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, ~~2017~~2018


☐	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

ATN INTERNATIONAL, 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)

500 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒		Accelerated filer ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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, ~~2017,~~2018, the registrant had outstanding ~~16,016,~~15,965,472~~566~~shares of its common stock ($.01 par value).

~~Table of Contents~~

ATN INTERNATIONAL, INC.

FORM 10-Q

Quarter Ended September 30, ~~2017~~2018


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 September 30, ~~2017~~2018 and December 31, ~~2016~~2017	4

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	5

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~32-62~~32-60

Item 3	Quantitative and Qualitative Disclosures About Market Risk	6261

Item 4	Controls and Procedures	6261

PART II—OTHER INFORMATION		6361

Item 1	Legal Proceedings	6361

Item1A	Risk Factors	6362

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	63

Item 6	Exhibits	64

SIGNATURES		65

CERTIFICATIONS

~~Table of Contents~~

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 estimated timeline for ~~restoration~~the rebuilding of our operations and revenues from our customers in the U.S. Virgin Islands ~~operations;~~following the hurricanes; our estimates of total losses due to ~~Hurricanes Irma~~the hurricanes and ~~Maria;~~our estimated costs of restoring hurricane-damaged services; the competitive environment in our key markets, demand for our services and industry trends; the pace of expansion and improvement of our telecommunications network and renewable energy operations including our level of estimated future capital expenditures and our realization of the benefits of these investments; the anticipated timing of our build schedule and ~~the commencement of~~ energy production of our India renewable energy projects; expectations regarding our revenue, expenses and financial performance; the impact of new accounting pronouncements; our satisfaction of performance obligations; the impact of litigation; the sufficiency of our cash and our expectations regarding capital expenditures 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) our ability to ~~conduct and complete a full assessment of damage in the U.S. Virgin Islands; (2) our ability to~~ restore our networks and services to our customers in the U.S. Virgin Islands in an efficient and timely ~~manner; (3)~~manner and to obtain governmental or other support necessary to fully restore services in the U.S. Virgin Islands; (2) our ability to ~~operate~~receive financial support from the government for our ~~newly acquired businesses~~rebuild in ~~Bermuda and~~ the U.S. Virgin Islands and ~~both integrate these operations into~~the timing of such support (3) our ~~existing operations and~~ability to execute planned network expansions and ~~upgrades;~~upgrades in our various markets; (4) the general performance of our operations, including operating margins, revenues, capital expenditures, and the future growth and retention of our major customers and subscriber base and consumer demand for solar power; (5) government regulation of our businesses, which may impact our ~~FCC~~Federal Communications Commission (“FCC”) and other telecommunications licenses or our renewables business; (6) economic, political and other risks facing our operations; (7) our ability to maintain favorable roaming ~~arrangements;~~arrangements and satisfy the needs and demands of our major wireless customers; (8) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; (9) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (10) our ability to find investment or acquisition or disposition opportunities that fit ~~our~~the strategic goals ~~for~~of the Company; (11) increased competition; (12) our ability to expand our renewable energy business; (13) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (14) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (15) the occurrence of weather events and natural catastrophes; (16) our continued access to capital and credit markets; (17) the risk of currency fluctuation for those markets in which we ~~operate~~operate; and (18) our ability to realize the value that we believe exists in our businesses. 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, ~~2016,~~2017, filed with the SEC on March 1, ~~2017~~2018 as may be updated by our Quarterly Reports on Form 10-Q and the other reports we file from time to time with the SEC. ~~The~~Except as required by law, 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 ATN International, 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.

~~Table of Contents~~

PART I—FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)


	September 30,		December 31,		September 30,		December 31,
	2017		2016		2018		2017
ASSETS
Current Assets:
Cash and cash equivalents	$	224,597	$	269,721	$	161,112	$	207,956
Restricted cash		833		524		1,071		833
Short-term investments		7,857		9,237		314		7,076
Accounts receivable, net of allowances of $16.1 million and $13.1 million, respectively		48,829		45,419
Materials and supplies		14,809		14,365
Accounts receivable, net of allowances of $15.3 million and $15.0 million, respectively						44,094		43,529
Inventory, materials and supplies						7,990		15,398
Prepayments and other current assets		37,813		28,103		37,239		68,136
Assets held for sale						97,477		—
Total current assets		334,738		367,369		349,297		342,928
Fixed Assets:
Property, plant and equipment		1,130,117		1,138,362		1,157,566		1,169,806
Less accumulated depreciation		(505,522)		(490,650)		(543,139)		(526,660)
Net fixed assets		624,595		647,712		614,427		643,146
Telecommunication licenses, net		95,952		48,291		95,952		95,952
Goodwill		63,969		62,873		63,970		63,970
Customer relationships, net		12,310		15,029		9,863		11,734
Restricted cash		16,206		18,113		11,768		11,101
Other assets		36,248		38,831		38,773		36,774
Total assets	$	1,184,018	$	1,198,218	$	1,184,050	$	1,205,605
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	13,944	$	12,440	$	4,688	$	10,919
Accounts payable and accrued liabilities		129,016		92,708		96,387		116,133
Dividends payable		3,110		5,487		2,713		2,724
Accrued taxes		9,370		13,531		12,789		6,751
Advance payments and deposits		18,161		25,529		18,076		25,178
Other current liabilities		76		410
Liabilities held for sale						80,673		—
Total current liabilities		173,677		150,105		215,326		161,705
Deferred income taxes		45,655		46,622		7,614		31,732
Other liabilities		32,245		47,939		44,880		37,072
Long-term debt, excluding current portion		145,707		144,383		87,183		144,873
Total liabilities		397,284		389,049		355,003		375,382
Commitments and contingencies (Note 12)
Commitments and contingencies (Note 13)
ATN International, 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; 17,093,351 and 16,971,634 shares issued, respectively, and 16,016,860 and 16,138,983 shares outstanding respectively		169		169
Treasury stock, at cost; 1,076,491 and 832,652 shares, respectively		(36,095)		(23,127)
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,130,894 and 17,102,530 shares issued, respectively, 15,958,952 and 16,025,745 shares outstanding respectively						170		170
Treasury stock, at cost; 1,171,942 and 1,076,785 shares, respectively						(40,285)		(36,110)
Additional paid-in capital		166,326		160,176		174,914		167,973
Retained earnings		512,175		538,109		565,180		552,948
Accumulated other comprehensive income		2,053		1,728		(2,324)		3,746
Total ATN International, Inc. stockholders’ equity		644,628		677,055		697,655		688,727
Non-controlling interests		142,106		132,114		131,392		141,496
Total equity		786,734		809,169		829,047		830,223
Total liabilities and equity	$	1,184,018	$	1,198,218	$	1,184,050	$	1,205,605

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

~~Table of Contents~~

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~2018 AND ~~2016~~2017

(Unaudited)

(In thousands, except per share amounts)


	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017
REVENUE:
Wireless	$	57,254	$	61,151	$	167,945	$	177,300	$	52,003	$	60,305	$	153,046	$	175,777
Wireline		56,309		66,129		181,568		122,190		63,717		56,817		173,083		182,777
Renewable energy		4,974		5,784		14,765		16,935		5,418		5,010		17,272		14,938
Equipment and other		3,595		5,731		9,214		12,046
Total revenue		122,132		138,795		373,492		328,471		121,138		122,132		343,401		373,492
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		27,387		34,359		85,758		77,872		29,866		30,554		84,037		94,478
Engineering and operations		18,852		19,372		57,881		40,621		18,177		18,852		54,738		57,881
Sales, marketing and customer service		8,440		8,377		26,176		21,814		8,995		8,440		25,969		26,176
Equipment expense		3,167		3,390		8,720		10,751
General and administrative		26,620		26,854		76,969		62,525		25,210		26,660		77,470		77,089
Transaction-related charges		61		2,091		887		16,156		178		61		642		887
Restructuring charges		—		—		—		1,785
Depreciation and amortization		21,157		21,866		65,904		52,913		21,384		21,157		64,602		65,904
Impairment of long-lived assets		—		349		—		11,425
Bargain purchase gain		—		—		—		(7,304)
(Gain) loss on disposition of long-lived assets		(593)		56		513		27		(13,496)		(593)		(15,509)		513
Loss on damaged assets and other hurricane related charges		36,566		—		36,566		—
Loss on damaged assets and other hurricane related charges, net of insurance recovery										-		36,566		666		36,566
Total operating expenses		141,657		116,714		359,374		288,585		90,314		141,697		292,615		359,494
Income from operations		(19,525)		22,081		14,118		39,886
Income (loss) from operations										30,824		(19,565)		50,786		13,998
OTHER INCOME (EXPENSE)
Interest income		453		236		1,087		929		568		453		1,420		1087
Interest expense		(2,098)		(1,787)		(6,567)		(3,674)		(2,229)		(2,098)		(6,759)		(6,567)
Loss on deconsolidation of subsidiary		—		—		(529)		—		—		—		—		(529)
Other income (expense)		(690)		766		(1,751)		643
Other expenses										(1,244)		(650)		(3,042)		(1,631)
Other expense, net		(2,335)		(785)		(7,760)		(2,102)		(2,905)		(2,295)		(8,381)		(7,640)
INCOME BEFORE INCOME TAXES		(21,860)		21,296		6,358		37,784
Income taxes		(884)		9,602		4,839		17,178
INCOME (LOSS) BEFORE INCOME TAXES										27,919		(21,860)		42,405		6,358
Income tax provisions (benefit)										7,010		(884)		13,018		4,839
NET INCOME (LOSS)		(20,976)		11,694		1,519		20,606		20,909		(20,976)		29,387		1,519
Net income attributable to non-controlling interests, net of tax expense of $0.3 million, $0.6 million, $0.7 million, and $1.0 million, respectively.		(3,784)		(4,523)		(13,535)		(10,400)
Net income attributable to non-controlling interests, net of tax expense of $0.5 million, $0.3 million, $1.1 million, and $0.7 million, respectively.										(3,887)		(3,784)		(10,705)		(13,535)
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	(24,760)	$	7,171	$	(12,016)	$	10,206	$	17,022	$	(24,760)	$	18,682	$	(12,016)
NET INCOME (LOSS) PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:
Basic	$	(1.53)	$	0.44	$	(0.74)	$	0.63	$	1.07	$	(1.53)	$	1.17	$	(0.74)
Diluted	$	(1.53)	$	0.44		(0.74)		0.63	$	1.06	$	(1.53)	$	1.16	$	(0.74)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		16,178		16,148		16,177		16,128		15,958		16,178		15,987		16,177
Diluted		16,178		16,241		16,177		16,228		16,021		16,178		16,042		16,177
DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK	$	0.17	$	0.34	$	0.85	$	0.98	$	0.17	$	0.17	$	0.51	$	0.85

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

~~Table of Contents~~

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 ~~AND 2016~~

(Unaudited)

(In thousands)



	Three months ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Net income (loss)	$	(20,976)	$	11,694	$	1,519	$	20,606	$	20,909	$	(20,976)	$	29,387	$	1,519
Other comprehensive income:
Foreign currency translation adjustment		(1,311)		(164)		921		(200)		(2,510)		(1,311)		(6,093)		921
Reclassifications of gains on sale of marketable securities to net income		—		—		(1,044)		—		—		—		—		(1,044)
Unrealized gain (loss) on securities		67		—		(65)		—		45		67		226		(65)
Projected pension benefit obligation		—		—		513		—
Projected pension benefit obligation, net of tax of $0.0 million, $0.0 million, $0.0 million, and $0.4 million, respectively										—		—		—		513
Other comprehensive income (loss), net of tax		(1,244)		(164)		325		(200)		(2,465)		(1,244)		(5,867)		325
Comprehensive income (loss)		(22,220)		11,530		1,844		20,406		18,444		(22,220)		23,520		1,844
Less: Comprehensive income attributable to non-controlling interests		(3,784)		(4,523)		(13,535)		(10,400)		(3,887)		(3,784)		(10,705)		(13,535)
Comprehensive income (loss) attributable to ATN International, Inc.	$	(26,004)	$	7,007	$	(11,691)	$	10,006	$	14,557	$	(26,004)	$	12,815	$	(11,691)

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

~~Table of Contents~~

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER, 30 ~~2017~~2018 AND ~~2016~~2017

(Unaudited)

(In thousands)


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2018		2017
Cash flows from operating activities:
Net income	$	1,519	$	20,606	$	29,387	$	1,519
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		65,904		52,913		64,602		65,904
Provision for doubtful accounts		3,041		1,058		4,199		3,041
Amortization and write off of debt discount and debt issuance costs		458		372		591		458
Stock-based compensation		5,437		5,032		5,071		5,437
Unrealized loss on foreign currency						1,951		—
Deferred income taxes		1,456		(8,775)		(3,062)		1,456
Loss in equity method investments		2,033		—
Bargain purchase gain		—		(7,304)
Loss on disposition of long-lived assets		513		27
Loss on damaged assets from hurricanes		35,213		—
Loss on equity method investments						—		2,033
Loss on damaged assets from Hurricanes						—		35,213
(Gain) Loss on disposition of long-lived assets						(15,509)		513
Gain on sale of investments		(1,055)		—		—		(1,055)
Impairment of long-lived assets		—		11,425
Loss on deconsolidation of subsidiary		529		—		—		529
Other non-cash activity		512		—		246		512
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:
Accounts receivable		(8,456)		(2,234)		(7,257)		(8,456)
Materials and supplies, prepayments, and other current assets		(1,875)		(9,471)		(715)		(1,875)
Prepaid income taxes		995		—		3,147		995
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities		13,642		(2,854)		6,926		13,642
Accrued taxes		(8,966)		21,886		7,410		(8,966)
Other assets		3,794		(2,169)		139		3,794
Other liabilities		7,294		11,593		888		7,294
Net cash provided by operating activities		121,988		92,105		98,014		121,988
Cash flows from investing activities:
Capital expenditures		(108,276)		(78,455)		(75,375)		(108,276)
Strategic investments		(18,107)		(2,000)
Divestiture of businesses, net of transferred cash of $2.1 million		22,381		—
Acquisition of businesses, net of acquired cash of $0 and $12.6 million		(2,363)		(145,454)
Hurricane rebuild capital expenditures						(78,903)		—
Hurricane insurance proceeds						34,606		—
Receipt of government grants						5,400		—
Purchase of strategic investments						(3,000)		(18,107)
Divestiture of businesses, net of transferred cash of $0.0 million and $2.1 million, respectively						926		22,381
Acquisition of businesses, net of acquired cash of $0.0 million						—		(1,183)
Purchases of spectrum licenses and other intangible assets, including deposits		(36,832)		(10,860)		—		(36,832)
Acquisition of non-controlling interest in subsidiary		—		(7,045)
Purchase of short-term investments		—		(7,422)
Proceeds from sale of investments		2,761		—		6,564		2,761
Change in restricted cash		1,598		(28,287)
Proceeds from disposition of long-lived assets		—		1,424
Proceeds from sale of assets						4,130		—
Net cash used in investing activities		(138,838)		(278,099)		(105,652)		(139,256)
Cash flows from financing activities:
Dividends paid on common stock		(16,502)		(15,469)		(8,153)		(16,502)
Proceeds from new borrowings		8,571		60,000		—		8,571
Distribution to non-controlling interests		(3,583)		(7,667)		(15,271)		(3,583)
Payment of debt issuance costs		(326)		(494)		—		(326)
Proceeds from stock option exercises		933		612		72		931
Principal repayments of term loan		(5,447)		(7,982)		(5,723)		(5,446)
Purchase of common stock		(11,139)		(3,997)
Repurchase of common stock						(3,677)		(11,139)
Acquisition of businesses, net of acquired cash of $0.0 million						—		(1,178)
Repurchases of non-controlling interests		(1,103)		(767)		(5,196)		(1,104)
Investments made by minority shareholders in consolidated affiliates		122		22,409		—		122
Net cash (used in) provided by financing activities		(28,474)		46,645
Net cash used in provided by financing activities						(37,948)		(29,654)
Effect of foreign currency exchange rates on cash and cash equivalents		200		(263)		(353)		200
Net change in cash and cash equivalents		(45,124)		(139,612)
Cash and cash equivalents, beginning of period		269,721		392,045
Cash and cash equivalents, end of period	$	224,597	$	252,433
Supplemental cash flow information:
Net change in cash, cash equivalents, and restricted cash						(45,939)		(46,722)
Total cash, cash equivalents, and restricted cash, beginning of period						219,890		288,358
Total cash, cash equivalents, and restricted cash, end of period					$	173,951	$	241,636
Noncash investing activity:
Transfer from inventory, materials and supplies to property, plant and equipment					$	6,708	$	—
Purchases of property, plant and equipment included in accounts payable and accrued expenses	$	15,668	$	10,632	$	13,202	$	15,668

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

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ATN INTERNATIONAL, 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) develops, owns and operates commercial distributed generation solar power systems in the United States and India, and (iii) owns and operates terrestrial and submarine fiber optic transport systems in the United States and in the Caribbean. The Company was incorporated in Delaware in 1987 and began trading publicly in 1991. Since that time, the Company has engaged in strategic acquisitions and investments to grow its operations. The Company actively evaluates additional domestic and international acquisition, divestiture, and investment opportunities and other strategic transactions in the telecommunications, energy-related and other industries that meet its return-on-investment and other acquisition criteria.

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 and wholesale customers in Bermuda, Guyana, the U.S. Virgin Islands, and the United States.

Wireline. The Company’s wireline services include local telephone and data services in Bermuda, the Cayman Islands, Guyana, the U.S. Virgin Islands, and the United States. The Company’s wireline services also include video services in Bermuda, the Cayman Islands, and the ~~U.S~~U.S. Virgin Islands. ~~In addition, the~~The Company offers wholesale long‑distance voice services to telecommunications carriers. Through March 8, 2017, the Company also offered facilities‑based integrated voice and data communications services and wholesale transport services to enterprise and residential customers in New England, primarily Vermont, and in New York State.

Renewable Energy. In the United States, the Company ~~provides~~provided distributed generation solar power to corporate and municipal ~~customers.~~customers through November 6, 2018. The Company also owns and develops projects in India providing distributed generation solar power to corporate customers.

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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, ~~2017:~~2018:


Segment	Services	Markets	Tradenames
U.S. Telecom	Wireless	United States (rural markets)	Commnet, Choice, Choice NTUA Wireless, WestNet, Geoverse
	Wireline	United States	Essextel, Deploycom
International Telecom	Wireline	Bermuda, Guyana, U.S. Virgin Islands, Cayman Islands	One, ~~(formerly Logic in Bermuda),~~ GTT+, Viya, ~~(formerly Innovative),~~ Logic, Fireminds
	Wireless	Bermuda, Guyana, U.S. Virgin Islands	One, ~~(formerly CellOne),~~ GTT+, Viya ~~(formerly Innovative and Choice)~~
	Video Services	Bermuda, U.S. Virgin Islands, Cayman Islands	One, ~~(formerly Bermuda CableVision),~~ Viya, ~~(formerly Innovative),~~ Logic
Renewable Energy	Solar	United States (Massachusetts, California, and New Jersey), India	Ahana Renewables, Vibrant Energy

On November 6, 2018, the Company completed the sale of its renewable energy business in the United States to CleanCapital Holdco 4, LLC.

The Company actively evaluates 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. Management fees from subsidiaries are eliminated in consolidation.

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 Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, filed with the SEC on March 1, ~~2017.~~2018.

The condensed 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. The changes did not impact operating income. For the three months ended September 30, 2016 the aggregate impact of the changes included

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a decrease to termination and access fees of $2.4 million, an increase to engineering and operations expenses of $3.1 million, a decrease to sales and marketing expenses of $0.6 million, an increase in equipment expense of $0.3 million, and a decrease to general and administrative expenses of $0.4 million. For the nine months ended September 30, 2016 the aggregate impact of the changes included a decrease to termination and access fees of $2.8 million, an increase to engineering and operations expenses of $4.4 million, a decrease to sales and marketing expenses of $0.6 million, an increase in equipment expense of $0.4 million, and a decrease to general and administrative expenses of $1.4 million.

The Company’s effective tax rate for the three months ended September 30, 2017 and 2016 was 4.0% and 45.1%, respectively. When a company operates in a jurisdiction that generates ordinary losses but does not expect to realize them, ASC 740-270-30-36(a) requires the exclusion of the respective jurisdiction from the overall annual effective tax rate (“AETR”) calculation and instead, a separate AETR should be computed. The effective tax rate for the three months ended September 30, 2017 was primarily impacted by the following items: (i) the exclusion of losses in jurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands, (ii) a $3.4 million benefit for the net capital loss due to the stock sales of our businesses in New England, New York and St. Maarten, (iii) a $3.4 million amended return refund claim filed for tax year 2013 recognized discretely, (iv) a $228 thousand increase (net) in unrecognized tax benefits recognized discretely, (v) a $536 thousand benefit (net) to record a return to accrual adjustment recognized discretely and, (vi) the mix of income generated among the jurisdictions in which it operates. The effective tax rate for the three months ended September 30, 2016 was impacted by the following items: (i) certain transactional charges incurred in connection with the Company’s acquisitions that had no tax benefit, (ii) the mix of income generated among the jurisdictions in which we operate, and (iii) $1.6 million provision (net) to record multiple discrete items. The Company’s 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. The Company’s consolidated tax rate will continue to be impacted by the mix of income generated among the jurisdictions in which it operates. The Company’s effective tax rate for the nine months ended September 30, 2017 and 2016 was 76.1% and 45.5%, respectively. The effective tax rate for the nine months ended September 30, 2017 was primarily impacted by the following items: (i) the exclusion of losses in jurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands, (ii) a $3.4 million benefit for the net capital loss due to the stock sales of its businesses in New England, New York and St. Maarten, (iii) a $3.4 million amended return refund claim filed for tax year 2013 recognized discretely in the third quarter, (iv) a $683 thousand increase (net) in unrecognized tax benefits related to current year and prior year positions recognized discretely in respective quarters, (v) a $367 thousand benefit (net) to record return to accrual adjustments recognized discretely in the respective quarter and, (vi) the mix of income generated among the jurisdictions in which it operates. The effective tax rate for the nine months ended September 30, 2016 was impacted by the following items: (i) certain transactional charges incurred in connection with the Company’s acquisitions that had no tax benefit, (ii) an impairment charge to write down the value of assets related to the Company’s wireline business, (iii) the mix of income generated among the jurisdictions in which we operate, and (iv) $2.2 million provision (net) to record multiple discrete items. The Company’s 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. The Company’s consolidated tax rate will continue to be impacted by the mix of income generated among the jurisdictions in which it operates.

Recent Accounting Pronouncements

In May 2014, the FASB issued ~~ASU~~Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), and subsequently issued related updates, (collectively known as ASC 606), which provides 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. The FASB has since modified the standard with several ASU’s which must beCompany adopted ~~concurrently. The Company’s evaluation currently identifies the impacted areas to include, but not be limited to, the following:~~

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The timing of revenue recognition and the allocation of revenue between equipment and services. The reallocation and timing impacts generally arise when bundle discounts are provided in a contract arrangement that includes equipment and service performance obligations. In these cases, the revenue will be allocated according to the relative stand-alone selling prices of the performance obligations included in the bundle and this may be different that how the products and services are billed to the customer and recognized under current guidance. The Company also notes that a large majority of its products and services are sold to customers at stand-alone selling prices and bundle discounts are limited to certain geographic markets and services.

Contract cost assets will be established to defer incremental contract acquisition costs. These costs generally relate to commissions paid to sales associates. The Company expects to utilize the practical expedient which allows expensing of contract acquisition costs when the expected amortization period is one year or less.

~~The new standard will require certain amounts be recorded as contract assets and liabilities on the balance sheet as well as enhanced disclosures around performance obligations.~~

Overall, with the exception of the impacts mentioned above, we do not expect the standard will result in a substantive change to the method or allocation of revenues between services and equipment or the timing of revenue recognition.

The Company is in the process of determining quantitative information related to the impact of the new standard and our initial assessment may change due to changes in contractual terms or new service and product offerings. The Company has identified, and is in the process of implementing, new systems, processes and controls which are required to implement ASU 2014-09. The Company will adopt the standard on January 1, 2018. ~~The Company will use the modified retrospective adoption method which requires it~~Refer to ~~apply the standard only~~Note 3 to the ~~most current period presented with the cumulative effect of applying the standard being recognized through retained earnings at the adoption date.~~Consolidated Financial Statements in this Report.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40),” which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. ASU 2014-15 is effective for annual reporting periods ending after December 15, 2016. Early application is permitted. The Company adopted this guidance for the fourth quarter ended December 31, 2016. The adoption of this guidance did not impact The Company’s Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”, which provides guidance about whether a cloud computing arrangement includes software and how to account for the license for software. The new guidance does not change the accounting for a customer’s accounting for service contracts. The adoption of ASU 2015-05 by the Company on January 1, 2017 did not have a material impact on the Company’s financial position, result of operations or cash flows.

In January 2016, the FASB issued ASU 2016-01, ~~Financial~~“Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial ~~Liabilities~~ ~~(ASU 2016-01)~~Liabilities” (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ~~ASU 2016-01 is effective~~The Company adopted this standard on January 1, ~~2018, with early~~2018. Upon adoption ~~permitted under certain circumstances. At September 30, 2017,~~ the Company ~~holds approximately~~held $20.1 million of equity investments ~~accounted~~that did not have readily determinable fair values. As a result these investments are measured at cost less impairments, adjusted for ~~under~~observable price changes of similar investments of the same issuer. The Company performs a qualitative impairment assessment of these investments quarterly by reviewing available information. The Company has not adjusted the cost ~~method. The~~of these investments since acquisition. Upon adoption, the Company ~~is continuing~~held $0.6 million of equity investments with readily determinable fair values and reclassified $0.2 million of unrealized gains on this investment to ~~evaluate the overall impact of this guidance and currently does not expect the adoption of ASU 2016-01 will have a material effect on our Consolidated Financial Statements.~~retained earnings.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and subsequently issued related updates (“ASU 2016-02”), which ~~provides~~provide comprehensive lease accounting guidance. The standard requires entities to recognize lease assets and liabilities on the balance sheet as well as disclosure of key information about leasing arrangements. ASU 2016-02 will become effective for fiscal years, and

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interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is ~~currently evaluating~~in the process of implementing new systems, processes and controls to implement the guidance. The Company will adopt the standard on January 1, 2019 by applying the new lease requirements at the effective date and will recognize a cumulative-effect adjustment to the

opening balance sheet retained earnings in the period of adoption with no adjustments to prior periods. The Company expects to adopt the package of practical expedients which allows it to not reassess: i) whether an arrangement contains a lease, ii) operating and capital lease classifications; and iii) previously recorded initial direct costs. The adoption will result in right to use assets and liabilities being recorded on the Company’s balance sheet. The Company is in the process of determining quantitative information related to the impact of the ~~new guidance~~guidance. The Company expects the adoption of ASU 2016-02 to have a material impact on its ~~Consolidated Financial Statements.~~financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The Company adopted ASU 2016-09 on January 1, 2017. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. This had no impact on the Company’s historical results. Also as a result of the adoption, the Company changed its policy election to account for forfeitures as they occur rather than on an estimated basis. The change resulted in the Company reclassifying $0.3 million from additional paid-in capital to retained earnings for the net cumulative-effect adjustment in stock compensation expense related to prior periods.

In August 2016, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ~~Accounting Standards Update (“ASU”)~~ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides further clarification on eight cash flow classification issues. The ~~standard further clarifies the classification of several elements of the statement of cash flows with the following being relevant to the company:~~

~~debt prepayment or debt extinguishment costs are classified as cash outflows from financing activities. This is consistent with the Company’s current accounting policy.~~

contingent consideration payments made three months or less after a business combination are classified as investing activities and those made after that time are classified as financing activities. The Company ~~currently classifies all payments made in a business combination as investing activities. When~~ adopted ~~the Company will reclassify $1.2 million of cash payments to financing activities for the nine months ended September 30, 2017.~~

~~proceeds from the settlement of insurance claims are classified on the basis of the nature of the loss. This is consistent with the Company’s current accounting policy.~~

distributions received from equity method investees are classified using either a cumulative earning or nature of distribution approach. The Company is currently evaluating both methods of adoption.

~~separately identifiable cash flows and application of the predominance principle. This is consistent with the Company’s current accounting policy.~~

ASU 2016-15 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. ASU 2016-15 is to be applied using a retrospective transition method for each period presented. The Company will adopt this standard on January 1, 2018. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” (“ASU 2016-18”). The amendments in ASU 2016-18 are intended to reduce diversity in practice related to the classification and presentation of changes in restricted cash or restricted cash equivalents on the statement of cash flows. The amendments in ASU 2016-18 require that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard on January 1, 2018.

The Company’s statement of cash flows reports the cash effects during a period of an entity’s operations, its investing transactions, and its financing transactions. The statement of cash flows explains the change during the period in the total cash which includes cash equivalents as well as restricted cash. The Company applies the predominance principle to classify separately identifiable cash flows based on the nature of the underlying cash flows. Debt prepayment or extinguishment costs are classified as cash outflows from financing activities. Contingent consideration payments made three months or less after a business combination are classified as investing activities and those made after that time are classified as financing activities. Proceeds from the settlement of insurance claims are classified on the basis of the nature of the loss. Prior to January 1, 2018, the Company classified all payments made in a business combination as investing activities and did not include restricted cash in total cash. This change impacted the Company’s cash flows for the nine months ended September 30, 2017 as indicated below (amounts in thousands):


Statement of Cash flows - Nine months ended September 30, 2017

		Reported		Change		Under previous guidance
Net cash provided by operating activities	$	121,988	$	—	$	121,988
Net cash used in investing activities		(139,256)		420		(138,836)
Net cash used in financing activities		(29,654)		1,178		(28,476)
Effect of foreign currency exchange rates on total cash		200		—		200
Net change in total cash	$	(46,722)	$	1,598	$	(45,124)
Total cash, beginning of period		288,358		(18,637)		269,721
Total cash, end of period	$	241,636	$	(17,039)	$	224,597

In October 2016 the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory”. The new standard eliminates all intra-entity sales of assets other than inventory, the exception under current standards that permits the tax effects of intra-entity asset transfers to be deferred until the transferred asset is sold to a third party or otherwise recovered through use. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs. Any deferred

tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new standard ~~will be~~was effective for the Company on January 1, 2018. ~~The Company does~~There was not ~~expect the~~a material impact ~~of the new standard to be material to its Consolidated Financial Statements.~~

In November 2016, the FASB issued Accounting Standards Update 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” or ASU 2016-18. The amendments in ASU 2016-18 are intended to reduce diversity in practice related to the classification and presentation of changes in restricted or restricted cash equivalents on the statement of cash flows. The amendments in ASU 2016-18 require that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period

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total amounts shown on the statement of cash flows. At September 30, 2017, the Company held $17.0 million of restricted cash. ASU 2016-18 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2017, with early adoption permitted. The Company will adopt this standard on January 1, 2018. Upon adoption of ASU 2016-18 the restricted cash balance at that time will be included in cash and cash equivalents in the statement of cash flows.Company’s consolidated financial statements upon adoption.

