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~~June 30, ~~2020~~2021


☐	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 (State or other jurisdiction of incorporation or organization)	47-0728886 (I.R.S. Employer Identification No.)
500 Cummings Center, Suite 2450 Beverly, Massachusetts (Address of principal executive offices)	01915 (Zip Code)

(978) 619-1300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	ATNI	The Nasdaq Stock Market LLC

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 every Interactive Data File required to be submitted 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 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 ☐
		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 4, 2020,~~August 9, 2021, the registrant had outstanding ~~15,898,477~~15,864,072 shares of its common stock ($.01 par value).

Table of Contents

ATN INTERNATIONAL, INC.

FORM 10-Q

Quarter Ended ~~September~~June 30, ~~2020~~2021


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~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020	4

	Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	5

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	6

	Condensed Consolidated Statements of Equity for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	7

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	9

	Notes to Unaudited Condensed Consolidated Financial Statements	10

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~31-58~~33-60

Item 3	Quantitative and Qualitative Disclosures About Market Risk	5860

Item 4	Controls and Procedures	5860

PART II—OTHER INFORMATION		5961

Item 1	Legal Proceedings	5961

Item 1A	Risk Factors	5961

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	6066

Item 5	Other Information	67

Item 6	Exhibits	6167

SIGNATURES		6268

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, including the impact of the novel coronavirus pandemic on the economies of the markets we serve, and on our business and operations; expectations regarding future revenue, operating income, EBITDA and capital expenditures; the competitive environment in our key markets, demand for our services and industry trends; our expectations regarding construction progress under our FirstNet agreement and the effect such progress will have on our financial results; our expectations regarding the benefits of our acquisition of Alaska Communications; the impact of federal support program revenues; expectations regarding litigation; our liquidity; 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) the general performance of our operations, including operating margins, revenues, capital expenditures, and the retention of and future growth ~~and retention~~ of our ~~major customers and~~ subscriber base, including growth in our private networks business; (2) our ability to successfully integrate our newly acquired Alaska Communications business with our own and ~~consumer demand for solar power; (2)~~realize cost synergies and expansion plans; (3) our ability to maintain favorable roaming arrangements, receive roaming traffic and satisfy the needs and demands of our major wireless customers; ~~(3)~~(4) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; ~~(4)~~(5) government regulation of our businesses, which may impact our FCC and other telecommunications ~~licenses or our renewables businesses; (5)~~licenses; (6) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; ~~(6)~~(7) economic, political and other risks and opportunities facing our operations, including those resulting from the pandemic; ~~(7)~~(8) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; ~~(8) our ability to expand and obtain funding for our renewable energy business;~~ (9) our ability to find investment or acquisition or disposition opportunities that fit the strategic goals of the Company; (10) the occurrence of weather events and natural ~~catastrophes;~~catastrophes and our ability to secure the appropriate level of insurance coverage for these assets; (11) increased competition; (12) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; and (13) our continued access to capital and credit ~~markets; and (14) the risk of currency fluctuation for those markets in which we operate.~~markets. 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, ~~2019,~~2020, filed with the SEC on March ~~2, 2020, as amended by Amendment No.~~ 1, ~~to the Annual Report on Form 10-K filed with the SEC on April 29, 2020,~~2021, and the other reports we file from time to time with the SEC. 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, except as required by ~~law~~.law.

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 US 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,

2020

2019
ASSETS

Current Assets:

Cash and cash equivalents

$
135,153

$
161,287
Restricted cash

1,072

1,071
Short-term investments

403

416
Accounts receivable, net of allowances for credit losses of $12.2 million and $12.7 million, respectively

43,471

35,904
Inventory, materials and supplies

5,127

5,253
Prepayments and other current assets

40,358

24,792
Total current assets

225,584

228,723
Fixed Assets:

Property, plant and equipment

1,297,519

1,237,555
Less accumulated depreciation

(708,091)

(631,974)
Net fixed assets

589,428

605,581
Telecommunication licenses, net

114,083

93,686
Goodwill

60,691

60,691
Customer relationships, net

6,266

7,441
Operating lease right-of-use assets

64,294

68,763
Other assets

53,068

65,841
Total assets

$
1,113,414

$
1,130,726
LIABILITIES AND EQUITY

Current Liabilities:

Current portion of long-term debt

$
3,750

$
3,750
Accounts payable and accrued liabilities

82,961

74,093
Dividends payable

2,725

2,721
Accrued taxes

7,921

8,517
Current portion of lease liabilities

10,902

11,406
Advance payments and deposits

24,603

19,182
Total current liabilities

132,862

119,669
Deferred income taxes

2,602

8,680
Lease liabilities, excluding current portion

53,543

56,164
Other liabilities

49,836

57,454
Long-term debt, excluding current portion

79,973

82,676
Total liabilities

318,816

324,643
Commitments and contingencies (Note 13)

ATN International, Inc. Stockholders’ Equity:

Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, NaN issued and outstanding

—

—
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,383,898 and 17,324,858 shares issued, respectively, 15,898,477 and 16,001,937 shares outstanding, respectively

172

172
Treasury stock, at cost; 1,485,421 and 1,322,921 shares, respectively

(59,456)

(51,129)
Additional paid-in capital

191,578

188,471
Retained earnings

540,119

541,890
Accumulated other comprehensive income

(4,538)

(3,282)
Total ATN International, Inc. stockholders’ equity

667,875

676,122
Non-controlling interests

126,723

129,961
Total equity

794,598

806,083
Total liabilities and equity

$
1,113,414

$
1,130,726


	June 30,		December 31,
	2021		2020
ASSETS
Current Assets:
Cash and cash equivalents	$	94,885	$	103,925
Restricted cash		1,072		1,072
Accounts receivable, net of allowances for credit losses of $13.5 million and $12.1 million, respectively		40,644		44,152
Customer receivable		4,094		1,227
Inventory, materials and supplies		6,837		5,504
Prepayments and other current assets		52,313		49,450
Assets held for sale		—		34,735
Total current assets		199,845		240,065
Fixed Assets:
Property, plant and equipment		1,276,517		1,252,780
Less accumulated depreciation		(750,232)		(716,318)
Net fixed assets		526,285		536,462
Telecommunication licenses, net		114,083		114,083
Goodwill		60,690		60,691
Customer relationships, net		5,233		5,913
Operating lease right-of-use assets		62,287		63,235
Customer receivable - long term		28,333		9,614
Other assets		69,818		53,648
Total assets	$	1,066,574	$	1,083,711
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	3,750	$	3,750
Current portion of Customer receivable credit facility		2,335		—
Accounts payable and accrued liabilities		84,811		96,205
Dividends payable		2,707		2,703
Accrued taxes		7,496		7,501
Current portion of lease liabilities		12,871		12,371
Advance payments and deposits		22,602		24,681
Liabilities held for sale		—		717
Total current liabilities		136,572		147,928
Deferred income taxes		7,439		10,675
Lease liabilities, excluding current portion		51,306		51,082
Other liabilities		48,455		50,617
Customer receivable credit facility, net of current portion		14,322		—
Long-term debt, excluding current portion		67,294		69,073
Total liabilities		325,388		329,375
Commitments and contingencies (Note 14)
ATN International, Inc. Stockholders’ Equity:
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, NaN issued and outstanding		—		—
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,466,542 and 17,383,898 shares issued, respectively, 15,899,714 and 15,898,477 shares outstanding, respectively		172		172
Treasury stock, at cost; 1,566,828 and 1,485,421 shares, respectively		(63,388)		(59,456)
Additional paid-in capital		189,006		187,754
Retained earnings		516,208		516,901
Accumulated other comprehensive income		(72)		278
Total ATN International, Inc. stockholders’ equity		641,926		645,649
Non-controlling interests		99,260		108,687
Total equity		741,186		754,336
Total liabilities and equity	$	1,066,574	$	1,083,711

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 OPERATIONS

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Unaudited)

(In Thousands, Except Per Share ~~Data~~)Data)


	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
REVENUE:
Communication services	$	108,721	$	112,840	$	322,865	$	318,473	$	112,964	$	106,240	$	223,599	$	214,145
Other		3,018		2,776		8,878		8,164		10,901		2,858		24,776		5,859
Total revenue		111,739		115,616		331,743		326,637		123,865		109,098		248,375		220,004
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		26,979		27,622		83,562		83,440
Construction costs		390		—		390		—
Engineering and operations		18,127		20,095		53,983		58,234
Sales, marketing and customer service		9,344		9,785		28,220		29,048
General and administrative		25,735		25,110		75,413		75,518
Cost of services										48,479		45,837		97,986		92,439
Cost of construction revenue										9,535		—		22,142		—
Selling, general and administrative										40,652		34,125		78,344		68,552
Transaction-related charges		31		21		147		89		1,396		72		2,126		116
Depreciation and amortization		21,580		22,603		66,089		64,870		20,155		21,991		40,662		44,509
(Gain) Loss on disposition of long-lived assets		(4)		132		60		321
Loss on disposition of long-lived assets										743		49		861		64
Total operating expenses		102,182		105,368		307,864		311,520		120,960		102,074		242,121		205,680
Income from operations		9,557		10,248		23,879		15,117		2,905		7,024		6,254		14,324
OTHER INCOME (EXPENSE)
Interest income		118		414		427		1,860		46		66		40		309
Interest expense		(1,361)		(1,298)		(4,091)		(3,843)		(1,137)		(1,574)		(2,285)		(2,730)
Other income (expense)		(2,031)		(2,686)		(4,341)		(2,755)		(66)		590		2,309		(2,310)
Other income (expense), net		(3,274)		(3,570)		(8,005)		(4,738)		(1,157)		(918)		64		(4,731)
INCOME BEFORE INCOME TAXES		6,283		6,678		15,874		10,379		1,748		6,106		6,318		9,593
Income tax provisions		92		1,834		(1,057)		2,774		(1,542)		(2,258)		(1,247)		(1,149)
NET INCOME		6,191		4,844		16,931		7,605		3,290		8,364		7,565		10,742
Net income attributable to non-controlling interests, net of tax expense of $0.2 million, $0.4 million, $0.8 million, $1.2 million, respectively.		(3,530)		(3,459)		(10,538)		(8,657)
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	2,661	$	1,385	$	6,393	$	(1,052)
NET INCOME (LOSS) PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:
Net income attributable to non-controlling interests, net of tax expense of $0.3 million, $0.2 million, $0.4 million, and $0.6 million, respectively.										(1,271)		(3,618)		(2,842)		(7,009)
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS									$	2,019	$	4,746	$	4,723	$	3,733
NET INCOME PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:
Basic	$	0.17	$	0.09	$	0.40	$	(0.07)	$	0.13	$	0.30	$	0.30	$	0.23
Diluted	$	0.17	$	0.09	$	0.40	$	(0.07)	$	0.13	$	0.30	$	0.30	$	0.23
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		15,962		16,000		15,946		15,984		15,912		15,970		15,907		15,958
Diluted		16,011		16,007		15,990		15,984		15,921		16,004		15,930		15,993
DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK	$	0.17	$	0.17	$	0.51	$	0.51	$	0.17	$	0.17	$	0.34	$	0.34

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~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Unaudited)

(In Thousands)



	Three Months Ended September 30,				Nine Months Ended September 30,				Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Net income	$	6,191	$	4,844	$	16,931	$	7,605	$	3,290	$	8,364	$	7,565	$	10,742
Other comprehensive income (loss):
Foreign currency translation adjustment		1,521		(1,194)		(1,113)		(694)		(370)		1,782		(410)		(2,644)
Unrealized gain (loss) on derivatives		35		(38)		(143)		(211)		29		8		60		(168)
Other comprehensive income (loss), net of tax		1,556		(1,232)		(1,256)		(905)		(341)		1,790		(350)		(2,812)
Comprehensive income		7,747		3,612		15,675		6,700		2,949		10,154		7,215		7,930
Less: Comprehensive income attributable to non-controlling interests		(3,530)		(3,459)		(10,538)		(8,657)		(1,271)		(3,618)		(2,842)		(7,009)
Comprehensive income (loss) attributable to ATN International, Inc.	$	4,217	$	153	$	5,137	$	(1,957)
Comprehensive income attributable to ATN International, Inc.									$	1,678	$	6,536	$	4,373	$	921

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 EQUITY

FOR THE THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Unaudited)

(In Thousands, Except Per Share Data)


									Accumulated		Total														Accumulated		Total
			Treasury		Additional				Other		ATNI		Non-						Treasury		Additional				Other		ATNI		Non-
	Common		Stock,		Paid In		Retained		Comprehensive		Stockholders’		Controlling		Total		Common		Stock,		Paid In		Retained		Comprehensive		Stockholders’		Controlling		Total
	Stock		at cost		Capital		Earnings		Income/(Loss)		Equity		Interests		Equity		Stock		at cost		Capital		Earnings		Income/(Loss)		Equity		Interests		Equity
Balance, June 30, 2020	$	172	$	(55,316)	$	189,785	$	540,183	$	(6,094)	$	668,730	$	128,913	$	797,643
Purchase of 80,754 shares of common stock upon exercise of stock options		—		(4,140)		—		—		—		(4,140)		—		(4,140)
Balance, March 31, 2021																	$	172	$	(61,677)	$	186,930	$	516,897	$	269	$	642,591	$	99,678	$	742,269
Purchase of 37,428 shares of common stock																		—		(1,711)		—		—		—		(1,711)		—		(1,711)
Stock-based compensation																		—		—		2,150		—		—		2,150		25		2,175
Dividends declared on common stock ($0.17 per common share)																		—		—		—		(2,708)		—		(2,708)		(958)		(3,666)
Repurchase of non-controlling interests																		—		—		(74)		—		—		(74)		(1,085)		(1,159)
Investments made by minority shareholders in consolidated affiliates																		—		—		—		—		—		—		329		329
Comprehensive income:
Net income																		—		—		—		2,019		—		2,019		1,271		3,290
Other comprehensive income																		—		—		—		—		(341)		(341)		—		(341)
Total comprehensive income																		—		—		—		—		—		1,678		1,271		2,949
Balance, June 30, 2021																	$	172	$	(63,388)	$	189,006	$	516,208	$	(72)	$	641,926	$	99,260	$	741,186

Balance, March 31, 2020																	$	172	$	(54,358)	$	189,667	$	538,161	$	(7,884)	$	665,758	$	127,321	$	793,079
Purchase of 17,854 shares of common stock upon exercise of stock options																		—		(958)		—		—		—		(958)		—		(958)
Stock-based compensation		—		—		1,793		—		—		1,793		94		1,887		—		—		1,418		—		—		1,418		131		1,549
Dividends declared on common stock ($0.17 per common share)		—		—		—		(2,725)		—		(2,725)		(962)		(3,687)		—		—		—		(2,724)		—		(2,724)		(1,321)		(4,045)
Repurchase of non-controlling interests		—		—		—		—		—		—		(4,852)		(4,852)		—		—		(1,300)		—		—		(1,300)		(836)		(2,136)
Comprehensive income:
Net income		—		—		—		2,661		—		2,661		3,530		6,191		—		—		—		4,746		—		4,746		3,618		8,364
Other comprehensive income		—		—		—		—		1,556		1,556		—		1,556		—		—		—		—		1,790		1,790		—		1,790
Total comprehensive income		—		—		—		—		—		4,217		3,530		7,747		—		—		—		—		—		6,536		3,618		10,154
Balance, September 30, 2020	$	172	$	(59,456)	$	191,578	$	540,119	$	(4,538)	$	667,875	$	126,723	$	794,598

Balance, June 30, 2019	$	172	$	(50,125)	$	185,112	$	555,806	$	(1,282)	$	689,683	$	128,858	$	818,541
Issuance of 2,000 shares of common stock upon exercise of stock options		—		—		62		—		—		62		—		62
Purchase of 8,542 shares of common stock upon exercise of stock options		—		(259)		—		—		—		(259)		—		(259)
Stock-based compensation		—		—		1,272		—		—		1,272		275		1,547
Dividends declared on common stock ($0.17 per common share)		—		—		—		(2,828)		—		(2,828)		(1,885)		(4,713)
Repurchase of non-controlling interests		—		—		—		—		—		—		(491)		(491)
Comprehensive income (loss):
Net income		—		—		—		1,385		—		1,385		3,459		4,844
Other comprehensive income		—		—		—		—		(1,232)		(1,232)		—		(1,232)
Total comprehensive income (loss)		—		—		—		—		—		153		3,459		3,612
Balance, September 30, 2019	$	172	$	(50,384)	$	186,446	$	554,363	$	(2,514)	$	688,083	$	130,216	$	818,299
Balance, June 30, 2020																	$	172	$	(55,316)	$	189,785	$	540,183	$	(6,094)	$	668,730	$	128,913	$	797,643

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

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ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Unaudited)

(In Thousands, Except Per Share Data)

Accumulated

Total




Treasury

Additional

Other

ATNI

Non-

Common

Stock,

Paid In

Retained

Comprehensive

Stockholders’

Controlling

Total

Stock

at cost

Capital

Earnings

Income/(Loss)

Equity

Interests

Equity

Balance, December 31, 2019

$
172

$
(51,129)

$
188,471

$
541,890

$
(3,282)

$
676,122

$
129,961

$
806,083

Purchase of 161,500 shares of common stock

—

(8,327)

—

—

—

(8,327)

—

(8,327)

Stock-based compensation

—

—

4,419

—

—

4,419

189

4,608

Dividends declared on common stock ($0.51 per common share)

—

—

—

(8,164)

—

(8,164)

(6,514)

(14,678)

Repurchase of non-controlling interests

—

—

(1,312)

—

—

(1,312)

(7,451)

(8,763)

Comprehensive income:

Net income

—

—

—

6,393

—

6,393

10,538

16,931

Other comprehensive loss

—

—

—

—

(1,256)

(1,256)

—

(1,256)

Total comprehensive income

—

—

—

—

—

5,137

10,538

15,675

Balance, September 30, 2020

$
172

$
(59,456)

$
191,578

$
540,119

$
(4,538)

$
667,875

$
126,723

$
794,598

Balance, December 31, 2018

$
172

$
(48,547)

$
181,778

$
563,593

$
(1,609)

$
695,387

$
127,937

$
823,324

Issuance of 2,000 shares of common stock upon exercise of stock options

—

—

62

—

—

62

—

62

Purchase of 28,393 shares of common stock

—

(1,837)

—

—

—

(1,837)

—

(1,837)

Stock-based compensation

—

—

4,606

—

—

4,606

275

4,881

Dividends declared on common stock ($0.51 per common share)

—

—

—

(8,178)

—

(8,178)

(5,788)

(13,966)

Repurchase of non-controlling interests

—

—

—

—

—

—

(1,353)

(1,353)

Investments made by minority shareholders in consolidated affiliates

—

—

—

—

—

—

488

488

Comprehensive income (loss):

Net income (loss)

—

—

—

(1,052)

—

(1,052)

8,657

7,605

Other comprehensive income

—

—

—

—

(905)

(905)

—

(905)

Total comprehensive income (loss)

—

—

—

—

—

(1,957)

8,657

6,700

Balance, September 30, 2019

$
172

$
(50,384)

$
186,446

$
554,363

$
(2,514)

$
688,083

$
130,216

$
818,299


									Accumulated		Total
			Treasury		Additional				Other		ATNI		Non-
	Common		Stock,		Paid In		Retained		Comprehensive		Stockholders’		Controlling		Total
	Stock		at cost		Capital		Earnings		Income/(Loss)		Equity		Interests		Equity
Balance, December 31, 2020	$	172	$	(59,456)	$	187,754	$	516,901	$	278	$	645,649	$	108,687	$	754,336
Purchase of 81,406 shares of common stock		—		(3,932)		—		—		—		(3,932)		—		(3,932)
Stock-based compensation		—		—		3,413		—		—		3,413		98		3,511
Dividends declared on common stock ($0.34 per common share)		—		—		—		(5,416)		—		(5,416)		(2,488)		(7,904)
Repurchase of non-controlling interests		—		—		(2,161)		—		—		(2,161)		(10,208)		(12,369)
Investments made by minority shareholders in consolidated affiliates		—		—		—		—		—		—		329		329
Comprehensive income:
Net income		—		—		—		4,723		—		4,723		2,842		7,565
Other comprehensive loss		—		—		—		—		(350)		(350)		—		(350)
Total comprehensive income		—		—		—		—		—		4,373		2,842		7,215
Balance, June 30, 2021	$	172	$	(63,388)	$	189,006	$	516,208	$	(72)	$	641,926	$	99,260	$	741,186

Balance, December 31, 2019	$	172	$	(51,129)	$	188,471	$	541,890	$	(3,282)	$	676,122	$	129,961	$	806,083
Issuance of restricted shares of common stock		—		—		—		—		—		—		—		—
Purchase of 80,746 shares of common stock		—		(4,187)		—		—		—		(4,187)		—		(4,187)
Stock-based compensation		—		—		2,614		—		—		2,614		107		2,721
Dividends declared on common stock ($0.34 per common share)		—		—		—		(5,440)		—		(5,440)		(5,553)		(10,993)
Repurchase of non-controlling interests		—		—		(1,300)		—		—		(1,300)		(2,611)		(3,911)
Comprehensive income:
Net income		—		—		—		3,733		—		3,733		7,009		10,742
Other comprehensive income		—		—		—		—		(2,812)		(2,812)		—		(2,812)
Total comprehensive income		—		—		—		—		—		921		7,009		7,930
Balance, June 30, 2020	$	172	$	(55,316)	$	189,785	$	540,183	$	(6,094)	$	668,730	$	128,913	$	797,643

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

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ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Unaudited)

(In Thousands)

Nine Months Ended September 30,

2020

2019

Cash flows from operating activities:

Net income
$
16,931

$
7,605

Adjustments to reconcile net income to net cash flows provided by operating activities:

Depreciation and amortization

66,089

64,870

Provision for doubtful accounts

4,452

3,796

Amortization of debt discount and debt issuance costs

395

420

Stock-based compensation

4,608

4,881

Deferred income taxes

(6,078)

(6,287)

Loss on equity investments

3,360

2,131

Loss on disposition of long-lived assets

60

321

Unrealized loss on foreign currency

449

233

Other non-cash activity

—

28

Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:

Accounts receivable

(12,189)

(10,193)

Materials and supplies, prepayments, and other current assets

(14,849)

(5,507)

Prepaid income taxes

2,038

5,158

Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities

7,382

6,324

Accrued taxes

(1,418)

(19,047)

Other assets

1,057

(2,041)

Other liabilities

(696)

4,155

Net cash provided by operating activities

71,591

56,847

Cash flows from investing activities:

Capital expenditures

(50,662)

(49,486)

Purchase of spectrum, including deposits

(20,396)

—

Purchases of strategic investments

(2,768)

(10,285)

Proceeds from strategic investments

11,969

—

Purchase of short-term investments

(116)

(8,028)

Proceeds from sale of short-term investments

—

5,141

Net cash used in investing activities

(61,973)

(62,658)

Cash flows from financing activities:

Dividends paid on common stock

(8,166)

(8,160)

Distributions to non-controlling interests

(6,503)

(5,760)

Payment of debt issuance costs

(1,096)

(1,340)

Principal repayments of term loan

(2,814)

(2,825)

Purchases of common stock – share based compensation

(1,733)

(1,607)

Purchases of common stock – share buyback

(6,589)

(162)

Repurchases of non-controlling interests

(8,763)

(1,353)

Investments made by minority shareholders in consolidated affiliates

—

488

Net cash used in financing activities

(35,664)

(20,719)

Effect of foreign currency exchange rates on cash and cash equivalents

(87)

(26)

Net change in cash, cash equivalents, and restricted cash

(26,133)

(26,556)

Total cash, cash equivalents, and restricted cash, beginning of period

162,358

192,907

Total cash, cash equivalents, and restricted cash, end of period
$
136,225

$
166,351

Noncash investing activity:

Purchases of property, plant and equipment included in accounts payable and accrued expenses
$
15,097

$
7,419


	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income	$	7,565	$	10,742
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		40,662		44,509
Provision for doubtful accounts		2,299		3,397
Amortization of debt discount and debt issuance costs		337		260
Stock-based compensation		3,511		2,721
Deferred income taxes		(3,236)		(3,204)
(Gain) loss on equity investments		(1,793)		1,412
Loss on disposition of long-lived assets		861		64
Unrealized (gain) loss on foreign currency		(81)		780
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:
Accounts receivable		1,226		(14,475)
Customer receivable		(21,586)		—
Materials and supplies, prepayments, and other current assets		(73)		(7,313)
Prepaid income taxes		—		399
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities		(1,745)		2,497
Accrued taxes		(1,360)		(1,838)
Other assets		782		993
Other liabilities		91		(569)
Net cash provided by operating activities		27,460		40,375
Cash flows from investing activities:
Capital expenditures		(35,424)		(30,597)
Reimbursable capital expenditures		(6,508)		(1,368)
Receipt of capital government grants		3,292		—
Divestiture of businesses, net of transferred cash of $0.9 million		18,597		—
Purchase of intangible assets; including deposits		—		(20,000)
Purchases of strategic investments		(5,242)		(2,768)
Net cash used in investing activities		(25,285)		(54,733)
Cash flows from financing activities:
Dividends paid on common stock		(5,411)		(5,443)
Distributions to non-controlling interests		(4,488)		(5,541)
Repayment of customer receivable credit facility		(384)		—
Payment of debt issuance costs		—		(1,059)
Principal repayments of term loan		(1,883)		(1,876)
Purchases of common stock – stock-based compensation		(1,713)		(1,733)
Purchases of common stock – share repurchase plan		(2,219)		(2,449)
Repurchases of non-controlling interests		(12,699)		(3,911)
Proceeds from customer receivable credit facility		17,582		—
Net cash used in financing activities		(11,215)		(22,012)
Effect of foreign currency exchange rates on cash and cash equivalents		—		(118)
Net change in cash, cash equivalents, and restricted cash		(9,040)		(36,488)
Total cash, cash equivalents, and restricted cash, beginning of period		104,997		162,358
Total cash, cash equivalents, and restricted cash, end of period	$	95,957	$	125,870
Purchases of property, plant and equipment included in accounts payable and accrued expenses	$	11,990	$	7,715

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 isstrives to be a ~~holding company that, directly~~leading platform for the operation of, and ~~through its~~investment in, smaller and specialty market communications services and technology companies. The Company has a long track record of delivering critical infrastructure-based solutions to rural and historically underserved markets. The Company’s majority-owned operating subsidiaries ~~owns~~provide facilities-based communications services, along with related information technology solutions, in the United States, Bermuda, and ~~operates telecommunications businesses~~the Caribbean. The Company also has non-controlling investments in ~~North America, the Caribbean and Bermuda as well as~~ a renewable energy company and several communications and technology companies, and it continues to consider opportunities to make controlling and minority investments in businesses that it believes have the potential for generating substantial and relatively steady cash flows over extended periods of time or have technologies or business ~~in India.~~ models that might prove valuable to the Company’s main operating subsidiaries or create significant longer term growth potential for the Company as a whole.

At the holding company level, the Company oversees the allocation of capital within and among its subsidiaries, affiliates, new investments, and stockholders. The Company also has developed significant operational expertise and resources that it uses to augment the capabilities of its individual operating subsidiaries. Over the past ten years, the Company has built a platform of resources and expertise to support its operating subsidiaries and to improve their quality of service, and customer acquisition, retention, and satisfaction while maintaining optimal operating efficiencies. The Company has a number of shared service functions, including billing, network and engineering and customer service, and also employs personnel with specialized skills that provide greater economies of scale and expertise than would typically be available at the operating subsidiary level.

The Company was incorporated in Delaware in 1987, began trading publicly in 1991 and spun off more than half of its operations to stockholders in 1998. ~~Since~~ The Company actively evaluates potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, and generally looks for those that ~~time,~~ it believes have the potential for generating steady excess cash flows over extended periods of time. In addition, the Company considers non-controlling investments in earlier stage businesses that it considers strategically relevant, and which may offer long-term growth potential for us, either individually, or as research and development businesses that can support the Company’s operating subsidiaries in new technology, product, and service development and offerings. The Company has ~~engaged~~ ~~in many strategic~~ ~~acquisitions~~ ~~and investments~~ to ~~help~~ ~~grow~~ used the cash generated from its ~~operations, using~~ ~~the~~ ~~cash~~ ~~generated~~ ~~from~~ ~~its~~ established operating units, and any asset sales, to re-invest in its existing businesses,, to make strategic investments in additional businesses, and to return cash to the Company’s investors. The Company ~~has built,~~provides management, technical, financial, regulatory, and ~~seeks~~marketing services to ~~maintain, resources to support~~its subsidiaries and typically receives a management fee calculated as a percentage of their revenues, which is eliminated in consolidation. For further information about the Company’s financial segments and geographical information about its operating ~~subsidiaries~~revenues and assets, see Note 13 to ~~improve their customer acquisition, retention, and satisfaction while maintaining optimal operating efficiencies.~~ ~~The Company~~ ~~looks~~ ~~for~~ ~~businesses~~ ~~that~~ ~~offer growth~~ ~~opportunities~~ or ~~potential~~ ~~strategic benefits,~~ ~~butrequire~~ ~~additional~~ ~~capital investment~~ the Unaudited Condensed Consolidated Financial Statements included in ~~order to~~ this Report.

