02.03.2007 00:20:00
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Atlantic Tele-Network Reports 2006 Results
Atlantic Tele-Network, Inc. (NASDAQ: ATNI) today reported earnings for
the quarter and year ended December 31, 2006. For the year ended
December 31, 2006, revenue was $155.4 million, an increase of $53.1
million or 52% as compared to revenue of $102.3 million for the year
ended December 31, 2005. For the year ended December 31, 2006, earnings
were $23.2 million as compared to $13.6 million for the same period in
2005, an increase of $9.6 million or 71%. On a per share basis, earnings
increased by 56% to $1.70 per share from $1.09 per share for the year
ended December 31, 2005.
Revenue for the quarter was $42.0 million, an increase of $10.6 million
or 34% as compared to revenue of $31.4 million for the quarter ended
December 31, 2005. Earnings were $6.6 million as compared to $2.9
million for the quarter ended December 31, 2005, an increase of $3.7
million or 128%. On a per share basis, earnings increased by 87% to
$0.43 per share from $0.23 per share for the quarter ended December 31,
2005. Excluding the impact of a $2.1 million reserve taken in the fourth
quarter of 2005, earnings for the three months and year ended December
31, 2006, increased $1.6 million and $7.5 million, respectively, or 32%
and 48%, respectively.
Per share data for the three months and year ended December 31, 2006
were affected by the Company’s sale in the
third quarter of 2.6 million shares of the Company’s
common stock at $19.00 per share in an underwritten public offering,
from which the Company received $46.3 million in net proceeds.
Share and per share amounts for all periods also reflect the effects of
the 5-for-2 split of the Company’s common
stock, which took place on March 31, 2006.
"Our main objective for the year was to
develop new sources of revenue and growth without negatively impacting
earnings. Thus far, we have exceeded our goals. This announcement of our
full year results for 2006 concludes a very satisfying year”
said Michael T. Prior, Chief Executive Officer of Atlantic Tele-Network,
Inc. "Our recently added rural wireless
business (Commnet) and New England telephone, data and service provider
(Sovernet) both had a strong year. In particular, the team at Commnet
completed an ambitious expansion of our rural wireless network in the
Southwest, while continuing to grow multiple sources of revenue from
core voice roaming services for major US carriers, to data roaming and
roaming for international carriers. And, we are pleased as well that
most of our pre-existing businesses were able to deliver very
respectable results for the year. In Guyana, GT&T managed to grow
revenues, operating income and profits despite an increase in cellular
competition. In 2006, we extended coverage and increased the capacity of
our GSM network in Guyana and extended the wireline network to new areas
as well. Choice Communications managed to continue to grow revenue and
reduce operating losses, reaching our goal of self-funding all cash
operating expenses by year-end.”
Mr. Prior added, "Looking ahead, we expect to
invest significant additional capital in our U.S. businesses which we
believe have attractive opportunities to expand the reach of their
networks and add new services. Our main challenge in 2007 appears to be
greater competition in Guyana, where the existing nationwide wireless
competitor was acquired in late 2006 by a large, aggressive, regional
operator. The increased competition is likely to put pressure on our
wireless operating margins and market share in Guyana. Overall, we
expect to grow consolidated earnings in 2007, but do not think the
organic growth will be as strong as in 2006.” Fourth Quarter 2006 Operating Highlights
As was previously announced, the Company completed the acquisitions of
Sovernet, Inc., a Vermont telephone and data services provider, in
February 2006 and Commnet Wireless, LLC, a U.S. rural wireless business,
in September 2005. The Company’s results
reflect Sovernet only since the date of acquisition and consequently
Sovernet is not reflected in the Company’s
results for the three months or twelve months ended December 31, 2005.
The Company’s results for the year ended
December 31, 2005 reflect Commnet only from the date of its acquisition
in September 2005.
The Company generated the following operating results for the quarter
ended December 31, 2006 (unless otherwise indicated, all comparative
information is compared against the quarter ended December 31, 2005): Wireless Revenue Wireless revenue increased by $5.9 million, or
50%, to $17.7 million from $11.8 million. This increase was attributable
to the continued expansion of our rural wireless network, along with
growth in minutes of use and increases in data and international roaming
revenue. Our Commnet subsidiary ended the quarter with a total of 287
base stations, compared to 233 on December 31, 2005. In addition, the
increase in wireless revenue also reflects growth of our subscriber base
in Guyana. Our wireless customer base in Guyana increased from 228,000
subscribers to 269,000 subscribers, of which 207,000 use GSM service as
compared to 102,000 GSM subscribers a year ago and 175,000 at the end of
September 2006.
