ATN International teases another big carrier deal

ATN International executives said the company expects to ink an agreement with "another national carrier" during its current fiscal quarter. But they didn't provide details about the structure of the agreement or reveal the identity of the carrier.

In 2019, AT&T agreed to pay ATN's Commnet Wireless $167.5 million to build and maintain AT&T's wireless network in the Southwestern US. AT&T said it would use the network for its own commercial mobile services and for public safety offerings delivered through FirstNet. FirstNet is a government agency charged with offering nationwide wireless services to public safety users.

"These partnerships with the national mobile carriers are a testament to our strong and reliable offerings, scalability, deep and broad local operating capabilities and brand reputation," ATN CEO Michael Prior boasted during his company's recent quarterly earnings call, according to a Seeking Alpha transcript.

The financial analysts at Raymond James expressed hope that ATN's new carrier deal plays out differently than its initial agreement with AT&T for FirstNet. ATN had planned to be finished with its FirstNet work in 2021, but Prior reported last week that the project is still only about 75% complete.

Figure 1: FirstNet targets public safety users like police.
(Source: B Christopher/Alamy Stock Photo)

ATN "has a project with another nationwide carrier in the pipeline, though it will be different in structure from FirstNet, have positive margins, help optimize costs, and have an underpinning of long-term recurring revenues," the Raymond James analysts wrote. "We are highly interested in learning more details when the contract is finalized."

The analysts noted that the remaining build revenues from ATN's FirstNet construction project should amount to around $12 million to $14 million, well below initial expectations of $27 million. Further, construction of some sites is getting pushed into 2024 while others are being canceled altogether.

"Given the low-margin nature of these revenues, the impact ... is minimal," the analysts noted.

In a subsequent call with Light Reading, ATN's Prior explained that the company's FirstNet build revenues are separate from the revenues the company will earn from its overall FirstNet contract. And he added that the delay in the ATN FirstNet network buildout won't necessarily affect the deal's overall economics.

Chasing new business

As Light Reading previously reported, ATN is pivoting away from wireless and toward fiber. Under its previous model, big wireless network operators like AT&T and Verizon would pay ATN roaming fees in order to make sure their customers had a connection where ATN offered services through Commnet and other brands.

However, that strategy slowly fell apart as the big network operators expanded their networks into the rural locations where ATN operated.

Now, ATN is mainly pursuing a strategy of building fiber in rural areas. In its legacy wireless business, the company is now offering "carrier services" that include space on its cell towers for the radios of other, incoming network operators, alongside installation, backhaul and maintenance services for those radios. That's likely what the company is hoping to offer its new "national carrier" customer.

ATN's new customer may be Verizon or T-Mobile. T-Mobile, for its part, has made rural expansion a key part of its overall business case in recent years.

In 2022, ATN reported $129 million from its US "carrier services" business, up from the $108 million it notched in 2021. However, the company attributed most of that growth to its Alaskan operations.

The company said it lost around $14.5 million in its western US "carrier services" business during that period "primarily as a result of the restructure of certain carrier contracts."

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano