact of the changes included an increase to termination and access fees of $3.3 million, a decrease to engineering and operations expenses of $2.3 million, an increase to sales and marketing expenses of $0.3 million and a decrease to general and administrative expenses of $1.4 million. For the nine months ended September 30, 2014 the aggregate impact of the changes included an increase to termination and access fees of $10.1 million, a decrease to engineering and operations expenses of $7.4 million, an increase to sales and marketing expenses of $1.1 million and a decrease to general and administrative expenses of $3.7 million.

The Company’s effective tax rates for the three months ended September 30, 2014 and 2015 were 33.6% and 46.5%, respectively. The Company’s effective tax rates for the nine months ended September 30, 2014 and 2015 were 34.0% and 46.8%, respectively. The Company’s effective tax rate increased in 2015 primarily due to the $19.9 million loss on deconsolidation of its Island Wireless business that has no 2015 tax benefit.

Recent Accounting Pronouncements

In May 2014, the FASB issued a standard on revenue recognition providing 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 standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. On July 9, 2015, the FASB approved the deferral of the new standard's effective date by one year. The new standard now would be effective for annual reporting periods beginning after December 15, 2017. The FASB will permit companies to adopt the new standard early, but not before the original effective date of December 15, 2016. The Company is currently evaluating the adoption method options and the impact of the new guidance on our consolidated financial statements.

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In April 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 provides guidance on determining when disposals can be presented as discontinued operations. ASU 2014-08 requires that only disposals representing a strategic shift in operations should be presented as discontinued operations. A strategic shift may include a disposal of a major line of business, major equity method investment or a major part of an entity. Additionally, ASU 2014-08 requires expanded disclosures regarding discontinued operations. This standard was effective prospectively for reporting periods beginning after December 15, 2014. The adoption of this amendment did not have a material impact on the Company’s consolidated financial statements.

In April 2015, FASB issued ASU 2015-03, which amends the presentation of debt issuance costs on the consolidated balance sheet. Under the new guidance, debt issuance costs are presented as a direct deduction from the carrying amount of the debt liability rather than as an asset. The new guidance is effective retrospectively for fiscal periods starting after December 15, 2015 and early adoption is permitted. We expect to adopt ASU 2015-03 on January 1, 2016 and have determined that its adoption will not have a material impact on our consolidated financial statements and related disclosures at that time.

In April 2015, the FASB issued guidance to customers about whether a cloud computing arrangement includes software and how to account for that software license. The new guidance does not change the accounting for a customer’s accounting for service contracts. The standard is effective beginning January 1, 2017, with early adoption permitted, and may be applied prospectively or retrospectively. We do not expect it to have a material impact on our consolidated financial position, results of operations or cash flows.

In September 2015, the FASB issued updated guidance related to simplifying the accounting for measurement period adjustments related to business combinations. The amended guidance eliminates the requirement to retrospectively account for adjustments made during the measurement period. The standard is effective beginning January 1, 2016, with early adoption permitted. We do not expect it to have a material impact on our consolidated financial position, results of operations or cash flows.

3. 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 purchase business combinations, fair value of indefinite-lived intangible assets, goodwill and income taxes. Actual results could differ significantly from those estimates.

4. ACQUISITIONS

Pending Acquisitions

KeyTech Limited

On October 6, 2015, the Company entered into an agreement with KeyTech Limited (“KeyTech”), a publicly held Bermuda company listed on the Bermuda Stock Exchange (“BSX”) that provides voice, broadband, and cable television services under the “Logic” name in Bermuda and the Cayman Islands, in which the Company will acquire a controlling interest in KeyTech as part of a proposed business combination of KeyTech with the Company’s subsidiary providing wireless services under the “CellOne” name in Bermuda. As part of the proposed transaction, the Company will contribute its current ownership interest of approximately 43% in CellOne and approximately $42 million in cash in exchange for a 51% ownership interest in KeyTech. On a combined basis, the Company and KeyTech currently own approximately 85% of CellOne. As part of the proposed transaction, CellOne will be merged with and into a company within the KeyTech group and the approximate 15% interest in CellOne held, in the aggregate, by CellOne’s minority shareholders will be converted into the right to receive common shares in KeyTech. Following the transaction, CellOne

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will be indirectly wholly owned by KeyTech and KeyTech will continue to be listed on the BSX. A portion of the cash proceeds that KeyTech will receive upon closing will be used to fund a one-time special dividend to KeyTech's existing shareholders and to retire KeyTech's subordinated debt. The Company currently consolidates the operations of CellOne and, upon closing of the proposed transaction, will consolidate the results of KeyTech, in its financial statements.

The proposed transaction is subject to customary closing terms and conditions, including, among others, the receipt of approval from the Bermuda Regulatory Authority, the Federal Communications Commission, and the Information and Communications Technology Authority of the Cayman Islands and the consent of the Bermuda Stock Exchange to certain transaction matters. KeyTech shareholders approved the proposed transaction by affirmative vote on October 20, 2015. The Company currently expects to complete the proposed transaction in the first quarter of 2016.

Caribbean Asset Holdings LLC

On October 1, 2015, the Company announced that it had entered into an agreement to acquire all of the membership interests of Caribbean Asset Holdings LLC, the holding company for the Innovative group of companies operating cable TV, Internet and landline services primarily in the U.S. Virgin Islands ("Innovative") from the National Rural Utilities Cooperative Finance Corporation ("CFC"). The Company will purchase the Innovative operations for a purchase price of approximately $145 million, subject to certain purchase price adjustments, with $85 million payable in cash and the option to finance the remaining $60 million of the purchase price with a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative. With the purchase, the Company’s current operations in the U.S. Virgin Islands under the "Choice" name will be combined with Innovative to deliver residential and business subscribers a full range of telecommunications and media services.

The agreement is subject to customary closing terms and conditions, the expiration of the Hart-Scott Rodino waiting period and the receipt of approvals from the Federal Communications Commission and regulatory authorities in the U.S. and British Virgin Islands and St. Maarten. The Company currently expects to complete the proposed transaction in mid-2016.

Completed Acquisition

On December 24, 2014, the Company acquired substantially all of the assets of Green Lake Capital, LLC and certain of its affiliates (collectively, "Green Lake"), an owner and operator of commercial distributed generation solar power systems in Massachusetts, California and New Jersey (the "Ahana Acquisition"). The Company acquired these assets as part of a total transaction valued at approximately $117.7 million which is comprised of approximately $66.3 million of cash consideration, a $12.5 million reimbursement of cash and restricted cash held by Green Lake on the date of the acquisition, and the assumption of $38.9 million of debt. Of the $78.8 million purchase price, $11.9 million was paid in 2015. The acquisition was performed through the Company's newly formed subsidiary, Ahana Renewables, LLC ("Ahana Renewables"). Certain subsidiaries of Ahana Renewables have been partially capitalized by a third-party tax equity investor who maintains a non-controlling interest in these subsidiaries. The tax equity investor’s interest in these subsidiaries changes at a certain date (the "Flip Date"), which is the later of a) the five-year anniversary of the placed in service date for the solar assets owned by the subsidiary or, b) the date that the tax equity investor receives a certain return on their original investment in that subsidiary. These dates typically occur at approximately 2 - 4 years from the acquisition date. The profits and losses of these subsidiaries will be allocated to the tax equity investors and to the Company using the Hypothetical Liquidation Book Value method. The Hypothetical Liquidation Book Value Method is used to calculate the non-controlling interests' share of income for each period by measuring the difference in funds that would flow to the non-controlling interests in a hypothetical liquidation event at the beginning of the period compared to the end of a period (adjusted for capital distributions). The method assumes that the proceeds on liquidation approximate book value and then the proceeds are allocated to the Company and non-controlling interests based on the liquidation provisions of the solar facility operating agreement. A positive difference during the period represents non-controlling interests' share of income and a decrease represents a loss. Ahana Renewables has the option to buy-out the non-controlling interests.

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Ahana Renewables generates revenue from the sale of electricity through long-term (10 - 25 years) power purchase agreements as well as the sale of Solar Renewable Energy Credits (“SRECs”) which are government emissions allowances obtained through power generation and compliance with various regulations.

5. LOSS ON DECONSOLIDATION OF SUBSIDIARY

During March 2015, the Company sold certain assets and liabilities of its Turks and Caicos business in its Island Wireless segment. As a result, the Company recorded a loss of approximately $19.9 million arising from the deconsolidation of non-controlling interests of $20.0 million and a gain of $0.1 million arising from an excess of sales proceeds over the carrying value of net assets disposed of. The disposition is included within other income (expense) and does not relate to a strategic shift in the Company’s operations. As a result, the subsidiary’s historical results and financial position are presented with continuing operations.

6. 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 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 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.

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Assets and liabilities of the Company measured at fair value on a recurring basis as of December 31, 2014 and September 30, 2015 are summarized as follows (in thousands):


	December 31, 2014
			Significant Other
	Quoted Prices in		Observable
	Active Markets		Inputs
Description	(Level 1)		(Level 2)		Total
Certificates of deposit	$	—	$	363	$	363
Money market funds	$	1,493	$	—	$	1,493
Total assets measured at fair value	$	1,493	$	363	$	1,856
Debt (Note 7)	$	—	$	38,877	$	38,877
Total liabilities measured at fair value	$	—	$	38,877	$	38,877


	September 30, 2015
			Significant Other
	Quoted Prices in		Observable
	Active Markets		Inputs
Description	(Level 1)		(Level 2)		Total
Certificates of deposit	$	—	$	363	$	363
Money market funds	$	71,105	$	—	$	71,105
Total assets measured at fair value	$	71,105	$	363	$	71,468

Certificate of Deposit

As of December 31, 2014 and September 30, 2015, this asset class consisted of a time deposit at a financial institution denominated in U.S. 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 December 31, 2014 and September 30, 2015, this asset class consisted of a money market portfolio that comprises Federal government and U.S. 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.