Local Telephone and Data Revenue Local telephone and data revenue
increased $3.8 million, or 51%, to $11.2 million from $7.4 million. Of
this increase, $3.6 million was attributable to the addition of
Sovernet. Excluding that contribution, local telephone and data revenue
generated by our Guyana and Virgin Islands operations increased by $0.2
million, or 3%. Access lines at GT&T increased from approximately
113,000 to 121,000, or 7%, as we continued to extend the wireline
infrastructure to additional communities. In the Virgin Islands, our
broadband wireless subscriber base grew by more than 146% over the year,
contributing to the increase in revenues.
International Long Distance Revenue and Other Revenue
International long distance revenue, all of which is generated by our
GT&T subsidiary, was $12.2 million during 2006, an increase of $0.8
million, or 7%, from $11.4 million in 2005. Inbound minutes represented
86% of international traffic for the quarter. Other revenue increased
primarily as a result of a 16% increase in television subscribers in our
Virgin Islands operations.
Operating Expenses Operating expenses increased by $8.1 million,
or 40%, from $20.1 million to $28.2 million for 2005 and 2006,
respectively. Of the $8.1 million increase, $3.0 million is attributable
to the addition of Sovernet. Excluding Sovernet, operating expenses
increased $5.1 million. Of the $5.1 million, $1.7 million is
attributable to increased sales and marketing efforts at GT&T to
encourage our TDMA subscribers to convert to GSM handsets and to
re-position ourselves against our changing competition. A further $1.8
million is related to increased engineering and operations costs
associated with expanding our networks and an increase in termination
and access fees from year over year traffic growth at both GT&T and
Commnet. The balance of the increase in operating expenses is
predominantly a result of increased depreciation and amortization
expense and additional overhead costs to support our growth.
Operating Income Operating income increased by $2.5 million, or
22%, from $11.3 million to $13.8 million. Of the $2.5 million increase,
$0.6 million is attributable to the addition of Sovernet. The balance
primarily reflects the growth in our rural wireless and Virgin Islands
businesses.
Bermuda Digital Communications Equity in the earnings from BDC,
our Bermuda affiliate, declined from $0.6 million for 2005 to $0.5
million for 2006. This decline was due to a decrease in revenue and
increased marketing and handset expenses to maintain our share of a
maturing market. Wireless subscribers were down slightly from December
31, 2005, although we maintained our position as the largest of the
three competitive cellular providers in Bermuda.
Conference Call Information
Atlantic Tele-Network will host a conference call tomorrow, March 2,
2007 at 10:00 a.m. Eastern time (ET) to discuss its fourth quarter
results for 2006. The call will be hosted by Michael Prior, President
and Chief Executive Officer, and Justin Benincasa, Chief Financial
Officer. The dial-in numbers are US/Canada: (800) 946-0713 and
International: (719) 457-2642, access code 8472275. A replay of the call
will be available from 1:00 p.m. (ET) March 2, 2007 until 11:59 p.m.
(ET) on March 8, 2007. The replay dial-in numbers are US/Canada: (888)
203-1112 and International: (719) 457-0820, access code 8472275.
About Atlantic Tele-Network
Atlantic Tele-Network, Inc. (NASDAQ:ATNI) is a telecommunications
company with corporate offices in Salem, Massachusetts and St. Thomas,
U.S. Virgin Islands. Its principal subsidiaries include: Guyana
Telephone and Telegraph Company, Limited, which is the national
telephone service provider for all local, long-distance and
international service, as well as the largest cellular service provider,
in the Cooperative Republic of Guyana; Commnet Wireless, LLC, which
provides voice and data wireless roaming services for U.S. and
international carriers in rural areas throughout the United States;
Sovernet, Inc., which provides wireline voice and data services to
businesses and homes across Vermont; and Choice Communications, LLC,
which provides wireless television and wireless broadband services, as
well as dial-up internet services in the U.S. Virgin Islands. The
Company also owns 44% of Bermuda Digital Communications Ltd., which,
under the Cellular One name, is the largest provider of cellular voice
and data services in Bermuda.
