ATN International
Annual Report 2018

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10‑K(Mark One) ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018Or☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File No. 001‑12593ATN INTERNATIONAL, INC. (Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization)47‑0728886(I.R.S. EmployerIdentification No.)500 Cummings CenterBeverly, Massachusetts(Address of principal executive offices)01915(Zip Code)(978) 619‑1300(Registrant’s telephonenumber, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of each exchange on which registeredCommon Stock, par value $.01 per share The Nasdaq Stock Market LLCSecurities registered pursuant to Section 12(g) of the Act: None(Title of each class)Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒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 1934during 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 requirementsfor 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 ofRegulation S‑T 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to thisForm 10‑K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-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 newor 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 Act). Yes ☐ No ☒The aggregate market value of Common Stock held by non‑affiliates of the registrant as of June 29, 2018, was approximately $575 million based on theclosing price of the registrant’s Common Stock as reported on the Nasdaq Global Select Market.As of February 28, 2019, the registrant had 16,003,345 outstanding shares of Common Stock, $.01 par value.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s Definitive Proxy Statement for the 2019 Annual Meeting of Stockholders are incorporated by reference into Part III of thisForm 10‑K. Table of ContentsTABLE OF CONTENTS PageSpecial Note Regarding Forward Looking Statements 1PART I Item 1. Business 2 Overview 2 Strategy 3 Our Services 5 Wireless Services 6 Wireline Services 7 Renewable Energy Services 10 Employees 12 Regulation 12 U.S. Federal Regulation 13 U.S. State Regulation 18 Guyana Regulation 19 Bermuda Regulation 20 Available Information 23Item 1A. Risk Factors 23 Other Risks Related to Our Businesses 28 Risks Related to Our Capital Structure 34Item 1B. Unresolved Staff Comments 35Item 2. Properties 35Item 3. Legal Proceedings 35Item 4. Mine Safety Disclosures 36PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37Item 6. Selected Financial Data 39Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Overview 41 Results of Operations: Years Ended December 31, 2018 and 2017 48 Results of Operations: Years Ended December 31, 2017 and 2016 58 Regulatory and Tax Issues 63 Liquidity and Capital Resources 64 Recent Accounting Pronouncements 71Item 7A. Quantitative and Qualitative Disclosures About Market Risk 72Item 8. Financial Statements and Supplementary Data 72Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 72Item 9A. Controls and Procedures 72 Evaluation of Disclosure Controls and Procedures 72 Management’s Report on Internal Control over Financial Reporting 73 Changes in Internal Control over Financial Reporting 73Item 9B. Other Information 73PART III Item 10. Directors, Executive Officers and Corporate Governance 74Item 11. Executive Compensation 77Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters\ 77Item 13. Certain Relationships and Related Transactions, and Director Independence 77Item 14. Principal Accountant Fees and Services 77PART IV Item 15. Exhibits and Financial Statement Schedules 78Item 16. Form 10-K Summary 80 Signatures 81 Index to Consolidated Financial Statements F‑1 Table of ContentsSPECIAL NOTE REGARDING FORWARD‑LOOKING STATEMENTSThis Annual Report on Form 10‑K (this “Report”) contains forward-looking statements relating to, among othermatters, our future financial performance and results of operations; the estimated timeline for increase in revenues from ourcustomers in the U.S. Virgin Islands following Hurricanes Irma and Maria (the “Hurricanes); the competitive environment inour key markets, demand for our services and industry trends; the pace of expansion and improvement of ourtelecommunications network and renewable energy operations including our level of estimated future capital expendituresand our realization of the benefits of these investments and their impact on our customers; the anticipated timing of our buildschedule and energy production of our India renewable energy projects; our pipeline of additional solar capacity;expectations regarding our revenue, expenses and financial performance; our compliance with requirements for certain grantsand programs; the impact of new accounting pronouncements; our satisfaction of performance obligations; the impact oflitigation; the sufficiency of our cash and our expectations regarding capital expenditures; and management’s plans andstrategy for the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and arenot guarantees of future events or results. Actual future events and results could differ materially from the events and resultsindicated in these statements as a result of many factors, including, among others, (1) the general performance of ouroperations, including operating margins, revenues, capital expenditures, and the future growth and retention of our majorcustomers and subscriber base and commercial and industrial demand for solar power; (2) our ability to maintain favorableroaming arrangements and satisfy the needs and demands of our major wireless customers; (3) our ability to efficiently andcost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in thetelecommunications industry; (4) government regulation of our businesses, which may impact our Federal CommunicationsCommission (“FCC”) and other telecommunications licenses or our renewables business; (5) our reliance on a limitednumber of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (6)our ability to restore our networks and services to our customers in the U.S. Virgin Islands in an efficient and timely mannerand to obtain governmental or other support necessary to fully restore services in the U.S. Virgin Islands; (7) our ability toreceive financial support from the government for our rebuild in the U.S. Virgin Islands and the timing of such support; (8)economic, political and other risks facing our operations; (9) the loss of or an inability to recruit skilled personnel in ourvarious jurisdictions, including key members of management; (10) our ability to find investment or acquisition ordisposition opportunities that fit the strategic goals of the Company; (11) the occurrence of weather events and naturalcatastrophes; (12) increased competition; (13) the adequacy and expansion capabilities of our network capacity andcustomer service system to support our customer growth; (14) our continued access to capital and credit markets; and (15) therisk of currency fluctuation for those markets in which we operate in. Statements are based on our management’s beliefs andassumptions, which in turn are based on currently available information. These assumptions could be proven inaccurate.You should keep in mind that any forward‑looking statement made by us in this Report or elsewhere speaks only asof the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predictthese events or how they may affect us. In any event, these and other important factors may cause actual results to differmaterially from those indicated by our forward‑looking statements, including those set forth in Item 1A of this Report underthe caption “Risk Factors.” We have no duty to, and do not intend to, update or revise the forward‑looking statements madeby us in this Report after the date of this Report, except as may be required by law.In this Report, the words “the Company”, “we,” “our,” “ours,” “us” and “ATN” refer to ATN International, Inc. andits subsidiaries. This Report contains trademarks, service marks and trade names that are the property of, or licensed by, ATNand its subsidiaries.References to dollars ($) refer to U.S. dollars unless otherwise specifically indicated. 1 Table of Contents PART I ITEM 1. BUSINESSOverviewWe are a holding company that, directly and through our subsidiaries, owns and operates telecommunications andrenewable energy businesses in North America, India, Bermuda and the Caribbean. We were incorporated in Delaware in1987, began trading publicly in 1991 and spun off more than a half of our operations to stockholders in 1998. Since thattime, we have engaged in many strategic acquisitions and investments to help grow our operations, using the cash generatedfrom our established operating units to re-invest in our existing businesses and to make strategic investments in earlier stagebusinesses. We look for businesses that offer growth opportunities or potential strategic benefits, but that require additionalcapital investment in order to execute on their business plans. We hold controlling positions with respect to some of ourinvestments and minority positions in others. These strategic investments frequently offer a product and servicedevelopment component in addition to the prospect of generating returns on our invested capital. For a discussion of therisks involved in our investment strategy, see “Risk Factors—We are actively evaluating investment, acquisition and otherstrategic opportunities, which may affect our long‑term growth prospects.” We have identified three operating segments tomanage and review our operations, and to facilitate investor presentations of our results, as follows: ·U.S. Telecom. In the United States, we offer wireless and wireline services. We offer wholesale wireless voiceand data roaming services to national, regional, local and selected international wireless carriers in rural marketslocated principally in the Southwest and Midwest United States. We also provide retail wireless, wirelineservices and wholesale long‑distance voice services to telecommunications carriers in the areas in which weoffer wireline services. ·International Telecom. Our international wireless services include voice and data services to retail customersin Bermuda, Guyana and the U.S. Virgin Islands. Our international wireline services include voice and dataservices in Bermuda, the Cayman Islands, Guyana and the U.S. Virgin Islands, as well as video services inBermuda, the Cayman Islands, and the U.S. Virgin Islands. In addition, we offer wholesale long‑distance voiceservices to other telecommunications carriers in the countries in which we offer international wireline services. ·Renewable Energy. In India, we provide distributed generation solar power to corporate, utility and municipalcustomers. Through November 6, 2018, we also provided distributed generation solar power in the UnitedStates in Massachusetts, California and New Jersey. 2 Table of ContentsThe following chart summarizes the operating activities of our principal subsidiaries, the segments in which we report ourrevenue and the markets we served as of December 31, 2018: Segment Services Markets Tradenames U.S. Telecom Wireless United States (rural markets) Choice, ChoiceNTUA Wireless,Commnet, WestNet,Geoverse Wireline United States Essextel,Deploycom International Telecom Wireline Bermuda, Cayman Islands,Guyana, U.S. Virgin Islands Fireminds, GTT+,One, Logic, Viya Wireless Bermuda, Guyana, U.S. VirginIslands GTT+, One, Viya Video Services Bermuda, Cayman Islands, U.S.Virgin Islands Logic, One, Viya Renewable Energy Solar India Vibrant Energy As a holding company, we provide management, technical, financial, regulatory, and marketing services to oursubsidiaries and typically receive a management fee equal to a percentage of their revenues, which is eliminated inconsolidation.Our principal corporate offices are located at 500 Cummings Center, Beverly, Massachusetts, 01915. The telephonenumber at our principal corporate offices is (978) 619‑1300. StrategyThe key elements of our strategy consist of the following:·Target Under‑served Markets or Industries Where We Can Compete Successfully. We operate ourtelecommunications businesses primarily in smaller, rural or under‑served markets where we believe we are or will beone of the leading providers of telecommunications services. We take a long-term view and are willing to considermore difficult operating or political environments. Our businesses typically have or develop strong local brandidentities that help them become leaders in the markets they serve. By providing access to low-cost capital,leveraging local brand identities and market knowledge and supplementing the business with senior managementand other expertise at the holding company level, we strive to improve and expand our product and service offeringsin the locations we serve in order to better satisfy customer needs, expand our customer bases and revenues andensure the business is efficient and economically viable. More recently, we have made multiple investments inearlier stage businesses in all three operating segments (U.S. and International Telecom and Renewable Energy) thatwe believe have the potential to provide a platform for future organic and strategic growth. Additionally, theseinvestments, some of which are non-controlling investments, can provide a variety of benefits that enhance thepotential to expand our business, including providing an entry point into emerging sectors of our existingbusinesses, as well as enhancing our product offerings, providing visibility into newer technologies and establishingand enhancing strategic relationships.·Collaborate with Local Management. We believe that strong local management enhances our close relationshipwith customers and reduces risk. Wherever feasible, we seek to partner with local investors, owners or managementteams who have demonstrated a successful track record or have extensive knowledge of the industry or markets inwhich we operate, and who have local credibility. By maintaining these relationships and leveraging ourcomprehensive management experience and technical and financial expertise, we can assist the local managementteams in further improving operations and growing their businesses.3 Table of Contents·Maintain a Disciplined Earnings‑‑Oriented Approach. We carefully assess the potential for cash flow stability andgrowth when we evaluate the performance of our subsidiaries, new investment opportunities and prospectiveacquisitions or dispositions. In managing our more mature businesses, we seek to solidify our brands, improvecustomer satisfaction, add new services, control costs and preserve cash flow. In managing newer, early‑stagebusinesses, we seek to invest capital to improve our competitive position, increase our market share and generatestrong long-term revenue and cash flow potential. We consider new investments, acquisitions and dispositions on adisciplined, return‑on‑investment basis. In addition, we have been increasingly willing to make non-controllinginvestments in earlier stage businesses that we consider strategically relevant, and which may offer long-term growthpotential for us, either individually, or as research and development businesses that can support our operatingsubsidiaries in new product and service development and offerings.Recent AcquisitionsU.S. Telecom In July 2016, we acquired certain telecommunications fixed assets and the associated operations in the westernUnited States. Results of operations for the business are included in the U.S. Telecom segment and are not material to ourhistorical results of operations. International Telecom During 2016, we completed the acquisitions of One Communications and Viya (the “2016 International TelecomAcquisitions”). One Communications (formerly KeyTech Limited) On May 3, 2016, we completed our acquisition of a controlling interest in One Communications Ltd. (formerlyknown as KeyTech Limited, “One Communications”), a publicly held Bermuda company listed on the Bermuda StockExchange (“BSX”) that provides broadband and video services and other telecommunications services to residential andenterprise customers in Bermuda and the Cayman Islands (the “One Communications Acquisition”). Viya (formerly Innovative) On July 1, 2016, we completed an acquisition of all of the membership interests of Caribbean Asset Holdings LLC(“CAH”), the holding company for the group of companies operating video services, Internet, wireless and landline servicesin the U.S. Virgin Islands, British Virgin Islands and St. Maarten (collectively, “Viya”) (the “Viya Transaction”). In April2017, the U.S. Virgin Islands operations and our existing wireless operations rebranded their tradenames from “Innovative”and “Choice,” respectively, to “Viya.” Subsequent to the Viya Transaction, we sold the acquired businesses in St. Maartenand the British Virgin Islands, as further described in “Dispositions” below. Renewable Energy Vibrant Energy On April 7, 2016, we completed our acquisition of a solar power development portfolio in India (the “VibrantEnergy Acquisition”). The business operates under the name Vibrant Energy. We also retained several employees in Indiawho are employed by us to oversee the development, construction and operation of Indian solar projects. These projects areinitially located in the states of Andhra Pradesh and Telangana and are based on a commercial and industrial business model,similar to the operating model we followed for our renewable energy operations in the United States, which we sold inNovember 2018. 4 Table of ContentsPlatform and Minority Investments U.S. Telecom During the second quarter of 2018, we invested in a new platform, based in the United States, to develop in-building wireless network technology that enables building owners to capitalize on the growing demand for better indoorwireless solutions. Also during the second quarter of 2018, we provided funding for another new platform, based in theUnited States, seeking to “build to suit” large scale fiber networks to serve the telecommunications and content providerindustries in need of lower latency long haul fiber transit services. International TelecomIn 2017, we completed our investment in a technology solutions business based in Bermuda that provides a varietyof cloud-based managed services and information technology solutions for enterprise-hosted software applications. In 2017 we also made a minority investment in an Australian-based tower operator. Dispositions U.S. Telecom On March 8, 2017, we completed the sale of our integrated voice and data communications and wholesale transportbusinesses in New England and New York (the “Sovernet Transaction”). This disposition did not qualify as discontinuedoperations because the disposition did not represent a strategic shift that has a major effect on our operations and financialresults. International Telecom On August 18, 2017, we completed the sale of the Viya cable operations located in the British Virgin Islands. On January 3, 2017, we completed the sale of the Viya cable operations located in St. Maarten. On December 15, 2016, we transferred control of our subsidiary in Aruba to another stockholder in a nonreciprocaltransfer. These dispositions do not qualify as discontinued operations because the dispositions did not represent a strategicshift that had a major effect on our operations and financial results. Renewable Energy (U.S. Operations) On November 6, 2018, we completed the sale of our U.S. solar business that owned and managed distributedgeneration solar power projects operated under the Ahana name in Massachusetts, California and New Jersey (the “U.S. SolarOperations”). The transaction had a total value of approximately $122.6 million, which included a cash purchase price of$65.3 million and the assumption of approximately $55.0 million in debt, and is subject to certain other post-closingadjustments (the “U.S. Solar Transaction”). Approximately $6.5 million of the purchase price will be held in escrow for aperiod of twelve months after the closing to secure our indemnification obligations. We recorded a gain of $12.4 millionupon the completion of the sale. Our Telecommunications ServicesIn addition to managing and reviewing our results by operating segment, we also evaluate our results by service,namely wireless and wireline telecommunications, as well as renewable energy. We provide mobile wireless voice and datacommunications services in the United States, Bermuda, Guyana and the Caribbean. Our revenues from5 Table of Contentswireless services were approximately 44% of our consolidated revenues for fiscal year 2018. The U.S. portion of our businessconstitutes a significant portion of our consolidated revenue from wireless services. Our revenues from U.S. wireless serviceswere approximately 24%, 29% and 32% of our consolidated revenues for the years ended December 31, 2018, 2017 and2016, respectively. Our U.S. wireless service revenues have historically had high operating margins and therefore havecontributed a large percentage to our operating income. Our wireline services include operations in Guyana, Bermuda, the U.S. Virgin Islands, the Cayman Islands, andmainland United States. Our revenues from wireline services were approximately 51%, 47% and 42% of our consolidatedrevenues for fiscal years 2018, 2017 and 2016, respectively.U.S. Telecom SegmentWireless ServicesServices. In the United States, we provide wholesale wireless voice and data roaming services in rural markets tonational, regional, local and selected international wireless carriers. Our largest wholesale networks are located principally inthe western United States. We also offer wireless voice and data services to retail customers in certain rural markets alreadycovered by our wholesale networks.The revenue and profits of our U.S. wholesale wireless business are primarily driven by the number of sites and basestations in operation, the amount of voice and data traffic that each of these sites generates, and the rates we receive from ourcarrier customers on that traffic. Many of our sites are located in popular tourist and seasonal visitor areas, which has resultedin higher wholesale revenues in those areas during the summer months.We currently have roaming agreements with 39 United States‑based wireless service providers and, as ofDecember 31, 2018, had roaming arrangements with each of the four U.S. national wireless network operators: VerizonWireless, AT&T, Sprint and T‑Mobile. Other than the agreements with the national carriers, our standard roaming agreementsare usually terminable within 90 days. Occasionally, we may agree or strategically decide to lower rates or build a newmobile network at a specified location as part of a long‑term roaming agreement to offer our roaming partner pricingcertainty in exchange for priority designation with respect to their customers’ wireless traffic. Once we complete building arural network, we then benefit from the use of that network under existing roaming agreements with other international,national, regional, and local carriers to supplement our initial revenues. In 2018, the four national wireless service providerstogether accounted for a substantial portion of our wholesale wireless revenues, with AT&T and Verizon accounting for anaggregate of 17% of our total consolidated revenue for the year.Network and Operations. Our roaming network offers mobile communications service through a digital wirelessvoice and data network that utilizes multiple cellular mobile technologies including UMTS/HSPA, CDMA/EvDO and LTEthat often will be deployed at a single cell site location in order to maximize revenue opportunities. We provide wirelesscommunications network products and services with owned and leased spectrum primarily in the 700 megahertz (MHz), 800megahertz (MHz) and 1900 megahertz (MHz) spectrum ranges. In 2018, we continued the efforts to upgrade our cell siteswith advanced 4G LTE technology throughout our service areas. Our networks comprise base stations and radio transceiverslocated on owned or leased towers and buildings, telecommunications switches and owned or leased transport facilities. Wedesign and construct our network in a manner that will provide high-quality service to substantially all types of compatiblewireless devices. Network reliability is carefully considered and redundancy is employed in many aspects of our networkdesign.Route diversity, redundant equipment, ring topologies and the use of emergency standby power are used toenhance network reliability and minimize service disruptions from any particular network element failure. We operate high-capacity, carrier-class digital wireless switching systems that are capable of serving multiple markets through a single mobiletelephone switching office. Centralized equipment used for network and data management is located in high-availabilityfacilities supported by multiple levels of power and network redundancy. Our systems are designed to incorporate InternetProtocol (IP) packet-based Ethernet technology, which allows for increased data capacity and a6 Table of Contentsmore efficient network. Interconnection between the mobile telephone switching office and the cell sites utilizes Ethernettechnology over fiber or microwave links for virtually all of our 4G LTE sites. As of December 31, 2018, we owned and operated a total of 1,045 domestic base stations on 482 owned and leasedsites, a Network Operations Center (or “NOC”), a switching center, and presence in numerous leased data centers designed tosupport network virtualization and provide network resiliency. Our NOC provides dedicated, 24‑hour, year‑roundmonitoring of our network to ensure quality and reliable service to our customers. In 2018, we continued to expand andimprove our network, adding 58 new base stations and approximately 8 new sites and upgraded approximately 15 sites tomore advanced 4G LTE data technology. We will continue to deploy 4G LTE technology to enable more networkcapacity. In addition, we plan to test and commercially deploy Voice Over LTE (“VoLTE”) technology over the next fewyears. VoLTE technology allows customers to utilize a 4G LTE network for both voice and data services, and the migrationof our wholesale and retail subscribers to the more efficient 4G technology from 2G/3G technologies will result in increasedspectrum availability.Competition. We compete with wireless service providers that operate networks in our markets and offer wholesaleroaming services. However, the most significant competitive challenge we face in our U.S. wholesale wireless business is theextent to which our carrier customers choose not to roam on our networks or elect to build or acquire their own infrastructurein a market in which we operate, reducing or eliminating their need for our services in those markets. We address thiscompetitive threat mainly by providing a service that would be more costly for the carrier to provide itself, or, at least, a lessattractive expenditure than alternative investments in its network or business.Occasionally, we have entered into buildout projects with existing carrier customers to help the carrier acceleratethe buildout of a given area. Pursuant to these arrangements, we agree to incur the cost of building and operating a networkin a newly designated area meeting specified conditions. In exchange, the carrier agrees to license us spectrum in that areaand enter into a contract with specific pricing and term. These arrangements typically include a purchase right in favor of thecarrier to purchase that portion of the network for a predetermined price, depending on when the option to purchase isexercised. In July 2018, we completed the previously disclosed sale of approximately 100 cell sites, which, generatedapproximately $13.9 million of wholesale revenue during the year ended December 31, 2018. We did not receive anyadditional cash proceeds at closing from the sale and recorded a gain on the sale of $15.2 million.Our ability to maintain appropriate capacity and relevant technology to respond to our roaming partners’ needsalso shapes our competitive profile in the markets in which we operate. We believe that currently available technologies andappropriate capital additions will allow sufficient capacity on our networks to meet anticipated demand for voice and dataservices over the next few years. However, increasing demand for high-speed data may require the acquisition of additionalspectrum licenses to provide sufficient capacity and throughput.Wireline ServicesSales and Marketing. Our wholesale transport and capacity customers are predominately communications carrierssuch as local exchange carriers, wireless carriers, internet service providers and interstate integrated providers.Competition. Our wholesale competitors include Level 3 and Verizon Communications, other regional wholesaleproviders and cable television companies that operate fiber‑optic networks.On March 8, 2017, we completed the sale of our integrated voice and data communications and wholesale transportbusiness in New England and New York.7 Table of ContentsInternational Telecom SegmentWireless ServicesWe provide wireless voice and data service to retail and business customers in Bermuda under the “One” brandname, in Guyana under the “GTT” brand name and in the U.S. Virgin Islands under the “Viya” brand name. We also provideroaming services for many of the largest U.S. providers’ customers visiting these locations. As of December 31, 2018, we hadapproximately 300,000 wireless subscribers in our International Telecom segment and over 87% of those subscribers were onprepaid plans.Products and Services. In Bermuda, a majority of our customers subscribe to one of our postpaid plans, whichallow customers to select a plan with voice minutes, text messaging, a given amount of data and other features that recur on amonthly basis, which services are billed at the end of the service period. In our other markets, a substantial majority of ourcustomers subscribe to our prepaid plans, which require customers to purchase an amount of voice minutes, text messages ordata prior to use. In most markets, we also provide certain homes and businesses with fixed wireless services including highspeed internet.Network. We currently operate multiple advanced wireless voice and data technologies in our internationalmarkets in the 700, 850, 900, 1800, 1900 and 2500 MHz frequency bands, including GSM/EDGE, UMTS/HSPA+, and LTE.We have extensive backbone facilities linking our sites, switching facilities and international interconnection points. Out-of-territory connectivity is provided by leased and owned undersea fiber‑based interconnections.Sales and Marketing. We maintain retail stores in our markets and allow customers to pay their bills and “top up”,or add additional minutes to their prepaid plans, through payment terminals at local stores, business centers or our website,by purchase of prepaid calling cards, or via mobile or web-based apps. We advertise frequently through print and electronicmedia and radio station spots and we sponsor various events and initiatives. Our handsets, prepaid cards and prepaidaccounts are also sold through independent dealers that we pay on a commission basis.Handsets and Accessories. We offer a diverse line of wireless devices and accessories designed to meet both thepersonal and professional needs of our customers. Our device assortment includes a wide range of smartphones includingthose featuring the Android™ and iOS™ operating systems in addition to a full line of feature phones, wireless hot spots andvarious wireless solutions for small businesses. To complement our phone offerings, we sell a complete range of originalequipment manufacturer and after‑market accessories that allow our customers to personalize their wireless experience,including phone protection, battery charging solutions and Bluetooth hands‑free kits.Competition. We believe we compete for wireless retail customers in our international properties based on features,price, technology deployed, network coverage (including through roaming arrangements), quality of service and customercare. We compete against Digicel, which is a large mobile telecommunications company in the Caribbean region, and insome markets, against one or more U.S. national operators.Wireline Services Voice services. We offer voice services that include local exchange, regional and long distance calling and voicemessaging services in Bermuda, Guyana, the U.S. Virgin Islands, and in other smaller markets in the Caribbean and theUnited States. As of December 31, 2018, we had an aggregate of approximately 171,000 access lines in service in ourmarkets, which represent both residential and commercial subscribers. Across our international businesses, residentialcustomers account for approximately three-quarters of the wireline local telephone service revenue while commercialcustomers account for approximately one‑quarter.In Guyana, we are the exclusive licensed provider of domestic wireline local and long‑distance voice and dataservices into and out of the country, and in the U.S. Virgin Islands, we are the incumbent local exchange carrier and solefixed telephony provider. With respect to our international long‑distance business, we also collect payments from foreigncarriers for handling international long‑distance calls originating from the foreign carriers’ countries and8 Table of Contentsterminating on our network. We also make payments to foreign carriers for international calls originating on one of ournetworks and terminating in the foreign carrier’s countries and collect from our subscribers or a local originating carrier a ratethat is market-based or set by regulatory tariff. Internet services. We offer high-speed Internet services with varying speeds to address different customer needsand price requirements in our various markets. As of December 31, 2018, we had approximately 120,000 Internet customersacross our markets.Video services. We also offer video service over our coaxial cable and fiber-optic networks in our internationalmarkets. In the U.S. Virgin Islands we are the only authorized video services operator and are a provider of video services tocustomers in Bermuda. As of December 31, 2018, we had approximately 42,000 video customers across our markets. Wehave several offerings available to our video customers, including basic and tiered local and cable TV channels grouped intovarious content categories, such as news, sports and entertainment. Network. All of our fixed access lines are digitally switched from our switching centers in the U.S. Virgin Islands,Bermuda and Guyana. Our switching centers provide dedicated monitoring of our network to ensure quality and reliableservice to our customers. In the U.S. Virgin Islands, we deliver our services via a hybrid fiber coaxial (“HFC”) cable network and continue totransition our traditional copper network to our voice, video and data services on this network. The HFC network gives usexpanded Internet access coverage to more than 95% of homes in the U.S. Virgin Islands with speeds up to 100 Mbps forresidential customers. Following Hurricanes Irma and Maria in 2017 (collectively, the “Hurricanes”), service to ourcustomers over the HFC network was impacted due to both the loss of power and damage to our network. While we havesubstantially completed remediation efforts to our network, it may take significant time to return to pre-hurricane revenuelevels. Our international voice and data networks are linked with the rest of the world principally through underseafiber‑optic cables. In Guyana we co‑own the Suriname‑Guyana Submarine Cable System with Telesur, thegovernment‑owned telecommunications provider in Suriname, that provides us with more robust redundancy, the capacityto meet growing data demands in Guyana, and the opportunity to provide new and enhanced services such as Internetservice. We also lease capacity on certain satellites to provide both international and local backhaul services.Sales and Marketing. Our businesses utilize four key sales channels: stores, telesales, business-to-business (“B2B”)channels and residential sales (inbound). The telesales department makes outbound calls to existing customers to promotebundling and other upgrade opportunities and our B2B sales channel focuses on selling data and voice products to businessand government accounts. Certain residential sales are made through inbound communications to customer servicerepresentatives who assist with a wide range of inquiries and sell different product offerings to help retain customers orimprove their service with upgrades or bundles. Our revenues for our wireline services are derived from installation chargesfor new lines, monthly line charges, data and video services and value added services, such as hosting or enterprise voice anddata solutions. For our voice wireline services, rates differ for residential and commercial customers and in certain markets,may be set by regulatory authorities.Competition. We compete with a limited number of other providers, including Digicel, with respect to variousproducts. In 2016, we acquired our wireline businesses in Bermuda and the U.S. Virgin Islands in order to provide us withgreater scale in those markets and the capability to offer a “quad play” of connectivity: high speed internet, mobility, videoand voice services. In 2017, our competition in Bermuda made substantial additional wireline network investments andbegan offering video services and competitive high speed internet services. We believe our breadth of services and localeconomies of scale provide us with a strong competitive position and the ability to win and retain an economically viableshare of those markets. In Guyana, we have the exclusive right to provide domestic fixed and international voice and data services,pursuant to a license from the Government of Guyana. As the initial term of our license was scheduled to expire in December2010, we notified the Government of Guyana of our election to renew our exclusive license for an additional 20 year termexpiring in 2030 and received return correspondence from the Government that our exclusive license had9 Table of Contentsbeen renewed until such time that new legislation is implemented with regard to the Government’s intention to introducecompetition into the sector. We believe, however, our exclusive license continues to be valid unless and until such time aswe enter into an alternative agreement with the Government. See “—Guyana Regulation—Regulatory Developments” and“Risk Factors—Our exclusive license to provide local exchange and international voice and data services in Guyana issubject to significant political and regulatory risk.”Impact of Hurricanes During September 2017, the economy, our customer base and our operations in the U.S. Virgin Islands were severelyimpacted by the Hurricanes. Our wireless and wireline networks as well as our commercial operations were severely damagedby these storms. As a result of the significant damage to the wireline network and the lack of consistent commercial power inthe territory, we were unable to provide most of our wireline services, which comprise the majority of our revenue in thisbusiness, subsequent to the Hurricanes and through a majority of 2018. During the year ended December 31, 2017, we recorded a net pre-tax loss within our consolidated statement ofoperations of $4.0 million. This loss consisted of $35.4 million for the write off of damaged assets, net of insurancerecoveries of $34.6 million which were received in February 2018. This loss also included $3.2 million of additionaloperating expenses that were specifically incurred to address the impact of the Hurricanes. During the year ended December 31, 2018, we received $15.5 million in additional funding from the FederalCommunications Commission’s (“FCC”) Universal Service Fund (“USF”) to further subsidize our operations in the U.S.Virgin Islands that was recorded as revenue. This level of additional funding is not expected to continue in future periods. During the years ended December 31, 2017 and 2018, we spent $8.6 million and $80.2 million, respectively, fornetwork restoration and resiliency enhancements that allowed the reconnection of a significant majority of affectedhouseholds and businesses. We believe that the wireline network restoration work is substantially complete, however,returning our revenue to pre-Hurricane levels may take significant time as a result of population movements, the economicimpact the Hurricanes had on the market, and our subscriber base’s appetite for continued wireline services. Renewable Energy ServicesUnited StatesOn November 6, 2018, we completed the sale of our U.S. Solar Operations. The transaction had a total value ofapproximately $122.6 million, which included a cash purchase price of $65.3 million and the assumption of approximately$57.3 million in debt, and was subject to certain other post-closing adjustments. Approximately $6.5 million of the purchaseprice is being held in escrow for a period of twelve months after the closing to secure our indemnification obligation and werecorded a gain of $12.4 million.Prior to the sale of the U.S. Solar Operations, we owned and operated 29 commercial solar projects at 60 sites withan aggregate 46.93 megawatts DC peak (“MWp”) of electricity generating capacity. We owned these sites through variousindirect subsidiaries that were formed for the purpose of financing the development of, and owning and operating, the sites.Services. Historically, our U.S. solar projects were in the “commercial and industrial” (“C&I”) sector of the solarmarket, which is distinguished from utilities and residential customers. Our customers or “offtakers” included high‑creditquality corporate entities, utilities, schools, and municipalities, which purchased electricity from us under the terms oflong‑term power purchase agreements (“PPAs”). In the future, we may develop a new project portfolio of U.S. facilitiesthrough additional investments with offtakers with strong credit ratings in markets that offer favorable government policiesto encourage renewable energy projects and where our projects can generate electricity at a cost that is less than or equal tothe price of purchasing power from traditional energy sources. We contract with utilities through10 Table of Contentsan interconnection agreement to export excess energy generated by our Facilities to another offtaker and/or the utilityelectrical grid.Infrastructure. Prior to the sale of the U.S. Solar Operations, our Facilities were comprised of rooftop,ground‑mounted and elevated solar support structure photovoltaic (“PV”) installations. Our facilities were located on ourcustomers’ buildings, parking structures, landfill sites and other locations pursuant to leases or easements granted to us byour customers. These facilities used crystalline silicon PV modules mounted in ballasted, tracking or roof penetratingfixed‑tilt configurations.InternationalOn April 7, 2016, we acquired a solar power development portfolio in India and since that time, have beenconstructing distributed generation solar power projects in the states of Andhra Pradesh and Telangana based on acommercial and industrial business model, similar to our U.S. renewable energy operations. As of December 31, 2018, wehave five power evacuating solar projects (each, a “Facility”) each with capacity ranging from 7.5 to 11.5 megawatts DCpeak (“MWp”). We have an additional 4 MWp under construction that will expand one of our existing Facilities and expectto add a sixth Facility by mid- 2019. We currently have a pipeline of acquisition opportunities and new constructioncapacity of up to an additional 300MWp. Solar projects are capital intensive and the greatest challenge to increasing ouroperating portfolio is our ability to secure third party debt to fund the installation of the additional capacity. Our strategy isalso to seek third party equity capital in order to build a larger portfolio and achieve economies of scale and diversificationbenefits. Our ability to expand our business will also depend on, among other things, our ability to acquire the required landfor the new capacity, our ability to secure agreements to sell the power on terms that our financing sources consider to bebankable, our willingness to compete with local solar businesses who may be willing to build projects with a lowerrisk/return profile than ours, and the need to further strengthen our systems and processes to manage the ensuing growthopportunities. For a discussion of the risks associated with executing our short and long term growth plans in India, see “ RiskFactors—Risks Related to Our Renewable Energy Segment.” Market Opportunity. We believe solar power in India is an attractive investment opportunity for our RenewableEnergy business due to the large unmet demand for electricity, coupled with ideal weather conditions for solar energy andthe continued low cost to build, due to decreases in solar panel pricing and the decreasing cost of debt. We consider India to be an attractive market for solar power without the need to rely on governmentalsubsidies. While we currently expect the landscape for solar power to change over time in India, and potentially materiallyas the market matures, we believe that the core principal behind our investment in our Indian solar business, that solar powercan compete with fossil fuels on a level playing field for the long-term, remains valid. Services. We own our Facilities through various Special Purpose Entities. We sell electricity to C&I customers anddo not expect to sell power directly to residential customers in India. Our target C&I customers or “offtakers” for our initialFacilities are corporate entities, including banks, manufacturers, hotel groups, and hospital groups, which purchaseelectricity from us under the terms of PPAs. We focus on customers that have high credit ratings or that we otherwise believeto present limited credit risk. The PPA terms agreed upon with our initial customer base are typically five years in duration,with an option to extend for another five years and priced at rates with annual rate escalators, allowing customers to secureelectricity at predictable and stable prices over the duration of their long‑term contract. As such, we believe the PPAsprovide us with high‑quality contracted cash flows, which, although our customers may terminate the PPAs with one-yearnotice, we nevertheless expect will continue over their average remaining life. Our PPAs typically have penalties for thenon-delivery of power and therefore, we typically try to enter into binding PPAs late in the development process when theconnection date of the solar farm can be predicted with greater confidence. On the other hand, if the offtaker fails to take theagreed quantum of power, we can levy a penalty equal to the loss of revenue we incurred due to such failure on the part of theofftaker. In the event of non-payment, current regulations allow us to sell power to any commercial or industrial customerwithin 500 kilometers of our grid connection and we would seek to sell the allotted power to a different customer. 11 Table of ContentsIn developing each solar project, we use in-house resources for development, engineering and project management andhire third party EPC contractors to construct our Facilities. We actively manage their performance through our in-housetechnical and quality assurance team. To date, we have financed the construction of our Facilities mainly with internalequity and intercompany debt and following the completion of construction, our goal is to secure project debt financing foreach completed Facility and to use those proceeds towards the construction of additional Facilities in 2019. Infrastructure. Our existing Facilities are located on land that we own and are comprised of ground‑mounted solarphotovoltaic (“PV”) installations. The majority of our Facilities are single-axis tracking systems to increase the generatingcapability of our Facilities. For a more detailed discussion of the risks associated with land procurement and ownership inIndia, see “ Risk Factors— Risks Related to Our Renewable Energy Segment.” We manage our Facilities through third partyoperation and maintenance (“O&M”) contracts and our corporate staff tracks the data and services provided by the third-party service provider. Our internal asset management team is hands-on and works closely with third-party vendor partners tomaintain performance. We depend on a limited number of key suppliers for the PV modules that we purchase for installation at our Facilities,with the majority of facilities constructed with Tier 1 PV modules supplied by GCL Systems, a Tier 1 Chinese modulesupplier. Typically, the PV modules carry materials and workmanship warranties of 10 years in duration, with powerwarranties for a 25‑year useful life. Competition. We compete with traditional electric power industry; however, our primary competitors are other solarenergy companies that may have greater financial resources or brand name recognition than we do, disadvantaging ourability to attract new customers. The solar energy industry is highly competitive and there are low barriers to entry forcompanies with sufficient financial resources. However, we believe that the availability of expansion capital from third partyfinancing sources, rather than competition from third parties, is the major risk factor that inhibits our achieving our near-termgoals for our Renewable Energy segment. Over the longer term, some of our competitors may have advantages over us interms of larger size, access to expansion capital, internal access to solar panels and greater operational, financial, technical,management, lower cost of capital or other resources. See “Risk Factors — Risks Related to Our Renewable Energy Segment— We face significant competition from traditional and renewable energy companies.” EmployeesAs of December 31, 2018, we had approximately 1,700 employees, of whom approximately 600 were employed inthe United States (including in the U.S. Virgin Islands). At the holding company level, we employ our executive managementteam and staff. Approximately half of our Guyana and U.S. Virgin Island full‑time work forces are represented by unions. Inaddition, approximately 19% of our Bermuda fulltime workforce is also represented by unions. We believe we have goodrelations with our employees.RegulationTelecom RegulationOur wireless and wireline telecommunications and video services operations are subject to extensive governmentalregulation in each of the jurisdictions in which we provide services. Our wireless and wireline operations and our videoservices operations in the United States and the U.S. Virgin Islands are governed by the Communications Act of 1934, asamended (“Communications Act”), the implementing regulations adopted thereunder by the FCC, including theTelecommunications Act of 1996, as well as judicial and regulatory decisions interpreting and implementing theCommunications Act, and other federal, state, and local statutes and regulations. Our operations are also governed by certainforeign laws and regulations.12 Table of Contents The following summary of regulatory developments and legislation does not purport to describe all present andproposed federal, state, local, and foreign regulation and legislation that may affect our businesses. Legislative or regulatoryrequirements currently applicable to our businesses may change in the future and legislative or regulatory requirements maybe adopted by those jurisdictions that currently have none. Any such changes could impose new obligations on us thatwould adversely affect our operating results.U.S. Federal Telecom RegulationWireless ServicesThe FCC regulates, among other things; the licensed and unlicensed use of radio spectrum; the ownership, lease,transfer of control and assignment of wireless licenses; the ongoing technical, operational and service requirementsapplicable to such licenses; the timing, nature and scope of network construction; the provision of certain services, such asenhanced 911 (“E 911”); and the interconnection of communications networks in the United States.Licenses. We provide our wireless services pursuant to various commercial mobile radio services (“CMRS”)licenses (including cellular, broadband Personal Communications Services (“PCS”), 600 MHz Band, 700 MHz Band,Advanced Wireless Service (“AWS”), and Broadband Radio Service (“BRS”) licenses granted by the FCC), pursuant tospecial temporary authority (“STA”) to use certain BRS spectrum for which we do not hold a license, and pursuant to leasesof spectrum from FCC licensed operators. Some of these licenses and STAs are site based while others cover specifiedgeographic market areas, e.g., Cellular Market Areas (“CMAs”) and Basic Trading Areas (“BTAs”), as defined by the FCC.The specific radio frequencies, the authorized spectrum amounts, and certain of the technical and service rules varydepending on the licensed service. The FCC generally allocates CMRS licenses through periodic auctions, after determininghow many licenses to make available in particular frequency ranges, the applicable service rules, and the terms on which thelicense auction will be conducted. Such licenses are also available via secondary market mechanisms, using procedures andregulations set forth by the FCC. There is no certainty as to when additional spectrum will be made available for wirelessbroadband services, the amount of spectrum that might ultimately be made available, the timing of any future auction ofspectrum, the likely configuration of any such additional spectrum and conditions that might apply to it, the usability of anyof this spectrum for wireless services competitive with our services or by us, or the likelihood that we will acquire spectrumlicenses made available in any future auction.Construction Obligations. The FCC conditions licenses on the satisfaction of certain obligations to constructnetworks covering a specified geographic area or population by specific dates. The obligations vary depending on thelicensed service. Failure to satisfy an applicable construction requirement can result in the assessment of fines and forfeituresby the FCC, a reduced license term, or automatic license cancellation. We are substantially in compliance with the applicableconstruction requirements that have arisen for the licenses we currently hold and expect to meet our future constructionrequirements as well. In particular, we have met the first build out requirement with respect to our 700 MHz Band licenses,with the second build out deadline (which requires coverage to 70 percent of each license area) coming due in June 2019. Ifwe fail to meet the first build out requirement applicable to any 600 MHz Band license (coverage to 40 percent of thepopulation in the license area within six years of license grant), the license term for that license will be reduced by two years.If we fail to meet the end-of term build out requirement applicable to any individual 600 MHz Band license (coverage to 75percent of the population in the license area by the end of the license term), that license will terminate automatically and wewill lose the ability to regain it.License Renewals. Our FCC licenses generally expire between 2019 and 2030 and are renewable upon applicationto the FCC. License renewal applications may be denied if the FCC determines, after appropriate notice and hearing, thatrenewal would not serve the public interest, convenience, or necessity. At the time of renewal, if we can demonstrate that wehave provided “substantial” service during the past license term and have complied with the Communications Act andapplicable FCC rules and policies, the FCC will award a renewal expectancy to us and will generally renew our existinglicenses without considering any competing applications. If we do not receive a renewal expectancy, the FCC will acceptcompeting applications for the license and conduct a comparative hearing. In that situation, the FCC may award the licenseto another applicant. While our licenses have been renewed regularly by the FCC in the past, there can be no assurance thatall of our licenses will be renewed in the future.13 Table of ContentsThe FCC may deny license applications and, in extreme cases, revoke licenses if it finds that an entity lacks therequisite qualifications to be a licensee. In making that determination, the FCC considers whether an applicant or licenseehas been the subject of adverse findings in a judicial or administrative proceeding involving felonies, the possession or saleof unlawful drugs, fraud, antitrust violations, or unfair competition, employment discrimination, misrepresentations to theFCC or other government agencies, or serious violations of the Communications Act or FCC regulations. To our knowledge,there are no activities and no judicial or administrative proceedings involving either us or the licensees in which we hold acontrolling interest that would warrant such a finding by the FCC.License Acquisitions. Prior FCC approval typically is required for transfers or assignments of a controlling interestin any license or construction permit, or of any rights thereunder. The FCC may approve or prohibit such transactionsaltogether, or approve such transactions subject to certain conditions such as divestitures or other requirements. Non-controlling minority interests in an entity that holds an FCC license generally may be bought or sold without FCC approval,subject to any applicable FCC notification requirements. The FCC permits licensees to lease spectrum to third parties undercertain conditions, subject to prior FCC approval, or in some instances, notification to the FCC. These mechanisms provideadditional flexibility for wireless providers to structure transactions and create additional business and investmentopportunities.The FCC no longer caps the amount of CMRS spectrum in which an entity may hold an attributable interest andnow engages in a case by case review of proposed wireless transactions, including spectrum acquired via auction, to ensurethat the proposed transaction serves the public interest and would not result in a rule violation or an undue concentration ofmarket power. The FCC utilizes a spectrum aggregation screen to determine whether a proposed secondary markettransaction requires additional scrutiny. The FCC in June 2014 adopted an order that updated the spectrum screen. TheFCC’s order continued the FCC’s policy of conducting a case by case analysis of a combined entity’s spectrum screenholdings for proposed transactions, revised its existing spectrum screen to reflect the current suitability and availability ofspectrum for mobile wireless services, and adopted certain limitations with respect to the purchase and transfer of 600 MHzspectrum. A transaction will be reviewed by the FCC for potential competitive effects if it will result in the acquiring entityhaving (1) total spectrum holdings generally exceeding approximately one-third of the total amount of suitable andavailable spectrum in any county; or (2) over 68 MHz of spectrum under 1 GHz. The FCC’s additional scrutiny would also betriggered if a proposed transaction results in a material change in the post transaction market share in a particular market asmeasured by the Herfindahl Hirschman Index. We are well below the spectrum aggregation screen in the majority ofgeographic areas in which we hold or have access to licenses, and thus we may be able to acquire additional spectrum eitherfrom the FCC in an auction or from third parties in private transactions in most locations in which we operate. However, weare approaching or could trigger the spectrum screen if we attempt to acquire additional spectrum in the U.S. Virgin Islands.Similarly, our competitors may be able to strengthen their operations by making additional acquisitions of spectrum in ourmarkets or by further consolidating the industry.Other Requirements. The Communications Act and the FCC’s rules impose a number of additional requirementsupon wireless service providers. A failure to meet or maintain compliance with the Communications Act and/or the FCC’srules may subject us to fines, forfeitures, penalties or other sanctions.Wireless licensees must satisfy a variety of FCC requirements relating to technical and reporting matters. Licenseesmust often coordinate frequency usage with adjacent licensees and permittees to avoid interference between adjacentsystems. In addition, the height and power of transmitting facilities and the type of signals emitted must fall within specifiedparameters. For certain licensed services, a variety of incumbent government and non-government operations may have to berelocated before a licensee may commence operations, which may trigger the incurrence of relocation costs by the incominglicensee. The radio systems towers that we own and lease are subject to Federal Aviation Administration and FCCregulations that govern the location, marking, lighting, and construction of towers and are subject to the requirements of theNational Environmental Policy Act, National Historic Preservation Act, and other environmental statutes enforced by theFCC. The FCC has also adopted guidelines and methods for evaluating human exposure to radiofrequency field emissionsfrom radio equipment. We believe that all of our radio systems on towers that we own or lease comply in all material respectswith these requirements, guidelines, and methods.14 Table of ContentsThe FCC has adopted requirements for cellular, PCS and other CMRS providers to implement basic 911 and E-911services. These services provide state and local emergency service providers with the ability to better identify and locate 911callers using wireless services, including callers using special devices for the hearing impaired. Because the implementationof these obligations requires that the local emergency services provider have certain facilities available, our specificobligations are set on a market by market basis as emergency service providers request the implementation of E-911 serviceswithin their locales. As part of an E-911 initiative, the FCC adopted stronger rules regarding E-911 location accuracy andcontinues to evaluate the potential for improving location accuracy for 911 calls. The extent to which we are required todeploy E-911 services will affect our capital spending obligations. Federal law limits our liability for uncompleted 911 callsto a degree commensurate with wireline carriers in our markets. The FCC also has adopted rules requiring wireless carriers and certain other text messaging service providers toprovide text-to-911 service and an automatic “bounce back” text message to consumers who try to text 911 where text to 911is not available, indicating the unavailability of such services. Like E-911 services, the obligation to provide these servicesis largely tied to requests from emergency service providers for these services. We are currently in compliance with all publicsafety answering point requests we have received. The FCC has also sought further comment regarding additional regulationspertaining to the provision of text to 911 service.In addition to CMRS licenses, our wireless business relies on FCC-licensed spectrum for “Common Carrier FixedPoint to Point Microwave” referred to as common carrier microwave. We currently operate over 250 licensed microwavelinks. Common carrier microwave stations are generally used in a point-to-point configuration for cellular site backhaulconnections or to connect points on the telephone network that cannot be connected using standard wireline or fiber opticcable because of cost or terrain. The majority of our license grants are for a period of ten years. The FCC grants licenserenewal applications in the ordinary course.The FCC established a Wireless Emergency Alerts (“WEA”) system that allows CMRS providers to transmitemergency alerts to the public. This system is voluntary. We are opting in to the service and are currently providing it to allof our retail wireless customers where technically feasible. The rules governing participation contain many requirements,such as alert logging, maximum message lengths, alerts regarding threats to police officers, and support for non-Englishmessages. Many of these requirements are not yet effective or will change over the next 12 months. We are monitoring theseeffective dates and plan to fully comply with the rules.The FCC’s rules require CMRS providers to offer “roaming” services to other providers. Roaming enables oneprovider’s customers to obtain service from another provider when the customer is using their wireless device in an areaserved by the second provider. These rules apply to voice, messaging, and data services, including Internet access, althoughthe roaming rules vary somewhat among these services. We are obligated to offer roaming, and we have the right to seekroaming from other providers, on reasonable terms and conditions. The FCC has identified a variety of factors that arerelevant to whether an offer to provide roaming is reasonable, including the price, terms and conditions, and whether the twoproviders’ networks are technologically compatible. Changes in the FCC’s roaming regulations may affect the terms underwhich we provide roaming services to third parties and may affect our ability to secure roaming arrangements with otherCMRS providers on behalf of our retail wireless customers.We are obligated to pay certain annual regulatory fees and assessments to support FCC wireless industry regulation,as well as fees supporting federal universal service programs, number portability, regional database costs, centralizedtelephone numbering administration, telecommunications relay service for the hearing impaired and application filing fees.These fees are subject to change periodically by the FCC and the manner in which carriers may recoup these fees fromcustomers is subject to various restrictions.Wireline ServicesThe Communications Act encourages competition in local telecommunications markets by removing barriers tomarket entry and imposing on non-rural incumbent local exchange carriers (“ILECs”) various requirements related to, amongother things, interconnection, access to unbundled network elements, co-location, access to poles, ducts, conduits,15 Table of Contentsand rights of way, wholesale and resale obligations, and telephone number portability. Our ILEC operations in the U.S.Virgin Islands through Viya are exempt from most of such federal requirements pursuant to a rural exemption.While, to date, the FCC has declined to classify interconnected voice-over Internet protocol (“VoIP”) service as atelecommunications service or information service, it has imposed a number of consumer protection and public safetyobligations on interconnected VoIP providers, relying in large part on its general ancillary jurisdiction powers. To the extentthat we provide interconnected VoIP service, we are subject to a number of these obligations.The FCC recently completed several related proceedings in which it adopted actions to help expedite thedeployment of wireline network infrastructure. Those actions include adopting rules to facilitate the attachment of newfacilities to utility poles and eliminating or reducing requirements to provide notice of service discontinuance. We expectthese FCC actions will facilitate our ability to expand our wireless network coverage. However, these FCC decisions havebeen appealed in federal circuit court, and we cannot predict with any certainty the likely timing or outcome of any courtactions. Video Services Video services systems are regulated by the FCC under the Communications Act. The FCC regulates ourprogramming selection through local broadcast TV station mandatory carriage obligations, constraints on our retransmissionconsent negotiations with local broadcast TV stations, and limited regulation of our carriage negotiations with cableprogramming networks. The FCC and federal laws also impose rules governing, among other things, leased cable set-topboxes, our ability to collect and disclose subscribers’ personally identifiable information, access to inside wiring in multipledwelling units, cable pole attachments, customer service and technical standards, and disability access requirements. Failureto comply with these regulations could subject us to penalties. The FCC is examining whether it should modernize its videoregulations and already has updated or eliminated some requirements, but we cannot predict whether and to what extent theFCC will continue to pursue deregulation in this space. Wireless and Wireline ServicesUniversal Service. In general, all telecommunications providers are obligated to contribute to the federal UniversalService Fund (“USF”), which is used to promote the availability of wireline and wireless telephone service to individuals andfamilies qualifying for federal assistance, households located in rural and high cost areas, and to schools, libraries, and ruralhealth care providers. Contributions to the federal USF are based on end-user interstate and international telecommunicationsrevenue. Some states have similar programs that also require contribution. The FCC has suggested that it may examine theway in which it collects carrier contributions to the USF, including a proposal to base collections on the number of telephonenumbers or network connections in use by each carrier, and some states have changed or are considering changing theircontribution methodologies. We contribute to the USF as required by the rules throughout the U.S., and receive funds fromthe USF for providing service in rural areas of the United States, including the U.S. Virgin Islands. The collection of USF feesand distribution of USF support is under continual review by state and federal legislative and regulatory bodies, and changesto these programs could affect our revenues. We are subject to audit by the Universal Service Administration Company(“USAC”) with respect to our contributions and our receipts of universal service funding. We believe we are substantiallycompliant with all FCC and state regulations related to the receipt and collection of universal service support.In November 2011, the FCC released an order reforming the USF program. As part of the USF reforms, the FCCordered the creation of two new replacement funds, the Connect America Fund and the Mobility Fund, both of which requirethe use of USF funds for broadband and voice services. These funds are intended to provide targeted financial support toareas that are unserved or under served by voice and broadband service providers. We and our subsidiaries pay into, andcertain of our subsidiaries receive funding from, these funds. We cannot predict the impact of any changes in the amounts wepay or receive in USF funds or whether such a change will occur in the future.In July 2012, the FCC initiated the application process for the Mobility Fund I program, a reverse auction for aone‑time distribution of up to $300 million intended to stimulate third‑ and fourth‑generation wireless coverage in16 Table of Contentsunserved and under‑served geographic areas. A number of our subsidiaries participated in the Mobility Fund I reverseauction on September 27, 2012 and bid successfully for approximately $21.7 million in one‑time support to expand voiceand broadband networks in certain geographic areas in order to offer either 3G or 4G coverage. These subsidiaries havecompleted the construction of the facilities funded by this support and have finalized the submissions necessary to receivetheir final payments.In August 2018, we were awarded $79.9 million over 10 years under the Connect America Fund Phase IIAuction. The funding requires we provide fixed broadband and voice services to certain eligible areas in the UnitedStates. We are subject to operational and reporting requirements under the program. We expect to begin receiving thefunding in 2019 and will record the amounts received as revenue in our financial statements.Our business in the U.S. Virgin Islands also benefits from USF support. Our U.S. Virgin Islands wireline business hashistorically received, and continues to receive, annual support of approximately $16.4 million. In addition, after thedevastation caused by the Hurricanes in September 2017, the FCC provided approximately $9.7 million in recovery supportin November 2017, and an additional $7.3 million in recovery support in August 2018. The FCC has an ongoing proceedingin which it has proposed to allocate USF funding of up to $18.65 million per year (inclusive of the $16.4 million per yearcurrently allocated to Viya) for 10 years to fixed voice and broadband providers in the U.S. Virgin Islands. In this proceeding,the FCC has asked questions about how to award this funding. Specifically, the FCC has asked for public comment regardingwhich entity or entities should be eligible for the funding and how it should be allocated among eligible recipients. Viya hasurged the FCC to maintain support to Viya at or above the current level of $16.4 million per year for a period of no less thanten years. The FCC’s proceeding remains open at this time and we cannot predict its outcome.Intercarrier Compensation. Under federal and state law, telecommunications providers are sometimes required tocompensate one another for originating and terminating traffic for other carriers. Consistent with these provisions, wecurrently receive compensation from other carriers and also pay compensation to other carriers. In October 2011, the FCC,significantly revised its intercarrier compensation regime such that most of these compensation obligations ceased by July 1,2017, and most remaining obligations will cease by July 1, 2020. As a result, this type of intercarrier compensation is nolonger material to our business.Net Neutrality. In January 2018, the FCC released a decision rescinding various “net neutrality” requirementsgoverning how broadband Internet access providers were permitted to offer broadband service. As a result, under the currentapproach, broadband Internet access providers must publicly disclose detailed information regarding their service offerings,Internet traffic management processes, and other practices affecting broadband customers, but are otherwise largely limited intheir ability to block, throttle, or prioritize specific types of Internet traffic. The FCC also held that states are prohibited fromenacting their own versions of these or similar requirements. Various Internet content providers, numerous states, and severaladvocacy groups have challenged the FCC’s 2018 decision in federal appeals court. Among other things, the challengersargue that the court should reinstate previous rules regulating broadband providers’ treatment of Internet traffic on theirnetworks, and that the FCC lacked authority to prohibit states from adopting state regulations. We cannot predict with anycertainty the likely timing or outcome of this court challenge. In the meantime, several states have adopted, or areconsidering, net neutrality requirements of their own. Some of these are currently subject to legal challenge by broadbandproviders and/or the United States government in federal district court. We cannot predict with any certainty the likelytiming or outcome of these or future challenges.Telecommunications Privacy Regulations. We are subject to federal regulations relating to privacy and datasecurity that impact all parts of our business. On April 3, 2017, the President signed into law a bill that nullified privacy rulesadopted by the FCC in October 2016, which would have imposed certain transparency, consumer choice, data security, anddata breach notification requirements on telecommunications providers, including broadband Internet providers. However,certain other federal statutory and regulatory privacy and data security requirements continue to apply to ourtelecommunications services. Other parts of our business are subject to the privacy and data security oversight by otherfederal regulators, including the Federal Trade Commission. Generally, attention to privacy and data security requirements isincreasing. We believe that we comply with all currently applicable requirements, but we cannot predict future changes oflaw in this area or the impact of any such changes on our businesses.17 Table of ContentsCALEA. Under certain circumstances, federal law also requires telecommunications carriers to provide lawenforcement agencies with capacity and technical capabilities to support lawful wiretaps pursuant to the CommunicationsAssistance for Law Enforcement Act (“CALEA”). Federal law also requires compliance with wiretap related record keepingand personnel related obligations. We are in compliance with all such requirements currently applicable to us. The FCC hasadopted rules that apply CALEA obligations to high-speed Internet access and VoIP services. Maintaining compliance withthese law enforcement requirements may impose additional capital spending obligations on us to make necessary systemupgrades.Obligations Due to Economic Stimulus GrantsOne of our subsidiaries has received awards from the Broadband Technology Opportunities Program (“BTOP”) ofthe U.S. Department of Commerce (“DOC”) pursuant to the American Recovery and Reinvestment Act of 2009 (“ARRA”). Asa BTOP sub-recipient, we are subject to the various terms and conditions included in the agency’s Notice of FundsAvailability published in the Federal Register on July 9, 2009. We are also required to comply with other terms andconditions of the individual DOC grants. We believe we are currently in material compliance with all BTOP and DOCrequirements applicable to our grants.U.S. State RegulationWireless ServicesFederal law preempts state and local regulation of the entry of, or the rates charged by, any CMRS provider. As apractical matter, we are free to establish wireless rates and offer new wireless products and services and are subject to only aminimum level of state regulatory requirements. The states in which we operate maintain nominal oversight jurisdiction. Forexample, although states do not have the authority to regulate the entry or the rates charged by CMRS providers, states mayregulate the “other terms and conditions” of a CMRS provider’s service. Most states still maintain some form of jurisdictionover complaints as to the nature or quality of services and as to billing issues. A number of state authorities have initiatedactions or investigations of various wireless carrier practices. The outcome of these proceedings is uncertain and couldrequire us to change certain of our practices and ultimately increase state regulatory authority over the wireless industry.States and localities assess on wireless carriers taxes and fees that may equal or even exceed federal obligations.The location and construction of our wireless transmission towers and antennas are subject to state and localenvironmental regulation, as well as state or local zoning, land use and other regulation. Before we can put a system intocommercial operation, we must obtain all necessary zoning and building permit approvals for the cell site and towerlocations. The time needed to obtain zoning approvals and requisite state permits varies from market to market and state tostate. Likewise, variations exist in local zoning processes. If zoning approval or requisite state permits cannot be obtained, orif environmental rules make construction impossible or infeasible on a particular site, our network design might be adverselyaffected, network design costs could increase and the service provided to our customers might be reduced.The FCC recently completed several related proceedings in which it adopted actions to help expedite thedeployment of wireless network infrastructure. Those actions include limiting state and local regulations governing theconstruction of towers and the installation of small cells and other facilities within and outside public rights-of-way when theFCC determines those regulations can be barriers to deployment. Among other things, the FCC established new shorter shotclocks for completion of local reviews of small wireless facility applications and eliminated federal environmental andhistoric preservation review of small wireless facilities. We expect these FCC actions to facilitate our ability to expand ourwireless network coverage.U.S. Virgin Islands RegulationVirgin Islands Public Service Commission 18 Table of ContentsIn addition to the regulations described above, our operations in the U.S. Virgin Islands are also subject to the U.S.Virgin Islands Public Utilities Code, pursuant to which the Virgin Islands Public Service Commission (“PSC”) regulatescertain telecommunications and cable TV services that Viya provides in the U.S. Virgin Islands. Among other things, the PSCestablishes the rates and fees that we may charge local exchange residential and enterprise customers in the U.S. VirginIslands. The PSC is required by U.S. Virgin Islands law to review local utility rates every five years. In June 2016, the PSCadopted an order increasing the rates and fees that we may charge subject to certain conditions and future obligations. Webelieve that we have satisfied these requirements. In addition, certain of our subsidiaries entered into a transfer of controlagreement with the PSC on July 1, 2016, which imposes certain operational and reporting obligations on the Viyacompanies. The PSC currently is evaluating our compliance with certain of these requirements. Although we believe that wecomply with all such requirements, some of which were temporarily waived by the PSC as a result of the Hurricanes inSeptember 2017, we cannot predict the outcome of this proceeding. Further, as a condition to Viya’s receipt of USF fundsfrom the FCC, the PSC is required to certify on an annual basis that Viya is in compliance with certain eligibletelecommunication carrier (“ETC”) obligations. We believe that we comply with all such obligations but cannot predict theoutcome of future PSC proceedings relating to Viya’s ETC status. Our subsidiaries provide cable TV service in the U.S. Virgin Islands pursuant to two franchises granted by the PSC.Each franchise was renewed in July 2015 by an order issued by the PSC, but the PSC has not yet issued new franchiseagreements memorializing these renewals. We cannot predict what requirements will be included in the renewed franchiseagreements. However, we understand that the renewed franchise agreements will likely contain substantially similar termsand conditions as the prior franchise agreements, including a 15-year term. We also believe that the renewed franchiseagreements will exclude prior language permitting the PSC to regulate our cable rates. The FCC is considering whether itshould place new limits on the powers of local cable franchising authorities such as the PSC, but we cannot predict what, ifany, action the FCC will take or how any such changes will impact our business. The PSC is reviewing the damage to our network caused by the Hurricanes, as well as our efforts to restoretelecommunications and video services in the U.S. Virgin Islands and maintain compliance with our communicationsregulatory obligations under U.S. Virgin Islands laws during our restoration efforts. We do not know what, if any, action thePSC will take in the course of this review. Virgin Islands Research and Technology Park Our video and wireless companies in the U.S. Virgin Islands also receive tax benefits as qualifying participants inthe U.S. Virgin Islands’ Research & Technology Park (“RTPark”) program. RTPark was chartered with the goal of promotingtechnology-based economic development in the territory and offering attractive economic incentives to companies thatcontribute to the development of the Virgin Islands through local employment and sourcing, as well as significantcontributions to both the economy and the non-profit sectors of the community. As part of the program, our participatingentities currently receive a 100% tax exemption applied against gross receipts and excise taxes as well as a 90% exemptionagainst income taxes. These benefits resulted in tax exemptions of approximately $2.7 million during the year endedDecember 31, 2018. In order to qualify, we are required to maintain certain capital investments over the first five years of theagreement, pay monthly management fees of 0.4% of tenant company revenue, make annual charitable contributions to theUniversity of the Virgin Islands, purchase products and services locally when feasible and provide in-kind services toRTPark. Guyana Regulation Our subsidiary, Guyana Telephone & Telegraph Limited (“GTT”), in which we hold an 80% interest, is subject toregulation in Guyana under the provisions of GTT’s License from the Government of Guyana, the Guyana Public UtilitiesCommission Act of 1999 as amended (or “PUC Law”) and the Guyana Telecommunications Act 1990 (or“Telecommunications Law”). The Public Utilities Commission of Guyana (or “PUC”) is an independent statutory body withthe principal responsibility for regulating telecommunications rates and services in Guyana. The Ministry ofTelecommunications, an agency of the Government of Guyana, has formal authority over telecommunications licensing andrelated issues.19 Table of ContentsLicenses. GTT provides domestic fixed (both wireline and wireless) and international voice and data services inGuyana pursuant to a license from the Government of Guyana granting GTT the exclusive right to provide the following:public telephone, radio telephone, and pay telephone services; domestic fixed services (both wireline and wireless);international voice and data services; sale of advertising in any telephone directories; and switched or non-switched privateline service. The license, which was issued in December 1990, had an initial 20‑year term. Pursuant to the license, GTT alsoprovides mobile wireless telephone service in Guyana on a non‑exclusive basis pursuant to an initial twenty-year term. InNovember 2009, GTT notified the Government of its election to renew both the exclusive and non-exclusive license grantsfor an additional 20 year term expiring in 2030. In exercising this option, GTT reiterated to the Government that GTT and theCompany would be willing to voluntarily relinquish the exclusivity aspect of GTT’s licenses, but only as part of analternative agreement with the Government. On December 15, 2010, the Government, through the Office of the President,sent a letter to GTT indicating that GTT’s license was renewed until such time as a new legislative and regulatory regime toreform the telecommunications sector in Guyana is brought into force; however, GTT formally notified the Government thatit is entitled to an unconditional renewal of both the exclusive and non‑exclusive license grants for an additional period oftwenty years or until such time as GTT and the Company enter into an alternative agreement with the Government.PUC Law and Telecommunications Law. The PUC Law and the Telecommunications Law provide the generalframework for the regulation of telecommunications services in Guyana. As a general matter, the PUC has authority toregulate GTT’s domestic and international telecommunications services and rates and to require GTT to supply certaintechnical, administrative and financial information as it may request. The PUC claims broad authority to review and amendany of GTT’s programs for development and expansion of facilities or services, although GTT has challenged the PUC’s viewon the scope of its authority. For a description of recent actions of the PUC, see Note 14 to the Consolidated FinancialStatements included in this Report.Regulatory Developments. In 2016, the Government of Guyana passed new telecommunications legislationintroducing material changes to many features of Guyana’s existing telecommunications regulatory regime with theintention of introducing additional competition into Guyana’s telecommunications sector. The legislation that passed,however, has not yet been implemented and does not include a provision that permits other telecommunications carriers toreceive licenses automatically upon signing of the legislation, nor does it have the effect of terminating our exclusivelicense. Instead, the legislation, as passed, requires the Minister of Telecommunications to conduct further proceedings andissue implementing orders to enact the various provisions of the legislation. We have met with the Government of Guyana,including as recently as December 2018, to discuss modifications of our exclusivity rights and other rights under our existingagreement and license. However, there can be no assurance that those discussions will be concluded before the Governmentissues new licenses as contemplated by the legislation or at all, or that they will satisfactorily address the Company’scontractual exclusivity rights. Although we believe that we would be entitled to damages or other compensation for anyinvoluntary termination of our contractual exclusivity rights, we cannot guarantee that we would prevail in a proceeding toenforce our rights or that our actions would effectively halt any unilateral action by the Government FCC Rule‑Making and International Long‑Distance Rates. The actions of foreign telecommunicationsregulators, especially the FCC in the United States, can affect the settlement or termination rate payable by foreign carriers toGTT for incoming international voice calls. While the FCC continues to monitor and evaluate termination rate levels andbenchmarks, we cannot predict when and if the FCC will further reduce settlement rates or the effect lower rates will have onrevenue in our International Telecom segment. Bermuda Regulation In Bermuda, we were historically subject to Bermuda’s Telecommunications Act of 1986 that authorized us to usespectrum to deliver services under our “Class B” license. In 2013, the Regulatory Authority implemented the ElectronicCommunications Act of 2011 (“ECA”), which allows communications service providers to enter new lines of business andintroduces competition in the sector. As the government of Bermuda reforms the local telecommunications market, it hasimposed regulatory and other fees and adopted additional regulation that have increased the regulatory costs incurred by,and could otherwise impact, our Bermuda operations. In 2019, the Regulatory Authority is expected to20 Table of Contentsconduct a review of the market as required by the ECA. We cannot now accurately predict the impact to the competitiveposition of our Bermuda business or limitations that such actions will have on our ability to grow.Renewable Energy Services RegulationIndia RegulationThe Electricity Act, 2003The Electricity Act, 2003, (the “Electricity Act”), regulates and governs the generation, transmission, distribution,trading and use of electricity in India. Under the Electricity Act, the transmission, distribution and trade of electricity areregulated activities that require licenses from the Central Electricity Regulatory Commission, State Electricity RegulatoryCommissions, or “SERCs”, or the joint commission (constituted by an agreement entered into by two or more stategovernments or the central government in relation to one or more state governments, as the case may be). In terms of the Electricity Act, any generating company may establish, operate and maintain generating stationswithout obtaining a license if it complies with prescribed technical standards relating to grid connectivity. The generatingcompany is required to establish, operate and maintain generating stations, tie-lines, sub-stations and dedicated transmissionlines.Further, the generating company may supply electricity to any licensee or even directly to consumers, subject toavailing open access to the transmission and distribution systems and payment of transmission charges, including wheelingcharges and open access charges, as may be determined by the relevant electricity regulatory commission. In terms of theElectricity Act, open access means the non-discriminatory provision for the use of transmission lines or distribution system orassociated facilities with such lines or system, by any licensee or consumer or a person engaged in generation in accordancewith the regulations specified by the relevant electricity regulatory commission.The relevant electricity regulatory commission is empowered, among other things, to determine or adopt the tarifffor supply of electricity from the generating company to a distribution licensee (such as the distribution utility companies),for transmission of electricity, wheeling of electricity and retail sale of electricity. However, the relevant electricityregulatory commission may, in case of shortage of supply of electricity, fix the minimum and maximum tariffs for sale orpurchase of electricity under agreements between a generating company and a licensee or between licensees, for a period notexceeding one year, to ensure reasonable prices of electricity. While determining the tariff, commissions are required to beguided by, among other things, the promotion of co-generation and generation of electricity from renewable sources ofenergy.The Electricity (Amendment) Bill, 2014 was introduced in the lower house of the Indian Parliament to amendcertain provisions of the Electricity Act. Among other things, the amendment empowers the Indian government to establishand review a national renewable energy policy, tariff policy and electricity policy. Further, the Indian government may, inconsultation with the state governments, notify policies and adopt measures for promotion of renewable energy generationincluding through tax rebates, generation-linked incentives, creation of a national renewable energy fund, development ofthe renewable industry and for effective implementation and enforcement of such measures. Generating companies are also required to ensure compliance with certain other regulations, including the CentralElectricity Authority (Safety Requirements for Construction, Operation and Maintenance of Electrical Plants and ElectricLines) Regulations, 2011. The National Electricity Policy, 2005The Indian government approved the National Electricity Policy on February 12, 2005, in accordance with theprovisions of the Electricity Act. The National Electricity Policy, 2005 has material effects on our business since it providesthe policy framework to the central and state Electricity Regulatory Commissions in developing the power21 Table of Contentssector, supplying electricity and protecting interests of consumers and other stakeholders, while keeping in view theavailability of energy resources, technology available to exploit such resources, economics of generation using differentresources and energy security issues. The National Electricity Policy emphasizes the need to promote generation ofelectricity based on non-conventional sources of energy. Central Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable EnergySources) Regulations, 2012The Central Electricity Regulatory Commission announced the Central Electricity Regulatory Commission (Termsand Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2012 (the “Tariff Regulations”),which prescribe the criteria that may be taken into consideration by the SERCs while determining the tariff for the sale ofelectricity generated from renewable energy sources that include, among other things, return on equity, interest on loancapital and depreciation. Accordingly, such tariffs cannot be determined independently by renewable energy powerproducers such as our company. Pursuant to the Tariff Regulations, the Central Electricity Regulatory Commission isrequired to determine the rate of return on equity which may be adopted by the SERCs to determine the generic tariff,keeping in view the overall risk and prevalent cost of capital, which factors are also to be taken into consideration by SERCswhile determining the tariff rate. The Tariff Regulations prescribe that the normative return on equity shall be 20% perannum for the first 10 years and 24% per annum from the 11th year onward. The Tariff Regulations also provide the mechanism for sharing of carbon credits from approved clean developmentmechanism projects between renewable energy power producers and the concerned beneficiaries. Under the TariffRegulations, the project developer is entitled to retain 100% of the gross proceeds on account of clean developmentmechanism project benefits in the first year following the date of commercial operation of the generating station.Subsequently, in the second year, the share of the beneficiaries is increased to 10% and then progressively increased by 10%every year until it reaches 50%, after which the clean development mechanism project proceeds are to be shared equallybetween the generating company and the beneficiaries. MNREThe Ministry of New and Renewable Energy (“MNRE”) in India has been facilitating the implementation ofprograms harnessing renewable power, renewable energy for industrial and commercial applications and development. Theministry is focused on a mix of subsidies, fiscal incentives, preferential tariffs, market mechanisms and affirmative actionssuch as renewable purchase obligations by way of legislation and policies. It has introduced the generation-based incentivescheme to support small grid solar projects, pursuant to which the MNRE will pay incentives to the state utilities when theydirectly purchase solar power from project developers. One such incentive is exemption of customs and excise duties on allrooftop Solar PV Power Projects with a minimum capacity of 100 kw. Renewable Purchase Obligations The Electricity Act promotes the development of renewable sources of energy by requiring the SERCs to ensuregrid connectivity and the sale of electricity generated from renewable sources. In addition, it requires the SERCs to specify,for the purchase of electricity from renewable sources, a percentage of the total consumption of electricity within the area of adistribution licensee, which are known as RPOs. Pursuant to this mandate, most of the SERCs have specified solar and non-solar RPOs in their respective states. In terms of the RPO regulations, RPOs are required to be met by obligated entities (thatis, distribution licensees, captive power plants and open access consumers) by purchasing renewable energy, either byentering into PPAs with renewable energy power producers or by purchasing renewable energy certificates. The RPOregulations require the obligated entities to purchase power from renewable energy power producers such as our company. Inthe event of default by an obligated entity in any fiscal year, the SERCs may direct the obligated entity to deposit an amountdetermined by the relevant SERC, into a fund to be utilized for, among other things, the purchase of renewable energycertificates. Additionally, pursuant to the Electricity Act, a defaulting obligated entity may also be liable to pay a penalty asdetermined by the SERCs.22 Table of ContentsIn May 2015, the Supreme Court of India upheld a regulation that made it compulsory for captive power plants andopen access consumers to purchase electricity to fulfill their RPOs. This judgment is expected to boost the demand forrenewable energy by captive players and also improve the marketability of renewable