In January 2017, the FASB issued ~~Accounting Standards Update 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” or~~ ASU 2017-01. The amendments in ASU 2017-01 provide a screen to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. Under ASU 2017-01, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business and the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. ASU 2017-01 also narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. ASU 2017-01 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2017, with early adoption permitted. The Company prospectively adopted ASU 2017-01 in the fourth quarter of 2016. The standard will result in the Company accounting for more transactions as asset acquisitions as opposed to business combination.

~~In January 2017, the FASB issued Accounting Standards Update~~ 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” or (“ASU ~~2017-04.~~2017-04”). The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities. Instead, under the amendments in ASU 2017-04, an entity performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not more than the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard in the third quarter of 2017. ~~Refer to Note 4 for discussion of impairment tests performed during 2017.~~

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” ~~(“ASU 2017-07”)~~. The new guidance requires the service cost component to be presented separately from the other components of net benefit costs. Service cost will be presented with other employee compensation cost within income from operations. The other components of net benefit cost, such as interest cost, amortization of prior service cost and gains or losses are required to be presented ~~outside~~in other income. The Company adopted this standard on January 1, 2018.

The Company sponsors pension and other postretirement benefit plans for employees of ~~operations. This~~certain subsidiaries. Net periodic pension expense consists of service cost, interest cost, expected return on plan assets, and amortization of actuarial gains and losses. Service cost is ~~a change from~~recognized in operating income and all other components of pension expense are recognized in other income in the Company’s ~~current accounting policy~~Statement of Operations. The Company recognizes a pension or other postretirement plan’s funded status as either an asset or liability in ~~which~~its consolidated balance sheet. Actuarial gains and losses are reported as a component of other comprehensive income and amortized through other income in subsequent periods. Prior to January 1, 2018, all components of pension expense were recognized in operating income. This change impacted the Company’s Statement of Operations for the three and nine months ended September 30, 2017 by increasing operating expenses $40 thousand and $120 thousand, respectively and increasing other income by the same amount. There was no impact on income before income taxes. The Company elected the practical expedient allowing the use of the amounts disclosed for the various components of net ~~periodic~~benefit cost in the pension and other postretirement benefit costs are included within operating income. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The guidance should be applied retrospectivelyplans footnote as the basis for the ~~presentation of the service cost component in the income statement and allows a practical expedient for the estimation basis for applying the~~ retrospective ~~presentation requirements. The Company will adopt ASU 2017-07 on January 1, 2018 and we are currently in the process of evaluating the impact of this guidance on our Consolidated Financial Statements.~~application.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The standard: (a) expands and refines hedge accounting for both financial and non-financial risk components, (b) aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and (c) includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including the adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance related to cash flow and net investment hedges existing at the date of adoption should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The

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guidance related to presentation and disclosure should be applied prospectively. The Company is currently assessing the impact of ASU 2017-12 on its ~~Consolidated Financial Statements.~~consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02 “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” (“ASU 2018-02”). The standard gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income that were impacted by the Tax Cuts and Jobs Act of 2017 (“Tax Act”). The guidance is effective for all entities for fiscal years beginning after December 31, 2018 and interim periods within those fiscal years. Early adoption is permitted. The guidance may be applied in the period of adoption or retrospectively to each

impacted period. The Company has elected to early adopt ASU 2018-02 on December 31, 2017 and recorded its impact in the period of adoption. The impact of the adoption results in a $0.8 million reclassification from accumulated other comprehensive income to retained earnings, which is offset by an equivalent valuation allowance, with the net impact being zero.

3. Revenue Recognition

The Company’s significant accounting policies are detailed in “Note 2 – Summary of Significant Accounting Policies” within Item 8 of its Annual Report on Form 10-K for the year ended December 31, 2017. The Company’s accounting policies are updated as a result of adopting ASC 606 on January 1, 2018. The adoption of ASC 606 impacted the accounting for contract acquisition costs, multiyear retail wireless contracts with promotional discounts, and deferral of certain activation fees as further described below.

Revenue Recognition – The Company earns revenue from its telecommunication and renewable energy operations. The Company recognizes revenue through the following steps:

Identification of the contract with a customer

Identification of the performance obligations in the contract

Determination of the transaction price

Allocation of the transaction price to the performance obligations in the contract

Recognize revenue when, or as, we satisfy performance obligations

Revenue Recognition- Telecommunications

Wireless revenue consists of wholesale and retail revenue. Wholesale revenue is generated from providing mobile voice and data services to the customers of other wireless carriers, the provision of network switching services and certain transport services using the Company’s wireless networks. The transaction price of some wholesale revenue contracts includes variable consideration in the form of volume discounts. Management uses its judgment based on projected transaction volumes to estimate the transaction price and to allocate the transaction price to the performance obligations in the contract. Revenue is recognized over time as the service is rendered to the customer. Retail revenue is generated from providing mobile voice and data services to subscribers as well as roaming services provided to other carriers’ customers roaming into the Company’s retail markets. This revenue is recognized over time as the service is rendered. Lastly, wireless revenue includes revenues from equipment sold to customers which is recognized when the equipment is delivered to the customer.

Management considers transactions where customers purchase subsidized or discounted equipment and mobile voice or data services to be a single contract. For these contracts, the transaction price is allocated to the equipment and mobile service based on their standalone selling prices. The standalone selling price is based on the amount the Company charges for the equipment and service to similar customers. Equipment revenue is recognized when the equipment is delivered to customers and service revenue is recognized as service is rendered.

Wireline revenue is generated from access and usage fees for internet, voice and video services charged to subscribers as well as wholesale long-distance voice services provided to telecommunication carriers at contracted rates. Revenue from these contracts is recognized over time as the service is rendered to the customer.

The Company’s wireless and wireline contracts occasionally include promotional discounts such as free service periods or discounted products. If a contract contains a substantive termination penalty, the transaction price is allocated to the performance obligations based on standalone selling price resulting in accelerated revenue recognition and the establishment of a contract asset that will be recognized over the life of the contract. If a contract includes a promotional discount but no substantive termination penalty the discount is recorded in the promotional period and no contract asset is established. The Company’s customers also have the option to purchase additional telecommunication services. Generally, these options are not performance obligations and are excluded from the transaction price because they do not provide the customers with a material right.

The Company may charge upfront fees for activation and installation of some of its products and services. These fees are reviewed to determine if they represent a separate performance obligation. If they are not a separate performance obligation, the contract price associated with them is recognized over the life of the customer. If the fees represent a performance obligation they are recognized when delivered to the customer based on standalone selling price.

Sales and use and state excise taxes collected from customers that are remitted to the governmental authorities are reported on a net basis and excluded from the revenues and sales.

Revenue Recognition-Renewable Energy

Revenue from the Company’s Renewable Energy segment is generated from the sale of electricity through power purchase agreements (“PPAs”) with various customers that generally range from 10 to 25 years. The Company recognizes revenue at contractual PPA rates over time as electricity is generated and simultaneously consumed by the customer. The Company’s Renewable Energy segment also generates revenue from the sale of Solar Renewable Energy Credits (“SRECs”). Revenue is recognized over time as SRECs are sold through long-term purchase agreements at the contractual rate specified in the agreement.

Disaggregation

The Company's revenue is presented on a disaggregated basis in Note 13 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from wireline, wireless and renewable energy, as well as domestic versus international wireline and wireless services. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Contract Assets and Liabilities

The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount. In these contracts the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on its balance sheets. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retail revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including mobile voice and data services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on its balance sheets. Contract assets and liabilities consisted of the following (amounts in thousands):


		September 30, 2018		June 30, 2018		$ Change	% Change
Contract asset – current	$	1,577	$	1,434	$	143	10%
Contract asset – noncurrent		603		568		35	6%
Contract liabilities		(10,867)		(9,552)		(1,315)	14%
Net contract liability	$	(8,687)	$	(7,550)	$	(1,137)	15%

The contract asset-current is included in prepayments and other current assets, the contract asset – noncurrent is included in other assets, and the contract liabilities are included in advance payments and deposits on the Company’s balance sheet. The increase in the Company’s net contract liability was due to the timing of customer prepayments and contract billings. In the third quarter of 2018, the Company recognized revenue of $6.9 million related to its June 30, 2018 contract liability and amortized $0.5 million of the June 30, 2018 contract asset into revenue. The Company did not recognize any revenue in the third quarter of 2018 related to performance obligations that were satisfied or partially satisfied in previous periods.

Contract Acquisition Costs

The Company pays sales commissions to its employees and agents for obtaining customer contracts. These costs are incremental because they would not have been incurred if the contract was not obtained. The Company recognizes an asset for these costs and subsequently amortizes the asset on a systematic basis consistent with the pattern of the transfer of the services to the customer. The amortization period, which is between 2 and 6 years, considers both the original contract period as well as anticipated contract renewals as appropriate. The amortization period also includes renewal commissions when those commissions are not commensurate with new commissions. The Company estimates contract renewals based on its actual renewals in recent periods. When the expected amortization period is one year or less the Company utilizes the practical expedient and expenses the costs as incurred. The September 30, 2018 balance sheet includes current contract acquisition costs of $1.5 million in prepayments and other current assets and long term contract acquisition costs of $0.7 million in other assets. During the three and nine months ended September 30, 2018 the Company amortized $0.6 million and $1.2 million, respectively, of contract acquisition cost.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts that include a promotional discount. The transaction price allocated to unsatisfied performance obligations was $10.7 million at September 30, 2018. The Company expects to satisfy the remaining performance obligations and recognize the transaction price within 24 months. The Company has certain retail, wholesale, and renewable energy contracts where transaction price is allocated to remaining performance obligations. However the Company omits these contracts from the disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients.

Impacts of adoption in the current period

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. The Company elected the practical expedient to apply the new guidance only to contracts that were not substantially complete at the adoption date. The cumulative effect of adopting ASC 606 resulted in a contract asset of $1.6 million of which $1.2 million was recorded in prepayments and other current assets and $0.4 million was recorded in other assets, a contract liability of $0.2 million recorded in advance payments and deposits, contract acquisition costs of $1.5 million of which $0.9 million was recorded in prepayments and other current assets and $0.6 million was recorded in other assets, and a deferred tax liability of $0.3 million with the offset of $1.5 million recorded to retained earnings and $1.1 million recorded to minority interest. The tables below identify changes to the Company’s financial statements as of September 30, 2018 and for the three and nine months then ended as a result of the adoption of ASC 606 as compared to previous revenue guidance (amounts in thousands):


Balance Sheet - September 30, 2018
		Reported		Change		Under previous guidance
Prepayments and other current assets	$	37,239	$	(3,115)	$	34,124

Total current assets	$	349,297	$	(3,115)	$	346,182

Other assets	$	38,773	$	(1,290)	$	37,483

Total assets	$	1,184,050	$	(4,405)	$	1,179,645

Advance payments and deposits	$	18,076	$	(332)	$	17,744
Accrued taxes		12,789		(73)		12,716

Total current liabilities	$	215,326	$	(405)	$	214,921

Deferred income taxes	$	7,614	$	(302)	$	7,312

Total liabilities	$	355,003	$	(707)	$	354,296

Retained earnings	$	565,180	$	(2,107)	$	563,073
Minority interest	$	131,392	$	(1,591)	$	129,801

Total equity	$	829,047	$	(3,698)	$	825,349

Total liabilities and equity	$	1,184,050	$	(4,405)	$	1,179,645


		Statement of Operations

		Three months ended September 30, 2018						Nine months ended September 30, 2018

		Reported		Change		Under previous guidance		Reported		Change		Under previous guidance
Wireless revenue	$	52,003	$	(177)	$	51,826	$	153,046	$	(514)	$	152,532

Total revenue	$	121,138	$	(177)	$	120,961	$	343,401	$	(514)	$	342,887

Sales, marketing and customer service	$	8,995	$	4	$	8,999	$	25,969	$	622	$	26,591

Total operating expenses	$	90,314	$	4	$	90,318	$	292,615	$	622	$	293,237

Income from operations	$	30,824	$	(181)	$	30,643	$	50,786	$	(1,136)	$	49,650
Income before taxes		27,919		(181)		27,738		42,405		(1,136)		41,269
Income tax provision		7,010		69		7,079		13,018		(73)		12,945

Net income	$	20,909	$	(250)	$	20,659	$	29,387	$	(1,063)	$	28,324
Net income attributable to non-controlling interests		(3,887)		109		(3,778)		(10,705)		444		(10,261)
Net income attributable to ATN International, Inc. stockholders	$	17,022	$	(141)	$	16,881	$	18,682	$	(619)	$	18,063


		Statement of Comprehensive Loss

		Three months ended September 30, 2018						Nine months ended September 30, 2018

		Reported		Change		Under previous guidance		Reported		Change		Under previous guidance
Net income	$	20,909	$	(250)	$	20,659	$	29,387	$	(1,063)	$	28,324
Other comprehensive loss, net of tax		(2,465)		-		(2,465)		(5,867)		-		(5,867)
Comprehensive loss		18,444		(250)		18,194		23,520		(1,063)		22,457
Less: Comprehensive income attributable to non-controlling interests		(3,887)		109		(3,778)		(10,705)		444		(10,261)
Comprehensive income (loss) attributable to ATN International, Inc.	$	14,557	$	(141)	$	14,416	$	12,815	$	(619)	$	12,196


Statement of Cash Flows - Nine months ended September 30, 2018

		Reported		Change (1)		Under previous guidance
Net income	$	29,387	$	(1,063)	$	28,324

Materials and supplies, prepayments and other current assets	$	(715)	$	1,039	$	324
Accrued taxes		7,410		(73)		7,337
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities		6,926		(102)		6,824
Other assets	$	139	$	199	$	338

(1)

The adoption of ASC 606 had no impact on operating cash flows, investing cash flows, financing cash flows or net change in total cash.

4. 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 business combinations, fair value of indefinite-lived intangible assets, goodwill, assessing the impairment of assets, revenue, and income taxes. Actual results could differ significantly from those estimates.

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4.5. IMPACT OF HURRICANES IRMA AND MARIA

During September 2017, the economy, the Company’s ~~operations~~customer base and ~~customers~~its operations in the U.S. Virgin Islands were severely impacted by ~~both Hurricane~~Hurricanes Irma and ~~subsequently Hurricane~~ Maria (collectively, the “Hurricanes”). Both ~~its~~the Company’s wireless and wireline networks and commercial operations were severely damaged by these storms. As a result of the significant damage to ~~its~~the Company’s wireline network and the ~~ongoing~~ lack of consistent commercial power in the territory, ~~since~~ the ~~Hurricanes, the~~

Company ~~has been~~was unable to provide most of its wireline services, which comprise the majority of revenue in the business. Accordingly, it issued approximately $4.4 million of service credits to its subscribers in September, which are reflected as a reduction of its wireline revenue within our International Telecom segment. Due to of the ongoing poor conditions on the islands, the continued lack of consistent commercial power, and the damage to its wireline infrastructure, the Company currently expects this ~~impact to wireline revenue to continue for the next several quarters and estimates that it will be most pronounced in the fourth quarter of 2017.~~

~~As of November 9, 2017, the Company’s preliminary assessment of the level of wireline and wireless network damage by~~business, after the Hurricanes and ~~corresponding loss on~~through much of 2018 to date.

During the disposal of network has been estimated as $35.2 million. This amount, along with $1.4 million of additional operating expenses that it specifically incurred during the quarter to address the impact of the Hurricanes, has been recorded in its statement of operations for the three ~~and nine~~ months ended September 30, 2017. The level of network damage assessment and losses on damaged assets is based on information known as of the filing of this Form 10-Q. Given the current conditions in the USVI, including curfews, limited access to areas of the islands and the lack of consistent commercial power, additional damages may be discovered upon being able to fully access these areas and/or once commercial power is restored and2018, the Company ~~can bring its networks fully online. This assessment will continue~~received $7.2 million in additional funding from the FCC’s Universal Service Fund (“USF”) which largely contributed to ~~be updated in subsequent quarters as more information becomes available.~~

~~The Company has insurance coverage for~~ a ~~combination of replacement costs of damaged property, extra expenses and business interruption and could potentially receive proceeds up to an aggregate of approximately $34.0~~$4.6 million against these insurance claims but it believes that total losses for these items will exceed these aggregate proceeds. The Company does not expect to record any insurance recovery, however, until 2018, when its assessment is complete and the Company can determine the amount and nature of its claims under its insurance policies.

In connection with the above, the Company also determined there was a triggering event to assess the related reporting unit’s goodwill and indefinite lived intangible assets for impairment. After consideration of the write-downs of other assets within the reporting unit described above, the impairment test for goodwill and indefinite lived intangible assets was performed by comparing the fair value of the reporting unit to its carrying amount. The Company calculated the fair value of the reporting unit by utilizing an income approach, with Level 3 valuation inputs, including a cash flow discount rate of 14.5%. Determining fair value requires the exercise of significant judgment, including judgments about appropriate discount rates, perpetual growth rates, and the amount and timing of expected future cash flows. The discount rate was based on a weighted‑average cost of capital, which represents the average rate the business would pay its providers of debt and equity. The cash flows employed in the discounted cash flow analysis were derived from internal and external forecasts. The impairment assessment concluded that no impairment was required for the goodwill and indefinite lived intangible assets because the fair value of the reporting unit exceeded its carrying amount.

~~5. ACQUISITIONS AND DISPOSITIONS~~

~~International Telecom~~

~~Acquisitions~~

~~One Communications (formerly KeyTech Limited) Acquisition~~

On May 3, 2016, the Company completed its acquisition of a controlling interest in One Communications Ltd. (formerly known as KeyTech Limited, “One Communications”), a publicly held Bermuda company listed on the Bermuda Stock Exchange (“BSX”) that provides broadband and video services and other telecommunications services to

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~~residential and enterprise customers in Bermuda and the Cayman Islands (the “One Communications Acquisition”).~~ Subsequent to the completion of the Company’s acquisition, One Communications changed its legal name from KeyTech Limited and changed its “CellOne” and “Logic” trade names in Bermuda to “One Communications”. ~~Prior to the Company’s acquisition, One Communications also owned a minority interest of approximately 43%~~increase in the Company’s ~~previously held and consolidated subsidiary, Bermuda Digital Communications Ltd. (“BDC”),~~revenues in that provides wireless services in Bermuda. As part of the transaction, the Company contributed its ownership interest of approximately 43% in BDC and approximately $42 million in cash in exchange for a 51% ownership interest in One Communications. As part of the transaction, BDC was merged with and into a company within the One Communications group. The approximate 15% interest in BDC held in the aggregate by BDC’s minority shareholders was converted into the right to receive common shares in One Communications. Following the transaction, BDC became wholly owned by One Communications, and One Communications continues to be listed on the BSX. A portion of the cash proceeds that One Communications received upon closing was used to fund a one-time special dividend to One Communications’ existing shareholders and to retire One Communications’ subordinated debt. On May 3, 2016, the Company began consolidating the results of One Communications within our financial statements in our International Telecom segment.

~~The One Communications Acquisition was accounted for~~market as ~~a business combination of a controlling interest in One Communications in accordance with ASC 805,~~ ~~Business Combinations, and the acquisition of an incremental ownership interest in BDC in accordance with ASC 810,~~ ~~Consolidation. The total purchase consideration of $41.6 million of cash was allocated~~compared to the ~~assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition.~~

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Consideration Transferred

Cash consideration - One Communications
$
34,518

Cash consideration - BDC

7,045

Total consideration transferred

41,563

Non-controlling interests - One Communications

32,909

Total value to allocate
$
74,472

Value to allocate - One Communications

67,427

Value to allocate - BDC

7,045

Purchase price allocation One Communications:

Cash

8,185

Accounts receivable

6,451

Other current assets

3,241

Property, plant and equipment

100,892

Identifiable intangible assets

10,590

Other long term assets

3,464

Accounts payable and accrued liabilities

(16,051)

Advance payments and deposits

(6,683)

Current debt

(6,429)

Long term debt

(28,929)

Net assets acquired

74,731

Gain on One Communications bargain purchase
$
7,304

Purchase price allocation BDC:

Carrying value of BDC non-controlling interest acquired

2,940

Excess of purchase price paid over carrying value of non-controlling interest acquired
$
4,105

~~The acquired property, plant and equipment is comprised of telecommunication equipment located~~same period in Bermuda and the Cayman Islands. The property, plant and equipment was valued using the income and cost approaches. Cash flows were discounted at an approximate 15% rate to determine fair value under the income approach. The property, plant and equipment have useful lives ranging from 3 to 18 years and the customer relationships acquired have useful lives ranging from 9 to 12 years. The fair value of the non-controlling interest was determined using the income approach and a discount rate of approximately 15%. The acquired receivables consist of trade receivables incurred in the ordinary course of business. The Company has subsequently collected the full amount of the receivables.

The purchase price and resulting bargain purchase gain are the result of the market conditions and competitive environment in which One Communications operates along with the Company's strategic position and resources in those same markets. Each of the Company and One Communications realized that their combined resources could better serve customers in Bermuda. The bargain purchase gain is included in operating income for2017. For the nine months ended September 30, ~~2016.~~

~~Viya (formerly Innovative) Transaction~~

On July 1, 2016, the Company completed its acquisition of all of the membership interests of Caribbean Asset Holdings LLC (“CAH”), the holding company for the group of companies operating video services, Internet, wireless and landline services in the U.S. Virgin Islands, British Virgin Islands and St. Maarten (collectively, “Viya”), from

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~~the~~ ~~National Rural Utilities Cooperative Finance Corporation~~ ~~(“CFC”). In April 2017, the U.S. Virgin Islands operations and~~2018, the Company’s ~~existing wireless operations rebranded their tradenames from “Innovative” and “Choice”, respectively, to “Viya.” The Company acquired the Viya operations for~~received a ~~contractual purchase price~~total of $145.0 million, reduced by purchase price adjustments of $5.3 million (the “Viya Transaction”). In connection with the transaction, the Company financed $60.0 million of the purchase price with a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative (“RTFC”) on the terms and conditions of a Loan Agreement by and among RTFC, CAH and ATN VI Holdings, LLC, the parent entity of CAH and a wholly-owned subsidiary of the Company. The Company funded the remaining purchase price with (i) $51.9 million in cash paid to CFC, (ii) $22.5$15.4 million in additional ~~cash paid directly~~USF funding which offset $11.6 million decrease in revenue as compared to ~~fund Viya’ s pension~~the same period in 2017. This level of additional funding will not continue in future quarters.

During the ~~fourth quarter of 2016, and (iii) $5.3 million recorded as restricted cash to satisfy Viya’ s other postretirement benefit plans. On July 1, 2016,~~nine months ended September 30, 2018, the Company ~~began consolidating~~spent $78.9 million for network restoration and resiliency enhancements which allowed the ~~results~~reconnection of ~~Viya within its financial statements in its International Telecom segment. Subsequent to the Viya Transaction, the Company sold the acquired~~a significant majority of households and businesses ~~in St. Maarten and the British Virgin Islands, as further described in “Dispositions” below.~~

The Viya Transaction was accounted as a business combination in accordance with ASC 805. The consideration transferred to CFC of $111.9 million, and used for the purchase price allocation, differed from the contractual purchase price of $145.0 million due to certain GAAP purchase price adjustments including a reduction of $5.3 million related to working capital adjustments and the Company assuming pension and other postretirement benefit liabilities of $27.8 million as discussed above. The Company transferred $51.9 million in cash and $60.0 million in loan proceeds to CFC for total consideration of $111.9 million that was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the ~~date~~period end. The Company expects that its wireline network restoration work is substantially complete, however, returning the Company’s revenue to pre-Hurricane levels may take significant time as a result of population movements, the ~~acquisition. The table below represents~~economic impact that the ~~allocation of the consideration transferred to the net assets of Viya based on their acquisition date fair values:~~

Consideration Transferred
$
111,860

Non-controlling interests

221

Total value to allocate

112,081

Purchase price allocation:

Cash

4,229

Accounts receivable

6,553

Materials & supplies

6,533

Other current assets

1,927

Property, plant and equipment

108,284

Telecommunication licenses

7,623

Goodwill

20,586

Intangible assets

7,800

Other assets

4,394

Accounts payable and accrued liabilities

(15,971)

Advance payments and deposits

(7,793)

Deferred tax liability

(2,935)

Pension and other postretirement benefit liabilities

(29,149)

Net assets acquired
$
112,081

~~The acquired property, plant and equipment is comprised of telecommunication equipment located in the U.S Virgin Islands,~~ ~~British Virgin Islands and St. Maarten (subsequently disposed, see below).~~ ~~The property, plant and equipment was valued using the income and cost approaches. Cash flows were discounted between 14% and 25% based~~Hurricanes had on the ~~risk associated with the cash flows to determine fair value under the income approach. The property, plant~~market, and equipment have useful lives ranging from 1 to 18 years and the customer relationships acquired have useful lives ranging from 7 to 13 years. The fair value of the non-controlling interest was determined using the income approach with discount rates ranging from 15% to 25%. The acquired receivables consist of trade receivables incurred in the ordinary course of business. The Company has collected full amount of the receivables. The Company recorded a liability equal

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~~to the funded status of the plans in~~ its ~~purchase price allocation. Discount rates between 3.6% and 3.9% were used to determine the pension and postretirement benefit obligations.~~subscriber base’s appetite for continued wireline services.

The goodwill generated from the Viya Transaction is primarily related to value placed on the acquired employee workforces, service offerings, and capabilities of the acquired businesses as well as expected synergies from future combined operations. The goodwill is not deductible for income tax purposes.6. DISPOSITIONS

The Company acquired Viya’s pension and other postretirement benefit plans as part of the transaction. The plans cover employees located in the U.S. Virgin Islands and consist of noncontributory defined benefit pension plans and noncontributory defined medical, dental, vision and life benefit plans. As noted above, the contractual purchase price included an adjustment related to the funded status of Viya’s pension and other postretirement benefit plans. As contemplated by the transaction, the Company contributed approximately $22.5 million during the fourth quarter of 2016 to Viya’s pension plans. This payment is recorded as a cash outflow from operations in the statement of cash flows in the fourth quarter of 2016. At September 30, 2017, the Company held $5.1 million of restricted cash equal to the unfunded status of the other postretirement benefit plans. The cash is restricted due to the Company’s intent to use the cash to satisfy future postretirement benefit obligations.

~~Dispositions~~

On December 15, 2016, the Company transferred control of its subsidiary in Aruba to another stockholder in a nonreciprocal transfer. Subsequent to that date, it no longer consolidated the results of the operations of the Aruba business. The Company did not recognize a gain or loss on the transaction.International Telecom

On January 3, 2017, the Company completed the sale of the Viya cable operations located in St. Maarten for $4.8 million and recognized a gain of $0.1 million on the transaction.

On August 18, 2017, the Company completed the sale of the Viya cable operations located in the British Virgin Islands. The ~~company~~Company did not recognize a gain or loss on the transaction.

The results of the ~~St. Maarten, Aruba, and~~ British Virgin Islands and St. Maarten operations are not material to the Company’s historical results of operations. Since the dispositions do not relate to a strategic shift in ~~our~~its operations, the historical results and financial position of the operations are presented within continuing operations.

U.S. Telecom

~~Acquisition~~

~~In July 2016,~~On March 8, 2017, the Company ~~acquired certain telecommunications fixed assets and~~completed the ~~associated operations located in the western United States. The acquisition qualified as a business combination for accounting purposes. The Company transferred $9.1 million~~sale of cash consideration in the acquisition. The consideration transferred was allocated to $10.2 million of acquired fixed assets, $3.5 million of deferred tax liabilities, and $0.7 million to other net liabilities, and the resulting $3.1 million in goodwill which is not deductible for income tax purposes. Results of operations for the business are included in the U.S. Telecom segment and are not material to the Company’s historical results of operations.

~~Disposition~~

~~On August 4, 2016, the Company entered into a stock purchase agreement to sell~~ its integrated voice and data communications and wholesale transport businesses in New England and New York ~~(“Sovernet”). On March 8, 2017, the Company completed the sale~~ for consideration of $25.9 million (the “Sovernet Transaction”). The consideration included $20.9 million of cash, $3.0 million of receivables, and $2.0 million of contingent consideration. The $3.0 million of receivables ~~are~~were held in escrow to satisfy working capital adjustments in favor of the acquirer, to fund certain capital expenditure projects related to the assets sold and to secure the Company’s indemnification obligations. The contingent consideration represents the fair value of future payments related to certain operational milestones of the

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disposed assets. The value of the contingent consideration could ~~be up~~increase to as much as $4.0 million based on whether or not ~~the~~certain operational milestones ~~are~~were achieved by December 31, 2017. The table below identifies the assets and liabilities transferred (amounts in thousands):

Consideration Received
$
25,926

Assets and liabilities disposed

Cash

1,821

Accounts receivable

1,696

Inventory

639

Prepaid

1,034

Property, plant and equipment

25,294

Other assets

288

Accounts payable and accrued liabilities

(1,718)

Advance payments and deposits

(1,897)

Net assets disposed

27,157

Consideration less net assets disposed

(1,231)

Transaction costs

(1,156)

Loss
$
(2,387)


Consideration Received	$	25,926

Assets and liabilities disposed
Cash		1,821
Accounts receivable		1,696
Inventory		639
Prepayments and other current assets		1,034
Property, plant and equipment		25,294
Other assets		288
Accounts payable and accrued liabilities		(1,718)
Advance payments and deposits		(1,897)
Net assets disposed		27,157

Consideration less net assets disposed		(1,231)

Transaction costs		(1,156)

Loss	$	(2,387)

Prior to the closing of the ~~transaction,~~Sovernet Transaction, the Company repurchased non-controlling interests from minority shareholders in a Sovernet subsidiary for $0.7 million. The non-controlling interest had a book value of zero. Additionally, the Company recorded a loss on deconsolidation of $0.5 million.