7. LONG-TERM DEBT

Long-term debt comprises the following (in thousands):


	December 31,		September 30,
	2014		2015

Term loans assumed in Ahana acquisition	$	38,877	$	34,395
Less: current portion		(6,083)		(6,254)
Total long-term debt	$	32,794	$	28,141

On December 19, 2014, the Company amended and restated its credit facility to provide for a $225 million revolving credit facility (the "Amended Credit Facility") that includes (i) up to $10 million under the Amended Credit Facility for standby or trade letters of credit, (ii) up to $25 million under the Amended 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.

Amounts the Company may borrow under the Amended Credit Facility bear interest at a rate equal to, at its option, either (i) the London Interbank Offered Rate (LIBOR) plus an applicable margin ranging between 1.50% to

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1.75% or (ii) a base rate plus an applicable margin ranging from 0.50% to 0.75%. 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 and (y) the one-month LIBOR; (ii) the federal funds effective rate (as defined in the Credit Agreement) plus 0.50% per annum; and (iii) the prime rate (as defined in the Credit Agreement). The applicable margin is determined based on the ratio (as further defined in the Amended Credit Agreement) of the Company's indebtedness to EBITDA. Under the terms of the Amended Credit Agreement, the Company must also pay a fee ranging from 0.175% to 0.250% of the average daily unused portion of the Amended Credit Facility over each calendar quarter.

The Amended Credit Facility contains customary representations, warranties and covenants, as well as covenants by the Company limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. In addition, the Amended Credit Facility contains a financial covenant that imposes a maximum ratio of indebtedness to EBITDA on the Company. As of September 30, 2015, the Company was in compliance with all of the financial covenants of the Amended Credit Facility.

Throughout 2014 and as of September 30, 2015, the Company had no borrowings under the Amended Credit Facility and approximately $10.6 million of outstanding letters of credit.

The carrying value of debt approximates its fair value.

Acquisition of Green Lake Capital, LLC

In connection with the Ahana Acquisition on December 24, 2014, the Company assumed $38.9 million in long-term debt (the "Ahana Debt"). The Ahana Debt includes multiple loan agreements with banks that bear interest at rates between 4.5% and 6.0%, mature at various times between 2018 and 2023 and are secured by certain solar facilities. Repayment of the Ahana Debt with the banks is made on a monthly basis until maturity. As of September 30, 2015, $34.4 million of the Ahana Debt remained outstanding.

The Ahana Debt includes a loan from Public Service Electric & Gas (PSE&G) of $2.8 million. The note payable to PSE&G bears interest at 11.3%, matures in 2027, and is secured by certain solar facilities. Repayment of the Ahana Debt with PSE&G can be made in either cash or solar renewable energy credits (“SRECs”), at the Company's discretion, with the value of the SRECs being the current market value as of the date of repayment.

8. GOVERNMENT GRANTS

The Company has received funding from the U.S. Government and its agencies under Stimulus and Universal Services Fund programs. These are generally designed to fund telecommunications infrastructure expansion into rural or underserved areas of the United States. The fund programs are evaluated to determine if they represent funding related to capital expenditures (capital grants) or operating activities (income grants).

Mobility Fund Grants

As part of the Federal Communications Commission’s (“FCC”) reform of its Universal Service Fund (“USF”) program, which previously provided support to carriers seeking to offer telecommunications services in high-cost areas and to low-income households, the FCC created two new funds, including the Mobility Fund, a one-time award meant to support wireless coverage in underserved geographic areas in the United States. In August 2013, the Company received FCC final approval for $21.7 million of Mobility Fund support to its wholesale wireless business (the "Mobility Funds"), to expand voice and broadband networks in certain geographic areas in order to offer either 3G or 4G coverage. As part of the receipt of the Mobility Funds, the Company committed to comply with certain additional FCC construction and other requirements. A portion of these funds will be used to offset network capital costs and a portion is used to offset the costs of supporting the networks for a period of five years. In connection with the Company’s application for the Mobility Funds, the Company has issued approximately $10.6 million in letters of credit to the Universal Service Administrative Company (“USAC”) to secure these obligations. If the Company fails to comply with any of the terms and conditions upon which the Mobility Funds were granted, or if it loses eligibility for the Mobility Funds, USAC will

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be entitled to draw the entire amount of the letter of credit applicable to the affected project plus penalties and may disqualify the Company from the receipt of additional Mobility Fund support.

The Company began the construction of its Mobility Funds projects during the third quarter of 2013 and its results are included in the Company’s “U.S. Wireless” segment. As of September 30, 2015, the Company has received approximately $8.1 million in Mobility Funds. Of these funds, $3.1 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 and $1.2 million is recorded within other current liabilities while the remaining $3.8 million is recorded within other long-term liabilities in the Company's consolidated balance sheet as of September 30, 2015. The balance sheet presentation is based on the timing of the expected usage of the funds which will reduce future operations expenses.

9. EQUITY

Shareholders’ equity was as follows (in thousands):


	Nine months ended September 30,
	2014						2015
	Atlantic Tele-		Non-Controlling				Atlantic Tele-		Non-Controlling		Total
	Network, Inc.		Interests		Total Equity		Network, Inc.		Interests		Equity
Equity, beginning of period	$	643,330	$	56,525	$	699,855	$	677,222	$	60,960	$	738,182
Stock-based compensation		3,381		—		3,381		3,832		—		3,832
Comprehensive income:								0		0
Net income		35,520		8,116		43,636		12,757		13,417		26,174
Translation adjustment		—		—		—		29		—		29
Total comprehensive income		35,520		8,116		43,636		12,786		13,417		26,203
Issuance of common stock upon exercise of stock options		1,106		—		1,106		2,073		—		2,073
Dividends declared on common stock		(13,218)		—		(13,218)		(14,442)		—		(14,442)
Distributions to non-controlling interests		—		(7,932)		(7,932)		—		(11,513)		(11,513)
Investments made by non-controlling interests		—		—		—		—		905		905
Sale of non-controlling interests		—		(59)		(59)		—		20,013		20,013
Purchase of treasury stock		(1,850)		—		(1,850)		(1,955)		—		(1,955)
Equity, end of period	$	668,269	$	56,650	$	724,919	$	679,516	$	83,782	$	763,298

10. NET INCOME PER SHARE

For the three and nine months ended September 30, 2014 and 2015, outstanding stock options were the only potentially dilutive securities. The reconciliation from basic to diluted weighted average common shares outstanding is as follows (in thousands):


	Three months ended September 30,		Nine months ended September 30,
	2014	2015	2014	2015
Basic weighted-average common shares outstanding	15,923	16,049	15,890	16,009
Stock options	107	116	111	119
Diluted weighted-average common shares outstanding	16,030	16,165	16,001	16,128

The above calculation for the three and nine months ended September 30, 2015, does not include approximately 2,000 and 1,000 shares related to certain stock options because the effect of such options were anti-dilutive. There were no anti-dilutive shares for the three and nine months ended September 30, 2014.

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11. SEGMENT REPORTING

For the nine months ended September 30, 2014, the Company had four reportable segments for separate disclosure in accordance with the FASB’s authoritative guidance on disclosures about segments of an enterprise. Those four segments were: i) U.S. Wireless, which generates all of its revenues in and has all of its assets located in the United States, ii) International Integrated Telephony, which generates all of its revenues in and has all of its assets located in Guyana, iii) Island Wireless, which generates a majority of its revenues in, and has a majority of its assets located in, Bermuda and which also generates revenues in and has assets located in the U.S. Virgin Islands, Aruba and Turks and Caicos (through March 23, 2015) and iv) U.S. Wireline, which generates all of its revenues in and has all of its assets located in the United States. With the Ahana Acquisition on December 24, 2014, the Company added a fifth reportable segment, Renewable Energy, which generates all of its revenues in and has all of its assets located in the United States. Segment presentations for the nine months ended September 30, 2014 were not impacted by the Ahana Acquisition. The operating segments are managed separately because each offers different services and serves different markets.

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


For the Three Months Ended September 30, 2014
			International
	U.S.		Integrated		Island		U.S.		Renewable		Reconciling
	Wireless		Telephony		Wireless		Wireline		Energy		Items		Consolidated
Revenue
U.S. Wireless	$	44,306	$	—	$	—	$	—	$	—	$	—	$	44,306
International Wireless		—		6,399		15,158		—		—		—		21,557
Wireline		152		15,249		—		6,130		—		—		21,531
Renewable energy		—		—		—		—		—		—		—
Equipment and Other		278		183		1,469		69		—		—		1,999
Total Revenue		44,736		21,831		16,627		6,199		—		—		89,393
Depreciation and amortization		3,657		4,397		2,596		1,193		—		999		12,842
Non-cash stock-based compensation		—		—		—		—		—		1,002		1,002
Operating income (loss)		27,585		5,065		2,231		(471)		—		(6,252)		28,158


For the Three Months Ended September 30, 2015
			International
	U.S.		Integrated		Island		U.S.		Renewable		Reconciling
	Wireless		Telephony		Wireless		Wireline		Energy		Items		Consolidated
Revenue
U.S. Wireless	$	47,047	$	—	$	—	$	—	$	—	$	—	$	47,047
International Wireless		—		6,503		13,889		—		—		—		20,392
Wireline		152		15,572		—		6,091		—		—		21,815
Renewable energy		—		—		—		—		5,052		—		5,052
Equipment and Other		480		462		1,479		55		—		—		2,476
Total Revenue		47,679		22,537		15,368		6,146		5,052		—		96,782
Depreciation and amortization		4,522		4,470		1,930		1,193		1,205		1,270		14,590
Non-cash stock-based compensation		—		—		—		—		29		1,126		1,155
Operating income (loss)		25,208		1,313		3,615		(990)		2,694		(9,316)		22,524