~~execute~~ on ~~their~~ ~~business plans.~~ ~~The Company~~ ~~holds controlling positions~~ ~~with respect~~ to ~~some~~ of ~~its~~ ~~investments and non-controlling~~ ~~positions~~ ~~in others.~~ ~~The Company’s investments in earlier stage businessesfrequently~~ ~~offer a~~ ~~product and~~ ~~service~~ ~~development component~~ in ~~addition~~ to ~~the~~ ~~prospect~~ ~~of generating~~ ~~returns~~ on ~~its~~ ~~invested capital.~~

~~The~~10

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Through June 30, 2021, the Company ~~has~~had identified 3 operating segments to manage and review its operations and to facilitate investor presentations of its results. These 3 operating segments are as follows:

●

International Telecom. ~~The~~Businesses contained in the Company’s international telecom segment offer a mix of fixed data, internet and voice services (“Fixed”) as well as retail mobility (“Mobility”) services to customers in Bermuda, the Cayman Islands, Guyana and the US Virgin Islands. The Company offers fixed video services in Bermuda, the Cayman Islands, and the US Virgin Islands and managed information technology services (“Managed Services”) to enterprise customers in all its markets. The Company also offers services to other telecom providers (“Carrier Services”), such as international long-distance, ~~roaming from other carriers’ customers traveling into the Company’s retail markets, and~~ transport and access services, ~~as well as fixed internet~~ and ~~voice services and retail mobility services to~~roaming from such telecom providers’ customers traveling in Bermuda, Guyana and the US Virgin Islands. The Company also offers fixed video services in Bermuda, the Cayman Islands, and the US Virgin Islands. In addition, the international telecom segment offers managed information technology services to enterprise customers.its network service areas.

●

US Telecom. In the United States, primarily in the Southwest, the Company offers ~~carrier services,~~Carrier Services, including wholesale roaming services, ~~site maintenance and~~ the leasing of critical network infrastructure such as towers and transport facilities, ~~as well as fixed~~ and ~~mobile communications services~~site maintenance. The Company also provides Fixed, Mobility, and Managed Services to ~~the Company’s~~its retail and enterprise customers, ~~in the Southwestern United States.~~and private network services to enterprise customers, municipalities and other service providers.

●

Renewable Energy. In India, the Company ~~provides~~provided distributed generation solar power to ~~corporate~~commercial and industrial ~~customers.~~customers through January 27, 2021. See Sale of Renewable Energy Operations for further details

The following chart summarizes the operating activities of the Company’s principal subsidiaries, the segments in which ~~the Company~~it reports its revenue and the markets it served ~~as of September~~during the three months ended June 30, ~~2020:~~2021:


Segment	Services	Markets	Tradenames
International Telecom	Mobility	Bermuda, Guyana, US Virgin Islands	One, GTT+, ~~One,~~ Viya
	Fixed	Bermuda, Cayman Islands, Guyana, US Virgin Islands	~~GTT+,~~ One, Logic, GTT+, Viya
	Carrier Services	Bermuda, Guyana, US Virgin Islands	One, GTT+, ~~One,~~ Viya
	Managed Services	Bermuda, Cayman Islands, US Virgin Islands, Guyana	Fireminds, One, Logic, GTT+, Viya ~~GTT+~~
US Telecom	Mobility	United States (rural markets)	~~Commnet,~~ Choice, Choice NTUA Wireless, ~~WestNet,~~ Geoverse
	Fixed	United States	Commnet, Choice, Choice NTUA Wireless, Deploycom ~~WestNet~~
	Carrier Services	United States	Commnet, Essextel
	Managed Services	United States	Choice
Renewable Energy (1)	Solar	India	Vibrant Energy

(1)

See Sale of Renewable Energy Operations for further details.

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. In addition, the Company considers non-controlling investments in earlier stage businesses that it considers strategically relevant, and which may offer long-term growth potential for the Company, either individually, or as research and development businesses that can support the Company’s operating subsidiaries in new product and service development and offerings. 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 revenues which is eliminated in consolidation. For further information about the Company’s financial segments and geographical information about its operating revenues and assets, see Note 1213 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

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COVID-19

In March 2020, the World Health Organization declared a novel strain of coronavirus, now referred to as COVID-19, as a pandemic, and the virus has now spread globally to over 200 countries and territories, including the United States and other countries in which the Company has substantial operations. The Company is continuing to monitor and assess the effects of the ongoing COVID-19 pandemic on its commercial operations, the safety of its employees and their families, its sales force and customers and any potential impact on ~~the Company’s~~its revenue in ~~2020.~~2021.

The preparation of the condensed consolidated financial statements requires the Company to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates estimates, judgments and methodologies. The Company assessed certain accounting matters and estimates that generally require consideration of forecasted financial information in context with the information and estimates reasonably available to ~~the Company~~it and the unknown future impacts COVID-19 as of ~~September~~June 30, ~~2020~~2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the ~~Company’s~~ allowance for credit losses, the carrying value of ~~the Company’s~~ goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition.

The Company assessed the impacts of COVID-19 on ~~the~~its consolidated financial statements as of and for the ~~quarter~~three and six months ended ~~September~~June 30, ~~2020,~~2021, in particular, the impacts on ~~lines of~~ revenues, operating expenses and cash flows. During the three and six months ended June 30, 2021, the International Telecom segment experienced an increase in its Mobility, Fixed and Carrier Services revenue as ~~well as~~certain pandemic-related travel and stay-at-home restrictions were lifted during the ~~deferral and savings on other operating expenses and~~

~~capital expenditures.~~ ~~During~~latter half of the three months ended ~~September~~June 30, ~~2020, while~~2021 which allowed for the reopening of many retail stores in all of the Company’s international markets and an increase in tourism in certain markets. Expenses within the Company’s International Telecom segment ~~experienced strengthened demand for both its mobile and fixed services, its carrier services revenue declined~~increased as a result of the increased demand for its products and services and as a ~~reduction in roaming revenue due to pandemic-related travel~~result of certain expenses, such as facility and ~~stay-at-home restrictions as compared to~~utility costs, being incurred during the three and six months ended June 30, 2021 that were not incurred during the same ~~period~~periods of ~~2019. Such restrictions also resulted in decreased mobile and carrier services revenues within its~~2020. Within the US Telecom segment, the Company experienced an increase in revenue during the three and six months ended ~~September~~June 30, ~~2020 as compared~~2021, for its rural broadband services to further support the ~~same period~~demand, which has been increased by the impact of ~~2019. However, in response~~COVID-19, for remote working and connectivity. Similar to ~~certain anticipated impacts,~~ the ~~Company was able to implement operating expense savings, particularly with respect to its~~ International Telecom segment, the US Telecom segment recorded an increase in expenses associated with the increased demand for its products and services as well as the recording certain expenses that ~~when coupled with Company-wide travel expense savings~~were incurred during the three and ~~capital expenditure deferrals, acted to offset much~~six months ended June 30, 2021 that were not incurred during the same periods of ~~the revenue loss or additional credit loss allowances caused by anticipated customer non-payment activity in the quarter.~~2020.

As a result, the Company’s assessment did not indicate that there was a material adverse impact to ~~the Company’s~~its consolidated financial statements as of and for the ~~quarter~~three and six months ended ~~September~~June 30, ~~2020.~~2021. However, ~~the Company’s~~ future assessments of the impacts of COVID-19 for the remainder of ~~the year and into 2021or its ability to realize continued operational expense savings,~~2021, as well as other factors, including the possible reinstatement of certain COVID-19 travel-related and stay-at-home restrictions, could result in material adverse impacts to the Company’s consolidated financial statements in future reporting periods. For example, the local economies of many of the ~~Company’s~~ Caribbean markets are tourism-dependent and ~~the~~a decline in global travel activity resulting from reinstated COVID-19 restrictions may ~~continue to~~adversely impact ~~its~~ revenue and cash flows for certain services in these ~~markets~~markets. Further, the Company may experience difficulty in procuring network or retail equipment, such as handsets for subscribers, if such COVID-19 restrictions are reinstated. Apart from possible government issued travel restrictions, the ~~Company’s retail and enterprise customers~~Company currently cannot assess how COVID-19 may ~~be unable to pay~~influence subscribers’ procurement behavior for services ~~and~~or how that behavior will impact revenues in the ~~Company’s international roaming revenue may decline as compared to last year.~~ The extent to which the COVID-19 pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from the Company management’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent economic conditions normalize and more customary operating conditions resume.foreseeable future.

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 the periods described therein. 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

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and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the SEC on March ~~2, 2020,~~ ~~as amended by Amendment No.~~ 1, ~~to the 2019 Annual Report on Form 10-K filed with the SEC on April 29, 2020.~~2021.

The condensed consolidated financial statements include the accounts of the Company, its subsidiaries in which the Company holds controlling interests 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.

Presentation of Revenue

Effective January 1, 2020, the Company changed its presentation of revenue in the Condensed Consolidated Statement of Operations and in the Selected Segment Financial Information tables. This change is intended to better align the Company’s financial performance with the views of management and industry competitors, and to facilitate a more constructive dialogue with the investment community.

Specifically, the previously disclosed revenue categories of wireless and wireline revenue are being represented as ~~mobility, fixed~~Mobility, Fixed and ~~carrier services~~Carrier Services revenue within the Company’s segment information and are included within communications services revenue within its Statements of Operations. Managed services revenue, which was previously a component of wireline revenue, along with revenue from the Company’s Renewable Energy

operations, is now included in other revenue. Construction revenue is also included as a component of other revenue.

~~Recent Accounting Pronouncements~~

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and subsequently issued related updates (“ASU 2016-02”), which provide comprehensive lease accounting guidance. The standard requires entities to recognize lease assets and liabilities on the balance sheet as well as disclosurePresentation of key information about leasing arrangements. ASU 2016-02 became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company adopted ASC 2016-02 on January 1, 2019 utilizing the optional transition method with a cumulative adjustment on the date of adoption and not adjusting prior periods. Refer to Note 4 of the Condensed Consolidated Financial Statements.Operating Expenses

~~In August 2017,~~Effective January 1, 2021, 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 andCompany changed its presentation of ~~the effects of hedging instruments and hedge items~~operating expenses in the ~~financial statements,~~Condensed Consolidated Statement of Operations by combining the previously disclosed Termination and ~~(c) includes certain targeted improvements~~Access Fees with Engineering and Operations as the newly represented Cost of Services. In addition, the previously disclosed Sales, Marketing and Customer Service expenses are now combined with the previously disclosed General and Administrative expenses within the newly represented Selling, general and administrative expenses. The change in presentation was made 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. The Company adopted this standard on January 1, 2019. There was not a material impact to~~better align the Company’s ~~Consolidated Financial Statements upon adoption.~~results with industry standards. Cost of construction services continues to be broken out separately and all depreciation and amortization continues to be shown separately.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company adopted ASU 2016-13 using the modified retrospective approach on its January 1, 2020 effective date. Refer to Note 3 of the Condensed Consolidated Financial Statements in this Report.

On December 18, 2019, the FASB issued new guidance that simplifies the accounting for income taxes. Amendments include the removal of certain exceptions to the general principles of ASC 740, Income taxes. The Company adopted this guidance in 2021 using a prospective method. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements; however, the impact in future periods will be dependent on the extent of future events and circumstances.

3. REVENUE RECOGNITION AND RECEIVABLES

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

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contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’s 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 the Company’s balance sheets.

In July 2019, ~~and August 2020,~~ the Company entered into a Network Build and Maintenance Agreement ~~(the “FirstNet Agreement”) and First Amendment to that agreement~~ with AT&T Mobility, LLC (“AT&T”)~~, respectively, to build~~ and subsequently entered into amendments in August 2020 and May 2021 (the “FirstNet Agreement”). In connection with the FirstNet Agreement, the Company is building a portion of AT&T’s network for the First Responder Network Authority ~~(“FirstNet”) as well as a commercial wireless network~~ in or near the Company’s current operating area in the Southwestern United States (the “FirstNet Transaction”). The ~~transaction~~FirstNet Transaction includes construction and service performance obligations. The Company allocated the transaction price of the FirstNet Agreement to each performance obligation based on the relative standalone selling price of each performance obligation in the contract. The standalone selling price is the estimated price the Company would charge for the good or service in a separate transaction with similar customers in similar circumstances. The current portion receivables under this agreement are recorded in customer receivable and the long-term portion is recorded in customer receivable long-term on the Company’s balance sheet.

The Company has certain wholesale roaming agreements that contain stand ready performance obligations and management allocates transaction value to performance obligations based on the standalone selling price. The standalone selling price is the estimated price the Company would charge for the good or service with similar customers in similar circumstances. Management determined the performance obligations were obligations to make the service continuously available and will recognize revenue evenly over the service period.

Contract assets and liabilities consisted of the following ~~(in~~(amounts in thousands):


	September 30, 2020		December 31, 2019			$ Change	% Change		June 30, 2021		December 31, 2020			$ Change	% Change
Contract asset – current	$	2,269	$	2,413	$	(144)	(6)	%	$	3,536	$	2,478	$	1,058	43	%
Contract asset – noncurrent		699		905		(206)	(23)	%		916		910		6	1	%
Contract liability – current		(16,338)		(15,044)		(1,294)	(9)	%		(15,332)		(18,544)		3,212	17	%
Contract liability – noncurrent		(2,486)		(5,450)		2,964	54	%		(2,125)		(2,193)		68	3	%
Net contract liability	$	(15,856)	$	(17,176)	$	1,320	8	%	$	(13,005)	$	(17,349)	$	4,344	25	%

The contract asset – current is included in prepayments and other current assets and the contract asset – noncurrent is included in other assets on the Company’s balance sheet. The contract liability – current is included in advance payments and deposits and the contract liability – noncurrent is included in other liabilities on the Company’s balance sheet. The decrease in the Company’s net contract liability was due to the timing of customer prepayments, contract billings, and the FirstNet Transaction. During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company recognized revenue of ~~$15.0~~$18.2 million related to its December 31, ~~2019~~2020 contract ~~liability. During the three~~liability and ~~nine months ended September 30, 2020, the Company recognized $0.5~~amortized $1.4 million ~~and $1.9 million, respectively,~~ of the December 31, ~~2019~~2020 contract asset into revenue. The Company did 0t recognize any revenue in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 related to performance obligations that were satisfied or partially satisfied in previous periods.

Contract Acquisition Costs

The ~~September~~June 30, ~~2020~~2021 balance sheet includes current contract acquisition costs of ~~$1.8~~$2.1 million in prepayments and other current assets and long term contract acquisition costs of ~~$1.1~~$1.4 million in other assets. During the three and ~~nine~~six months ended ~~September~~June 30, 2021, the Company amortized $0.6 million and $1.2 million, respectively, of contract acquisition costs. During the three and six months ended June 30, 2020, the Company amortized $0.5 million and ~~$1.5~~$1.0 million, respectively, of contract acquisition ~~cost.~~costs.

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Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts, which include a promotional discount, and the Company’s construction and service contracts. The transaction price allocated to unsatisfied performance obligations was ~~$321~~$249 million and ~~$241~~$299 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The Company expects to satisfy ~~the majority~~approximately 60% of the remaining performance obligations and recognize the transaction price as revenue within 24 months and the remainder thereafter.

The Company has certain retail, wholesale, and renewable energy contracts where the transaction price is allocated to remaining performance obligations. However, the Company omits these contracts from its disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients.

Disaggregation

The Company's revenue is presented on a disaggregated basis in Note 1213 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision makers for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from Communication Services and ~~other~~Other revenue. Communication Services revenue is further disaggregated into ~~mobility, fixed, carrier services,~~Mobility, Fixed, Carrier Services, and ~~other~~Other services. Other revenue is further

disaggregated into ~~renewable energy, managed services~~Renewable Energy, Managed Services and ~~construction~~Construction revenue. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Receivables

The Company adopted ASU 2016-13 on January 1, 2020. The standard requires that certain financial assets be measured at amortized cost reflecting an allowance for estimated credit losses expected to occur over the life of the assets. The estimate of credit losses is based on all relevant information including historical information, current conditions, and reasonable and supportable forecasts that affect the collectability of the amounts. The Company adopted ASU 2016-13 using the modified retrospective approach, however, there was 0 impact of adoption on retained earnings.

The standard impacted the Company’s calculation of credit losses from trade receivables. Historically, the Company recorded credit losses subsequent to the initial revenue transaction. After adoption of ASU 2016-13, the Company will record an estimate of future credit losses in conjunction with the revenue transaction based on the information available including historical experience and management’s expectations of future conditions. Those estimates will be updated as additional information becomes available. Our allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics. There iswas no significant impact to the Company’s operating results ~~for the current period~~ due to the adoption of this standard.

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At ~~September~~June 30, 2021, the Company had gross accounts receivable of $86.6 million and an allowance for credit losses of $13.5 million. The receivable under the FirstNet Agreement totaled $32.4 million of which $4.1 million was current and $28.3 million was long-term. At December 31, 2020, the Company had gross accounts receivable of ~~$55.7 million and an allowance for credit loss of $12.2~~ ~~million. At January 1, 2020 the Company had gross accounts receivable of $48.6~~$67.1 million and an allowance for credit losses of ~~$12.7~~$12.1 million. The receivable under the FirstNet Agreement totaled $10.8 million of which $1.2 million was current and $9.6 million was long-term. The Company monitors receivables through the use of historical operating data adjusted for expectation of future performance as appropriate. Activity in the allowance for credit losses is below:


	Nine months ended September 30, 2020		Six months ended June 30, 2021		Six months ended June 30, 2020

Balance at January 1, 2020	$	12,724
Balance at beginning of period			$	12,121	$	12,724
Current period provision for expected losses		4,452		2,299		3,397
Write-offs charged against the allowance		(5,434)		(1,196)		(4,875)
Recoveries collected		466		267		354
Balance at September 30, 2020	$	12,208
Balance at end of period			$	13,491	$	11,600

4. LEASES

The Company adopted ASU 2016-02 on January 1, 2019, utilizing the optional transition method with a cumulative adjustment on the date of adoption. Under this approach, the guidance was applied to leases that had commenced as of January 1, 2019 with a cumulative effect adjustment as of that date and prior periods were not adjusted. Upon adoption, the Company recognized an operating lease right-of-use (“ROU”) asset of $70.8 million, a short-term lease liability of $8.2 million, and a long-term lease liability of $61.2 million. The adoption had 0 impact on retained earnings or other components of equity.

~~The Company elected the package of practical expedients. Under the package of practical expedients, for existing leases, the Company does not reassess: i) whether the arrangement contains a lease; ii) lease classification and; iii) initial direct costs.~~

The Company has operating and financing leases for towers, land, corporate offices, retail facilities, ~~vehicles,~~ and data transport capacity. The leaseterms are generally between ~~generally~~3 ~~between~~ ~~three~~ and ~~ten~~10 years, some of which include additional renewal options.

Supplemental lease information

The components of lease expense were as follows (in thousands):



	Three months ended June 30, 2021		Three months ended June 30, 2020		Six months ended June 30, 2021		Six months ended June 30, 2020
Operating lease cost:
Operating lease cost	$	4,248	$	4,029	$	8,473	$	8,076
Short-term lease cost		729		729		1,137		1,271
Variable lease cost		1,016		1,540		2,080		2,343
Total operating lease cost	$	5,993	$	6,298	$	11,690	$	11,690

Finance lease cost:
Amortization of right-of-use asset	$	615	$	522	$	1,190	$	1,094
Variable costs		197		186		392		458
Total finance lease cost	$	812	$	708	$	1,582	$	1,552

During the six month periods ended June 30, 2021 and 2020, the Company paid $7.6 million and $7.2 million, respectively, for operating lease liabilities. During the six months ended June 30, 2021 and 2020, the Company recorded $6.3 million and $1.7 million, respectively, of operating lease liabilities arising from ROU assets.

At June 30, 2021, finance leases with a cost of $26.7 million and accumulated amortization of $10.7 million were included in property, plant and equipment. During the six months ended June 30, 2021, the Company paid $0.5 million for finance lease liabilities and recorded $1.4 million of additional finance lease liabilities. At June 30, 2021, finance leases had a lease liability of $2.1 million, of which $0.4 million was current. At December 31, 2020, finance leases with a cost of $25.4 million and accumulated amortization of $9.5 million were included in property, plant and equipment.

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~~Supplemental lease information~~

~~The components of lease expense were as follows (in thousands):~~

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019
Operating lease cost:

Operating lease cost
$
4,152

$
3,627

$
12,228

$
11,294
Short-term lease cost

769

652

2,040

2,232
Variable lease cost

692

1,151

3,034

2,400
Total operating lease cost
$
5,613

$
5,430

$
17,302

$
15,926

Finance lease cost:

Amortization of right-of-use asset
$
534

$
570

$
1,628

$
1,749
Variable costs

198

244

655

802
Total finance lease cost
$
732

$
814

$
2,283

$
2,551

~~During the nine months ended September 30, 2020 and 2019, the Company paid $9.1 million and $10.2~~ ~~million, respectively, for operating lease liabilities. During the nine months ended September 30, 2020 and 2019, the Company recorded~~ ~~$5.7 million and $7.3~~ ~~million, respectively, of operating lease liabilities arising from ROU assets.~~

~~At September 30, 2020, finance leases with a cost of $25.2 million and accumulated amortization of $9.0 million were included in property, plant and equipment. During the nine months ended September 30, 2020, the Company paid~~ ~~$0.6 million for finance lease liabilities and recorded $1.5~~ ~~million of additional finance lease liabilities. At September 30, 2020, finance leases had a lease liability of~~ ~~$1.3 million of which, $0.3~~ ~~million was current. At December 31, 2019, finance leases with a cost of~~ ~~$25.9 million and accumulated amortization of $9.4 million were included in property, plant and equipment.~~

The weighted average remaining lease terms and discount rates as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are noted in the table below:


	September 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
Weighted-average remaining lease term
Operating leases		6.0 years		6.5 years		5.7 years		5.9 years
Financing leases		10.5 years		11.7 years		10.5 years		10.9 years

Weighted-average discount rate
Operating leases		5.0%		5.0%		4.8%		5.0%
Financing leases		3.3%		n/a		4.3%		3.3%

Maturities of lease liabilities as of ~~September~~June 30, ~~2020~~2021 were as follows (in thousands):


	Operating Leases		Operating Leases		Financing Leases
2020 (excluding the nine months ended September 30, 2020)	$	3,014
2021		15,761
2021 (excluding the six months ended June 30, 2021)			$	8,184	$	251
2022		14,170		15,243		501
2023		11,789		12,846		501
2024		10,466		11,702		383
2025				8,800		285
Thereafter		19,885		14,599		522
Total lease payments		75,085		71,374		2,443
Less imputed interest		(10,640)		(9,323)		(317)
Total	$	64,445	$	62,051	$	2,126

Maturities of lease liabilities as of December 31, ~~2019~~2020 were as follows (in thousands):


	Operating Leases		Operating Leases		Financing Leases
2020	$	14,526
2021		13,714	$	14,877	$	334
2022		12,787		14,202		333
2023		10,713		11,799		333
2024		9,671		10,633		211
2025				7,816		-
Thereafter		18,354		13,094		-
Total lease payments		79,765		72,421		1,211
Less imputed interest		(12,195)		(10,097)		(82)
Total	$	67,570	$	62,324	$	1,129

As of ~~September~~June 30, ~~2020,~~2021, the Company did not have any material operating or finance leases that have not yet commenced.

5. 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 credit losses, 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,

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assessing the impairment of assets, revenue, and income taxes. Actual results could differ significantly from those estimates. See Note 1 to the Unaudited Condensed Consolidated Financial Statements included in this Report for a discussion of the impact of COVID-19 on the use of these estimates.

6. ACQUISITIONS AND DISPOSITIONS

US Telecom

Acquisition of Alaska Communications

See Note 15 to the Unaudited Condensed Consolidated Financial Statements included in this Report for a description of the Company’s acquisition of Alaska Communications.

Renewable Energy

Disposition of International Solar Business

In January 2021, the Company completed the sale of 67% of the outstanding equity in its business that owns and operates distributed generation solar power projects operated under the Vibrant name in India (the “Vibrant Transaction”). The post-sale results of the Company’s ownership interest in Vibrant are recorded through the equity method of accounting within the Corporate and Other operating segment. As such, the Company’s consolidated financial statements do not include revenue and operating expenses from Vibrant, but instead, “other income (expense)” within the Corporate and Other operating segment includes the Company’s share of Vibrant’s profits or losses. The Company will continue to present the historical results of its Renewable Energy segment for comparative purposes.

The table below identifies the assets and liabilities transferred (in thousands):


Consideration Received	$	35,218
Assets and liabilities disposed
Current assets		4,899
Property, plant and equipment		45,891
Other assets		439
Current liabilities		(759)
Net assets disposed	$	50,470

Consideration less net assets disposed		(15,252)

Foreign currency losses reclassified from accumulated other comprehensive income		6,258

Loss on sale		21,510
Transaction costs		1,283
Loss on sale including transaction costs	$	(22,793)

The Company reported a loss on sale of $21.5 million during the year ended December 31, 2020 due to the Vibrant Transaction and the assets and liabilities subject to the Vibrant Transaction were reported as held for sale at December 31, 2020. The Company recorded transaction costs of $1.3 million on the Vibrant Transaction, of which $0.7 million was recorded during the year ended December 31, 2020 and $0.6 million was recorded during the six months ended June 30, 2021. The consideration received includes $19.5 million of cash and $3.9 million of receivables related to the amounts held in escrow and earn out consideration. The Company has recorded $11.8 million pursuant to an equity method investment with respect to its remaining 33% ownership interest in Vibrant. The Company is finalizing working capital adjustments and the purchase price escrow will be held in escrow for a period of 12 months after the

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closing to secure the Company’s indemnification obligations. During the six months ended June 20, 2021, the Company recorded additional losses of $0.7 million related the ongoing working capital assessment. The Company has 24 months after the close of the transaction to satisfy the conditions necessary to receive the earn-out consideration.

The Vibrant Transaction does not qualify as discontinued operations because the disposition was not a strategic shift which will have a major effect on the Company’s operations, and as a result, the historical results and financial position of the operations are presented within continuing operations.

7. FAIR VALUE MEASUREMENTS AND INVESTMENTS

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 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 traded derivative contracts.

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.

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Assets and liabilities of the Company measured at fair value on a recurring basis as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are summarized as follows (in thousands):


	September 30, 2020								June 30, 2021
	Significant Other								Significant Other
	Quoted Prices in		Observable		Unobservable				Quoted Prices in		Observable		Unobservable
	Active Markets		Inputs		Inputs				Active Markets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Certificates of deposit	$	—	$	380	$	—	$	380	$	—	$	380	$	—	$	380
Money market funds		2,450		—		—		2,450		3,134		—		—		3,134
Short term investments		403		—		—		403
Other investments		—		—		13,172		13,172		—		—		2,016		2,016
Interest rate swap		—		(189)		—		(189)		—		(97)		—		(97)
Total assets and liabilities measured at fair value	$	2,853	$	191	$	13,172	$	16,216	$	3,134	$	283	$	2,016	$	5,433


	December 31, 2019								December 31, 2020
	Significant Other								Significant Other
	Quoted Prices in		Observable		Unobservable				Quoted Prices in		Observable		Unobservable
	Active Markets		Inputs		Inputs				Active Markets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Certificates of deposit	$	—	$	380	$	—	$	380	$	—	$	380	$	—	$	380
Money market funds		2,329		—		—		2,329		2,785		—		—		2,785
Short term investments		416		—		—		416
Other investments		—		—		12,700		12,700		—		—		13,357		13,357
Interest rate swap		—		(56)		—		(56)		—		(157)		—		(157)
Total assets and liabilities measured at fair value	$	2,745	$	324	$	12,700	$	15,769	$	2,785	$	223	$	13,357	$	16,365

During the six months ended June 30, 2021, other investments measured using Level 3 inputs decreased $11.3 million. The decrease was the result of transferring $11.0 million out of Level 3 due to the conversion of a convertible debt instrument. At December 31, 2020, the Company accounted for a convertible debt instrument at fair value. During the six months ended June 30, 2021, that instrument was converted to equity and the Company began accounting for the investment under the cost method of accounting. Refer to Other Investments below. Also, during the six months ended June 30, 2021, the fair value of the remaining Level 3 investments decreased $0.3 million due to $0.5 million of cash distributions and $0.2 million of income recognized in the other income line of the Company’s statement of operations.

Certificate of Deposit

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020 this asset class consisted of a time deposit at a financial institution denominated in US 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~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, this asset class consisted of a money market portfolio that comprises Federal government and US 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, 2020 and December 31, 2019, these asset classes consisted of short term foreign and US corporate bonds, equity securities, and commercial paper. Corporate bonds and 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 $0.1 million and $0.2 million at September 30, 2020 and December 31, 2019, respectively. Net income includes $0.1 million of losses for the nine months ended September 30, 2020. NaN gain or loss was recorded in the three and nine months ended September 30, 2019.

Other Investments

In the first quarter of 2019, the Company made an investment in an early-stage venture through the acquisition of a convertible debt instrument. The Company elected to fair value the investment upon acquisition. At September 30, 2020, the fair value of the investment was $10.8 million. During the three and nine months ended September 30, 2020,

the Company recorded $0.1 million of expense and $0.6 million of income, respectively, from changes in the fair value of the investment. The asset is classified within Level 3 of the fair value hierarchy. The Company used the income approach to fair value the investment and the inputs consisted of a discount rate calculated based on the investment attributes and the probability of potential future scenarios occurring.