The Company incurred $1.2 million of transaction related charges pertaining to legal, accounting and consulting services associated with the ~~transaction,~~Sovernet Transaction, of which $0.6 million ~~were~~was incurred during the ~~nine months~~year ended ~~September 30,~~December 31, 2017. Since the Sovernet ~~disposition~~Transaction does not relate to a strategic shift in ~~our~~the Company’s operations, the historic results and financial position of the operations are presented within continuing operations.

Subsequent to close of the Sovernet Transaction, management continually monitored and assessed the probability of earning the contingent consideration. In September 2017, based on progress toward achieving the operational milestones, ~~necessary to earn the contingent consideration~~ and the December 31, 2017 deadline under which ~~such milestones are~~ to ~~be achieved,~~do so, management ~~has~~ determined that ~~the Company is unlikely to earn~~earning the contingent consideration ~~or any material portion thereof.~~was unlikely. As a result the fair value of the contingent consideration was reduced to zero. The amount was recorded as a loss on disposition of assets within operating income during the ~~three and~~ nine months ended September 30, 2017.

~~Prior to~~ The disposed assets did not achieve the ~~Sovernet Transaction, in~~operational milestones by the second quarter of 2016, the Company recorded an impairment loss of $11.1 million on assets related to Sovernet. The impairment consisted of a $3.6 million impairment of property, plant and equipment and $7.5 million impairment of goodwill.

~~Pro forma Results~~

The following table reflects unaudited pro forma operating results of the Company for the nine months ended September 30, 2016 as if the One Communications and Viya Transactions occurred on January 1, 2016. The pro forma amounts adjust One Communications’ and Viya’s results to reflect the depreciation and amortization that would have been recorded assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied from January 1, 2016. Also, the pro forma results were adjusted to reflect changes to the acquired entities’

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capital structure related to the transaction. One Communications’ results reflect the retirement of $24.7 million of debt. Viya’s results reflect the retirement of $185.8 million of debt and the addition of $60 million of purchase price debt. Finally, the Company’s results were adjusted to reflect the Company’s incremental ownership in BDC. The historical results of the Vibrant Energy, and Western United States acquisitions are not included in the pro forma results as their impacts were not material to the Company’s historical results.

The pro forma results for the nine months ended September 30, 2016 include $5.4 million of impairment charges recorded by One Communications and Viya prior to the Company’s acquisition of the businesses. Amounts are presented in thousands, except per share data.

Nine months ended September 30,

(unaudited)

2016

As

Pro-

Reported

Forma

Revenue

$
328,471

$
407,096

Net income attributable to ATN International, Inc. Stockholders

10,206

12,768

Earnings per share:

Basic

0.63

0.79

Diluted

0.63

0.79

The three months ended September 30, 2016 is not presented because both the One Communications and Viya transactions were completed on or before July 1, 2016. As a result there are no pro forma adjustments. The unaudited pro forma data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the acquisitions had been consummated on these dates or of future operating results of the combined company following the transactions.December 31, 2017 deadline.

Renewable Energy

~~Vibrant Energy~~

On ~~April 7, 2016,~~November 6, 2018, the Company completed the sale of its ~~acquisition of a~~U.S. solar business that owns and manages distributed generation solar power ~~development portfolio in India (the “Vibrant Energy Acquisition”). The business operates~~projects operated under the Ahana name ~~Vibrant Energy.~~in Massachusetts, California and New Jersey (the “U.S. Solar Operations”) to CleanCapital Holdco 4, LLC. The ~~Company also retained several employees~~transaction has a total value of approximately $122.6 million, which includes a cash purchase price of $65.4 million and the assumption of approximately $57.2 million in debt, and is subject to certain other post-closing adjustments (the “U.S. Solar Transaction”). Approximately $6.5 million of the ~~seller~~purchase price will be held in escrow for a period of twelve months after the ~~United Kingdom and India~~closing to oversee the development, construction and operation of the India solar projects. The projects to be developed initially are located in the states of Andhra Pradesh, Maharashtra and Telangana and are based on a commercial and industrial business model, similar tosecure the Company’s ~~existing renewable energy operations in the United States. As of April 7, 2016,~~indemnification obligation and the Company ~~began consolidating~~expects to record a gain between $10 million and $15 million during the ~~results~~fourth quarter of ~~Vibrant Energy in its financial statements within its Renewable Energy segment.~~

2018.

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~~The Vibrant Energy Acquisition was accounted for as a business combination in accordance with ASC 805. The total purchase consideration~~As of ~~$6.2 million was allocated to~~September 30, 2018 the assets ~~acquired~~ and liabilities ~~assumed at their estimated fair values~~being disposed in the U.S. Solar Transaction were classified as ~~of the date of the acquisition.~~held for sale. The table below ~~represents~~identifies the ~~allocation of the consideration transferred to the net~~ assets ~~of Vibrant Energy based on their acquisition date fair values (in~~and liabilities (amounts in thousands):

Consideration Transferred
$
6,193

Purchase price allocation:

Cash

136
Prepayments and other assets

636
Property, plant and equipment

7,321
Goodwill

3,279
Accounts payable and accrued liabilities

(5,179)
Net assets acquired
$
6,193


Assets and Liabilities Held for Sale
Accounts receivable	$	1,599
Prepayments and other current assets		783
Property, plant and equipment		113,569
Accumulated depreciation		(18,474)
Current assets held for sale	$	97,477

Accounts payable	$	1,742
Taxes payable		(586)
Current portion of long-term debt		10,126
Long-term debt, excluding current portion		48,034
Deferred income taxes		21,357
Current liabilities held for sale	$	80,673

The ~~consideration transferred includes $4.9~~U.S. Solar Operations reported income before income taxes of $0.4 million ~~paid as of~~and $1.1 million for the three months ended September 30, 2018 and 2017, respectively, and $2.4 million and $3.8 million for the nine months ended September 30, 2018 and 2017, respectively. The U.S. Solar Operations reported non-controlling interest expense of $0.2 million and $0.3 million for the three months ended September 30, 2018 and 2017, respectively, and $0.7 million and $0.8 million for the nine months ended September 30, 2018 and 2017, respectively. Lastly, the U.S. Solar Operations reported depreciation expense of $1.3 million ~~payable at future dates, which is contingent upon the passage of time~~ and achievement of initial production milestones that are considered probable. The acquired property, plant and equipment is comprised of solar equipment and the accounts payable and accrued liabilities consists mainly of amounts payable for certain asset purchases. The fair value of the property, plant, and equipment was based on recent acquisition costs$3.8 million for the ~~assets, given their recent purchase dates from third parties.~~ three and nine months ended September 30, 2018, respectively.

The ~~goodwill is~~U.S. Solar Operations do not ~~deductible for income tax purposes~~qualify as a discontinued operation because the disposition does not represent a strategic shift that has a major effect on the Company’s operations and ~~primarily relates to~~financial results. As a result, the ~~assembled workforce of the business acquired.~~historical results are included in continuing operations.

7. 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~~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~~non‑exchange traded derivative contracts.

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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.

Assets and liabilities of the Company measured at fair value on a recurring basis as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 are summarized as follows (in thousands):


			September 30, 2017						September 30, 2018
			Significant Other						Significant Other
	Quoted Prices in		Observable				Quoted Prices in		Observable
	Active Markets		Inputs				Active Markets		Inputs
Description	(Level 1)		(Level 2)		Total		(Level 1)		(Level 2)		Total
Certificates of deposit	$	—	$	391	$	391	$	—	$	380	$	380
Money market funds	$	2,287	$	—	$	2,287		2,399		—		2,399
Short term investments	$	371	$	7,486	$	7,857		314		—		314
Commercial paper	$	—	$	50,107	$	50,107		—		23,977		23,977
Interest rate swap	$	—	$	(42)	$	(42)		—		277		277
Total assets and liabilities measured at fair value	$	2,658	$	57,942	$	60,600	$	2,713	$	24,634	$	27,347


	December 31, 2016						December 31, 2017
			Significant Other						Significant Other
	Quoted Prices in		Observable				Quoted Prices in		Observable
	Active Markets		Inputs				Active Markets		Inputs
Description	(Level 1)		(Level 2)		Total		(Level 1)		(Level 2)		Total
Certificates of deposit	$	—	$	391	$	391	$	—	$	391	$	391
Money market funds	$	29,027	$	—	$	29,027		2,894		—		2,894
Short term investments	$	1,751	$	7,486	$	9,237		555		6,521		7,076
Commercial paper	$	—	$	29,981	$	29,981		—		49,954		49,954
Total assets measured at fair value	$	30,778	$	37,858	$	68,636
Interest rate swap								—		52		52
Total assets and liabilities measured at fair value							$	3,449	$	56,918	$	60,367

Certificate of Deposit

As of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, 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 September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, 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.

Short Term Investments and Commercial Paper

As of September 30, ~~2017~~2018 and December 31, ~~2016, this~~2017, these asset ~~class~~classes consisted of short term foreign and U.S. corporate bonds, equity securities, and commercial paper. Corporate bonds and ~~including~~ commercial paper are classified within Level 2 of the fair value hierarchy because the fair value is based on observable market data. Equity securities are classified within Level 1 because fair value is based on quoted market prices in active markets for identical assets. The Company held equity securities with a fair value of $0.4 million at September 30, 2018 and net income for the three months then ended included $0.1 million of losses on these securities.

Other Fair Value Disclosures

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The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturities of these financial instruments.

The fair value of the interest rate swap is measured using ~~level~~Level 2 inputs.

~~In the third quarter of 2017,~~At September 30, 2018, the Company ~~made strategic~~holds $23.1 million of equity securities consisting of non-controlling investments ~~totaling $18.1 million.~~in privately held companies. These investments, over which the Company does not have the ability to exercise significant influence, are without readily determinable fair values. The investments are ~~accounted~~measured at cost, less any impairment, adjusted for ~~as cost method investments. At September 30, 2017,~~observable price changes of similar investments of the ~~Company holds $20.1 million of investments accounted for under the cost method. The Company has not estimated the fair value of these investments because the fair~~same issuer. Fair value is not ~~readily determinable and~~estimated for these investments if there ~~have been~~are no identified events or changes in circumstances ~~which would~~that may have an ~~adverse~~ effect on the fair value of the investment. The carrying value of the strategic investments was $23.1million and $20.1 million at September 30, 2018 and December 31, 2017, respectively. As of September 30, 2018 no impairments or price adjustments were recorded on the investments. Strategic investments are included with other assets on the consolidated balance sheets.

The fair value of long-term debt is estimated using Level 2 inputs. At September30, 2018, the fair value of long-term debt, including the current portion, was $153.2 million and its book value was $150.0 million. At December 31, 2017, the fair value of long-term debt, including the current portion, was $~~163.1~~ ~~million and its book value was $159.7~~ ~~million. At December 31, 2016, the fair value of long-term debt, including the current portion, was $159.9~~159.2 million and its book value was $~~156.8~~155.8 million.

8. LONG-TERM DEBT

The Company has a credit facility with CoBank, ACB and a syndicate of other lenders to provide for a $225 million revolving credit facility (the “Credit Facility”) that includes (i) up to $10 million under the Credit Facility for standby or trade letters of credit, (ii) up to $25 million under the 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.~~sub-facility ( the “Swingline Loans”).

Amounts the Company may borrow under the Credit Facility bear interest at a rate equal to, at its option, either (i) the London Interbank Offered Rate (~~LIBOR~~(“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%. The Swingline ~~loans~~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~~;LIBOR; (ii) the federal funds effective rate (as defined in the Credit ~~Facility~~)Facility) plus 0.50% per annum; and (iii) the prime rate (as defined in the Credit ~~Facility~~)Facility). The applicable margin is determined based on the ratio (as further defined in the Credit Facility) of the Company’s indebtedness to EBITDA. Under the terms of the Credit Facility, the Company must also pay a fee ranging from 0.175% to 0.250% of the average daily unused portion of the Credit Facility over each calendar quarter.

On January 11, 2016, the Company amended the Credit Facility (the “Amendment”) to increase the amount the Company is permitted to invest in “unrestricted” subsidiaries of the Company, which are not subject to the covenants of the Credit Facility,, from $275.0 million to $400.0 million (as such increased amount shall be reduced from time to time by the aggregate amount of certain dividend payments to the Company’s stockholders). The Amendment also provides for the incurrence by the Company of incremental term loan facilities, when combined with increases to revolving loan commitments under the Credit Facility,, in an aggregate amount not to exceed $200.0 million, which facilities shall be subject to certain conditions, including pro forma compliance with the total net leverage ratio financial covenant under the Credit ~~Facility~~.Facility.

The 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 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 Credit Facility contains a financial covenant that imposes a maximum ratio of indebtedness to EBITDA. As of September 30, ~~2017,~~2018, the Company was in compliance with all of the financial covenants of the Credit Facility.

As of September 30, ~~2017,~~2018, the Company had no borrowings under the Credit Facility.

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Ahana Debt

On December 24, 2014, in connection with the acquisition of its U.S. solar business that owns and manages distributed generation solar power projects operated under the Ahana ~~Acquisition,~~name in Massachusetts, California and New Jersey, the Company assumed $38.9 million in long-term debt (the “Original Ahana Debt”). The Original Ahana Debt included multiple loan agreements with banks that bore interest at rates between 4.5% and 6.0%, matured at various times between 2018 and 2023 and were secured by certain solar facilities. Repayment of the Original Ahana Debt was being made in cash on a monthly basis until maturity.

The Original Ahana Debt also included a loan from Public Service Electric & Gas (the “PSE&G Loan”). The PSE&G Loan bears interest at 11.3%, matures in 2027, and is secured by certain solar facilities. Repayment of the Original Ahana Debt with PSE&G can be made in either cash or ~~solar renewable energy credits (“SRECs”),~~sale of SREC, at the Company’s discretion, with the value of the SRECs being fixed at the time of the ~~loan’s~~PSE&G Loan closing. Historically, the Company has made all repayments of the PSE&G Loan using SRECs.

On December 19, 2016, Ahana’s wholly owned subsidiary, Ahana Operations, issued $20.6 million in aggregate principal amount of 4.427% senior notes due 2029 (the “Series A Notes”) and $45.2 million in aggregate principal amount of 5.327% senior notes due 2031 (the “Series B Notes” and collectively with the Series A Notes and the PSE&G Loan, the “Ahana Debt”). Interest and principal are payable semi-annually, until the respective maturity dates of March 31, 2029 (for the Series A Notes) and September 30, 2031 (for the Series B Notes). Cash flows generated by the solar projects that secure the Series A Notes and Series B Notes are only available for payment of such debt and are not available to pay other obligations or the claims of the creditors of Ahana or its subsidiaries. However, subject to certain restrictions, Ahana Operations holds the right to the excess cash flows not needed to pay the Series A Notes and Series B Notes and other obligations arising out of the securitizations. The Series A Notes and Series B Notes are secured by certain assets of Ahana and are guaranteed by certain of its subsidiaries.

A portion of the proceeds from the issuances of the Series A Notes and Series B Notes ~~were~~was used to repay the Original Ahana Debt in full except for the PSE&G Loan which ~~remains~~remained outstanding after the refinancing.

The Series A Notes and the Series B Notes contain customary representations, warranties and certain affirmative and negative covenants, which limit additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. The Series A Notes and Series B Notes are subject to financial covenants that ~~imposes~~impose 1) a maximum debt service coverage ratio and 2) a maximum ratio of the present value of Ahana’s future cash flow to the aggregate principal amounts of all outstanding obligations. These financial covenants are tested semi-annually for Ahana

Operations on a consolidated basis and on an individual basis for certain subsidiaries. Both the Series A Notes and Series B Notes may be redeemed at any time, in whole or part, subject to a make-whole premium. As of September 30, ~~2017,~~2018, the Company was in compliance with all of the financial covenants of the Series A Notes and the Series B Notes.

The Company capitalized $2.8 million of fees associated with the Series A Notes and Series B Notes which is recorded as a reduction to the debt carrying amount and will be amortized over the life of the notes.

As of September 30, ~~2017, $2.3~~2018, $2.0 million of the Original Ahana Debt ~~$64.6~~and $58.6 million of the Series A Notes and Series B Notes remained outstanding, and ~~$2.7~~$2.5 million of the capitalized fees remain unamortized.

The Original Ahana Debt, the Series A Notes and Series B Notes were classified as held for sale as part of the U.S. Solar Transaction as of September 30, 2018. On November 6, 2018, the Company consummated the U.S. Solar Transaction, which included the transfer of the Original Ahana Debt, the Series A Notes and Series B Notes to the purchaser. Refer to Note 6 to the Consolidated Financial Statements in this Report.

One Communications Debt

In connection with the acquisition of One Communications ~~Transaction~~ on May 3, 2016, the Company assumed $35.4 million in debt (the “One Communications Debt”) in the form of a loan from HSBC Bank Bermuda Limited. The One Communications Debt was scheduled to mature in 2021, was bearing interest at the three-month LIBOR rate plus a margin of 3.25%, and had repayment being made quarterly. ~~As of March 31, 2017, $28.9 million of the One Communications Debt was outstanding.~~ The One Communications Debt contained customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that limited the maximum ratio of indebtedness less cash to annual operating cash flow.

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On May 22, 2017, the Company amended and restated the One Communications Debt to increase the original facility to $37.5 million. The amended and restated debt is scheduled to mature on May 22, 2022 and bears an interest at the three month LIBOR rate plus an applicable margin rate ranging between 2.5% to 2.75% paid quarterly. The amended and restated One Communications Debt contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and financial covenants that limit the ratio of tangible net worth to long term debt and total net debt to EBITDA and require a minimum debt service coverage ratio (net cash generated from operating activities plus interest expense less net capital expenditures to debt repayments plus interest expense). The Company was in compliance with its covenants ~~are tested annually commencing the fiscal year ending December 31, 2017.~~as of September 30, 2018

As a condition of the ~~amended and restated agreement,~~amendment of the One Communications Debt, within 90 days of the refinance date the Company iswas required to enter into a hedging arrangement with a notional amount equal to at least 30% of the ~~outstanding~~outstanding loan balance and a term corresponding to the maturity of the One Communications Debt. ~~As of~~In July 2017, wethe Company entered into an amortizing interest rate swap. This swap has been designated as a cash flow hedge, has an original notional amount of $11.0 million, has an interest rate of 1.874%, and expires in March 2022.

In connection with the ~~amended and restated debt,~~amendment of the One Communications Debt, the Company increased the limit of its overdraft facility from $5.0 million to $10.0 million. This facility has an interest rate of three month LIBOR plus 1.75%.

The Company capitalized $0.3 million of fees associated with the One Communications Debt, which is recorded as a reduction to the debt carrying amount and will be amortized over the life of the debt.

As of September 30, ~~2017, $36.6~~2018, $32.8 million of the One Communications Debt was outstanding, there were no borrowings under the overdraft facility, and ~~$0.3~~$0.2 million of the capitalized fees remain unamortized.

Viya Debt (formerly Innovative Debt)

On July 1, 2016, the Company and certain of its subsidiaries entered into a $60.0 million loan agreement (the “Viya Debt”) with Rural Telephone Finance Cooperative (“RTFC”). The Viya Debt agreement contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties,

sale of assets and liens) and a financial covenant that limits the maximum ratio of indebtedness ~~less cash~~ to annual operating cash ~~flow. The~~flow to 3.5 to 1.0 (the “Net Leverage Ratio”). This covenant is tested on an annual basis ~~commencing in 2017.~~at the end of each fiscal year. Interest is paid quarterly at a fixed rate of 4.0% and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt may be subject to a fee under certain circumstances. The debt is secured by certain assets of the Company’s Viya subsidiaries and is guaranteed by the Company. Earlier in 2018, the Company began funding the restoration of Viya’s network following the Hurricanes through an intercompany loan arrangement which exceeded certain limitations on Viya incurring additional debt. RTFC consented to these intercompany advances and increased the intercompany debt limit to $50.0 million. During the three months ended September 30, 2018, RTFC increased the limit to $75.0 million at the Company’s request due to an increase in the on-going restoration and resiliency costs.

The Company paid a fee of $0.9 million to lock the interest rate at 4% per annum over the term of the ~~debt.~~Viya Debt. The fee was recorded as a reduction to the ~~debt~~Viya Debt carrying amount and will be amortized over the life of the loan.

As of September 30, ~~2017,~~2018, $60.0 million of the Viya Debt remained outstanding and ~~$0.8~~$0.7 million of the rate lock fee was unamortized.

8.9. GOVERNMENT GRANTS

Universal Service Fund

The USF is a system of subsidies and fees managed by the FCC. USF funds are disbursed to telecommunication providers through four programs: the Connect America Fund; Lifeline; Schools and Libraries Program (“E-Rate”); and Rural Health Care Support. The Company ~~has received funding from~~participates in the ~~U.S. Government~~Connect America Fund; Lifeline, E-Rate programs, and ~~its agencies under Stimulus and Universal Services Fund programs. These are generally designed to fund telecommunications infrastructure expansion into rural or underserved areas~~Rural Health Care Support programs as further described below. All of the ~~United States. The fund~~funding programs are ~~evaluated~~subject to ~~determine if they represent funding related to capital expenditures (capital grants) or operating activities (income grants).~~certain operational and reporting compliance requirements. The Company believes it is in compliance will all applicable requirements.

~~Phase I~~The FCC’s Mobility ~~Fund Grants~~

~~As part of~~Funds and High Cost Support programs are administered through the ~~Federal Communications Commission’s (“FCC”) reform of its Universal Service Fund (“USF”)~~Connect America Fund. The High-Cost Support program ~~which previously provided support to carriers seeking to offer~~subsidizes telecommunications services in ~~high-cost areas~~rural and ~~to low-income households, the~~remote areas. The FCC created the Phase I Mobility Fund (“Phase I Mobility Fund”), a one-time award meant to support wireless coverage in underserved geographic areas in the United States.

The Company ~~has~~ received

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~~$21.1~~ $21.1 million of Phase I Mobility Fund support to its wholesale wireless business (the “Mobility Funds”) to be used 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 was 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 from the award date.

~~The Mobility Funds projects and their results are included within our U.S. Telecom segment. As of~~ ~~September~~ ~~30, 2017, the Company had received approximately $21.1~~ ~~million in Mobility Funds.~~service. Of these funds, $~~7.2~~ $7.2 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. The remaining $13.9 million received ~~offsets~~offset operating expenses from inception of ~~which $9.0~~the program through part of the third quarter of 2018. The Mobility Funds projects and their operating results are included within the Company’s U.S. Telecom segment. As part of the receipt of the Mobility Funds, the Company committed to comply with certain additional FCC construction and other requirements. If the requirements are not met the funds may be subject to claw back provisions. The Company currently expects to comply with all applicable requirements related to these funds.

During the three and nine months ended September 30, 2018, the Company recorded $4.1 million ~~has been~~and $12.4 million, respectively, of revenue from High Cost Support in its International Telecom segment for its U.S. Virgin Islands operations. Also, during the three and nine months ended September 30, 2018, the Company recorded $0.3 million and $0.9 million, respectively, of High Cost Support revenue in its US Telecom segment. The Company is subject to ~~date; $4.9 million~~certain operational, reporting and construction requirements as a result of this funding and the Company believes that it is in compliance with all of these requirements. In addition, the Company recorded ~~within current liabilities~~revenue of $7.2 million and $15.4 million during the three and nine months ended September 30, 2018, respectively, from additional funding authorized by the FCC following the Hurricanes.

In August 2018, the Company was awarded $79.9 million over 10 years under the Connect America Fund Phase II Auction. The funding requires the Company to provide fixed broadband and voice services to certain eligible

areas in the ~~Company’s consolidated balance sheet as~~United States. The Company is subject to operational and reporting requirements under the program. The Company expects to begin receiving the funding in 2019 and are still evaluating how these funds will be recorded.

The E-Rate program provides discounted telecommunication access to eligible schools and libraries. The E-Rate program awards providers grants to build network connectivity for eligible participants and pays recurring charges for eligible broadband services. The grants are distributed upon completion of a project. As of September 30, ~~2017.~~2018, the Company was awarded approximately $15.4 million of E-Rate grants with construction completion obligations between June 2019 and June 2020. Once these projects are constructed the Company is obligated to provide service to the E-Rate program participants. The ~~balance sheet presentation~~Company is ~~based~~in various stages of constructing the networks and has not received any of the funds. The Company expects to meet all requirements associated with these grants.

The Company also receives funding to provide discounted telecommunication services to eligible customers under the E-Rate, Lifeline, and Rural Health Care Support Programs. During the three and nine months ended September 30, 2018 the Company recorded revenue of $2.0 million and $6.3 million, respectively, in the aggregate from these programs. The Company is subject to certain operational and reporting requirements under the above mentioned programs and it believes that it is in compliance with all of these requirements.

Tribal Bidding Credit

As part of the broadcast television spectrum incentive auction, the FCC implemented a tribal lands bidding credit to encourage deployment of wireless services utilizing 600 MHz spectrum on the ~~timing~~lands of federally recognized tribes. The Company received $7.4 million under this program in the ~~expected usage~~first quarter of 2018. A portion of these funds will be used to offset network capital costs and a portion will be used to offset the ~~funds~~costs of supporting the networks. The Company’s current estimate is that it will use $5.4 million to offset capital costs and, consequently, reduce future depreciation expense and $2.0 million to offset the cost of supporting the network which will reduce future ~~operations expenses through~~operating expense. The credits are subject to certain requirements, including deploying service by January 2021 and meeting minimum coverage metrics. If the ~~expiration of~~requirements are not met the ~~arrangement in July 2018.~~funds may be subject to claw back provisions. The Company currently expects to comply with all applicable requirements related to these funds.

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9.10. EQUITY

Stockholders’ equity was as follows (in thousands):


	Nine months ended September 30,												Nine months ended September 30,
	2017						2016						2018						2017
	ATN		Non-Controlling				ATN		Non-Controlling		Total		ATN		Non-Controlling				ATN		Non-Controlling		Total
	International, Inc.		Interests		Total Equity		International, Inc.		Interests		Equity		International, Inc.		Interests		Total Equity		International, Inc.		Interests		Equity
Equity, beginning of period	$	677,055	$	132,114	$	809,169	$	680,299	$	81,425	$	761,724	$	688,727	$	141,496	$	830,223	$	677,055	$	132,114	$	809,169
Stock-based compensation		5,415		—		5,415		5,034		—		5,034		5,071		—		5,071		5,415		—		5,415
Comprehensive income:		0		0						0												0
Net income		(12,016)		13,535		1,519		10,206		10,400		20,606		18,682		10,705		29,387		(12,016)		13,535		1,519
Projected pension benefit obligation		513		—		513		—		—		—		—		—		—		513		—		513
Unrealized loss on securities		(65)		—		(65)		—		—		—
Unrealized (gain) loss on securities														226		—		226		(65)		—		(65)
Reclassifications of gains on sale of marketable securities to net income		(1,044)		—		(1,044)		—		—		—		—		—		—		(1,044)		—		(1,044)
Foreign Currency translation adjustment		921		—		921		(200)		—		(200)		(6,093)		—		(6,093)		921		—		921
Total comprehensive income		(11,691)		13,535		1,844		10,006		10,400		20,406
Total comprehensive income (loss)														12,815		10,705		23,520		(11,691)		13,535		1,844
Issuance of common stock upon exercise of stock options		1,057		—		1,057		1,371		—		1,371		571		—		571		1,057		—		1,057
Dividends declared on common stock		(13,680)		—		(13,680)		(15,838)		—		(15,838)		(8,116)		—		(8,116)		(13,680)		—		(13,680)
Distributions to non-controlling interests		—		(3,761)		(3,761)		—		(7,828)		(7,828)		—		(15,487)		(15,487)		—		(3,761)		(3,761)
Investments made by non-controlling interests		—		123		123		—		22,409 (1)		22,409		—		—		—		—		123		123
Acquisition of One Communications		—		—		—		—		32,717		32,717
Acquisition of Viya		—		—		—		—		221		221
Acquisition from non-controlling interests		—		—		—		(306)		(270)		(576)
Loss on deconsolidation of subsidiary		—		529		529		—		—		—		—		—		—		—		529		529
Change in accounting method- adoption of ASC 2016-09		110		—		110		—		—		—
Change in accounting method- adoption of ASU 2016-09														—		—		—		110		—		110
Change in accounting method- adoption of ASU 2014-09														1,488		1,147		2,635		—		—		—
Repurchase of non-controlling interests		(670)		(434)		(1,104)		(4,105)		(2,940)		(7,045)		1,273		(6,469)		(5,196)		(670)		(434)		(1,104)
Purchase of treasury stock		(12,968)		—		(12,968)		(4,755)		—		(4,755)		(4,174)		—		(4,174)		(12,968)		—		(12,968)
Equity, end of period	$	644,628	$	142,106	$	786,734	$	671,706	$	136,134	$	807,840	$	697,655	$	131,392	$	829,047	$	644,628	$	142,106	$	786,734

~~(1)~~

During the nine months ended September 30, 2016, the holder of a non-controlling interest in one of ATN’s U.S. Telecom subsidiaries contributed $21.7 million of cash to the subsidiary. ATN maintained a controlling interest in the subsidiary both before and after the contribution.

11. INCOME TAXES

The Company’s effective tax rate for the three months ended September 30, 2018 and 2017 was 25.1% and 4.0%, respectively. The effective tax rate for the three months ended September 30, 2018 was primarily impacted by the following items: (i) a $1.5 million increase (net) of unrecognized tax positions recognized discretely, (ii) a $516

2826

~~Table~~thousand benefit (net) to record a return to accrual adjustment recognized discretely, (iii) a $1.4 million benefit (net) to record a valuation allowance release on an indefinite lived intangible asset recognized discretely, and (iv) the mix of ~~Contents~~income generated among the jurisdictions in which the Company operates along with the exclusion of losses in jurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands and India.

The effective tax rate for the three months ended September 30, 2017 was primarily impacted by the following items: (i) the exclusion of losses in jurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands, (ii) a $3.4 million benefit for the net capital loss due to the stock sales of its businesses in New England, New York and St. Maarten, (iii) a $3.4 million amended return refund claim filed for tax year 2013 recognized discretely, (iv) a $228 thousand increase (net) in unrecognized tax benefits recognized discretely, (v) a $536 thousand benefit (net) to record a return to accrual adjustment recognized discretely and, (vi) the mix of income generated among the jurisdictions in which the Company operates.