energy certificates in India.Available Information Our website address is www.atni.com. The information on our website is not incorporated by reference in thisReport and you should not consider information provided on our website to be part of this Report. Investors may access, freeof charge, our annual reports on Form 10‑K, quarterly reports on Form 10‑Q and current reports on Form 8‑K, plusamendments to such reports as filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934,as amended, through the SEC’s electronic data gathering, analysis and retrieval system (“EDGAR”), via electronic means onthe SEC’s website at www.sec.gov, or through the “Financials & Filings” portion of the “Investor Relations” section of ourwebsite as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities andExchange Commission. In addition, paper copies of these documents may be obtained free of charge upon request by writingto us at 500 Cummings Center, Beverly, Massachusetts 01915, Attention: Investor Relations, by calling us at(978) 619‑1300 or by emailing us at ir@atni.com.We have adopted a written Code of Ethics that applies to all of our employees and directors, including, but notlimited to, our principal executive officer, principal financial officer, and principal accounting officer or controller, orpersons performing similar functions. Our Code of Ethics, along with our Compensation Committee Charter, AuditCommittee Charter and Nominating and Corporate Governance Committee Charter, are available at the CorporateGovernance section of our website. We intend to make any disclosure required under the SEC rules regarding amendments to,or waivers from, our Code of Ethics on our website. ITEM 1A. RISK FACTORSIn addition to the other information contained in, or incorporated by reference into, this Report, you shouldcarefully consider the risks described below that could materially affect our business, financial condition, or future results.These risks are not the only risks facing us. Additional risks and uncertainties not presently known to us or that we currentlybelieve are immaterial also may materially adversely affect our business, financial condition and/or results of operations.Risks Related to our U.S. Telecom SegmentA significant portion of our U.S. wholesale wireless revenue is derived from a small number of customers.A substantial portion of our U.S. Wireless revenue is generated from four national wireless service providers. OurU.S. wholesale wireless revenues accounted for approximately 20.1% of our consolidated revenues in 2018. Our relationships with our roaming customers generally are much more financially significant for us than for ourcustomers. Frequently, our relationships with our roaming customers do not require them to “prefer” our networks or requirethem to send us a minimum amount of traffic. Instead, roaming customers may choose to utilize other networks, if available,for their subscribers’ roaming use. If our markets currently included in our roaming partners’ home calling areas are insteadsubject to the imposition of additional roaming charges or if we fail to keep any of our roaming customers satisfied with ourservice offerings or economic terms, we could lose their business, experience less roaming traffic or be unable to renew orenter into new agreements with these customers on beneficial terms (including pricing), resulting in a substantial loss ofrevenue, which would have a material adverse effect on our results of operations and financial condition. In addition, if thesecustomers build or acquire wireless networks in our service areas, we would lose revenue. Should any of these customers takesuch actions over a significant portion of the areas we serve, it may have a material adverse effect on our results of operationsand financial condition.23 Table of Contents We may have difficulty meeting the growing demand for data services.Demand for smartphones and data services continues to grow across all of our wireless markets and our value to ourcustomers in some markets depends in part on our network’s ability to provide high‑quality and high capacity networkservice to smartphone devices. Indeed, much of the revenue growth in our wireless businesses in the past few years has beenattributable to increased demand for data services. However, if data usage increases faster than we anticipate and exceeds thethen‑available capacity of any of our networks, our costs to deliver roaming services may be higher than we anticipate. In theUnited States, the dearth of available spectrum and or non-transparent spectral allocation practices in our industry means thatwe cannot guarantee that we will be able to acquire additional spectrum at a reasonable cost or at all to ensure our ability tomaintain or grow our business and traffic volumes. As demand for advanced mobile data services continues to grow, we mayhave difficulty satisfying our retail and wholesale customers’ demand for these services without substantial upgrades andadditional capital expenditures and operating expenses, which could have an adverse effect on our results of operations andfinancial condition.Risks Relating to Our International Telecom Segment Changes in USF funding could have an adverse impact on our financial condition or results of operations.Viya, our subsidiary operating video services, Internet, wireless and landline services in the U.S. VirginIslands, currently receives high-cost USF support in the U.S. Virgin Islands of approximately $16.4 million per year. The FCChas proposed in response to the damage caused by the Hurricanes to allocate $18.65 million per year for 10 years in the U.S.Virgin Islands to wireline voice and broadband providers and this amount is inclusive of the USF funding currently receivedby Viya. The FCC has not yet determined which entities will be eligible for this funding or what standards will be used toallocate the funding. Any reduction in the amount of USF funding allocated to Viya in this proceeding could negativelyaffect our efforts to build and maintain networks in the U.S. Virgin Islands and our ability to provide services supported byUSF funds, which could adversely affect the revenues of our International Telecom segment.We may have difficulty securing video services content from third parties desirable to our customers on terms andconditions favorable to us.We have secured licensing agreements with numerous content providers to allow our various video servicesbusinesses to offer a wide array of popular programming to our subscribers. Typically, we make long-term commitmentsrelating to these rights in advance even though we cannot predict the popularity of the services or ratings the programmingwill generate. License fees may be negotiated for a number of years and may include provisions requiring us to pay part ofthe fees even if we choose not to distribute such programming. The success of our video services operations depends on our ability to access an attractive selection of videoprogramming from content providers on terms and pricing favorable to us. Our ability to provide movies, sports and otherpopular programming is a major factor that attracts subscribers to our services. Our inability to provide the content desired byour subscribers on satisfactory terms or at all could result in reduced demand for, and lower revenue from, our cableoperations that may not offset the typically large subscription fees that we pay for these services. In certain cases, we may nothave satisfactory contracts in place with the owners of our distributed content, leading to such parties’ desire for increasedrenewed contractual pricing or leading to disputes with such parties including claims for copyright or other intellectualproperty infringement. The cost of obtaining programming associated with providing our video services is significant. The terms of manyof our programming contracts are for multiple years and provide for future increases in the fees we must pay. In addition,local over-the-air television stations are increasingly seeking substantial fees for retransmission of their stations over ourcable networks. Historically, we have absorbed increased programming costs in large part through increased prices to ourcustomers. We cannot assure that competitive and other marketplace factors will permit us to continue to pass through thesecosts or that we are able to renew programming agreements on comparable or favorable terms. Also, programming in theCaribbean typically includes Latin American or Spanish programming, while our subscribers24 Table of Contentstypically prefer content in English. To the extent that we are unable to reach acceptable agreements with programmers orobtain desired content, we may be forced to remove programming from our line-up, which could result in a loss of customersand materially adversely affect our results of operations and financial condition. Our exclusive license to provide local exchange and international voice and data services in Guyana is subject tosignificant political and regulatory risk. Since 1991, our subsidiary Guyana Telephone and Telegraph, Ltd. (“GTT”) has operated in Guyana pursuant to alicense from the Government of Guyana to be the exclusive provider of domestic fixed and international voice and dataservices pursuant to a license with an initial term ending in December 2010, which was renewable at our sole option for anadditional 20-year term. In November 2009, we notified the Government of Guyana of our election to renew our exclusivelicense for an additional 20-year term expiring in 2030. On December 15, 2010, we received correspondence from theGovernment of Guyana indicating that our license had been renewed until such time that new legislation is in place withregard to the Government’s intention to expand competition within the sector; however, we believe our exclusive licensecontinues to be valid unless and until such time as we enter into an alternative agreement with the Government.In 2016, the Government of Guyana passed new telecommunications legislation introducing material changes tomany features of Guyana’s existing telecommunications regulatory regime with the intention of introducing additionalcompetition into Guyana’s telecommunications sector. The legislation that passed, however, has not yet been implementedand does not have the effect of terminating our exclusive license. Instead the legislation as passed requires the Minister ofTelecommunications to conduct further proceedings and issue implementing orders to put into effect the various provisionsof the legislation. We have met with the Government of Guyana to discuss modifications of the Company’s exclusivityrights and other rights under its existing agreement and license. However, there can be no assurance that those discussionswill be concluded before the Government issues new licenses as contemplated by the legislation or at all, or that they willsatisfactorily address the Company’s contractual exclusivity rights. Although we believe that we would be entitled todamages or other compensation for any involuntary termination of our contractual exclusivity rights, we cannot guaranteethat we would prevail in a proceeding to enforce our rights or that our actions would effectively halt any unilateral action bythe Government.We are dependent on GTT for approximately 23% of our total consolidated revenues. A loss of exclusivity oninternational voice and data service would result in a reduction in the international call traffic and as a result, a loss in thatportion of our wireline revenue. Any modification, early termination or other revocation of the exclusive domestic fixed andinternational voice and data license could materially adversely affect our revenues and profits and diminish the value of ourinvestment in Guyana.Risks Related to Our Renewable Energy SegmentOur Facilities have a limited operating history.All of our Facilities have limited operating histories. Our expectations about the performance of these Facilities arebased on assumptions and estimates made without the benefit of a lengthy operating history. There can be no assurance thatour Facilities will perform as anticipated or projected and the failure of these Facilities to perform as we expect could have amaterial adverse effect on the financial condition, results of operations and cash flows of our Renewable Energy segment.Our revenues are dependent on the performance and effectiveness of our PPAs.The cash flow from our PPAs is significantly affected by our ability to collect payments from offtakers under ourPPAs. If for any reason our PPA customers are unable or unwilling to fulfill their related contractual obligations or if theyrefuse to accept delivery of power or otherwise terminate or breach such agreements, such non‑payment could have amaterial adverse effect on our revenues from the Renewable Energy segment. In addition, our inability to perform ourobligations under the PPAs could also have a material adverse effect on these revenues. For instance, our inability to25 Table of Contentsmeet certain operating thresholds or performance measures under certain of our PPAs within specified time periods exposesus to the risk of covering the cost of any shortfall or early termination by such customer.Certain of our PPAs provide for early termination for a variety of reasons, including in the event that (a) an offtakeris unable to appropriate government funds, (b) there is a change of law that substantially reduces the value of utility credits,(c) termination for convenience, (d) change of control in the managing structure of the offtaker, (e) insolvency of the offtaker,or (f) any change in the credit worthiness of the offtaker. While we would be entitled to a termination fee (typically set at theterminal value of the PPA) in most cases, the termination fee might not be a sufficient substitute for the payments otherwisedue under the PPAs. There can be no assurances that such appropriations will be made or timely made in any given year orthat tax or other incentives will continue to be available for the purchase of solar energy. However, we have the option tosell the power to the grid and claim Average Pooled Purchase Price (“APPC”) in the event of early termination while we arelooking for alternate buyers or offtakers to sign a new PPA contract. In the event a PPA for one or more of our projects isterminated or payments are not made (or not made in a timely manner) pursuant to such provisions, it could materially andadversely affect our results of operations from the Renewable Energy segment and our financial condition. We cannotprovide any assurance that PPAs containing such provisions will not be terminated or, in the event of termination, we will beable to enter into a replacement PPA. Moreover, any replacement PPA may be on terms less favorable to us than the PPA thatwas terminated. India is undergoing rapid governmental and regulatory change, which may have both short and long term materialadverse impacts on our operations and ability to execute our strategic growth plans. The government of Prime Minister Narendra Modi in India has expressed its intention to cut down on corruptionand tax avoidance wherever possible and in parallel with its anti-corruption measures, the Indian government is also lookingto encourage foreign investment in India. Some of these changes have had a significant impact on our operations in India inthe short-term. For instance, India is currently a predominately cash economy, with millions of people having no bankaccounts and transacting solely in cash. On November 8, 2016, the Indian government removed the 500 (approximatelyequal to $7.60 at the time) and 1,000 rupee notes from circulation and replaced them with new 2,000 rupee notes. This stepwas taken to remove money from the black market economy with a view to reducing corruption, increasing tax receipts, andmoving India to a modern, non-cash economy. While we have very limited cash transactions in India (mostly in relation tothe payment of employee travel and subsistence expenses), much of the construction team employed by our sub-contractorsis paid in cash, often on a daily basis. With the removal of 500 and 1,000 rupee notes from circulation, our sub-contractorshave struggled to source the cash required to pay their labor, resulting in many of the workers responsible for our ongoingsolar Facility construction failing to continue to show up to the worksite. To remedy the situation, our sub-contractors havebeen opening bank accounts on behalf of their workers to enable them to receive their compensation electronically; however,the construction of our solar farms in India has met with substantial delays as a result. Further, our business model in India is predicated on the availability of “open access” rules, which allow ourcustomers to buy their electricity from us, rather than from traditional utility providers. Any major policy changes issued bythe Indian government to current open access rules, or other major policy changes, particularly when implemented in such ashort time frame, could impair the development or operations of our solar projects and may adversely impact our ability toconstruct our power project portfolio or maintain operations, once constructed. Land title in India can be uncertain and difficult to procure. There is no central title registry for real property in India and the documentation of land records in India has notbeen fully computerized. Property records in India are generally maintained at the state and district level and in locallanguages, and are updated manually through physical records. Therefore, property records may not be available online forinspection or may not be updated in a timely manner, may be illegible, untraceable, incomplete or inaccurate in certainrespects, or may have been kept in poor condition, which may impede title investigations or our ability to rely on suchproperty records. Furthermore, title to land in India is often fragmented, and in many cases, land may have multiple owners.Title may also suffer from irregularities, such as non-execution or non-registration of conveyance deeds and inadequatestamping, and may be subject to encumbrances that we are unaware of. As a result, potential disputes or claims over title tothe land on which our power projects are or will be constructed may arise. Any real estate issues26 Table of Contentscould impair the development or operations of our solar projects and any defects in, or irregularities of, title may result in aloss of development or operating rights over the land that may adversely impact our ability to construct our power projectportfolio or maintain operations, once constructed. Further, the government may exercise its rights of eminent domain, orcompulsory acquisition in respect of land on which our projects are or will be located. Any of this may adversely affect ourbusiness, results of operations and cash flows in the future. For instance, in one such state a PIL (Public Interest Litigation)has been filed in the courts against the acquisition of large parcels of land by the solar power generation companies. Anysuch litigation may result in new regulations, adversely affecting our project construction and operation. We may not be able to timely and effectively construct our developed solar project portfolio. The development and construction of solar projects involve numerous risks and uncertainties and require extensiveresearch, planning and due diligence. We have already incurred, and may continue to incur, significant costs for land andinterconnection rights, regulatory approvals, preliminary engineering, permits, and legal and other expenses before we candetermine whether a solar project is economically, technologically or otherwise feasible. Our ability to realize profits in our investment may depend greatly on our ability to achieve the following: ·accurately identify and prioritize geographic markets for entry, both in terms of market demand and viability ofsolar conditions and grid connection;·manage local operations, capital investment or component sourcing in compliance with regulatoryrequirements;·procure land at cost-effective prices and on terms favorable to us;·procure equipment and negotiate favorable payment and other terms with suppliers;·obtain grid interconnection rights;·successfully complete construction prior to the expiration of any procured grid interconnection rights;·secure reliable and enforceable EPC and O&M resources; and·sign PPAs or other arrangements on a long-term basis on terms that are favorable to us. Construction of our solar projects may be also be adversely affected by circumstances outside of our control,including inclement weather, adverse geological and environmental conditions, a failure to receive regulatory approvals onschedule or third-party delays in providing supplies and other materials. Any construction setbacks or delays could have amaterial adverse effect on our ability to obtain, maintain and perform under the PPAs we seek to procure and could result infinancial penalties under these agreements and/or the termination of such agreements, which could have a material adverseimpact on our prospects and results of operations in our Renewable Energy segment. We are reliant on India’s infrastructure to deliver power and any failure or technical challenges may lead to delays orother impediments that may have an adverse effect on our operations or financial condition. India has a target of installing 175 GW of renewable energy capacity by March 2022, of which it is intended that100 GWp will be solar power capacity. New capacity additions have historically been lower than the targeted capacity. If thegovernment fails to reach its targeted solar capacity, it will likely result in a slowdown in our growth opportunities andadversely affect our ability to achieve our long term business objectives, targets and goals. Moreover, due to the intermittentnature of most forms of renewable energy generation, significant renewable energy generation capacity on a limited area ofgrid infrastructure can cause technical challenges to keep the grid in balance. Such technical issues could result in a gridcompany looking to turn down the export capacity of one of our solar projects for a limited or extended period, or the gridcompany incurring additional costs in order to manage its grid infrastructure, and looking to recharge such costs torenewable energy generators. Such actions by a grid operator could have a material adverse impact on our prospects andresults of operations in our Renewable Energy segment. For distributing power to an offtaker, we generally rely on transmission lines and other transmission anddistribution facilities that are owned and operated by the respective state governments or public entities. In absence of suchtransmission and distribution networks, we may engage contractors to build transmission lines and other relatedinfrastructure. In such a case, we will be exposed to additional costs and risks associated with developing transmission27 Table of Contentslines and other related infrastructure, such as the ability to obtain right of way from land owners for the construction of ourtransmission lines, which may delay and increase the costs of our projects. We may not be able to secure access to theavailable transmission and distribution networks at reasonable prices, in a timely manner or at all. In some instances, we are required to distribute power to customers across long distances from our project sites. Anyconstraints or limited access to transmission and distribution networks, could curtail the transmission and dispatch of the fulloutput of our projects and we may have to suspend producing electricity during the period when electricity cannot betransmitted, thereby reducing the net power generation of our projects. Any such curtailment of our power projects’ outputlevels will reduce our electricity output and limit operational efficiencies, which in turn could have an adverse effect on ourbusiness, results of operations and cash flows. Our ability to realize the benefits of our investment in India may be delayed and our growth prospects depend to asignificant extent on the availability of additional funding options with acceptable terms. We require a significant amount of cash to fund the installation and construction of our projects in India and otheraspects of our operations, and have planned to incur debt or acquire additional equity funding in the future to complementour investment. We may also require additional cash due to changing business conditions or other future developments,including any investments or acquisitions we may decide to pursue in order to remain competitive. We intend to evaluatethird-party financing options, including any bank loans, equity investors, financial leases and