~~In the third quarter of~~ 2019, the Company made a $14.4 million investment in a renewable energy partnership as a tax equity investor. ~~The~~In 2020, the Company received an investment tax credit of $12.0 million ~~in the three months ended September 30, 2020~~from its investment and will receive future cash distributions from the partnership’s operations. The Company elected the deferral method to account for the credit and elected the fair value option to account for the equity investment. The Company’s investment had a fair value of ~~$2.4~~$2.0 million at ~~September~~June 30, ~~2020,~~2021, and ~~$2.5~~ $2.3 million at December 31, ~~2019.~~2020. The asset is classified within Level 3 of the fair value hierarchy. The Company used the income approach to fair value the investment and the inputs consisted of a discount rate and future cash flows calculated based on the investment attributes.

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Also in 2019, the Company made an investment in an early-stage venture through the acquisition of a convertible debt instrument. The instrument converted into equity during the first quarter of 2021. Upon conversion the Company accounted for the investment under the cost method of accounting as the investment does not have a readily determinable fair value. Prior to conversion, the Company accounted for the investment under the fair value option using Level 3 inputs. During the six months ended June 30, 2021, the Company recorded a gain of $2.5 million on the conversion and invested an additional $3.0 million of cash, increasing its book value from $11.0 million at December 31, 2020 to $16.5 million at June 30, 2021.

The Company also holds investments in equity securities consisting of non-controlling investments 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 measured at cost, less any impairment, adjusted for observable price changes of similar investments of the same issuer. Fair value is not estimated for these investments if there are no identified events or changes in circumstances that may have an effect on the fair value of the investment. The carrying value of the investments was $1.3 ~~million at September 30, 2020 and $2.1~~ million at June 30, 2021, unchanged from December 31, ~~2019. During the three months ended September 30, 2020 the Company recorded a loss of~~ ~~$0.8~~ ~~million as the result of an observable price change in the investments.~~2020. These investments are included with other assets on the consolidated balance sheets.

Equity Method Investments

In the first quarter of 2020, the Company increased its ownership in one investment of a privately held company to approximately 24% of the outstanding voting equity through an additional $2.8 million investment. With this investment the Company obtained the ability to exercise significant influence over the investee and began accounting for the investment under the equity method of accounting including the recording of its share of the investee’s earnings or losses. The carrying value of the investment was $~~17.0~~16.6 million and ~~$15.5~~$17.9 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The value ~~increased~~decreased $~~1.5~~1.3 million from the December 31, ~~2019~~2020 balance due to ~~an additional investment of $2.8 million, $1.5~~$0.9 million of the Company’s share of investee losses, and currency ~~gains~~losses of ~~$0.2~~$0.4 million. The investment is included with other assets on the consolidated balance sheets.

In the first quarter of 2021, the Company began to account for its former India solar operations under the equity method of accounting. Subsequent to the close of the Vibrant Transaction in January 2021, the value of the investment increased from $11.8 million to $12.9 million at June 30, 2021. The increase of $1.1 million was due to currency losses of $0.2 million, an additional investment of $1.6 million into its operations, and a distribution of $0.3 million to a minority investment partner.

Other Fair Value Disclosures

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 2 inputs.

The fair value of long-term debt and the customer receivable credit facility is estimated using Level 2 inputs. At ~~September~~June 30, 2021, the fair value of long-term debt and the customer receivable credit facility, including the current portion, was $88.6 million and its book value was $87.7 million. At December 31, 2020, the fair value of long-term debt, including the current portion, was $~~84.2~~73.3 million and its book value was ~~$83.7~~ ~~million. At December 31, 2019, the fair value of long-term debt, including the current portion, was~~ ~~$86.9 million and its book value was $86.4~~$72.8 million.

7.8. LONG-TERM DEBT

On April 10, 2019, the Company entered into a credit facility, with CoBank, ACB and a syndicate of other lenders (the “2019 CoBank Credit Facility”). The 2019 CoBank Credit Facility provides for a $200 million revolving credit facility that includes (i) up to ~~(i)~~ $75 million for standby or trade letters of credit and (ii) up to $10 million under a swingline sub-facility. Approximately $16.0 million of performance ~~and standby~~ letters of credit have been issued and remain outstanding and undrawn as of ~~September~~June 30, ~~2020.~~2021. The 2019 CoBank Credit Facility matures on April 10, 2024.

2021

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Amounts borrowed under the 2019 CoBank Credit Facility bear interest at a rate equal to, at the Company’s option, either (i) the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging between 1.25% to 2.25% or (ii) a base rate plus an applicable margin ranging from 0.25% to 1.25%. Swingline loans 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~~ LIBOR for an interest period of one month and (y) ~~the~~ LIBOR for an interest period of one week; (ii) the Federal Funds Effective Rate (as defined in the 2019 CoBank Credit Facility) plus 0.50% per annum; and (iii) the Prime Rate (as defined in the 2019 CoBank Credit Facility). The applicable margin is determined based on the Total Net Leverage Ratio (as defined in the 2019 CoBank Credit Facility). Under the terms of the 2019 CoBank Credit Facility, wethe Company must also pay a fee ranging from 0.150% to 0.375% of the average daily unused portion of the 2019 CoBank Credit Facility over each calendar quarter.

The 2019 CoBank 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. The Company’s investments in “unrestricted” subsidiaries and certain dividend payments to ~~the Company’s~~its stockholders are not limited unless the Total Net Leverage Ratio is equal to or greater than 1.75 to 1.0. The Total Net Leverage Ratio is measured each fiscal quarter and is required to be less than or equal to 2.75 to 1.0. In the event of a Qualifying Acquisition (as defined in the 2019 CoBank Credit Facility), the Total Net Leverage Ratio increases to 3.25 to 1.0 for the subsequent three fiscal quarters.

The 2019 CoBank Credit Facility also provides for the incurrence by the Company of incremental term loan facilities, when combined with increases to revolving loan commitments, in an aggregate amount not to exceed $200 million (the “Accordion”). Amounts borrowed under the Accordion are also subject to proforma compliance with a net leverage ratio financial covenant.

As of ~~September~~June 30, ~~2020,~~2021, the Company was in compliance with all of the financial covenants, had no0 outstanding borrowings and, net of the $16.0 million of outstanding performance letters of credit, had $184.0 million of availability under the 2019 CoBank Credit Facility. On July 20, 2021, and in connection with the Alaska Transaction, the Company drew $73.0 million from its 2019 CoBank Credit Facilityand subsequently repaid $10.0 million of that amount.

Alaska Credit Facility

On July 22, 2021, Alaska Communications entered into a new credit facility to provide debt financing associated with the Alaska Transaction. See Note 15 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

FirstNet Receivables Credit Facility

On March 26, 2020, Commnet Finance, a wholly owned subsidiary of Commnet Wireless, entered into a receivables credit facility with the Company, Commnet Wireless, and CoBank, ACB (the “Receivables Credit Facility”).

The Receivables Credit Facility provides for a senior secured delayed draw term loan in an aggregate principal amount of up to ~~$75~~$75.0 million and the proceeds may be used to acquire certain receivables from Commnet Wireless. The receivables to be financed and sold under the Receivables Credit Facility, which provide the loan security, relate to the obligations of AT&T under the FirstNet Agreement. The delayed draw period will expire on December 31, 2021.

The maturity date for each loan will be set by CoBank and will match the weighted average maturity of the certain receivables financed.

Interest on the loans accrues at a rate based on (i) ~~the~~ LIBOR plus 2.50%, (ii) a base rate plus 1.50% or (iii) a fixed annual interest rate to be quoted by ~~CoBank~~CoBank. If the Company selects a variable interest rate option, the Company is required to enter an interest rate swap fixing the interest rate.

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The Receivables Credit Facility contains customary events of termination, representations and warranties, affirmative and negative covenants and events of default customary for facilities of this type.

As of ~~September~~June 30, ~~2020,~~2021, the Company had 0$17.2 million outstanding, ~~borrowings~~of which $2.3 million was current, and $57.4 million of availability under the Receivables Credit Facility.

The Company capitalized $0.9 million of fees associated with the Receivables Credit Facility which are being amortized over the life of the debt and $0.8 million were unamortized at June 30, 2021.

Viya Debt

The Company, and certain of its subsidiaries, have 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 to annual operating cash flow to 3.5 to 1.0 (the “Net Leverage Ratio”). This covenant is tested on an annual basis at the end of each fiscal year. Interest is paid quarterly at a fixed rate of 4.0% per annum 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. With RTFC’s consent, the Company funded the restoration of Viya’s network, following Hurricanes Irma and Maria in 2017, through an intercompany loan arrangement with a $75.0 million limit. The Company was not in compliance with the Net Leverage Ratio covenant of the Viya Debt agreement for the year ending December 31, ~~2019~~2020 and received a waiver from the RTFC on February ~~26, 2020.~~ 25, 2021.

The Company paid a fee of $0.9 million in 2016 to lock in 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 is being amortized over the life of the loan.

As of ~~September~~June 30, ~~2020,~~2021, $60.0 million of the Viya Debt remained outstanding and $0.5 million of the rate lock fee was unamortized.

One Communications Debt

The Company has an outstanding loan from HSBC Bank Bermuda Limited (the “One Communications Debt”) which is scheduled to mature on May 22, 2022 and bears interest at the one-month LIBOR plus a margin ranging between 2.5% to 2.75%, per annum paid quarterly.

The One Communications Debt contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, ~~guarantees,~~guaranties, sale of assets and liens) and financial covenants, tested annually as of and for the twelve months ended December 31st, 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 (as defined in the One Communications Debt agreement). The Company was in compliance with its covenants as of December 31, ~~2019.~~

2020.

As a condition of the One Communications Debt, the Company was 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 term of the One Communications Debt. As such, the Company entered into an amortizing interest rate swap that has been designated as a cash flow hedge, which had an original notional amount of $11.0 million, has an interest rate of 1.874%, and expires in March 2022. As of ~~September~~June 30, ~~2020,~~2021, the swap had an unamortized notional amount of ~~$7.6~~$6.8 million.

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

As of ~~September~~June 30, ~~2020, $24.3~~2021, $11.6 million of the One Communications Debt was outstanding and $0.1 million of the capitalized fees remained unamortized.

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8.9. GOVERNMENT GRANTS

Universal Service Fund

The Federal Universal Service Fund (“USF”) is a subsidy program managed by the Federal Communications Commission (“FCC”). USF funds are disbursed to telecommunication providers through 4 programs: the High Cost Program; Low Income Program (“Lifeline Program”); Schools and Libraries Program (“E-Rate Program”); and Rural Health Care Support Program. The Company participates in the High Cost Program, Lifeline Program, E-Rate Program, and Rural Health Care Support Program as further described below. All of these funding programs are subject to certain operational and reporting compliance requirements. The Company believes it is in compliance with all applicable requirements.

During the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020,~~2021, the Company recorded ~~$4.1~~$4.3 million and ~~$12.3~~$8.4 million, respectively, of revenue from the High Cost Program in its International Telecom ~~segment.~~segment for its US Virgin Islands operations under the “Viya” name. During the three and ~~nine~~six month periods ended ~~September 30, 2019, the Company recorded~~ ~~$4.1 million and $12.3~~ ~~million, respectively, of revenue from the High Cost Program in its International Telecom segment. Also, during the three and nine month periods ended September~~June 30, 2020, the Company recorded ~~$0.3~~$4.1 million and ~~$0.9~~$8.2 million, respectively, from the same program. In 2018, the FCC initiated a proceeding to replace the High Cost Program support received by Viya in the US Virgin Islands with a new Connect USVI Fund. On November 16, 2020, the FCC announced that Viya was not the recipient of the Connect USVI Fund award and authorized funding to begin payment to the awardee in June 2021. Pursuant to the terms of the program, Viya’s USF support will be reduced, to two-thirds of the legacy total amount, or $10.9 million, during the first year following the finalization of the award and to one-third of the legacy total amount, or $5.5 million, during the second year. Thereafter, Viya will not receive High Cost Program support.

Also, during each of the three and six month periods ended June 30, 2021, the Company recorded $0.3 million and $0.6 million, respectively, of High Cost Program revenue in its US Telecom segment. During the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2019,~~2020, the Company recorded $0.3 million and ~~$0.9~~$0.6 million, respectively, ~~of High Cost Program revenue in its US Telecom segment.~~from the same program. The Company is subject to 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 August 2018, the Company was awarded $79.9 million over 10 years under the Connect America Fund Phase II Auction. ~~The~~Under this program, the Company is required to provide fixed broadband and voice services to certain eligible areas in the United ~~States. The Company~~States and is subject to operational and reporting ~~requirements under the program and the Company expects to incur additional capital expenditures to comply with these~~ requirements. The Company determined the award is a revenue grant, and as a result the Company will record the funding as revenue upon receipt. ~~During~~For the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020,~~2021, the Company recorded ~~$1.9~~$1.9 million and ~~$5.7~~$3.8 million, respectively, ~~of revenue~~ from the Connect America Fund Phase II program. ~~During~~For the three and ~~nine months~~six month periods ended ~~September~~June 30, ~~2019,~~2020, the Company recorded ~~$1.9~~$1.9 million and ~~$3.4~~$3.8 million, respectively, ~~of revenue~~ from the ~~program, as funding began in the second quarter of 2019.~~same program.

The Company also receives construction grants to build network connectivity for eligible communities. The funding is used to reimburse construction costs and is distributed upon completion of a project. As of ~~September 30,~~December 31, 2020, the Company ~~has~~had been awarded approximately $16.8 million of such grants. The Company was awarded $6.5 million of additional grants in the six months ended June 30, 2021. The Company has completed its construction obligations on $10.2 million of these projects and $13.1 million of such construction obligations remain with ~~construction~~ completion ~~obligations~~deadlines beginning in ~~June 2020.~~ September 2021. Once these projects are constructed, the Company is obligated to provide service to the participants. The Company receives funds upon construction ~~completion and is in various stages of constructing the networks.~~completion. The ~~Company did~~ 0~~t receive any funds during the nine months ended September 30, 2020. During 2019, the~~ Company received $~~5.4~~1.3 million ~~of which $3.1 million was a reimbursement of capital expenditures and $2.3~~ ~~million offset operating activities.~~during the six months ended June 30, 2021. 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 Program, Lifeline Program, and Rural Health Care Support Program. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company recorded revenue of $~~2.2~~1.8 million and ~~$6.6~~$3.9 million, respectively, in the aggregate from these programs. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company recorded revenue of $~~1.5~~2.2 million and ~~$4.7~~$4.4 million, respectively, in the aggregate from these programs. The Company is subject to certain

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operational and reporting requirements under the above mentioned programs and it believes that it is in compliance with all of these requirements.

CARES Act

As of December 31, 2020, the Company had received $16.3 million of funding under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). During the six months ended June 30, 2021, the Company received an additional $2.4 million of funding. In total the Company received $18.7 million of funding under this program. The funding was utilized to construct network infrastructure in the Company’s US Telecom segment. The construction was completed as of June 30, 2021 and $18.4 million of the funding was recorded as a reduction to property, plant and equipment and subsequent reduction to depreciation expense. The remaining $0.3 million was recorded as a reduction to operating expense in the six months ended June 30, 2021.

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 lands of federally recognized tribes. The Company received a bidding credit of $7.4 million under this program in 2018. A portion of these funds will be used to offset network capital costs and a portion will be used to offset the costs of supporting the networks. The Company’s current estimate is that it will use ~~$5.4~~$6.1 million to offset capital costs, consequently reducing future depreciation expense, and ~~$2.0~~$1.3 million to offset the cost of supporting the network which will reduce future operating expense. Through ~~September~~June 30, ~~2020,~~2021, the Company ~~has~~had spent ~~$5.1~~$6.1 million on capital ~~expenditures~~expenditures. During the three and ~~has~~six months ended June 30, 2021 the Company recorded ~~$0.1~~$0.3 million and $0.6 million, respectively, in offsets to the cost of supporting the network. The credits are subject to certain requirements, including ~~deploying service by January 2021 and meeting~~ minimum coverage metrics. If the requirements are not met the funds may be subject to claw back provisions. The Company ~~currently expects to comply~~believes it is in compliance with all applicable requirements related to these funds.

CBRS Auction

During the third quarter of 2020, the Company participated in the FCC’s Citizens Broadband Radio Service (CBRS) auction for Priority Access Licenses (PALs). in the 3.5 GHz spectrum band. These PALs are licensed on a county-by-county basis and are awarded for a 10-year renewable term. The Company ~~bid on and~~ was ~~awarded~~a winning bidder for PALs located strategically throughout the United States ~~and made an investment~~at a total cost of approximately $20.4 million. In connection with the awarded licenses, the Company will have to achieve certain CBRS spectrum build out obligations. The Company currently expects to comply with all applicable requirements related to these licenses.

RDOF

In the 2020 Rural Digital Opportunity Fund Phase I Auction (“RDOF”), pending the FCC’s conclusion of the award process, we expect to receive approximately $20.1 million over 10 years to provide broadband coverage to over 10,000 households. Once confirmed, the Company will be obligated to provide broadband and voice services to certain eligible areas in the United States.

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9.10. RETIREMENT PLANS

The Company has noncontributory defined benefit pension and noncontributory defined medical, dental, vision, and life benefit plans for eligible employees in its International Telecom segment who meet certain eligibility criteria.

The Company recorded the net periodic benefit cost identified below (in thousands):


	Three months ended								Three months ended
	September 30, 2020				September 30, 2019				June 30, 2021				June 30, 2020
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Operating expense
Service cost	$	(164)	$	32	$	447	$	37	$	54	$	35	$	423	$	32
Non-operating expense
Interest cost		603		45		841		40		572		41		879		45
Expected return on plan assets		(414)		—		(1,263)		—		(687)		—		(1,158)		—
Actuarial (gain)/ loss		(7)		(15)		7		(17)		—		—		(7)		(15)
Net periodic pension expense	$	18	$	62	$	32	$	60
Net periodic pension expense (benefit)									$	(61)	$	76	$	137	$	62


	Nine months ended								Six months ended
	September 30, 2020				September 30, 2019				June 30, 2021				June 30, 2020
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Operating expense
Service cost	$	682	$	96	$	1,342	$	111	$	108	$	70	$	846	$	64
Non-operating expense
Interest cost		2,361		135		2,524		120		1,144		82		1,758		90
Expected return on plan assets		(2,730)		—		(3,790)		—		(1,374)		—		(2,316)		—
Actuarial (gain)/ loss		(21)		(45)		22		(51)		—		—		(14)		(30)
Net periodic pension expense	$	292	$	186	$	98	$	180	$	(122)	$	152	$	274	$	124

In the first quarter of 2020, the Company began the process of winding up one of its pension plans. At December 31, ~~2019~~2020 this plan had assets of ~~$15.1~~$15.6 million and a projected benefit obligation of $15.6 million.

The Company was not required to make contributions to its pension plans during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. However, the Company periodically evaluates whether to make discretionary contributions. ~~During the nine months ended September 30, 2020 and 2019, the Company contributed~~ ~~$0.7 million and $0.3~~ ~~million, respectively, to its pension plans.~~ The Company funds its postretirement benefit plans as claims are ~~made.~~made and did not make contributions to its pension plans during the six months ended

June 30, 2021. During the six months ended June 30, 2020 the Company contributed $0.7 million to its pension benefit plans.

~~10.~~11. INCOME TAXES

The Company’s effective tax rate for the three months ended ~~September~~June 30, ~~2020 and 2019 was 1.5% and 27.5%, respectively.~~

On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, among other things, allows NOLs incurred in 2018, 2019,2021 and 2020 ~~to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.~~was (88.2%) and (37.0%), respectively.

The effective tax rate for the three months ended ~~September~~June 30, 2021 was primarily impacted by the following items: (i) the mix of income generated among the jurisdictions in which the Company operates and (ii) discrete items including a $3.4 million benefit from the reversal of an unrecognized tax position due to a statute of limitations expiration and a $0.5 million expense for interest on unrecognized tax positions.

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The effective tax rate for the three months ended June 30, 2020 was primarily impacted by the following items: (i) the remeasurement of a forecasted domestic loss at a higher tax rate due to carryback provisions as provided by the CARES Act, (ii) the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), and (iii) discrete items including a ~~$0.4~~$2.9 million benefit from the reversal of an unrecognized tax position due to statute of limitations expiration and a $0.5 million expense for interest on unrecognized tax positions, a $0.2 million expense to record a valuation allowance against an investment write-off which cannot be currently benefitted for tax, and a $0.6 million benefit (net) related to the utilization of losses at a higher tax rate as allowed by the CARES Act.

The effective tax rate for the three months ended September 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the US Virgin Islands and India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) a $1.3 million deferred tax benefit related to an investment tax credit, and (ii) a $0.5 million net interest expense on unrecognized tax positions.

The Company’s effective tax rate for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ was ~~(6.7%~~(19.7%) and ~~26.7%,~~(12.0%) respectively.

The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, 2021 was primarily impacted by the following items: (i) the mix of income generated among the jurisdictions in which the Company operates and (ii) discrete items including a $3.4 million benefit from the reversal of an unrecognized tax position due to a statute of limitations expiration and a $1.0 million expense for interest on unrecognized tax positions.

The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the following items: (i) the remeasurement of a forecasted domestic loss at a higher tax rate due to carryback provisions as provided by the CARES Act, (ii) the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in India where ~~the Company~~we cannot benefit from those losses as required by ASC 740-270-30-36(a), and (iii) discrete items including a $2.9 million benefit from the reversal of an unrecognized tax position due to a statute of limitations expiration, a ~~$1.4~~$1.0 million expense for interest on unrecognized tax positions, a ~~$0.6~~$0.4 million expense to record a valuation allowance against an investment ~~write-downs~~write-down which cannot be benefitted for tax purposes, and a ~~$1.0~~$0.3 million benefit (net) related to the ~~utilization~~remeasurement of existing losses and temporary differences at a higher tax rate due to carryback provisions as ~~allowed~~provided by the CARES Act.

The effective tax rate for the nine months ended September 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the US Virgin Islands and India where the Company cannot benefit from those losses as required by ASC 740-270-30 36(a), in addition to the following discrete items: (i) a $1.3 million deferred tax benefit related to an investment tax credit, and (ii) a $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure.

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 the Company operates. While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from the Company’s accrued positions as a result of uncertain and complex ~~application~~applications of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and ~~judgment~~judgments by management. Accordingly, the Company could record additional provisions or benefits for US federal, state, and foreign tax matters in future periods as new information becomes available.

~~11.~~12. NET INCOME ~~(LOSS)~~ PER SHARE

For each of the three and six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the calculations of basic and diluted weighted average shares of common stock outstanding do not include 5,000 shares relating to stock options as the effects of those options were anti-dilutive.

For each of the nine months ended September 30, 2020 and 2019, the calculations of basic and diluted weighted average shares of common stock outstanding do not include 5,000 and 38,564 shares, respectively, relating to stock options as the effects of those options were anti-dilutive.

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~~12.~~13. SEGMENT REPORTING

The Company has the following 3 reportable and operating segments: i) International Telecom, ii) US Telecom, and iii) Renewable Energy.

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


For the Three Months Ended September 30, 2020
For the Three Months Ended June 30, 2021											For the Three Months Ended June 30, 2021

	International		US		Renewable		Corporate and					International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	21,406	$	2,432	$	—	$	—	$	23,838		$	22,754	$	2,407	$	—	$	—	$	25,161
Fixed		57,364		5,419		—		—		62,783			59,126		5,877		—		—		65,003
Carrier Services		1,851		19,852		—		—		21,703			2,523		20,038		—		—		22,561
Other		397		—		—		—		397			239		—		—		—		239
Total Communication Services Revenue		81,018		27,703		—		—		108,721			84,642		28,322		—		—		112,964
Other
Renewable Energy		—		—		1,177		—		1,177
Managed Services		1,447		—		—		—		1,447			1,576		—		—		—		1,576
Construction		—		394		—		—		394			—		9,325		—		—		9,325
Total Other Revenue		1,447		394		1,177		—		3,018			1,576		9,325		—		—		10,901
Total Revenue		82,465		28,097		1,177		—		111,739			86,218		37,647		—		—		123,865
Depreciation and amortization		13,671		5,729		491		1,689		21,580			13,790		5,079		—		1,286		20,155
Non-cash stock-based compensation		29		—		66		1,792		1,887			10		—		—		2,165		2,175
Operating income (loss)		16,024		2,218		(98)		(8,587)		9,557			14,643		(556)		(771)		(10,411)		2,905


For the Three Months Ended September 30, 2019
For the Three Months Ended June 30, 2020											For the Three Months Ended June 30, 2020

	International		US		Renewable		Corporate and					International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	21,364	$	2,601	$	—	$	—	$	23,965		$	19,062	$	2,367	$	—	$	—	$	21,429
Fixed		55,845		4,304		—		—		60,149			56,567		4,937		—		—		61,504
Carrier Services		2,403		25,988		—		—		28,391			1,897		20,856		—		—		22,753
Other		335		—		—		—		335			554		—		—		—		554
Total Communication Services Revenue		79,947		32,893		—		—		112,840			78,080		28,160		—		—		106,240
Other
Renewable Energy		—		—		1,438		—		1,438			—		—		874		—		874
Managed Services		1,338		—		—				1,338			1,984		—		—				1,984
Total Other Revenue		1,338		—		1,438		—		2,776			1,984		—		874		—		2,858
Total Revenue		81,285		32,893		1,438		—		115,616			80,064		28,160		874		—		109,098
Depreciation and amortization		14,089		5,770		1,016		1,728		22,603			14,132		5,717		486		1,656		21,991
Non-cash stock-based compensation		285		—		—		1,263		1,548			28		—		131		1,402		1,561
Operating income (loss)		10,867		7,912		(714)		(7,817)		10,248			14,617		1,826		(620)		(8,799)		7,024

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For the Nine Months Ended September 30, 2020
For the Six Months Ended June 30, 2021											For the Six Months Ended June 30, 2021

	International		US		Renewable		Corporate and					International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	60,604	$	7,203	$	—	$	—	$	67,807		$	44,575	$	5,267	$	—	$	—	$	49,842
Fixed		172,420		15,181		—		—		187,601			117,873		12,248		—		—		130,121
Carrier Services		5,392		60,779		—		—		66,171			4,406		38,774		—		—		43,180
Other		1,286		—		—		—		1,286			456		—		—		—		456
Total Communication Services Revenue		239,702		83,163		—		—		322,865			167,310		56,289		—		—		223,599
Other
Renewable Energy		—		—		3,373		—		3,373			—		—		418		—		418
Managed Services		5,111		—		—		—		5,111			2,726		—		—		—		2,726
Construction		—		394		—		—		394			—		21,632		—		—		21,632
Total Other Revenue		5,111		394		3,373		—		8,878			2,726		21,632		418		—		24,776
Total Revenue		244,813		83,557		3,373		—		331,743			170,036		77,921		418		—		248,375
Depreciation and amortization		42,120		17,331		1,590		5,048		66,089			27,616		10,272		188		2,586		40,662
Non-cash stock-based compensation		20		—		197		4,391		4,608			47		—		22		3,442		3,511
Operating income (loss)		44,119		6,241		(1,175)		(25,306)		23,879			27,786		(1,090)		(1,433)		(19,009)		6,254


For the Nine Months Ended September 30, 2019
For the Six Months Ended June 30, 2020											For the Six Months Ended June 30, 2020

	International		US		Renewable		Corporate and					International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	62,766	$	8,095	$	—	$	—	$	70,861		$	39,198	$	4,770	$	—	$	—	$	43,968
Fixed		166,925		9,885		—		—		176,810			115,056		9,762		—		—		124,818
Carrier Services		6,970		62,820		—		—		69,790			3,541		40,927		—		—		44,468
Other		1,012		—		—		—		1,012			891		—		—		—		891
Total Communication Services Revenue		237,673		80,800		—		—		318,473			158,686		55,459		—		—		214,145
Other
Renewable Energy		—		—		4,376		—		4,376			—		—		2,196		—		2,196
Managed Services		3,788		—		—				3,788			3,663		—		—				3,663
Total Other Revenue		3,788		—		4,376		—		8,164			3,663		—		2,196		—		5,859
Total Revenue		241,461		80,800		4,376		—		326,637			162,349		55,459		2,196		—		220,004
Depreciation and amortization		40,709		16,919		2,269		4,973		64,870			28,448		11,602		1,100		3,359		44,509
Non-cash stock-based compensation		306		—		—		4,575		4,881			(9)		—		131		2,599		2,721
Operating income (loss)		35,802		5,927		(750)		(25,862)		15,117			28,005		4,019		(1,077)		(16,623)		14,324

(1)

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

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Selected balance sheet data for each of the Company’s segments as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 consists of the following (in thousands):



	International		US		Renewable		Corporate and				International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated		Telecom		Telecom		Energy		Other (1)		Consolidated
September 30, 2020
June 30, 2021
Cash, Cash equivalents, and Investments	$	67,701	$	25,177	$	22,376	$	20,302	$	135,556	$	48,301	$	26,041	$	5,350	$	15,193	$	94,885
Total current assets		124,515		59,801		25,290		15,978		225,584		108,346		65,043		9,287		17,169		199,845
Fixed assets, net		452,303		77,017		45,773		14,335		589,428		447,261		68,064		—		10,960		526,285
Goodwill		25,421		35,270		—		—		60,691		25,421		35,269		—		—		60,690
Total assets		664,307		233,288		71,757		144,062		1,113,414		640,162		308,514		22,170		95,728		1,066,574
Total current liabilities		71,254		36,898		909		23,801		132,862		81,709		33,624		1,126		20,113		136,572
Total debt		83,723		—		—		—		83,723		71,044		16,657		—		—		87,701
December 31, 2019
December 31, 2020
Cash, Cash equivalents, and Investments	$	43,125	$	38,240	$	25,054	$	55,284	$	161,703	$	45,848	$	26,921	$	4,311	$	26,845	$	103,925
Total current assets		91,497		54,207		27,534		55,485		228,723		107,315		65,806		39,057		27,887		240,065
Fixed assets, net		466,523		69,184		48,421		21,453		605,581		449,888		73,717		—		12,857		536,462
Goodwill		25,421		35,270		—		—		60,691		25,421		35,270		—		—		60,691
Total assets		647,228		222,356		76,723		184,419		1,130,726		642,834		265,797		39,045		136,035		1,083,711
Total current liabilities		77,644		24,905		2,745		14,375		119,669		80,875		43,200		1,038		22,815		147,928
Total debt		86,426		—		—		—		86,426		72,823		—		—		—		72,823


	Capital Expenditures										Capital Expenditures

		International		US		Renewable		Corporate and				International		US		Renewable		Corporate and
Nine months ended September 30,		Telecom		Telecom		Energy		Other (1)		Consolidated
Six months ended June 30,												Telecom		Telecom		Energy		Other (1)		Consolidated
2021											$	21,843	$	18,792	$	—	$	1,297	$	41,932
2020	$	28,439	$	17,254	$	2,116	$	2,853	$	50,662		19,929		8,883		1,634		1,519		31,965
2019		8,533		33,159		2,183		5,611		49,486

(1)

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

~~13.~~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.