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For the Nine Months Ended September 30, 2014
			International
	U.S.		Integrated		Island		U.S.		Renewable		Reconciling
	Wireless		Telephony		Wireless		Wireline		Energy		Items		Consolidated
Revenue
U.S. Wireless	$	110,153	$	—	$	—	$	—	$	—	$	—	$	110,153
International Wireless		—		20,054		47,073		—		—		—		67,127
Wireline		457		44,399		—		19,488		—		—		64,344
Renewable energy		—		—		—		—		—		—		—
Equipment and Other		663		573		4,782		194		—		—		6,212
Total Revenue		111,273		65,026		51,855		19,682		—		—		247,836
Depreciation and amortization		10,413		13,111		7,810		3,519		—		2,899		37,752
Non-cash stock-based compensation		—		—		—		—		—		3,381		3,381
Operating income (loss)		63,826		15,293		8,210		(2,511)		—		(18,804)		66,014


For the Nine Months Ended September 30, 2015
			International
	U.S.		Integrated		Island		U.S.		Renewable		Reconciling
	Wireless		Telephony		Wireless		Wireline		Energy		Items		Consolidated
Revenue
U.S. Wireless	$	122,993	$	—	$	—	$	—	$	—	$	—	$	122,993
International Wireless		—		19,114		42,673		—		—		—		61,787
Wireline		457		45,583		—		18,457		—		—		64,497
Renewable energy		—		—		—		—		15,631		—		15,631
Equipment and Other		1,606		1,305		4,467		167		—		—		7,545
Total Revenue		125,056		66,002		47,140		18,624		15,631		—		272,453
Depreciation and amortization		13,175		13,249		6,461		3,699		3,613		3,616		43,813
Non-cash stock-based compensation		—		—		—		—		238		3,594		3,832
Operating income (loss)		67,160		11,545		9,902		(3,046)		8,037		(23,183)		70,415


			International
	U.S.		Integrated		Island		U.S.		Renewable		Reconciling
	Wireless		Telephony		Wireless		Wireline		Energy		Items			Consolidated
December 31, 2014
Net fixed assets	$	79,910	$	108,972	$	26,590	$	28,113	$	111,342	$	14,655		$	369,582
Goodwill		32,148		—		5,438		7,491		—		—			45,077
Total assets		188,377		201,649		74,563		42,446		130,124		287,871	(1)		925,030
September 30, 2015
Net fixed assets	$	84,631	$	107,222	$	23,200	$	29,593	$	107,754	$	13,615		$	366,015
Goodwill		32,148		—		5,438		7,491		—		—			45,077
Total assets		193,315		204,315		76,629		45,387		122,667		304,145	(1)		946,458

(1)

Includes $175 and $44 of assets associated with our discontinued operations as of December 31, 2014 and September 30, 2015, respectively.

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		Capital Expenditures
				International
		U.S.		Integrated		Island		U.S.		Renewable		Reconciling
Nine months ended September 30,		Wireless		Telephony		Wireless		Wireline		Energy		Items		Consolidated
2014	$	26,496	$	6,816	$	3,966	$	2,325	$	—	$	2,096	$	41,699
2015		21,617		9,720		6,077		6,015		26		2,576		46,031

12. 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.

As part of the FCC’s reform of its USF program, which previously provided support to carriers seeking to offer telecommunications services in high-cost areas and to low-income households, the FCC created two new funds, including the Mobility Fund, a one-time award meant to support wireless coverage in underserved geographic areas in the United States. In August 2013, the Company received FCC final approval for $21.7 million of Mobility Fund support to its wholesale wireless business (the "Mobility Funds"), to expand voice and broadband networks in certain geographic areas in order to offer either 3G or 4G coverage. As part of the receipt of the Mobility Funds, the Company committed to comply with certain additional FCC construction and other requirements. A portion of these funds will be used to offset network capital costs and a portion is used to offset the costs of supporting the networks for a period of five years. In connection with the Company’s application for the Mobility Funds, the Company has issued approximately $10.6 million in letters of credit to the Universal Service Administrative Company (“USAC”) to secure these obligations. The letters of credit accrue a fee at a rate of 1.75% per annum on the outstanding amounts. As of Septemer 30, 2015 the Company had approximately $10.6 million in letters of credit payable to USAC outstanding to cover its Mobility Fund obligations and there were no drawdowns against these letters of credit. If the Company fails to comply with any of the terms and conditions upon which the Mobility Funds were granted, or if it loses eligibility for the Mobility Funds, USAC will be entitled to draw the entire amount of the letter of credit applicable to the affected project plus penalties and may disqualify the Company from the receipt of additional Mobility Fund support.

Currently, the Company’s Guyana subsidiary, GT&T, 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. Since that time, the Company and GT&T have met on several occasions with officials of the Government of Guyana to discuss potential modifications of GT&T’s exclusivity and other rights under the existing agreement and license. In 2012, the Government of Guyana introduced draft legislation in Parliament that, if enacted, would have the effect of terminating the Company’s exclusive license rights by permitting other telecommunications carriers to receive licenses to provide domestic fixed services and international voice and data services in Guyana. Along with the draft legislation, the Government also released drafts of new regulations and licenses (collectively, the “Draft Laws”). These Draft Laws would also introduce material changes to many other features of Guyana’s existing telecommunications regulatory regime. While little or no substantive actions were taken on the Draft Laws since 2012, the Company cannot predict when or if the proposed legislation will be adopted by Parliament or, if adopted and then signed into law by the President, the manner in which it would be implemented by the relevant Minister and the PUC. 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.

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Historically, GT&T 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 not likely, 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 agreed to with the Government. GT&T 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. Using a recommended methodology for the calculation of spectrum fees as jointly proposed by GT&T and Digicel to the NFMU by letter in November 2011, GT&T, over the past four years, calculated and paid the NFMU spectrum fees representing payments in full for 2008-2014. While the NFMU rejected this proposed methodology in 2011, to date, it has not yet provided its own recommendation for such calculation to GT&T. There have been no further discussions on this subject and GT&T has not had the opportunity to review any recommendation made 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. On November 7, 2009 and again on April 4, 2013, CTL filed a similar claim against GT&T and the PUC in the High Court of Guyana. The Company believes these claims are without merit and are duplicative of a previous claim filed by CTL in Guyana that was dismissed. There has been no action on these matters since the April 2013 filing.

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

On February 17, 2010, GT&T filed a lawsuit in the High Court of Guyana asserting that, despite its denials, Digicel is engaged in international bypass in violation of GT&T’s exclusive license rights, the interconnection agreement between the parties, and the laws of Guyana. GT&T is seeking, among other things, injunctive relief to stop the illegal bypass activity, actual damages in excess of US$9 million and punitive damages of approximately US$5 million. Digicel filed counterclaims alleging that GT&T has violated the terms of the interconnection agreement and Guyana laws. GT&T intends to vigorously prosecute this suit.

On July 20, 2012 a trial court in Guyana made findings calling into question the validity of GT&T's exclusive license to provide international voice and data service in Guyana and the applicability of that license to telecommunications services using Voice over Internet Protocol ("VoIP"). The findings were made in a breach of contract case brought originally in 2007 against GT&T by a subscriber to its Internet service. The Court of Appeals in Guyana reversed the decision of the trial court and both Plaintiff and GT&T appealed the case to the Caribbean Court of Justice (“CCJ”). In July 2015, the CCJ upheld the trial judge’s finding that no GT&T contract term prohibited the personal use of VoIP by the GT&T customer. The CCJ declined to express any view on the validity or Constitutionality of GT&T’s exclusive license and dismissed that aspect of the appeal.

GT&T 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. Should GT&T be held liable for any of the disputed tax assessments, totaling $33.2 million, the Company believes that the Government of Guyana would then be obligated to reimburse GT&T for any amounts necessary to ensure that GT&T’s return on investment was no less than 15% per annum for the relevant periods.

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In Bermuda, the Regulatory Authority continued its implementation of the Electronic Communications Act of 2011, which allows communications service providers to enter new lines of business and encourages further competition in the sector. As the government of Bermuda reforms the local telecommunications market, it has imposed regulatory and other fees and adopted additional regulation that have increased the regulatory costs incurred by and could otherwise impact the Company’s Bermuda operations. For instance, in December 2014, the Bermuda Regulatory Authority adopted a decision imposing a limitation on amounts of spectrum that may be held by a single carrier and requiring the Company to surrender a portion of existing spectrum held in Bermuda that the Company had reserved for the launch of next generation services in accordance with the Company’s plans and demands of its customers. The Company initiated legal proceedings challenging the implementation of such decision, however, was not successful in staying the decision and in March 2015 surrendered the spectrum in question to the Bermuda Regulatory Authority. The Company has withdrawn its appeal of the decision without prejudice and cannot now accurately predict the impact to the competitive position of the Company’s Bermuda business or limitations that such actions will have on the Company’s ability to grow.

The term of the Company’s telecommunications license to operate in Aruba expired on January 15, 2014. The government of Aruba informed the Company earlier in January 2014 that a renewed license would be issued only upon payment by the Company of a fee in the amount of Afl 7.2 million (or approximately US$4 million). The Company is continuing to operate as it is actively contesting the assessment of such fee.

13. SUBSEQUENT EVENTS

See Note 4 for discussions of the Company’s pending acquisitions of KeyTech Limited and Caribbean Asset Holdings, LLC.

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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, 2014, 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, through our operating subsidiaries, (i) provides wireless and wireline telecommunications services in North America, Bermuda and the Caribbean, (ii) owns and operates commercial distributed generation solar power systems in the United States, and (iii) owns and operates terrestrial and submarine fiber optic transport systems in the United States and the Caribbean, respectively. We were incorporated in Delaware in 1987 and began trading publicly in 1991. Since that time, we have engaged in strategic acquisitions and investments to grow our operations. We continue to actively evaluate additional domestic and international acquisition, divesture, and investment opportunities and other strategic transactions in the telecommunications, energy-related and other industries that meet our return-on-investment and other acquisition criteria. For a discussion of 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.” in our 2014 Annual Report on Form 10-K.

We offer the following principal services:

Wireless. In the United States, 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 offer wireless voice and data services to retail customers in Guyana, Bermuda, and in other smaller markets in the Caribbean and the United States.