The Company’s effective tax rate for the nine months ended September 30, 2018 and 2017 was 30.7% and 76.1%, respectively. The effective tax rate for the nine months ended September 30, 2018 was primarily impacted by the following items: (i) a $2.0 million increase (net) of unrecognized tax positions recognized discretely, (ii) a $585 thousand benefit (net) to record a return to accrual adjustment recognized discretely, (iii) a $514 thousand benefit for the release of a capital loss valuation allowance due to a capital gain on a sale of a wireless license, (iv) a $1.4 million benefit (net) to record a valuation allowance adjustment on an indefinite lived intangible asset recognized discretely, (v) a $695 thousand provision for the intercompany sale of assets from the U.S. to the U.S. Virgin Islands, and (vi) the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in jurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands and India.

The effective tax rate for the nine months ended September 30, 2017 was primarily impacted by the following items: (i) the exclusion of losses in jurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands, (ii) a $3.4 million benefit for the net capital loss due to the stock sales of its businesses in New England, New York and St. Maarten, (iii) a $3.4 million amended return refund claim filed for tax year 2013 recognized discretely in the third quarter, (iv) a $683 thousand increase (net) in unrecognized tax benefits related to current year and prior year positions recognized discretely in respective quarters, (v) a $367 thousand benefit (net) to record return to accrual adjustments recognized discretely in the respective quarter and, (vi) the mix of income generated among the jurisdictions in which the Company operates.

The Company’s 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. The Company’s consolidated tax rate will continue to be impacted by any transactional or one-time items in the future and the mix of income in any given year generated among the jurisdictions in which it operates. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its consolidated financial statements as of December 31, 2017. In the third quarter of 2018 the Company made adjustments to the provisional amounts, including continued refinements to its deferred taxes of a $0.4 million provision from the $18.0 million benefit recorded at year-end and a $2.5 million provision on the deemed repatriation of undistributed foreign earnings in addition to the $7.4 million provision recorded at year-end. The Company continues to collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service (“IRS”), and other standard-setting bodies. The accounting for the tax effects of the Tax Act will be completed by the end of 2018. While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from its accrued positions as a result of uncertain and complex application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, the Company could record additional provisions or benefits for U.S. federal, state, and foreign tax matters in future periods as new information becomes available.

~~10.~~12. NET INCOME (LOSS) PER SHARE

For the three and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, outstanding stock options were the only potentially dilutive securities. The reconciliation from basic to diluted weighted average shares of common stock outstanding is as follows (in thousands):


	Three months ended September 30,		Nine months ended September 30,		Three months ended September 30,		Nine months ended September 30,
	2017	2016	2017	2016	2018	2017	2018	2017
Basic weighted-average shares of common stock outstanding	16,178	16,148	16,177	16,128	15,958	16,178	15,987	16,177
Stock options	—	93	—	100	63	—	55	—
Diluted weighted-average shares of common stock outstanding	16,178	16,241	16,177	16,228	16,021	16,178	16,042	16,177

The above calculation does not include approximately 5,000 shares related to certain stock options because the effects of such options were anti-dilutive during both the three and nine months ended September 30, 2016, respectively.

~~11.~~

13. SEGMENT REPORTING

The ~~Company’s~~Company has the following three reportable ~~segments consist of the following:~~and operating segments: i) U.S. Telecom, ~~consisting of the Company’s former U.S. Wireless and U.S. Wireline segments,~~ ii) International Telecom, ~~consisting of the Company’s former Island Wireless and International Integrated Telephony segments and the results of its One Communications and Viya Acquisitions as discussed below,~~ and iii) Renewable ~~Energy, consisting of the Company’s former Renewable Energy segment and the results of its Vibrant Energy Acquisition.~~ Energy.

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


For the Three Months Ended September 30, 2017
For the Three Months Ended September 30, 2018											For the Three Months Ended September 30, 2018

	U.S.		International		Renewable		Corporate and					U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	36,830	$	20,424	$	—	$	—	$	57,254		$	29,784	$	22,219	$	—	$	—	$	52,003
Wireline		2,336		53,973		—		—		56,309			2,024		61,693		—		—		63,717
Renewable Energy		—		—		4,974		—		4,974			—		—		5,418		—		5,418
Equipment and Other		945		2,614		36		—		3,595
Total Revenue		40,111		77,011		5,010		—		122,132			31,808		83,912		5,418		—		121,138
Depreciation and amortization		6,301		12,088		1,656		1,112		21,157			5,665		12,441		1,819		1,459		21,384
Non-cash stock-based compensation		—		8		29		1,621		1,658			—		20		29		1,344		1,393
Operating income (loss)		15,987		(28,491)		976		(7,997)		(19,525)			22,774		16,239		(177)		(8,012)		30,824


For the Three Months Ended September 30, 2016
For the Three Months Ended September 30, 2017											For the Three Months Ended September 30, 2017

	U.S.		International		Renewable		Corporate and					U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	40,076	$	21,075	$	—	$	—	$	61,151		$	37,774	$	22,531	$	—	$	—	$	60,305
Wireline		6,936		59,193		—		—		66,129			2,336		54,481		—		—		56,817
Renewable Energy		—		—		5,784		—		5,784			—		—		5,010		—		5,010
Equipment and Other		548		5,045		138		—		5,731
Total Revenue		47,560		85,313		5,922		—		138,795			40,110		77,012		5,010		—		122,132
Depreciation and amortization		6,211		12,861		1,227		1,567		21,866			6,301		12,088		1,656		1,112		21,157
Non-cash stock-based compensation		—		—		28		1,371		1,399			—		8		29		1,621		1,658
Operating income (loss)		18,120		11,358		2,822		(10,219)		22,081			15,987		(28,531)		976		(7,997)		(19,565)

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~~Table of Contents~~


For the Nine Months Ended September 30, 2017
For the Nine Months Ended September 30, 2018											For the Nine Months Ended September 30, 2018

	U.S.		International		Renewable		Corporate and					U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	108,499	$	59,446	$	—	$	—	$	167,945		$	85,767	$	67,279	$	—	$	—	$	153,046
Wireline		10,443		171,125		—		—		181,568			4,824		168,259		—		—		173,083
Renewable Energy		—		—		14,765		—		14,765			—		—		17,272		—		17,272
Equipment and Other		1,939		7,101		174		—		9,214
Total Revenue		120,881		237,672		14,939		—		373,492			90,591		235,538		17,272		—		343,401
Depreciation and amortization		19,098		38,339		4,941		3,526		65,904			19,013		35,907		5,492		4,190		64,602
Non-cash stock-based compensation		—		146		86		5,205		5,437			—		68		86		4,917		5,071
Operating income (loss)		44,520		(7,713)		3,263		(25,952)		14,118			35,839		37,450		3,687		(26,190)		50,786


For the Nine Months Ended September 30, 2016
For the Nine Months Ended September 30, 2017											For the Nine Months Ended September 30, 2017

	U.S.		International		Renewable		Corporate and					U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	117,194	$	60,106	$	—	$	—	$	177,300		$	110,398	$	65,379	$	—	$	—	$	175,777
Wireline		18,793		103,397		—		—		122,190			10,483		172,294		—		—		182,777
Renewable Energy		—		—		16,935		—		16,935			—		—		14,938		—		14,938
Equipment and Other		1,716		10,071		259		—		12,046
Total Revenue		137,703		173,574		17,194		—		328,471			120,881		237,673		14,938		—		373,492
Depreciation and amortization		17,510		27,376		3,642		4,385		52,913			19,098		38,339		4,941		3,526		65,904
Non-cash stock-based compensation		—		—		86		4,946		5,032			—		146		86		5,205		5,437
Operating income (loss)		39,698		28,320		(734)		(27,398)		39,886			44,520		(7,832)		3,263		(25,953)		13,998

~~(1) Corporate and Other items refer to corporate overhead costs and consolidating adjustments~~

~~Selected balance sheet data for each of our segments as of September 30, 2017 and December 31, 2016 consists of the following (in thousands):~~

U.S.

International

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
September 30, 2017

Cash, Cash equivalents, and Investments

$
31,328

$
111,336

$
19,147

$
70,643

$
232,454
Total current assets

61,473

163,235

25,301

84,729

334,738
Fixed assets, net

100,349

347,421

158,554

18,271

624,595
Goodwill

35,268

25,421

3,280

—

63,969
Total assets

221,528

586,747

201,024

174,719

1,184,018
Total current liabilities

53,065

86,359

18,561

15,692

173,677
Total debt

—

95,464

64,187

—

159,651
December 31, 2016

Cash, Cash equivalents, and Investments

$
22,235

$
97,681

$
27,378

$
131,664

$
278,958
Total current assets

50,983

143,201

37,440

135,745

367,369
Fixed assets, net

129,274

372,741

130,268

15,429

647,712
Goodwill

35,268

24,326

3,279

—

62,873
Total assets

240,006

597,454

190,253

170,505

1,198,218
Total current liabilities

23,162

95,502

12,603

18,838

150,105
Total debt

—

91,316

65,507

—

156,823

~~Table of Contents~~

Capital Expenditures













U.S.

International

Renewable

Corporate and

Nine months ended September 30,

Telecom

Telecom

Energy

Other (1)

Consolidated

2017

$
17,396

$
54,775

$
31,327

$
4,778

$
108,276

2016

26,709

36,543

10,326

4,877

78,455

(1)

Corporate and Other items refer to corporate overhead costs and consolidating ~~adjustments.~~adjustments

~~12.~~

Selected balance sheet data for each of the Company’s segments as of September 30, 2018 and December 31, 2017 consists of the following (in thousands):



	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
September 30, 2018
Cash, Cash equivalents, and Investments	$	25,202	$	50,753	$	12,085	$	73,386	$	161,426
Assets held for sale		—		—		97,477		—		97,477
Total current assets		48,003		99,624		121,070		80,600		349,297
Fixed assets, net		80,088		473,086		41,716		19,537		614,427
Goodwill		35,269		25,421		3,280		—		63,970
Total assets		187,831		640,123		178,663		177,433		1,184,050
Liabilities held for sale		—		—		80,673		—		80,673
Total current liabilities		23,825		84,310		84,659		22,532		215,326
Total debt		—		91,871		—		—		91,871
December 31, 2017
Cash, Cash equivalents, and Investments	$	19,585	$	110,700	$	8,120	$	76,627	$	215,032
Total current assets		40,975		190,396		18,060		93,497		342,928
Fixed assets, net		99,462		367,485		158,447		17,752		643,146
Goodwill		35,269		25,421		3,280		—		63,970
Total assets		200,142		629,007		192,406		184,050		1,205,605
Total current liabilities		41,248		91,887		14,754		13,816		161,705
Total debt		—		94,577		61,215		—		155,792


		Capital Expenditures

		U.S.		International			Renewable		Corporate and
Nine months ended September 30,		Telecom		Telecom			Energy		Other (1)		Consolidated
2018	$	9,461	$	136,790	(2)	$	1,642	$	6,385	$	154,278
2017		17,396		54,775			31,327		4,778		108,276

(1)

Corporate and other items refer to corporate overhead costs and consolidating adjustments

(2)

Includes $78.9 million of expenditures used to rebuild the Company’s damaged networks in the U.S. Virgin Islands which was impacted by the Hurricanes. These expenditures were financed, in part, by the $34.6 million of insurance proceeds the Company received during the first quarter of 2018.

14. 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.

~~Currently, the~~The Company’s Guyana subsidiary, GTT, 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. In connection therewith, the Company and GTT have met on several occasions with officials of the Government of Guyana to discuss potential modifications of GTT’s exclusivity and other rights under the existing agreement and license. On July 18, 2016, the Guyana Parliament passed telecommunications legislation, and on August 5, 2016, the legislation was signed into law that introduces material changes to many features of Guyana’s existing telecommunications regulatory regime with the intention of creating a more competitive market. The legislation does not have the effect of terminating the Company’s exclusive license. Instead the legislation as passed requires the Minister of Telecommunications to conduct further proceedings and issue implementing orders to enact the various provisions of the legislation, including the issuance of competing licenses. The Company cannot predict the manner in which or when the legislation will be implemented by the Minister of Telecommunications.

In ~~December 2016~~January 2018 the Government of Guyana and the Company met to discuss modifications of the Company’s exclusivity rights and other rights under its existing agreement and license. Those discussions are on-going, however, there can be no assurance that those discussions will be concluded before the Government issues new licenses contemplated by the legislation or at all, or that such discussions will satisfactorily address the Company’s contractual exclusivity rights. 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.

Historically, GTT 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,~~the Company believes unlikely, 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 GTT agreed to with the Government. GTT 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. In 2011, GTT paid the NFMU $2.6 million representing payments in full for 2008, 2009 and 2010. However, by letter dated November 23, 2011, the NFMU stated that it did not concur with GTT’s inference that the amount was payment in full for the specified years as it was ~~their~~NFMU’s continued

~~Table of Contents~~

opinion that the final calculation for ~~GSM~~ spectrum fees was not agreed upon and was still an outstanding issue. By further letter dated November 24, 2011, the NFMU further rejected a proposal that was previously submitted jointly by GTT and another communications provider that outlined a recommended methodology for the calculation of these fees. The NFMU stated that it would prepare its own recommendation for consideration by the Minister of Telecommunications, who would decide the matter. GTT has paid undisputed spectrum fees according to the methodology used for its 2011 payments, and has reserved amounts payable according to this methodology. There have been limited further discussions on this subject and GTT has not had the opportunity to review any recommendation made by the NFMU 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 GTT and ATN claiming breach of an interconnection agreement for domestic cellular services in Guyana and related claims. CTL asserted over $200 million in damages. GTT 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. In November 2009 and again in April 2013, CTL filed and then abandoned a similar claim against GTT and the Public Utility Commission in the High Court of Guyana. CTL once more filed a similar claim against the Company in December 2017, seeking damages of $25 million; however, this matter was dismissed in May 2018. CTL made an untimely filing for an appeal thereafter, which the court subsequently denied.

On May 8, 2009, a GTT competitor, Digicel, filed a lawsuit in Guyana challenging the legality of GTT’s exclusive license rights under Guyana’s constitution. Digicel initially filed this lawsuit against the Attorney General of Guyana on May 13, 2009, GTT petitioned to intervene in the suit in order to oppose Digicel’s claims and GTT’s petition was granted on May 18, 2009. GTT filed an answer to the charge on June 22, 2009. The case remains pending. The

Company believes that any legal challenge to GTT’s exclusive license rights granted in 1990 is without merit and the Company intends to defend vigorously against such legal challenge.

GTT has filed several lawsuits in the High Court of Guyana asserting that, despite its denials, Digicel is engaged in international bypass in violation of ~~GTT’s~~GTT’s exclusive license rights, the interconnection agreement between the parties, and the laws of Guyana. GTT is seeking injunctive relief to stop the illegal bypass activity and money damages. Digicel filed counterclaims alleging that GTT has violated the terms of the interconnection agreement and Guyana laws. These suits, filed in 2010 and 2012, have ~~yet~~been consolidated with Digicel’s constitutional challenge described above and is scheduled to proceed to trial ~~and it remains uncertain as to when a trial date may be set.~~ in the second quarter of 2019. GTT intends to prosecute these matters vigorously.

GTT 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. The Company maintains that any liability GTT might be found to have with respect to the disputed tax assessments, totaling $44.1 million, would be offset in part by the amounts necessary to ensure that GTT’s return on investment was no less than 15% per annum for the relevant periods. The Company believes that some adverse outcome is probable and has accordingly accrued $5.0 million as of September 30, ~~2017~~2018 for these matters.

15. PLATFORM INVESTMENTS

During the third quarter of 2017, the Company completed its investment in a managed services and technology business based in Bermuda.

During the second quarter of 2018, the Company established a new platform, based in the United States, to develop in-building wireless network technology that enables building owners to capitalize on the growing demand for better indoor wireless solutions. Also during the second quarter of 2018, the Company established a new platform, based in the United States, to further develop large scale fiber networks to serve the telecommunications and content provider industries with network infrastructure to develop network solutions.

16. SUBSEQUENT EVENTS

On November 6, 2018, the Company completed the sale of its U.S. solar business that owns and manages distributed generation solar power projects operated under the Ahana name in Massachusetts, California and New Jersey to CleanCapital Holdco 4, LLC. The transaction has a total value of approximately $122.6 million, which includes a cash purchase price of $65.4 million and the assumption of approximately $57.2 million in debt, and is subject to certain other post-closing adjustments. Approximately $6.5 million of the purchase price will be held in escrow for a period of twelve months after the closing to secure the Company’s indemnification obligation and the Company expects to record a gain between $10 million and $15 million during the fourth quarter of 2018.

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, ~~2016~~2017 (our ~~“2016~~“2017 Annual Report on Form 10-K”), and 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) develops, owns and operates commercial distributed generation solar power systems in the United States and India, and (iii) owns and operates terrestrial and submarine fiber optic transport systems in the United States and in the Caribbean. We were incorporated in Delaware in 1987, ~~and~~ began trading publicly in ~~1991.~~1991 and spun off more than half of our operations to stockholders in 1998. Since that time, we have engaged in strategic acquisitions and investments to grow our operations. We actively evaluate additional domestic and international acquisition, divestiture, 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

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and risks involved, see “~~Risk~~“Risk Factors—We are actively evaluating investment, acquisition and other strategic opportunities, which may affect our long-term growth ~~prospects~~.prospects.” in our ~~2016~~2017 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 and wholesale customers in Bermuda, Guyana, the U.S. Virgin Islands, and the United States.

Wireline. Our wireline services include local telephone and data services in Bermuda, the Cayman Islands, Guyana, the U.S. Virgin Islands, and the United States. Our wireline services also include video services in Bermuda, the Cayman Islands, and the ~~U.S~~U.S. Virgin Islands. ~~In addition, we~~We offer wholesale long‑distance voice services to telecommunications carriers. Through March 8, 2017, we also offered facilities‑based integrated voice and data communications services and wholesale transport services to enterprise and residential customers in New England, primarily Vermont, and in New York State.

Renewable Energy. In the United States, we ~~provide~~provided distributed generation solar power to corporate and municipal ~~customers. Beginning in April 2016, we began developing~~customers through November 6, 2018. We also own and develop projects in India ~~to provide~~providing distributed generation solar power to corporate customers.

The following chart summarizes the operating activities of our principal subsidiaries, the segments in which we report our revenue and the markets we served as of September 30, ~~2017:~~2018:


Segment	Services	Markets	Tradenames
U.S. Telecom	Wireless	United States (rural markets)	Commnet, Choice, Choice NTUA Wireless, WestNet, Geoverse
	Wireline	United States	Essextel, Deploycom
International Telecom	Wireline	Bermuda, Guyana, U.S. Virgin Islands, Cayman Islands	One, ~~(formerly Logic in Bermuda),~~ GTT+, Viya, ~~(formerly Innovative),~~ Logic, Fireminds
	Wireless	Bermuda, Guyana, U.S. Virgin Islands	One, ~~(formerly CellOne),~~ GTT+, Viya ~~(formerly Innovative and Choice)~~
	Video Services	Bermuda, U.S. Virgin Islands, Cayman Islands	One, ~~(formerly Bermuda CableVision),~~ Viya, ~~(formerly Innovative),~~ Logic
Renewable Energy	Solar	United States (Massachusetts, California, and New Jersey), India	Ahana Renewables, Vibrant Energy

On November 6, 2018, we completed the sale of our renewable energy business in the United States to CleanCapital Holdco 4, LLC.

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~~revenues, which is eliminated in consolidation.

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For information about our financial segments, see Note 13 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Impact of Hurricanes Irma and Maria

During September 2017, the economy, our customer base and our operations ~~and customers~~ in the U.S. Virgin Islands were severely impacted by ~~Hurricane~~Hurricanes Irma and ~~subsequently Hurricane~~ Maria (collectively, the “Hurricanes”). Both our wireless and wireline networks and commercial operations were severely damaged by these storms. As a result of the significant damage to our wireline network and the ~~ongoing~~ lack of consistent commercial power in the territory, we ~~have been~~were unable to provide most of our wireline services, which comprise the majority of revenue in ~~the~~this business, since the Hurricanes. Accordingly, we issued approximately $4.4 million of service credits to our subscribers in September which are reflected as a reduction of our wireline revenue within our International Telecom segment. Due to the ongoing poor conditions on the islands, the continued lack of consistent commercial power, and the damage to our wireline infrastructure, we currently expect this impact to wireline revenue to continue for the next several quarters and estimate that it will be most pronounced in the fourth quarter of 2017.

~~As of November 9, 2017, our preliminary assessment of the level of wireline and wireless network damage by~~after the Hurricanes and ~~corresponding loss has been estimated as $35.2 million. This amount, along with $1.4~~through much of 2018 to date.

During the three months ended September 30, 2018, we received $7.2 million ofin additional ~~operating expenses that we specifically incurred during~~funding from the ~~quarter~~Federal Communications Commission’s (“FCC”) Universal Service Fund (“USF”), which largely contributed to ~~address the impact of the Hurricanes, has been recorded~~a $4.6 million increase in our ~~statement of operations for~~revenues in that market as compared to the ~~three and~~same period in 2017. For the nine months ended September 30, 2018, we received a total of $15.4 million in additional USF funding which offset $11.6 million decrease in revenue as compared to the same period in 2017. ~~The~~This level of additional funding will not continue in future quarters.

During the nine months ended September 30, 2018, we spent $78.9 million for network ~~damage assessment~~restoration and ~~losses on damaged assets is based on information known~~resiliency enhancements which allowed the reconnection of a significant majority of households and businesses as of the ~~filing~~period end. We expect that our wireline network restoration work is substantially complete, however, returning our revenue to pre-Hurricane levels may take significant time as a result of ~~this Form 10-Q. Given~~population movements, the ~~conditions in~~economic impact the ~~USVI, including curfews, limited access to areas of~~Hurricanes had on the ~~islands~~market, and ~~the lack of consistent commercial power, additional damages may be discovered upon being able to fully access these areas and/or once commercial power is restored and we can bring~~ our ~~networks fully online. This assessment will continue to be updated in subsequent quarters as more information becomes available.~~ subscriber base’s appetite for continued wireline services.

We have insurance coverage for a combination of replacement costs of damaged property, extra expenses and business interruption and could potentially receive proceeds up to an aggregate of approximately $34.0 million against these insurance claims but we believe that total losses for these items will exceed these aggregate proceeds. We do not expect to record any insurance recovery, however, until 2018, when our assessment is complete and we can determine the amount and nature of our claims under our insurance policies.

~~Acquisitions~~

~~International Telecom~~

During 2016, we completed our acquisitions of a controlling interest in One Communications (formerly KeyTech Limited) as well as all of the membership interests of Caribbean Asset Holdings LLC, the holding company for the Viya (formerly Innovative) group of companies (collectively, the “2016 International Telecom Acquisitions”).

~~One Communications (formerly KeyTech Limited)~~

On May 3, 2016, we completed our acquisition of a controlling interest in One Communications Ltd. (formerly known as KeyTech Limited, “One Communications”), a publicly held Bermuda company listed on the Bermuda Stock Exchange (“BSX”) that provides broadband and cable television services and other telecommunications services to residential and enterprise customers under the “One Communications” name in Bermuda and the “Logic” name in the Cayman Islands (the “One Communications Acquisition”). Subsequent to the completion of our acquisition, One Communications legally changed its name from KeyTech Limited and changed its “CellOne” and “Logic” trade names in Bermuda to One Communications. Prior to the acquisition, One Communications also owned a minority interest of approximately 43% in our previously held and consolidated subsidiary, Bermuda Digital Communications Ltd. (“BDC”) that provides wireless services in Bermuda. As part of the transaction, we contributed our ownership interest of approximately 43% in BDC and approximately $42.0 million in cash in exchange for a 51% ownership interest in One Communications. As part of the transaction, BDC was merged with and into a company within the One Communications group and the approximate 15% interest in BDC held, in the aggregate, by BDC’s minority shareholders was converted into the right to receive common shares in One Communications. Following the transaction, BDC became wholly owned by One Communications, and One Communications continues to be listed on the BSX. A portion of the cash proceeds

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that One Communications received upon closing was used to fund a one-time special dividend to One Communications’ existing shareholders and to retire One Communications subordinated debt. On May 3, 2016, we began consolidating the results of One Communications within our financial statements in our International Telecom segment.

~~The One Communications Acquisition was accounted for as a business combination of a controlling interest in One Communications in accordance with ASC 805,~~ ~~Business Combinations, and the acquisition of an incremental ownership interest in BDC in accordance with ASC 810,~~ ~~Consolidation. The total purchase consideration of $41.6 million of cash was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition.~~ Dispositions

~~Viya (formerly Innovative)~~Renewable Energy (U.S. Operations) - Subsequent Event

On ~~July 1, 2016,~~September 9, 2018, we ~~completed~~entered into a Purchase and Sale Agreement to sell our ~~acquisition~~U.S. solar business that owns and manages distributed generation solar power projects operated under the Ahana name in Massachusetts, California and New Jersey (the “U.S. Solar Operations”). The transaction has a total value of all of the membership interests of Caribbean Asset Holdings LLC (“CAH”), the holding company for the group of companies operating video services, Internet, wireless and landline services in the U.S. Virgin Islands, British Virgin Islands and through January 2017, St. Maarten (collectively, “Viya”), from the National Rural Utilities Cooperative Finance Corporation (“CFC”). In April 2017, CAH’s operations and our existing wireless operations in the U.S. Virgin Islands rebranded their tradenames from “Innovative” and “Choice”, respectively, to “Viya.” We acquired these operations forapproximately $122.6 million, which includes a ~~contractual~~cash purchase price of ~~$145.0~~$65.4 million ~~reduced by purchase price~~and the assumption of approximately $57.2 million in debt, and is subject to certain other post-closing adjustments ~~of $5.3 million~~ (the ~~“Viya~~“U.S. Solar Transaction”). ~~In connection with the transaction, we financed $60.0~~Approximately $6.5 million of the purchase price ~~with~~will be held in escrow for a ~~loan from an affiliate~~period of ~~CFC,~~twelve months after the ~~Rural Telephone Finance Cooperative (“RTFC”)~~closing to secure our indemnification obligations. We completed the U.S. Solar Transaction on ~~the terms~~November 6, 2018 and ~~conditions~~expect to record a gain of ~~a Loan Agreement by~~between $10 and ~~among RTFC, CAH and ATN VI Holdings, LLC, the parent entity of CAH and our wholly-owned subsidiary. We funded the remaining purchase price with (i) $51.9~~$15 million ~~in cash paid to CFC, (ii) $22.5 million in additional cash paid directly to fund Viya’ s pension in~~during the fourth quarter of 2016, and (iii) $5.3 million recorded as restricted cash to satisfy Viya’ s other postretirement benefit plans. On July 1, 2016, we began consolidating the results of Viya within our financial statements in our International Telecom segment.2018.

The ~~Viya~~U.S. Solar Transaction ~~was accounted~~does not qualify as a ~~business combination in accordance with ASC 805.~~discontinued operation prior to November 6, 2018 because the disposition does not represent a strategic shift that has a major effect on our operations and financial results. The ~~consideration transferred to CFC~~$97.5 million of ~~$111.9~~assets and $80.7 million ~~and used for the purchase price allocation, differed from the contractual purchase price~~ of $145.0 million, due to certain GAAP purchase price adjustments including a reduction of $5.3 million related to working capital adjustments and our agreement to subsequently settle assumed pension and other postretirement benefit liabilities of ~~$27.8 million. We transferred~~ ~~$51.9 million in cash~~our U.S. Solar Operations have been reclassified to Assets held for sale and ~~$60.0 million in loan proceeds to CFC~~Liabilities held for ~~total consideration of $111.9 million that~~ ~~was allocated to the assets acquired and liabilities assumed at their estimated fair values~~sale, respectively, as of ~~the date of the acquisition.~~

~~Renewable Energy~~

~~Vibrant Energy~~

On April 7, 2016, we completed our acquisition of a solar power development portfolio in India from Armstrong Energy Global Limited (“Armstrong”), a well-known developer, builder, and owner of solar farms (the “Vibrant Energy Acquisition”). The business operates under the name Vibrant Energy. We also retained several Armstrong employees in the United Kingdom and India to oversee the development, construction and operation of the India solar projects. The projects to be developed initially are located in the states of Andhra Pradesh, Maharashtra and Telangana and are based on a commercial and industrial business model, similar to our existing renewable energy operations in the United States. As of April 7, 2016, we began consolidating the results of Vibrant Energy in our financial statements within our Renewable Energy segment.

~~The Vibrant Energy Acquisition was accounted for as a business combination in accordance with ASC 805,~~ ~~Business Combinations. The total purchase consideration of $6.2 million cash was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition.~~

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~~U.S. Telecom~~

In July 2016, we acquired certain telecommunications fixed assets and the associated operations in the western United States. The acquisition was accounted for as a business combination in accordance with ASC 805, ~~Business Combinations~~. We transferred $9.1 million of cash consideration for the acquisition and allocated $10.2 million to acquire fixed assets, $3.5 million to deferred tax liability, and $0.7 million to other net liabilities, resulting in goodwill of $3.1 million. Results of operations for the business are included in the U.S. Telecom segment and are not material to our historical results of operations.

~~Dispositions~~September 30, 2018.

International Telecom

On December 15, 2016, we transferred control of our subsidiary in Aruba to another stockholder in a nonreciprocal transfer. Subsequent to that date, we no longer consolidated the results of the operations of the Aruba business. We did not recognize a gain or loss on the transaction.

On January 3, 2017, we completed the sale of the Viya cable operations located in St. Maarten for $4.8 million and recognized a gain of $0.1 million on the transaction.

On August 18, 2017, we completed the sale of the Viya cable operations located in the British Virgin Islands. We did not recognize a gain or loss on the transaction.

The results of the ~~St. Maarten,~~ British Virgin Islands and ~~Aruba~~St. Maarten operations are not material to our historical results of operations. Since the dispositions do not relate to a strategic shift in our operations, the historical results and financial position of the operations are presented within continuing operations.