In 1990, the Company’s Guyana subsidiary, GTT, was awarded a license to provide domestic 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 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 October 5, 2020, the Prime Minister of Guyana formally implemented telecommunications legislation previously passed by the Guyana Parliament in 2016 that introduces material changes to many features of Guyana’s existing telecommunications regulatory regime with the intention of creating a more competitive market. At that time, the Company was issued a new

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license to provide domestic and international voice ~~and~~as well as data services and mobile services in ~~Guyana, and 2~~Guyana. NaN of ~~its~~the Company’s competitors were issued service licenses as well. ~~The terms and conditions of the licenses have not yet been made~~

~~public.~~ While the Company has requested details of its ~~competitors~~competitors’ licenses, such information has not been made ~~available~~public by the Guyana Telecommunications ~~Authority,~~Agency, and the Company is not yet able to ascertain whether the licenses issued to its competitors permit any competitors to provide services that have been subject to GTT’s exclusive rights contained in its 1990 ~~license~~license.

On October 23, 2020, the Government of Guyana also brought into effect new telecommunications regulations called for by the telecommunications legislation. The regulations include new requirements onfor the market as a whole, which impose costly additional regulatory fees and impact the Company’s operations, administrative reporting and ~~service requirements.~~services. There can be no assurance that these regulations will be effectively implemented, or that they will be administered in a fair and transparent manner. Under these circumstances, there can be no assurance that the Company’s discussions with the Government of Guyana will resume or be concluded, 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 it would prevail in a proceeding to enforce its rights.

Historically, GTT has been subject to other long-standing litigation proceedings and disputes in Guyana that have not yet been resolved. 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 operations 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 of Guyana. 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 NFMU’s continued opinion that the final calculation for 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~~been given the opportunity to review ~~any recommendation~~recommendations made by the NFMU to the ~~Minister.~~Minister on spectrum fee methodology, if any.

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 and GTT intervened in the suit in order to oppose Digicel’s claims. 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 exclusive license rights, the interconnection agreement between the parties, and the laws of Guyana. GTT is seeking injunctive relief to stop what it perceives to be the illegal bypass activity and to obtain monetary 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 been consolidated with Digicel’s constitutional challenge described above. Prior to the declaration of COVID-19 related travel and business restrictions in Guyana, the consolidated cases werescheduled to proceed to trial in ~~2020~~. 2020. GTT expects to resume the litigation following the lifting of COVID-19 related restrictions and intends to prosecute these matters vigorously; however, the Company cannot accurately predict at this time when the consolidated suit will go to trial.

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, ~~that the Guyana~~

~~Revenue Authority has alleged total~~totaling $44.1 million, would be offset in part by the amounts necessary to ensure that GTT’s return on investment was no less

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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~~June 30, ~~2020~~2021 for these matters.

On May 20, 2021, the Company was served with a notice of application for enforcement of a foreign judgment with respect to a matter brought by the Trinidad & Tobago Electric Commission (“TTEC”) in the High Court of Justice in the Republic of Trinidad and Tobago in August 2013 against the Company and other defendants, alleging breach of contract due to the Company’s failure to pay TTEC in connection with amounts alleged to be owed as reimbursement for cable repair costs. In May 2015, the Company defaulted in appearance in the matter and judgment was entered against the Company in the amount of approximately $2.8 million. In July 2021, the Company appeared in the High Court of Guyana to oppose the enforcement of the foreign judgment and intends to vigorously defend the matter. The Company believes that some adverse outcome is probable and has accordingly accrued $1.1 million as of June 30, 2021 for this matters.

~~14.~~15. SUBSEQUENT EVENTS

~~Changes in Guyana Telecommunications Legislation~~Acquisition of Alaska Communications

On July 22, 2021, the Company completed the acquisition of Alaska Communications Systems Group, Inc. (“Alaska Communications”), a publicly listed company, for approximately $340~~On October 5, 2020,~~ million on cash, (the “Alaska Transaction”). Alaska Communications provides broadband telecommunication and managed information technology services to customers in the ~~Prime Minister~~State of ~~Guyana formally implemented~~Alaska and beyond using its statewide and interstate telecommunications ~~legislation previously passed by~~network. The Company completed the ~~Guyana Parliament in 2016 that introduces material changes~~acquisition to ~~many features of Guyana’s~~enter a new market with similar characteristics to its existing ~~telecommunications regulatory regime with the intention of creating a more competitive market. See Note 13 for additional details.~~operations.

~~Increase~~In conjunction with the Alaska Transaction, the Company entered into an agreement with affiliates and investment funds managed by Freedom 3 Capital, LLC as well as other institutional investors (collectively the “Freedom 3 Investors”). The Freedom 3 Investors contributed approximately $70 million in conjunction with the Alaska Transaction (the “Freedom 3 Investment”). The Freedom 3 Investment consists of common and preferred equity instruments in a subsidiary of the Company which holds the ownership of ~~One Communications, Ltd.~~

~~In October 2020,~~Alaska Communications. The Company will account for the Freedom 3 Investment as mezzanine equity in its consolidated financial statements. The Company ~~completed~~also entered into a financing transaction drawing $220 million on a new credit facility to ~~increase its equity ownership in One Communications, its subsidiary based in Bermuda and~~complete the ~~Cayman Islands. Subsequent to~~Alaska Transaction. As a result of the ~~private transaction, which involved the Company’s acquisition of equity from another shareholder for cash,~~Alaska Transaction, the Company owns approximately ~~70%~~52% of ~~One~~the common equity of Alaska Communications and controls its operations and management. The Company incurred $2.4 million of transaction costs in conjunction with the Alaska Transaction, of which $1.5 million was incurred during the six months ended June 30, 2021. Beginning on July 22, 2021, the results of the Alaska Transaction will be included in the Company’s US Telecom segment.

Due to the limited time since the acquisition date, and the size and complexity of the Alaska Transaction, the accounting for the business combination is not yet complete. The Company is not able to provide the valuation of certain components of consideration transferred or provide the allocation of consideration paid to the assets acquired or liabilities assumed. Supplemental pro forma revenue and earnings of the combined company will be determined on the completion of the business combination accounting and allocation of consideration.

Alaska Financing

On July 22, 2021, Alaska Communications entered into a Credit Agreement with Fifth Third Bank, National Association, as Administrative Agent, and the lenders party thereto to provide debt financing in the form of a revolving facility in an aggregate amount at any one time outstanding not to exceed $35.0 million (the “Alaska Revolving Facility”) and an initial term loan facility in the aggregate amount not to exceed $210.0 million (the “Alaska Credit Facility”). In connection with the Alaska Transaction, Alaska Communications drew $220 million from the new Alaska Credit Facility in the amounts of $210.0 million under the term loan and $10.0 million under the Alaska Revolving Facility. The Alaska Credit Facility also provides for incremental term loans up to an aggregate principal amount of the greater of $70.0 million and Alaska Communications’ trailing twelve month Consolidated EBITDA (as defined in the Alaska Credit Facility).

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The key terms and conditions of the Alaska Credit Facility include the following:

●

Amounts outstanding bear an interest rate of LIBOR, or a LIBOR replacement rate as applicable, plus a margin ranging from 3.00% to 4.00% based on Alaska Communications’ Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) or an alternate base rate may be selected at a margin that is 1% lower than the counterpart LIBOR margin;

●

Principal payments are due quarterly commencing in the fourth quarter of 2023 in quarterly amounts as follows: from the fourth quarter of 2023 through the third quarter of 2024, $1,312,500; and from the fourth quarter of 2024 through the third quarter of 2026, $2,625,000. The remaining unpaid balance is due on, and the final maturity date is, July 22, 2026;

●

Alaska Communications is required to maintain financial ratios subsequent to the closing of the Alaska Transaction, as defined in the Alaska Credit Facility, including (a) a maximum Consolidated Net Total Leverage Ratio of 4.00:1.00, stepping down to 3.75:1.00 beginning with the second quarter of 2024; and (b) a minimum Consolidated Fixed Charge Coverage Ratio of not less than 1.25:1.00; and

●

The Alaska Credit Facility is non-recourse to the Company and is secured by substantially all of the personal property and certain material real property owned by Alaska Communications.

On July 20, 2021, the Company drew $73.0 million in proceeds from its 2019 CoBank Credit Facility to pay a portion of the purchase price of the Alaska Transaction. For more information on the 2019 CoBank Credit Facility, see Note 8 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

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 is 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, ~~2019 (as amended by Amendment No. 1 to the 2019 Annual Report on Form 10-K~~ 2020 filed with the SEC on ~~April 29, 2020, the~~ ~~“2019~~March 1, 2021, (the “2020 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 strive to be a leading platform for the operation of, and investment in, smaller and specialty market communications services and technology companies. We ~~are~~have a ~~holding company that, directly~~long track record of delivering critical infrastructure-based solutions to rural and ~~through our~~historically underserved markets. Our majority-owned operating subsidiaries ~~owns~~provide facilities-based communications services, along with related information technology solutions in the United States, Bermuda, and ~~operates telecommunications businesses~~the Caribbean. We also have non-controlling investments in ~~North America, the Caribbean and Bermuda as well as~~ a renewable energy company and several communications and technology companies and we continue to consider opportunities to make controlling and minority investments in businesses that we believe have the potential for generating substantial and relatively steady cash flows over extended periods of time or have technologies or business ~~in India.~~ models that might prove valuable to our main operating subsidiaries or create significant longer term growth potential for us as a whole.

At the holding company level, we oversee the allocation of capital within and among our subsidiaries, affiliates, new investments, and stockholders. We also have developed significant operational expertise and resources that we use to augment the capabilities of our individual operating subsidiaries. Over the past 10 years, we have built a platform of

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resources and expertise to support our operating subsidiaries and to improve their quality of service and customer acquisition, retention, and satisfaction while maintaining optimal operating efficiencies. We have a number of shared service functions, including billing, network and engineering and customer service, and also employ personnel with specialized skills that provide greater economies of scale and expertise than would typically be available at the operating subsidiary level.

We were incorporated in Delaware in 1987, began trading publicly in 1991 and spun off more than a half of our operations to stockholders in 1998. ~~Since~~We actively evaluate potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, and generally look for those that ~~time,~~ we believe have ~~engaged~~the potential for generating steady excess cash flows over extended periods of time. In addition, we consider non-controlling investments in ~~many strategic acquisitions~~earlier stage businesses that we consider strategically relevant, and ~~investments to help grow~~which may offer long-term growth potential for us, either individually, or as research and development businesses that can support our ~~operations using~~operating subsidiaries in new technology, product, and service development and offerings. We have used the cash generated from our established operating units, and any asset sales, to re-invest in our existing businesses, to make strategic investments in additional businesses, and to return cash to our investors. We ~~have built,~~provide management, technical, financial, regulatory, and ~~seek~~marketing services to ~~maintain, resources to support~~our subsidiaries and typically receive a management fee calculated as a percentage of their revenues, which is eliminated in consolidation. For further information about our financial segments and geographical information about our operating ~~subsidiaries~~revenues and ~~to improve their customer acquisition, retention,~~assets, see Notes 1 and satisfaction while maintaining optimal operating efficiencies. We look for businesses that offer growth opportunities or potential strategic benefits but require additional capital investment in order to execute on their business plans. We hold controlling positions with respect to some of our investments and non-controlling positions in others. Our investments in earlier stage businesses frequently offer a product and service development component in addition13 to the ~~prospect of generating returns on our invested capital. For a discussion of the risks involved~~Unaudited Condensed Consolidated Financial Statements included in ~~our investment strategy, see “~~this Report.~~Risk Factors—We are actively evaluating investment, acquisition and other strategic opportunities, which may affect our long-term growth prospects.”~~ ~~in our 2019 Annual Report on Form 10-K.~~

~~We review our operations in~~Through June 30, 2021, we had identified three operating segments to ~~facilitate both~~manage and review our ~~internal~~operations and to facilitate investor presentations of our results. These three operating segments are as follows:

●

International Telecom. ~~Our~~Businesses contained in our international telecom segment ~~offers~~offer a mix of fixed data, internet and voice services (“Fixed”) as well as retail mobility (“Mobility”) services to customersin Bermuda, the Cayman Islands, Guyana and the US Virgin Islands. We offer fixed video services in Bermuda, the Cayman Islands, and the US Virgin Islands and managed information technology services (“Managed Services”) to enterprise customers in all our markets. We also offer services to other telecom providers (“Carrier Services”), such as international long-distance, ~~roaming from other carriers’ customers traveling into our retail markets, and~~ transport and access services, ~~as well as fixed internet~~ and ~~voice services and retail mobility services to~~roaming from such telecom providers’ customers traveling in Bermuda, Guyana and the US Virgin Islands. We also offer fixed video services in Bermuda, the Cayman Islands, and the US Virgin Islands. In addition, the international telecom segment offers managed information technology services to enterprise customers.our network service areas.

●

US Telecom. In the United States, primarily in the Southwest, we offer ~~carrier services,~~Carrier Services, including wholesale roaming services, ~~site maintenance and~~ the leasing of critical network infrastructure such as towers and transport facilities, ~~as well as fixed~~ and ~~mobile communications services~~site maintenance. We also provide Fixed, Mobility, and Managed Services to our retail and enterprise customers, ~~in the Southwestern United States.~~and private network services to enterprise customers, municipalities and other service providers

●

Renewable Energy. In India, we ~~provide~~provided distributed generation solar power to ~~corporate~~commercial and industrial ~~customers.~~customers through January 27, 2021. See Sale of Renewable Energy Operations for further details.

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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~~June 30, ~~2020:~~2021:


Segment	Services	Markets	Tradenames
International Telecom	Mobility	Bermuda, Guyana, US Virgin Islands	One, GTT+, ~~One,~~ Viya
	Fixed	Bermuda, Cayman Islands, Guyana, US Virgin Islands	~~GTT+,~~ One, Logic, GTT+, Viya
	Carrier Services	Bermuda, Guyana, US Virgin Islands	One, GTT+, ~~One,~~ Viya
	Managed Services	Bermuda, Cayman Islands, US Virgin Islands, Guyana	Fireminds, One, Logic, GTT+, Viya ~~GTT+~~
US Telecom	Mobility	United States (rural markets)	~~Commnet,~~ Choice, Choice NTUA Wireless, ~~WestNet,~~ Geoverse
	Fixed	United States	Commnet, Choice, Choice NTUA Wireless, Deploycom ~~WestNet~~
	Carrier Services	United States	Commnet, Essextel
	Managed Services	United States	Choice
Renewable Energy (1)	Solar	India	Vibrant Energy

(1)

See Sale of Renewable Energy Operations for further details.

We actively evaluate potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, that meet our return on investment and other criteria. In addition, we consider non-controlling investments in earlier stage businesses that we consider strategically relevant, and which may offer long-term growth potential for us, either individually, or as research and development businesses that can support our operating subsidiaries in new product and service development and offerings. We provide management, technical, financial, regulatory, and marketing services to our subsidiaries and typically receive a management fee equal to a percentage of their revenues, which is eliminated in consolidation. For further information about our financial segments and geographical information about our operating revenues and assets see Notes 1 and 1213 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

~~COVID-19~~

~~In March 2020, the World Health Organization declared a novel strain of coronavirus, now referred to as~~ COVID-19 ~~as a pandemic, and the virus has now spread globally to over 200 countries and territories, including the United States and other countries in which we have substantial operations.~~

We are continuing to monitor and assess the effects of the ongoing COVID-19 pandemic on our commercial operations, the safety of our employees and their families, our sales force and customers and any potential impact on our revenue in ~~2020.~~2021.

The preparation of the condensed consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate estimates, judgments and methodologies. We assessed certain accounting matters and estimates that generally require consideration of forecasted financial information in context with the information and estimates reasonably available to us and the unknown future impacts of COVID-19 as of ~~September~~June 30, ~~2020~~2021 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for credit losses, the carrying value of our goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition.

We assessed the impacts of COVID-19 on our consolidated financial statements as of and for the ~~quarter~~three months ended ~~September~~June 30, ~~2020,~~2021, in particular, the impacts on ~~lines of~~ revenues, operating expenses ~~as well as the deferral~~ and ~~savings on other operating expenses and capital expenditures.~~ cash flows. During the three months ended ~~September~~June 30, ~~2020, while~~2021, our International Telecom segment experienced ~~strengthened demand for both~~an increase in its ~~mobile~~Mobility, Fixed and ~~fixed services, its carrier services~~Carrier Services revenue ~~declined~~ as ~~a result of a reduction in roaming revenue due to~~certain pandemic-related travel and stay-at-home restrictions ~~as compared to~~were lifted during the ~~same period~~latter half of ~~2019. Such restrictions also resulted~~the three months ended June 30, 2021, which allowed for the reopening of many retail stores in ~~decreased mobile~~all of our international markets and ~~carrier services revenues~~an increase in tourism in certain markets. Expenses within our USInternational Telecom segment increased as a result of the increased demand for our products and services and as a result of certain expenses, such as facility and utility costs, being incurred during the three months ended ~~September~~June 30, ~~2020 as compared~~2021 that were not incurred during the three months ended June 30, 2020. Within our US Telecom segment, we experienced an increase in revenue for our rural broadband services to further support demand, which has been increased by the ~~same period~~impact of ~~2019. However, in response~~COVID-19, for remote working and

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connectivity. Similar to ~~certain anticipated impacts, we were able to implement operating expense savings, particularly with respect to our~~the International Telecom segment, the US Telecom segment recorded an increase in expenses associated with the increased demand for our products and services as well as the recording of certain expenses that ~~when coupled with Company-wide travel expense savings and capital expenditure deferrals, acted to offset much of~~were incurred during the ~~revenue loss or additional credit loss allowances caused by anticipated customer non-payment activity in~~three months ended June 30, 2021 that were not incurred during the ~~quarter.~~three months ended June 30, 2020.

As a result, our assessment did not indicate that there was a material adverse impact to our consolidated financial statements as of and for the ~~quarter~~three months ended ~~September~~June 30, ~~2020.~~2021. However, our future assessments of the impacts of COVID-19 for the remainder of 2021, which could be influenced by a number of factors, including the ~~year~~possible reinstatement of certain COVID-19 travel-related and ~~into 2021 or our ability to realize continued operational expense savings, as well as other factors,~~stay-at-home restrictions, could result in material adverse impacts to our consolidated financial statements in future reporting periods. For example, the local economies of many of our Caribbean markets are tourism-dependent and ~~the~~a decline in global travel activity resulting from reinstated COVID-19 restrictions may ~~continue to~~adversely impact our revenue and cash flows for certain services in these ~~markets~~markets. Further, we may experience difficulty in procuring network or retail equipment, such as handsets for our ~~retail and enterprise customers~~subscribers, if such COVID-19 restrictions are reinstated. Apart from possible government issued travel restrictions, we currently cannot assess how COVID-19 may ~~be unable to pay~~influence our subscribers’ procurement behavior for our services ~~and~~or how that behavior will impact our ~~international roaming revenue may decline as compared to last year.~~ ~~The extent to which~~revenues in the COVID-19 pandemic ultimately impacts our business, financial condition, results of operations, cash flows, and liquidity may differ from our management’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent economic conditions normalize and more customary operating conditions resume.

~~Presentation of Revenue~~foreseeable future.

~~Effective January 1, 2020, we changed our presentation~~Acquisition of revenue in the Condensed Consolidated Statement of Operations and in the Selected Segment Financial Information tables. This change is intended to better align our financial performance with the views of management and industry competitors, and to facilitate a more constructive dialogue with the investment community.Alaska Communications

~~Specifically,~~On July 22, 2021, we completed the ~~previously disclosed revenue categories~~acquisition of ~~wireless~~Alaska Communications Systems Group, Inc. (“Alaska Communications”), a publicly listed company, for approximately $340 million on cash, (the “Alaska Transaction”). As a result of the Alaska Transaction, we now own approximately 52% of common equity of Alaska Communications. In connection with the Alaska Transaction, Alaska Communications drew $220 million from a new Alaska credit facility and ~~wireline revenue are being represented as mobility, fixed~~we drew $73.0 million in proceeds from our 2019 CoBank Credit Facility to pay a portion of the purchase price of the merger. For more information on the new Alaska credit facility or the 2019 CoBank Credit Facility, see Note 15 and ~~carrier services revenue within our segment information and are included within communications services revenue within our~~Note 8, respectively, to the Unaudited Condensed Consolidated Financial Statements ~~of Operations. Managed services revenue, which was previously a component of wireline revenue, is now~~ included in ~~other revenue along with revenue from~~this Report. Beginning on July 22, 2021, the results of the Alaska Transaction will be included in our US Telecom segment.

Sale of Renewable Energy Operations

In January 2021, we completed the sale of 67% of the outstanding equity in our business that owns and operates distributed generation solar power projects operated under the Vibrant name in India (the “Vibrant Transaction”). The post-sale results of our ownership interest in Vibrant, representing 33% of Vibrant’s profits and losses, will be recorded through the equity method of accounting within the Corporate and Other operating segment. We will continue to present the historical results of our Renewable Energy ~~operations.~~segment for comparative purposes.

The operations of Vibrant did not qualify as discontinued operations because the disposition did not represent a strategic shift that had a major effect on our operations and financial results.

FirstNet Agreement

In July 2019, ~~and August 2020,~~ we entered into a Network Build and Maintenance Agreement ~~(the “FirstNet Agreement”) and First Amendment to that agreement~~ with AT&T Mobility, LLC (“AT&T”)~~, respectively, to build~~ that we amended in August 2020 and May 2021 (the “FirstNet Agreement”). In connection with the FirstNet Agreement, we are building a portion of AT&T’s network for the First Responder Network Authority (“FirstNet”) ~~as well as a commercial wireless network~~ in or near our current operating area in the Southwestern United ~~States (the “FirstNet Transaction”).~~ States. Pursuant to the FirstNet Agreement and subject to certain limitations contained therein, all cell sites must be completed and accepted within a specified period of time. We expect to recognize construction revenue of approximately $80 million to $85 million through ~~2021~~2022 that will be mainly offset by construction costs as sites are completed. Revenues from construction are expected to have minimal impact on operating income. The network build portion of the FirstNet Agreement has continued during the COVID-19 pandemic but the overall timing of the build schedule has been delayed. Subject to ongoing delays caused by COVID-19 related restrictions, we currently expect construction revenues to continue ~~through 2021.~~into the first half of 2022.

Following acceptance of a cell site, AT&T will own the cell site and we will assign to AT&T any third-party tower lease applicable to such cell site. If the cell site is located on a communications tower we own, AT&T will pay us

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pursuant to a separate lease agreement for an initial term of eight years. In addition to building the network, we will provide ongoing equipment and site maintenance and high capacity transport to and from these cell sites for an initial term ending in 2029.

AT&T will continue to use our wholesale domestic mobility network for roaming services at a fixed rate per site during the construction period until such time as the cell site is transferred to AT&T. Thereafter, revenue from the maintenance, leasing and transport services provided to AT&T is expected to generally offset revenue from wholesale mobility roaming services. We ~~began~~are currently receiving revenue from the FirstNet Transaction ~~in the third quarter of 2019~~ and expect overall operating income contributions from the FirstNet Transaction to have a relatively steady impact ~~from 2020 onwards.~~going forward.

~~For more information about the risks to our business with respect to our FirstNet Agreement, see “~~~~Risks Related to our US Telecom Segment – we may not be able to timely and effectively meet our obligations to AT&T related to our partnership with the First Responder Network Authority~~~~” in Part I, Item 1A of our 2019 Annual Report Form 10-K.~~

See Sources of Cash below for a discussion regarding our March 26, 2020 credit agreement providing the ability to finance the assets built under the FirstNet Agreement.

Universal Service Fund

Care Support Program as further described below. All of these funding programs are subject to certain operational and reporting compliance requirements. We believe ~~that~~ we are in compliance with all applicable requirements.

During the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020,~~2021, we recorded ~~$4.1~~$4.3 million and ~~$12.3~~$8.4 million, respectively, of revenue from the High Cost Program in our International Telecom ~~segment.~~segment for our US Virgin Islands operations under the “Viya” name. During the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2019,~~2020, we recorded $4.1 million and ~~$12.3~~$8.2 million, respectively, ~~of revenue~~ from the same program. In 2018, the FCC initiated a proceeding to reform the High Cost Program in ~~our International Telecom segment.~~ the US Virgin Islands and Puerto Rico in which it proposed to allocate USF funding of up to $18.7 million per year (inclusive of the $16.4 million per year currently allocated to Viya) for 10 years to supplant the $16.4 million that Viya currently receives per year. While Viya applied for Connect USVI Fund support allocated for the US Virgin Islands, on November 16, 2020, the FCC announced that Viya was not the recipient of the award. The support was authorized in June 2021. Pursuant to the terms of the program, Viya’s USF support will be reduced, to two-thirds of the legacy total amount, or $10.9 million, during the first year following the finalization of the award and to one-third of the legacy total amount, or $5.5 million, during the second year. Thereafter, Viya will not receive High Cost Program support.

Also, during each of the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020,~~2021, we recorded $0.3 million and ~~$0.9~~$0.6 million, respectively, of High Cost Program revenue in our US Telecom segment. During the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2019,~~2020, we recorded $0.3 million and ~~$0.9~~$0.6 million, ~~of High Cost Program revenue in our US Telecom segment.~~respectively, from the same program. We are subject to 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 August 2018, we were awarded $79.9 million over 10 years under the Connect America Fund Phase II Auction. ~~The funding began in the second quarter of 2019 and~~Under this program, we are required to provide fixed broadband and voice services to certain eligible areas in the United ~~States. We~~States and are subject to operational and reporting ~~requirements under the program and we expect to incur additional capital expenditures to comply with these~~ requirements. We determined the award is a revenue grant, and as a result we will record the funding as revenue upon receipt. ~~During~~For the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020,~~2021, we recorded $1.9 million and ~~$5.7~~$3.8 million, respectively, from the Connect America Fund Phase II program. ~~During~~For the three and ~~nine months~~six month periods ended ~~September~~June 30, ~~2019,~~2020, we recorded $1.9 million and ~~$3.4~~$3.8 million ~~of revenue~~ from the ~~program, respectively, as funding began in the second quarter of 2019.~~same program.

We also receive construction grants to build network connectivity for eligible communities. The funding is used to reimburse construction costs and is distributed upon completion of a project. As of ~~September 30,~~December 31, 2020, we have been awarded approximately $16.8 million of such grants. We were awarded $6.5 million of additional grants in the six months ended June 30, 2021. We have completed our construction obligations on $10.2 million of these projects and $13.1 million of such construction obligations remain with ~~construction~~ completion ~~obligations~~deadlines beginning in ~~June 2020.~~ September 2021. Once these projects are constructed, we are obligated to provide service to the participants. We receive funds upon

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construction ~~completion and are in various stages of constructing the networks.~~completion. We ~~did not receive any funds~~received $1.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020. During 2019, we received $5.4 million, of which $3.1 million was a reimbursement of capital expenditures and $2.3 million offset operating activities.~~2021. 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 Program, Lifeline Program, and Rural Health Care Support Program. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we recorded revenue of ~~$2.2~~$1.8 million and ~~$6.6~~$3.9 million, respectively, in the aggregate from these programs. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we recorded revenue of ~~$1.5~~$2.2 million and ~~$4.7~~$4.4 million, respectively, in the aggregate from these ~~programs. We~~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.

