ATNI — Q2 2026 Financial Report Analysis

A $230 million tower sale buries a modest operating quarter

ATN International reported net income of $167.3 million ($10.71 per diluted share) for the second quarter of 2026, against a loss of $7.0 million ($0.56 per share) a year earlier. Almost all of that swing is one transaction: on June 2 the company completed the initial closing of the sale of its southwestern US cell-tower portfolio (a deal covering about 214 sites) to an affiliate of Everest Infrastructure Partners, received $267.7 million in cash and booked a $229.9 million gain. Strip that out and the business itself grew slowly: revenue rose 1.8% to $184.5 million, while Adjusted EBITDA rose 9% to $49.7 million on cost cuts.

At a glance

• Revenue $184.5M, +1.8%. Growth came from carrier contracts and add-on services; it was held back by the end of a federal broadband subsidy in the US Virgin Islands and less construction work.
• Adjusted EBITDA $49.7M, +9%; margin 27.0% vs 25.3%. Costs fell faster than revenue grew, mainly from layoffs and reorganizations done over the past year.
• Net debt ratio 0.91x vs 2.36x at year-end. The tower cash cut debt by $52 million and left $331.9 million in cash, so the company now owes less than one year's EBITDA net of cash.

ATN runs telecom networks in small and remote markets: mobile, broadband and fixed services in Guyana, Bermuda and the US Virgin Islands (the International Telecom segment), and fiber, fixed-wireless and wholesale services for other carriers in Alaska and the rural US Southwest (US Telecom).

Key figures

Adjusted EBITDA is the company's own non-GAAP measure: operating profit before depreciation and amortization (the accounting cost of wearing out networks), and before stock pay, deal costs, restructuring costs and gains or losses on asset sales. Operating margin on a GAAP basis was about 130% of revenue this quarter because of the gain, which says nothing about the business, so it is not shown as a margin.

Where the revenue came from

International Telecom revenue rose 1.4% to $96.2 million. Mobile service revenue grew $0.8 million (3.0%) on more subscribers, higher rates and more equipment sales, and add-on services for retail customers added $1.6 million. Against that, fixed (home and business line) revenue fell $1.2 million because the FCC's High-Cost Support Program in the US Virgin Islands, a federal subsidy for serving expensive-to-reach areas, ended on December 31, 2025. The segment's operating income rose 35% to $21.9 million, helped by cost cuts and lower depreciation after several years of smaller capital spending.

US Telecom revenue rose 2.2% to $88.3 million. Carrier services revenue (what ATN earns from AT&T, Verizon and other carriers for building, running and hosting their networks) grew $3.0 million, or 10.1%, which the 10-Q attributes to "the transition of legacy roaming arrangements to carrier service management contracts" (both the AT&T FirstNet and Verizon contracts were amended in May 2026). Fixed revenue grew $1.0 million on higher government support payments in Alaska, while construction revenue fell to $0.8 million from $2.2 million as fewer build sites were completed. Segment Adjusted EBITDA rose 4.5% to $19.1 million.

What the headline numbers hide

• The profit is a one-off. Remove the $230.9 million gain on dispositions line (the tower gain plus a $1.1 million real-estate sale in the International segment) and pre-tax results were a loss of about $2.3 million, compared with a $13.0 million loss a year ago. That is a real improvement, helped by $1.9 million lower interest expense and lower restructuring costs ($2.6M vs $4.9M), but it is still roughly break-even, not $10.71 a share. Deal costs also jumped to $6.3 million from $0.2 million.
• Minority partners took a larger share. $19.2 million of net income went to non-controlling interests (outside co-owners of ATN subsidiaries), $16.1 million of it in US Telecom, versus a $2.2 million loss share a year ago.
• Cash flow looks better than it is. Operating cash flow for the first half was $53.5 million, down 11% from $59.8 million. But it includes a $42.3 million build-up of income taxes that have been booked and not yet paid, much of it tax on the tower gain; taxes payable rose to $55.4 million from $7.6 million at year-end. When that tax is paid, it will come out of operating cash flow, so the underlying first-half cash generation was much weaker than the reported figure. Free cash flow (operating cash flow minus the company's own capital spending) was about $15.3 million for the half, versus $17.8 million a year earlier.
• The tax rate was flattered. The quarter's effective tax rate was 18.4% (29.0% a year ago), helped by a $4.9 million net benefit from an expired uncertain tax position.
• No help from buybacks. Diluted share count rose to 15.46 million from 15.22 million. ATN repurchased no stock in the quarter, though the board raised the buyback authorization to $30 million on July 31.
• Broadband: lots of new reach, few new customers. Homes passed with 100 Mbps-plus service grew 21%, mainly from fixed-wireless deployments in late 2025, but customers grew only 1% and fell by 2,300 from Q1. The share of reachable homes that actually subscribe dropped to about 27% from about 32% a year ago. Mobile churn (the share of subscribers who leave) rose to 3.48% from 3.09%.

Takeaway: The $10.71 of EPS is the price of selling the towers, not the earning power of the business. Stripped of the gain, ATN is a roughly break-even telecom operator whose Adjusted EBITDA is growing on cost cuts rather than customers. What changed for good is the balance sheet: net debt fell to 0.91x EBITDA, which gives the new CEO, Naji Khoury, room to fund buybacks, dividends and network spending.

Outlook

Management reaffirmed its full-year 2026 guidance on August 5: Adjusted EBITDA of $183-193 million and capital expenditures of $105-115 million (excluding government-reimbursed spending). The EBITDA range was lowered on June 2 from $190-200 million purely for the tower sale, which the company said would cut its 2026 revenue by $3 million and Adjusted EBITDA by $7 million over the last seven months of the year, mainly because ATN now pays rent on towers it used to own. The 10-Q also warns that US carrier services revenue will decline once the sale has a full quarter's effect.

Two other deals are pending: up to $29.6 million more from later tower closings over the next ten months, and an agreement to sell US spectrum licenses for up to $41.0 million (expected to close in 2027, with a gain of up to $4.6 million).

Our read: First-half Adjusted EBITDA was $98.4 million, so the guidance implies $84.6-94.6 million in the second half, a step down that is mostly the lost tower income. Capital spending was only $38.3 million in the first half, so hitting the guided $105-115 million means spending $67-77 million in the second half, about double the first-half pace. With a large tax bill still to pay on the gain, second-half free cash flow could be thin even though the balance sheet is now strong. The things to watch in Q3 are whether broadband customer numbers start to catch up with the expanded network, whether churn comes back down, and how management splits the tower cash between buybacks, debt and investment.