Wireline. Our local telephone and data services include our operations in Guyana and the mainland United States. We are the exclusive licensed provider of domestic wireline local and long-distance telephone services in Guyana and international voice and data communications into and out of Guyana. We also offer facilities-based integrated voice and data communications services and wholesale transport services to enterprise and residential customers in New England, primarily in Vermont and New York State. In addition, we offer wholesale long-distance voice services to telecommunications carriers.

Renewable Energy. In the United States, we provide distributed generation solar power to corporate, utility and municipal customers in Massachusetts, California and New Jersey.

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The following chart summarizes the operating activities of our principal subsidiaries and the segments in which we report our revenue and the markets we served as of September 30, 2015:


Services	Segment	Markets	Tradenames
Wireless	U.S. Wireless	United States (rural markets)	Commnet, Choice
	Island Wireless	Aruba, Bermuda, Turks and Caicos (through March 23, 2015), U.S. Virgin Islands	Mio, CellOne, Islandcom (through March 23, 2015), Choice
	International Integrated Telephony	Guyana	Cellink
Wireline	International Integrated Telephony	Guyana	GT&T
	U.S. Wireline	United States (New England and New York State)	Sovernet, ION, Essextel
Renewable Energy	Renewable Energy	United States (Massachusetts, California, and New Jersey)	Ahana Renewables

We provide management, technical, financial, regulatory, and marketing services to our subsidiaries and typically receive a management fee equal to a percentage of their respective revenue. Management fees from our subsidiaries are eliminated in consolidation.

The pending acquisitions, as described in Note 4, will be included within the International Telecom segment upon the completion of those acquisitions.

Acquisitions

Pending Acquisitions

For the purpose of clarity and consistency, and except where expressly indicated, each of the forward-looking statements made regarding our operations in this Item 2 assumes that the acquisitions have not yet been consummated.

KeyTech Limited

On October 6, 2015, we entered into an agreement with KeyTech Limited (“KeyTech”), a publicly held Bermuda listed on the Bermuda Stock Exchange (“BSX”) company that provides voice, broadband, and cable television services under the “Logic” name in Bermuda and the Cayman Islands, in which we will acquire a controlling interest in KeyTech as part of a proposed business combination of KeyTech with our subsidiary providing wireless services under the “CellOne” name in Bermuda (the “KeyTech Transaction”). As part of the KeyTech Transaction, we will contribute our current ownership interest of approximately 43% in CellOne and approximately $42 million in cash in exchange for a 51% ownership interest in KeyTech. Together with KeyTech, we currently own approximately 85% of CellOne. CellOne will then be merged with and into a company within the KeyTech group and the approximate 15% interest in CellOne held, in the aggregate, by CellOne’s minority shareholders will be converted into the right to receive common shares in KeyTech. Following the transaction, CellOne will be indirectly wholly owned by KeyTech and KeyTech will continue to be listed on the BSX. A portion of the cash proceeds that KeyTech will receive upon closing will be used to fund a one-time special dividend to KeyTech's existing shareholders and to retire KeyTech's subordinated debt. We currently consolidate the operations of CellOne and, upon closing of the KeyTech Transaction, will consolidate the results of KeyTech, in our financial statements.

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The KeyTech Transaction is subject to customary closing terms and conditions, including, among others, the receipt of approval from the Bermuda Regulatory Authority, the Federal Communications Commission, and the Information and Communications Technology Authority of the Cayman Islands and the consent of the Bermuda Stock Exchange to certain transaction matters. KeyTech shareholders approved the proposed transaction by affirmative vote on October 20, 2015. We currently expect to complete the KeyTech Transaction in the first quarter of 2016.

Caribbean Asset Holdings LLC

On October 1, 2015, we announced that we have entered into an agreement to acquire all of the membership interests of Caribbean Asset Holdings LLC, the holding company for the Innovative group of companies operating cable TV, Internet and landline services primarily in the U.S. Virgin Islands (the "Innovative Purchase") from the National Rural Utilities Cooperative Finance Corporation ("CFC"). We will purchase the Innovative operations for a purchase price of approximately $145 million, subject to certain purchase price adjustments, with $85 million payable in cash and the option to finance the remaining $60 million of the purchase price with a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative. With the purchase, our current operations in the U.S. Virgin Islands under the "Choice" name will be combined with Innovative to deliver residential and business subscribers a full range of telecommunications and media services. Subject to customary closing terms and conditions, we currently expect to complete the transaction in mid-2016.

The Innovative Purchase is subject to customary closing terms and conditions, the expiration of the Hart-Scott Rodino waiting period and the receipt of approvals from the Federal Communications Commission and regulatory authorities in the U.S. and British Virgin Islands and St. Maarten.

Completed Acquisition

On December 24, 2014, we acquired substantially all of the assets of Green Lake Capital, LLC and certain of its affiliates (collectively, "Green Lake"), an owner and operator of commercial distributed generation solar power systems in Massachusetts, California and New Jersey (the "Ahana Acquisition"). We acquired these assets as part of a total transaction valued at approximately $117.7 million which is comprised of approximately $66.3 million of cash consideration, a $12.5 million reimbursement of cash and restricted cash held by Green Lake on the date of the acquisition, and the assumption of $38.9 million of debt. The acquisition was performed through our newly formed subsidiary, Ahana Renewables, LLC ("Ahana Renewables"). Certain subsidiaries of Ahana Renewables have been partially capitalized by a third-party tax equity investor who maintains a non-controlling interest in these subsidiaries. The tax equity investor’s interest in these subsidiaries changes at a certain date (the "Flip Date"), which is the later of a) the five-year anniversary of the placed in service date for the solar assets owned by the subsidiary or, b) the date that the tax equity investor receives a certain return on their original investment in that subsidiary. These dates typically occur at approximately 2 - 4 years from the acquisition date. The profits and losses of these subsidiaries will be allocated to the tax equity investors and to the Company using the Hypothetical Liquidation Book Value method. The Hypothetical Liquidation Book Value Method is used to calculate the non-controlling interests' share of income for each period by measuring the difference in funds that would flow to the non-controlling interests in a hypothetical liquidation event at the beginning of the period compared to the end of a period (adjusted for capital distributions). The method assumes that the proceeds on liquidation approximate book value and then the proceeds are allocated to ATN and non-controlling interests based on the liquidation provisions of the solar facility operating agreement. A positive difference during the period represents non-controlling interests' share of income and a decrease represents a loss. Ahana Renewables has the option to buy-out the non-controlling interests.

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Disposal of Turks and Caicos Operations

During March 2015, we completed the sale of certain assets and liabilities operated in Turks and Caicos and recorded a loss on the disposition and related deconsolidation of this subsidiary of approximately $19.9 million.

Stimulus Grants

We were awarded several federal stimulus grants in 2009 and 2010 by the U.S. Government under provisions of the American Recovery and Reinvestment Act of 2009 intended to stimulate the deployment of broadband infrastructure and services to rural, unserved and underserved areas. As of September 30, 2015, we have spent (i) $35.8 million in capital expenditures (of which $27.5 million has been funded by the federal stimulus grant) in connection with our build of ten new segments of fiber-optic, middle-mile broadband infrastructure in upstate New York and parts of Pennsylvania and Vermont; (ii) $7.6 million in capital expenditures (of which $5.3 million has been funded by the federal stimulus grant) in connection with our last-mile broadband infrastructure buildout in the Navajo Nation across Arizona, New Mexico and Utah; and (iii) $47.9 million in capital expenditures (of which $33.0 million has been funded by the federal stimulus grant) in connection with our fiber-optic middle mile network buildout to provide broadband and transport services to over 340 community anchor institutions in Vermont. The results of our New York and Vermont stimulus projects are included in our “U.S. Wireline” segment and the results of our Navajo stimulus project are included in our “U.S. Wireless” segment. The New York and Navajo stimulus projects were completed during 2013. The Vermont stimulus project was completed during the fourth quarter of 2014.

Mobility Fund Grants

As part of the Federal Communications Commission’s (“FCC”) reform of its Universal Service Fund (“USF”) program, which previously provided support to carriers seeking to offer telecommunications services in high-cost areas and to low-income households, the FCC created two new funds, including the Mobility Fund, a one-time award meant to support wireless coverage in underserved geographic areas in the United States. In August 2013, the Company received FCC final approval for $21.7 million of Mobility Fund support to its wholesale wireless business (the “Mobility Funds”), to expand voice and broadband networks in certain geographic areas in order to offer either 3G or 4G coverage. As part of the receipt of the Mobility Funds, the Company committed to comply with certain additional FCC construction and other requirements. A portion of these funds will be used to offset network capital costs and a portion is used to offset the costs of supporting the networks for a period of five years. In connection with the Company’s application for the Mobility Funds, the Company has issued approximately $10.6 million in letters of credit to the Universal Service Administrative Company (“USAC”) to secure these obligations. If the Company fails to comply with any of the terms and conditions upon which the Mobility Funds were granted, or if it loses eligibility for the Mobility Funds, USAC will be entitled to draw the entire amount of the letter of credit applicable to the affected project plus penalties and may disqualify the Company from the receipt of additional Mobility Fund support.

The Company began the construction of its Mobility Funds projects during the third quarter of 2013 and their results are included in the Company’s “U.S. Wireless” segment. As of September 30, 2015, the Company has received approximately $8.1 million in Mobility Funds. Of these funds, $3.1 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 and $1.2 million is recorded within other current liabilities while the remaining $3.8 million is recorded within other long-term liabilities in the Company’s consolidated balance sheet as of September 30, 2015. The balance sheet presentation is based on the timing of the expected usage of the funds which will reduce future operations expenses.