CARES Act

As of December 31, 2020, we have received $16.3 million of funding under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). During the six months ended June 30, 2021, we received an additional $2.4 million of funding. In total we received $18.7 of funding under this program. The funding was utilized to construct network infrastructure in our US Telecom segment. The construction was completed as of June 30, 2021 and $18.4 million of the funding was recorded as a reduction to property, plant and equipment and a subsequent reduction to depreciation expense. The remaining $0.3 million was recorded as a reduction to operating expense in the six months ended June 30, 2021.

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 lands of federally recognized tribes. We received a bidding credit of $7.4 million under this program in 2018. A portion of these funds will be used to offset network capital costs and a portion will be used to offset the costs of supporting the networks. Our current estimate is that we will use ~~$5.4~~$6.1 million to offset capital costs, ~~and,~~ consequently ~~reduce~~reducing future depreciation expense, and ~~$2.0~~$1.3 million to offset the cost of supporting the network which will reduce future operating expense. Through ~~September~~June 30, ~~2020,~~2021, we have spent ~~$5.1~~$6.1 million on capital ~~expenditures~~expenditures. During the three and ~~have~~six months ended June 30, 2021 we recorded ~~$0.1~~$0.3 million and $0.6 million, respectively, in offsets to the cost of supporting the network. The credits are subject to certain requirements, including ~~deploying service by January 2021 and~~ meeting minimum coverage metrics. If the requirements are not met the funds may be subject to claw back provisions. We ~~currently expect to comply~~believe we are in compliance with all applicable requirements related to these funds.

CBRS Auction

~~In September~~During the third quarter of 2020, we ~~secured approximately 1,500 licenses as part of~~participated in the FCC’s Citizens Broadband Radio Service ~~auction.~~(CBRS) auction for Priority Access Licenses (PALs) in the 3.5 GHz spectrum band. These ~~licenses~~PALs are licensed on a county-by-county basis and are awarded for ~~an initial ten year period and are subject~~a 10-year renewable term. We were a winning bidder for PALs located strategically throughout the United States at a total cost of approximately $20.4 million. In connection with the awarded licenses, we will have to ~~meeting a substantial performance requirement by the end of the initial term.~~achieve certain CBRS spectrum build out obligations. We currently expect to comply with all applicable requirements related to these licenses.

RDOF

In the 2020 Rural Digital Opportunity Fund Phase I Auction (“RDOF”), pending the FCC’s conclusion of the award process, we expect to receive approximately $20.1 million over 10 years to provide broadband coverage to over 10,000 households. Once confirmed, we will be obligated to provide broadband and voice services to certain eligible areas in the United States.

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Selected Segment Financial Information

The following represents selected segment information for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):

For the Three Months Ended September 30, 2020











International

US

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
Revenue

Communication Services

Mobility

$
21,406

$
2,432

$
—

$
—

$
23,838
Fixed

57,364

5,419

—

—

62,783
Carrier Services

1,851

19,852

—

—

21,703
Other

397

—

—

—

397
Total Communication Services Revenue

81,018

27,703

—

—

108,721
Other

Renewable Energy

—

—

1,177

—

1,177
Managed Services

1,447

—

—

—

1,447
Construction

—

394

—

—

394
Total Other Revenue

1,447
��

394

1,177

—

3,018
Total Revenue

82,465

28,097

1,177

—

111,739

Operating income (loss)

16,024

2,218

(98)

(8,587)

9,557


For the Three Months Ended September 30, 2019
For the Three Months Ended June 30, 2021											For the Three Months Ended June 30, 2021

	International		US		Renewable		Corporate and					International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated			Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	21,364	$	2,601	$	—	$	—	$	23,965		$	22,754	$	2,407	$	—	$	—	$	25,161
Fixed		55,845		4,304		—		—		60,149			59,126		5,877		—		—		65,003
Carrier Services		2,403		25,988		—		—		28,391			2,523		20,038		—		—		22,561
Other		335		—		—		—		335			239		—		—		—		239
Total Communication Services Revenue		79,947		32,893		—		—		112,840			84,642		28,322		—		—		112,964
Other
Renewable Energy		—		—		1,438		—		1,438
Construction													—		—		—		—		—
Managed Services		1,338		—		—		—		1,338			1,576		—		—		—		1,576
Construction													—		9,325		—		—		9,325
Total Other Revenue		1,338		—		1,438		—		2,776			1,576		9,325		—		—		10,901
Total Revenue		81,285		32,893		1,438		—		115,616			86,218		37,647		—		—		123,865

Operating income (loss)		10,867		7,912		(714)		(7,817)		10,248			14,643		(556)		(771)		(10,411)		2,905


For the Three Months Ended June 30, 2020

	International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	19,062	$	2,367	$	—	$	—	$	21,429
Fixed		56,567		4,937		—		—		61,504
Carrier Services		1,897		20,856		—		—		22,753
Other		554		—		—		—		554
Total Communication Services Revenue		78,080		28,160		—		—		106,240
Other
Construction		—		—		—		—		—
Renewable Energy		—		—		874		—		874
Managed Services		1,984		—		—		—		1,984
Total Other Revenue		1,984		—		874		—		2,858
Total Revenue		80,064		28,160		874		—		109,098

Operating income (loss)		14,617		1,826		(620)		(8,799)		7,024

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

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

International Telecom. ~~Revenues~~Revenue within our International Telecom segment increased ~~$1.2~~$6.1 million, or ~~1.5%~~7.6%, to ~~$82.5~~ $86.2 million from ~~$81.3~~$80.1 million for the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively, ~~due to increases in fixed broadband revenues partially offset by lower carrier services revenues related to reduced roaming revenues~~ as a result of an increase in both Fixed and Mobility subscribers as well as an increase in the ~~impact~~average revenue per subscriber within all of our international markets. In addition, certain international markets recognized an increase in Carrier Services revenue as a result of increased tourism as certain COVID-19 related travel and stay-at-home ~~restrictions.~~restrictions were lifted during the latter half of the three months ended June 30, 2021.

Operating expenses within our International Telecom segment ~~decreased~~increased by ~~$3.9~~$6.1 million, or ~~5.5%~~9.3%, to ~~$66.5~~$71.6 million from ~~$70.4 million~~$65.5 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~decrease~~increase was primarily the result of ~~a reduction~~an increase in ~~contract labor, site maintenance~~direct costs incurred in connection with the increase in this segment’s revenue, and ~~facility utilities as a result of~~certain costs being incurred during the three months ended June 30, 2021 that were not incurred during the three months ended June 30, 2020 due to the impact of COVID-19 restrictions. The three month period ended June 30, 2021 also includes additional legal and ~~the result of cost efficiency initiatives.~~regulatory costs.

As a result, our International Telecom segment’s operating income ~~increased $5.1 million, or 46.8%, to $16.0 million from $10.9~~remained consistent at $14.6 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019, respectively.~~2020.

US Telecom. Revenue within our US Telecom segment ~~decreased~~increased by ~~$4.8~~$9.4 million, or ~~14.6%~~33.3%, to ~~$28.1~~$37.6 million from ~~$32.9~~$28.2 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily~~due to a decrease in carrier services revenue~~ as a result of ~~restructured contracts with carriers.~~an increase in construction revenue from the FirstNet Transaction and an increase in Fixed revenues, including broadband services, partially offset by reductions in Carrier Services revenue.

Operating expenses within our US Telecom segment increased ~~$0.9~~$11.8 million, or ~~3.6%~~44.7%, to ~~$25.9~~$38.2 million from ~~$25.0~~$26.4 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, as a result of ~~additional expenses, such as transport and~~ construction costs and other expenses being incurred in connection with the FirstNet Transaction, costs associated with the CARES Act-funded build-out of rural broadband operations, costs to further fund our private network business and certain costs being incurred during the ~~operating costs~~three months ended June 30, 2021 that were not incurred during the three months ended June 30, 2020 as a result of ~~our in-building mobility business.~~the impact of COVID-19 restrictions.

As a result of the above, our US Telecom segment’s operating income decreased ~~$5.7~~$2.4 million ~~or 72.2%,~~ to ~~$2.2~~a loss of $0.6 million from ~~$7.9~~income of $1.8 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Renewable Energy. ~~Revenue within our Renewable Energy segment decreased $0.2 million,~~Through the completion of the Vibrant Transaction on January 27, 2021, we distributed generation solar power to commercial and industrial customers under the Vibrant name in India. Accordingly, we did not generate revenue or ~~14.3%, to $1.2 million from $1.4 million for the three months ended September 30, 2020 and 2019, respectively, primarily due to the impact of COVID-19 and reduced professional fees.~~

~~Operating~~incur operating expenses within our Renewable Energy segment ~~decreased by $0.8 million, or 38.1%, to $1.3 million from $2.1 million for~~during the three months ended ~~September~~June 30, ~~2020 and 2019 due to decreased site maintenance expenses.~~

~~As a result of the above, our Renewable Energy segment’s operating income increased by $0.6 million to a loss of $0.1 million compared to a loss of $0.7 million for~~2021. For the three months ended ~~September~~June 30, 2020, we generated revenue, incurred operating expenses and ~~2019,~~reported an operating loss of $0.9 million, $1.5 million and $0.6 million, respectively.

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The following represents a year over year discussion and analysis of our results of operations for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):



	Three Months Ended				Amount of		Percent		Three Months Ended				Amount of		Percent
	September 30,				Increase		Increase		June 30,				Increase		Increase
	2020		2019		(Decrease)		(Decrease)		2021		2020		(Decrease)		(Decrease)
REVENUE:
Communication services	$	108,721	$	112,840	$	(4,119)	(3.7)	%	$	112,964	$	106,240	$	6,724	6.3	%
Other		3,018		2,776		242	8.7			10,901		2,858		8,043	281.4
Total revenue		111,739		115,616		(3,877)	(3.4)			123,865		109,098		14,767	13.5
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Termination and access fees		26,979		27,622		(643)	(2.3)
Construction costs		390		—		390	100.0
Engineering and operations		18,127		20,095		(1,968)	(9.8)
Sales, marketing and customer services		9,344		9,785		(441)	(4.5)
General and administrative		25,735		25,110		625	2.5
Cost of services										48,479		45,837		2,642	5.8
Cost of construction revenue										9,535		—		9,535	100.0
Selling, general and administrative										40,652		34,125		6,527	19.1
Transaction-related charges		31		21		10	47.6			1,396		72		1,324	1,838.9
Depreciation and amortization		21,580		22,603		(1,023)	(4.5)			20,155		21,991		(1,836)	(8.3)
(Gain) Loss on disposition of long-lived assets		(4)		132		(136)	(103.0)
Loss on disposition of long-lived assets										743		49		694	1,416.3
Total operating expenses		102,182		105,368		(3,186)	(3.0)			120,960		102,074		18,886	18.5
Income from operations		9,557		10,248		(691)	(6.7)			2,905		7,024		(4,119)	(58.6)
OTHER INCOME (EXPENSE):
Interest income		118		414		(296)	(71.5)			46		66		(20)	(30.3)
Interest expense		(1,361)		(1,298)		60	4.9			(1,137)		(1,574)		437	(27.8)
Other income (expense)		(2,031)		(2,686)		(655)	(24.4)			(66)		590		(656)	(111.2)
Other expense, net		(3,274)		(3,570)		(296)	(8.3)
Other income (expense), net										(1,157)		(918)		(239)	26.0
INCOME BEFORE INCOME TAXES		6,283		6,678		(395)	(5.9)			1,748		6,106		(4,358)	(71.4)
Income tax expense		92		1,834		(1,742)	(95.0)			(1,542)		(2,258)		716	(31.7)
NET INCOME		6,191		4,844		1,347	27.8			3,290		8,364		(5,074)	(60.7)
Net income attributable to non-controlling interests, net of tax:		(3,530)		(3,459)		(71)	(2.1)			(1,271)		(3,618)		2,347	(64.9)
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	2,661	$	1,385	$	1,276	92.1	%	$	2,019	$	4,746	$	(2,727)	(57.5)	%

Communications services revenue

Mobility revenue. Our ~~mobility~~Mobility revenue consists of retail revenue generated within both our International Telecom and US Telecom segments by providing retail mobile voice and data services over our wireless networks ~~and~~as well as through the sale of related equipment, such as handsets and other accessories, to our retail subscribers.

Mobility revenue ~~decreased~~increased by ~~$0.2~~ $3.8 million, or ~~0.8%~~17.8%, to ~~$23.8~~$25.2 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$24.0~~$21.4 million for the three months ended ~~September~~June 30, ~~2019.~~2020. The ~~decrease~~increase in ~~mobility~~Mobility revenue, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, ~~mobility~~Mobility revenue ~~remained consistent at $21.4~~increased by $3.7 million, or 19.4%, to $22.8 million for the three months ended ~~September~~June 30, 2021 from $19.1 million for the three months ended June 30, 2020 ~~and 2019. The impact of COVID-19’s travel and stay-at-home restrictions were offset by the benefits of ongoing sales~~due to improved retail and marketing ~~initiatives~~strategies which resulted in an increase in ~~demand~~subscribers and ~~subscribers for our mobility services.~~the average revenue per subscriber. Mobility revenue during the three months ended June 30, 2021 also increased as a result of certain pandemic- related travel and stay-at-home restrictions being lifted during the latter half of the period.

●

US Telecom. Mobility revenue within our US Telecom ~~segment decreased by $0.2 million, or 7.7%, to $2.4 million from $2.6~~ remained consistent at $2.4 million for the three months ended ~~September~~June 30, 2021 and 2020 as a result of an increase in retail subscribers and ~~2019, respectively. This decrease is related to~~revenue generated by our early stage private network business. These increases were offset by a decrease in ~~subscribers within our retail mobility operations which was primarily related to~~ the ~~impact of COVID-19.~~average revenue per subscriber.

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We expect that ~~mobility~~Mobility revenue within both our ~~International~~US Telecom and USInternational Telecom segments may increase as a result of an increase in subscribers if certain COVID-19 travel related restrictions continue to ~~decline~~be lifted. Mobility revenue within our US Telecom segment may also increase as a result of our expanding early-stage private network business. However, such growth in both segments may be partially offset if ~~the~~ COVID-19 related travel restrictions ~~continue for an extended period of time or become more severe resulting~~are reinstated so as to result in significant business interruptions and retail store closures.

Apart from possible government issued travel restrictions, we currently cannot assess how the impact of COVID-19 may influence our subscribers’ procurement behavior for our services or how that behavior will affect our revenues in the foreseeable future.

Fixed communications revenue. Fixed communications revenue is primarily generated by internet, voice, and video service revenues provided to retail and enterprise customers over our wireline networks. Fixed revenue within our US Telecom segment also includes revenue from the Connect America Fund Phase II program award.

Within our International Telecom segment, Fixed communications revenue includes funding under the FCC’s High Cost Program in the US Virgin Islands. Fixed communications revenue increased by ~~$2.7 million,~~$3.5 million, or ~~4.5%~~5.7%, to ~~$62.8~~$65.0 million from ~~$60.1~~$61.5 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~net~~ increase in ~~fixed~~Fixed communications revenue, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, ~~fixed~~Fixed communications revenue increased by ~~$1.6~~$2.5 million, or ~~2.9%~~4.4%, to ~~$57.4~~$59.1 million from ~~$55.8~~ $56.6 million, for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily as a result of ~~an increase in fixed~~stronger demand for broadband ~~subscribers and usage~~services in order to enable remote working and ~~better~~improved connectivity for our subscribers during the COVID-19 pandemic. ~~These increases were~~This increase was partially offset by a decrease in revenue from certain enterprise customers, such as hotels, which ~~were~~continued to be impacted by the effects of ~~COVID-19.~~COVID-19 related travel and stay-at-home restrictions in certain markets.

●

US Telecom. Fixed communications revenue within our US Telecom segment increased by ~~$1.1~~$1.0 million, or ~~25.6%~~20.4%, to ~~$5.4~~ $5.9 million from ~~$4.3~~$4.9 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. This increase was related to an increase in usage for both enterprise and residential subscribers to support remote working and ~~better~~improved connectivity during the COVID-19 ~~pandemic.~~pandemic partially offset by a reduction in the average revenue per user.

~~We expect that fixed~~Fixed communications revenue within our International Telecom segment may ~~decline~~increase as a result of an increase in subscribers in order to further enable remote working and in connection with certain new contracts with oil and gas providers in Guyana. However, the ~~response, such as long delays in the return of tourism activity, to the COVID-19 pandemic, which could result in significant business interruptions that might impact our customers’ ability to pay~~demand for our ~~services. Fixed revenue~~video services may ~~also~~ decline ~~in many of our international markets as a result of a decline in video revenues~~ due to subscribers using alternative methods to receive video content. Any growth may be offset if COVID-19 travel related restrictions continue in some of our markets.

~~We expect that fixed revenue within the~~Within our US Telecom segment, ~~may also decline~~any declines in Fixed communications revenue that could be incurred as a result of ~~our customers’ inability to pay for our services if~~ the ~~COVID-19 related travel restrictions continue for an extended period~~impact of ~~time or become more severe. However, those declines~~COVID-19 may be partially offset by the ~~fixed~~stable nature of our federal support contracts, such as the Connect America Fund Phase II program award, which are expected to provide steady and predictable revenues.

Apart from possible government issued travel restrictions, we currently cannot assess how the impact of reinstated COVID-19 restrictions may influence our subscribers’ procurement behavior for our services or how that behavior will affect our revenues in the foreseeable future.

Carrier Services revenue. Carrier ~~services~~Services revenue is generated by both our International Telecom and US Telecom segments. Within our International Telecom segment, ~~carrier services~~Carrier Services revenue includes international long-distance services, roaming revenues generated by other carriers’ customers roaming into our retail markets, transport services and access services provided to other telecommunications carriers. Within our US Telecom segment, ~~carrier services~~Carrier Services revenue includes services provided under the FirstNet Transaction, wholesale roaming revenues, the provision of network switching services, tower lease revenue and other services provided to carriers. Carrier Services revenue

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~~Carrier services revenue~~ decreased by ~~$6.7~~$0.2 million, or ~~23.6%~~0.9%, to ~~$21.7~~ $22.6 million from ~~$28.4~~$22.8 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The decrease, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, ~~carrier services~~Carrier Services revenue ~~decreased~~increased by ~~$0.5 million,~~$0.6 million, or ~~20.8%~~31.6%, to ~~$1.9~~$2.5 million from ~~$2.4~~$1.9 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, as a result of ~~decreased~~increased roaming revenues due to increased tourism within most of our International Telecom ~~markets as a result of the travel and stay-at-home restrictions implemented in response to COVID-19.~~markets.

●

US Telecom. Carrier ~~services~~Services revenue within our US Telecom segment decreased by ~~$6.1~~$0.9 million, or ~~23.5%~~4.3%, to ~~$19.9~~$20.0 million from ~~$26.0~~$20.9 million, for the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively,

primarily as a result of the 2020 restructuring of certain carrier ~~contracts which eliminated the seasonality of revenue recorded under the previous agreement.~~contracts.

Within our International Telecom segment, ~~we expect that carrier services~~Carrier Services revenue may continue to ~~decline~~increase if ~~the COVID-19 related~~tourism returns to pre-pandemic levels. Apart from possible government issued travel restrictions, ~~continue~~we currently cannot assess how the impact of COVID-19 may influence our subscribers’ procurement behavior for ~~an extended period of time~~our services or ~~become more severe.~~

how that behavior will affect our revenues in the foreseeable future. Also within our International Telecom segment, we expect that ~~carrier services~~Carrier Services revenue from our international ~~long-distance~~long-distance business in Guyana will continue to decrease as consumers seek to use alternative technology services to place long-distance calls. In addition, such revenue may decline as the result of the implementation, by the Government of Guyana, of recently-passed legislation which terminates our right to be the exclusive provider of domestic ~~fixed~~Fixed and international long-distance service in Guyana. While the loss of our exclusive rights may cause an immediate reduction inour ~~carrier services~~Carrier Services revenue, the complete impact of the new legislation to our operations will not be fully known until the Government of Guyana ~~make~~makes the terms and conditions of licenses issued to two of our competitors available to us. Over the longer term, such declines in Carrier Services revenue may be offset by increased Fixed communications revenue from broadband services to consumers and enterprises in Guyana, increased Mobility communications revenue from an increase in regulated local calling rates in Guyana or possible economic growth within that country. See Note 1314 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Within our US Telecom segment, we expect Carrier Services revenue to decrease as we progress through the construction phase of the FirstNet Transaction and from the impact of continued reduced contractual rates and imposed revenue caps. We believe that maintaining roaming and other Carrier Services favorable to our carrier customers allows us to preserve revenue for a longer period of time while creating the potential for long-lived shared infrastructure solutions for carriers in areas they may consider to be non-strategic.

The most significant competitive factor we face within our US Telecom segment is the extent to which our carrier customers in our wholesale ~~mobility~~Mobility business choose to roam on our networks and lease our tower space and transport ~~(“backhaul”)~~ services or elect to build or acquire their own infrastructure in a market, reducing or eliminating their need for our services in those markets. We also face competition from other providers of such shared infrastructure solutions. In the past, we have entered into buildout projects with existing carrier customers to help these customers accelerate the buildout of a given area in exchange for the carrier’s agreement to lease us spectrum in that area and enter into a contract with specific pricing and terms. Historically, these arrangements have differed from our FirstNet Transaction and have typically 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.

During the construction phase of the FirstNet Transaction, we expect carrier services revenue to remain consistent and then decrease over time as the result of continued reduced contractual rates and imposed revenue caps. We believe that maintaining roaming and other carrier services favorable to our carrier customers allows us to preserve revenue for a longer period of time while creating the potential for long-lived shared infrastructure solutions for carriers in areas they may consider to be non-strategic.

Other communications services revenue. Other communications services revenue includes miscellaneous services that ~~our~~the operations within our International Telecom segment provide to retail subscribers. Other communications ~~revenues increased~~services revenue decreased to ~~$0.4~~$0.2 million from ~~$0.3~~$0.6 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Other revenue

Renewable energy revenue. ~~Renewable energy revenue includes~~Through the completion of the Vibrant Transaction on January 27, 2021, we distributed generation ofsolar power ~~through Power Purchase Agreements (“PPAs”) from our solar plants~~to commercial and industrial customers under the Vibrant name in India. ~~Our PPAs, which are typically priced at or below local retail electricity rates and allow~~Accordingly, we did not generate revenue within our ~~customers to secure electricity at predictable and stable prices over the duration of their long-term contracts, provide us with high-quality contracted cash flows.~~

Renewable ~~energy revenue decreased by $0.2 million, or 14.3%, to $1.2 million from $1.4 million for~~Energy segment during the three months ended ~~September~~June

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30, 2021. For the three months ended June 30, 2020, ~~and 2019, respectively, primarily due to pandemic-related delays and restrictions.~~

~~We believe that~~ our renewable energy ~~revenue may decline in future periods if COVID-19 related restrictions require the reduction or limited usage by our customers~~operations generated $0.9 million of their facilities thereby reducing demand for the generation of power from our commercial customers for the duration of such restrictions. Thereafter we believe our renewable energy revenue should stabilize as we continue to operate our solar plants in accordance with our long term PPAs.revenue.

Managed ~~services~~Services revenue. Managed ~~services~~Services revenue is generated ~~primarily in~~within our International Telecom segment and includes network, application, infrastructure, and hosting services.

Managed ~~services~~Services revenue ~~increased~~decreased by ~~$0.1~~$0.4 million, or ~~7.7%~~20.0%, to ~~$1.4~~$1.6 million from ~~$1.3~~$2.0 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily as a result of ~~an increase~~the impact of COVID-19 which resulted in a decrease in equipment sales and consulting ~~services and equipment sales.~~services.

We expect that ~~managed services~~Managed Services revenue may ~~decline~~increase if ~~the~~ COVID-19 related travel restrictions continue ~~for an extended period of time or become more severe resulting in significant business interruptions~~ to ~~our customers.~~be lifted.

Construction revenue. Construction revenue represents revenue generated within our US Telecom segment for the construction of network cell sites related to the FirstNet Agreement. During the three months ended ~~September~~June 30, ~~2020,~~2021, we recognized ~~$0.4~~$9.3 million of construction ~~revenue for our~~revenue. As of June 30, 2021, 40% of the cell sites related to the FirstNet Agreement were completed and we expect that an additional 25% of the sites will be completed by the end of 2021. We expect the remaining sites to be completed during the first ~~two sites under this agreement and expect such revenue to total $80 million to $85 million through the project’s expected completion in late 2021.~~half of 2022.

Operating expenses

~~Termination and access fee expenses.~~Cost of services. ~~Termination and access fee expenses~~Cost of services are charges that we incur for voice and data transport circuits (in particular, the circuits between our ~~mobility~~Mobility sites and our ~~switches),~~switches, internet capacity, video programming costs, ~~other~~ access fees we pay to terminate our calls, telecommunication spectrum fees and direct costs associated ~~with~~within our ~~managed services~~Managed Services and technology ~~business~~business. Cost of services also include expenses associated with developing, operating, upgrading and supporting our ~~renewable energy operations. Termination~~telecommunications networks, including the salaries and ~~access fees also include~~benefits paid to employees directly involved in the development and operation of those businesses, as well as bad debt reserves and the cost of handsets and customer resale equipment incurred by our retail businesses.

~~Termination and access fees decreased~~Cost of services increased by ~~$0.6~~$2.6 million, or ~~2.3%~~5.8%, to ~~$27.0~~ $48.5 million from ~~$27.6~~$45.8 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The net ~~decrease~~increase in ~~termination and access fees,~~cost of services, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, ~~termination and access fees decreased~~cost of services increased by ~~$1.0~~$2.2 million, or ~~5.4%~~7.1%, to ~~$17.4~~ $33.3 million from ~~$18.4~~$31.1 million, for the three months ended ~~September~~June 30, 2021 and 2020, respectively. This increase was primarily related to the increase in the demand for our products as well as expenses, such as facility and ~~2019, respectively. Termination and access fees decreased within all of our markets within this segment~~utility costs, incurred during the three months ended June 30, 2021 that were not incurred during the three months ended June 30, 2020 as a result of ~~a decrease in video programming costs and a reduction in roaming charges and equipment sales as a result of the impact of COVID-19.~~

●

~~US Telecom~~. Termination and access fees within our US Telecom segment increased by $0.4 million, or 4.4%, to $9.5 million from $9.1 million for the three months ended September 30, 2020 and 2019. This increase was primarily a result of an increase in data transport costs incurred in connection with the FirstNet Transaction partially offset by decreases in wholesale roaming expenses, which were reduced, as a result of the impact of COVID-19 related restrictions on the ability of our customers to travel to other carriers’ markets, and a decrease in the cost of equipment sales which were also impacted by COVID-19.

We expect that termination and access fee expenses may increase within all of our segments due to an expected increase in roaming and other termination costs when the COVID-19 related travel restrictions are lifted. Within the US Telecom segment, our performance under the FirstNet Transaction is also anticipated to contribute to an increase in termination and access fee expenses during the construction phase which is expected to conclude in late 2021.

~~Construction costs.~~ Construction costs include the expenses incurred in generating the construction revenue associated with our FirstNet Agreement. Construction costs, all of which are incurred within our US Telecom segment, were $0.4 million during the three months ended September 30, 2020.

~~Engineering and operations expenses.~~ Engineering and operations expenses include the expenses associated with developing, operating, upgrading and supporting our telecommunications networks and renewable energy operations, including the salaries and benefits paid to employees directly involved in the development and operation of those businesses.

Engineering and operations expenses decreased by $2.0 million, or 9.8%, to $18.1 million from $20.1 million for the three months ended September 30, 2020 and 2019, respectively. The net decrease in engineering and operations expenses, within our segments, consisted of the following:

●

~~International Telecom~~~~. Within our International Telecom segment, engineering and operations expenses decreased by $~~2.0 million, or 12.3%, to $14.3 million from $16.3 million, for the three months ended September 30, 2020 and 2019, respectively. This decrease was recognized within substantially all of our international markets as a result of certain cost reduction measures and cost efficiency initiatives and the impact of COVID-19 related restrictions which resulted in reduced travel and facility costs.

●

~~US Telecom~~. Engineering and operations expenses increased within our US Telecom segment by $0.1 million, or 2.7%, to $3.8 million from $3.7 million, for the three months ended September 30, 2020 and 2019, respectively, primarily in order to support the construction phase of the FirstNet. This increase was partially offset by certain cost reduction programs and a reduction in travel as a result of the COVID-19 pandemic.

●

~~Corporate Overhead~~~~. Engineering and operations expenses within our corporate overhead remained consistent at $0.1 million for the three months ended September 30, 2020 and 2019.~~

We expect that engineering and operations expenses may increase when the COVID-19 related restrictions are lifted. We expect engineering and operating expenses to continue to increase in our US Telecom segment during the construction phase of the FirstNet Transaction which we expect to continue through 2021.

~~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 decreased by $0.5 million, or 4.5%, to $9.3 million from $9.8 million for the three months ended September 30, 2020 and 2019, respectively. The net decrease in sales and marketing expenses, within our segments, consisted of the following:

●

~~International Telecom~~. Within our International Telecom segment, our sales and marketing expenses decreased by $0.8 million, or 9.8%, to $7.4 million from $8.2 million for the three months ended September 30, 2020 and 2019, respectively. This decrease was incurred within all of our international markets primarily as a result of a reduction in advertising and promotions as well as the impact of COVID-19 restrictions.

●

US Telecom. ~~Sales and marketing expenses increased~~Cost of services within our US Telecom segment increased by ~~$0.3~~$1.0 million, or ~~18.8%~~6.8%, to ~~$1.9~~$15.6 million from ~~$1.6~~$14.6 million for the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively, ~~primarily~~ as a result of ~~increased spending~~the further development of our private network business, an increase in data transport costs associated with the ~~retail business within~~FirstNet Transaction and costs associated with our ~~US mobility operations and within~~recent funding award under the CARES Act. These increases were partially offset by decreases in our ~~in-building mobility~~wholesale long-distance voice services business.

We expect that ~~sales and marketing expenses~~cost of services may increase ~~when~~within our International and US Telecom segments due to an expected increase in roaming and other termination costs if COVID-19 related travel restrictions ~~are~~continue to be lifted. Within ~~our~~the US Telecom segment, ~~sales~~we expect an increase in cost of services due to the anticipated expansion of our private network business, expenses associated with our recent funding award under the CARES Act and ~~marketing expenses may also continue to increase~~ as a result of our performance under the ~~expansion~~FirstNet Transaction during the construction phase which is expected to be completed during the first half of ~~our in-building mobility business.~~2022.

~~General~~Cost of construction revenue. Cost of construction revenue includes the expenses incurred in connection with the construction of and the delivery to AT&T of cell sites in accordance with our FirstNet Agreement and was $9.5 million during the three months ended June 30, 2021. As of June 30, 2021, 40% of the cell sites related to the FirstNet

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Agreement were completed, and we expect that an additional 25% of sites will be completed by the end of 2021. We expect the remaining sites to be completed during the first half of 2022.

Selling, general and administrative expenses. ~~General~~Selling, general and administrative expenses include salaries and benefits we pay to sales personnel, customer service expenses and the costs associated with the development and implementation of our promotional and marketing campaigns. Selling, general and administrative expenses also 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~~resources as well as internal costs associated with our performance of due-diligence ~~in connection~~and integration related costs associated with acquisition activities.

~~General~~Selling, general and administrative expenses increased by ~~$0.6~~$6.5 million, or ~~2.5%~~19.1%, to ~~$25.7~~$40.7 million from ~~$25.1~~ $34.1 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The net increase in selling, general and administrative expenses, within our segments, consisted of the following:

●

International ~~Telecom.~~ Telecom~~General~~. Within our International Telecom segment, our selling, general and administrative expenses increased ~~within our International Telecom segment~~ by ~~$0.3~~ $4.3 million, or ~~2.2%~~21.3%, to ~~$13.7~~$24.5 million from ~~$13.4~~$20.2 million for the three months ended ~~September~~June 30, 2021 and 2020, respectively. This increase was incurred within certain international markets primarily as a result of an increase in telecommunications license, legal and regulatory related fees, including a $1.1 million accrual for certain legal matters, as well as expenses incurred during the three months ended June 30, 2021 that were not incurred during the three months ended June 30, 2020 ~~and 2019, respectively. The increase was the~~as a result of ~~increased expenditures in information~~

~~technology to further enhance our network security partially offset by~~ the impact of ~~COVID-19 related restrictions which resulted in a reduction in travel~~COVID-19. The three month period ended June 30, 2021 also includes additional legal and regulatory costs.

●

US Telecom. ~~General~~Selling, general and administrative expenses ~~decreased~~increased within our US Telecom segment by ~~$0.1~~$1.9 million, or ~~2.1%~~31.1%, to ~~$4.6~~$8.0 million from ~~$4.7~~ $6.1 million, for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily as a result of ~~certain cost reduction measures and the impact of COVID-19 related restrictions, which reduced travel costs~~increased spending within our ~~US mobility~~expanding early stage private network business ~~partially offset by an increase in expenditures for information technology~~ and ~~an increase~~ within our ~~in-building mobility network business to support its expanding~~Mobility retail operations.

●

Renewable ~~Energy~~Energy. ~~. General~~We incurred $0.1 million and $0.9 million of selling, general and administrative expenses within our Renewable Energy segment ~~decreased by $0.2 million, or 20.0%, to $0.8 million from $1.0 million for~~during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019, respectively, as a result of reduced professional fees and the impact of COVID-19 related restrictions which resulted in a reduction in travel costs.~~2020.

●

Corporate Overhead. ~~General~~Selling, general and administrative expenses within our corporate overhead increased by ~~$0.8~~$1.2 million, or ~~13.6%~~17.4%, to ~~$6.7~~$8.1 million from ~~$5.9~~$6.9 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily related to increased non-cash equity compensation expense from the timing of the underlying annual grants, an increase in ~~information technology expenditures to further enhance our network security.~~legal expenses and integration costs associated with the completion of the Alaska Transaction that were incurred during 2021.

~~General~~Within our International Telecom segment, we expect that selling, general and administrative expenses ~~within all of our segments~~ may increase ~~as the~~if COVID-19 related travel restrictions ~~are~~continue to be lifted. Within ~~our~~the US Telecom segment, we expect an increase due to the anticipated expansion of our early-stage private network business, expenses associated with our recent funding award under the CARES Act and as a result of our performance under the FirstNet Transaction, during its construction phase, which is expected to be completed during the first half of 2022. Our Corporate Overhead segment may also ~~expect to incur additional general and administrative~~experience an increase in these expenses to support our ~~in-building mobility network~~expanding operations. ~~In addition, we expect general and administrative expenses within our corporate overhead to increase as we work to further enhance our network security.~~

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 $1.4 million and a nominal amount of ~~transaction related~~transaction-related charges during the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019.~~respectively. The transaction-related charges incurred during 2021 were primarily related to the Alaska Transaction.

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.

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Depreciation and amortization expenses decreased by ~~$1.0~~$1.8 million, or ~~4.5%~~8.3%, to ~~$21.6~~$20.2 million from ~~$22.6~~$22.0 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The net decrease in depreciation and amortization expenses, within our segments, consisted primarily of the following:

●

International Telecom. Depreciation and amortization expenses decreased within our International Telecom segment by ~~$0.4~~$0.3 million, or ~~2.8%~~2.1%, to ~~$13.7~~$13.8 million from $14.1 million, for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. This decrease was ~~recognized within some of our international markets as~~ a result of certain assets becoming fully depreciated in recent ~~quarters.~~periods partially offset by recent upgrades and expansions to this segment’s network assets.

●

US Telecom. Depreciation and amortization ~~remained consistent at $5.8~~expenses decreased within our US Telecom segment by $0.6 million, or 10.5%, to $5.1 million from $5.7 million, for the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~respectively, primarily as a result of ~~additional depreciation being recognized for recent upgrades within our US mobility businesses offset by~~ certain assets becoming fully depreciated in recent ~~quarters.~~periods partially offset by capital expenditures within our early-stage private network and US Mobility businesses.

●

Renewable Energy. ~~Depreciation~~We incurred no depreciation expense and ~~amortization expenses~~$0.5 million of depreciation expense within our Renewable Energy segment ~~decreased by $0.5 million, or 50.0%, to $0.5 million from $1.0 million for~~during the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019, respectively, as a result of certain assets within this segment becoming full depreciated during recent quarters.~~respectively.

●

Corporate Overhead. Depreciation and amortization expenses ~~remained consistent at $1.7~~decreased within our corporate overhead by $0.4 million, or 23.5%, to $1.3 million from $1.7 million, for the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019~~respectively, primarily as a result ~~of certain shared services assets being placed into service throughout 2019 partially offset by the effect~~ of certain assets becoming fully depreciated in recent ~~quarters.~~periods.

We expect depreciation and amortization expense to increase in our International Telecom, US Telecom and Corporate Overhead segments as we acquire tangible assets to expand or upgrade our telecommunications ~~networks and expand our solar power generating assets.~~networks.

Loss on disposition of long-lived assets. During the three months ended ~~September~~June 30, ~~2019,~~2021, we recorded a loss on the disposition of long-lived assets of $0.7 million, primarily related to the Vibrant Transaction.

During the three months ended June 30, 2020, we recorded a loss on the disposition of long-lived assets of $0.1 million on the disposition of ~~long-lived assets as a result of the disposal of miscellaneous~~long lived assets within our US mobility and ~~renewable energy~~Renewable Energy operations.

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

Interest income decreased ~~$0.3 million, or 71.5%,~~ to ~~$0.1 million~~a nominal amount from ~~$0.4~~$0.1 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, as a result of a reduction in the balances of our cash, cash equivalents and short-term investments ~~resulting in reduced returns in addition to reduced~~as well as our return ~~rates.~~on those balances.

Interest expense. We incur interest expense on the Viya Debt and the One Communications Debt (each as defined below), as well as commitment fees, letter of credit fees and the amortization of debt issuance costs on our 2019 CoBank Credit ~~Facility. Beginning on March 26, 2020,~~Facility (as defined below). During the three months ended June 30, 2021, we also ~~began incurring~~incurred interest expense related to ~~the amortization of debt issuance costs, on~~borrowings under the Receivables Credit Facility (as defined below). and incurred interest expense on those borrowings as well as the amortization of debt issuance costs.

Interest expense ~~increased by $0.1 million, or 4.9%,~~decreased to ~~$1.4~~$1.1 million from ~~$1.3~~$1.6 million for the three months ended ~~September~~June 30, 2021 and 2020, ~~and September 30, 2019,~~ respectively, ~~primarily~~ as ~~a result of the amortization of debt issuance costs on~~additional interest expense being incurred for new borrowings under the Receivables Credit ~~Facility.~~Facility was offset by reduced debt balances within our International Telecommunications segment.

We expect that interest expense tomay increase in future periods as a result of future borrowings under the Receivables Credit Facility.

Other ~~expenses.~~income (expense). Other ~~expenses~~income (expense) represents miscellaneous non-operational income earned and expenses incurred.

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For the three months ended ~~September~~June 30, ~~2020,~~2021, other ~~expenses~~income (expense) was ~~$2.0~~ an expense of $0.1 million which was primarily related to losses from our non-controlling ~~equity investments.~~investments and on foreign currency transactions. These losses were partially offset by miscellaneous income generated during the quarter.

For the three months ended ~~September~~June 30, ~~2019,~~2020, other ~~expenses~~income (expense) was ~~$2.7~~income of $0.6 million which was primarily related to ~~a $2.1~~$0.4 million ~~write down~~ of ~~a previously acquired~~income from non-controlling equity ~~investment~~investments and ~~$0.8~~$0.5 million of income related to certain employee benefit plans. This income was partially offset by $0.3 million relating to a net loss on foreign currency transactions. ~~These expenses were partially offset by $0.1 million of income recognized in connection with some of our employee benefit plans.~~

Income taxes.Our effective tax rate for the three months ended ~~September~~June 30, ~~2020 and 2019 was 1.5% and 27.5%, respectively.~~

The effective tax rate for the three months ended ~~September~~June 30, 2021 was primarily impacted by the following items: (i) the mix of income generated among the jurisdictions in which we operate and (ii) discrete items including a $3.4 million benefit from the reversal of an unrecognized tax position due to a statute of limitations expiration and a $0.5 million expense for interest on unrecognized tax positions.

The effective tax rate for the three months ended June 30, 2020 was primarily impacted by the following items: (i) the remeasurement of a forecasted domestic loss at a higher tax rate due to carryback provisions as provided by the CARES Act, (ii) the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in India where we cannot benefit from those losses as required by ASC 740-270-30-36(a), and (iii) discrete items including a ~~$0.4~~$2.9 million benefit from the reversal of an unrecognized tax position due to statute of limitations expiration and $0.5 million expense for interest on unrecognized tax positions.

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. 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 judgments by management. Accordingly, we could record additional provisions or benefits for US federal, state, and foreign tax matters in future periods as new information becomes available.

Net income attributable to non-controlling interests, net of tax. Net income attributable to non-controlling interests, net of tax reflected an allocation of income of $1.3 million and $3.6 million generated by our less than wholly owned subsidiaries for the three months ended June 30, 2021 and 2020, respectively, a decrease of $2.3 million, or 64.9%. Changes in net income attributable to non-controlling interests, net of tax, within our segments, consisted of the following:

●

International Telecom. Net income attributable to non-controlling interests, net of tax decreased by $0.7 million, or 28.0%, to $1.8 million from $2.5 million for the three months ended June 30, 2021 and 2020, respectively, primarily as a result of an increase in our ownership in certain less than wholly owned profitable subsidiaries as well as a decrease in profitability in other less than wholly owned subsidiaries.

●

US Telecom. Net income attributable to non-controlling interests, net of tax decreased by $1.7 million to an allocation of losses of $0.6 million from an allocation of income of $1.1 million for the three months ended June 30, 2021 and 2020, respectively, primarily as a result of decreased profitability at certain less than wholly owned subsidiaries within our US Mobility retail operations and an allocation of certain costs associated with the Alaska Transaction to the minority shareholder of that subsidiary.

Net income attributable to ATN International, Inc. stockholders. Net income attributable to ATN International, Inc. stockholders was $2.0 million and $4.7 million for the three months ended June 30, 2021 and 2020, respectively.

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On a per diluted share basis, net income (loss) was $0.13 and $0.30 per diluted share for the three months ended June 30, 2021 and 2020, respectively.

Selected Segment Financial Information

The following represents selected segment information for the six months ended June 30, 2021 and 2020 (in thousands):



For the Six Months Ended June 30, 2021

	International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	44,575	$	5,267	$	—	$	—	$	49,842
Fixed		117,873		12,248		—		—		130,121
Carrier Services		4,406		38,774		—		—		43,180
Other		456		—		—		—		456
Total Communication Services Revenue		167,310		56,289		—		—		223,599
Other
Renewable Energy		—		—		418		—		418
Managed Services		2,726		—		—		—		2,726
Construction		—		21,632		—		—		21,632
Total Other Revenue		2,726		21,632		418		—		24,776
Total Revenue		170,036		77,921		418		—		248,375

Operating income (loss)		27,786		(1,090)		(1,433)		(19,009)		6,254


For the Six Months Ended June 30, 2020

	International		US		Renewable		Corporate and
	Telecom		Telecom		Energy		Other (1)		Consolidated
Revenue
Communication Services
Mobility	$	39,198	$	4,770	$	—	$	—	$	43,968
Fixed		115,056		9,762		—		—		124,818
Carrier Services		3,541		40,927		—		—		44,468
Other		891		—		—		—		891
Total Communication Services Revenue		158,686		55,459		—		—		214,145
Other
Renewable Energy		—		—		2,196		—		2,196
Managed Services		3,663		—		—		—		3,663
Total Other Revenue		3,663		—		2,196		—		5,859
Total Revenue		162,349		55,459		2,196		—		220,004

Operating income (loss)		28,005		4,019		(1,077)		(16,623)		14,324

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

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

International Telecom. Revenues within our International Telecom segment increased $7.7 million, or 4.7%, to $170.0 million from $162.3 million for the six months ended June 30, 2021 and 2020, respectively, as a result of an increase in Fixed and Mobility subscribers and average revenue per subscriber within all of our international markets. In addition, certain international markets recognized an increase in Carrier Services revenue as a result of increased tourism as certain COVID-19 related travel and stay-at-home restrictions were lifted during the latter half of the six months ended June 30, 2021.

Operating expenses within our International Telecom segment increased by $7.9 million, or 5.9%, to $142.2 million from $134.3 million for the six months ended June 30, 2021 and 2020, respectively. The increase was primarily the result of an increase in direct costs incurred in connection with the increase in this segment’s revenue, increased legal and regulatory costs and certain costs being incurred during the six months ended June 30, 2021 that were not incurred during the six months ended June 30, 2020 as a result of the impact of COVID-19 restrictions.

As a result, our International Telecom segment’s operating income decreased $0.2 million, ~~expense~~or 0.7%, to ~~record~~$27.8 million from $28.0 million.

US Telecom. Revenue within our US Telecom segment increased by $22.4 million, or 40.4%, to $77.9 million from $55.5 million for the six months ended June 30, 2021 and 2020, respectively, primarily as a ~~valuation allowance against~~result of an ~~investment write-off which cannot be currently benefitted~~increase in construction revenue from the FirstNet Transaction and an increase in Fixed revenues, including broadband services, partially offset by reductions in Carrier Services revenue.

Operating expenses within our US Telecom segment increased by $27.5 million, or 53.4%, to $79.0 million from $51.5 million for ~~tax,~~the six months ended June 30, 2021 and 2020, respectively, as a ~~$0.6 benefit (net) related to~~result of construction costs and other expenses being incurred in connection with the ~~utilization of losses at a higher tax rate as allowed by~~FirstNet Transaction, costs associated with the CARES ~~Act.~~Act-funded build-out of rural broadband operations, costs to further fund our private network business and certain costs being incurred during the six months ended June 30, 2021 that were not incurred during the six months ended June 30, 2020 as a result of the impact of COVID-19 restrictions. The three month period ended June 30, 2021 also includes additional legal and regulatory costs.

As a result of the above, our US Telecom segment’s operating income decreased $5.1 million to a loss of $1.1 million from income of $4.0 million for the six months ended June 30, 2021 and 2020, respectively.

Renewable Energy. Through the completion of the Vibrant Transaction on January 27, 2021, we distributed generation solar power to commercial and industrial customers under the Vibrant name in India. Accordingly, we did not generate revenue or incur operating expenses within our Renewable Energy segment subsequent to that date. For the six months ended June 30, 2020, we generated revenue, incurred operating expenses and reported an operating loss of $2.2 million, $3.3 million and $1.1 million, respectively.

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The following represents a year over year discussion and analysis of our results of operations for the six months ended June 30, 2021 and 2020 (in thousands):


	Six Months Ended				Amount of		Percent
	June 30,				Increase		Increase
	2021		2020		(Decrease)		(Decrease)

REVENUE:
Communication services	$	223,599	$	214,145	$	9,454	4.4	%
Other		24,776		5,859		18,917	322.9
Total revenue		248,375		220,004		28,371	12.9
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):
Cost of services		97,986		92,439		5,547	6.0
Cost of construction revenue		22,142		—		22,142	100.0
Selling, general and administrative		78,344		68,552		9,792	14.3
Transaction-related charges		2,126		116		2,010	1,732.8
Depreciation and amortization		40,662		44,509		(3,847)	(8.6)
Loss on disposition of long-lived assets		861		64		797	1,245.3
Total operating expenses		242,121		205,680		36,441	17.7
Income from operations		6,254		14,324		(8,070)	(56.3)
OTHER INCOME (EXPENSE):
Interest income		40		309		(269)	(87.1)
Interest expense		(2,285)		(2,730)		445	(16.3)
Other expense		2,309		(2,310)		4,619	(200.0)
Other expense, net		64		(4,731)		4,795	(101.4)
INCOME BEFORE INCOME TAXES		6,318		9,593		(3,275)	(34.1)
Income tax expense		(1,247)		(1,149)		(98)	8.5
NET INCOME		7,565		10,742		(3,177)	(29.6)
Net income attributable to non-controlling interests, net of tax:		(2,842)		(7,009)		4,167	(59.5)
NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS	$	4,723	$	3,733	$	990	26.5	%

Communications services revenue

Mobility revenue. Mobility revenue increased by $5.8 million, or 13.2%, to $49.8 million for the six months ended June 30, 2021 from $44.0 million for the six months ended June 30, 2020. The increase in Mobility revenue, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, Mobility revenue increased by $5.4 million, or 13.8%, to $44.6 million for the six months ended June 30, 2021 from $39.2 million for the six months ended June 30, 2020 as a result of an increase in subscribers and the average revenue per subscriber due to the impact that COVID-19 related travel and stay-at-home restrictions had during the six months ended June 30, 2020.

●

US Telecom. Mobility revenue within our US Telecom segment increased by $0.5 million, or 10.4%, to $5.3 million from $4.8 million for the six months ended June 30, 2021 and 2020 as a result of an increase in retail subscribers and revenue generated by our early stage private network business. These increases were offset by a decrease in the average revenue per subscriber.

Fixed communications revenue. Fixed communications revenue increased by $5.3 million, or 4.2%, to $130.1 million from $124.8 million for the six months ended June 30, 2021 and 2020, respectively. The increase in Fixed communications revenue, within our segments, consisted of the following:

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●

International Telecom. Within our International Telecom segment, Fixed communications revenue increased by $2.8 million, or 2.4%, to $117.9 million from $115.1 million, for the six months ended June 30, 2021 and 2020, respectively, primarily as a result of an increase in Fixed broadband services in order to enable remote working during the COVID-19 pandemic. This increase was partially offset by a decrease in revenue from certain enterprise customers, such as hotels, which continued to be impacted by the effects of COVID-19 related travel and stay-at-home restrictions.

●

US Telecom. Fixed communications revenue within our US Telecom segment increased by $2.4 million, or 24.5%, to $12.2 million from $9.8 million for the six months ended June 30, 2021 and 2020, respectively. This increase was related to an increase in usage for both enterprise and residential subscribers to support remote working and better connectivity during the COVID-19 pandemic partially offset by a reduction in the average revenue per user.

Carrier Services revenue. Carrier Services revenue decreased by $1.3 million, or 2.9%, to $43.2 million from $44.5 million for the six months ended June 30, 2021 and 2020, respectively. The decrease, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, Carrier Services revenue increased by $0.9 million, or 25.7%, to $4.4 million from $3.5 million for the six months ended June 30, 2021 and 2020, respectively, as a result of increased roaming revenues due to increased tourism within most of our International Telecom markets.

●

US Telecom. Carrier Services revenue within our US Telecom segment decreased by $2.1 million, or 5.1%, to $38.8 million from $40.9 million, for the six months ended June 30, 2021 and 2020, respectively, primarily as a result of the 2020 restructuring of certain carrier contracts.

Other communications services revenue. Other communications services revenue includes miscellaneous services that the operations within our International Telecom segment provide to retail subscribers. Other communications services revenue decreased to $0.5 million from $0.9 million for the six months ended June 30, 2021 and 2020, respectively.

Other revenue

Renewable energy revenue. Renewable energy revenue decreased by $1.8 million to $0.4 million from $2.2 million for the six months ended June 30, 2021 and 2020, respectively, as a result of the impact of the Vibrant Transaction.

Managed Services revenue. Managed Services revenue decreased by $1.0 million, or 27.0%, to $2.7 million from $3.7 million for the six months ended June 30, 2021 and 2020, respectively, primarily as a result of the impact of COVID-19 which resulted in a decrease in equipment sales and consulting services.

Construction revenue. During the six months ended June 30, 2021, we recognized $21.6 million of construction revenue. As of June 30, 2021, 40% of the cell sites related to the FirstNet Agreement were complete with an expected and we expect that an additional 25% of the sites will be completed by the end of 2021. We expect the remaining sites to be completed during the first half of 2022.

Operating expenses

Cost of services. Cost of services are charges that we incur for voice and data transport circuits (in particular, the circuits between our Mobility sites and our switches), internet capacity, video programming costs, access fees we pay to terminate our calls, telecommunication spectrum fees and direct costs associated within our Managed Services and technology business. Cost of services also include expenses associated with developing, operating, upgrading and supporting our telecommunications networks, including the salaries and benefits paid to employees directly involved in

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the development and operation of those businesses, as well as bad debt reserves and the cost of handsets and customer resale equipment incurred by our retail businesses.

Cost of services increased by $5.5 million, or 6.0%, to $98.0 million from $92.4 million for the six months ended June 30, 2021 and 2020, respectively. The net increase in cost of services, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, cost of services increased by $3.1 million, or 4.8%, to $67.7million from $64.6 million, for the six months ended June 30, 2021 and 2020, respectively. This increase was primarily related to the increase in the demand for our products as well as expenses, such as facility and utility costs, incurred during the six months ended June 30, 2021 that were not incurred during the six months ended June 30, 2020 as a result of the impact of COVID-19.

●

US Telecom. Cost of services within our US Telecom segment increased by $3.1 million, or 11.2%, to $30.7 million from $27.6 million for the six months ended June 30, 2021 and 2020, respectively, as a result of an increase in data transport costs in connection with the FirstNet Transaction partially offset by decreases in our wholesale long-distance voice services businesses.

Cost of construction revenue. Cost of construction revenue includes the expenses incurred in connection with the construction of and the delivery to AT&T of cell sites in accordance with our FirstNet Agreement and was $22.1 million during the six months ended June 30, 2021. As of June 30, 2021, 40% of the cell sites related to the FirstNet Agreement were completed, and we expect that an additional 25% of sites will be completed by the end of 2021. We expect the remaining sites to be completed during the first half of 2022.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $9.8 million, or 14.3%, to $78.3 million from $68.6 million for the six months ended June 30, 2021 and 2020, respectively. The net increase in selling, general and administrative expenses, within our segments, consisted of the following:

●

International Telecom. Within our International Telecom segment, our selling, general and administrative expenses increased by $5.7 million, or 13.8%, to $47.0 million from $41.3 million for the six months ended June 30, 2021 and 2020, respectively. This increase was incurred within certain international markets primarily as a result of an increase in legal and regulatory related fees, including a $1.1 million accrual for certain legal matters, as well as expenses incurred during the six months ended June 30, 2021 that were not incurred during the six months ended June 30, 2020 as a result of the impact of COVID-19.

●

US Telecom. Selling, general and administrative expenses increased within our US Telecom segment by $3.6 million, or 29.3%, to $15.9 million from $12.3 million, for the six months ended June 30, 2021 and 2020, respectively, primarily as a result of increased spending within our expanding early stage private network business and within our Mobility retail operations.

●

Renewable Energy. Selling, general and administrative expenses within our Renewable Energy segment decreased $1.5 million to $0.4 million from $1.9 million for the six months ended June 30, 2021 and 2020, respectively, as a result of the Vibrant Transaction.

●

Corporate Overhead. Selling, general and administrative expenses within our corporate overhead increased by $2.0 million, or 15.4%, to $15.0 million from $13.1 million, for the six months ended June 30, 2021 and 2020, respectively, primarily related to increased non-cash equity compensation expense from the timing of the underlying annual grants, an increase in legal expenses and integration costs associated with the completion of the Alaska Transaction that were incurred during 2021.

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We incurred $2.1 million and a nominal amount of transaction-related charges during the six months ended June 30, 2021 and 2020, respectively. The transaction-related charges incurred during 2021 were primarily related to the Alaska Transaction.

Depreciation and amortization expenses. Depreciation and amortization expenses decreased by $3.8 million, or 8.5%, to $40.7 million from $44.5 million for the six months ended June 30, 2021 and 2020, respectively. The net decrease in depreciation and amortization expenses, within our segments, consisted primarily of the following:

●

International Telecom. Depreciation and amortization expenses decreased within our International Telecom segment by $0.8 million, or 2.8%, to $27.6 million from $28.4 million, for the six months ended June 30, 2021 and 2020, respectively. This decrease was a result of certain assets becoming fully depreciated in recent periods partially offset by recent upgrades and expansions to this segment’s network assets.

●

US Telecom. Depreciation and amortization expenses decreased within our US Telecom segment by $1.3 million, or 11.2%, to $10.3 million from $11.6 million, for the six months ended June 30, 2021 and 2020, respectively, primarily as a result of certain assets becoming fully depreciated in recent periods partially offset by capital expenditures within our US Mobility and early-stage private network business.

●

Renewable Energy. Depreciation and amortization expenses within our Renewable Energy segment decreased by $0.9 million to $0.2 million from $1.1 million for the six months ended June 30, 2021 and 2020, respectively, as a result of the Vibrant Transaction.

●

Corporate Overhead. Depreciation and amortization expenses decreased within our corporate overhead by $0.8 million, or 23.5%, to $2.6 million from $3.4 million, for the six months ended June 30, 2021 and 2020, respectively, primarily as a result of certain assets becoming fully depreciated in recent periods.

Loss on disposition of long-lived assets. During the six months ended June 30, 2021, we recorded a loss on the disposition of long-lived assets of $0.9 million, primarily related to the Vibrant Transaction.

During the six months ended June 30, 2020, we recorded a loss on the disposition of long-lived assets of $0.1 million primarily as a result of the disposal of miscellaneous assets within our US mobility and renewable energy operations.

Interest income. Interest income decreased to a nominal amount from $0.3 million for the six months ended June 30, 2021 and 2020, respectively, as a result of a reduction in the balances of our cash, cash equivalents and short-term investments as well as our return on those balances.

Interest expense. Interest expense decreased to $2.3 million from $2.7 million for the six months ended June 30, 2021 and 2020, respectively, as additional interest expense being incurred for new borrowings under the Receivables Credit Facility was offset by reduced debt balances within our International Telecommunications segment.

Other income (expense). Other income (expense) represents miscellaneous non-operational income earned and expenses incurred.

For the six months ended June 30, 2021, other income (expense) was income of $2.3 million which was primarily related to gains from our non-controlling investments partially offset by a net loss on foreign currency transactions.

For the six months ended June 30, 2020, other expenses was an expense of $2.3 million which was primarily related to $1.4 million of losses related to non-controlling investments and $1.3 million related to net losses on foreign currency transactions. These expenses were partially offset by $0.4 million of income related to certain employee benefit plans.

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Income taxes.Our effective tax rate for the six months ended June 30, 2021 and 2020 was (19.7%) and (12.0%) respectively.

The effective tax rate for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2021 was primarily impacted by the following items: (i) the mix of income generated among the jurisdictions in which we operate and (ii) discrete items including a $3.4 million benefit from the reversal of an unrecognized tax position due to a statute of limitations expiration and a $1.0 million expense for interest on unrecognized tax positions.

