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Atlantic Tele-Network, Inc. Message Board

  • doubledowntenbagger doubledowntenbagger Mar 3, 2011 6:25 PM Flag

    Right on track

    To anyone who has spent some time running through the numbers, speaking with management and gaining an understanding of the company you will see that things are right in line with what they said was going to happen. Most of the subscriber losses that everyone is fretting over were in the Pre-paid space. Management has been trying to tell you that they are losing a major distributor (Wal-Mart). This is understandable when you consider that Wal-Mart is national and these guys are....well not national.

    There is significant expense is the current operations of the company due to the fact that they do not control this trust. The trust is charged with migrating the existing customer base over to the new network with as little inconvenience to them as possible. To me that says they don't care about the interim expense to the operations, they just want to keep the consumer experience as ubiquitous as possible.

    So what do they get in this deal? The get some significant wireless assets. Most of the base stations operated in these regions by Alltell were owned by them. That presents a nice opportunity for a sale and lease back. They also acquired over 40 retail locations. I haven't been to visit any yet but I am told they are typical of a wireless retail location. There is very little competition in these markets which is why Verizon was forced to divest these markets and AT&T was no allowed to bid.

    I believe that ATNI stated during this call that they incurred over $15 million in costs related to the transition. It seems to me that this expense is likely to virtually go away all at once. At some point the market will start to price this event into the stock. So at today's close we have a market cap of about $500 million. If we take the EBITDA for the year $128 and add back the costs associated with transition in Q4 we get to $143 in EBITDA. If we add back the $10 million in expenses incurred during Q3 we get a little over $150 million in EBITDA. That puts this company at a little over 3x EBITDA.

    If you bothered to listen to the Q3 conference call management said expenses would peak during this quarter but that the transition would complete late in Q2. I expect to see an additional $10-$12 million in expenses during Q1 but to see that trail off in Q2 with full benefit in Q3. I can't tell you what that means for the stock price but with the dividend they pay and knowing what the future holds for ATNI I am a buyer at these prices.

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    • Doubledown,

      Do it upset you when someone special orders a Big Mac? Get back to flipping burgers before you get fired.

    • They are on track alright! On track to be run over by a Big Black train with a red V on it.

    • Get back to work doubledown. I'm sure you have a marketing plan and conference calls to complete by the end of day.

      Your funny numbers have too many (what if's) in them. Use the real numbers and throw your thesis in the trash along with your and start over.

      3:17 PM, 03/02/2011 -- Atlantic Tele-Network slides after it said late Tuesday Q4 sales were 194.7 million and net income was $0.21 per share. The Wall Street Journal says earnings missed analysts' expectations.

      Separately, shares were cut this morning to equal weight from overweight at Stephens, which also lowered its price target to $35 from $50.

      In case you can't calculate a percentage that's a 42.9% cut.

      They don't cut when companies are "right on track" doubledown.

      Doubledown, Do we listen to you or the Wall Street Journal and a reputable Investment Bank?

      In my humble opinion you are misleading people for personal reasons.

      • 1 Reply to dumbdandelmagio
      • Being right on track at this point does not necessarily mean that numbers are going to be great. The company told everybody on the 3rd quarter call that the expense would be higher this quarter and that churn would continue to be high while they renewed contracts and shed some lower credit threshold customers. Of course the Wall Street Journal says they missed the numbers. That's because that is based upon the analyst numbers that never did his research. Q1 expense and churn might be a little lower but it will likely look a lot like Q4.

        There are a lot of momentum guys that got caught here because they didn't understand the transaction. Meanwhile, I will keep buying!

    • I will give you credit for a decent valuation of the company. Even though you are adding back in a lot of (if's) which haven't been coming to fruition as of late.

      These are old assets that are becoming more and more outdated so it will only bring 3X multiple max. Who would buy these assets other than Verizon or AT&T, which can't purchase them. Private equity got the heck out of the industry after they got a peak under the covers of Alltel in 2007. Sold in less than a year and counted there blessing all the way to the bank.

      This would equate to a stock price of approx. $28-$29 fully valued on current business. That's only if things don't continue to worsen.

      That's where the heartburn lies? We don't really know what's going on inside the wireless business. The numbers aren't telling a pretty story.