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Results of Operations

Three Months Ended September 30, 2014 and 2015



	Three Months Ended				Amount of		Percent
	September 30,				Increase		Increase
	2014		2015		(Decrease)		(Decrease)
REVENUE:
U.S. wireless	$	44,306	$	47,047	$	2,741	6.2	%
International wireless		21,557		20,392		(1,165)	(5.4)
Wireline		21,531		21,815		284	1.3
Renewable Energy		—		5,052		5,052	100.0
Equipment and other		1,999		2,476		477	23.9
Total revenue		89,393		96,782		7,389	8.3
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		19,321		21,343		2,022	10.5
Engineering and operations		7,525		10,631		3,106	41.3
Sales, marketing and customer services		5,827		5,797		(30)	(0.5)
Equipment expense		2,924		3,431		507	17.3
General and administrative		12,823		15,930		3,107	24.2
Transaction-related charges		(27)		2,536		2,563	(9,492.6)
Depreciation and amortization		12,842		14,590		1,748	13.6
Gain on disposition of long-lived assets		—		—		—	(100.0)
Total operating expenses		61,235		74,258		13,023	21.3
Income from operations		28,158		22,524		(5,634)	(20.0)
OTHER INCOME (EXPENSE):
Interest expense, net		(13)		(795)		(782)	6,015.4
Loss on deconsolidation of subsidiary		—		—		—	—
Other income, net		338		53		(285)	(84.3)
Other income (expense), net		325		(742)		(1,067)	(328.1)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		28,483		21,782		(6,701)	(23.5)
Income tax expense		9,569		10,134		565	5.9
NET INCOME		18,914		11,648		(7,266)	(38.4)
Net income attributable to non-controlling interests, net of tax:		(2,747)		(5,072)		(2,325)	84.6
NET INCOME ATTRIBUTABLE TO ATLANTIC TELE-NETWORK, INC. STOCKHOLDERS	$	16,167	$	6,576	$	(9,591)	(59.3)	%

U.S. wireless revenue. The substantial majority of U.S. wireless revenue consists of wholesale revenue. For each of the three months ended September 30, 2014 and 2015, wholesale revenue represented 95% and 91% of total U.S. wireless revenue, respectively. In addition, U.S. wireless revenue also includes retail revenues generated by our operations in certain smaller rural markets already covered by our wholesale network in the western United States. Wholesale revenue is generated from providing mobile voice or 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.

The most significant competitive factor we face in our 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, we have entered into buildout projects with existing carrier customers to help the customer accelerate the buildout of a given area. Pursuant to these

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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 license us spectrum in that area and enter into a contract with specific pricing and terms. These arrangements typically include a right in favor of the carrier to purchase that portion of the network and receive back the spectrum for a predetermined price, depending on when such option to purchase is exercised. For example, as previously disclosed, in December 2012, we sold a portion of our network to a carrier customer pursuant to an option to purchase contained in our roaming and buildout agreement with that carrier. We currently have one buildout arrangement of approximately 100 newly built cell sites, which provides the carrier with an option to purchase such sites exercisable beginning no earlier than 2018. At this time, we cannot predict the level of roaming traffic that will develop on this newly built network or whether the call option will be exercised.

Our U.S. wireless revenue increased from $44.3 million for the three months ended September 30, 2014 to $47.0 million for the three months ended September 30, 2015, an increase of $2.7 million or 6%. The increase was mainly driven by revenue growth in our rural U.S. retail business. U.S. wholesale revenues increased slightly from the prior year as a result of expanded network traffic volume, driven by the increased demand for our data services supported by our network capacity and technology upgrades and the increase to 799 base stations as of September 30, 2015, offset by lower wholesale rates.

While we will continue to expand our coverage with additional and upgraded base stations in the fourth quarter 2015 and into 2016, it will be at a slower rate than in previous periods. We expect that data volumes will continue to increase during the fourth quarter of 2015 and into 2016, however, we expect to experience a significant decline in revenues in the fourth quarter of 2015 due to the greater impact of contract calendar year volume tier pricing. We expect revenues to increase in the first quarter 2016 compared with the fourth quarter of 2015 after the reset of annual volume based pricing tiers. We believe that our new model which lowered contract rates in exchange for an extended term has much lower risk and creates a long-lived infrastructure solution for our roaming partner that increases the ultimate value of our wholesale business. Our U.S. wireless revenues may also be positively impacted by our expanded network capabilities, reach and capacity, but continued declines in overall voice traffic on our networks or decisions by our roaming partners to no longer roam on our networks or to expand their networks in areas where we operate may partially or entirely offset such increases.

International wireless revenue. International wireless revenue includes retail and wholesale voice and data wireless revenue from our operations in Bermuda and the Caribbean, including the U.S. Virgin Islands.

International wireless revenue decreased by $1.2 million, or 6%, from $21.6 million for the three months ended September 30, 2014 to $20.4 million for the three months ended September 30, 2015. This decrease was primarily the result of the sale of our operations in Turks and Caicos in March 2015 and a decrease in roaming revenue in our other Island Wireless businesses due to anticipated rate declines.

In total, our international wireless subscribers decreased from approximately 320,000 to 315,000 as of September 30, 2014 and 2015, respectively. A substantial majority of the net decrease was the result of the sale of our operations in Turks and Caicos within our Island Wireless segment offset by additions in our Integrated International Telephony segment.

We expect international wireless revenues from our retail operations to grow in future periods as a result of subscriber growth. However, we anticipate that wholesale roaming revenues in Bermuda and the Caribbean will continue to decline in future periods due to anticipated rate declines. Wholesale roaming revenues in these markets are also subject to seasonality and can fluctuate between quarters.

Additionally, international wireless revenue from our wireless voice and data services in Bermuda may be negatively impacted, principally through the loss of market share, if the Bermuda Regulatory Authority decides to reassign our competitors the spectrum we surrendered to it in March 2015 that we had reserved for the launch of next generation wireless and data services. We currently cannot predict the impact that the recapturing of our spectrum will have on our operations or if the Bermuda Regulatory Authority will choose to reassign such spectrum to our competitors.

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Wireline revenue. Wireline revenue is generated by our wireline operations in Guyana, including international telephone calls into and out of that country, our integrated voice and data operations in New England, our wholesale transport operations in New York State and our wholesale long-distance voice services to telecommunications carriers. This revenue includes basic service fees, measured service revenue, and internet access fees, as well as installation charges for new lines, monthly line rental charges, long-distance or toll charges, and maintenance and equipment sales.

Wireline revenue increased by $0.3 million, or 1%, from $21.5 million for the three months ended September 30, 2014 to $21.8 million for the three months ended September 30, 2015. This increase was primarily due to a $0.3 million increase in data services within our International Integrated Telephony segment.

We anticipate that wireline revenue from our international long-distance business in Guyana will continue to be negatively impacted, principally through the loss of market share, should we cease to be the exclusive provider of domestic fixed and international long-distance service in Guyana, whether by reason of the Government of Guyana enacting legislation to such effect or a modification, revocation or lack of enforcement of our exclusive rights. While the loss of our exclusive rights will likely cause an immediate reduction in our wireline revenue, over the longer term such declines may be offset by increased revenue from data services to consumers and enterprises in Guyana, an increase in regulated local calling rates in Guyana, and increased wholesale transport services and large enterprise and agency sales in the United States.

We currently cannot predict when or if the Government of Guyana will enact such legislation or take, or fail to take, any action that would otherwise affect our exclusive rights in Guyana. See “Business—Guyana Regulation” in the Company’s 2014 Annual Report on Form 10-K.

Renewable Energy revenue. Renewable energy revenue represents revenue from the sale of electricity through long-term (10 to 25 years) power purchase agreements (“PPAs”) as well as the sale of solar renewable energy credits (“SRECs”).

Renewable energy revenue was $5.1 million for the three months ended September 30, 2015 and is attributable to Ahana Renewables, LLC which we acquired in December 2014.

Our PPAs, which are typically priced at or below local retail electricity rates, allow our customers to secure electricity at predictable and stable prices over the duration of their long-term contract. As such, our PPAs provide us with high-quality contracted cash flows, which will continue over their average remaining life. For these reasons, we expect that Renewable Energy revenue from our current portfolio of commercial solar projects will remain fairly consistent in future periods.

Equipment and other revenue. Equipment and other revenue represent revenue from wireless equipment sales, primarily handsets, to retail telecommunications and other miscellaneous revenue items.

Equipment and other revenue increased by $0.5 million, or 25% from $2.0 million for the three months ended September 30, 2014 to $2.5 million for the three months ended September 30, 2015. Equipment and other revenue increased in our U.S. Wireless segment’s retail operations and in our International Integrated Telephony segment by $0.2 million and $0.3 million, respectively, as a result of increased demand for handsets.

We believe that equipment and other revenue could continue to increase as a result of gross subscriber additions, more aggressive subsidies driving demand for devices and the continued growth in smartphone penetration.

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, other access fees we pay to terminate our calls, customer bad debt expense, telecommunication spectrum fees and direct costs associated with our Renewable Energy segment.

Termination and access fees increased by $2.0 million, or 10%, from $19.3 million for the three months ended September 30, 2014 to $21.3 million for the three months ended September 30, 2015. Our U.S. Wireless segment

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reported an increase of $1.8 million in these costs as the result of increased data traffic volumes and the expansion and upgrade of our networks. Termination and access fees also increased in our International Integrated Telephony segment by $0.4 million and as a result of our Renewable Energy business, acquired in December 2014, which recorded $0.3 million of these costs. These increases were partially offset by a decrease of $0.6 million in our Island Wireless segment primarily as the result of the sale of our operations in Turks and Caicos in March 2015.

Termination and access fees are expected to continue to increase in future periods with expected growth in data traffic volumes on our networks, but remain fairly proportionate to their related revenue as our networks expand.

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.

Engineering and operations expenses increased by $3.1 million, or 41%, from $7.5 million to $10.6 million for the three months ended September 30, 2014 and 2015, respectively. The increase was primarily the result of an increase within our U.S. Wireless segment of $1.7 million to support its expanding and upgraded network and as a result of the conclusion of a transition services agreement entered into to provide supporter services following the sale of our Alltel business which was accounted for as an offset to the expenses in previous periods. Our International Integrated Telephony segment reported an increase in engineering and operations expenses of $1.6 million for network and billing system support, maintenance, and consulting. These increases were offset partially by decreases of $0.1 million in our other operating segments as a result of operating efficiencies and the sale of our operations in Turks and Caicos in March 2015.

Engineering and operations expenses are expected to increase as a result of the costs required to support the increased capacity and geographic expansion of our telecommunications network as well as to support our Renewable Energy segment.

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 remained consistent at $5.8 million for the three months ended September 30, 2014 and 2015. Sales and marketing expenses increased by $0.7 million in our International Integrated Telephony segment as a result of increased promotions and product re-branding expenses. Such increase was partially offset by a reduction in sales and marketing expenses in our Island Wireless segment of $0.6 million primarily as a result of the sale of our operations in Turks and Caicos in March 2015.

We expect that sales, marketing and customer service expenses will remain fairly consistent as a percentage of revenues in future periods.

Equipment expenses. Equipment expenses include the costs of our handset and customer resale equipment in our retail wireless businesses.

Equipment expenses increased by $0.5 million, or 17%, from $2.9 million for the three months ended September 30, 2014 to $3.4 million for the three months ended September 30, 2015. The increase in equipment expenses was primarily the result of increased equipment sales in our U.S. Wireless segment’s retail operations as well as our International Integrated Telephony segment which incurred increases in equipment expenses of $0.4 million and $0.6 million, respectively. These increases were partially offset by reduced expenses in our Island Wireless segment of $0.5 million which previously included our operations in Turks and Caicos which was sold in March 2015.

We believe that equipment expenses could continue to increase as a result of the increase in demand for smartphones by our subscribers.

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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 by $3.1 million, or 24% from $12.8 million for the three months ended September 30, 2014 to $15.9 million for the three months ended September 30, 2015. The increase is primarily the result of an increase of $1.1 million relating to one-time legal and consulting costs in our International Integrated Telephony segment. Our U.S. Wireless segment also reported an increase in general and administrative expenses of $0.8 million as a result of the conclusion of a transition services agreement entered into to provide supporter services following the sale of our Alltel business which was accounted for as an offset to the expenses in previous periods. In addition, our Renewable Energy business, acquired in December 2014, incurred $0.8 million of general and administrative expenses. The remaining increase of $0.2 million was incurred in our other operating segments and within our corporate overhead.

We expect that these general and administrative expenses will remain fairly consistent as a percentage of revenues in future periods.

Transaction-related charges. Transaction-related charges include the external costs, such as legal, tax and 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.

The $2.5 million of transaction-related charges during the three months ended September 30, 2015 primarily related to our pending KeyTech Transaction and Innovative Purchase.

We expect that acquisition and disposition related expenses will continue to be incurred from time to time as we continue to explore additional acquisition or disposition opportunities.

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 increased by $1.8 million, or 14% from $12.8 million for the three months ended September 30, 2014 to $14.6 million for the three months ended September 30, 2015 respectively. The increase is primarily the result of our Renewable Energy business which was acquired in December 2014 and reported $1.2 million of depreciation and amortization expense during the three months ended September 30, 2015. Our U.S. Wireless segment incurred an increase in depreciation and amortization expenses of $0.9 million as a result of network expansions and upgrades and our corporate overhead incurred an increase of $0.3 million to support our expanding operations. These increases were partially offset by a decrease of $0.7 million in our Island Wireless segment primarily as a result of the sale of our operations in Turks in Caicos in March 2015.

We expect depreciation expense to increase due to the assets acquired as part of our Renewable Energy segment business and as we acquire more tangible assets to expand or upgrade our telecommunications networks.

Interest income (expense), net. Interest income (expense), net represents interest and commitment fees incurred on our outstanding credit facilities and interest incurred on the term loans we assumed in our Ahana acquisition, net of interest income.

Interest income (expense), net increased $0.8 million from a nominal amount of expense for the three months ended September 30, 2014 to $0.8 million of expense for the three months ended September 30, 2015. This increase was primarily the result of the interest we incurred on the term loans we assumed in our December 2014 Ahana Acquisition.

Other income (expense), net. Other income (expense), net represents miscellaneous non-operational income we earned or expenses we incurred. Other income (expense), net was nominal for the three months ended September 30, 2014 and 2015.

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Income taxes. Our effective tax rates for the three months ended September 30, 2014 and 2015 were 33.6 % and 46.5%, respectively. 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 effective tax rate increased in 2015 primarily due to the loss on the deconsolidation of our Turks and Caicos business. This loss generated in a non-tax foreign jurisdiction for which we receive no tax benefit. Our consolidated tax rate will continue to be impacted by the mix of income generated among the jurisdictions in which we operate.

Net income attributable to non-controlling interests. Net income attributable to non-controlling interests reflected an allocation of $2.7 million and $5.1 million of income generated by our less than wholly-owned subsidiaries for the three months ended September 30, 2014 and 2015, respectively. Of this $2.4 million increase, $1.3 million was the result of increased net income at our less than wholly-owned retail operations in our U.S. Wireless segment, $0.4 million was the result of our renewable energy operations which were acquired in December 2014 and $1.0 million was the result of our operations in Turks and Caicos which were sold in March 2015 and which operated at a loss. These increases were partially offset by decrease of $0.4 million in our other less than wholly owned operations.

Net income attributable to Atlantic Tele-Network, Inc. stockholders. Net income attributable to Atlantic Tele-Network, Inc. stockholders decreased from $16.2 million to $6.6 million for the three months ended September 30, 2014 and 2015, respectively.

On a per share basis, net income increased from $1.01 per diluted share to $0.41 per diluted share for the three months ended September 30, 2014 and 2015, respectively.

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Nine Months Ended September 30, 2014 and 2015


	Nine Months Ended				Amount of		Percent
	September 30,				Increase		Increase
	2014		2015		(Decrease)		(Decrease)

REVENUE:
U.S. wireless	$	110,153	$	122,993	$	12,840	11.7	%
International wireless		67,127		61,787		(5,340)	(8.0)
Wireline		64,344		64,497		153	0.2
Renewable Energy		—		15,631		15,631	100.0
Equipment and other		6,212		7,545		1,333	21.5
Total revenue	$	247,836	$	272,453	$	24,617	9.9	%
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		58,188		60,827		2,639	4.5
Engineering and operations		21,508		26,218		4,710	21.9
Sales and marketing		16,499		16,315		(184)	(1.1)
Equipment expense		8,938		10,093		1,155	12.9
General and administrative		38,596		44,743		6,147	15.9
Transaction-related charges		341		2,852		2,511	736.4
Depreciation and amortization		37,752		43,813		6,061	16.1
Gain on disposition of long lived asset		—		(2,823)		(2,823)	(100.0)
Total operating expenses	$	181,822	$	202,038	$	20,216	11.1	%
Income from operations	$	66,014	$	70,415	$	4,401	6.7	%
OTHER INCOME (EXPENSE):
Interest expense, net		(220)		(2,153)		(1,933)	878.6
Loss on deconsolidation of subsidiary		—		(19,937)		(19,937)	(100.0)
Other income (expense), net		302		114		(188)	(62.3)
Other income (expense), net	$	82	$	(21,976)	$	(22,058)	(26,900.0)	%
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		66,096		48,439		(17,657)	(26.7)
Income tax expense		22,460		22,655		195	0.9
INCOME FROM CONTINUING OPERATIONS		43,636		25,784		(17,852)	(40.9)
Income from discontinued operations, net of tax		—		390		390	100.0
NET INCOME		43,636		26,174		(17,462)	(40.0)
Net income attributable to non-controlling interests, net of tax:		(8,116)		(13,417)		(5,301)	65.3
NET INCOME ATTRIBUTABLE TO ATLANTIC TELE-NETWORK, INC. STOCKHOLDERS	$	35,520	$	12,757	$	(22,763)	(64.1)	%

U.S. wireless revenue. U.S. wireless revenue increased by $12.8 million, or 12%, from $110.2 million for the nine months ended September 30, 2014, to $123.0 million for the nine months ended September 30, 2015. The increase was primarily driven by growth in our rural U.S. retail wireless business and the result of U.S. wholesale growth due to expanded traffic volume driven by capacity and technology upgrades to our network and the increase in the number of base stations from 716 as of September 30, 2014 to 799 as of September 30, 2015. The increase in traffic volume was partially offset by a decrease in wholesale rates due to volume tier discounts.

International wireless revenue. International wireless revenue decreased by $5.3 million, or 8%, from $67.1 million for the nine months ended September 30, 2014 to $61.8 million for the nine months ended September 30, 2015. Our Island Wireless segment reported a decrease in international wireless revenue of $4.4 million primarily as the result of the sale of our operations in Turks and Caicos in March 2015 and a decrease in roaming revenue in our other Island Wireless businesses due to anticipated rate declines. Our International Integrated Telephony segment also reported a $1.0 million decrease in international wireless revenue as a result of a decrease in subscribers.

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Wireline revenue. Wireline revenue increased by $0.2 million from $64.3 million for the nine months ended September 30, 2014 to $64.5 million for the nine months ended September 30, 2015. This increase was primarily due to a $1.2 million increase in our International Integrated Telephony segment due to increased data revenues offset by a $0.9 decrease in our U.S. wireline segment due to decreases in our wholesale long-distance voice services operations.

Renewable energy. Renewable energy revenue was $15.6 million for the nine months ended September 30, 2015 and is attributable to Ahana Renewables, LLC which we acquired in December 2014.

Equipment and other revenue. Equipment and other revenue increased by $1.3 million, or 21% from $6.2 million for the nine months ended September 30, 2014, to $7.5 million for the nine months ended September 30, 2015. Equipment and other revenue increased in both our U.S. Wireless segment’s retail operations and in our International Integrated Telephony segment by $0.8 million and $0.7 million, respectively, as a result of increased demand for handsets. These increases, however, were offset by a $0.3 million decrease in our Island Wireless segment as a result of our sale of our operations in Turks and Caicos in March 2015 and a decrease in subscribers within our other Island Wireless locations purchasing handsets.