The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the following items: (i) the remeasurement of a forecasted domestic loss at a higher tax rate due to carryback provisions as provided by the CARES Act, (ii) the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in ~~the US Virgin Islands and~~ India where we cannot benefit from those losses as required by ASC 740-270-30-36(a), ~~in addition~~and (iii) discrete items including a $2.9 million benefit from the reversal of an unrecognized tax position due to ~~the following discrete items: (i)~~ a ~~$1.3~~statute of limitations expiration, a $1.0 million ~~deferred tax benefit related to an investment tax credit, and (ii) a $0.5 million net~~expense for interest ~~expense~~ on unrecognized tax ~~positions.~~positions, a $0.4 million expense to record a valuation allowance against an investment write-down which cannot be benefitted for tax purposes, and a $0.3 million benefit (net) related to the remeasurement of existing losses and temporary differences at a higher tax rate due to carryback provisions as provided by the CARES Act.

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. 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 applications 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 US federal, state, and foreign tax matters in future periods as new information becomes available.

Net income attributable to non-controlling interests, net of tax. Net income attributable to non-controlling interests, net of tax reflected an allocation of $3.5 million of income generated by our less than wholly owned subsidiaries for each of the three months ended September 30, 2020 and 2019. Changes in net income attributable to non-controlling interests, net of tax, within our segments, consisted of the following:

●

~~International Telecom~~. Net income attributable to non-controlling interests, net of tax increased by $0.6 million, or 27.3%, to $2.8 million from $2.2 million for the three months ended September 30, 2020 and 2019, respectively, primarily as a result of an increase in profitability at our less than wholly owned subsidiaries partially offset by the increase in our ownership in some of those subsidiaries.

●

~~US Telecom~~. Net income attributable to non-controlling interests, net of tax decreased by $0.5 million, or 38.5%, to $0.8 million from $1.3 million for the three months ended September 30, 2020 and 2019, respectively, primarily as a result of decreased profitability at certain less than wholly owned subsidiaries within our US mobility retail operations.

~~Net income attributable to ATN International, Inc. stockholders.~~ ~~Net income attributable to ATN International, Inc. stockholders was $2.7~~$2.8 million and ~~$1.4 million for the three months ended September 30, 2020 and 2019, respectively.~~

~~On a per diluted share basis, net income was $0.17 and $0.09 per diluted share for the three months ended September 30, 2020 and 2019, respectively.~~

~~Selected Segment Financial Information~~

~~The following represents selected segment information for the nine months ended September 30, 2020 and 2019 (in thousands):~~

For the Nine Months Ended September 30, 2020











International

US

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
Revenue

Communication Services

Mobility

$
60,604

$
7,203

$
—

$
—

$
67,807
Fixed

172,420

15,181

—

—

187,601
Carrier Services

5,392

60,779

—

—

66,171
Other

1,286

—

—

—

1,286
Total Communication Services Revenue

239,702

83,163

—

—

322,865
Other

Renewable Energy

—

—

3,373

—

3,373
Managed Services

5,111

—

—

—

5,111
Construction

—

394

—

—

394
Total Other Revenue

5,111

394

3,373

—

8,878
Total Revenue

244,813

83,557

3,373

—

331,743

Operating income (loss)

44,119

6,241

(1,175)

(25,306)

23,879

For the Nine Months Ended September 30, 2019











International

US

Renewable

Corporate and

Telecom

Telecom

Energy

Other (1)

Consolidated
Revenue

Communication Services

Mobility

$
62,766

$
8,095

$
—

$
—

$
70,861
Fixed

166,925

9,885

—

—

176,810
Carrier Services

6,970

62,820

—

—

69,790
Other

1,012

—

—

—

1,012
Total Communication Services Revenue

237,673

80,800

—

—

318,473
Other

��
Renewable Energy

—

—

4,376

—

4,376
Managed Services

3,788

—

—

—

3,788
Total Other Revenue

3,788

—

4,376

—

8,164
Total Revenue

241,461

80,800

4,376

—

326,637

Operating income (loss)

35,802

5,927

(750)

(25,862)

15,117

~~(1)~~

~~Reconciling items refer to corporate overhead costs and consolidating adjustments~~

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

~~International Telecom.~~ Revenues within our International Telecom segment increased $3.3 million, or 1.4%, to $244.8 million from $241.5 million for the nine months ended September 30, 2020 and 2019, respectively, as a result of an increase in broadband services in many of our international telecom markets which more than offset the impact of the

~~reduction in carrier services and mobility services (including handset sale revenues) due to COVID-19 related travel and stay-at-home restrictions.~~

Operating expenses within our International Telecom segment decreased by $5.0 million, or 2.4%, to $200.7 million from $205.7 million for the nine months ended September 30, 2020 and 2019, respectively. The decrease was primarily the result of the impact of COVID-19 and other cost reduction measures which reduced roaming, advertising, contract labor and facility costs throughout all of our markets within this segment.

As a result, our International Telecom segment’s operating income increased $8.3 million, or 23.2%, to $44.1 million from $35.8 million for the nine months ended September 30, 2020 and 2019, respectively.

~~US Telecom~~. Revenue within our US Telecom segment increased by $2.8 million, or 3.5%, to $83.6 million from $80.8 million for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of an increase in fixed revenues including broadband services and funding from the Connect America Fund Phase II program as well as construction revenue from the FirstNet Transaction.

Operating expenses within our US Telecom segment increased $2.5 million, or 3.3%, to $77.4 million from $74.9 million for the nine months ended September 30, 2020 and 2019, respectively, as a result of additional expenses being incurred in connection with the FirstNet Transaction partially offset by the impact of COVID-19.

As a result of the above, our US Telecom segment’s operating income increased $0.3 million, or 5.1%, to $6.2 million from $5.9 million for the nine months ended September 30, 2020 and 2019, respectively.

~~Renewable Energy.~~ Revenue within our Renewable Energy segment decreased $1.0 million, or 22.7%, to $3.4 million from $4.4 million for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of a decrease in production as a result of the impact of COVID-19.

Operating expenses within our Renewable Energy segment decreased by $0.6 million, or 11.5%, to $4.6 million from $5.2 million for the nine months ended September 30, 2020 and 2019 due to increased site maintenance expenses.

As a result of the above, our Renewable Energy segment’s operating loss increased by $0.4 million, or 50.0%, to a loss of $1.2 million compared to a loss of $0.8 million for the nine months ended September 30, 2020 and 2019, respectively.

~~The following represents a year over year discussion and analysis of our results of operations for the nine months ended September 30, 2020 and 2019 (in thousands):~~

Nine Months Ended

Amount of

Percent

September 30,

Increase

Increase

2020

2019

(Decrease)

(Decrease)



REVENUE:











Communication services

$
322,865

$
318,473

$
4,392

1.4
%
Other

8,878

8,164

714

8.7

Total revenue

331,743

326,637

5,106

1.6

OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):

Termination and access fees

83,562

83,440

122

0.1

Construction costs

390

—

390

100.0

Engineering and operations

53,983

58,234

(4,251)

(7.3)

Sales, marketing and customer services

28,220

29,048

(828)

(2.9)

General and administrative

75,413

75,518

(105)

(0.1)

Transaction-related charges

147

89

58

65.2

Depreciation and amortization

66,089

64,870

1,219

1.9

Loss on disposition of long-lived assets

60

321

(261)

(81.3)

Total operating expenses

307,864

311,520

(3,656)

(1.2)

Income from operations

23,879

15,117

8,762

58.0

OTHER INCOME (EXPENSE):

Interest income

427

1,860

(1,433)

(77.0)

Interest expense

(4,091)

(3,843)

(248)

(6.5)

Other expense

(4,341)

(2,755)

(1,586)

(57.6)

Other expense, net

(8,005)

(4,738)

(3,267)

(69.0)

INCOME BEFORE INCOME TAXES

15,874

10,379

5,495

52.9

Income tax expense

(1,057)

2,774

(3,831)

(138.1)

NET INCOME

16,931

7,605

9,326

122.6

Net income attributable to non-controlling interests, net of tax:

(10,538)

(8,657)

(1,881)

(21.7)

NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS

$
6,393

$
(1,052)

$
7,445

707.7
%

~~Communications services~~

~~Mobility revenue.~~ Mobility revenue decreased by $3.1 million, or 4.4%, to $67.8 million for the nine months ended September 30, 2020 from $70.9 million for the nine months ended September 30, 2019. The decrease in mobility revenue, within our segments, consisted of the following:

●

~~International Telecom~~. Within our International Telecom segment, mobility revenue decreased by $2.2 million, or 3.5%, to $60.6 million for the nine months ended September 30, 2020 from $62.8 million for the nine months ended September 30, 2019. The impact of COVID-19’s travel and stay-at-home restrictions resulted in a decrease in our voice and data services as well as our equipment sales.

●

~~US Telecom~~. Mobility revenue within our US Telecom segment decreased by $0.9 million, or 11.1%, to $7.2 million from $8.1 million for the nine months ended September 30, 2020 and 2019, respectively. This decrease is related to a decrease in subscribers within our retail mobility operations which was primarily related to the impact of COVID-19.

~~Fixed communications revenue.~~ Fixed communications revenue increased by $10.8 million, or 6.1%, to $187.6 million from $176.8 million for the nine months ended September 30, 2020 and 2019, respectively. The net increase in fixed communications revenue, within our segments, consisted of the following:

●

~~International Telecom~~. Within our International Telecom segment, fixed communications revenue increased by $5.5 million, or 3.3%, to $172.4 million from $166.9 million, for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of an increase in fixed broadband services in order to enable remote working and better connectivity during the COVID-19 pandemic. This increase was partially offset by a decrease in revenue from certain enterprise customers, such as hotels, which were impacted by the effects of COVID-19.

●

~~US Telecom~~. Fixed communications revenue within our US Telecom segment increased by $5.3 million, or 53.5%, to $15.2 million from $9.9 million for the nine months ended September 30, 2020 and 2019, respectively. This increase was related to an increase in usage to support remote working and better connectivity during the COVID-19 pandemic as well as an increase related to the Connect America Fund Phase II program award which began during the latter half of the second quarter of 2019 and an increase in subscribers.

~~Carrier Services revenue.~~ Carrier services revenue decreased by $3.6 million, or 5.2%, to $66.2 million from $69.8 million for the nine months ended September 30, 2020 and 2019, respectively. The decrease, within our segments, consisted of the following:

●

~~International Telecom~~~~. Within our International Telecom segment, carrier services revenue decreased by $1.6 million, or 22.9%, to $5.4 million from~~ $7.0 million for the nine months ended September 30, 2020 and 2019, respectively, as a result of decreased roaming revenues within most of our International Telecom markets as a result of the travel and stay-at-home restrictions implemented in response to COVID-19.

●

~~US Telecom~~. Carrier services revenue within our US Telecom segment decreased by $2.0 million, or 3.2%, to $60.8 million from $62.8 million, for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of increased revenues in connection with the FirstNet Transaction.

~~Other communications services revenue.~~ ~~Other communications services revenue increased to $1.3 million from $1.0 million for the nine months ended September 30, 2020 and 2019, respectively.~~

~~Other revenue~~

~~Renewable energy revenue.~~ ~~Renewable energy revenue decreased by $1.0 million, or 22.7%, to $3.4 million from $4.4 million for the nine months ended September 30, 2020 and 2019, respectively,~~ ~~primarily as a result of a decreases in production as a result of the impact of COVID-19.~~

~~Managed services revenue.~~ Managed services revenue increased by 1.3 million, or 34.2%, to $5.1 million from $3.8 million for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of an increase in consulting services and equipment sales.

~~Construction revenue.~~ ~~During the nine months ended September 30, 2020, we recognized $0.4 million of construction revenue in connection with the FirstNet Transaction.~~

~~Operating expenses~~

~~Termination and access fee expenses.~~Termination and access fees increased by $0.2 million, or 0.2%, to $83.6 million from $83.4 million for the nine months ended September 30, 2020 and 2019, respectively. The net increase in termination and access fees, within our segments, consisted of the following:

●

~~International Telecom.~~ Within our International Telecom segment, termination and access fees increased by $0.2 million, or 0.4%, to $54.2 million from $54.0 million, for the nine months ended September 30, 2020 and 2019, respectively. Increases within termination and access fees included the increase in bad debt expense within all of our international telecom markets. In addition, our US Virgin Islands operations incurred an increase in variable termination and access fees that were not incurred during 2019 as a result of the impact of

Hurricanes Irma and Maria. Our managed information technology services business also incurred an increase of termination and access fees as a result of an increase in the volume and cost of its equipment sales. Partially offsetting these increases was a decrease in the cost of retail equipment sales as many of our retail stores were closed during much of 2020 as a result of the impact of COVID-19.

●

~~US Telecom~~. Termination and access fees within our US Telecom segment decreased by $0.1 million, or 0.3%, to $29.1 million from $29.2 million for the nine months ended September 30, 2020 and 2019, respectively. This decrease was primarily a result of decreases in our wholesale long-distance voice services businesses partially offset by an increase in data transport costs in connection with the FirstNet Transaction.

●

~~Renewable Energy~~. Termination and access fees within our Renewable Energy segment decreased $0.3 million, or 75.0%, to $0.1 million from $0.4 million for the nine months ended September 30, 2020 and 2019, respectively.

~~Construction costs.~~ Construction costs, all of which are incurred within our US Telecom segment, were $0.4 million during the nine months ended September 30, 2020 and were incurred in connection with the FirstNet Transaction.

~~Engineering and operations expenses.~~ Engineering and operations expenses decreased by $4.2 million, or 7.3%, to $54.0 million from $58.2 million for the nine months ended September 30, 2020 and 2019, respectively. The net decrease in engineering and operations expenses, within our segments, consisted of the following:

●

~~International Telecom~~. Within our International Telecom segment, engineering and operations expenses decreased by $4.9 million, or 10.5%, to $41.9 million from $46.8 million, for the nine months ended September 30, 2020 and 2019, respectively. This decrease was recognized within all of our international markets as a result of the impact of the COVID-19 pandemic which caused a reduction in contract labor, site repairs and maintenance, travel and facility costs, such as utilities.

●

~~US Telecom~~. Engineering and operations expenses increased within our US Telecom segment by $0.9 million, or 8.3%, to $11.8 million from $10.9 million, for the nine months ended September 30, 2020 and 2019, respectively, primarily in order to support the construction phase of the FirstNet Transaction and our expanding in-building mobility business. This increase was partially offset by the impact of the COVID-19 pandemic which caused a reduction in contract labor, site repairs and maintenance, travel and facility costs, such as utilities.

●

~~Corporate Overhead~~. Engineering and operations expenses within our corporate overhead decreased by $0.3 million, or 50.0%, to $0.3 million from $0.6 million for the nine months ended September 30, 2020 and 2019, respectively.

~~Sales and marketing expenses.~~ Sales and marketing expenses decreased by $0.8 million, or 2.9%, to $28.2 million from $29.0 million for the nine months ended September 30, 2020 and 2019, respectively. The net decrease in net sales and marketing expenses, within our segments, consisted of the following:

●

~~International Telecom~~. Within our International Telecom segment, our sales and marketing expenses decreased by $2.6 million, or 10.4%, to $22.4 million from $25.0 million for the nine months ended September 30, 2020 and 2019, respectively. This decrease was incurred within all of our international markets primarily as a result of a reduction in advertising and promotions and the impact of COVID-19 restrictions.

●

~~US Telecom~~. Sales and marketing expenses increased within our US Telecom segment by $1.7 million, or 41.5%, to $5.8 million from $4.1 million, for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of increased spending in our retail business within our US mobility operations and within our expanding in-building mobility business. These increases were partially offset by the impact of COVID-19.

~~General and administrative expenses.~~General and administrative expenses decreased by $0.1 million, or 0.1%, to $75.4 million from $75.5 million for the nine months ended September 30, 2020 and 2019, respectively. The net decrease in general and administrative expenses, within our segments, consisted of the following:

●

~~International Telecom~~. General and administrative expenses increased within our International Telecom segment by $0.8 million, or 2.0%, to $40.0 million from $39.2 million, for the nine months ended September 30, 2020 and 2019, respectively. The increase was the result of increased expenditures in information technology to further enhance our network security partially offset by the impact of COVID-19 related restrictions which resulted in a reduction in travel and facility costs, such as utilities.

●

~~US Telecom~~. General and administrative expenses decreased by $0.6 million, or 4.4%, to $13.0 million from $13.6 million for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of certain cost reduction measures within our US mobility business and the impact of COVID-19 related restrictions on travel partially offset by an increase within our in-building mobility network business to support its expanding operations.

●

~~Renewable Energy~~. General and administrative expenses within our Renewable Energy segment increased by $0.4 million, or 17.4%, to $2.7 million from $2.3 million for the nine months ended September 30, 2020 and 2019, respectively, as a result of the recent expansion of operations partially offset by the impact of COVID-19 related restrictions on travel.

●

~~Corporate Overhead~~. General and administrative expenses within our corporate overhead decreased by $0.7 million, or 3.4%, to $19.7 million from $20.4 million, for the nine months ended September 30, 2020 and 2019, respectively, primarily related to certain cost reduction measures and the impact of COVID-19, partially offset by an increase in information technology expenditures to further enhance our network security.

~~Transaction-related charges.~~ ~~We incurred $0.1 million of transaction-related charges during each of the nine months ended September 30, 2020 and 2019.~~

~~Depreciation and amortization expenses.~~ Depreciation and amortization expenses increased by $1.2 million, or 1.9%, to $66.1 million from $64.9 million for the nine months ended September 30, 2020 and 2019, respectively. The net increase in depreciation and amortization expenses, within our segments, consisted primarily of the following:

●

~~International Telecom~~. Depreciation and amortization expenses increased within our International Telecom segment by $1.4 million, or 3.4%, to $42.1 million from $40.7 million, for the nine months ended September 30, 2020 and 2019, respectively. This increase was recognized throughout most of our international markets as a result of recent upgrades and expansions to this segment’s network assets including resiliency enhancements in the US Virgin Islands which were impacted by Hurricanes Irma and Maria in 2017.

●

~~US Telecom~~. Depreciation and amortization expenses increased within our US Telecom segment by $0.5 million, or 3.0%, to $17.4 million from $16.9 million, for the nine months ended September 30, 2020 and 2019, respectively, primarily as a result of capital expenditures within our US mobility businesses.

●

~~Renewable Energy~~. Depreciation and amortization expenses within our Renewable Energy segment decreased $0.7 million, or 30.4%, to $1.6 million from $2.3 million for the nine months ended September 30, 2020 and 2019, respectively, as a result of certain assets becoming fully depreciated in recent periods.

●

~~Corporate Overhead~~~~. Depreciation and amortization expenses remained consistent at $5.0 million for the nine months ended September 30, 2020 and 2019, respectively.~~

~~Loss on disposition of long-lived assets~~. During the nine months ended September 30, 2020 and 2019, we recorded a loss on the disposition of long-lived assets of $0.1 million and $0.3 million, respectively, primarily as a result of the disposal of miscellaneous assets within our US mobility and renewable energy operations.

~~Interest income.~~ Interest income decreased $1.5 million to $0.4 million from $1.9 million for the nine months ended September 30, 2020 and 2019, respectively, as a result of a reduction in the balances of our cash, cash equivalents and short-term investments as well as our return on those balances.

~~Interest expense.~~ Interest expense increased by $0.3 million, or 6.5%, to $4.1 million from $3.8 million for the nine months ended September 30, 2020 and September 30, 2019, respectively, primarily as a result of the amortization of debt issuance costs related to the Receivables Credit Facility.

~~Other expenses.~~For the nine months ended September 30, 2020, other expenses was $4.3 million which was primarily related to $3.4 million of losses related to non-controlling investments and $1.2 million relating to net losses on foreign currency transactions.

For the nine months ended September 30, 2019, other expense was $2.8 million which was primarily related to a $2.1 million write down of a non-controlling equity investment and $0.8 million relating to a net loss on foreign currency transactions.

~~Income taxes.~~~~Our effective tax rate for the nine months ended September 30, 2020 and 2019 was (6.7%) and 26.7%, respectively.~~

The effective tax rate for the nine months ended September 30, 2020 was primarily impacted by the following items: (i) the remeasurement of a forecasted domestic loss at a higher tax rate due to carryback provisions as provided by the CARES Act, (ii) the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in India where we cannot benefit from those losses as required by ASC 740-270-30-36(a) and, (iii) discrete items including a $2.9 million benefit from the reversal of an unrecognized tax position due to statute expiration, a $1.4 million expense for interest on unrecognized tax positions, a $0.6 million expense to record a valuation allowance against investment write-downs which cannot be benefitted for tax purposes, and a $1.0 million benefit (net) related to the utilization of losses at a higher rate as allowed by the CARES Act.

The effective tax rate for the nine months ended September 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in the US Virgin Islands and India where we cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) a $1.3 million deferred tax benefit related to an investment tax credit, and (ii) a $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure.

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. 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 applications 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 US federal, state, and foreign tax matters in future periods as new information becomes available.

~~Net income attributable to non-controlling interests, net of tax.~~~~Net income attributable to non-controlling interests, net of tax reflected an allocation of $10.5 million and $8.7~~ million of income generated by our less than wholly owned subsidiaries for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively, ~~an increase~~a decrease of ~~$1.9 million,~~$4.2 million, or ~~21.7%~~59.5%. Changes in net income attributable to non-controlling interests, net of tax, within our segments, consisted of the following:

●

International Telecom. Net income attributable to non-controlling interests, net of tax ~~increased~~decreased by ~~$1.0~~$1.5 million, or ~~14.7%~~30.0%, to ~~$7.8~~$3.5 million from ~~$6.8~~$5.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily as a result of an increase in ~~profitability at~~our ownership in certain less than wholly owned profitable subsidiaries ~~partially offset by an increase~~as well as a decrease in ~~our ownership~~profitability in ~~some of those~~other less than wholly owned subsidiaries.

●

US Telecom. Net income attributable to non-controlling interests, net of tax ~~increased~~decreased by ~~$1.0~~$2.0 million ~~or 52.6%,~~ to ~~$2.9~~$0.1 million from ~~$1.9~~$2.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily as a result of ~~increased~~decreased profitability at certain less than wholly owned subsidiaries within our US ~~mobility~~Mobility retail ~~operations.~~operations and an allocation of certain costs associated with the Alaska Transaction to the minority shareholder of that subsidiary.

Net income ~~(loss)~~ attributable to ATN International, Inc. stockholders. Net income ~~(loss)~~ attributable to ATN International, Inc. stockholders was ~~income of $6.4~~$4.7 million and ~~a loss of $1.1~~$3.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Table of Contents

On a per diluted share basis, net income ~~(loss)~~ was ~~income of $0.40~~$0.30 and ~~a loss of $0.07~~$0.23 per diluted share for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, 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 a discussion of ongoing proceedings, see Note 1314 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Tax Reform

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was signed into law on December 22, 2017, has resulted in significant changes to the US corporate income tax system and the US Virgin Islands mirror code which replaces “United States” with “US Virgin Islands” throughout the Internal Revenue Code. The Tax Act transitions international taxation from a worldwide system to a modified territorial system and includes two base erosion prevention measures on non-US earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to US taxation as global intangible low taxed income (“GILTI”), 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 but did not have an impact on us in the initial ~~year~~ or ~~2019.~~following years. Based on our forecasted income for ~~2020,~~2021, we are not currently projecting a GILTI inclusion. We do not expect we will be subject to BEAT and therefore have not included any tax impacts of BEAT in our consolidated financial statements for the quarter ended ~~September~~June 30, ~~2020.~~2021.

CARES Act

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. Certain provisions of the CARES Act impact our income tax provision computations.

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 financings. 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.

Total liquidity. As of June 30, 2021, we had approximately $96.0 million in cash, cash equivalents and restricted cash. Of this amount, $40.1 million was held by our foreign subsidiaries and is indefinitely invested outside the United States. In addition, we had approximately $87.7 million of debt, net of unamortized deferred financing costs, as of June 30, 2021. How and when we deploy our balance sheet capacity will figure prominently in our longer-term growth prospects and stockholder returns.

Uses of Cash

Acquisitions and investments. ~~Historically, we~~We have historically funded our acquisitions with a combination of cash-on-hand, borrowings under our credit facilities as well as equity investor and seller financings.

Alaska Transaction. On July 22, 2021, Alaska Communications entered into a new debt financing in connection with the Alaska Transaction. See Acquisition of Alaska Communications System Group, Inc.

We continue to explore opportunities to expand our telecommunications ~~and our international renewable energy businesses~~business or acquire new businesses and telecommunications licenses in the United States, the Caribbean and elsewhere. Such acquisitions may require

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~~elsewhere. Such acquisitions, including acquisitions~~Table of ~~renewable energy assets, may require~~ Contents

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, 2020, we had approximately $136.2 million in cash, cash equivalents and restricted cash. Of this amount, $61.0 million was held by our foreign subsidiaries and is indefinitely invested outside the United States. In addition, we had approximately $83.7 million of debt, net of unamortized deferred financing costs, as of September 30, 2020. How and when we deploy our balance sheet capacity will figure prominently in our longer-term growth prospects and stockholder returns.

Cash used in investing activities. Cash used in investing activities was ~~$62.0~~$25.3 million and ~~$62.7~~$54.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The net decrease in cash used for investing activities of ~~$0.7~~$29.4 million was primarily related to $18.6 million and $3.3 million in cash received during the six months ended June 30, 2021 from the Vibrant Transaction and government grants, respectively, partially offset by increases in cash used for capital expenditures and strategic investments of $10.0 million and $2.5 million, respectively. In addition, the six months ended June 30, 2020 ~~cash usage of $20.4~~includes $20.0 million for the acquisition of telecommunications licenses, partially offset by a $19.5 million reduction in cash used for strategic investments, a $2.8 million reduction in cash used for short-term investments and a $1.2 million reduction in capital expenditures.licenses.

Cash used in financing activities. Cash used in financing activities was ~~$35.7~~$11.2 million and ~~$20.7~~$22.0 million during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively. The ~~increase~~decrease in cash used for financing activities of ~~$15.0~~$10.8 million was primarily related to ~~a $0.7 million increase in the distributions made to minority shareholders, a $7.4 million increase in~~cash received for borrowings and cash used for principal repayments under the Receivables Credit Facility of $17.6 million and $0.4 million, respectively, within the six months ended June 30, 2021. Cash used for debt issuance costs and for distributions to ~~acquire~~ non-controlling interests ~~in our less than wholly owned subsidiaries~~each declined by $1.1 million during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 and ~~a $6.4 million increase in~~ cash used for the repurchase of our common stock under the 2016 Repurchase ~~Plan.~~Plan (as defined below) decreased by $0.2 million. Partially offsetting these amounts was an $8.8 million increase in cash used to acquire non-controlling interests in One Communications (our subsidiary in Bermuda and the Cayman Islands.

Working Capital. Historically, we have internally funded our working capital needs. Pursuant to the FirstNet Agreement, ~~which we entered into during July 2019,~~ AT&T has the option to repay construction costs, with interest, over an ~~eight year~~eight-year period. To fund the working capital needs created by AT&T’s option to extend its payment terms, we completed the Receivables Credit Facility, as discussed below, on March 26, 2020.

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

For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we spent approximately ~~$50.7~~$41.9 million and ~~$49.5~~$32.0 million, respectively, on capital expenditures. The following notes our capital expenditures, by operating segment, for these periods (in thousands):


	Capital Expenditures										Capital Expenditures

		International		US		Renewable		Corporate and				International		US		Renewable		Corporate and
Nine months ended September 30,		Telecom		Telecom		Energy		Other (1)		Consolidated
Six months ended June 30,												Telecom		Telecom		Energy		Other (1)		Consolidated
2021											$	21,843	$	18,792	$	—	$	1,297	$	41,932
2020	$	28,439	$	17,254	$	2,116	$	2,853	$	50,662		19,929		8,883		1,634		1,519		31,965
2019		8,533		33,159		2,183		5,611		49,486

(1)

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

We are continuing to invest in our telecommunication networks along with our operating and business support systems in many of our markets. Such investments include the upgrade and expansion of both our ~~mobility~~Mobility and ~~fixed~~Fixed telecommunications networks as well as our service delivery platforms. WeFor 2021, we expect ~~full year 2020~~International Telecom capital expenditures to be ~~lower than the originally forecasted amounts within the 2019 Annual Report on Form~~ ~~10-K as a result of the COVID-19 pandemic. We expect full year 2020 capital expenditures in International Telecom~~approximately $45 million to ~~be between $35 million and $40~~$55 million. In the US Telecom segment, we expect ~~full year 2020~~ capital expenditures to be approximately ~~$30~~$45 million ~~as we continue~~ to ~~build sites and backhaul to support the FirstNet Transaction.~~$50 million, excluding Alaska Communications Systems for 2021.

We expect to fund our current capital expenditures primarily from our current cash balances, ~~and~~ cash generated from operations ~~but may secure additional financing to support renewable energy capital expenditures in India.~~and our existing credit facilities including the Receivables Credit Facility.

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 ~~which~~and to date has been to indefinitely reinvest the

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undistributed earnings of our foreign subsidiaries. As we continue to reinvest our remaining foreign earnings, no additional provision for income taxes has been made on accumulated earnings of foreign subsidiaries.