securitization. However, wecannot guarantee that we will be successful in obtaining additional suitable sources of financing on a timely basis or at all, oron terms or at costs that are acceptable to us, which may materially adversely affect our ability to continue construction andexpand our operations in India. In addition, rising interest rates could adversely impact our ability to secure financing onfavorable terms. We face significant competition from traditional and renewable energy companies. We face significant competition in the markets in which we operate. Our competitors may have greater operational,financial, technical and management expertise or other resources than we do and may be able to achieve better economies ofscale and lower cost of capital, allowing them to sell electricity at more competitive rates. Our local competitors are likely tobe funded from Indian sources of capital, and so will not have to factor foreign currency movements into their target returns,which may also enable them to sell electricity at more competitive rates. Our competitors may also have a more effective orestablished localized business presence or a greater appetite for risk (for example in relation to equipment warranties) andgreater willingness or ability to operate with little or no operating margins for sustained periods of time. Our market positiondepends on our financing, development and operational capabilities, reputation and track record. Any increase incompetition or reduction in our competitive capabilities could have a significant adverse impact on the margins we generatefrom our solar projects. We cannot assure that we will be able to compete effectively, and our failure to do so could result inan adverse effect on our business, results of operations and cash flows in our Renewable Energy segment. Other Risks Related to Our BusinessesFailure of network or information technology systems, including as a result of security breaches, could have an adverseeffect on our business.We are highly dependent on our information technology (“IT”) systems for the operation of our network, ourfacilities delivery of services to our customers and compilation of our financial results. Failure of these IT systems, throughcyberattacks, breaches of security, or otherwise, may cause disruptions to our operations. There can be no assurance that wewill be able to successfully prevent a material security breach stemming from future cyberattacks. Our inability to operateour network, facilities and back office systems as a result of such events, even for a limited period of time, may result insignificant expenses and impact the timely and accurate delivery of our services or other information. Other risks that mayalso cause interruptions in service or reduced capacity for our customers include power loss, capacity limitations, softwaredefects and breaches of security by computer viruses, break‑ins or otherwise. Disruptions in our networks and theunavailability of our services or our inability to efficiently and effectively complete necessary technology or systemsupgrades or conversions could lead to a loss of customers, damage to our reputation and violation28 Table of Contentsof the terms of our licenses and contracts with customers. Additionally, breaches of security may lead to unauthorized accessto our customer or employee information processed and stored in, and transmitted through, our IT systems. We may berequired to expend significant additional resources to modify our protective measures or to investigate and remediatevulnerabilities or other exposures arising from operational and security risks, including notification under data privacy lawsand regulations, and we may be subject to litigation, regulatory penalties and financial losses. These failures could also leadto significant negative publicity, regulatory problems and litigation.Storms and changes in meteorological conditions may materially disrupt our operations.Many of the areas in which we operate have experienced severe weather conditions over the years includinghurricanes, tornadoes, blizzards, fires, damaging storms and floods. Some areas in which we operate may also be at risk ofearthquakes. Such events may materially disrupt and adversely affect our business operations, such as the ongoing impacts ofthe Hurricanes in the U.S. Virgin Islands in 2017, which we assessed caused damage and losses to our wireline and wirelessnetworks in excess of $35.4 million. Major hurricanes also passed directly over Bermuda in 2003, 2014 and 2016, causingmajor damage to our network and to the island’s infrastructure. Guyana has suffered from severe rains and flooding in the pastas well. These types of events can also cause major disruption and harm to the communities and markets we serve, which canhave a material adverse effect on our business. We cannot be sure that these types of events will not have an impact in thefuture or that we can procure insurance coverage against these types of severe weather events under reasonable business termsand conditions, or that any insurance coverage we are able to maintain will adequately compensate us for all damage andeconomic losses resulting from natural catastrophes. In addition, it may take significant time to return to pre-storm levelsfollowing any such storm or meteorological event. If we are unable to restore service on a timely and cost-effective basis, itcould harm our reputation and have a material adverse effect on our business, financial condition or results of operationsthrough continued loss of revenue and customer attrition to our competitors. The electricity produced and revenues generated by a solar electric generation facility is highly dependent onsuitable solar and associated weather conditions and our solar panels and inverters could be damaged by severe weather, suchas hailstorms or tornadoes. In addition, replacement and spare parts for key components may be difficult or costly to acquireor may be unavailable. Unfavorable weather and atmospheric conditions could reduce the output of our facilities and lead toa loss of revenue from our offtakers.In addition, rising ocean temperatures in the Atlantic Ocean may result in the intensification of hurricanes overtime. If the frequency of more intense hurricanes increases in the Atlantic Ocean and Caribbean Sea, the likelihood ofsignificant damage also increases, including in locations where we operate. After major events such as hurricanes, which cancause significant destruction to the power grid, our ability to access sites and facilities, obtain fuel and receive sufficient fuelsupplies in order to provide power for stand-by generators is severely limited, and in many cases, is not possible for extendedperiods of time. Our ability to access ports in order to obtain relief and supplies for affected areas will also likely besignificantly hampered for extended periods of time.Regulatory changes may impose restrictions that adversely affect us or cause us to incur significant unplanned costs inmodifying our business plans or operations.We are subject to U.S. federal, state and local regulations and foreign government regulations, all of which aresubject to change. As new laws and regulations are issued or discontinued, we may be required to materially modify ourbusiness plans or operations. We cannot be certain that we can do so in a cost effective manner. Our operations in the UnitedStates are subject to the Communications Act. The interpretation and implementation of the provisions of theCommunications Act and the FCC rules implementing the Communications Act continue to be heavily debated and mayhave a material adverse effect on our business. Also, although comprehensive legislation has not yet been introduced, therehave been indications that Congress may substantially revise the Telecommunications Act of 1996 and other regulations inthe next few years. Our international operations are subject to similar regulations, the interpretation and implementation ofwhich are also often debated, and which may have a material adverse effect on our business. Our interpretation of ourobligations may differ from those of regulatory authorities. Both federal and state regulators, as well as internationalregulators, require us to pay various fees and assessments, file periodic reports and comply with various29 Table of Contentsrules regarding our consumer marketing practices and the contents of our bills, on an on-going basis. If we fail to complywith these requirements, we may be subject to fines or potentially be asked to show cause as to why our licenses to provideservice should not be revoked.The loss of certain licenses could adversely affect our ability to provide wireless and broadband services. In the United States, wireless licenses generally are valid for ten years from the effective date of the license,although recently-issued 600 MHz licenses were issued for a slightly longer initial term to account for the need for broadcasttelevision incumbents to vacate the spectrum before the new wireless licensees could construct. Licensees may renew theirlicenses (including renewal of 600 MHz licenses) for additional ten year periods by filing renewal applications with the FCC.Our 600 MHz wireless licenses all expire in 2029. Our other wireless licenses in the U.S. expire between 2019 and 2030. Weintend to renew our licenses expiring this year, and the renewal applications are subject to FCC review and are put out forpublic comment to ensure that the licensees meet their licensing requirements and comply with other applicable FCCmandates. Failure to file for renewal of these licenses or failure to meet any licensing requirements could lead to a denial ofthe renewal application and thus adversely affect our ability to continue to provide service in that license area. Furthermore,our compliance with regulatory requirements, such as E-911 and CALEA requirements, may depend on the availability ofnecessary equipment or software. In our international markets, telecommunications licenses are typically issued and regulated by the applicabletelecommunications ministry. The application and renewal process for these licenses may be lengthy, require us to expendsubstantial renewal fees, and/or be subject to regulatory or legislative uncertainty, such as we are experiencing in Guyana, asdescribed above. Failure to comply with these regulatory requirements may have an adverse effect on our licenses oroperations and could result in sanctions, fines or other penalties.Rapid and significant technological changes in the telecommunications industry may adversely affect us.Our industry faces rapid and significant changes in technology that directly impact our business, including thefollowing:·evolving industry standards;·requirements resulting from changing regulatory regimes;·the allocation of radio frequency spectrum in which to license and operate wireless services;·ongoing improvements in the capacity and quality of digital technology;·changes in end‑user requirements and preferences;·convergence between video and data services;·development of data and broadband capabilities and rapidly expanding demand for those capabilities·migration to new‑generation services such as “5G” network technology;·introduction of new telecom delivery platforms such as next generation satellite services, including SDNand IMS services; and.·consolidation among service providers within the industry. For us to keep pace with these technological changes and remain competitive, at a minimum we must continue tomake significant capital expenditures to add to our networks’ capacity, coverage and technical capability. For example, wehave spent considerable amounts adding higher speed and capacity mobile data services to many of our networks in recentyears and we think it likely that more such expenditures, including adding LTE mobile data and 5G fixed wireless accessservices technologies, will be needed over the next few years.We cannot predict the effect of technological changes on our business. Alternative or new technologies may bedeveloped that provide communications services superior to those available from us, which may adversely affect ourbusiness. For example, to accommodate the demand from our wireless customers for next‑generation advanced wirelessproducts such as high‑speed data and streaming video, we may be required to purchase additional spectrum, however, wehave had difficulty finding spectrum for sale or on terms that are acceptable to us. In addition, usage of wireless voice orbroadband services in excess of our expectations could strain our capacity, causing service disruptions and30 Table of Contentsresult in higher operating costs and capital expenditures. In each of our markets, providing more and higher speed dataservices through our wireless or wireline networks may require us to make substantial investments in additionaltelecommunications transport capacity connecting our networks to the Internet, and in some cases such capacity may not beavailable to us on attractive terms or at all. Failure to provide these services or to upgrade to new technologies on a timelybasis and at an acceptable cost could have a material adverse effect on our ability to compete with carriers in our markets. We rely on a limited number of key suppliers and vendors for timely supply of handsets, accessories, equipment andservices relating to our network or Facility infrastructure. If these suppliers or vendors experience problems or favor ourcompetitors, we could fail to obtain sufficient quantities of the products and services we require to operate our businessessuccessfully.We depend on a limited number of suppliers and vendors for equipment and services relating to our handset lineup,network infrastructure, solar equipment and our back‑office IT systems infrastructure. If these suppliers experienceinterruptions or other problems delivering these network components and other equipment on a timely basis, our subscriberor revenue growth and operating results could suffer significantly.We source wireless devices for our retail wireless businesses from a small number of handset resellers and to a lesserextent, equipment manufacturers and depend on access to compelling devices at reasonable prices on primary and secondarymarkets for these devices, as well as timely delivery of devices to meet market demands. The inability to provide acompetitive device lineup could materially impact our ability to attract new customers and retain existing customers. We arealso reliant upon a limited number of network equipment manufacturers, including Ericsson and Nokia and a limited numberof solar equipment manufacturers, including GCL for photovoltaic modules and Satcon for inverters.We are also dependent on the ability of our solar equipment manufacturers to fulfill the warranties on our solarequipment, which typically range from 5 to 25 years in length, in the event of equipment malfunction. If these supplierscease operations or for some reason default on their warranties, we would have to bear the expense of repairing or replacingany faulty equipment. Our business, financial condition, results of operations and cash flows could be materially adverselyaffected if we cannot make claims under warranties covering our Facilities. If it becomes necessary to seek alternativesuppliers and vendors, we may be unable to obtain satisfactory replacement suppliers or vendors on economically attractiveterms on a timely basis. Changes in our relationships with our vendors, changes in tax policy or trade relations, interruptions in our supply chainor increased commodity or supply chain costs could adversely affect our results of operations. A number of our equipment suppliers and vendors are based outside the United States, with China serving as one ofour primary non-U.S. sources for our international telecommunications and solar equipment. Because a large portion of ourequipment is sourced, directly or indirectly, from outside the United States, major changes in tax policy or trade relations,such as the disallowance of tax deductions for imported products or the imposition of additional tariffs or duties on importedproducts, could adversely affect our business, results of operations, effective income tax rate, liquidity and net income.We are actively evaluating investment, acquisition and other strategic opportunities, which may affect our long‑termgrowth prospects. We actively evaluate acquisition, investment, business divestitures and combinations, and other strategicopportunities, both domestic and international, in telecommunications, energy‑related and other industries, including inareas that may not be seen by the broader market as timely today. We may focus on opportunities that we believe havepotential for long‑term organic and strategic growth or that may otherwise satisfy our return and other investment criteria.Any acquisition or investment that we might make outside of the telecommunications or solar industries would pose the riskinherent in our entering into a new, unrelated business, including the ability of our holding company management team toeffectively oversee the management team of such operations. Similarly, there are risks inherent in31 Table of Contentsthe sale of a business or assets, including the potential of a transaction’s failing to close due to last minute negotiations,regulatory issues, or other unpredictable matters that can be costly and disruptive to our operations. There can be noassurance as to whether, when or on what terms we will be able to invest in, acquire or divest any businesses or assets or thatwe will be able to successfully integrate the business or realize the perceived benefits of any acquisition or strategicinvestment. Any such transactions may be accomplished through the payment of cash, issuance of shares of our capital stockor incurrence of additional debt, or a combination thereof. As of December 31, 2018, we had approximately $193.3 million incash, cash equivalents, restricted cash, and short term investments and approximately $91.0 million of long‑term debt. Howand when we deploy our balance sheet capacity will figure prominently in our longer‑term growth prospects and stockholderreturns. Increased competition may adversely affect growth, require increased capital expenditures, result in the loss of existingcustomers and decrease our revenues.We face competition in the markets in which we operate. For example:·In the United States, our greatest competitive risk to our wholesale wireless business is the possibility thatour current roaming customers may elect to build or enhance their own networks within the rural marketsin which we currently provide service, which is commonly known as “over‑building.” If our roamingcustomers, who generally have greater financial resources and access to capital than we do, determine toover‑build our network, their need for our roaming services will be significantly reduced or eliminated.·In Bermuda and the Caribbean, we compete primarily against Digicel, a large mobile telecommunicationscompany in the Caribbean region, and other larger providers such as Liberty Global, a multinationaltelecommunications company.·In our solar power business, we face competition from traditional utilities and renewable energycompanies. Many of our competitors are larger with greater resources and are less dependent on thirdparties for the sourcing of equipment or operation and maintenance of their solar facilities.Over the last decade, an increase in competition in many areas of the telecommunications industry has contributedto a decline in prices for communication services, including mobile wireless services, local and long‑distance telephoneservice and data services. Increased competition in the industry may further decrease prices. In addition, increasedcompetition in the telecommunications and renewable energy industries could reduce our customer base, require us to investin new facilities and capabilities and result in reduced revenues, margins and returns.Our International Telecom segment operates mainly in island locations, where a limited number of providersmaintain strong competition in these small markets. In several of our markets, we hold a dominant position as the localincumbent carrier and in others we may have a competitive advantage in our ability to bundle some combination of voice,data, video and wireless services. Increased competition, whether from new entrants or increased capital investment by ourcompetitors in their existing networks, will make it more difficult for us to attract and retain customers in our small markets,which could result in lower revenue and cash flow from operating activities. General economic factors, domestically and internationally, may adversely affect our business, financial condition andresults of operations. General economic factors could adversely affect demand for our products and services, require a change in theservices we sell or have a significant impact in our operating costs. Energy costs are historically volatile and are subject tofluctuations arising from changes in domestic and international supply and demand, labor costs, competition, marketspeculation, government regulations, or weather conditions. Rapid and significant changes in these and other commodityprices may affect our sales and profit margins. General economic conditions can also be affected by the outbreak of war, actsof terrorism, or other significant national or international events.32 Table of ContentsIn addition, an economic downturn in markets in which we currently operate or in the global market may lead toslower economic activity, increased unemployment, concerns about inflation, decreased consumer confidence and otheradverse business conditions that could have an impact on our businesses. For example, among other things·a decrease in tourism could negatively affect revenues and growth opportunities from operations in theislands and in a number of areas covered by U.S. rural and wholesale wireless operations that serve touristdestinations;· an increase in “bad debt”, or the amounts that we have to write off of our accounts receivable could resultfrom our inability to collect subscription fees from our subscribers; and·we rely on the population of Guyanese living abroad who initiate calls to Guyana or are responsible forremittances to relatives living in Guyana. A prolonged economic downturn in the U.S. or Canadianeconomies could affect inbound calling and, therefore, our revenue in Guyana.The impact, if any, that these events might have on us and our business, is uncertain.Our operations are subject to economic, political, currency and other risks that could adversely affect our revenues orfinancial position.Our operations may face adverse financial consequences and operational problems due to political or economicchanges, such as changes in national or regional political or economic conditions, laws and regulations that restrictrepatriation of earnings or other funds, or changes in foreign currency exchange rates. As new laws and regulations are issuedor discontinued to implement an agenda set by the current U.S. administration, we may be required to materially modify ourbusiness plans or operations. Any of these changes could adversely affect our revenues or financial position.In India in particular, our exposure to the fluctuation in the value of the rupee will have a direct impact on ourability to meet expected returns projected in U.S. dollars or make payment on any debt denominated in U.S. dollars. Anyfurther currency fluctuation could have a material adverse impact on our ability to realize the returns we projected in makingsuch investments. Our ability to recruit and retain experienced management and technical personnel could adversely affect our results ofoperations and ability to maintain internal controls.The success of our business depends on the ability of our executive officers and the officers of our operating unitsto develop and execute on our business plan, and to identify and pursue new opportunities and product innovations, as wellas on our ability to attract and retain these officers and other highly qualified technical and management personnel. If ourexecutive officers and the officers of our operating units are not able to execute on our business plan, this could adverselyaffect our business, financial condition and results of operations. Furthermore, we believe that there is, and will continue tobe, strong competition for qualified personnel in the communications and energy industries and in our markets, and wecannot be certain that we will be able to attract and retain the personnel necessary for the development of our business. Werely heavily on local management to run our operating units. Many of the markets in which we operate are small and remote,making it difficult to attract and retain talented and qualified managers and staff in those markets. The loss of key personnelor the failure to attract or retain personnel with the sophistication to run complicated telecommunications or solar equipment,networks and systems could have a material adverse effect on our business, financial condition and results of operations. Wedo not currently maintain “key person” life insurance on any of our key employees and none of the executives at our parentcompany have executed employment agreements.In addition, cultural differences abroad and local practices of conducting business in our foreign operations maynot be in line with the business practices, recordkeeping and ethics standards in the United States. In order to continue toensure compliance with foreign and U.S. laws, accounting standards and our own corporate policies, we have implementedfinancial and operational controls, created an internal audit team responsible for monitoring and ensuring compliance withour internal accounting controls, and routinely train our employees, vendors and consultants. However, having substantialforeign operations also increases the complexity and difficulty of developing, implementing and33 Table of Contentsmonitoring these internal controls and procedures. If we are unable to manage these risks effectively, it could have a materialadverse effect on our business, financial condition and results of operations. Risks Related to Our Capital StructureOur debt instruments include restrictive and financial covenants that limit our operating flexibility.The credit facilities that we and our subsidiaries maintain include certain financial and other covenants that, amongother things, restrict our ability to take specific actions, even if we believe such actions are in our best interest. These includerestrictions on our ability to do the following: ·incur additional debt;·create liens or negative pledges with respect to our assets;·pay dividends or distributions on, or redeem or repurchase, our capital stock;·make investments, loans or advances or other forms of payments;·issue, sell or allow distributions on capital stock of specified subsidiaries;·enter into transactions with affiliates; or·merge, consolidate or sell our assets. Any failure to comply with the restrictions of the credit facilities or any subsequent financing agreements mayresult in an event of default. Such default may allow our creditors to accelerate the repayment of the related debt and mayresult 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 able to terminate any commitments they had made to provide us with further funds.Our founder is our largest stockholder and will continue to exert significant influence over us.Cornelius B. Prior, Jr., our founder and the father of our Chairman and Chief Executive Officer, together with relatedentities, affiliates and family members (including our Chairman and Chief Executive Officer), beneficially ownsapproximately 27% of our outstanding Common Stock. As a result, he is able to exert significant influence over all matterspresented to our stockholders for approval, including election and removal of our directors and change of controltransactions. His interests may not always coincide with the interests of other holders of our Common Stock.Low trading volume of our stock may limit our stockholders ability to sell shares and/or result in lower sale prices.For the three months prior to February 1, 2019, the average daily trading volume of our Common Stock wasapproximately 68,000 shares. As a result, our stockholders may have difficulty selling a large number of shares of ourCommon Stock in the manner or at a price that might be attainable if our Common Stock were more actively traded. Inaddition, the market price of our Common Stock may not be reflective of its underlying value.We may not pay dividends in the future.Our stockholders may receive dividends out of legally available funds if, and when, they are declared by our Boardof Directors. We have consistently paid quarterly dividends in the past, but may cease to do so or decrease the dividendamount at any time. Our credit facility sets certain limitations on our ability to pay dividends on, or repurchase, our capitalstock. We may incur additional indebtedness in the future that may further restrict our ability to declare and pay dividends.We may also be restricted from paying dividends in the future due to restrictions imposed by applicable state laws, ourfinancial condition and results of operations, capital requirements, management’s assessment of future capital needs andother factors considered by our Board of Directors. 34 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTSNone. ITEM 2. PROPERTIESWe lease approximately 21,000 square feet of office space at 500 Cummings Center, Beverly, MA 01915 for ourcorporate headquarters. Worldwide, we utilize the following approximate square footage of space for our operations: International Renewable Type of space U.S. Telecom Telecom Energy Office 65,038 287,503 5,720 Retail stores 16,177 27,290 — Technical operations 115,631 1,933,296 — All of the above locations are leased except for the office and technical space within our International Telecomsegment, which we own. As of December 31, 2018, we operated twelve retail stores in our U.S. Telecom segment and nineteenretail stores in our International Telecom segment.Our offices and technical operations are in the following locations: U.S. Telecom International Telecom Renewable Energy Little Rock, AR Georgetown, Guyana Hyderabad, India Castle Rock, CO Bermuda Singapore Atlanta, GA U.S. Virgin Islands Cayman Islands Within our telecommunications operations, we globally own 277 towers, lease an additional 376 towers and havefive switch locations within rented locations. In addition, our renewable energy operations own 52MW commercial solarprojects at 5 sites. We consider our owned and leased properties to be suitable and adequate for our business operations. ITEM 3. LEGAL PROCEEDINGSOur Guyana subsidiary, Guyana Telephone & Telegraph, Ltd. (“GTT”) holds an exclusive license to providedomestic fixed services and international voice and data services in Guyana. The license, whose initial term of twenty yearsexpired at the end of 2010, allowed for GTT at its sole option, to extend the term for an additional twenty years, untilDecember 2030. GTT exercised its extension right, in accordance with the terms of its License and its agreement with theGovernment of Guyana, in November 2009.In 2016, the Government of Guyana passed new telecommunications legislation introducing material changes tomany features of Guyana’s existing telecommunications regulatory regime with the intention of introducing additionalcompetition into Guyana’s telecommunications sector. The legislation that passed, however, has not yet beenimplemented and does not include a provision that permits other telecommunications carriers to receive licensesautomatically upon signing of the legislation, nor does it have the effect of terminating the Company’s exclusivelicense. Instead the legislation as passed requires the Minister of Telecommunications to conduct further proceedings andissue implementing orders to enact the various provisions of the legislation. We have met with the Government of Guyana,including as recently as December 2018 to discuss modifications of the Company’s exclusivity rights and other rights underits existing agreement and license. However, there can be no assurance that those discussions will be concluded before theGovernment issues new licenses as contemplated by the legislation or at all, or that they will satisfactorily address ourcontractual exclusivity rights. Although the Company believes that it would be entitled to35 Table of Contentsdamages or other compensation for any involuntary termination of its contractual exclusivity rights, it cannot guarantee thatthe Company would prevail in a proceeding to enforce its rights or that its actions would effectively halt any unilateralaction by the Government.In November 2007, Caribbean Telecommunications Limited (“CTL”) filed a complaint in the U.S. District Court forthe District of New Jersey against GTT and ATN claiming breach of an interconnection agreement for domestic cellularservices in Guyana and related claims. CTL asserted over $200 million in damages. GTT and ATN moved to dismiss thecomplaint on procedural and jurisdictional grounds. On January 26, 2009, the court granted the motions to dismiss thecomplaint on the grounds asserted. In November 2009 and again in April 2013, CTL filed and then abandoned a similarclaim against GTT and the PUC in the High Court of Guyana. CTL once more filed a similar claim against the Company inDecember 2017, seeking damages of $25 million; however, this matter was dismissed in May 2018. CTL made an untimelyfiling for an appeal thereafter, which the court subsequently denied. The Company continues to believe this claim is withoutmerit and intends to vigorously defend against it.On May 8, 2009, Digicel filed a lawsuit in Guyana challenging the legality of GTT’s exclusive license rights underGuyana’s constitution. Digicel initially filed this lawsuit against the Attorney General of Guyana in the High Court. OnMay 13, 2009, GTT petitioned to intervene in the suit in order to oppose Digicel’s claims and that petition was granted onMay 18, 2009. GTT filed an answer to the charge on June 22, 2009, and the case is pending. We believe that any legalchallenge to GTT’s exclusive license rights granted in 1990 is without merit, and we intend to vigorously defend againstsuch a legal challenge.GTT has filed several lawsuits in the High Court of Guyana asserting that Digicel is engaged in international bypassin 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 the illegal bypass activity and punitive damages caused thereby. Digicel filedcounterclaims 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 and is scheduled toproceed to trial in the second quarter of 2019. GTT intends to vigorously prosecute these matters.GTT is also involved in several legal claims regarding its tax filings with the Guyana Revenue Authority datingback to 1991 regarding the deductibility of intercompany advisory fees as well as other tax assessments. Should GTT beheld liable for any of the disputed tax assessments, totaling $44.1 million, the Company believes that the Government ofGuyana would then be obligated to reimburse GTT for any amounts necessary to ensure that GTT’s return on investment wasno less than 15% per annum for the relevant periods. ITEM 4. MINE SAFETY DISCLOSURESNot Applicable. 36 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIESOur Common Stock, $.01 par value, is listed on the Nasdaq Global Select Market under the symbol “ATNI.” Thenumber of holders of record of Common Stock as of February 28, 2019 was 87.Issuer Purchases of Equity Securities in the Fourth Quarter of 2018On September 19, 2016, our Board of Directors authorized the repurchase of up to $50.0 million of our commonstock from time to time on the open market or in privately negotiated transactions (the “2016 Repurchase Plan”). As ofDecember 31, 2018, we have $37.7 million remaining authorized to be repurchased under the 2016 Repurchase Plan. The following table reflects the repurchases by the Company of its Common Stock during the quarter endedDecember 31, 2018: (d) Maximum Number (or (c) Approximate (b) Total Number of Dollar Value) of (a) Average Shares Purchased Shares that May Total Number Price as Part of Publicly be Purchased of Shares Paid per Announced Plans Under the Plans or Period Purchased (1) Share or Programs Programs October 1, 2018 — October 31, 2018 11,479(1)$79.44(1) — $37,690,086 November 1, 2018 — November 30, 2018 87,245(2) 84.25(2) $37,690,086 December 1, 2018 — December 31, 2018 — — — $37,690,086 (1)Consists of 11,479 shares purchased on October 2, 2018, October 6, 2018, October 19, 2018, and October 31, 2018 fromour executive officers and other employees who tendered these shares to the Company to satisfy their tax withholdingobligations incurred in connection with the exercise of stock options and the vesting of restricted stock awards at suchdate. These shares were not purchased under the plan discussed above. The price paid per share was the closing price pershare of our Common Stock on the Nasdaq Stock Market on the date those shares were purchased(2)Consists of 87,245 shares purchased on November 9, 2018, November 12, 2018 and November 30, 2018 from ourexecutive officers and other employees who tendered these shares to the Company to satisfy their tax withholdingobligations incurred in connection with the exercise of stock options and the vesting of restricted stock awards at suchdate. These shares were not purchased under the plan discussed above. The price paid per share was the closing price pershare of our Common Stock on the Nasdaq Market on the date those shares were purchased37 Table of ContentsStock Performance GraphThe graph below matches ATN International's cumulative 5-Year total shareholder return on common stock with thecumulative total returns of the Russell 2000 index, the S&P Smallcap 600 index, and the NASDAQ Telecommunicationsindex. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestmentof all dividends) from 12/31/2013 to 12/31/2018. 12/1312/1412/1512/1612/1712/18 ATN International 100.00121.70143.24149.34104.64136.92Russell 2000 100.00104.89100.26121.63139.44124.09S&P Smallcap 600 100.00105.76103.67131.20148.56135.96NASDAQ Telecommunications 100.00102.75100.20106.61130.48130.76 The stock price performance included in this graph is not necessarily indicative of future stock price performance 38 Table of Contents ITEM 6. SELECTED FINANCIAL DATAYou should read the selected financial data in conjunction with our “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and our Consolidated Financial Statements for the years ended December 31,2018, 2017 and 2016 and the related Notes to those Consolidated Financial Statements included in this Report. Thehistorical results set forth below are not necessarily indicative of the results of future operations. Period to periodcomparisons are also significantly affected by our significant acquisitions. See Notes 5 to the Consolidated FinancialStatements included in this Report for a more detailed discussion of our recent acquisitions and discontinued operations.The selected Consolidated Income Statement data for the years ended December 31, 2018, 2017 and 2016 and theselected Consolidated Balance Sheet data as of December 31, 2018 and 2017 are derived from our Consolidated FinancialStatements beginning on page F-1 of this Annual Report on Form 10-K. The selected Consolidated Income Statement datafor the years ended December 31, 2015 and 2014 and the selected Consolidated Balance Sheet data as of December 31, 2016,2015 and 2014 are derived from our Consolidated Financial Statements not included in this Annual Report on Form 10-K. Year ended December 31, 2018 2017 2016 2015 2014 (In thousands, except per share data) Income Statement Data Revenue $451,207 $481,193 $457,003 $355,369 $336,347 Operating expenses 390,184 425,885 405,733 276,774 250,771 Income from operations 61,023 55,308 51,270 78,595 85,576 Other income (expense): Interest income 1,811 1,613 1,239 588 788 Interest expense (7,973) (8,838) (5,362) (3,180) (1,208) Other, net(1) (1,119) (530) (1,773) (19,802) 1,012 Other income (expense), net (7,281) (7,755) (5,896) (22,394) 592 Income from continuing operations before income taxes 53,742 47,553 45,374 56,201 86,168 Income (benefit) provisions 18,870 (1,341) 21,160 24,137 28,148 Income from continuing operations 34,872 48,894 24,214 32,064 58,020 Income from discontinued operations, net of tax — — — 1,092 1,102 Net income 34,872 48,894 24,214 33,156 59,122 Net income attributable to non‑controlling interests,net of tax (15,057) (17,406) (12,113) (16,216) (10,970) Net income attributable to ATN International, Inc.Stockholders $19,815 $31,488 $12,101 $16,940 $48,152 Net income per weighted average basic shareattributable to ATN International, Inc. Stockholders: Continuing operations 1.24 1.95 0.75 0.99 2.96 Discontinued operations — — — 0.07 0.07 Total 1.24 1.95 0.75 1.06 3.03 Net income per weighted average diluted shareattributable to ATN International, Inc. Stockholders: Continuing operations 1.24 1.94 0.75 0.98 2.94 Discontinued operations — — — 0.07 0.07 Total 1.24 1.94 0.75 1.05 3.01 Dividends per share applicable to common stock 0.68 1.02 1.32 1.22 1.12 39 Table of Contents 2018 2017 2016 2015 2014 (In thousands) Balance Sheet Data (as of December 31,): Cash, restricted cash, and short term investments $193,300 $226,966 $297,595 $398,346 $371,394 Assets of discontinued operations — — — — 175 Working capital 135,116 181,223 217,264 384,137 347,305 Fixed assets, net 626,852 643,146 647,712 373,503 369,582 Total assets 1,107,304 1,205,605 1,198,218 945,004 925,030 Short‑term debt (including current portion oflong‑term debt) 4,688 10,919 12,440 6,284 6,083 Liabilities of discontinued operations — — — — 1,247 Long‑term debt, net 86,294 144,873 144,383 26,575 32,794 ATN International, Inc. stockholders’ equity 695,387 688,727 677,055 680,299 677,222 Statement of Cash Flow Data (for the years ended December 31,): Net cash provided by (used in): Operating activities: Continuing operations $115,865 $145,725 $111,656 $139,079 $82,699 Discontinued operations — — — 158 (4,719) Investing activities: Continuing operations (87,319) (172,318) (296,580) (31,971) (74,467) Discontinued operations — — — — — Financing activities: Continuing operations (55,230) (42,101) 75,334 (41,438) (33,904) Discontinued operations — — — — — Capital expenditures (185,921) (142,371) (124,282) (64,753) (58,300) (1)During the year ended December 31, 2015, the Company recognized a loss on the deconsolidation of a subsidiary. 40 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONSOverviewWe are a holding company that, directly and through our subsidiaries, owns and operates telecommunications andrenewable energy businesses in North America, India, Bermuda and the Caribbean. We were incorporated in Delaware in1987, began trading publicly in 1991 and spun off more than a half of our operations to stockholders in 1998. Since thattime, we have engaged in many strategic acquisitions and investments to help grow our operations, using the cash generatedfrom our established operating units to re-invest in our existing businesses and to make strategic investments in earlier stagebusinesses. We look for businesses that offer growth opportunities or potential strategic benefits, but that require additionalcapital investment in order to execute on their business plans. We hold controlling positions with respect to some of ourinvestments and minority positions in others. These strategic investments frequently offer a product and servicedevelopment component in addition to the prospect of generating returns on our invested capital. For a discussion of therisks involved in our investment strategy, see “Risk Factors—We are actively evaluating investment, acquisition and otherstrategic opportunities, which may affect our long‑term growth prospects.” We have identified three operating segments tomanage and review our operations, and to facilitate investor presentations of our results, as follows: ·U.S. Telecom. In the United States, we offer wireless and wireline services. We offer wholesale wireless voiceand data roaming services to national, regional, local and selected international wireless carriers in rural marketslocated principally in the Southwest and Midwest United States. We also provide retail wireless, wirelineservices and wholesale long‑distance voice services to telecommunications carriers in the areas in which weoffer wireline services. ·International Telecom. Our international wireless services include voice and data services to retail customersin Bermuda, Guyana and the U.S. Virgin Islands. Our international wireline services include voice and dataservices in Bermuda, the Cayman Islands, Guyana and the U.S. Virgin Islands, as well as video services inBermuda, the Cayman Islands, and the U.S Virgin Islands. In addition, we offer wholesale long‑distance voiceservices to other telecommunications carriers in the countries in which we offer international wireline services. ·Renewable Energy. In India, we provide distributed generation solar power to corporate, utility and municipalcustomers. Through November 6, 2018, we also provided distributed generation solar power in the UnitedStates in Massachusetts, California and New Jersey. The following chart summarizes the operating activities of our principal subsidiaries, the segments in which wereport our revenue and the markets we served as of December 31, 2018:Segment Services Markets Tradenames U.S. Telecom Wireless United States (rural markets) Choice, Choice NTUAWireless, Commnet,WestNet, Geoverse Wireline United States Essextel, Deploycom International Telecom Wireline Bermuda, Cayman Islands, Guyana, U.S.Virgin Islands Fireminds, GTT+, One,Logic, Viya Wireless Bermuda, Guyana, U.S. Virgin Islands GTT+, One, Viya Video Services Bermuda, Cayman Islands, U.S. VirginIslands Logic, One, Viya Renewable Energy Solar India Vibrant Energy We actively evaluate potential acquisitions, investment opportunities and other strategic transactions, bothdomestic and international, that meet our return on investment and other criteria. In addition, we consider non-41 Table of Contentscontrolling investments in earlier stage businesses that we consider strategically relevant, and which may offer long-termgrowth potential for us, either individually, or as research and development businesses that can support our operatingsubsidiaries 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 theirrevenues, which is eliminated in consolidation. For information about our financial segments and geographical informationabout our operating revenues and assets see Notes 1 and 16 to the Consolidated Financial Statements included in this Report. Acquisitions U.S. Telecom In July 2016, we acquired certain telecommunications fixed assets and the associated operations in the westernUnited States. Results of operations for the business are included in the U.S. Telecom segment and are not material to ourhistorical results of operations. International Telecom During 2016, we completed the acquisitions of One Communications and Viya (the “2016 International TelecomAcquisitions”). One Communications (formerly KeyTech Limited) On May 3, 2016, we completed our acquisition of a controlling interest in One Communications Ltd. (formerlyknown as KeyTech Limited, “One Communications”), a publicly held Bermuda company listed on the Bermuda StockExchange (“BSX”) that provides broadband and video services and other telecommunications services to residential andenterprise customers in Bermuda and the Cayman Islands (the “One Communications Acquisition”). Viya (formerly Innovative) On July 1, 2016, we completed an acquisition of all of the membership interests of Caribbean Asset Holdings LLC(“CAH”), the holding company for the group of companies operating video services, Internet, wireless and landline servicesin the U.S. Virgin Islands, British Virgin Islands and St. Maarten (collectively, “Viya”) (the “Viya Transaction”). In April2017, the U.S. Virgin Islands operations and our existing wireless operations rebranded their tradenames from “Innovative”and “Choice”, respectively, to “Viya.” Subsequent to the Viya Transaction, we sold the acquired businesses in St. Maartenand the British Virgin Islands, as further described in “Dispositions” below. Renewable Energy Vibrant EnergyOn April 7, 2016, we completed our acquisition of a solar power development portfolio in India (the “VibrantEnergy Acquisition”). The business operates under the name Vibrant Energy. We also retained several employees in Indiawho are employed by us to oversee the development, construction and operation of Indian solar projects. These projects areinitially located in the states of Andhra Pradesh and Telangana and are based on a commercial and industrial business model,similar to the operating model we followed for our renewable energy operations in the United States, which we sold inNovember 2018. Platform and Minority Investments U.S. Telecom During the second quarter of 2018, we invested in a new platform, based in the United States, to develop in-building wireless network technology that enables building owners to capitalize on the growing demand for better indoor42 Table of Contentswireless solutions. Also during the second quarter of 2018, we provided funding for another new platform, based in theUnited States, seeking to “build to suit” large scale fiber networks to serve the telecommunications and content providerindustries in need of lower latency long haul fiber transit services. International Telecom In 2017, we completed our investment in a technology solutions business based in Bermuda that provides a varietyof cloud-based managed services and information technology solutions for enterprise hosted software applications. In 2017 we also made a minority investment in an Australian-based tower operator. Dispositions U.S. Telecom On March 8, 2017, we completed the sale of our integrated voice and data communications and wholesale transportbusinesses in New England and New York for consideration of $25.9 million (the “Sovernet Transaction”). Theconsideration included $20.9 million of cash, $3.0 million of receivables and $2.0 million of contingent consideration. Thecontingent consideration represented the fair value of payments related to certain operational milestones of the disposedassets. The value of the contingent consideration was up to $4.0 million based on whether or not certain operationalmilestones were achieved by December 31, 2017. In September 2017, based on progress toward achieving the operationalmilestones, and the December 31, 2017 deadline under which to do so, management determined that earning the contingentconsideration was unlikely. As a result, the fair value of the contingent consideration was reduced to zero. The amount wasrecorded as a loss on disposition of assets within operating income during the year ended December 31, 2017. Thisdisposition does not qualify as discontinued operations because the disposition did not represent a strategic shift that has amajor effect on our operations and financial results. International Telecom On August 18, 2017, we completed the sale of the Viya cable operations located in the British Virgin Islands. On January 3, 2017, we completed the sale of the Viya cable operations located in St. Maarten. On December 15, 2016, we transferred control of our subsidiary in Aruba to another stockholder in a nonreciprocaltransfer. These dispositions do not qualify as discontinued operations because the dispositions did not represent a strategicshift that had a major effect on our operations and financial results. Renewable Energy (U.S. Operations) On November 6, 2018, we completed the sale of our U.S. solar business that owned and managed distributedgeneration solar power projects operated under the Ahana name in Massachusetts, California and New Jersey (the “U.S. SolarOperations”). The transaction had a total value of approximately $122.6 million, which included a cash purchase price of$65.3 million and the assumption of approximately $57.3 million in debt, and is subject to certain other post-closingadjustments (the “U.S. Solar Transaction”). Approximately $6.5 million of the purchase price will be held in escrow for aperiod of twelve months after the closing to secure our indemnification obligations. We recorded a gain of $12.4 millionupon the completion of the sale. The U.S. Solar Transaction does not qualify as a discontinued operation because the disposition does not represent astrategic shift that has a major effect on our operations and financial results. 