Termination and access fee expenses. Termination and access fees increased by $2.6 million, or 4%, from $58.2 million for the nine months ended September 30, 2014 to $60.8 million for the nine months ended September 30, 2015. Our U.S. Wireless segment reported an increase of $4.7 million in these costs as the result of increased data traffic volumes and the expansion and upgrade of our networks. Termination and access fees also increased as a result of our Renewable Energy business, acquired in December 2014, which recorded $0.9 million of these costs. These increases were partially offset by decreases of $1.0 million in our International Integrated Telephony segment as a result of non-recurring reductions in bandwidth costs, a $0.7 million reduction in our wholesale long-distance voice services operations within our U.S. Wireline segment and $1.2 million in our Island Wireless segment which included our operations in Turks and Caicos which was sold in March of 2015.

Engineering and operations expenses. Engineering and operations expenses increased by $4.7 million, or 22%, from $21.5 million to $26.2 million for the nine months ended September 30, 2014 and 2015, respectively. The increase was primarily the result of an increase within our U.S. Wireless segment of $3.3 million to support its expanding and upgraded network and as a result of the conclusion of a transition services agreement entered into to provide supporter services following the sale of our Alltel business which was accounted for as an offset to the expenses in previous periods. Our International Integrated Telephony segment reported an increase in engineering and operations expenses of $2.0 million for network and billing system support, maintenance, and consulting. These increases were offset partially by decreases in our other operating segments as a result of operating efficiencies.

Sales and marketing. Sales and marketing expenses increased by $0.2 million, or 1%, from $16.5 million for the nine months ended September 30, 2014 to $16.3 million for the nine months ended September 30, 2015. Sales and marketing expenses increased by $1.0 million in our International Integrated Telephony segment as a result of increased promotions and product re-branding expenses and by $0.3 million in our U.S. Wireless segment’s retail operations to support our increased revenues and subscriber base. Such increases were partially offset by a reduction in sales and marketing expenses in our Island Wireless segment of $1.7 million primarily as a result of the sale of our operations in Turks and Caicos in March 2015.

Equipment expenses. Equipment expenses increased by $1.2 million, or 13%, from $8.9 million for the nine months ended September 30, 2014 to $10.1 million for the nine months ended September 30, 2015 primarily as a result of increased equipment sales in our U.S. Wireless segment’s retail operations as well as in our International Integrated Telephony segment which incurred increases in equipment expenses of $1.2 million and $1.1 million, respectively. These increases were partially offset by reduced expense in our Island Wireless segment of $1.1 million which previously included our operations in Turks and Caicos which was sold in March 2015.

General and administrative expenses. General and administrative expenses increased by $6.1 million, or 16% from $38.6 million for the nine months ended September 30, 2014 to $44.7 million for the nine months ended September 30, 2015. The increase was primarily the result of our newly acquired Renewable Energy business which

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was acquired in December 2014 and incurred $3.0 million of general and administrative expenses during the nine months ended September 30, 2015. Our International Integrated Telephony segment reported an increase in general and administrative expenses of $1.5 million relating to one-time legal and consulting costs. Our U.S. Wireless segment reported an increase of $1.1 million as a result of the conclusion of a transition services agreement entered into to provide supporter services following the sale of our Alltel business which was accounted for as an offset to the expenses in previous periods. The remaining increase of $0.6 million was incurred within our other operating segments and within our corporate overhead.

Transaction-related charges. We incurred $0.3 million and $2.9 million of transaction-related charges for the nine months ended September 30, 2014 and 2015, respectively. The increase was primarily related to our pending KeyTech Transaction and Innovative Purchase.

Depreciation and amortization expenses. Depreciation and amortization expenses increased by $6.0 million from $37.8 million for the nine months ended September 30, 2014 to $43.8 million for the nine months September 30, 2015, respectively. The increase was primarily the result of $3.6 million of depreciation and amortization being recognized in our Renewable Energy business which was acquired in December 2014 and a $2.8 million increase in depreciation expense in our U.S. Wireless segment as a result of certain network expansions. Our corporate overhead incurred an increase of $0.7 million to support our expanding operations. These increases were partially offset by a decrease of $1.3 million in our Island Wireless segment primarily as a result of our sale of operations in Turks and Caicos in March 2015.

Gain on disposal of long lived asset. During the nine months ended September 30, 2015, we sold certain network assets and telecommunications licenses in our U.S. Wireless segment and recognized a gain on such disposition of $2.8 million.

Interest income (expense), net. Interest income (expense), net increased $2.0 million from $0.2 million of expense to $2.2 million of expense for the nine months ended September 30, 2014 and 2015, respectively. This increase was primarily the result of the interest we incur on Ahana debt.

Loss on deconsolidation of subsidiary. During March 2015, we completed the sale of certain assets and liabilities operated in Turks and Caicos and recorded a loss on the disposition and related deconsolidation of this subsidiary of approximately $19.9 million.

Income taxes. Our effective tax rates for the nine months ended September 30, 2014 and 2015 were 33.9% and 46.8%, respectively. Our effective tax rate increased in 2015 primarily due to the loss on the deconsolidation of our Turks and Caicos business. This loss was generated in a non-tax foreign jurisdiction for which we receive no tax benefit. Our consolidated tax rate will continue to be impacted by the mix of income generated among the jurisdictions in which we operate.

Net loss attributable to non-controlling interests. Net loss attributable to non-controlling interests reflected an allocation of $8.1 million and $13.4 million of income generated by our less than wholly-owned subsidiaries for the nine months ended September 30, 2014 and 2015, respectively. Of this $5.3 million increase, $3.0 million was the result of increased net income at our less than wholly-owned retail operations in our U.S. Wireless segment, $1.5 million was the result of our renewable energy operations which were acquired in December 2014 and $1.3 million was the result of our operations in Turks and Caicos which were sold in March 2015. These increases were partially offset by a decrease of $0.5 million in our other less than wholly owned operations.

Net income attributable to Atlantic Tele-Network, Inc. stockholders. Net income attributable to Atlantic Tele-Network, Inc. stockholders decreased from $35.5 million for the nine months ended September 30, 2014 to $12.8 million for the nine months ended September 30, 2015.

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On a per share basis, net income decreased from $2.22 per diluted share to $0.79 per diluted share for the nine months ended September 30, 2014 and 2015, respectively.

Regulatory and Tax Issues

We are involved in a number of regulatory and tax proceedings. A material and adverse outcome in one or more of these proceedings could have a material adverse impact on our financial condition and future operations. For discussion of ongoing proceedings, see Note 12 to the Unaudited Condensed Consolidated Financial Statements in this Report.

Liquidity and Capital Resources

Historically, we have met our operational liquidity needs through a combination of cash on hand and internally generated funds and have funded capital expenditures and acquisitions with a combination of internally generated funds, cash on hand and borrowings under our credit facilities. We believe our current cash, cash equivalents and availability under our current credit facility will be sufficient to meet our cash needs for the next twelve months for working capital and capital expenditures.

Uses of Cash

Capital Expenditures. A significant use of our cash has been for capital expenditures to expand and upgrade our networks.

For the nine months ended September 30, 2014 and 2015, we spent approximately $41.7 million and $46.0 million, respectively, on capital expenditures. The following notes our capital expenditures, by operating segment, for these periods (in thousands):


		Capital Expenditures
				International
		U.S.		Integrated		Island		U.S.		Renewable		Reconciling
Nine months ended September 30,		Wireless		Telephony		Wireless		Wireline		Energy		Items		Consolidated
2014	$	26,496	$	6,816	$	3,966	$	2,325	$	—	$	2,096	$	41,699
2015		21,617		9,720		6,077		6,015		26		2,576		46,031

We are continuing to invest in upgrading and expanding our telecommunications networks in many of our markets, along with upgrading our operating and business support systems. We currently anticipate that telecom capital expenditures for the year ended December 31, 2015 will be between $60 million and $70 million. Capital expenditures in our Renewable Energy segment are more difficult to project, however we continue to actively pursue investments in this segment.

We expect to fund our current capital expenditures primarily from our current cash balances and cash generated from operations.

Acquisitions and Investments. Historically, we have funded our acquisitions with a combination of cash on hand and borrowings under our credit facilities. As discussed above, we expected to fund our pending acquisition of KeyTech with $42 million of cash. In regard to the pending acquisition of Caribbean Asset Holding, LLC, we expect to fund $85 million payable in cash and the option to finance the remaining $60 million of the purchase price with a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative

We continue to explore opportunities to expand our business or acquire new businesses and licenses in the United States, the Caribbean and elsewhere. Such acquisitions, including acquisitions of renewable energy assets, may require external financing. While there can be no assurance as to whether, when or on what terms we will be able to

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acquire any such businesses or licenses or make such investments, such acquisitions may be accomplished through the issuance of shares of our capital stock, payment of cash or incurrence of additional debt. From time to time, we may raise capital ahead of any definitive use of proceeds to allow us to move more quickly and opportunistically if an attractive investment materializes.

As of September 30, 2015, we had approximately $403.6 million in cash, cash equivalents and restricted cash, of which $102.5 million was held outside the United States in our foreign subsidiaries and $34.4 million of debt. How and when we deploy our balance sheet capacity will figure prominently in our longer-term growth prospects and stockholder returns.

Income taxes. We have historically used cash-on-hand to make payments for income taxes. The Company does not provide for United States income tax on earnings for foreign subsidiaries as such earnings are considered to be indefinitely reinvested.

Dividends. We use cash-on-hand to make dividend payments to our common stockholders when declared by our Board of Directors. For the nine months ended September 30, 2015, our Board declared dividends to our stockholders, which includes a $0.32 per share dividend declared on September 10, 2015, and paid on October 9, 2015, of $14.4 million. We have declared quarterly dividends for the last 68 fiscal quarters.

Stock repurchase plan. Our Board of Directors approved a $5.0 million stock buyback plan in September 2004 pursuant to which we have spent approximately $2.1 million through September 30, 2015. Our last repurchase of our Common Stock under this plan was in 2007. We may repurchase shares at any time depending on market conditions, our available cash and our cash needs.