Cautionary Language Concerning
Forward-Looking Statements
This news release contains forward-looking statements relating to, among
other matters, the future financial performance and results of
operations of the Company, including the relative contributions of
Commnet and Sovernet; demand for our services and industry trends; the
pace of our network expansion and improvement, including 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)
significant political and regulatory risk facing our exclusive license
to provide local exchange and long distance telephone services in
Guyana; (2) any significant decline in the price or volume of
international long distance calls to Guyana; (3) increased competition
affecting our businesses; (4) the regulation of rates that GT&T may
charge for local wireline telephone service; (5) significant tax
disputes between GT&T and the Guyanese tax authorities; (6) a
significant portion of our U.S. wireless revenue is derived from a small
number of customers; (7) our failure to maintain favorable roaming
arrangements; (8) economic, political and other risks facing our foreign
political operations; (9) regulatory changes affecting our businesses;
(10) rapid and significant technological changes in the
telecommunications industry; (11) our reliance on a limited number of
key suppliers and vendors for timely supply of equipment and services
relating to our network infrastructure; (12) loss of any key members of
management; (13) the adequacy and expansion capabilities of our network
capacity and customer service system to support our customer growth;
(14) dependence of our wireless and wireline revenues on the reliability
and performance of our network infrastructure; (15) the occurrence of
severe weather and natural catastrophes; (16) our economic interest in
our Bermuda affiliate may be reduced in 2008; and (17) our inability to
realize the value that we believe exists in businesses that we acquire.
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, 2005, which is on file with the SEC. The
Company undertakes no obligation 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.
ATLANTIC TELE-NETWORK, INC. Unaudited Condensed Consolidated Balance Sheet As of December 31, 2005 and 2006
(in Thousands)
December 31,
December 31,
2005
2006
Assets
Cash and Cash Equivalents
$
26,493
$
60,543
Other Current Assets
22,179
30,596
Total Current Assets
48,672
91,139
Fixed Assets, net
125,709
138,573
Goodwill and Other Intangible Assets, net
40,277
59,733
Other Assets
19,173
13,169
Total Assets
$ 233,831
$ 302,614
Liabilities and Stockholders’ Equity
Current Liabilities (excluding current portion of long term debt)
$
33,962
$
35,041
Long Term Debt (including current portion)
55,750
50,000
Other Liabilities
6,469
12,846
Total Liabilities
96,181
97,887
Minority Interests
21,940
25,539
Stockholders’ Equity
115,710
179,188
Total Liabilities and Stockholders’ Equity
$ 233,831
$ 302,614
ATLANTIC TELE-NETWORK, INC. Unaudited Condensed Consolidated Statements of Operations (in Thousands, Except per Share Data)
Three Months Ended December 31, Year Ended December 31, 2005
2006
2005
2006
Revenue:
Wireless
$
11,786
$
17,697
$
25,964
$
61,946
Local Telephone and Data
7,357
11,183
27,926
43,103
International Long Distance
11,449
12,151
45,439
46,663
Other Revenues
790
963
2,952
3,646
Total Revenue
31,382
41,994
102,281
155,358
Operating Expenses:
Termination and Access Fees
3,535
5,408
7,941
22,687
Internet and Programming
678
933
2,601
3,504
Engineering and Operations
4,262
5,654
15,136
19,691
Sales, Marketing and Customer Services
1,772
3,760
6,457
10,088
General and Administrative
4,851
5,729
15,624
21,767
Depreciation and Amortization
4,886
6,477
17,110
24,510
Non-Cash Stock Based Compensation
119
213
420
822
Total Operating Expenses
20,103
28,174
65,289
103,069
Operating Income
11,279
13,820
36,992
52,289
Other Income (Expense):
Interest Income (Expense), net
(865)
(266)
(688)
(2,147)
Other Income (Expense)
(1,775)
106
(630)
725
Other Expense, net
(2,640)
(160)
(1,318)
(1,422)
Income Before Income Taxes, Minority Interests and Equity in
Earnings of Unconsolidated Affiliates
8,639
13,660
35,674
50,867
Income Taxes
5,159
6,234
20,801
25,210
Income Before Minority Interests and Equity in Earnings of
Unconsolidated Affiliates
3,480
7,426
14,873
25,657
Equity in Earnings of Unconsolidated Affiliates
763
457
3,043
2,467
Minority Interests
(1,354)
(1,306)
(4,318)
(4,919)
Net Income
$ 2,889
$ 6,577
$ 13,598
$ 23,205
Net Income Per Share
Basic
$ 0.23
$ 0.44
$ 1.09
$ 1.71
Diluted
$ 0.23
$ 0.43
$ 1.09
$ 1.70
Weighted Average Common Shares Outstanding
Basic
12,435
15,095
12,465
13,568
Diluted
12,480
15,247
12,488
13,672
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