      It's probably safe to say Verizon is pretty happy these days.

      • 1 Reply to dumbdandelmagio
      • I haven't gotten my hands on the transcript yet so I'll admit that I haven't seen all the numbers on ARPU or churn yet. I did listen to the call albeit by several distractions. I suspected back in December that there would be a sell off after the report because investors and analysts either weren't listening to what the company was telling them or worse they chose to ignore it.

        You made several comments which I think deserve a reply. First is the comment about Verizon and the iPhone. I seriously doubt they took many customers from anybody because of the iPhone. Until Verizon allows simultaneous voice and data usage they are not going to measure up as a true 'smart phone' carrier. I had Verizon for a long time and they have a good network but it's using a walkie talkie when you can't talk to someone and access information relative to the conversation.

        Next you commented about private equity not being interested in the space. I can't speak for their interest in all wireless deals but private equity is always interested in transactions where they can make a quick buck. That being said they too were excluded from bidding on this transaction because the DOJ wanted a stable service provider. Translation, they wanted whoever bought the assets to state the network.

        Last you commented about Verizon and their deployment of LTE. Most of these markets will not see LTE for some time. Many of them probably haven't even had 3G for an extended period. However, I understand the need to get a grasp on what is driving what you outlined as disturbing numbers and a disturbing trend. It helps to call the company.

        As for the Stephens analyst and others. I can say this because I have no stake in that relationship but I question the amount of due diligence performed prior to the issue of the previous report. I kinda of hope they report another stinker of a quarter because I can buy more stock. I am patient and I can wait unlike most people these days. They're not investors, they're not even traders, they're just following the heard.

    • The fact of the matter is there are much better stocks to purchase versus speculating on a small company who has made the US wireless business the bulk of their revenues.

      You can buy Verizon with a 5.5% dividend, AT&T with a 6% dividend, along with Windstream with a 7.5% dividend.

      A derivative play on ATNI would be to buy both VZ and T because they are going to be the beneficiaries of the line loss of ATNI.

      Then the folks who are buying dividend paying stocks could sleep better at night knowing full well what they are buying versus guessing.

    • You obviously haven't been reviewing the numbers or you would have clearly seen that post pay disconnects far outpaced the prepay disconnects, which leaves one to believe the problems lie much deeper than Wal Mart. There is a lot of people that have popped up over the last day or two to express their opinion because they have lost their rear in this stock. Don't try to paint a rosy picture when the results are lackluster at best. Before you send out anymore hype why don;t you get you hands on the modeling Stephen's has done who just downgraded the stock from $50 to $35 (12 month target)

      4Q Gross Additions Net Additions
      Prepay 27,136 (22,059)
      Postpay 24,746 (26,752)

      4Q Total Disconnects
      Prepay (49,195)
      Postpay (54,498)

      So you couple the rapidly declining growth in postpay with the declining Postpay ARPU along with a 42% increase in churn at 3.18 and you have a wireless company in serious trouble by most analyst's observations. All other carriers are showing a significant growth in ARPU.

      It's pretty apparent that Verizon and AT&T are taking some serious market share over a much quicker time table than most expected.

      The problem only gets worse with Verizon getting the IPhone on a CDMA network. They are putting some serious hurt on Sprint and T-Mobile with this new handset so you know the finds it's way to Alltel. This impact isn't even showing up in Alltel numbers yet but will be very shortly.

      The plot thickens, Verizon announced they are ahead on the LTE network expansion and that will have negative impact in 2011 when Alltel is supposed to get back to normal.

      The reason they had to divest is because Verizon is already in most of their markets and when you take a closer look they not only have to compete with Verizon but AT&T is there as well.

      You sound like an intelligent investor so you should know hat ultimately the Mr. Market decides who;s right and who is wrong and for now the market has given this company a thumbs downs which contradicts that management is right in line with market expectations.

      The stock market is up over 27% over the last five months while this stock is down over 30%. What does that tell you about the forecasts versus actual results.

      I do agree with you on one thing. This stock is getting real close to being a good buy if you believe that things will turn around but they have a huge headwind in front of them and you have to ask yourself. Do they have the right team in place to get the job done? Not sure!

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