Sources of Cash

Total liquidity. As of September 30, 2015, we had approximately $403.6 million in cash, cash equivalents and restricted cash, an increase of $32.2 million from the December 31, 2014 balance of $371.4 million. The increase is attributable to cash provided by our operating activities of $113.1 million and cash proceeds from our sale of certain assets and liabilities operated in Turks and Caicos partially offset by our capital expenditures of $46.0 million, cash used to complete the Ahana Acquisition of $12.0 million and cash used in our financing activities of $28.8 million.

Cash provided by operations. Cash provided by operating activities was $113.1 million for the nine months ended September 30, 2015 as compared to cash provided by operating activities of $51.0 million for the nine months ended September 30, 2014. The increase in cash flow from operations of $62.1 million was primarily the result of an increase in the change in accounts receivable of $11.6 million, an increased change in accrued taxes of $46.1 million (which was driven by tax payments made in 2014 in connection with or sale of the Alltel business in September 2013) and an increase in cash provided by discontinued operations of $5.2 million arising from refunds of overpayments and limited payables actively. Cash flow from operations was also impacted by a decrease in net income of $17.5 million and the $19.9 million loss on the deconsolidation of our operations in Turks and Caicos recorded in the nine months ended September 30, 2015.

Cash used in investing activities. Cash used in investing activities was $12.8 million for the nine months ended September 30, 2015. Cash used in investing activities was $1.6 million for the nine months ended September 30, 2014. The increase in cash used in investing activities of $11.1 million was primarily the result of an increase in capital expenditures of $4.3 million and the usage of $12.0 million related to the Ahana acquisition. These increases were partially offset by an increase in the proceeds received from the disposition of certain assets of $4.5 million.

Cash used in financing activities. Cash used in financing activities increased by $7.2 million, from $21.6 million for the nine months ended September 30, 2014 to $28.8 million for the nine months ended September 30, 2015. This increase was predominately the result of increased distributions to minority holders of $3.4 million, and repayments of $4.5 million of Ahana debt.

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Credit facilities. On December 19, 2014, we amended and restated our credit facility to provide for a $225.0 million revolving credit facility (the “Amended Credit Facility”) that includes (i) up to $10.0 million under the Amended Credit Facility for standby or trade letters of credit, (ii) up to $25.0 million under the Amended 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.

Amounts we may borrow under the Amended Credit Facility bear interest at a rate equal to, at our option, either (i) the London Interbank Offered Rate (LIBOR) plus an applicable margin ranging between 1.50% to 1.75% or (ii) a base rate plus an applicable margin ranging from 0.50% to 0.75%. 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 and (y) the one-month LIBOR; (ii) the federal funds effective rate (as defined in the Credit Agreement) plus 0.50% per annum; and (iii) the prime rate (as defined in the Credit Agreement). The applicable margin is determined based on the ratio (as further defined in the Amended Credit Agreement) of the Company’s indebtedness to EBITDA. Under the terms of the Amended Credit Agreement, we must also pay a fee ranging from 0.175% to 0.250% of the average daily unused portion of the Amended Credit Facility over each calendar quarter.

The Amended 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 by us limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. As of September 30, 2015, we were in compliance with all of the financial covenants of the Amended Credit Facility.

As of September 30, 2015, we had no borrowings under the Amended Credit Facility and approximately $10.6 million of outstanding letters of credit.

Acquisition of Green Lake Capital, LLC

In connection with the Ahana Acquisition on December 24, 2014, we assumed $38.9 million in long-term debt (the “Ahana Debt”). The Ahana Debt includes multiple loan agreements with banks that bear interest at rates between 4.5% and 6.0%, mature at various times between 2018 and 2023 and are secured by certain solar facilities. Repayment of the Ahana Debt with the banks is made on a monthly basis until maturity.

The Ahana Debt includes a loan from Public Service Electric & Gas (PSE&G) of $2.8 million. The note payable to PSE&G bears interest at 11.3%, matures in 2027, and is secured by certain solar facilities. Repayment of the Ahana Debt with PSE&G can be made in either cash or solar renewable energy credits (“SRECs”), at the Company’s discretion. The value of the SRECs was fixed at the time of the loan’s closing.

Factors Affecting Sources of Liquidity

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

Restrictions under Amended Credit Facility. Our Amended Credit Facility contains customary representations, warranties and covenants, including covenants limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. In addition, the Amended Credit Facility contains a financial covenant that imposes a maximum ratio of indebtedness to EBITDA. As of September 30, 2015, we were in compliance with all of the financial covenants of the Amended Credit Facility.

Capital markets. Our ability to raise funds in the capital markets depends on, among other things, general economic conditions, the conditions of the telecommunications and renewable energy industries, our financial performance, the state of the capital markets and our compliance with Securities and Exchange Commission (“SEC”)

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requirements for the offering of securities. On June 6, 2014, the SEC declared effective our “universal” shelf registration statement. This filing registered potential future offering of our securities.

Pending Acquisitions. As discussed above, we expected to fund our pending acquisition of KeyTech with $42 million of cash. In regard to the pending acquisition of Caribbean Asset Holding, LLC, we expect to fund $85 million payable in cash and the option to finance the remaining $60 million of the purchase price with a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative

Recent Accounting Pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Sensitivity. The only foreign currency for which we have a material exposure is the Guyanese dollar, because a significant portion of our Guyana revenues and expenditures are transacted in Guyanese

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dollars. The Guyanese exchange rate remained relatively constant at approximately 205 Guyana dollars to 1 U.S. dollar from 2004 through May 2013. Beginning in May 2013, the exchange rate began to increase and ended at a rate of approximately 210 Guyana dollars to 1 U.S. dollar as of September 30, 2015. The results of future operations may be affected by changes in the value of the Guyana dollar.

Interest Rate Sensitivity. As of September 30, 2015, we did not have any outstanding variable rate debt and as a result, we believe that we do not have an exposure to fluctuations in interest rates. We may have an exposure to fluctuations in interest rates if we again borrow amounts under our revolver loan within our Credit Facility.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2015. Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2015, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note 12 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Item 1A. Risk Factors

Risks Relating to Our Pending Acquisitions

On October 1, 2015, we announced that we have entered into an agreement (the “Innovative Purchase”) to acquire all of the membership interests of Caribbean Asset Holdings LLC, the holding company for the Innovative group of companies operating cable TV, Internet and landline services primarily in the U.S. Virgin Islands from the National Rural Utilities Cooperative Finance Corporation ("CFC"). The agreement is subject to customary closing terms and conditions, the expiration of the Hart-Scott Rodino waiting period and the receipt of approvals from the Federal Communications Commission (the “FCC”) and regulatory authorities in the U.S. and British Virgin Islands and St. Maarten. Although we have received no indication that these regulatory authorities do not plan to grant the required approvals, there can be no guarantee that we will receive such approvals. In addition, the FCC may impose conditions on any approval, such as requiring the divestiture of certain markets and spectrum licenses. These conditions, if imposed and if sufficiently significant, may permit CFC not to consummate the transaction or may have other negative impacts on our business. Subject to the receipt of these approvals and other customary closing terms and conditions, the Company currently expects to complete the transaction in mid-2016.

On October 6, 2015, we entered into an agreement with KeyTech Limited (“KeyTech”), a publicly held Bermuda company listed on the Bermuda Stock Exchange that provides voice, broadband, and cable television services under the “Logic” name in Bermuda and the Cayman Islands, in which we will acquire a controlling interest in KeyTech as part of a proposed business combination of KeyTech with our subsidiary providing wireless services under the “CellOne” name in Bermuda. The proposed transaction is subject to customary closing terms and conditions, including, among others, the receipt of approval from the Bermuda Regulatory Authority, the Federal Communications Commission, and the Information and Communications Technology Authority of the Cayman Islands and the consent of the Bermuda Stock Exchange to certain transaction matters. KeyTech shareholders approved the proposed transaction by affirmative vote on October 20, 2015. Although we have receive no indication that the regulatory authorities listed above do no plan to grant the required approvals, there can be no guarantee that we will receive such approval or consent. In addition, the Bermuda Regulatory Authority may impose conditions on any approval, such as a prohibition or strict approval of any bundling of services between the combined companies. These conditions, if imposed and if sufficiently significant, may permit KeyTech not to consummate the transaction or may have other negative impacts on our business or the business of the combined companies following the consummation of the KeyTech Transaction. Subject to the receipt of these approvals and other customary closing terms and conditions, the Company currently expects to complete the transaction in the first quarter of 2016.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2014 Annual Report on Form 10-K as filed with the SEC on March 16, 2015. The risks described in our 2014 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In September 2004, the Board of Directors authorized the Company to repurchase up to $5.0 million of common stock. The repurchase authorizations do not have a fixed termination date and the timing of the buyback amounts and exact number of shares purchased will depend on market conditions. No repurchases were made under this plan during the quarter ended September 30, 2015.

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The following table reflects the repurchases by the Company of its common stock during the quarter ended September 30, 2015:


					(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 (1)	Share (1)		or Programs	Programs
July 1, 2015 — July 31, 2015	—	$	—	—	$	2,919,965
August 1, 2015 — August 31, 2015	—	$	—	—	$	2,919,965
September 1, 2015 — September 30, 2015	—	$	—	—	$	2,919,965

Item 5. Additional Information

None.

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Item 6. Exhibits :


2.1*	Purchase Agreement, effective as of September 30, 2015, by and among Caribbean Asset Holdings, LLC, National Rural Utilities Cooperative Finance Corporation, ATN VI Holdings, LLC and Atlantic Tele-Network, Inc.

2.2	Transaction Agreement, dated as of October 5, 2015, by and among Atlantic Tele-Network, Inc., ATN Caribbean Holdings, Ltd., ATN Bermuda Holdings Ltd., KeyTech Limited and Chancery Holdings Limited (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K (File No. 001-12593) filed on October 6, 2015).

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. 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. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith. Schedules omitted pursuant to item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Atlantic Tele-Network, Inc.

Date: November 9, 2015	/s/ Michael T. Prior
	Michael T. Prior
	President and Chief Executive Officer

Date: November 9, 2015	/s/ Justin D. Benincasa
	Justin D. Benincasa
	Chief Financial Officer and Treasurer