U.S. Wireline Business

On ~~August 4, 2016,~~March 8, 2017, we ~~entered into a stock purchase agreement to sell its~~completed the sale of our integrated voice and data communications and wholesale transport businesses in New England and New York ~~(“Sovernet”). On March 8, 2017, we completed the sale~~ for consideration of $25.9 million (the “Sovernet Transaction”). The consideration included $20.9 million of cash, $3.0 million of receivables, and $2.0 million of contingent consideration. The $3.0 million of receivables are held in escrow to satisfy working capital adjustments in favor of the acquirer, to fund certain capital expenditure projects related to the assets sold and to secure our indemnification obligations. The contingent consideration represents the fair value of future payments related to certain operational milestones of the disposed assets. The value of the contingent consideration could ~~be up~~increase to as much as $4.0 million based on whether or not ~~the~~certain operational milestones ~~are~~were achieved by December 31, 2017. In September 2017, based on progress toward achieving the operational milestones, and the December 31, 2017 deadline under which to do so, management determined that earning the contingent consideration was unlikely. As a result the fair value of the contingent consideration was reduced to zero. The amount was recorded as a loss on disposition of assets within operating income during the ~~three and nine months~~year ended ~~September 30,~~December 31, 2017.

~~Phase I Mobility~~Universal Service Fund ~~Grants~~

~~As part~~The USF is a system of subsidies and fees managed by the FCC. USF funds are disbursed to telecommunication providers through four programs: the Connect America Fund; Lifeline; Schools and Libraries Program (“E-Rate”); and Rural Health Care Support. We participate in the Connect America Fund; Lifeline, E-Rate programs, and Rural Health Care Support programs as further described below. All of the ~~Federal Communications Commission’s (“FCC”) reform of its Universal Service Fund (“USF”)~~funding programs are subject to certain operational and reporting compliance requirements. We believe we are in compliance will all applicable requirements.

The FCC’s Mobility Funds and High Cost Support programs are administered through the Connect America Fund. The High-Cost Support program ~~which previously provided support to carriers seeking to offer~~subsidizes telecommunications services in ~~high-cost areas~~rural and ~~to low-income households, the~~remote areas. The FCC created the Phase I Mobility Fund (“Phase I Mobility Fund”), a one-time award meant to support wireless coverage in underserved geographic areas in the United States.

We ~~have~~ received $21.1 million of Phase I Mobility Fund support to ~~its~~our wholesale wireless business (the “Mobility Funds”) to be used 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, we committed to comply with certain additional FCC construction and other requirements. A portion of these funds was 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 from the award date.

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~~The Mobility Funds projects and their results are included within our U.S. Telecom segment. As of September 30, 2017, we have received approximately $21.1 million in Mobility Funds.~~service. Of these funds, $7.2 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. The remaining $13.9 million received ~~offsets~~offset operating expenses from inception of ~~which $9.0~~the program through part of the third quarter of 2018. The Mobility Funds projects and their operating results are included within our U.S. Telecom segment. As part of the receipt of the Mobility Funds, we committed to comply with certain additional FCC construction and other requirements. If the requirements are not met the funds may be subject to claw back provisions. We currently expect to comply with all applicable requirements related to these funds.

During the three and nine months ended September 30, 2018, we recorded $4.1 million ~~has been~~and $12.4 million, respectively, of revenue from High Cost Support in its International Telecom segment for our U.S. Virgin Islands operations. Also, during the three and nine months ended September 30, 2018, we recorded $0.3 million and $0.9 million, respectively, of High Cost Support revenue in our US Telecom segment. We are subject to ~~date; $4.9~~certain operational, reporting and construction requirements as a result of this funding and we believe that we are in compliance with all of these requirements. In addition, we recorded revenue of $7.2 million ~~is recorded within current liabilities~~and $15.4 million during the three and nine months ended September 30, 2018, respectively, from additional funding authorized by the FCC following the Hurricanes. This level of additional funding will not continue in future quarters.

In August 2018, we were awarded $79.9 million over 10 years under the Connect America Fund Phase II Auction. The funding requires we provide fixed broadband and voice services to certain eligible areas in the ~~our consolidated balance sheet as~~United States. We are subject to operational and reporting requirements under the program. We expect to begin receiving the funding in 2019 and are still evaluating how these funds will be recorded.

The E-Rate program provides discounted telecommunication access to eligible schools and libraries. The E-Rate program awards providers grants to build network connectivity for eligible participants and pays recurring charges for eligible broadband services. The grants are distributed upon completion of a project. As of September 30, ~~2017. The balance sheet presentation is based~~2018, we were awarded approximately $15.4 million of E-Rate grants with construction completion obligations between June 2019 and June 2020. Once these projects are constructed we are obligated to provide service to the E-Rate program participants. We are in various stages of constructing the networks and has not received any of the funds. We expect to meet all requirements associated with these grants.

We also receive funding to provide discounted telecommunication services to eligible customers under the E-Rate, Lifeline, and Rural Health Care Support Programs. During the three and nine months ended September 30, 2018 we recorded revenue of $2.0 million and $6.3 million, respectively, in the aggregate from these programs. We are subject to certain operational and reporting requirements under the above mentioned programs and we believe that we are in compliance with all of these requirements.

Tribal Bidding Credit

As part of the broadcast television spectrum incentive auction, the FCC implemented a tribal lands bidding credit to encourage deployment of wireless services utilizing 600 MHz spectrum on the ~~timing~~lands of federally recognized tribes. We received $7.4 million under this program in the ~~expected usage~~first quarter of 2018. A portion of these funds will be used to offset network capital costs and a portion will be used to offset the ~~funds~~costs of supporting the networks. Our current estimate is that it will use $5.4 million to offset capital costs and, consequently, a reduction in future depreciation expense and $2.0 million to offset the cost of supporting the network which will reduce future ~~operations expenses through~~operating expense. The credits are subject to certain requirements, including deploying service by January 2021 and meeting minimum coverage

metrics. If the ~~expiration~~requirements are not met the funds may be subject to claw back provisions. We currently expect to comply with all applicable requirements related to these funds.

Platform Investments

During the third quarter of 2017, we completed our investment in a managed services and technology business based in Bermuda.

During the ~~arrangement~~second quarter of 2018, we established a new platform, based in ~~July 2018.~~the United States, to develop in-building wireless network technology which enables building owners to capitalize on the growing demand for better indoor wireless solutions. Also during the second quarter of 2018, we established a new platform, based in the United States, to further develop large scale fiber networks to serve the telecommunications and content provider industries with network infrastructure to develop network solutions.

Selected Segment Financial Information

The following represents selected segment information for the quarters ended September 30, ~~2017~~2018 and ~~2016~~2017 (in thousands):


For the Three Months Ended September 30, 2017
For the Three Months Ended September 30, 2018											For the Three Months Ended September 30, 2018

	U.S.		International		Renewable		Corporate and					U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	36,830	$	20,424	$	—	$	—	$	57,254		$	29,784	$	22,219	$	—	$	—	$	52,003
Wireline		2,336		53,973		—		—		56,309			2,024		61,693		—		—		63,717
Renewable Energy		—		—		4,974		—		4,974			—		—		5,418		—		5,418
Equipment and Other		945		2,614		36		—		3,595
Total Revenue		40,111		77,011		5,010		—		122,132			31,808		83,912		5,418		—		121,138

Operating income (loss)		15,987		(28,491)		976		(7,997)		(19,525)			22,774		16,239		(177)		(8,012)		30,824


For the Three Months Ended September 30, 2016
For the Three Months Ended September 30, 2017											For the Three Months Ended September 30, 2017

	U.S.		International		Renewable		Corporate and					U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	40,076	$	21,075	$	—	$	—	$	61,151		$	37,774	$	22,531	$	—	$	—	$	60,305
Wireline		6,936		59,193		—		—		66,129			2,336		54,481		—		—		56,817
Renewable Energy		—		—		5,784		—		5,784			—		—		5,010		—		5,010
Equipment and Other		548		5,045		138		—		5,731
Total Revenue		47,560		85,313		5,922		—		138,795			40,110		77,012		5,010		—		122,132

Operating income (loss)		18,120		11,358		2,822		(10,219)		22,081			15,987		(28,531)		976		(7,997)		(19,565)

(1) Reconciling items refer to corporate overhead costs and consolidating adjustments

A quarter over quarter summary of our segment results is as follows:

U.S. Telecom. Revenues within our U.S. Telecom segment decreased by ~~$7.5~~$8.3 million, or ~~15.8%~~20.7%, to ~~$40.1~~$31.8 million from ~~$47.6~~$40.1 million for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. Of this decrease, $1.9 million was attributable to our wholesale wireless operations which were subject to reduced wholesale roaming rates and revenue caps with certain carrier customers that more than offset an increase in the number of base stations and data traffic volumes. In addition, revenue from our retail wireless business decreased by $1.4 million as a result of a decrease in subscribers and traffic volumes. In our wireline businesses, the Sovernet Transaction resulted in a decrease of $5.3 million that was partially offset by a $0.7 million increase in our ~~wholesale long-distance voice services.~~

Of this decrease, $8.1 million was attributable to our wholesale wireless operations which had its revenue negatively impacted by $3.7 million relating to the previously announced July 2018 sale of 100 cell sites. The remaining $4.4 million decrease in our wholesale wireless revenue was primarily the result of a reduction in wholesale roaming rates and the impact of contractual revenue caps with certain carrier customers.

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Our wireline operations reported a decline in traffic volumes within our wholesale long-distance services resulting in a decrease in revenues of $0.2 million in that business. Partially offsetting the decrease in our wholesale wireless business was a $0.1 million increase in revenue from our retail wireless business.

Operating expenses within our U.S. Telecom segment decreased ~~$5.4~~$15.1 million, or ~~18.3%~~62.7%, to ~~$24.1~~$9.0 million from ~~$29.5~~$24.1 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This decrease in operating expenses was primarily related to the ~~Sovernet Transaction which resulted in a decrease~~July 2018 sale of ~~$5.9 million.~~ 100 cell sites and the gain we recognized on such transaction.

As a result of the above, our U.S. Telecom segment’s operating income ~~decreased $2.1~~increased $6.8 million, or ~~11.6%~~42.5%, to ~~$16.0~~$22.8 million from ~~$18.1~~$16.0 million for the three months ended September 30, 2018 and 2017, ~~and 2016, respectively~~respectively.

International Telecom. Revenues within our International Telecom segment ~~decreased $8.3~~increased $6.9 million, or ~~9.7%~~9.0%, to ~~$77.0~~$83.9 million from ~~$85.3~~$77.0 million for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. This decrease was primarily the result of the sale of our operations in St. Maarten and the British Virgin Islands, $4.4 million of service credits issued during the month of September to customers impacted by the Hurricanes, and the deconsolidation of our Aruba operations.

Revenue within the U.S. Virgin Islands for the three months ended September 30, 2018 included $7.2 million of additional funding received from the FCC’s USF program to assist in the recovery of the impact of the Hurricanes. This level of additional funding will not continue in future quarters. The impact of the August 2017 sale of our operations in the British Virgin Islands which recorded $1.0 million of revenue during the three months ended September 30, 2017, partially offset this amount.

Revenues within our International Telecom segment were also positively impacted by an increase in broadband revenues in our other international markets and the addition of our new managed services and technology business, which began operations in September 2017.

Operating expenses within our International Telecom segment ~~increased~~decreased by ~~$31.5~~$37.8 million, or ~~42.6%~~35.8%, to ~~$105.5~~$67.7 million from ~~$74.0~~$105.5 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This ~~increase includes~~decrease was primarily the result of $36.6 million of hurricane related toexpenses recorded during the impact of the Hurricanes including $35.2 million for damaged assets and $1.4 million of additional operating expenses. This increase was partially offset by operating efficiencies and the effects of the sales of our operations in St. Maarten and the British Virgin Islands.three months ended September 30, 2017.

As a result, our International Telecom segment’s operating income ~~decreased $39.9~~increased to income of $16.2 million tofrom a loss of $28.5 ~~million from income of $11.4~~ million for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively.

Renewable Energy. Revenues within our Renewable Energy segment ~~decreased $0.9~~increased $0.4 million, or ~~15.3%~~8.0%, to ~~$5.0~~$5.4 million from ~~$5.9~~$5.0 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily as a result of the ~~expiration of certain incentive energy credits~~increase in revenue from ~~the state of California.~~our newly completed solar power plants in India partially offset by a decrease in revenue in our U.S. operations.

Operating expenses within our Renewable Energy segment increased ~~$0.9~~$1.6 million, ~~or 29.0%~~of 40.0%, to ~~$4.0~~$5.6 million from ~~$3.1million~~$4.0 million for the three months ended September 30, 2018 and 2017, respectively, primarily as a result of a loss recorded in connection with certain asset disposals and ~~2016, respectively. This increase in expenses was primarily associated with additional expenses incurred for the continued development of our Vibrant Energy operations.~~settlement agreements.

As a result of the above, our Renewable Energy segment’s operating income decreased by ~~$1.8~~$1.2 million ~~or 64.3%,~~ to ~~$1.0~~a loss of $0.2 million from ~~$2.8~~income of $1.0 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

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The following represents a ~~quarter over quarter~~quarter-over-quarter discussion and analysis of our results of operations for the ~~quarter~~quarters ended September 30, ~~2017~~2018 and ~~2016~~2017 (in thousands):



	Three Months Ended				Amount of		Percent		Three Months Ended				Amount of		Percent
	September 30,				Increase		Increase		September 30,				Increase		Increase
	2017		2016		(Decrease)		(Decrease)		2018		2017		(Decrease)		(Decrease)
REVENUE:
Wireless	$	57,254	$	61,151	$	(3,897)	(6.4)	%	$	52,003	$	60,305	$	(8,302)	(13.8)	%
Wireline		56,309		66,129		(9,820)	(14.8)			63,717		56,817		6,900	12.1
Renewable Energy		4,974		5,784		(810)	(14.0)			5,418		5,010		408	8.1
Equipment and other		3,595		5,731		(2,136)	(37.3)
Total revenue		122,132		138,795		(16,663)	(12.0)			121,138		122,132		(994)	(0.8)
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		27,387		34,359		(6,972)	(20.3)			29,866		30,554		(688)	(2.3)
Engineering and operations		18,852		19,372		(520)	(2.7)			18,177		18,852		(675)	(3.6)
Sales, marketing and customer services		8,440		8,377		63	0.8			8,995		8,440		555	6.6
Equipment expense		3,167		3,390		(223)	(6.6)
General and administrative		26,620		26,854		(234)	(0.9)			25,210		26,660		(1,450)	(5.4)
Transaction-related charges		61		2,091		(2,030)	(97.1)			178		61		117	191.8
Depreciation and amortization		21,157		21,866		(709)	(3.2)			21,384		21,157		227	1.1
Impairment of long-lived assets		—		349		(349)	(100.0)
(Gain) loss on disposition of long-lived assets		(593)		56		(649)	(1,158.9)			(13,496)		(593)		(12,903)	2,175.9
Loss on damaged assets and other hurricane related charges		36,566		—		36,566	100.0			—		36,566		(36,566)	100.0
Total operating expenses		141,657		116,714		24,943	21.4			90,314		141,697		(51,383)	(36.3)
Income from operations		(19,525)		22,081		(41,606)	(188.4)
Income (loss) from operations										30,824		(19,565)		50,389	(257.5)
OTHER INCOME (EXPENSE):
Interest income		453		236		217	91.9			568		453		115	25.4
Interest expense		(2,098)		(1,787)		(311)	17.4			(2,229)		(2,098)		(131)	6.2
Other income (expense)										(1,244)		(650)		(594)	91.4
Other expense, net		(690)		766		(1,456)	(190.1)			(2,905)		(2,295)		(610)	26.6
Other income (expense), net		(2,335)		(785)		(1,550)	197.5
INCOME BEFORE INCOME TAXES		(21,860)		21,296		(43,156)	(202.6)
Income tax expense		(884)		9,602		(10,486)	(109.2)
NET INCOME		(20,976)		11,694		(32,670)	(279.4)
INCOME (LOSS) BEFORE INCOME TAXES										27,919		(21,860)		49,779	(227.7)
Income tax expense (benefit)										7,010		(884)		7,894	(893.0)
NET INCOME (LOSS)										20,909		(20,976)		41,885	(199.7)
Net income attributable to non-controlling interests, net of tax:		(3,784)		(4,523)		739	(16.3)			(3,887)		(3,784)		(103)	2.7
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	(24,760)	$	7,171	$	(31,931)	(445.3)	%
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS									$	17,022	$	(24,760)	$	41,782	(168.7)	%

Wireless revenue. Our wireless revenue consists of wholesale revenue generated within our U.S. Telecom segment and retail revenue generated within both our U.S. Telecom and International Telecom segments. Within our International Telecom segment, wireless revenue is generated in Bermuda and the Caribbean (including the U.S. Virgin Islands).

Wholesale wireless revenue. Our U.S. Telecom segment generates wholesale wireless revenue from providing mobile voice orand 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.~~traffic as well as tower rental income.

The most significant competitive factor we face in our U.S. Telecom’s 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 arrangements, we agree to incur the cost of building and operating a network in a newly designated area meeting

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specified conditions. In exchange, the carrier agrees to lease us spectrum in that area and enter into a contract with

specific pricing and terms. Historically, these arrangements typically have included a purchase right in favor of the carrier to purchase that portion of the network for a predetermined price, depending on when the right to purchase is exercised. ~~We currently have one buildout arrangement~~During July 2018, we completed the previously disclosed sale of approximately 100 cell sites which, ~~provides~~under one of these arrangements, generated approximately $0.1 million and $3.8 million of wholesale wireless revenue during the ~~carrier with a right,exercisable in early~~three months ended September 30, 2018 ~~to purchase such sites.~~and 2017, respectively, and $10.5 million and $4.3 million of wholesale wireless revenue during the nine months ended September 30, 2018 and 2017, respectively. We ~~believe the holder is likely to exercise their right to purchase the network assets but due to the nature of the agreement with the holder, we expect minimal~~received no additional cash proceeds at closing as the cash proceeds were previously received and ~~to record a significant gain at the closing.~~deferred under our revenue arrangement.

Retail wireless revenue. Both our U.S. Telecom and International Telecom segments generate retail wireless revenues by providing mobile voice orand data services to our subscribers. Retail wireless revenues also include roaming revenues generated by other carriers’ customers roaming into our retail ~~markets.~~markets and wireless equipment sales, primarily handsets and data modems, as well as real estate rental income.

Wireless revenue decreased by ~~$3.9~~ $8.3million, or ~~6.4%~~13.8%, to ~~$57.3~~ $52.0million for the three months ended September 30, ~~2017~~2018 from ~~$61.2~~ $60.3million for the three months ended September 30, ~~2016.~~2017. The net decreases in wireless revenue, within our segments, consisted of the following:

U.S. Telecom. Wireless revenue within our U.S. Telecom segment decreased by ~~$3.3~~$8.0 million, or ~~8.2%~~21.2%, to ~~$36.8~~$29.8 million from ~~$40.1~~ $37.8million, for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Wholesale wireless revenue decreased by ~~$1.9~~$8.1 million or ~~5.5%~~24.4%, to ~~$32.4~~$25.1 million from ~~$34.3~~ $33.2million for the three months ended September 30, 2018 and 2017, ~~and 2016, respectively, as a~~respectively. Of this decrease, $3.7 million was related to the July 2018 sale of 100 cell sites with the remaining decrease being the result of a reduction in wholesale roaming rates and ~~and~~the impact of contractual revenue caps with certain carrier ~~customers~~customers. ~~partially offset by growth in data traffic volumes as a result of capacity and technology upgrades to our network and the increase in the number of base stations to 1,061 from 926as of September 30, 2017 and 2016, respectively.~~ Our U.S. Telecom’s retail wireless operations reported a ~~decrease~~slight increase in wireless revenues of ~~$1.4~~ $0.1million, or ~~24.1%~~2.2%, to ~~$4.4~~ $4.7million from ~~$5.8~~ $4.6million for the three months ended September 30, 2018 and 2017, ~~and 2016, respectively, as a result of a decrease in subscribers and traffic volumes.~~respectively.

International Telecom. Within our International Telecom segment, wireless revenue decreased by ~~$0.7~~$0.3 million, or ~~3.3%~~1.3%, to ~~$20.4 million from $21.1~~$22.2 million for the three months ended September 30, ~~2017 and 2016, respectively.~~2018 from $22.5million for the three months ended September 30, 2017. This decrease was primarily related to the ~~result of reduced roaming revenues and~~operations within the ~~effects of~~U.S. Virgin Islands which were negatively impacted by the ~~deconsolidation of our Aruba operations. These decreases were partially offset by an increase in our wireless subscribers in Guyana.~~Hurricanes.

We expect wholesale wireless revenues within our U.S. Telecom segment to continue to decline and margins to contract as a result of previously disclosed contracts that significantly reduce rates and impose revenue ~~caps.~~caps as well as the July 2018 sale of 100 cell sites. While we expect that wholesale data volumes will continue to increase due to increased demand combined with our increased capacity, we do not expect to significantly expand our footprint and we expect that our reduced rates and revenue caps will ~~more than offset~~mostly prevent us from realizing any revenue increase resulting from increased data ~~volumes.~~volumes or additional base stations. As such, we expect that capital expenditures in this segment will be significantly less going forward. ~~We also expect wholesale wireless~~While we are facing lower revenue ~~to decrease~~ as a result of the ~~expected sale of 100 cell sites to an existing carrier customer which has the right to purchase such sites beginning in early 2018. We~~renegotiated roaming arrangements, we believe that maintaining roaming arrangements favorable to our carrier customers allows us to preserve wholesale revenue for a longer period of time while creating potential for a long‑lived shared infrastructure solution for carriers in areas they may consider to be non-strategic.

~~We expect retail revenues within our U.S. Telecom segment to remain relatively consistent in future periods.~~

We expect wireless revenues within our International Telecom segment to increase as we invest in upgrading our networks and service offerings. Growth in revenue from anticipated subscriber growth in certain markets may be somewhat offset by a decline in roaming revenues due to lower negotiated roaming rates received from our carrier customers. Roaming revenues in these markets are also subject to seasonality and can fluctuate between quarters.

Wireline revenue. Wireline revenue is generated by our U.S. Telecom and International Telecom segments. Within our U.S. Telecom segment, wireline revenue ~~includes~~is generated by our wholesale long-distance voice services to telecommunications carriers. ~~Wireline revenue includes basic service fees, measured service revenue, and internet~~

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~~access fees, as well as installation charges for new lines, monthly line rental charges, long-distance or toll charges, and maintenance.~~ Within our International Telecom segment, wireline revenue is generated in Bermuda and the Caribbean (including the U.S. Virgin Islands) and includes internet, voice, and video service ~~revenues.~~ revenues as well as revenues from our new managed services and technology business.

Wireline revenue ~~decreased~~increased by ~~$9.8~~ $6.9million, or ~~14.8%~~12.1%, to ~~$56.3~~$63.7 million from ~~$66.1million~~$56.8million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~decreases~~increase in wireline revenue, within our segments, consisted of the following:

U.S. Telecom. Wireline revenue decreased within our U.S. Telecom segment by ~~$4.6~~$0.3 million, or ~~66.7%~~13.0%, to ~~$2.3~~ $2.0million from ~~$6.9~~ $2.3million, for the three months ended September 30, 2018 and 2017, ~~and 2016, respectively. Of this decrease $5.3 million was the~~respectively, as a result of ~~the effects of the Sovernet Transaction which was partially offset by an increase in~~decreased traffic ~~volumes~~volume within our wholesale ~~long-distance~~long distance voice services operations.

International Telecom. Within our International Telecom segment, wireline ~~revenue decreased~~increased by ~~$5.2~~$7.2 million, or ~~8.8%~~13.2%, to ~~$54.0~~$61.7 million from ~~$59.2~~$54.5 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This ~~decrease~~increase was ~~primarily related to $4.4~~ a result of $7.2 million ~~of service disruption credits~~in additional funding received from ~~damages related to~~the FCC’s USF partially offset by both the extensive damage caused by the Hurricanes in that market as well as the August 2017 sale of our ~~operations in St. Maarten and the~~ British Virgin Islands operations which generated $1.0 million in revenue during the three months ended September 30, 2017. Wireline revenues increased in other international markets as a result of increased broadband revenues and the ~~deconsolidation~~addition of our ~~Aruba operations.~~new managed services and technology business which began operations in September 2017.

~~With completion of the Sovernet Transaction, we expect that the remaining wireline revenue within our U.S. Telecom segment will be immaterial to the total segment.~~

Within our International Telecom segment, we anticipate that wireline revenue ~~will decrease,~~may increase (excluding the impact of the additional USF funding) in the next few quarters as ~~compared~~we continue to restore our wireline network in the U.S. Virgin Islands. However, returning revenues to levels reported prior to the ~~current quarter, in our US Virgin Island markets, during the next several quarters,~~Hurricanes will take longer as a result of the ~~impact~~damage caused by the Hurricanes to the economy of the ~~Hurricanes~~U.S. Virgin Islands and ~~the time necessary to rebuild~~ our ~~wireline network to service~~customer base in that market. In all of our ~~customers. In our other~~ international markets we may incur a decline in video revenues as a result of subscribers using alternative methods to receive video content. We anticipate that wireline revenue from our international long‑distance business in Guyana will continue to decrease as consumers seek to use alternative technology services to place calls as well as a result of 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 implementing recently-passed legislation or new regulations or the 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~~broadband services to consumers and enterprises in Guyana or an increase in regulated local calling rates in ~~Guyana, an increase in wholesale transport services and large enterprise and agency sales in the United States.~~Guyana. We currently cannot predict when or if the Government of Guyana will take any action to implement such legislation or any other action that would otherwise affect our exclusive rights in Guyana. See Note 1214 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Renewable energy revenue. ~~Renewable energy revenue represents revenue from the sale of electricity through long-term (10 to 25 years) power purchase agreements~~Our Power Purchase Agreements (“PPAs”) ~~as well as the sale of solar renewable energy credits and performance-based incentives (“SRECs”)~~, ~~which have a contract term of up to ten years.~~

~~Renewable energy revenue decreased $0.8 million, or 14.0%, to $5.0 million from $5.8 million for the three months ended September 30, 2017 and 2016, respectively, primarily as a result of~~ ~~the expiration of certain incentive energy credits from the state of California.~~

~~Our PPAs,~~ which are typically priced at or below local retail electricity rates and allow our customers to secure electricity at predictable and stable prices over the duration of their long-term ~~contract. As such, our PPAs~~contract and provide us with high-quality contracted cash ~~flows which will continue over their average remaining life. For these reasons, we expect that~~flows. Internationally, renewable energy revenue includes the generation of power through PPAs from our solar plants in India as well as from consulting fees. In the United States, and through the sale of those operations on November 6, 2018, renewable energy revenue represented revenue from the sale of electricity through PPA’s and the sale of Solar Renewable Energy ~~revenue~~Credits (“SRECs”). During the three and nine months ended September 30, 2018, our renewable energy operations within the United States ~~will remain fairly consistent in the near term but will continue to decline in the longer term as the solar renewable energy credits continue to expire.~~

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~~With the completion of our Vibrant Energy Acquisition, we are currently developing projects in India to provide distributed generation solar power to corporate~~generated $4.2 million and ~~utility customers. During the three months ended September 30, 2017, we recognized $0.4~~$13.3 million of revenue, ~~from those projects.~~

We have a pipeline of qualified grid capacity, feasibility study approvals and land or options to acquire land that may allow us to build projects generating in excess of 250MWs but the timing and extent of our build out of that pipeline will depend on market conditions, including financing.respectively.

~~Equipment and other revenue.~~ ~~Equipment and other~~Renewable energy revenue represents wireless equipment sales, primarily handsets and data modems, to retail telecommunications customers within both our U.S. Telecom and International Telecom segments. Equipment and other revenue also includes equipment, real estate and tower rental income within our International Telecom segment and consulting fees within our Renewable Energy segment.increased $0.4

~~Equipment and other revenue decreased by $2.1~~ million, or ~~37.3%~~8.0%, to ~~$3.6~~$5.4 million from ~~$5.7~~$5.0 million for the three months ended September 30, 2018 and 2017, ~~and 2016, respectively. The net decreases~~respectively, primarily as a result of a $0.4million increase in ~~equipment and other~~ revenue ~~within~~from our ~~segments, consisted of the following:~~newly completed solar power plants in India.

~~U.S. Telecom.~~ Equipment and other revenue increased within our U.S. Telecom segment by $0.4 million, or 80.0%, to $0.9 million from $0.5 million, for the three months ended September 30, 2017 and 2016, respectively, primarily as a result of an increase in handset sales in the retail operation of our wireless business partially offset by the Sovernet transaction.

~~International Telecom.~~ Within our International Telecom segment, equipment and other revenue decreased by $2.4 million, or 48.0%, to $2.6 million from $5.0 million, for the three months ended September 30, 2017 and 2016, respectively. This decrease was the result of a reduction in handset sales within most of our international markets and the impact of the Hurricanes.

~~Renewable Energy. Our Renewable Energy segment reported nominal amounts during the three months ended September 30, 2017 and 2016 as a result of consulting fees recognized by our Vibrant Energy operations.~~

~~We believe~~Internationally, we expect that ~~equipment~~renewable energy may have moderate growth through the remainder of 2018 and ~~other revenue will remain fairly consistent~~into 2019 as ~~a percentage of total revenues.~~ additional solar plants become operational.

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, video programming costs, other access fees we pay to terminate our calls, telecommunication spectrum fees and direct costs associated with our managed services and technology business and Renewable Energy segment. Termination and access fees also include the cost of handsets and customer resale equipment incurred by our retail businesses.

Termination and access fees decreased by ~~$7.0~~$0.7 million, or ~~20.3%~~2.3%, to ~~$27.4~~ $29.9million from ~~$34.4~~ $30.6 million for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~The net increases~~Decreases in termination and access fees, within our segments, consisted of the following:

U.S. Telecom. Termination and access fees within our U.S. Telecom segment decreased by ~~$2.2~~ $1.3million, or ~~17.3%~~11.5%, to ~~$10.5~~ $10.0million from ~~$12.7~~ $11.3million, for the three months ended September 30, 2018 and 2017, ~~and 2016, respectively. The decrease was~~respectively, primarily ~~related to our wireline operations which incurred a decrease of $2.9 million~~ as a result of ~~the Sovernet Transaction.~~a decrease in traffic volume within our U.S. wireless business.

International Telecom. Within our International Telecom segment, termination and access fees ~~decreased~~increased by ~~$4.9~~ $0.4million, or ~~22.9%~~2.1%, to ~~$16.5~~$19.3 million from ~~$21.4~~ $18.9million, for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~decrease~~increase was ~~primarily related to a reduction~~incurred in ~~television programming~~most of our international markets including our new managed services and ~~other variable costs~~technology platform, which ~~were not incurred as a result of~~began operation in September 2017, offset by the impact of the ~~Hurricanes.~~

Hurricanes and the sale of our operations in the British Virgin Islands.

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Renewable Energy. Termination and access fees within our Renewable Energy segment increased ~~slightly~~ to ~~$0.4~~$0.6 million from ~~$0.3~~$0.4 million for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. This increase was the result of increased activity within our India solar operations.

We expect that termination and access fee expenses will remain fairly consistent as a percentage of revenues in future periods.

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 and renewable energy operations.

Engineering and operations expenses decreased by ~~$0.5~~$0.7 million, or ~~2.7%~~3.6%, to ~~$18.9~~$18.2 million from ~~$19.4~~$18.9 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The net decrease in engineering and operations, within our segments, consisted of the following:

U.S. Telecom. Engineering and operations expenses ~~decreased within our U.S. Telecom segment~~increased by ~~$1.2~~$0.2 million, or ~~28.6%~~6.7%, to ~~$3.0~~$3.2 million from ~~$4.2~~$3.0 million ~~for the three months ended September 30, 2017 and 2016, respectively,~~ primarily as a result of ~~the effects of the Sovernet Transaction~~our newly created in-building and ~~operating efficiencies within our wireless businesses.~~

~~International Telecom.~~ ~~Within our International Telecom segment, engineering and~~large scale fiber network platform which began operations expenses increased by $0.3 million, or 2.0%, to $15.2 million from $14.9 million, for the three months ended September 30, 2017 and 2016, respectively. This increase was primarily the result of additional costs incurred to support our upgraded networks and additional technologies.in May 2018.

~~Renewable Energy~~International Telecom. ~~Engineering~~Within our International Telecom segment, engineering and operations expenses ~~within our Renewable Energy segment remained consistent at $0.1 million. These expenses were primarily incurred~~decreased by $0.6million, or 3.9%, to $14.6million from $15.2million, for the ~~continued development~~three months ended September 30, 2018 and 2017, respectively. This decrease was related to a decrease in most of our ~~Vibrant Energy operations.~~International Telecom markets which experienced operational efficiencies during the quarter.

We expect ~~to incur additional~~that engineering and operations expenses ~~necessary to repair and replace those network assets which were damaged by~~may increase until the ~~Hurricanes, to continue the development of our Vibrant Energy projects and to complete technology upgrades within our International Telecom segment. However, upon~~ completion of the ~~construction~~restoration of our network in the U.S. Virgin Islands, and ~~those upgrades, we expect that engineering and operations will~~then remain fairly consistent as a percentage of revenues.

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~~increased by $0.6million, or 6.6%, to $9.0million from $8.4million for the three months ended September 30, 2018 and 2017, ~~and 2016. Sales~~respectively. The net increase in sales and marketing expenses, within our segments, consisted of the following:

U.S. Telecom. Sales and marketing expenses ~~decreased~~increased within our U.S. Telecom segment by ~~$1.2~~ $0.6million ~~or 85.7%,~~ to ~~$0.2~~ $0.8million from ~~$1.4~~ $0.2million, for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily as a result of ~~a decrease~~an increase in ~~promotions~~marketing and advertising within the retail operations of our wireless ~~business and the Sovernet Transaction.~~

platforms as well as the operations of our new in-building and large scale fiber network businesses which began operations in May 2018.

International Telecom. Within our International Telecom segment, our sales and marketing expenses ~~increased~~decreased by ~~$1.3~~ $0.1million, or ~~18.6%~~1.2%, to ~~$8.3~~ $8.2million from ~~$7.0~~ $8.3million for the three months ended September 30, 2018 and 2017. A $0.2 million increase in our managed services and technology platform, which began operations in September 2017, ~~and 2016, respectively. This increase~~ was ~~primarily related to additional marketing promotional costs~~offset by spending reductions in ~~addition to incurred sales commissions.~~our other international markets.

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We expect sales ~~marketing~~ and ~~customer service~~marketing expenses to remain fairly consistent as a percentage of revenues in the longer term but may increase in the next several quarters to help support ~~those~~the operations ~~which~~that were impacted by the Hurricanes.

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

Equipment expenses decreased by $0.2 million, or 6.6%, to $3.2 million from $3.4 million for the three months ended September 30, 2017 and 2016, respectively. The decreases in equipment expenses, within our segments, consisted of the following:

~~U.S. Telecom~~. Equipment expenses decreased within our U.S. Telecom segment by $0.2 million, or 20.0%, to $0.8 million from $1.0 million, for the three months ended September 30, 2017 and 2016, respectively. This decrease was related to a decrease in handset sales within the retail operations of our wireless businesses.

~~International Telecom. Equipment expenses within our International Telecom segment remained consistent at $2.4 million, for the three months ended September 30, 2017 and 2016.~~

~~We believe that equipment expenses will remain fairly consistent as a percentage of equipment revenues.~~

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 decreased by ~~$0.2~~$1.5 million, or ~~0.9%~~5.4%, to ~~$26.6~~$25.2 million from ~~$26.9 million~~$26.7 million for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~Year over year changes~~Net decreases in general and administrative expenses, within our segments, consisted of the following:

U.S. Telecom. General and administrative expenses ~~decreased within our U.S. Telecom segment~~increased by ~~$0.1~~$0.4 million, or ~~2.5%~~10.3%, to ~~$3.9~~ $4.3million from ~~$4.0~~ $3.9million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily ~~as a result of Sovernet Transaction partially offset by an increase in our wireless businesses~~ to support ~~its expanding wireless networks.~~platform costs for our new in-building and large scale fiber network platforms which began operations in May 2018.

International Telecom. General and administrative expenses decreased within our International Telecom segment by ~~$0.6~~ $1.2million, or ~~4.0%~~8.4%, to ~~$14.3~~ $13.1million from ~~$14.9~~ $14.3million, for the three months ended September 30, 2018 and 2017, respectively. The decrease was primarily related to a $0.5million decrease within our U.S. Virgin Islands operations as it continues to recover from the impact of the Hurricanesand ~~2016, respectively,~~$1.0 million in other international markets as a result of ~~operating efficiencies being achieved~~a decrease in ~~most of our international markets.~~ professional fees and other cost reduction programs.

Renewable Energy. General and administrative expenses within our Renewable Energy segment ~~increased by $0.5~~decreased $0.2 million, or ~~35.7%~~10.5%, to ~~$1.9~~$1.7 million from ~~$1.4~~$1.9 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, as a result of ~~overhead and operating expenses incurred for the development of our India operations.~~certain cost savings measures.

Corporate Overhead. General and administrative expenses ~~increased~~decreased within our corporate overhead by ~~$0.1~~ $0.5million, or ~~1.5%~~7.6%, to ~~$6.6~~ $6.1million from ~~$6.5~~$6.6 million, for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively, primarily related to a decrease in ~~order to support our expanding operations.~~professional fees.

We expect ~~that~~ general and administrative expenses to increase over the next several ~~quarter~~quarters to help support the repair and restoration of our networks in our International Telecom segment which were impacted by the Hurricanes. We also expect to incur additional general and administrative expenses ~~necessary~~ to ~~continue the development of~~support our ~~Vibrant Energy projects that will disproportionately affect~~new managed services and technology platform, our ~~Renewable Energy results.~~new in-building telecom operations and our new large scale fiber network platform.

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

We incurred ~~$0.1~~ $0.2million and ~~$2.1~~ $0.1million of transaction‑related charges during the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~For the three months ended September 30, 2016, substantially all of the~~The 2018 transaction-related ~~expenses were related~~charges relate to our ~~Viya, One Communications~~2018 investments in our newly established in-building and ~~Vibrant Acquisitions.~~large scale fiber network platforms.

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 ~~decreased~~increased by ~~$0.7~~ $0.2million, or ~~3.2%~~1.1%, to ~~$21.2~~ $21.4million from ~~$21.9~~$21.2 million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Net ~~decreases~~changes in depreciation and amortization expenses, within our segments, consisted primarily of the following:

U.S. Telecom. Depreciation and amortization expenses ~~increased~~decreased within our U.S. Telecom segment by ~~$0.1~~ $0.6million, or ~~1.6%~~9.5%, to ~~$6.3~~$5.7 million from ~~$6.2~~ $6.3million for the three months ended September 30, 2018 and 2017, respectively. This decrease was primarily due to the completion of the previously disclosed sale of approximately 100 cell sites within our U.S. wireless operations which resulted in a $0.9 million decrease in depreciation and ~~2016, respectively, as a result of~~amortization expenses. This decrease was partially offset by certain wireless network expansions and upgrades ~~which were partially offset by the effects the Sovernet Transaction.~~in other geographic areas of our U.S. wireless network.

International Telecom. Depreciation and amortization expenses ~~decreased~~increased within our International Telecom segment by ~~$0.8~~ $0.3million, or ~~6.2%~~2.5%, to ~~$12.1~~ $12.4million from ~~$12.9~~$12.1 million for the three months ended September 30, 2018 and 2017, respectively. This increase was the result of expansion and ~~2016, respectively, primarily~~upgrades of our network assets in most of our International Telecom markets partially offset by a $0.6 million reduction in depreciation expense in our U.S. Virgin Islands market on assets which were damaged and written off as a result of the ~~sales of our operations in St. Maarten and the British Virgin Islands.~~

Hurricanes.

Renewable Energy. Depreciation and amortization expenses within our Renewable Energy segment increased by ~~$0.5~~ $0.1million, or ~~41.7%~~5.9%, to ~~$1.7~~ $1.8million from ~~$1.2~~ $1.7million for the three months ended September 30, 2018 and 2017, respectively, as a result of ~~certain projects within~~capital expenditures primarily related to the construction of our ~~Vibrant Energy~~solar operations ~~being placed into service.~~in India.

Corporate Overhead. Depreciation and amortization expenses ~~decreased~~increased by ~~$0.5~~ $0.4million or ~~31.3%~~36.4% to ~~$1.1~~$1.5 million from ~~$1.6~~ $1.1million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, as a result of certain tangible assets ~~becoming fully depreciated.~~being placed into service.

We expect depreciation expense to increase as we rebuild our networks in the International Telecom segment which were impacted by the Hurricanes and as we acquire more tangible assets to expand or upgrade our other telecommunications networks and build or acquire additional solar power generating ~~facilities and amortize intangible assets recorded in connection with acquisitions.~~facilities.

~~Impairment~~(Gain) loss on disposition of long-lived ~~assets.~~assets. During the three months ended September 30, ~~2016,~~2018, we ~~assessed~~recorded a gain on the ~~value~~disposition of ~~a tradename used within our International Telecom segment. As~~long-lived assets of $13.5 million as a result of ~~that assessment, we concluded that~~a $15.2 million gain on the ~~book value~~previously disclosed sale of ~~such tradename exceeded its fair value~~approximately 100 cell sites within our U.S. wireless operations. This gain was partially offset by a $1.5 million loss recorded in connection with certain asset disposals and as settlement agreements within our Renewable Energy segment and a ~~result, we recorded a non-cash impairment charge of $0.3~~$0.2 million ~~during the three months ended September 30, 2016.~~

~~Gain or~~ loss on ~~disposition~~the disposal of ~~long-lived assets.~~miscellaneous assets within our U.S. wireless operations. During the three months ended September 30, 2017, we recorded a gain on the disposition of long-lived assets of $0.6million related to the Sovernet Transaction. ~~During the three months ended September 30, 2016, we disposed of certain assets within our International Telecom segment and recognized a loss on such disposition of $0.1 million.~~

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Loss on damaged assets and other hurricane related charges. During September 2017, the economy, our customer base and our operations ~~and customers~~ in the U.S. Virgin Islands were severely impacted by ~~both Hurricane Irma and subsequently Hurricane Maria (collectively,~~ the ~~“Hurricanes”). Both our wireless and wireline networks and commercial operations were severely damaged by these storms. As a result~~Hurricanes.

During the three months ended September 30, 2017, we recorded $36.6 million in hurricane related charges of ~~the significant damage~~which $35.2 million was in connection with damages incurred to our wireline network and the ongoing lack of consistent commercial power in the territory since the Hurricanes, we have been unable to provide most of our wireline services, which comprise the majority of revenue, in the business. Due to the ongoing poor conditions on the islands, the continued lack of consistent commercial power, and the damage to our wireline infrastructure, we currently expect this impact to wireline revenue to continue for the next several quarters and estimate that it will be most pronounced in the fourth quarter of 2017.

~~As of November 9, 2017, our preliminary assessment of the level of wireline~~ and wireless ~~network damage by the Hurricanes~~networks and ~~corresponding loss has been estimated as $35.2 million. This amount, along with~~ $1.4 million ofrelated to additional operating expenses that we specifically incurred ~~during the quarter~~ to address the impact of the Hurricanes, has been recorded in our statement of operations for the three and nine months ended September 30, 2017. The level of network damage assessment and losses on damaged assets is based on information known as of the filing of this Form 10-Q. Given the current conditions in the USVI, including curfews, limited access to areas of the islands and the lack of consistent commercial power, additional damages may be discovered upon being able to fully access these areas and/or once commercial power is restored and we can bring our networks fully online. This assessment will continue to be updated in subsequent quarters as more information becomes available.

Interest income. Interest income represents interest earned on our cash, cash equivalents, restricted cash and short term investment balances.

Interest income increased ~~by $0.2 million, or 91.9%,~~ to ~~$0.5~~ $0.6million from ~~$0.2~~ $0.5million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~effects of~~increase was primarily related to an increase in the return on our cash, cash equivalents and marketable securities ~~were offset by a decrease in those assets~~ as compared to the previous year.

Interest expense. We incur interest expense on the ~~debt financed portion of the~~ Viya, ~~Acquisition purchase price, the term loans assumed in the~~ One Communications ~~Acquisition, which was refinanced to include additional borrowings on May 22, 2017, the~~and Ahana ~~Debt that was partially refinanced on December 19, 2016,~~debt as well as commitment fees, letter of credit fees, ~~amortization~~and interest on our outstanding letters of ~~debt issuance costs~~credit, and interest incurred on our outstanding credit facilities. Interest expense also includes the amortization of debt issuance costs. For information about our Viya, One Communications and Ahana Debt, see Note 8 of the Consolidated Financial Statements included in this report.

Interest expense increased by ~~$0.3~~ $0.1million to ~~$2.1million~~$2.2million from ~~$1.8~~ $2.1million for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The increase ~~predominantly reflects~~was primarily the result of a slight increase in interest ~~incurred~~rates on ~~debt used to finance a portion of the Viya Acquisition and the increased loan balance on the refinanced Ahana Debt.~~ our outstanding variable rate debt.

Other income (expense), net. Other income (expense), net represents miscellaneous non-operational income we earned orand expenses we incurred. ~~Other income (expense), net was an expense of $0.7 million and income of $0.8 million for~~For the three months ended September 30, 2018 and 2017, other income (expense) was an expense of $1.2 million and ~~2016,~~$0.7 million, respectively, which was primarily ~~as a result of gains and~~related to losses on foreign currency transactions.

Income taxes. Our effective tax rate for the three months ended September 30, 2018 and 2017 was 25.1% and ~~2016 was~~ 4.0% ~~and 45.1%~~, respectively. ~~When~~The effective tax rate for the three months ended September 30, 2018 was primarily impacted by the following items: (i) a ~~company operates~~$1.5 million increase (net) of unrecognized tax positions recognized discretely, (ii) a $0.5 million benefit (net) to record a return to accrual adjustment recognized discretely, (iii) a $1.4 million benefit (net) to record a valuation allowance release on an indefinite lived intangible asset recognized discretely, and (iv) the mix of income generated among the jurisdictions in ~~a jurisdiction that generates ordinary losses but does not expect to realize them, ASC 740-270-30-36(a) requires~~which we operate along with the exclusion of losses in jurisdictions where we cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the ~~respective jurisdiction from the overall annual effective tax rate (“AETR”) calculation~~U.S. Virgin Islands and ~~instead, a separate AETR should be computed.~~ India.

The effective tax rate for the three months ended September 30, 2017 was primarily impacted by the following items: (i) the exclusion of losses in jurisdictions where we cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands, (ii) a $3.4 million benefit for the net capital loss due to the stock sales of our businesses in New England,

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New York and St. Maarten, (iii) a $3.4 million amended return refund claim filed for tax year 2013 recognized discretely, (iv) a ~~$228 thousand~~$0.2 million increase (net) in unrecognized tax benefits recognized discretely, (v) a ~~$536 thousand~~$0.5 million benefit (net) to record a return to accrual adjustment recognized discretely and, (vi) the mix of income generated among the jurisdictions in which we operate. The effective tax rate for the three months ended September 30, 2016 was impacted by the following items: (i) certain transactional charges incurred in connection with our acquisitions that had no tax benefit, (ii) the mix of income generated among the jurisdictions in which we operate, and (iii) $1.6 million provision (net) to record multiple discrete items.

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 consolidated tax rate will continue to be impacted by any transactional or one-time items in the future and the mix of income in any given year generated among the jurisdictions in which we operate. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Cuts and Jobs Act of 2017 (“Tax Act”), we made reasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements as of December 31, 2017. In the third quarter of 2018 we made adjustments to the provisional amounts, including continued refinements to our deferred taxes of a $0.4 million provision from the $18.0 million benefit recorded at year-end and a $2.5 million provision on the deemed repatriation of undistributed foreign earnings in addition to the $7.4 million provision recorded at year-end. We continue to collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service (“IRS”),FCC and other standard-setting bodies. The accounting for the tax effects of the Tax Act will be completed by the end of 2018. While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from our accrued positions as a result of uncertain and complex application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, we could record additional provisions or benefits for U.S. federal, state, and foreign tax matters in future periods as new information becomes available.

Net income attributable to non-controlling ~~interests.~~interests, net of tax. Net income attributable to non-controlling interests reflected an allocation of ~~$3.8~~ $3.9million and ~~$4.5~~ $3.8million of income a generated by our ~~unconsolidated~~less than wholly-owned subsidiaries for the three months ended September 30, 2018 and 2017, ~~and 2016, respectively.~~respectively, an increase of $0.1million or 2.7%. Changes in net income attributable to non-controlling interests, within our segments, consisted of the following:

U.S. Telecom. Net income attributable to non-controlling interests, ~~decreased by $0.7 million, or 35.0%, to~~net of tax remained consistent at $1.3 ~~million from $2.0~~ million for the three months ended September 30, 2018 and 2017 ~~and 2016, respectively,~~primarily as a result of ~~decreased~~consistent profitability at certain less ~~that~~than wholly owned subsidiaries ofwithin our U.S. wireless retail operations.

International Telecom. Net income attributable to non-controlling interests, net of tax increased by $0.2million, or 9.1% to ~~an allocation of income of $2.2~~ $2.4million from ~~$2.0~~ $2.2million, primarily as a result of ~~an increase~~increased profitability in ~~profits in our Bermuda operations and as a result~~some of our ~~One Communications Acquisition.~~less than wholly owned subsidiaries within our international operations.

Renewable Energy. Net income attributable to non-controlling interests, net of tax decreased by $0.1 million, or 33.3%, to $0.2 million ~~or 40.0%, to~~from $0.3 million ~~from $0.5 million, as a result of increased~~for the three months September 30, 2018 and 2017, respectively, due to decreased profitability ~~and of our increased ownership percentage of~~in our domestic solar operations.

Net income (loss) attributable to ATN International, Inc. stockholders. Net income (loss) attributable to ATN International, Inc. stockholders was income of $17.0 million and a loss of $24.8million for the three months ended September 30, 2018 and 2017, ~~and income of $7.2 million for the three months ended September 30, 2016.~~respectively.

On a per share basis, net income (loss) was income of $1.06and a loss of $1.53 ~~per diluted share and income of $0.44~~ per diluted share for the three months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively.

Selected Segment Financial Information

The following represents selected segment information for the nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 (in thousands):

For the Nine Months Ended September 30, 2017











U.S.

International

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
Revenue

Wireless

$
108,499

$
59,446

$
—

$
—

$
167,945
Wireline

10,443

171,125

—

—

181,568
Renewable Energy

—

—

14,765

—

14,765
Equipment and Other

1,939

7,101

174

—

9,214
Total Revenue

120,881

237,672

14,939

—

373,492
Operating income (loss)

44,520

(7,713)

3,263

(25,952)

14,118


For the Nine Months Ended September 30, 2018

	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	85,767	$	67,279	$	—	$	—	$	153,046
Wireline		4,824		168,259		—		—		173,083
Renewable Energy		—		—		17,272		—		17,272
Total Revenue		90,591		235,538		17,272		—		343,401

Operating income (loss)		35,839		37,450		3,687		(26,190)		50,786



For the Nine Months Ended September 30, 2017

	U.S.		International		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Wireless	$	110,398	$	65,379	$	—	$	—	$	175,777
Wireline		10,483		172,294		—		—		182,777
Renewable Energy		—		—		14,938		—		14,938
Total Revenue		120,881		237,673		14,938		—		373,492

Operating income (loss)		44,520		(7,832)		3,263		(25,953)		13,998

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(1) Reconciling items refer to corporate overhead costs and consolidating adjustments

For the Nine Months Ended September 30, 2016











U.S.

International

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
Revenue

Wireless

$
117,194

$
60,106

$
—

$
—

$
177,300
Wireline

18,793

103,397

—

—

122,190
Renewable Energy

—

—

16,935

—

16,935
Equipment and Other

1,716

10,071

259

—

12,046
Total Revenue

137,703

173,574

17,194

—

328,471
Operating income (loss)

39,698

28,320

(734)

(27,398)

39,886

A ~~year over year summary~~year-to-date comparison of our segment results is as follows:

U.S. Telecom. ~~Revenues~~Revenue within our U.S. Telecom segment decreased by ~~$16.8~~$30.3 million, or ~~12.2%~~25.1%, to ~~$120.9~~$90.6 million from ~~$137.7~~$120.9 million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. Of this decrease, $7.8 million was attributable to our wholesale wireless operations which were subject to reduced wholesale roaming rates and revenue caps with certain carrier customers that more than offset an increase in its number of base stations and data traffic volumes. In addition, revenue from our retail wireless business decreased $0.9 million as a result of decreased subscribers and traffic volumes. In our wireline businesses, the Sovernet Transaction resulted in a decrease in revenue of $11.5 million which was partially offset by an increase in our wholesale long distance voice services of $2.7 million.

Of this decrease, $24.5 million was attributable to our wholesale wireless operations which had its revenue negatively impacted by $6.2 million relating to the July 2018 sale of 100 cell sites. The remaining $18.3million decrease in our wholesale wireless revenue was primarily the result of a reduction in wholesale roaming rates and the impact of contractual revenue caps with certain carrier customers.

In addition, we recorded a $0.2 million decrease in revenue from our retail wireless business and our wireline operations reported a decline in traffic volumes within our wholesale long-distance services resulting in a decrease in revenues of $1.9 million in that business. Also impacting year over year revenue was the impact of the Sovernet Transaction which represented $4.2 million of the total decrease.

Operating expenses within our U.S. Telecom segment decreased $21.6 million, or ~~22.0%~~28.3%, to ~~$76.4~~$54.8 million from ~~$98.0~~$76.4 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This decrease in operating expenses was primarily related to ~~a decrease~~the July 2018 sale of ~~$14.0 million as a result of~~100 cell sites and the ~~Sovernet Transaction,~~ ~~expense reductions implemented over the last several quarters and expense offsets from funds received under the Phase I Mobility Funds partially offset by expansions and upgrades of our networks.~~gain recognized on such transaction.

As a result of the above, our U.S. Telecom segment’s operating income ~~increased $4.8~~decreased $8.7 million, or ~~12.1%~~19.6%, to ~~$44.5~~$35.8 million from ~~$39.7~~$44.5 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

International Telecom. Revenues within our International Telecom segment ~~increased $64.1~~decreased $2.2 million, or ~~36.9%~~0.9%, to ~~$237.7~~$235.5 million from ~~$173.6~~$237.7 million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. This increase was related to the timing of the 2016 Acquisitions of OneComm and Viya which reported an aggregate of $130.2 million of revenue during the nine months ended September 30, 2017 as compared to $61.2 million for the nine months ended September 30, 2016. This $69.0 million increase was partially offset by our sale of our operations in St. Maarten and the British Virgin Islands, $4.4 million of service credits issued for the month of September to customers impacted by the Hurricanes and the deconsolidation of our Aruba operations.

Revenue within our U.S. Virgin Islands market included $15.3 million of additional funding from the FCC’s USF program to assist in the recovery of the impact of the Hurricanes, received during the nine months ended September 30, 2018. This level of additional funding will not continue in future quarters. The impact of this additional funding was partially offset by the impact of the Hurricanes and the sale of our operations in the British Virgin Islands in August 2017 which reported $3.3 million of revenue during the nine months ended September 30, 2017.

An increase in broadband revenues and the addition of our new managed services and technology platform, which began operations in September 2017, increased our revenues within the International Telecom market.

Operating expenses within our International Telecom segment ~~increased~~decreased by ~~$100.1~~$47.5 million, or ~~68.9%,~~19.3 %, to ~~$245.4~~$198.0 million from ~~$145.3~~$245.5 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This ~~increase~~decrease was ~~related to~~primarily the ~~timing~~result of ~~the 2016 Acquisitions of OneComm and Viya which reported an aggregate of $124.5~~$36.6 million of ~~operating~~hurricane related expenses recorded during the nine months ended September 30, 2017 as ~~compared to $57.9 million for~~well as the impact of the Hurricanes on our U.S. Virgin Islands operations throughout the nine months ended September 30, 2016. In addition to this $66.6 million increase, the segment increase also includes $36.6 million related to the impact of the Hurricanes including $35.2 million for damaged assets and $1.3 million of additional operating expenses. These increases were partially offset by operating efficiencies and the effects of the sale of our operations in St. Maarten and the British Virgin Islands.2018.

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As a result, our International Telecom segment’s operating income ~~decreased~~(loss) increased to income of $37.5 million from a loss of ~~$7.7 million from income of $28.3~~$7.8 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

Renewable Energy. ~~Revenues~~Revenue within our Renewable Energy segment ~~decreased $2.3~~increased $2.4 million, or ~~13.4%~~16.1%, to ~~$14.9~~$17.3 million from ~~$17.2~~$14.9 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily as a result of the increase in revenue from our newly completed solar power plants in India partially offset by a decrease in revenue in our U.S. operations as a result of the expiration of certain incentive energy credits from

the state of California.

Operating expenses within our Renewable Energy segment ~~decreased $6.2~~increased by $2.0 million, or ~~34.6%~~17.2%, to ~~$11.7~~$13.6 million from ~~$17.9~~$11.6 million for the nine months ended September 30, ~~2017~~2018 and 2016, respectively. This decrease in expenses was primarily associated with acquisition-related expenses incurred during 2016 as a part of our Vibrant Acquisition partially offset by increased operating expenses incurred for Vibrant in 2017.

As a result of the above, our Renewable Energy segment’s operating income increased by ~~$4.0~~$0.4 million, or 12.1%, to ~~income of $3.3~~$3.7 million from ~~a loss of $0.7~~$3.3 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

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The following represents a year over year discussion and analysis of our results of operations for the nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 (in thousands):


	Nine Months Ended				Amount of		Percent		Nine Months Ended				Amount of		Percent
	September 30,				Increase		Increase		September 30,				Increase		Increase
	2017		2016		(Decrease)		(Decrease)		2018		2017		(Decrease)		(Decrease)

REVENUE:
Wireless	$	167,945	$	177,300	$	(9,355)	(5.3)	%	$	153,046	$	175,777	$	(22,731)	(12.9)	%
Wireline		181,568		122,190		59,378	48.6			173,083		182,777		(9,694)	(5.3)
Renewable Energy		14,765		16,935		(2,170)	(12.8)			17,272		14,938		2,334	15.6
Equipment and Other		9,214		12,046		(2,832)	(23.5)
Total revenue	$	373,492	$	328,471	$	45,021	13.7	%	$	343,401	$	373,492	$	(30,091)	(8.1)	%
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		85,758		77,872		7,886	10.1			84,037		94,478		(10,441)	(11.1)
Engineering and operations		57,881		40,621		17,260	42.5			54,738		57,881		(3,143)	(5.4)
Sales and marketing		26,176		21,814		4,362	20.0
Equipment expense		8,720		10,751		(2,031)	(18.9)
Sales, marketing and customer services										25,969		26,176		(207)	(0.8)
General and administrative		76,969		62,525		14,444	23.1			77,470		77,089		381	0.5
Transaction-related charges		887		16,156		(15,269)	(94.5)			642		887		(245)	(27.6)
Restructuring charges		—		1,785		(1,785)	(100.0)
Depreciation and amortization		65,904		52,913		12,991	24.6			64,602		65,904		(1,302)	(2.0)
Impairment of long-lived assets		—		11,425		(11,425)	(100.0)
Bargain purchase gain		—		(7,304)		7,304	100.0
(Gain) Loss on disposition of long-lived assets		513		27		486	1,800.0
Loss on damaged assets and other hurricane related charges		36,566		—		36,566	100.0
(Gain) loss on disposition of long-lived assets										(15,509)		513		(16,022)	(3,123.2)
Loss on damaged assets and other hurricane related charges, net of insurance recovery										666		36,566		(35,900)	(98.2)
Total operating expenses	$	359,374	$	288,585	$	70,789	24.5	%	$	292,615	$	359,494	$	(66,879)	(18.6)	%
Income from operations	$	14,118	$	39,886	$	(25,768)	(64.6)	%	$	50,786	$	13,998	$	36,788	262.8	%
OTHER INCOME (EXPENSE):
Interest income		1,087		929		158	17.0			1,420		1,087		333	30.6
Interest expense		(6,567)		(3,674)		(2,893)	78.7			(6,759)		(6,567)		(192)	2.9
Loss on deconsolidation of subsidiary		(529)		—		(529)	100.0			—		(529)		529	(100.0)
Other expense, net		(1,751)		643		(2,394)	(372.3)			(3,042)		(1,631)		(1,291)	73.7
Other income (expense), net	$	(7,760)	$	(2,102)	$	(5,658)	269.2	%	$	(8,381)	$	(7,639)	$	(741)	9.7	%
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		6,358		37,784		(31,426)	(83.2)
INCOME BEFORE INCOME TAXES										42,405		6,359		36,047	567.0
Income tax expense		4,839		17,178		(12,339)	(71.8)			13,018		4,839		8,179	169.0
NET INCOME		1,519		20,606		(19,087)	(92.6)			29,387		1,519		27,868	1,834.6
Net income attributable to non-controlling interests, net of tax:		(13,535)		(10,400)		(3,135)	30.1			(10,705)		(13,535)		2,830	(20.9)
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	(12,016)	$	10,206	$	(22,222)	(217.7)	%
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS									$	18,682	$	(12,016)	$	30,698	(255.5)	%

Wireless revenue.Wireless revenue decreased by ~~$9.4~~$22.7 million, or ~~5.3%~~12.9%, to ~~$167.9~~$153.0 million for the nine months ended September 30, ~~2017~~2018 from ~~$177.3~~$175.8 million for the nine months ended September 30, ~~2016.~~2017. The decreases in wireless revenue, within our segments, consisted of the following:

U.S. Telecom. Wireless revenue within our U.S. Telecom segment decreased by ~~$8.7~~$24.6 million, or ~~7.4%~~22.3%, to ~~$108.5~~$85.8 million from ~~$117.2~~$110.4 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Wholesale wireless revenue decreased by ~~$7.8~~$24.4 million or ~~7.6%~~25.3%, to ~~$95.4~~$72.2 million from ~~$103.1~~$96.6 million for the

nine months ended September 30, 2018 and 2017, ~~and 2016, respectively, as~~respectively. Of this decrease, $6.2 million was related to the July 2018 sale of 100 cell sites with the remaining decrease a result of a reduction in wholesale roaming rates and the impact of contractual revenue caps with ~~our~~certain carrier customers. ~~This decrease was~~ ~~partially offset by growth in data traffic volumes as a result of capacity and technology upgrades to our network and the increase in the number of base stations to 1,061 from 926as of September 30, 2017~~

~~Table of Contents~~

~~and 2016, respectively.~~ Our U.S. Telecom’s retail operations reported a decrease in wireless revenues of ~~$0.9~~$0.2 million, or ~~6.4%~~1.4%, to ~~$13.1~~$13.6 million from ~~$14.0~~$13.8 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, as a result of a decrease in subscribers and traffic volumes.

International Telecom. Within our International Telecom segment, wireless revenue ~~decreased~~increased by ~~$0.7~~$1.9 million, or ~~1.2%~~2.9%, to ~~$59.4~~$67.3 million for the nine months ended September 30, ~~2017~~2018 from ~~$60.1~~$65.4 million for the nine months ended September 30, ~~2016.~~2017. This ~~decrease~~increase was primarily related to ~~the decline in roaming revenues within many of our international markets and the deconsolidation of our operations in Aruba. These decreases were partially offset by~~ an increase in ~~wireless subscribers~~voice and data traffic offset by a $0.8 million decrease in ~~Guyana.~~revenues in the U.S. Virgin Islands which was negatively impacted by the Hurricanes.

Wireline revenue. Wireline revenue ~~increased~~decreased by ~~$59.4~~$9.7 million, or ~~48.6%~~5.3%, to ~~$181.6~~$173.1 million from ~~$122.2~~$182.8 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~increases~~decreases in wireline revenue, within our segments, consisted of the following:

U.S. Telecom. Wireline revenue decreased within our U.S. Telecom segment by ~~$8.4~~$5.7 million, or ~~44.7%~~54.3%, to ~~$10.4~~$4.8 million from ~~$18.8~~$10.5 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily asdue to the Sovernet Transaction which resulted in a ~~result~~$4.2 million reduction in wireline revenue. The remainder of the ~~effects the Sovernet Transaction.~~decrease relates to a decrease in traffic volume within our wholesale long-distance voice services operations.

International Telecom. Within our International Telecom segment, wireline revenue ~~increased~~decreased by ~~$67.7~~$4.0 million, or ~~65.5%~~2.3%, to ~~$171.1~~$168.3 million from ~~$103.4~~$172.3 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This ~~increase~~decrease was ~~related to~~ the ~~timing~~result of the ~~2016 Acquisitions~~impact of ~~OneComm~~the Hurricanes and ~~Viya~~the August 2017 sale of our operations in the British Virgin Islands which ~~reported an aggregate of $126.3~~recorded $3.3 million of revenue during the nine months ended September 30, ~~2017 as compared to $56.6 million for the nine months ended September 30, 2016. This $69.7 million increase was~~2017. These decreases were partially offset by $15.4 million in additional USF funding from the FCC, a $6.8 million increase in revenue in our ~~sale~~other International Telecom markets and the addition of our managed service and technology platform which began operations in ~~St. Maarten and the British Virgin Islands and $4.4 million of service credits issued for the month of~~ September ~~to customers impacted by the Hurricanes.~~2017.

Renewable energy revenue.Renewable energy revenue ~~decreased $2.2~~increased by $2.4 million, or ~~12.8%~~15.6%, to ~~$14.8~~$17.3 million from ~~$16.9~~$14.9 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily as a result of the increase in revenue from our newly completed solar power plants in India, and partially offset by a $1.0 million decrease in our U.S. operations as a result of the expiration of certain incentive energy credits from the state of California and ~~decreased production due to~~adverse weather conditions in ~~California.~~the northeast United States.

~~Equipment and other revenue.~~ Equipment and other revenue decreased by $2.8 million, or 23.5%, to $9.2 million from $12.0 million for the nine months ended September 30, 2017 and 2016, respectively. The net decreases in equipment and other revenue, within our segments, consisted of the following:

~~U.S. Telecom.~~ Equipment and other revenue increased within our U.S. Telecom segment by $0.2 million, or 11.8%, to $1.9 million from $1.7 million, for the nine months ended September 30, 2017 and 2016, respectively, as a result of a decrease in handset sales within the retail operation of our wireless businesses and the effects of the Sovernet Transaction.

~~International Telecom.~~ Within our International Telecom segment, equipment and other revenue decreased by $3.0 million, or 29.7%, to $7.1 million from $10.1million, for the nine months ended September 30, 2017 and 2016, respectively. This decrease was primarily the result of a reduction in handset sales in most of our markets.

~~Renewable Energy~~. Our Renewable Energy segment reported $0.2 million and $0.3 million during the nine months ended September 30, 2017 and 2016, respectively, as a result of consulting fees recognized by our Vibrant Energy operations.

Termination and access fee expenses. Termination and access fees ~~increased~~decreased by ~~$7.9~~$10.4 million, or ~~10.1%~~11.1%, to ~~$85.8~~$84.0 million from ~~$77.9~~$94.5 million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~Increases~~Net decreases in termination and access fees, within our segments, consisted of the following:

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U.S. Telecom. Termination and access fees within our U.S. Telecom segment decreased by ~~$6.3~~$5.6 million, or ~~16.9%~~16.2%, to ~~$31.0~~$29.0 million from ~~$37.3~~$34.6 million, for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~Within our wholesale wireless operations, the~~Of this decrease, $2.2 million was ~~primarily a result of an~~ ~~expense reduction implemented over the last several quarters and expense offsets from funds received under the Phase I Mobility Funds. Additionally, there was a decrease~~ ~~of $6.6 million within our other wireline operations as a result of~~related to the effects of the Sovernet ~~Transaction.~~Transaction within our wireline operations. Additionally, a decrease in traffic volume within our wholesale long-distance voice services business resulted in a decrease in termination and access fees of $2.1 million within that business with the remaining decrease being attributable to decreased traffic volume in our U.S. wireless business.

International Telecom. Within our International Telecom segment, termination and access fees ~~increased~~decreased by ~~$14.1~~$5.1 million, or ~~35.6%~~8.6%, to ~~$53.7~~$53.9 million from ~~$39.6~~$59.0 million, for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. Of this decrease, $7.7 million was caused This increase was related to the timing of the 2016 Acquisitions of OneComm and Viya which reported an aggregate of $35.4 million of revenue during the nine months ended September 30, 2017 as compared to $19.2 million for the nine months ended September 30, 2016. This $16.2 million increase was partially offset by ~~our sale of our operations in St. Maarten and the British Virgin Islands and~~ a reduction in television programming and other variable costs which were not incurred as a result of the impact of the Hurricanes and the sale of our ope.rations in the British Virgin Islands. These decreases were partially offset by the costs incurred by our new managed services and technology platform, which began operations in September 2017, and within our other international markets.

Renewable Energy. Termination and access fees within our Renewable Energy ~~segment remained consistent at~~increased $0.4 million, or 40.0%, to $1.4 million from $1.0 million for the nine months ended September 30, 2018 and 2017, ~~and 2016.~~respectively, as a result of increased activity in our India operations.

Engineering and operations expenses. Engineering and operations expenses ~~increased~~decreased by ~~$17.3~~$3.2 million, or ~~42.5%~~5.4%, to ~~$57.9~~$54.7 million from ~~$40.6~~$57.9 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The net ~~increase~~decrease in engineering and operations, within our segments, consisted of the following:

U.S. Telecom. Engineering and operations expenses decreased within our U.S. Telecom segment by ~~$2.9~~$0.8 million, or ~~22.1%~~7.8%, to ~~$10.2~~$9.4 million from ~~$13.1~~$10.2 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily as a result of the Sovernet Transaction, which resulted in a decrease of $0.6 million, and operating efficiencies within our wireless ~~businesses and the effects of the Sovernet Transaction.~~businesses.

International Telecom. Within our International Telecom segment, engineering and operations expenses ~~increased~~decreased by ~~$19.9~~$2.0 million, or ~~74.5%~~4.3%, to ~~$46.6~~$44.6 million from ~~$26.7~~$46.6 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This ~~increase~~decrease was primarily related to a decrease in our U.S. Virgin Islands operations which were impacted by the ~~timing of the 2016 Acquisitions of OneComm~~Hurricanes and ~~Viya~~our other international markets which ~~reported an aggregate of $33.6 million of these expenses during the nine months ended September 30, 2017 as compared to $12.5 million for the nine months ended September 30, 2016.~~experienced operational efficiencies.

Renewable Energy. Engineering ~~and operations~~ expenses within our Renewable Energy segment ~~increased~~decreased $0.3 million, or 75.0%, to ~~$0.4~~$0.1 million from ~~$0.3~~$0.4 million for the nine months ended September 30, ~~2017~~2018 and ~~2016, respectively, as a result of~~2017.

Corporate Overhead. Engineering expenses within our ~~continued development of our Vibrant projects.~~corporate overhead decreased $0.1 million, or 12.5%, to $0.7 million from $0.8 million for the nine months ended September 30, 2018 and 2017.

Sales and marketing expenses. Sales and marketing expenses ~~increased~~decreased by ~~$4.4~~$0.2 million, or ~~20.0%~~0.8%, to ~~$26.2~~$26.0 million from ~~$21.8~~$26.2 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The net ~~increase~~decrease in sales and marketing expenses, within our segments, consisted of the following:

U.S. Telecom. Sales and marketing expenses decreased within our U.S. Telecom segment by ~~$1.5~~$0.3 million, or ~~36.6%~~11.5%, to ~~$2.6~~$2.3 million from ~~$4.1~~$2.6 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, primarily as a result of a decrease in ~~promotions~~marketing and advertising within the retail operations of our wireless ~~business and the Sovernet Transaction.~~business.

International Telecom. Within our International Telecom segment, our sales and marketing expenses ~~increased by $5.8~~remained consistent at $23.6 million ~~or 32.8%, to $23.5 million from $17.7 million,~~ for the nine months ended September 30, ~~2017~~2018 and ~~2016, respectively.~~ ~~This~~2017. The increase reported from most of our international markets was ~~related to the timing~~offset by a decrease of ~~the 2016 Acquisitions of OneComm and Viya which reported an aggregate of $9.9~~$1.4 million ~~of these expenses~~

~~Table of Contents~~

~~during the nine months ended September 30, 2017 as compared to $3.5 million for the nine months ended September 30, 2016.~~

~~Equipment expenses.~~ ~~Equipment expenses decreased by $2.0 million, or 18.9%, to $8.7 million from $10.8 million for the nine months ended September 30, 2017 and 2016, respectively. The decreases~~ in ~~equipment expenses, within our segments, consisted of the following:~~

~~U.S. Telecom. Equipment expenses decreased within~~ our U.S. Telecom segment by $1.1 million, or 33.3%, to $2.2 million from $3.3 million, for the nine months ended September 30, 2017 and 2016, respectively. This decrease was related to a decrease in handset sales within the retail operation of our wireless businesses.

~~International Telecom~~. Equipment expenses decreased within our International Telecom segment by $0.8 million, or 10.8%, to $6.6 million from $7.4 million, for the nine months ended September 30, 2017 and 2016, respectively,Virgin Islands operations, caused as a result of ~~an overall decrease in handset sales in our various markets.~~the Hurricanes.

General and administrative expenses. General and administrative expenses increased by ~~$14.4~~$0.4 million, or ~~23.1%~~0.5%, to ~~$77.0~~$77.5 million from ~~$62.5~~$77.1 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Net increases in general and administrative expenses, within our segments, consisted of the following:

U.S. Telecom. General and administrative expenses ~~decreased within our U.S. Telecom segment~~increased by ~~$1.1~~$1.0 million, or 9.3%, to $11.7 million from $10.7 million ~~from $11.8~~primarily to support our wireless operations and the addition of new in-building and large scale fiber network businesses offset by a $0.5 million ~~for the nine months ended September 30, 2017 and 2016, respectively as a result of the effects~~impact of the Sovernet ~~Transaction partially offset by an increase in our wireless businesses to support its expanding wireless networks.~~

Transaction.

International Telecom. General and administrative expenses ~~increased~~decreased within our International Telecom segment by ~~$12.1~~$0.6 million, or ~~43.4%~~1.5%, to ~~$40.0~~$39.4 million from ~~$27.9~~$40.0 million, for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~This increase~~The decrease was primarily related to our U.S. Virgin Islands operations as it continues to recover from the ~~timing~~impact of the ~~2016 Acquisitions of OneComm~~Hurricanes and ~~Viya~~certain cost reduction programs in our other international markets. These decreases were partially offset by our new managed services and technology platform which ~~reported an aggregate of $24.7 million of these expenses during the nine months ended~~began operations in September ~~30, 2017 as compared to $13.0 million for the nine months ended September 30, 2016.~~2017.

Renewable Energy. General and administrative expenses within our Renewable Energy segment ~~increased~~decreased by ~~$1.6~~$0.2 million, or ~~42.1%~~3.7%, to ~~$5.4~~$5.2 million from ~~$3.8~~$5.4 million for the nine months ended September 30, ~~2017~~2018 and ~~2016, respectively, as a result of overhead and operating expenses incurred for the development of our India operations.~~2017.

Corporate Overhead. General and administrative expenses increased within our corporate overhead by ~~$1.9~~$0.3 million, or ~~10.0%~~1.4%, to ~~$20.9~~$21.2 million from ~~$19.0~~$20.9 million, for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively, primarily related to an increase in professional fees, in order to support our expanding operations.

Transaction-related charges. We incurred ~~$0.9~~$0.6 million and ~~$16.2~~$0.9 million of transaction‑related charges during the nine months ended September 30, 2018 and 2017, respectively. The 2018 transaction-related charges were primarily related to the sale of our Ahana operations within our Renewable Energy segment and ~~2016, respectively.~~our new in-building and large scale fiber network platforms. Substantially all of the 2017 expenses were related to the Sovernet Transaction. ~~For the nine months ended September 30, 2016, substantially all of the expenses were related to our Viya, One Communications and Vibrant Acquisitions.~~

~~Restructuring Charges.~~ ~~During the nine months ended September 30, 2016, we incurred $1.8 million of certain restructuring costs in connection with the integration of One Communications and ATN.~~

Depreciation and amortization expenses. Depreciation and amortization expenses ~~increased~~decreased by ~~$13.0~~$1.3 million, or ~~24.6%~~2.0%, to ~~$65.9~~$64.6 million from ~~$52.9~~$65.9 million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~Increases~~Net decreases in depreciation and amortization expenses, within our segments, consisted primarily of the following:

~~Table of Contents~~

U.S. Telecom. Depreciation and amortization expenses ~~increased~~decreased within our U.S. Telecom segment by ~~$1.6~~ $0.1 million, or ~~9.1%~~0.5%, to ~~$19.1~~$19.0 million from ~~$17.5~~$19.1 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, as a result of ~~certain~~the completion of the previously disclosed sale of approximately 100 cell sites within our U.S. wireless ~~network expansions~~operations which reduced depreciation expense by $1.0 million and ~~upgrades partially offset~~ by the effects of the Sovernet ~~Transaction.~~Transaction which reduced depreciation and amortization expenses by $0.6 million. These decreases were partially offset by network expansions and upgrades within other geographic areas of our U.S. wireless operations.

International Telecom. Depreciation and amortization expenses ~~increased~~decreased within our International Telecom segment by ~~$10.9~~$2.4 million, or ~~39.8%~~6.3%, to ~~$38.3~~$35.9 million from ~~$27.4~~$38.3 million, for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. This ~~increase~~decrease was primarily related to ~~the timing~~a $4.9 million reduction in depreciation expense within our U.S. Virgin Islands market on assets that were damaged and written off as a result of the ~~2016 Acquisitions~~Hurricanes partially offset by the expansion and upgrades of OneComm and Viya which reported an aggregate of $19.8 million of depreciation and amortization expenses during the nine months ended September 30, 2017 as compared to $9.3 million for the nine months ended September 30, 2016.our network assets in our other International Telecom markets.

Renewable Energy. Depreciation and amortization expenses within our Renewable Energy segment increased by ~~$1.3~~$0.6 million, or ~~36.1%~~12.2%, to ~~$4.9~~$5.5 million from ~~$3.6~~$4.9 million as a result of capital expenditures primarily related to the construction of our ~~Vibrant Energy operations.~~solar operations in India.

Corporate Overhead. Depreciation and amortization expenses ~~decreased~~increased by ~~$0.9~~$0.7 million or ~~20.5%~~20.0% to ~~$3.5~~$4.2 million from ~~$4.4~~$3.5 million for the ~~three~~nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, as a result of certain tangible assets ~~becoming fully depreciated.~~being placed into service.

~~Impairment~~(Gain) loss on disposition of long-lived ~~assets.~~assets. During June 2016, as a result of industry consolidation activities and a review of strategic alternatives for our U.S. Wireline business in the Northeast, we identified factors indicating the carrying amount of certain assets may not be recoverable. More specifically, the factors included the competitive environment, recent industry consolidation, and our view of future opportunities in the market which began to evolve in the second quarter of 2016. As a result of these factors, the analysis concluded that certain U.S. Wireline assets in the U.S. Telecom segment were overvalued. As a result, we recorded a non-cash impairment charge of $11.1 million during the nine months ended September 30, ~~2016. The impairment reduced the carrying value of long lived assets by $3.6 million and goodwill by $7.5 million.~~

~~Bargain purchase gain.In connection with the One Communications Acquisition,~~2018, we recorded a ~~bargain purchase~~ gain ~~of $7.3 million during~~on the nine months ended September 30, 2016. The purchase price and resulting bargain purchase gain are the result of the market conditions and competitive environment in which One Communications operates along with the Company's strategic position and resources in those same markets. Both companies realized that their combined resources would accelerate the transformation of both companies to better serve customers in these markets. The bargain purchase gain is included in operating income in the accompanying income statement for the nine months ended September 30, 2016.

~~Loss on~~ disposition of long-lived assets of $15.5 million as a result of a $15.2 million gain on the previously disclosed sale of approximately 100 cell sites and a $2.4 million gain on the sale of certain telecommunication licenses within our U.S. wireless operations. These gains were partially offset by a $1.5 million loss recorded in connection with certain .asset disposals and settlement agreements within our Renewable Energy segment and a $0.7 million loss on the disposal of miscellaneous assets within our U.S. wireless operations. During the nine months ended September 30, 2017, we recorded a loss of $0.5 million in connection with the Sovernet Transaction.

~~Table of Contents~~

During the nine months ended September 30, 2018, we incurred $0.7 million in expenses associated with the procurement of continued building maintenance, security services, the supply of alternative power and ~~subsequently Hurricane Maria (collectively,~~related professional fees.

During the ~~“Hurricanes”). Both our wireless and wireline networks and commercial operations were severely damaged by these storms. As a result~~nine months ended September 30, 2017, we recorded $36.6 million in hurricane related charges of ~~the significant damage~~which $35.2 million was in connection with damages incurred to our wireline network and the ongoing lack of consistent commercial power in the territory since the Hurricanes, we have been unable to provide most of our wireline services, which comprise the majority of revenue, in the business. Due to the ongoing poor conditions on the islands, the continued lack of consistent commercial power, and the damage to our wireline infrastructure, we currently expect this impact to wireline revenue to continue for the next several quarters and estimate that it will be most pronounced in the fourth quarter of 2017.

~~As of November 9, 2017, our preliminary assessment of the level of wireline~~ and wireless ~~network damage by the Hurricanes~~networks and ~~corresponding loss has been estimated as $35.2 million. This amount, along with~~ $1.4 million ofrelated to additional operating expenses that we ~~specifically~~ incurred during ~~the quarter~~2017 to specifically address the impact of the Hurricanes, has been recorded in our statement of operations for the three and nine months ended September 30, 2017. The level of network damage assessment and losses on damaged assets is based on information known as of the filing of this Form 10-Q. Given the current conditions in the USVI, including curfews, limited access to areas of the islands and the lack of consistent commercial power, additional damages may be discovered upon being able to fully access these areas and/or once commercial power is restored and we can bring our networks fully online. This assessment will continue to be updated in subsequent quarters as more information becomes available.

Interest income. Interest income ~~represents interest earned on our cash, cash equivalents, restricted cash and short term investment balances.~~

~~Interest income~~ increased to ~~$1.1~~$1.4 million from ~~$0.9~~$1.1 million for the nine months ended September 30, 2018 and 2017, ~~and 2016.~~respectively. The ~~effects of~~increase was primarily related to an increase in the return on our cash, cash equivalents and marketable securities ~~were partially offset by a decrease in those assets~~ as compared to the previous year.

Interest expense. Interest expense increased by ~~$2.9~~$0.2 million, or 2.9%, to $6.8 million from $6.6 million ~~from $3.7 million for the nine months ended September 30, 2017 and 2016, respectively. The~~as a result of a slight increase ~~predominantly reflects~~in the interest ~~incurred~~rate on our variable rate debt ~~used to finance a portion of~~and the ~~Viya Acquisition, the term loans assumed with~~increase in the One Communications ~~Acquisition,~~debt which ~~were~~was refinanced ~~on September 30, 2017~~in May 2017. The increase in interest expense was partially offset by the effects of the semi-annual principal repayments of the Ahana debt and the ~~increased loan balance on~~quarterly principal repayments of the ~~refinanced Ahana Debt.~~ One Communications debt.

Loss on deconsolidation of subsidiary. During the nine months ended September 30, 2017, we recorded a ~~$0.5~~$0.4 million loss on the deconsolidation of a portion our U.S. Wireline operations upon the completion of the Sovernet Transaction. There were no similar changes during the nine months ended September 30, 2018.

Other income (expense), net. ~~Other~~For the nine months ended September 30, 2018, other income (expense)~~, net~~ was an$3.0 million expense ~~of $1.8 million for~~which was primarily related to losses on foreign currency transactions. For the nine months ended September 30, 2017, ~~and included our~~other income (expense) was an expense of $1.8 million which was primarily related to a loss on our equity method investment in our Aruba operations of $~~1.9~~ $1.9 million partially offset by a gain on the sale of marketable securities of $~~0.8~~ $0.8 million and the net ~~losses~~loss on foreign currency ~~transactions.~~transactions of $0.7 million.

Income taxes. Our effective tax rate for the nine months ended September 30, 2018 and 2017 was 30.7% and ~~2016 was~~ 76.1% ~~and 45.5%~~, respectively. ~~When~~The effective tax rate for the nine months ended September 30, 2018 was primarily impacted by the following items: (i) a ~~company operates~~$2.0 million increase (net) of unrecognized tax positions recognized discretely, (ii) a $0.6 million benefit (net) to record a return to accrual adjustment recognized discretely, (iii) a $0.5 million benefit for the release of a capital loss valuation allowance due to a capital gain on a sale of a wireless license, (iv) a $1.4 million benefit (net) to record a valuation allowance release on an indefinite lived intangible asset recognized discretely, (v) a $0.7 million provision for the intercompany sale of assets from the U.S. to the U.S. Virgin Islands, and (vi) the mix of income generated among the jurisdictions in ~~a jurisdiction that generates ordinary losses but does not expect to realize them, ASC 740-270-30-36(a) requires~~which we operate along with the exclusion of losses in jurisdictions where we cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the ~~respective jurisdiction from the overall annual effective tax rate (“AETR”) calculation~~U.S. Virgin Islands and ~~instead, a separate AETR should be computed.~~ India.

The effective tax rate for the nine months ended September 30, 2017 was primarily impacted by the following items: (i) the exclusion of losses in jurisdictions where we cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S.

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Virgin Islands, (ii) a $3.4 million benefit for the net capital loss due to the stock sales of our businesses in New England, New York and St. Maarten, (iii) a $3.4 million amended return refund claim filed for tax year 2013 recognized discretely in the third quarter, (iv) a ~~$683 thousand~~$0.7 million increase (net) in unrecognized tax benefits related to current year and prior year positions recognized discretely in respective quarters, (v) a ~~$367 thousand~~$0.4 million benefit (net) to record return to accrual adjustments recognized discretely in the respective quarter and, (vi) the mix of income generated among the jurisdictions in which we operate. The effective tax rate for the nine months ended September 30, 2016 was impacted by the following items: (i) certain transactional charges incurred in connection with our acquisitions that had no tax benefit, (ii) an impairment charge to write down the value of assets related to our wireline business, (iii) the mix of income generated among the jurisdictions in which we operate, and (iv) $2.2 million provision (net) to record multiple discrete items.

consolidated financial statements as of December 31, 2017. In the third quarter of 2018 we made adjustments to the provisional amounts, including continued refinements to our deferred taxes of a $0.4 million provision from the $18.0 million benefit recorded at year-end and a $2.5 million provision on the deemed repatriation of undistributed foreign earnings in addition to the $7.4 million provision recorded at year-end. We continue to collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies. The accounting for the tax effects of the Tax Act will be completed by the end of 2018. While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from our accrued positions as a result of uncertain and complex application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, we could record additional provisions or benefits for U.S. federal, state, and foreign tax matters in future periods as new information becomes available.

Net income attributable to non-controlling ~~interests.~~interests, net of tax. Net income attributable to non-controlling interests reflected an allocation of ~~$13.5~~$10.7 million and ~~$10.4~~$13.5 million of income generated by our less than wholly-owned subsidiaries for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively, ~~an increase~~a decrease of ~~$3.1~~$2.8 million or ~~30.1%~~20.9%. Changes in net income attributable to non-controlling interests, net of tax, within our segments, consisted of the following:

U.S. Telecom. Net income attributable to non-controlling interests, ~~increased~~net of tax decreased by ~~$0.5~~$2.6 million, or ~~10.2%~~48.1%, to ~~$5.4~~$2.8 million from ~~$4.9~~$5.4 million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively, primarily as a result of ~~the effects of the Sovernet transaction partially offset by~~ decreased profitability at certain less than wholly owned subsidiaries ofwithin our U.S. wireless retail operations.

International Telecom. Net income attributable to non-controlling interests, ~~increased~~net of tax decreased by ~~$3.4~~$0.1 million, or ~~87.2%~~1.4%, to ~~$7.3~~$7.2 million from ~~$3.9~~$7.3 million, primarily as a result of ~~an increase in profits~~decreased profitability in our ~~Bermuda operations as a result of~~less than wholly owned subsidiaries within our ~~One Communications acquisitions.~~international operations.

Renewable Energy. Net income attributable to non-controlling interests, net of tax decreased by $0.1 million, or 12.5% to $0.7 million from $0.8 million ~~or 50.0%, to $0.8 million from $1.6 million, as a result of decreased profitability~~for the nine months ended September 30, 2018 and ~~our increased ownership within our domestic solar operations.~~2017, respectively.

Net income (loss) attributable to ATN International, Inc. stockholders. Net income (loss) attributable to ATN International, Inc. stockholders was income of $18.7 million and a loss of $12.0 ~~and income of $10.2~~ million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively.

On a per share basis, net income (loss) was income of $1.16 and a loss of $0.74 ~~and income of $0.63~~ per diluted share for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, 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 1214 to the ~~Unaudited Condensed~~ Consolidated Financial Statements in this Report.

Tax Reform

The Tax Act also commonly referred to as U.S. tax reform, which was signed into law on December 22, 2017, has resulted in significant changes to the U.S. corporate income tax system and the U.S. Virgin Islands mirror code which replaces “United States” with “U.S. Virgin Islands” throughout the Internal Revenue Code. These changes include a U.S. federal statutory rate reduction from 35% to 21%, which results in a U.S. Virgin Islands rate change of 38.5% to 23.1% under the mirror tax code which allows for a 10% surcharge on the U.S. federal tax rate, 100% expensing of certain qualified capital investments, the elimination or reduction of the alternative minimum tax regime, certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation.

The Tax Act also transitions international taxation from a worldwide system to a modified territorial system and includes two base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low taxed income (“GILTI”) and eliminates the deduction of certain payments made to related foreign corporations, and imposes a minimum tax if greater than regular tax under the base-erosion and anti-abuse tax (“BEAT”). These changes became effective beginning in 2018. The Tax Act also includes a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (“the Transition Toll Tax”).

Transition Toll Tax

The Tax Act eliminates the deferral of U.S. income tax on the historical unrepatriated earnings by imposing the Transition Toll Tax, which is a one-time mandatory deemed repatriation tax on undistributed foreign earnings. The Transition Toll Tax is assessed on the U.S. shareholder's share of the foreign corporation's accumulated foreign earnings that have not previously been taxed. Earnings in the form of cash and cash equivalents will be taxed at a rate of 15.5% and all other earnings will be taxed at a rate of 8.0%.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements as of December 31, 2017. In the third quarter of 2018 we made adjustments to the provisional amounts, including a $2.5 million provision on the deemed repatriation of undistributed foreign earnings in addition to the $7.4 million provision recorded at year-end. We continue to collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, IRS, and other standard-setting bodies. The accounting for the tax effects of the Tax Act will be completed by the end of 2018.

