ATN's management urged to sell or go private

One of the top shareholders in ATN International, a Massachusetts-based telecom operator, urged the company's management to either sell the business or go private after ATN's shares collapsed following its first quarter earnings release.

"Are you seriously giving thoughts to just privatizing the company and embarking on a process to create shareholder value?" asked Robert Beauregard of Global Alpha Capital Management during ATN's earnings conference call last week, according to a Seeking Alpha transcript. "I mean, this is nice to say, but the stock is down from $80 to $20. And clearly, there's something that the market just doesn't have the patience for."

Global Alpha Capital Management is listed as one of ATN's top shareholders with around 6.7% of the company's shares. Other top institutional shareholders include BlackRock with 11%, Vanguard Group with 6.2% and Dimensional Fund Advisors with 6.6%. Cornelius Prior, ATN's founder and a former CEO, owns 27% of the company's shares. Prior's son, Michael Prior, owns 4%. Michael Prior was ATN's CEO from 2005 to 2023 and is now the executive chairman of the company's board of directors.

"I mean, I think at this point, you guys have to conduct, in all fairness to long-term shareholders, to conduct a process to sell the company or privatize it," continued Beauregard, Global Alpha Capital Management's chief investment officer. "I'm looking to some kind of commitment that you will look, at least, and discuss it with the board."

ATN CFO Carlos Doglioli replied: "We appreciate your comments, obviously, and we'll take that to the board and discuss it with them."

A period of upheaval

The remarkable exchange came hours after ATN's stock fell from around $28 per share to about $18 per share following ATN's first quarter earnings release. In its results, the company warned of an unexpected shortfall in 2024 revenue. Company officials blamed the shortfall on a delay in obtaining "significant contracts" from "a big program." But they did not elaborate.

Over the past 12 months, ATN's shares have lost almost half their value.

ATN is a network operator in rural parts of the US. As Light Reading previously reported, the company's strategy relied on charging big wireless network operators like AT&T and Verizon roaming fees to ensure that their customers had a connection where ATN offered mobile services through Commnet Wireless and other brands. But the strategy slowly fell apart as the big network operators expanded their own networks into the rural locations where ATN operated.

Now, ATN is mainly pursuing a strategy of building fiber in rural areas.

More recently, ATN has been chasing wireless network buildout contracts to supplement its flagging roaming revenues. For example, in 2019 AT&T agreed to pay Commnet $167.5 million to build and maintain AT&T's wireless network in the Southwestern US. Then, last year, Verizon inked a seven-year, $200 million agreement with Commnet to expand its network in the Southwestern US. While the buildout is underway, Verizon will continue to roam on Commnet's network in the area.

Amid ATN's transition to a "glass and steel" strategy that favors fiber over wireless, the company last year named a new leadership team fronted by Brad Martin, who replaced Michael Prior as the company's CEO. Martin joined ATN in 2018 from Internet of Things (IoT) network operator Senet.

Complaints can lead to change

ATN isn't the only company in the telecommunications industry facing ire from its shareholders. For example, AST SpaceMobile is now facing lawsuits over ongoing delays in the company's effort to launch satellites for cellphones. And Crown Castle continues to deal with investors urging the company to overhaul its operations and to sell off its fiber and small cell business.

Such complaints from investors can drive change. Consider the case of billionaire investor Mario Gabelli, who last year blasted TDS' "extraordinarily poor performance" in managing UScellular, its mobile business.

Prior to the complaints, rumors had swirled for years that TDS might sell its mobile business. But industry insiders didn't believe the Carlson family, which maintains majority control over TDS, would ever be willing to sell the company.

However, just a few months after Gabelli voiced his complaints, TDS announced it would put UScellular up for sale. That sale process remains ongoing.