Dividends. We use cash-on-hand to make dividend payments to our stockholders when declared by our Board of Directors. For the three months ended ~~September~~June 30, ~~2020,~~2021, our Board of Directors declared $2.7 million of dividends to our stockholders which includes a $0.17 per share dividend declared on ~~September 17, 2020~~June 10, 2021 and paid on ~~October~~July 9, ~~2020.~~2021. We have declared quarterly dividends for the last 8890 fiscal quarters.

Stock 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”). We repurchased ~~$4.1~~$1.7 million and ~~$6.6~~$2.2 million of our common stock under the 2016 Repurchase Plan during the three months and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. We repurchased ~~$0.2~~$0.8 million and $2.4 million of our common stock under the 2016 Repurchase Plan during the three months and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020, respectively. As of ~~September~~June 30, ~~2020,~~2021, we have ~~$30.9~~$28.7 million authorized and available for share repurchases under the 2016 Repurchase Plan.

Sources of Cash

~~Total liquidity.~~ As of September 30, 2020, we had approximately $136.2 million in cash, cash equivalents and restricted cash which represents a decrease of $26.2 million from the December 31, 2019 balance of $162.4 million. The decrease is primarily attributable to $50.7 million used for capital expenditures, $20.4 million used to acquire telecommunications licenses, $8.8 million to repurchase certain non-controlling ownership interests ,$8.2 million used for dividends paid on our common stock, $6.6 million used for the repurchase of our common stock as a part of the 2016 Repurchase Plan, $6.5 million used for distributions to our minority shareholders, $2.8 million used for strategic investments, $2.8 million used to repay principal on our debt, $1.7 million used for the repurchase of our common stock from employees in order to satisfy their tax obligations and $1.1 million used to complete the Receivables Credit Facility. These amounts were partially offset by cash provided by our operations of $71.6 million, which included $10.1 million used for construction costs associated with the FirstNet Agreement, and $12.0 million in tax refunds.

Cash provided by operations. Cash provided by operating activities was ~~$71.6~~$27.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to ~~$56.8~~$40.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The ~~increase~~decrease of $13.0 million was primarily related to a ~~$9.3 million~~decrease in operating income and an increase in ~~net income and~~working capital primarily as a ~~$4.5 million change in working capital.~~part of the FirstNet construction project.

Credit facility. On April 10, 2019, we entered into ~~the 2019 Credit Facility,~~a credit facility, with CoBank, ACB and a syndicate of other ~~lenders.~~lenders (the “2019 CoBank Credit Facility”). The 2019 CoBank Credit Facility provides for a $200 million revolving credit facility that includes (i) up to $75 million for standby or trade letters of credit and (ii) up to $10 million under a swingline sub-facility. Approximately $16.0 million of performance letters of credit have been issued and remain outstanding and undrawn as of ~~September~~June 30, ~~2020.~~2021. The 2019 CoBank Credit Facility matures on April 10, 2024.

Amounts borrowed under the 2019 CoBank Credit Facility bear interest at a rate equal to, at our option, either (i) the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging between 1.25% to 2.25% or (ii) a base rate plus an applicable margin ranging from 0.25% to 1.25%. Swingline loans 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~~ LIBOR for an interest period of one month and (y) ~~the~~ LIBOR for an interest period of one week; (ii) the Federal Funds Effective Rate (as defined in the 2019 CoBank Credit Facility) plus 0.50% per annum; and (iii) the Prime Rate (as defined in the 2019 CoBank Credit Facility). The applicable margin is determined based on the Total Net Leverage Ratio (as defined in the 2019 CoBank Credit Facility). Under the terms of the 2019 CoBank Credit Facility, we must also pay a fee ranging from 0.150% to 0.375% of the average daily unused portion of the 2019 CoBank Credit Facility over each calendar quarter.

leasebacks, transactions with affiliates and fundamental changes. Our investments in “unrestricted” subsidiaries and certain dividend payments to our stockholders are not limited unless the Total Net Leverage Ratio is equal to or greater than 1.75 to 1.0. The Total Net Leverage Ratio is measured each fiscal quarter and is required to be less than or equal to 2.75 to 1.0. In the event of a Qualifying Acquisition (as defined in the 2019 CoBank Credit Facility), the Total Net Leverage Ratio increases to 3.25 to 1.0 for the subsequent three fiscal quarters.

The 2019 CoBank Credit Facility also provides for the incurrence by us of incremental term loan facilities, when combined with increases to revolving loan commitments, in an aggregate amount not to exceed $200 million (the “Accordion”). Amounts borrowed under the Accordion are also subject to proforma compliance with a net leverage ratio financial covenant.

As of ~~September~~June 30, ~~2020,~~2021, we were in compliance with all of the financial covenants, had no outstanding borrowings and, net of the $16.0 million of outstanding performance letters of credit, ~~and~~ had $184.0 million of availability under the

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2019 CoBank Credit Facility. On July 20, 2021, and in connection with the Alaska Transaction, the Company drew $73.0 million from its 2019 CoBank Credit Facility (see Acquisition of Alaska Communications System Group, Inc.) and subsequently repaid $10.0 million of that amount.

Alaska Credit Facility

FirstNet Receivables Credit Facility

On March 26, 2020, Commnet Finance, a wholly owned subsidiary of Commnet Wireless, entered into receivables credit facility with the Company, Commnet Wireless, and CoBank, ACB (the “Receivables Credit Facility”).

The maturity date for each loan will be set by CoBank and will match the weighted average maturity of the certain receivables financed.

Interest on the loans accrues at a rate based on (i) ~~the~~ LIBOR plus 2.50%, (ii) a base rate plus 1.50% or (iii) a fixed annual interest rate to be quoted by ~~CoBank~~CoBank. If we select a variable interest rate option, we are required to enter an interest rate swap fixing the interest rate.

As of ~~September~~June 30, ~~2020,~~2021, we had no$17.2 million outstanding, ~~borrowings~~of which $2.3 million was current, and $57.4 million of availability under the Receivables Credit Facility.

We capitalized $0.9 million of fees associated with the Receivables Credit Facility which are being amortized over the life of the debt and $0.8 million were unamortized at June 30, 2021.

Viya Debt

We, and certain of our subsidiaries, have 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 to annual operating cash flow to 3.5 to 1.0 (the “Net Leverage Ratio”). This covenant is tested on an annual basis at the end of each fiscal year. Interest is paid quarterly at a fixed rate of 4.0% per annum 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 our Viya subsidiaries and is guaranteed by us. With RTFC’s consent, we funded the restoration of Viya’s network, following Hurricanes Irma and Maria in 2017, through an intercompany loan arrangement with a $75.0 million limit. We were not in compliance with the Net Leverage Ratio covenant of the Viya Debt agreement for the year ending December 31, ~~2019~~2020 and received a waiver from the RTFC on February ~~26, 2020.~~ 25, 2021.

We paid a fee of $0.9 million in 2016 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 is being amortized over the life of the loan.

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As of ~~September~~June 30, ~~2020,~~2021, $60.0 million of the Viya Debt remained outstanding and $0.5 million of the rate lock fee was unamortized.

One Communications Debt

We have an outstanding loan from HSBC Bank Bermuda Limited (the “One Communications Debt”) which is scheduled to mature on May 22, 2022 and bears interest at the one-month LIBOR plus a margin ranging between 2.5% to 2.75%, per annum paid quarterly.

The 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, tested annually as of and for the twelve months ended December 31st, 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 (as defined in the One Communications Debt agreement). We were in compliance with our covenants as of December 31, ~~2019~~

2020.

As a condition of the One Communications Debt, 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 term of the One Communications Debt. As such, we entered into an amortizing interest rate swap that has been designated as a cash flow hedge, which had an original notional amount of $11.0 million, has an interest rate of 1.874%, and expires in March 2022. As of ~~September~~June 30, ~~2020,~~2021, the swap had an unamortized notional amount of ~~$7.6~~$6.8 million.

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

As of ~~September~~June 30, ~~2020, $24.3~~2021, $11.6 million of the One Communications Debt was outstanding and $0.1 million of the capitalized fees remained 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 2019 CoBank 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 2019 CoBank Credit Facility contains a financial covenant that imposes a maximum ratio of indebtedness to EBITDA. As of ~~September~~June 30, ~~2020,~~2021, we were in compliance with all of the financial covenants of the 2019 CoBank 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 SEC requirements for the offering of securities. On May 12, 2020, we filed a “universal” shelf registration statement with the SEC, which automatically became effective upon filing. This filing registered potential future offerings of our securities.

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 US Dollars at the appropriate rates as of the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in 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. Monetary assets and

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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 within our income statement. During the three and six months ended ~~September~~June 30, ~~2020 and 2019,~~2021, we recorded ~~a nominal amount~~ $0.3 million and ~~$0.8~~$0.4 million, respectively, in losses on foreign currency transactions. During the ~~nine~~three and six months ended ~~September~~June 30, 2020, ~~and 2019,~~ we recorded ~~$1.2~~$0.3 million and ~~$1.1~~$1.3 million, respectively, ofin losses on foreign currency transactions. With the completion of the Vibrant Transaction, we have limited exposure to the Indian Rupee. 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 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 (“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 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.

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 US Dollars at the appropriate rates as of the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in 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.

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 our income statement.

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

Interest Rate Sensitivity. As of ~~September~~June 30, ~~2020,~~2021, we had ~~$16.8~~$4.8 million of variable rate debt outstanding, which 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 2019 CoBank 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~~June 30, ~~2020.~~2021. 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 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

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cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~September~~June 30, ~~2020,~~2021, 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.

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~~June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note 1314 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Item ~~1A.~~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 ~~2019~~2020 Annual Report on Form ~~10-K, as amended by Amendment No. 1 to our 2019 Annual Report on Form 10-K filed with the SEC on April 29, 2020.~~10-K. The risks described herein and in our ~~2019~~2020 Annual Report on Form 10-K, as amended, 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.

Risks Relating to Our Alaska Communications Business

We may have difficulties integrating the operations and business of Alaska Communications with our own.

The Alaska Transaction is the largest and most significant acquisition we have undertaken for a number of years. The complexities of the integration and expansion of Alaska Communications’ operations are not yet known. We have devoted and will continue to devote a significant amount of time and attention to integrating these operations with our existing operations teams. Among the challenges we face in ~~Guyana~~doing so are ~~subject~~the need to ~~significant political~~integrate a large number of new employees and ~~regulatory risk.~~integrating and aligning numerous business and work processes, including information technology and cyber security systems. If we have other difficulties with the transition process, it could harm our reputation and have a material adverse effect on our business, financial condition or results of operations.

We may not be able to realize the growth or synergies we expect from the Alaska Transaction.

We have announced that we plan to grow the Alaska Communications business by building additional anchor tenant and fiber projects and taking advantage of government funding opportunities to strategically grow its network. In addition, we have announced that we expect synergies resulting from the transaction to be approximately $2.0 million over the next 18 months. There can be no assurance as to whether, when or on what terms we will be able to invest in, acquire or build any assets, fiber projects, or additional business or participate in any government funding programs to strategically grow the Alaska Communications business, or to recognize anticipated synergies, and, accordingly, to realize the perceived benefits of the Alaska Transaction.

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The successful operation and growth of our businesses depends on economic conditions in Alaska.

~~Since 1991, our subsidiary Guyana Telephone~~The vast majority of Alaska Communications’ customers and ~~Telegraph,~~ operations are located in Alaska. Due to this geographical concentration, the successful operation and growth of the Alaska Communications businesses depends on economic conditions in Alaska. The Alaska economy, in turn, depends upon many factors, including:

~~Ltd. (“GTT”)~~

●

the strength of the natural resources industries, particularly oil production and prices of crude oil;

●

the strength of the Alaska tourism industry;

●

the level of government and military spending; and

●

the continued growth of service industries.

The population of Alaska, which has ~~operated~~declined marginally every year since 2016, is approximately 730,000 with Anchorage, Fairbanks and Juneau serving as the primary population and economic centers in ~~Guyana pursuant to~~the state.

It is estimated that one-third of Alaska’s economy is dependent on federal spending, one-third on natural resources, in particular the production of crude oil, and the remaining one-third on other activities such as tourism, mining, timber, seafood, international air cargo and miscellaneous support services.

Alaska’s economy is dependent on investment by oil companies, and state tax revenues correlate with the price of oil as the state assesses a ~~license~~tax based on the value of the oil that transits the pipeline from the ~~Government~~North Slope. British Petroleum, one of ~~Guyana~~the world’s major oil companies, is exiting Alaska and its Alaska operations and holdings are being taken over by a much smaller local company. The impact of this change on the state’s economy is uncertain.

Overall economic impacts from a sustained lower price of crude oil or any other matters that impact population decline or other economic impacts, if maintained over time, could have a material adverse effect on Alaska Communications’ results of operations and cash flow, and our ability to ~~be the exclusive provider of domestic fixed~~realize plans for growth in Alaska.

The telecommunications industry in Alaska is competitive and ~~international~~creates pressure on our pricing and customer retention efforts.

Alaska is a new market for us, with strong competitors that make it difficult for us to attract and retain customers, which could result in lower revenue and cash flow from operating activities. Our principal facilities-based competitor for voice and ~~data~~broadband services is GCI, which is also the dominant cable television provider in Alaska. In the business and wholesale market, GCI holds a dominant position through its extensive fiber optic, microwave and satellite based middle mile network as well as its undersea fiber cable network, where it owns and operates two of the four existing undersea fiber optic cables connecting Alaska to the contiguous states. In the consumer market, GCI bundles its cable video services with voice, broadband and mobile wireless services. ~~That license from~~Because the ~~Government of Guyana included an initial term ending in December 2010, which was renewable at our sole option for an additional 20-year term. In November 2009,~~video and mobile wireless services we ~~notified the Government of Guyana of our election~~offer are limited, we are unable to renew our exclusive license for an additional 20-year term expiring in 2030. On December 15, 2010, we received correspondence from the Government of Guyana indicating that our license had been renewed until such time that new legislation was enactedoffer competing bundles. GCI continues to expand ~~competition within~~its statewide reach, including with funding by federal subsidies that give it a substantial competitive advantage in the ~~sector.~~market.

~~Since 2001,~~

With a long history of operating in Alaska, AT&T also has a terrestrial long-haul network in Alaska where the ~~Government of Guyana has stated its intention to introduce additional competition into Guyana’s telecommunications sector. In connection therewith,~~focus is on serving certain national customers. AT&T’s primary mass market focus in Alaska is providing mobile wireless services.

As we ~~and GTT met with officials of~~compete more extensively in the Government of Guyana on several occasions to discuss potential modifications of GTT’s exclusivity and other rights under the existing agreement and license. On October 5, 2020, the Prime Minister of Guyana formally implemented telecommunications legislation previously passed by the Guyana Parliament in 2016 that introduces material changes to many features of Guyana’s existing telecommunications regulatory regime with the intention of creating a more competitive market. At that time, we were issued a new license to provide domestic and international voice and data services and mobile services in Guyana, and two of our competitors were issued service licenses as well. While we have requested details of our competitors’ licenses, such information has not been made public by the Guyana Telecommunications Authority, andAlaska market, we are ~~not yet able~~likely to ~~ascertain whether the licenses issued to our competitors permit competitors to provide services that have been subject to GTT’s exclusive rights contained in its 1990 license.~~

~~On October 23, 2020, the Government of Guyana also brought into effect~~face increased and new ~~telecommunications regulations called for by the telecommunications legislation. The regulations include new requirements on the market as a whole~~competition, both local and ~~our operations, administrative reporting and service requirements.~~national. There can be no assurance that ~~these regulations~~we will be able to successfully compete against larger or more established competitors, and the failure to compete effectively may adversely impact our ability to meet our growth and revenue plans may adversely impact our results of operations.

Alaska Credit Facility

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the aggregate amount not to exceed $210.0 million (the “Alaska Credit Facility”). In connection with the Alaska Transaction, Alaska Communications drew $220 million from the new Alaska Credit Facility in the amounts of $210.0 million under the term loan and $10.0 million under the Alaska Revolving Facility. Pursuant to the Alaska Credit Facility, principal payments are due quarterly commencing in the fourth quarter of 2023 and Alaska Communications is required to maintain financial ratios including a maximum Consolidated Net Total Leverage Ratio and a minimum Consolidated Fixed Charge Coverage Ratio (each as defined in the Alaska Credit Facility). While the Alaska Credit Facility is non-recourse to us, is guaranteed by the parent company to Alaska Communications and is secured by substantially all of the personal property and certain material real property owned by Alaska Communications, its parent company and its wholly-owned subsidiaries.

The Alaska Credit Facility provides for events of default customary for credit facilities of this type, including non-payment defaults on other debt, misrepresentation, breach of covenants, representations and warranties, change of control, and insolvency and bankruptcy. We are also subject to credit risk related to our counterparties on the swaps and to interest rate fluctuations on interest generated by our debt in excess of the notional term loans referenced above. Any failure to comply with the restrictions of the Alaska Credit Facility or any subsequent financing agreements may result in an event of default. Such default may allow our creditors to accelerate the repayment of the related debt and may result in the acceleration of the repayment of any other debt to which a cross-acceleration or cross-default provision applies. In addition, these creditors may be ~~effectively implemented,~~able to terminate any commitments they had made to provide us with further funds.

The Rural Health Care program in Alaska is being audited by USAC, and we may be subject to forfeiture or fine.

Alaska Communications participates in the Universal Service Administration’s (“USAC”) Rural Health Care program and received inquiries and requests for information from USAC, which administers the program, in connection with both current funding requests and, beginning with a letter dated June 2, 2017 from USAC’s auditors, prior period support payments. After Alaska Communications responded to the initial request for information about support payments prior to 2017, USAC’s auditors asked Alaska Communications to comment on some preliminary audit findings, and it responded with a letter dated December 21, 2018. On February 24, 2020, Alaska Communications received a draft audit report from USAC that ~~they will be administered~~alleges violations of the FCC’s rules for establishing rural rates and urban rates, the provisioning and billing of ineligible services and products, and violations of the FCC’s competitive bidding rules. Alaska Communications has engaged in dialogue with USAC’s auditors and looks forward to resolving all of USAC’s concerns.

Alaska Communications also received a ~~fair~~Letter of Inquiry on March 18, 2018, from the FCC Enforcement Bureau requesting historical information regarding its participation in the FCC’s Rural Health Care program. In response, Alaska Communications produced voluminous records throughout 2018 and ~~transparent manner. We believe our existing, exclusive license~~into the first quarter of 2019. On November 5, 2019 and January 22, 2021 Alaska Communications received additional letters from the FCC Enforcement Bureau requesting additional information, to which it responded. To date, the FCC’s Enforcement Bureau has not asserted any claims or alleged any rule violations. Alaska Communications continues to ~~be valid unless and until such time as we enter into an alternative arrangement~~work constructively with the ~~Government, however,~~FCC’s Enforcement Bureau to provide it the information it is seeking.

Similar audits of other companies have resulted in the FCC recouping certain previously awarded support funds, which could have a material adverse effect on our business, financial position, results of operations, and liquidity. At this time, we cannot predict the outcome of the USAC audit or the FCC Enforcement Bureau’s inquiry or the impact it may have on our business, financial condition, results of operations or liquidity.

Any change in federal or state funding could materially and adversely impact Alaska Communications’ financial position and results of operations.

Alaska Communications historically received federal high cost universal service payment revenues to support its wireline operations in high cost areas. In 2011, the FCC released a Transformation Order that established a new framework for high cost universal service support for price capped carriers that replaced existing support mechanisms that provide support to carriers that serve high-cost areas with new Connect America Fund (“CAF”) support mechanisms and service obligations that are focused on broadband Internet access services.

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The FCC released its CAF Phase II order, specific to Alaska Communications as the only price capped carrier in Alaska, on October 31, 2016, pursuant to which Alaska Communications receives approximately [$19.7] million annually in order to meet certain buildout requirements in Alaska over a 10 year period. Funding under ~~these circumstances, there~~the new program generally requires Alaska Communications to provide broadband service to unserved locations throughout the designated coverage area by the end of a specified build-out period, and meet interim milestone build-out obligations. As a result, while Alaska Communications currently expects its High Cost Program support revenue to be relatively unchanged for the next five years, it also expects that the FCC will enact substantial changes regarding our High Cost Program support funding after 2025.

There can be no assurance that Alaska Communications will meet its CAF Phase II obligations utilizing the delivery of broadband Internet access using a fixed wireless platform in a capital-efficient manner or at all, and there is uncertainty regarding the future level of revenue as well as the future obligations tied to this funding. If Alaska Communications fails to meet its obligations under the CAF Phase II order, or requires substantial additional capital expenditures in order to meet the obligations under the timeline required, its revenue, results of operations and liquidity may be materially adversely impacted.

Labor costs and the terms of Alaska Communications’ principal collective bargaining agreement can negatively impact its ability to remain competitive, which could cause our ~~discussions~~financial performance to suffer.

Labor costs are a significant component of Alaska Communications’ expenses and, as of December 31, 2020, approximately 54% of its workforce is represented by the International Brotherhood of Electrical Workers (“IBEW”). The collective bargaining agreement (“CBA”) between Alaska Communications and the IBEW, which is effective through December 31, 2023, governs the terms and conditions of employment for all IBEW represented employees working for Alaska Communications and has significant economic impacts on it as the CBA relates to wage and benefit costs and work rules. We believe Alaska Communications’ labor costs are higher than our competitors who employ a non-unionized workforce because Alaska Communications is required by the CBA to contribute to the IBEW Health and Welfare Trust and the Alaska Electrical Pension Fund (“AEPF”) for benefit programs, including defined benefit pension plans and health benefit plans, that are not reflective of the competitive marketplace. Furthermore, work rules under the existing agreement limit Alaska Communications’ ability to efficiently manage its workforce and make the incremental cost of work performed outside normal work hours high. In addition, Alaska Communications may make strategic and operational decisions that require the consent of the IBEW. The IBEW may not provide consent when needed to execute upon strategic new initiatives or cost saving measures, it may require additional wages, benefits or other consideration be paid in return for its consent, or it may call for a work stoppage against Alaska Communications. Any deterioration in the relationship with the ~~Government~~IBEW would have a negative impact on its operations and on our ability to achieve our plans for growth in Alaska.

Alaska Communications may incur substantial and unexpected liabilities arising out of ~~Guyana~~its pension plans.

Alaska Communications is required by the CBA to contribute to the AEPF for benefit programs, including defined benefit pension plans and health benefit plans. Alaska Communications also maintains pension benefits for substantially all of its Alaska-based employees. The AEPF is a multi-employer pension plan to which Alaska Communications makes fixed, per employee, contributions through the CBA, which covers the IBEW represented workforce, and a special agreement, which covers most of its non-represented workforce. Because contribution requirements are fixed, Alaska Communications cannot easily adjust annual plan contributions to address its own financial circumstances. Currently, this plan is not fully funded, which means Alaska Communications may be subject to increased contribution obligations, penalties, and ultimately, it could incur a contingent withdrawal liability should it choose to withdraw from the AEPF for economic reasons. Alaska Communications’ contingent withdrawal liability is an amount based on its pro-rata share among AEPF participants of the value of the funding shortfall. This contingent liability becomes due and payable if Alaska Communications terminates its participation in the AEPF. Moreover, if another participant in the AEPF goes bankrupt, Alaska Communications would become liable for a pro-rata share of the bankrupt participant’s vested, but unpaid, liability for accrued benefits for that participant’s employees. This could result in a substantial unexpected contribution requirement and making such a contribution

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could have a material adverse effect on Alaska Communications’ cash position and other financial results. These sources of potential liability are difficult to predict.

These plans and activities have and will ~~resume~~generate substantial cash requirements for Alaska Communications, and these requirements may increase beyond our expectations in future years based on changing market conditions could result in substantial liabilities on our balance sheet. The difference between projected plan obligations and assets, or the funded status of the plans, is a significant factor in determining the net periodic benefit costs of these pension plans and the ongoing funding requirements of those plans. Changes in interest rates, mortality rates, health care costs, early retirement rates, returns on investment and the market value of plan assets can affect the funded status of our defined benefit pension and cause volatility in the net periodic benefit cost and future funding requirements of the plans. In the future, we may be ~~concluded,~~required to make additional contributions to our defined benefit plan. Plan liabilities may impair our liquidity, have an unfavorable impact on our ability to obtain financing and place us at a competitive disadvantage compared to some of our competitors who do not have such liabilities and cash requirements.

Given the complexity of pension-related matters we may not, in every instance, be in full compliance with applicable requirements.

The lack of liquidity of our privately held investments may adversely affect our business.

Our subsidiaries and affiliates are typically private companies whose securities are not traded in any public market. In the past, we have partnered with other equity investors as well, and may have majority or minority holdings in certain investments. Investment agreements for both our majority and minority held subsidiaries often contain investor rights and obligations, such as rights of first refusal, co-sale, and "drag along" provisions related to liquidity events and transfers that may force us to sell or exit our holdings at times or on terms that are not optimal or limit our ability to sell or exit our holdings when we would like to. The illiquidity of our investments may make it difficult for us to quickly obtain cash equal to the value at which we record our investments if the need arises to satisfy the repurchase of such investments from our other equity investors in the event such company desires, or in the case of our Alaska Transaction, may be required to repurchase such securities pursuant to contractual arrangements. Such illiquidity could also cause us to miss other investment opportunities. There can also be no assurance that the Company’s investments will appreciate in value or that it will have the opportunity to divest such ~~discussions will satisfactorily address~~investments at acceptable prices or within the timeline envisaged because of market conditions. If any of the above circumstances arise, it could result in impairments to such investments, and could have a material adverse impact on our contractual exclusivity rights. Although we believe that we would be entitled to damages or other compensation for any involuntary termination of our contractual exclusivity rights, we cannot guarantee that we would prevail in a proceeding to enforce our rights.earnings, cash flow and financial condition.

~~A loss~~65

Table of exclusivity on international voice and data service would result in a reduction in international call traffic and as a result, a loss in that portion of our wireline revenue. Any modification, early termination or other revocation of the exclusive domestic fixed and international voice and data license could materially adversely affect our revenues and profits and diminish the value of our investment in Guyana. Any additional regulatory requirements that may be imposed on GTT’s operations may create administrative burdens or limitations on GTT’s ability to effectively compete in Guyana, and could materially adversely affect our revenues and profits in Guyana.Contents

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

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”). We have ~~$30.9~~$28.7 million available to be repurchased under that plan as of ~~September~~June 30, ~~2020.~~2021.

The following table reflects the repurchases by us of our common stock during the quarter ended ~~September~~June 30, ~~2020:~~2021:

(d)

Maximum

Number (or

(c)

Approximate

(c)

Approximate

(b)

Total Number of

Dollar Value) of

(b)

Total Number of

Dollar Value) of

(a)

Average

Shares Purchased

Shares that May

(a)

Average

Shares Purchased

Shares that May

Total Number

Price

as Part of Publicly

be Purchased

Total Number

Price

as Part of Publicly

be Purchased

of Shares

Paid per

Announced Plans

Under the Plans or

of Shares

Paid per

Announced Plans

Under the Plans or

Period

Purchased

Share

or Programs

Programs

Purchased

Share

or Programs

Programs

July 1, 2020 — July 31, 2020

—

35,078,237

August 1, 2020 — August 31, 2020

—

35,078,237

September 1, 2020 — September 30, 2020

80,754

51.27

80,754

30,938,016

April 1, 2021 — April 30, 2021

10,594

(1)

45.94

9,800

29,948,001

May 1, 2021 — May 31, 2021

3,073

45.96

3,073

29,806,778

June 1, 2021 — June 30, 2021

23,761

45.76

23,761

28,719,383

(1)

Includes 794 shares purchased on April 30, 2021 from our executive officers and other employees who tendered these shares to us to satisfy their tax withholding obligations incurred in connection with the vesting of restricted stock awards at such date. These shares were not purchased under the 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.

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Item 5. Other Information

None

Item 6. Exhibits:



~~10.1*#~~
10.1#			~~First~~Second Amendment to Network Build and Maintenance Agreement dated as of ~~6th~~the 4th day of ~~August, 2020~~May, 2021 and effective as of the 1st day of ~~July, 2020~~January, 2021 by and between Commnet Wireless, LLC and AT&T Mobility ~~LLC.~~LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-12593) filed on May 10, 2021).

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 USC 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 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*			Inline XBRL Taxonomy Extension Schema Document

101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page Interactive Data file (formatted as Inline XBRL and embedded within Exhibit 101).

* Filed herewith.

** The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Report and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates them by reference.

# Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the Securities and Exchange Commission.

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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 4, 2020~~August 9, 2021	/s/ Michael T. Prior
	Michael T. Prior
	President and Chief Executive Officer

Date: ~~November 4, 2020~~August 9, 2021	/s/ Justin D. Benincasa
	Justin D. Benincasa
	Chief Financial Officer

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	Three months ended September 30, 2020		Three months ended September 30, 2019		Nine months ended September 30, 2020		Nine months ended September 30, 2019
Operating lease cost:
Operating lease cost	$	4,152	$	3,627	$	12,228	$	11,294
Short-term lease cost		769		652		2,040		2,232
Variable lease cost		692		1,151		3,034		2,400
Total operating lease cost	$	5,613	$	5,430	$	17,302	$	15,926

Finance lease cost:
Amortization of right-of-use asset	$	534	$	570	$	1,628	$	1,749
Variable costs		198		244		655		802
Total finance lease cost	$	732	$	814	$	2,283	$	2,551