At September 30, 2018, we continue to assert our earnings are provisionally permanently reinvested outside the U.S., however the tax impact of subsequent cash distributions from our foreign subsidiaries will be limited to foreign withholding, where applicable, and state taxes. A cash dividend from Guyana was made in 2018, however these distributions are not subject to Guyanese withholding tax and the US state tax impact is minimal.

Effect on Deferred Tax Assets and Liabilities and other Adjustments

Our deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these temporary differences are expected to be realized or settled. Our deferred tax balances at December 31, 2017 were adjusted for the impact of the Tax Act; an additional adjustment of $0.4 million was recorded in the three-month period ending September 30, 2018 for temporary differences finalized with the filing of the 2017 tax return.

The BEAT provisions in the Tax Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. We do not expect we will be subject to this tax and therefore have not included any tax impacts of BEAT in our consolidated financial statements for the nine months ended September 30, 2018. Based on our initial calculation under the GILTI rules, we do not have an inclusion as of September 30, 2018. The FASB staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred. Our selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Therefore, we have not made any adjustments related to potential GILTI tax in our financial statements and have not made a policy decision regarding whether to record deferred taxes on GILTI.

Status of our Assessment

Our preliminary estimate of the Transition Toll Tax and the remeasurement of our deferred tax assets and liabilities is subject to the finalization of management’s analysis related to certain matters, such as developing interpretations of the provisions of the Tax Act, changes to certain estimates and amounts related to the earnings and

profits of certain subsidiaries and the filing of our tax returns. U.S. Treasury regulations, administrative interpretations or court decisions interpreting the Tax Act may require further adjustments and changes in our estimates.

The final determination of the Transition Toll Tax and the remeasurement of our deferred assets and liabilities will be completed as additional information becomes available, but no later than one year from the enactment of the Tax Act. As previously noted, we have made revisions to our provisional estimates however we continue to analyze certain income tax effects of The Act and the subsequent IRS notices and proposed regulations.

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, proceeds from dispositions, borrowings under our credit facilities and seller financing. We believe our current cash, cash equivalents, short term investments and availability under our current credit facility will be sufficient to meet our cash needs for at least the next twelve months for working capital needs and capital expenditures.

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Uses of Cash

Acquisitions and ~~Investments.~~investments. Historically, we have funded our acquisitions with a combination of cash on hand, borrowings under our credit facilities and seller financing.

We continue to explore opportunities to expand our telecommunications and our international renewable energy businesses 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 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, ~~2017,~~2018, we had approximately ~~$249.5~~$174.0 million in cash, cash equivalents and restricted ~~cash and short term investments.~~cash. Of this amount, ~~$147.9~~$57.7 million was held by our foreign subsidiaries and is provisionally indefinitely invested outside the United States. The amount held by our foreign subsidiaries decreased from the December 31, 2017 balance of $113.9 million primarily as the result of a $52.0 million dividend paid by our Guyana subsidiary during the first quarter of 2018 of which $41.6 million was paid to ATN (and eliminated in consolidation) while the remaining $10.4 million was paid to that subsidiary’s minority shareholder. As the Tax Act resulted in a one-time transition tax on the deemed repatriation of foreign earnings for federal tax purposes, the tax impact of subsequent cash distributions will be limited to foreign withholding tax, foreign exchange gain or loss, where applicable, and state taxes. In addition, we had approximately ~~$159.7~~$91.9 million of debt (excluding the Ahana Debt which has been reclassified to Liabilities held for sale in the accompanying September 30, 2018 balance sheet), net of unamortized deferred financing costs, as of September 30, ~~2017.~~2018. How and when we deploy our balance sheet capacity will figure prominently in our longer-term growth prospects and stockholder returns.

Capital ~~Expenditures.~~expenditures. Historically, a significant use of our cash has been for capital expenditures to expand and upgrade our telecommunications networks and to expand our renewable energy operations.

During 2016, we paid $10.9 million to participate in the FCC Auction 1002 for 600 MHz spectrum licenses. The auction was completed on March 30, 2017. On April 6, 2017, we were notified that we were the high bidder for certain licenses and paid the remaining balance of $36.8 million to acquire those licenses during June 2017, which is included within Telecommunications Licenses on our balance sheet as of September 30, 2017. Also as of September 30, 2017, we have reclassified the $10.9 million deposit from Other Assets to Telecommunications Licenses on our balance sheet.

For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, we spent approximately ~~$108.3~~$154.3 million and ~~$78.5~~$108.3 million, respectively, on capital expenditures. The following notes our capital expenditures, by operating segment, for these periods (in thousands):


		Capital Expenditures										Capital Expenditures

		U.S.		International		Renewable		Corporate and				U.S.		International			Renewable		Corporate and
Nine months ended September 30,		Telecom		Telecom		Energy		Other (1)		Consolidated		Telecom		Telecom			Energy		Other (1)		Consolidated
2018											$	9,461	$	136,790	(2)	$	1,642	$	6,385	$	154,278
2017	$	17,396	$	54,775	$	31,327	$	4,778	$	108,276		17,396		54,775			31,327		4,778		108,276
2016		26,709		36,543		10,326		4,877		78,455

~~(1) Reconciling items refer to corporate overhead costs and consolidating adjustments.~~

(1)

Corporate and other items refer to corporate overhead costs and consolidating adjustments

(2)

Includes $78.9 million of expenditures used for network repairs and resiliency enhancements in the U.S. Virgin Islands which were impacted by the Hurricanes. These expenditures were financed, in part, by the $34.6 million of insurance proceeds we received during the first quarter of 2018 and cash from operations.

We are continuing to invest in ~~upgrading and expanding~~ our ~~telecommunications~~telecommunication networks ~~and renewable energy assets in many of our markets,~~ along with ~~upgrading~~ our operating and business support ~~systems. With several major~~systems in many of our markets. Such investments include the upgrade and expansion of both our wireline and wireless ~~and wireline network expansions and upgrades currently underway, we anticipate that~~telecommunications networks as well as our service delivery platforms. We expect 2018 capital expenditures for our domestic and international telecom ~~segments,~~businesses to be approximately $90 million to $95 million excluding ~~the~~Hurricane restoration ~~work being undertaken~~costs in the U.S. Virgin ~~Islands as~~Islands. To a ~~result~~smaller extent we also continue to invest in expanding our renewable energy assets in India, however, continued expansion in the India market is largely dependent on our ability to secure local financing and the timing, terms and conditions of ~~the Hurricanes, for the year ending December 31, 2017,~~such financing, which are difficult to be between $95.0 million and $110.0 million. As of November 9, 2017, the magnitude and timing of the costs needed to restore our U.S. Virgin Islands operations has not yet been determined. Capital expenditures for our Renewable Energy segment will be between $30.0 million and $40.0 million for the year ending December 31, 2017 primarily relating to our solar operations in India.estimate at this time.

We expect to fund our current capital expenditures primarily from our current cash balances and cash generated from ~~operations.~~operations but may secure additional financing to support renewable energy capital expenditures in India.

Income taxes. We have historically used cash‑on‑hand to make payments for income taxes. Our policy is to allocate capital where we believe we will get the best returns and to date has been to indefinitely reinvest the undistributed earnings of our foreign ~~subsidiaries,~~subsidiaries. As the Tax Act resulted in a one-time transition tax on the deemed repatriation of foreign earnings for federal tax purposes, the tax impact of subsequent cash distributions will be limited to foreign withholding tax and ~~accordingly,~~foreign exchange gain or loss, where applicable, and state taxes. As we continue to reinvest our remaining foreign earnings on a provisional basis, outside of a one-time dividend from Guyana made in the first quarter of 2018, no additional provision for ~~federal~~

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income taxes has been made on accumulated earnings of foreign subsidiaries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation as such liability, if any, is dependent on circumstances existing if and when such remittance occurs.

Dividends. We use cash-on-hand to make dividend payments to our stockholders when declared by our Board of Directors. For the ~~three~~nine months ended September 30, ~~2017,~~2018, our Board declared $2.7 million of dividends to our stockholders, which includes a $0.17 per share dividend declared on September ~~15, 2017~~18, 2018 and paid on October ~~9, 2017, of $2.7 million.~~8, 2018. We have declared quarterly dividends for the last 7680 fiscal quarters.

~~Stock repurchase plan.~~ In September 2004, our Board of Directors approved a $5.0 million stock buyback plan (the “2004 Repurchase Plan”). Through September 19, 2016, we repurchased $4.1 million of our common stock under the 2004 Repurchase Plan.

On September 19, 2016, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock from time to time on the open market or in privately negotiated transactions (the “2016 Repurchase Plan”). ~~The 2016 Repurchase Plan replaces the 2004 Repurchase Plan.~~ During the ~~three~~nine months ended September 30, ~~2017,~~2018, we repurchased ~~201,932 shares of our common stock for approximately $10.6 million. As of September 30, 2017, we~~$1.6 million under the 2016 Repurchase Plan and have ~~$39.3~~$37.7 million available to be repurchased under ~~the 2016 Repurchase Plan.~~that plan as of September 30, 2018.

Sources of Cash

Total liquidity. As of September 30, ~~2017,~~2018, we had approximately ~~$249.5~~$174.0 million in cash, cash equivalents and restricted cash ~~and short term investments~~ which represents a decrease of ~~$49.8~~$45.9 million from the December 31, ~~2016~~2017 balance of ~~$299.3~~$219.9 million. The decrease is primarily attributable tocash used for capital expenditures of ~~$107.6~~$154.3 million ~~purchases~~(including $78.9 million for the network repairs and resiliency enhancements of ~~telecommunications spectrum~~our network in the U.S. Virgin Islands following the Hurricanes), distributions to our minority shareholders of ~~$36.8~~$15.3 million (which includes a distribution to the minority shareholder of

our Guyana subsidiary of $10.4 million), dividends paid on our common stock of ~~$16.5~~$8.2 million, ~~and~~ the repurchase of our common stock of $3.7 million, the principal repayment of our debt of $5.7 million, the repurchase of non-controlling interests of $5.2 million and $3.0 million used for ~~$11.1 million~~certain strategic investments. These amounts were partially offset by cash provided by our operations of ~~$122.0~~$98.0 million, the receipt of $34.6 million of insurance proceeds relating to the damages we incurred as a result of the Hurricanes, the aggregate net proceeds from the sale of assets and investments of $10.7 million and receipt of government grants of $5.4 million.

Cash provided by operations. Cash provided by operating activities was $~~122.0~~ $98.0 million for the nine months ended September 30, ~~2017~~2018 as compared to $~~92.1~~ $122.0 million for the nine months ended September 30, ~~2016.~~2017. The ~~increase~~decrease of $~~29.9~~ $24.0 million was ~~primarily~~ related to ~~an increase~~a decrease of $25.0 million within our U.S. Telecom segment which was primarily the result of the decrease in ~~cash provided by operations~~wireless revenues due to the reduction in wholesale roaming revenue rates and the impact of the July 2018 sale of 100 cell sites, a decrease of $11.5 million within our International Telecom segment ~~as a result of our One Communications and Viya Acquisitions, an increase in cash provided by our U.S. Telecom segment~~ primarily related to ~~certain expense reductions~~the impact of the Hurricanes and ~~an increase in cash provided by operations~~a decrease of $5.8 million within our ~~Renewable Energy segment primarily as a result of a decrease in transaction related expenses incurred in that segment in connection with our Vibrant Acquisition.~~renewable energy segment. These ~~increases in cash provided by operations~~decreases were partially offset by an increase in cash ~~used within our corporate overhead to support our recent acquisitions.~~flow from operations of $18.1 million as a result of the timing of payments made for accounts payable and income taxes.

Cash used in investing activities. Cash used in investing activities was ~~$138.8~~$105.7 million and ~~$278.1~~$139.3 million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~decrease~~nine months ended September 30, 2018 included $34.6 million of insurance proceeds relating to business interruptions and damages incurred as a result of the Hurricanes, $5.4 million of cash received for government grants and $10.7 million received for the aggregate proceeds on the sale of marketable securities and other investments. The nine months ended September 30, 2017 included aggregate proceeds of $22.4 million received from the Sovernet Transaction and the sale of our operations in St. Maarten. These cash receipts were offset by capital expenditures of $154.3 million (including $78.9 million for the rebuild of our network in the U.S. Virgin Islands which was impacted by the Hurricanes) and $3.0 million used for ~~investing activities of $139.3 million was primarily related to a $132.0 million decrease in the amount of cash paid for acquisitions and other~~certain strategic investments during ~~2017~~the nine months ended September 30, 2018 as compared to ~~2016.~~$108.3 million used for capital expenditures during the nine months ended September 30, 2017.

Cash used in financing activities. Cash used in financing activities was ~~$28.5~~$37.9 million and $29.7 million during the nine months ended September 30, 2018 and 2017, ~~as compared to~~respectively. The increase in cash ~~provided by~~used for financing activities of ~~$46.6 million. A majority~~$8.2 million was primarily related to an $11.7 million increase in the distributions made to minority shareholders (primarily the minority shareholder of our Guyana subsidiary) and a $4.1 million increase in the repurchases of non-controlling interests. These increases were partially offset by an $8.3 million decrease in the dividends paid to our stockholders, a $7.4 million reduction in the amounts we paid to repurchase our common stock and the effects of the ~~$75.1~~$8.6 million ~~change relates to~~refinancing of the ~~$60.0 million~~One Communications debt which was completed in ~~borrowings used to partially finance the Viya Acquisition.~~2017.

Credit Facilities.We have a credit facility with CoBank, ACB and a syndicate of other lenders to provide for a $225 million revolving credit facility (the “Credit Facility”) that includes (i) up to $10 million under the Credit Facility for standby or trade letters of credit, (ii) up to $25 million under the 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~~Swingline sub-facility.

Amounts that we may borrow under the Credit Facility bear interest at a rate equal to, at our option, ~~of,~~ either (i) the London Interbank Offered Rate (~~LIBOR~~)(LIBOR) plus an applicable margin ranging between 1.50% to 1.75% or (ii) a

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base rate plus an applicable margin ranging from 0.50% to 0.75%. Swingline ~~loans~~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~~;LIBOR; (ii) the federal funds effective rate (as defined in the Credit ~~Facility~~)Facility) plus 0.50% per annum; and (iii) the prime rate (as defined in the Credit ~~Facility~~)Facility). The applicable margin is determined based on the ratio (as further defined in the Credit Facility) of our indebtedness to EBITDA. Under the terms of the Credit Facility, we must also pay a fee ranging from 0.175% to 0.250% of the average daily unused portion of the Credit Facility over each calendar quarter.

On January 11, 2016, we amended the Credit Facility to increase the amount ~~that~~ we are permitted to invest in our “unrestricted” subsidiaries, which are not subject to the covenants of the Credit Facility,, from ~~$275.0~~$275 million to ~~$400.0~~$400 million (as such increased amount shall be reduced from time to time by the aggregate amount of certain dividend

payments to our stockholders).The Amendment also provides for the incurrence by us of incremental term loan facilities, when combined with increases to revolving loan commitments under the Credit Facility,, in an aggregate amount not to exceed ~~$200.0~~$200 million, which facilities shall be subject to certain conditions, including pro forma compliance with the total net leverage ratio financial covenant under the Credit ~~Facility~~.Facility.

The 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. In addition, the Credit Facility contains a financial covenant ~~by us~~ that imposes a maximum ratio of indebtedness to EBITDA. As of September 30, ~~2017,~~2018, we were in compliance with all of the financial covenants of the Credit Facility.

As of September 30, ~~2017,~~2018, we had no borrowings under the Credit Facility.

Ahana Debt

On December 24, 2014, in connection with the Ahana Acquisition, we assumed $38.9 million in long-term debt (the “Original Ahana Debt”). The Original Ahana Debt included multiple loan agreements with banks that bore interest at rates between 4.5% and 6.0%, matured at various times between 2018 and 2023 and were secured by certain solar facilities. Repayment of the Original Ahana Debt was being made in cash on a monthly basis until maturity.

The Original Ahana Debt also included a loan from Public Service Electric & Gas (the “PSE&G Loan”). The PSE&G Loan bears interest at 11.3%, matures in 2027, and is secured by certain solar facilities. Repayment of the Original Ahana Debt with PSE&G can be made in either cash or ~~solar renewable energy credits (“SRECs”),~~SRECs, at our discretion, with the value of the SRECs being fixed at the time of the loan’s closing. Historically, we have made all repayments of the PSE&G Loan using SRECs.

A portion of the proceeds from the issuances of the Series A Notes and Series B Notes ~~were~~was used to repay the Original Ahana Debt in full except for the PSE&G Loan which remained outstanding after the refinancing.

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substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. The Series A Notes and Series B Notes are subject to financial covenants that ~~imposes~~impose 1) a maximum debt service coverage ratio and 2) a maximum ratio of the present value of Ahana’s future cash flow to the aggregate principal amounts of all outstanding obligations. These financial covenants are tested semi-annually ~~basis~~ for Ahana Operations on a consolidated basis and on an individual basis for certain subsidiaries. Both the Series A Notes and Series B Notes may be redeemed at any time, in whole or part, subject to a make-whole premium. As of September 30, ~~2017,~~2018, we were in compliance with all of the financial covenants of the Series A Notes and the Series B Notes.

We capitalized $2.8 million of fees associated with the Series A Notes and Series B Notes which is recorded as a reduction to the debt carrying amount and will be amortized over the life of the notes.

The Original Ahana Debt, the Series A Notes and Series B Notes were classified as held for sale as part of the U.S. Solar Transaction as of September 30, 2018. On November 6, 2018, we consummated the U.S. Solar Transaction, which included the transfer of the Original Ahana Debt, the Series A Notes and Series B Notes to the purchaser. Refer to Note 6 to the Consolidated Financial Statements in this Report.

One Communications Debt

In connection with the ~~Acquisition of~~ One Communications Transaction on May 3, 2016, we assumed $35.4 million in debt (the “One Communications Debt”) in the form of a loan from HSBC Bank Bermuda Limited. The One Communications Debt was scheduled to mature in 2021, was bearing interest at the three-month LIBOR rate plus a margin of 3.25%, and had repayment being made quarterly. The One Communications Debt contained customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that ~~limits~~limited the maximum ratio of indebtedness less cash to annual operating cash flow.

On May 22, 2017, we amended and restated the One Communications Debt to increase the original facility by $8.6 million to $37.5 million. The amended and restated debt is scheduled to mature on May 22, 2022 and bears an interest at the three month LIBOR rate plus an applicable margin rate ranging between 2.5% to 2.75% paid quarterly. The amended and restated One Communications Debt contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and financial covenants that limit the ratio of tangible net worth to long term debt and total net debt to EBITDA and require a minimum debt service coverage ratio (net cash generated from operating activities plus interest expense less net capital expenditures to debt repayments plus interest expense). ~~The~~We were in compliance with its covenants ~~are tested annually commencing the fiscal year ending December 31, 2017.~~as of September 30, 2018.

As a condition of the ~~amended and restated agreement,~~amendment of the One Communications Debt, within 90 days of the refinance date we were required to enter into a hedging arrangement with a notional amount equal to at least 30% of the outstanding loan balance and a term corresponding to the maturity of the One Communications Debt. ~~As of~~In July 2017, we entered into an amortizing interest rate swap. This swap has been designated as a cash flow hedge, ~~has~~had an original notional amount of $11.0 million, has an interest rate of ~~1.874%~~1.874%, and expires in March 2022. As of September 30, 2018, the swap has an unamortized balance of $9.9 million.

In connection with the ~~amended and restated debt,~~amendment of the One Communications Debt, we increased the limit of ~~the~~its overdraft facility from $5.0 million to $10.0 million. This facility has an interest rate of three month LIBOR plus 1.75%.

We capitalized $0.3 million of fees associated with the One Communications Debt, which is recorded as a reduction to the debt carrying amount and will be amortized over the life of the debt.

Viya Debt (formerly Innovative Debt)`

On July 1, 2016, we ~~along with~~and certain ~~subsidiaries~~ of ~~ours,~~our subsidiaries entered into a $60.0 million loan agreement (the ~~Viya Debt)~~“Viya Debt”) with Rural Telephone Finance Cooperative (“RTFC”). The Viya Debt agreement contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that limits the maximum ratio of indebtedness ~~less cash~~ to annual operating cash ~~flow. The~~flow to 3.5 to 1.0 (the “Net Leverage Ratio”). This covenant is tested on an annual

~~Table~~ basis at the end of ~~Contents~~

~~basis commencing~~each fiscal ~~2017.~~year. Interest is paid quarterly at a fixed rate of 4.0% and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt may be subject to a fee under certain ~~circumstance.~~circumstances. The debt is secured by certain assets of ~~the Viya’s~~our Viya subsidiaries and is guaranteed by us. Earlier in 2018, we began funding the restoration of Viya’s network following the Hurricanes through an intercompany loan arrangement which exceeded certain limitations on Viya incurring additional debt. RTFC consented to these intercompany advances and increased the intercompany debt limit to

$50.0 million. Subsequent to the end of the second quarter end, RTFC increased the limit to $75.0 million at our request due to an increase in the on-going restoration and resiliency costs.

We paid a fee of $0.9 million to lock the interest rate at 4% per annum over the term of the Viya debt. The fee was recorded as a reduction to the Viya debt carrying amount and will be amortized over the life of the loan.

As of September 30, ~~2017,~~2018, $60.0 million of the Viya Debt remained outstanding and ~~$0.8~~$0.7 million of the rate lock fee was unamortized.

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 Credit Facility.Our 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 Credit Facility contains a financial covenant that imposes a maximum ratio of indebtedness to EBITDA. As of September 30, ~~2017,~~2018, we were in compliance with all of the financial covenants of the 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”) requirements for the offering of securities. On May 12, 2017, the SEC declared effective our “universal” shelf registration statement. This filing registered potential future ~~offering~~offerings of our ~~securities.~~ securities

~~Completed Acquisitions.~~ As discussed above, we funded our 2016 Acquisitions with $152.5 million of cash, net of cash acquired. In addition, we financed $60.0 million of the Viya Acquisition purchase price with a loan from an affiliate of the seller, the Rural Telephone Finance Cooperative.

Foreign Currency

We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies, primarily the Indian Rupee and the Guyana Dollar, to U.S. dollars at the appropriate ~~spot~~ rates as of the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in ~~spot~~ rates are recognized in foreign currency translation adjustment, a component of Accumulated Other Comprehensive Income on our balance sheet. Income statement accounts are translated using the monthly average exchange rates during the year. During the nine months ended September 30, ~~2017,~~2018, we ~~noted a decline in the Guyana Dollar exchange rate and~~ recorded a $~~1.0~~ $3.0 million loss on foreign currency transactions. ~~A continued decline could have a negative impact on our financial results in future periods.~~ We will continue to assess the impact of our exposure to both the Indian Rupee and the Guyana dollar.

Inflation

We do not believe that inflation has had a significant impact on our consolidated operations in any of the periods presented in ~~the~~this Report.

We have based our discussion and analysis of our financial condition and results of operations on our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (or GAAP). We base our estimates on our operating experience and on various conditions existing in the market and we believe them to be reasonable under the circumstances. Our estimates form the

~~Table of Contents~~

basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Recent Accounting Pronouncements

See Note 2 to the Unaudited Condensed Consolidated Financial Statements included in this ~~Report~~.Report.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Translation and Remeasurement, We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies, primarily the Indian Rupee and the Guyana Dollar, to U.S. dollars at the appropriate ~~spot~~ rates as of the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in ~~spot~~ rates are recognized in foreign currency translation adjustment, a component of Accumulated Other Comprehensive Income on our balance sheet. Income statement accounts are translated using the monthly average exchange rates during the year. ~~During the nine months ended September 30, 2017, we noted a decline in the Guyana Dollar exchange rate and recorded a $1.0~~ million loss on foreign currency transactions. A continued decline could have a negative impact on our financial results in future periods. We will continue to assess the impact of our exposure to the Guyana dollar.

Monetary assets and liabilities denominated in a currency that is different from a reporting entity’s functional currency must first be remeasured from the applicable currency to the legal entity’s functional currency. The effect of this remeasurement process is reported in other income on ~~the~~our income statement.

Employee Benefit Plan. ~~The company sponsors~~We sponsor pension and other postretirement benefit plans for employees of certain subsidiaries. Net periodic pension expense is recognized in ~~the Company’s~~our income statement. ~~The Company recognizes~~We recognize a pension or other postretirement plan’s funded status as either an asset or liability in ~~its~~our consolidated balance sheet. Actuarial gains and losses are reported as a component of other comprehensive income and amortized through ~~net periodic pension expense~~other income in subsequent periods.

Interest Rate Sensitivity. As of September 30, ~~2017,~~2018, we had ~~$25.6~~$22.9 million of variable rate debt outstanding, which ~~we assumed as a part of the One Communications Acquisition and~~ is subject to fluctuations in interest rates. Our interest expense may be affected by changes in interest rates. We believe that a 10% increase in the interest rates on our variable rate debt would have an immaterial impact on our Financial Statements. We may have additional 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, ~~2017.~~2018. 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”)~~SEC’s 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, ~~2017,~~2018, 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.

~~Table of Contents~~

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, ~~2017~~2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note 1214 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Item 1A. Risk Factors

In addition to the other information set forth in this Report, you should carefully consider the factors discussed under Part I, Item 1A “Risk Factors” of our ~~2016~~2017 Annual Report on Form 10-K. The risks described herein and in our ~~2016~~2017 Annual Report on 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, our Board of Directors approved a $5.0 million stock buyback plan (the “2004 Repurchase Plan”). Through September 19, 2016, we repurchased $4.1 million of our common stock.~~

On September 19, 2016, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock from time to time on the open market or in privately negotiated transactions (the “2016 Repurchase Plan”). ~~The~~We repurchased $1.6 million of our common stock under the 2016 Repurchase Plan ~~replaces~~during the ~~2004 Repurchase Plan. As of~~nine months ended September 30, ~~2017, we~~2018 and have ~~$39.3~~$37.7 million available to be repurchased under ~~the 2016 Repurchase Plan.~~ that plan as of September 30, 2018.

The following table reflects the repurchases by the Company of its common stock during the quarter ended September 30, ~~2017:~~2018:

(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

Share

or Programs

Programs

July 1, 2017 — July 31, 2017

200
(1)
$
66.71

—

$
49,902,511

Aug 1, 2017 — Aug 31, 2017

11,666
(2)

59.45

11,579

$
49,221,691

September 1, 2017 — September 30, 2017

190,353

52.30

190,353

$
39,266,984


					(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		or Programs	Programs
July 1, 2018 — July 31, 2018	183	$	57.94	—	$	37,690,086
August 1, 2018 — August 31, 2018	78		73.63		$	37,690,086
September 1, 2018 — September 30, 2018	—		—	—	$	37,690,086

~~(1)~~

(1) Represents shares purchased on July 8, ~~2017 and~~2018, July 27, ~~2017~~2018, and August 4, 2018 from our executive officers and other employees who tendered these shares to the Company to satisfy their cost to exercise stock options and tax withholding obligations incurred in connection with the exercise of stock options and the vesting of restricted stock awards at such date. These shares were not purchased under the plan 2016 Repurchase Plan discussed above. The price paid per share was the closing price per share of our Common Stock on the Nasdaq Stock Market on the date those shares were purchased.

~~(2)~~

Includes shares purchased on August 24, 2017 from our executive officers and other employees who tendered these shares to the Company to satisfy their tax withholding obligations incurred in connection with the exercise of stock options and the vesting of restricted stock awards at such date. These shares were not purchased under the plan discussed above. The price paid per share was the closing price per share of our Common Stock on the Nasdaq Stock Market on the date those shares were purchased

~~Table of Contents~~

Item 6. ~~Exhibits :~~Exhibits:


10.1		Consent and Waiver between Rural Telephone Finance Cooperative, Caribbean Asset Holdings, LLC and DTR Holdings, LLC, dated August 3, 2018. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-12593) filed on August 8, 2018).

10.2		Purchase and Sale Agreement by and between Ahana Renewables, LLC and CleanCapital Holdco 4, LLC, dated as of September 9, 2018, (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-12593) filed on September 9, 2018).

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 or furnished herewith.

~~Table of Contents~~

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.


	ATN International, Inc.

Date: November 9, ~~2017~~2018	/s/ Michael T. Prior
	Michael T. Prior
	President and Chief Executive Officer

Date: November 9, ~~2017~~2018	/s/ Justin D. Benincasa
	Justin D. Benincasa
	Chief Financial Officer


Consideration Transferred
Cash consideration - One Communications	$	34,518
Cash consideration - BDC		7,045
Total consideration transferred		41,563
Non-controlling interests - One Communications		32,909
Total value to allocate	$	74,472
Value to allocate - One Communications		67,427
Value to allocate - BDC		7,045

Purchase price allocation One Communications:
Cash		8,185
Accounts receivable		6,451
Other current assets		3,241
Property, plant and equipment		100,892
Identifiable intangible assets		10,590
Other long term assets		3,464
Accounts payable and accrued liabilities		(16,051)
Advance payments and deposits		(6,683)
Current debt		(6,429)
Long term debt		(28,929)
Net assets acquired		74,731

Gain on One Communications bargain purchase	$	7,304

Purchase price allocation BDC:
Carrying value of BDC non-controlling interest acquired		2,940

Excess of purchase price paid over carrying value of non-controlling interest acquired	$	4,105


Consideration Transferred	$	111,860
Non-controlling interests		221
Total value to allocate		112,081

Purchase price allocation:
Cash		4,229
Accounts receivable		6,553
Materials & supplies		6,533
Other current assets		1,927
Property, plant and equipment		108,284
Telecommunication licenses		7,623
Goodwill		20,586
Intangible assets		7,800
Other assets		4,394
Accounts payable and accrued liabilities		(15,971)
Advance payments and deposits		(7,793)
Deferred tax liability		(2,935)
Pension and other postretirement benefit liabilities		(29,149)
Net assets acquired	$	112,081


Consideration Transferred	$	6,193


Purchase price allocation:
Cash		136
Prepayments and other assets		636
Property, plant and equipment		7,321
Goodwill		3,279
Accounts payable and accrued liabilities		(5,179)
Net assets acquired	$	6,193