43 Table of ContentsUniversal Service Fund The Federal Universal Service Fund (‘USF’) is a subsidy program managed by the FCC. USF funds are disbursed totelecommunication providers through four programs: the High Cost Program; Low Income Program; Schools and LibrariesProgram (“E-Rate”); and Rural Health Care Program. We participate in High Cost Program, Low Income Program, Schoolsand Libraries Programs, and Rural Health Care Support programs as further described below. All of the funding programs aresubject to certain operational and reporting compliance requirements. We believe we are in compliance will all applicablerequirements. The FCC’s Mobility Funds and Connect America Funds are administered through the High Cost Program. TheHigh-Cost Support program subsidizes telecommunications services in rural and remote areas. The FCC created the Phase IMobility Fund (“Phase I Mobility Fund”), a one-time award meant to support wireless coverage in underserved geographicareas in the United States. We received $21.1 million of Phase I Mobility Fund support to our wholesale wireless business (the “MobilityFunds”) to be used to expand voice and broadband networks in certain geographic areas in order to offer either 3G or 4Gservice. Of these funds, $7.2 million was recorded as an offset to the cost of the property, plant, and equipment associatedwith these projects and, consequentially, a reduction of future depreciation expense. The remaining $13.9 million receivedoffset operating expenses from inception of the program through part of the third quarter of 2018. The Mobility Fundsprojects and their operating results are included within our U.S. Telecom segment. As part of the receipt of the MobilityFunds, we committed to comply with certain additional FCC construction and other requirements. If the requirements are notmet the funds may be subject to claw back provisions. We currently expect to comply with all applicable requirementsrelated to these funds. During the years ended December 31, 2018, 2017 and 2016, we recorded $16.5 million, $16.5 million, and $8.2million, respectively, of revenue from High Cost Support in our International Telecom segment for our U.S. Virgin Islandsoperations. Also, during each year ended December 31, 2018, 2017 and 2016, we recorded $1.2 million of High CostSupport revenue in our US Telecom segment. We are subject to certain operational, reporting and construction requirementsas a result of this funding and we believe that we are in compliance with all of these requirements. In addition, we recordedrevenue of $15.5 million during the year ended December 31, 2018, from additional funding authorized by the FCCfollowing the Hurricanes. In August 2018, we were awarded $79.9 million over 10 years under the Connect America Fund Phase IIAuction. The funding requires we to provide fixed broadband and voice services to certain eligible areas in the UnitedStates. We are subject to operational and reporting requirements under the program. We determined the award is a revenuegrant and as a result will record the funding as revenue upon receipt. We expect to begin receiving funds under the ConnectAmerica Fund Phase II program during mid-2019. The E-Rate program provides discounted telecommunication access to eligible schools and libraries. The E-Rateprogram awards (i) special construction funding to build network connectivity for eligible participants, and (ii) pays fordiscounted recurring charges for eligible broadband services. The special construction funding is used to reimburseconstruction costs and is distributed upon completion of a project. As of December 31, 2018, we were awardedapproximately $15.4 million of E-Rate grants with construction completion obligations between June 2019 and June 2020. Once these projects are constructed we are obligated to provide service to the E-Rate program participants. We are in variousstages of constructing the networks and have not received any of the funds. We expect to meet all requirements associatedwith these grants. We also receive funding to provide discounted telecommunication services to eligible customers under the E-Rate,Lifeline, and Rural Health Care Support Programs. During the years ended December 31, 2018, 2017, and 2016 we recordedrevenue of $8.2 million, $10.2 million, and $11.0 million, respectively, in the aggregate from these programs. We aresubject to certain operational and reporting requirements under the above mentioned programs and we believe that we are incompliance with all of these requirements. 44 Table of ContentsTribal Bidding Credit As part of the broadcast television spectrum incentive auction, the FCC implemented a tribal lands bidding credit toencourage deployment of wireless services utilizing 600 MHz spectrum on the lands of federally recognized tribes. Wereceived a bidding credit of $7.4 million under this program in 2018. A portion of these funds will be used to offset networkcapital 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 million to offset capital costs and, consequently, reduce future depreciation expense and $2.0 million to offset the costof supporting the network which will reduce future operating expense. The credits are subject to certain requirements,including deploying service by January 2021 and meeting minimum coverage metrics. If the requirements are not met thefunds may be subject to claw back provisions. We currently expect to comply with all applicable requirements related tothese funds. Impact of Hurricanes During September 2017, the economy, our customer base and our operations in the U.S. Virgin Islands were severelyimpacted by Hurricanes Irma and Maria (collectively, the “Hurricanes”). Both our wireless and wireline networks andcommercial operations were severely damaged by these storms. As a result of the significant damage to our wireline networkand the lack of consistent commercial power in the territory, we were unable to provide most of our wireline services, whichcomprise the majority of our revenue in this business, after the Hurricanes and through a majority of 2018. During the year ended December 31, 2017, we recorded a net pre-tax loss within our consolidated statement ofoperations of $4.0 million. This loss consisted of $35.4 million for the write off of damaged assets, net of insurancerecoveries of $34.6 million, for which we received the proceeds in February 2018. This loss also included $3.2 million ofadditional operating expenses that we specifically incurred to address the impact of the Hurricanes. During the year ended December 31, 2018, we received $15.5 million in additional funding from the FederalCommunications Commission’s (“FCC”) Universal Service Fund (“USF”) to further subsidize our operations in the U.S.Virgin Islands that was recorded as revenue. This level of additional funding is not expected to continue in future periods. During the years ended December 31, 2017 and 2018, we spent $8.6 million and $80.2 million, respectively, fornetwork restoration and resiliency enhancements that allowed the reconnection of a significant majority of affectedhouseholds and businesses as of the period end. We expect that our wireline network restoration work is substantiallycomplete, however, returning our revenue to pre-Hurricane levels may take significant time as a result of populationmovements, the economic impact the Hurricanes had on the market, and our subscriber base’s appetite for continued wirelineservices. 45 Table of ContentsSelected Segment Financial Information The following represents selected segment information for the years ended December 31, 2018 and 2017 (in thousands): For the Year Ended December 31, 2018 U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedRevenue Wireless $108,878 $89,946 $ — $ — $198,824Wireline 6,602 223,623 — — 230,225Renewable Energy — — 22,158 — 22,158Total Revenue 115,480 313,569 22,158 — 451,207 Operating income (loss) 36,813 45,022 13,440 (34,252) 61,023 For the Year Ended December 31, 2017 U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedRevenue Wireless $143,028 $89,473 $ — $ — $232,501Wireline 12,695 215,132 — — 227,827Renewable Energy — — 20,865 — 20,865Total Revenue 155,723 304,605 20,865 — 481,193 Operating income (loss) 55,317 28,308 5,179 (33,496) 55,308 (1)Reconciling items refer to corporate overhead costs and consolidating adjustments A year-to-date comparison of our segment results is as follows: U.S. Telecom. Revenue within our U.S. Telecom segment decreased by $40.2 million, or 25.8%, to $115.5 millionfrom $155.7 million for the years ended December 31, 2018 and 2017, respectively. Revenue within our wireless operations decreased by $34.1 million, or 23.8%, to $108.9 million from $143.0million for the years ended December 31, 2018 and 2017, respectively. All of this decrease was attributable to our wholesalewireless operations which had its revenue negatively impacted by $9.6 million relating to the July 2018 sale of 100 cell siteswith the remaining $24.5 million decrease resulting from a reduction in wholesale roaming rates, reduced roaming traffic, andthe impact of contractual revenue caps with certain carriers. Revenue from our retail wireless operations remained unchangedat $18.1 million for the years ended December 31, 2018 and 2017. Revenue within our wireline operations decreased by $6.1 million, or 48.0%, to $6.6 from $12.7 for the years endedDecember 31, 2018 and 2017, respectively. The impact of the Sovernet Transaction resulted in a decrease in revenue of $4.2million. In addition, a decline in traffic volumes within our wholesale long-distance services resulted in a decrease of $1.9million in that business. Operating expenses within our U.S. Telecom segment decreased $19.4 million, or 19.3%, to $81.0 million from$100.4 million for the years ended December 31, 2018 and 2017, respectively. This decrease in operating expenses wasprimarily related to the July 2018 sale of 100 cell sites and the related $15.2 gain recognized on such transaction as well as a$4.0 million decrease related to the Sovernet Transaction. As a result of the above, our U.S. Telecom segment’s operating income decreased $18.5 million, or 33.5%, to $36.8million from $55.3 million for the years ended December 31, 2018 and 2017, respectively. 46 Table of ContentsInternational Telecom. Revenues within our International Telecom segment increased $9.0 million, or 3.0%, to$313.6 million from $304.6 million for the years ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, we received $15.5 million in additional funding from the FederalCommunications Commission’s (“FCC”) Universal Service Fund (“USF”) to further subsidize our operations in the U.S.Virgin Islands that was recorded as revenue. This level of additional funding is not expected to continue in future periods. The impact of this additional funding on our revenues was offset by the impact of the Hurricanes and the sale of ouroperations in the British Virgin Islands in August 2017 which reported $3.1 million of revenue during the year endedDecember 31, 2017. An increase in broadband revenues and the addition of our new managed services and technology platform, whichbegan operations in September 2017, increased our revenues within the International Telecom market. Operating expenses within our International Telecom segment decreased by $7.7 million, or 2.8%, to $268.6 millionfrom $276.3 million for the years ended December 31, 2018 and 2017, respectively. The decrease was primarily the result ofa $3.2 million reduction in hurricane-related expenses (including a loss on damaged assets and other hurricane-relatedcharges, net of insurance recovery) and a $3.8 million reduction in television programming and other variable costs that werenot incurred as a result of the impact of the Hurricanes. As a result, our International Telecom segment’s operating income increased $16.7 million, or 59.0%, to $45.0million from $28.3 million for the years ended December 31, 2018 and 2017, respectively. Renewable Energy. Revenue within our Renewable Energy segment increased $1.3 million, or 6.2%, to $22.2million from $20.9 million for the year ended December 31, 2018 and 2017, respectively, primarily as a result of a $3.2million increase in revenue from our newly completed solar power plants in India partially offset by a $1.9 million decreasein revenue in our U.S. operations primarily as a result of the U.S. Solar Transaction. Operating expenses within our Renewable Energy segment decreased by $6.9 million, or 43.9%, to $8.8 millionfrom $15.7 million for the years ended December 31, 2018 and 2017, respectively, primarily related to the $11.9 million gainon the U.S. Solar Transaction. As a result of the above, our Renewable Energy segment’s operating income increased by $8.2 million, or 157.7%,to $13.4 million from $5.2 million for the years ended December 31, 2018 and 2017, respectively. 47 Table of ContentsThe following represents a year over year discussion and analysis of our results of operations for the years endedDecember 31, 2018 and 2017 (in thousands): Year Ended Amount of Percent December 31, Increase Increase 2018 2017 (Decrease) (Decrease) REVENUE: Wireless $198,824 $232,501 $(33,677) (14.5)%Wireline 230,225 227,827 2,398 1.1 Renewable Energy 22,158 20,865 1,293 6.2 Total revenue 451,207 481,193 (29,986) (6.2) OPERATING EXPENSES (excluding depreciation andamortization unless otherwise indicated): Termination and access fees 114,478 120,624 (6,146) (5.1) Engineering and operations 73,031 74,614 (1,583) (2.1) Sales, marketing and customer services 35,207 35,184 23 0.1 General and administrative 104,267 102,294 1,973 1.9 Transaction-related charges 2,642 1,009 1,633 161.8 Restructuring charges 515 1,169 (654) (55.9) Depreciation and amortization 85,719 86,934 (1,215) (1.4) (Gain) loss on disposition of long-lived assets (26,425) 101 (26,526) (26,263.4) Loss on damaged assets and other hurricane related charges, netof insurance recovery 750 3,956 (3,206) (81.0) Total operating expenses 390,184 425,885 (35,701) (8.4) Income from operations 61,023 55,308 5,715 10.3 OTHER INCOME (EXPENSE): Interest income 1,811 1,613 198 12.3 Interest expense (7,973) (8,838) 865 (9.8) Loss on deconsolidation of subsidiary — (529) 529 (100.0) Other expense, net (1,119) (1) (1,118) (100.0) Other expense, net (7,281) (7,755) 474 (6.1) INCOME BEFORE INCOME TAXES 53,742 47,553 6,189 13.0 Income tax expense (benefit) 18,870 (1,341) 20,211 (1,507.2) NET INCOME 34,872 48,894 (14,022) (28.7) Net income attributable to non-controlling interests, net of tax: (15,057) (17,406) 2,349 (13.5) NET INCOME ATTRIBUTABLE TO ATNINTERNATIONAL, INC. STOCKHOLDERS $19,815 $31,488 $(11,673) (37.1)% Wireless revenue. Our wireless revenue consists of wholesale revenue generated within our U.S. Telecom segmentand retail revenue generated within both our U.S. Telecom and International Telecom segments. Within our InternationalTelecom segment, wireless revenue is generated in Bermuda and the Caribbean (including the U.S. Virgin Islands). Wholesale wireless revenue. Our U.S. Telecom segment generates wholesale wireless revenue from providingmobile voice and data services to the customers of other wireless carriers, the provision of network switching services andcertain transport services using our wireless networks. Wholesale wireless revenue is primarily driven by the number of sitesand base stations we operate, the amount of voice and data traffic from the subscribers of other carriers that each of these sitesgenerates and the rates we are paid from our carrier customers for carrying that traffic as well as tower rental income. The most significant competitive factor we face in our U.S. Telecom’s wholesale wireless business is the extent towhich our carrier customers choose to roam on our networks or elect to build or acquire their own infrastructure in a48 Table of Contentsmarket, reducing or eliminating their need for our services in those markets. Occasionally, we have entered into buildoutprojects with existing carrier customers to help the customer accelerate the buildout of a given area. Pursuant to thesearrangements, we agree to incur the cost of building and operating a network in a newly designated area meeting specifiedconditions. In exchange, the carrier agrees to lease us spectrum in that area and enter into a contract with specific pricing andterms. Historically, these arrangements typically have included a purchase right in favor of the carrier to purchase thatportion of the network for a predetermined price, depending on when the right to purchase is exercised. In July 2018, wecompleted the previously disclosed sale of approximately 100 cell sites which, under one of these arrangements, generatedapproximately $4.3 million and $13.9 million of wholesale wireless revenue during the years ended December 31, 2018 and2017, respectively. We received no additional cash proceeds at closing as the cash proceeds were previously received anddeferred under our revenue arrangement. Retail wireless revenue. Both our U.S. Telecom and International Telecom segments generate retail wirelessrevenues by providing mobile voice and data services to our subscribers. Retail wireless revenues also include roamingrevenues generated by other carriers’ customers roaming into our retail markets and wireless equipment sales, primarilyhandsets and data modems, as well as real estate rental income. Wireless revenue decreased by $33.7 million, or 14.5%, to $198.8 million for the year ended December 31, 2018from $232.5 million for the year ended December 31, 2017. The decreases in wireless revenue, within our segments,consisted of the following: ·U.S. Telecom. Wireless revenue within our U.S. Telecom segment decreased by $34.1 million, or 23.8%, to $108.9million from $143.0 million, for the years ended December 31, 2018 and 2017, respectively. Of this decrease, $34.1million represented a decrease in wholesale wireless revenue, which was a 27.3% decrease to $90.8 million from$124.9 million for the years ended December 31, 2018 and 2017, respectively. Of this decrease in wholesalewireless revenue, $9.6 million was related to the July 2018 sale of 100 cell sites with the remaining decrease a resultof a reduction in wholesale roaming traffic, roaming rates and the impact of contractual revenue caps with certaincarrier customers. Wireless revenue within our U.S. Telecom’s retail operations remained unchanged at $18.1million for the years ended December 31, 2018 and 2017. ·International Telecom. Within our International Telecom segment, wireless revenue increased by $0.4 million, or0.4%, to $89.9 million for the year ended December 31, 2018 from $89.5 million for the year ended December 31,2017. This increase was primarily related to an increase in voice and data traffic within most of our internationalmarkets partially offset by a $2.9 million decrease in revenues in the U.S. Virgin Islands which was negativelyimpacted by the Hurricanes. We expect wholesale wireless revenue within our U.S. Telecom segment to continue to decline and margins tocontract as a result of a reduction in wholesale roaming traffic, previously disclosed contracts that significantly reduce ratesand impose revenue caps. Wholesale wireless revenue was also negatively impacted by the July 2018 sale of 100 cell sites. As such, we expect that capital expenditures in this segment will be significantly lower going forward. While we are facinglower revenue as a result of the renegotiated roaming arrangements, we believe that maintaining roaming arrangementsfavorable to our carrier customers allows us to preserve wholesale revenue for a longer period of time while creating potentialfor a long‑lived shared infrastructure solution for carriers in areas they may consider to be non-strategic. We expect wireless revenues within our International Telecom segment to increase as we invest in upgrading ournetworks and service offerings. Growth in revenue from anticipated subscriber growth in certain markets may be somewhatoffset by a decline in roaming revenues due to lower negotiated roaming rates received from our carrier customers. Roamingrevenues in these markets are also subject to seasonality and can fluctuate between quarters. Wireline revenue. Wireline revenue is generated by our U.S. Telecom and International Telecomsegments. Within our U.S. Telecom segment, wireline revenue is generated by our wholesale long-distance voice services totelecommunications carriers. Within our International Telecom segment, wireline revenue is generated in Bermuda and theCaribbean (including the U.S. Virgin Islands) and includes internet, voice, and video service revenues as well as revenuesfrom our new managed services and technology business.49 Table of Contents Wireline revenue increased by $2.4 million, or 1.1%, to $230.2 million from $227.8 million for the years endedDecember 31, 2018 and 2017, respectively. The changes in wireline revenue, within our segments, consisted of thefollowing: ·U.S. Telecom. Wireline revenue decreased within our U.S. Telecom segment by $6.1 million, or 48.0%, to $6.6million from $12.7 million, for the years ended December 31, 2018 and 2017, respectively, primarily due to theSovernet Transaction which resulted in a $4.2 million reduction in wireline revenue. The remainder of the decreaserelates to a decrease in traffic volume within our wholesale long-distance voice services operations. ·International Telecom. Within our International Telecom segment, wireline revenue increased by $8.5 million, or4.0%, to $223.6 million from $215.1 million, for the years ended December 31, 2018 and 2017, respectively. Withinthe U.S. Virgin Islands, revenue decreased by $0.6 million, net of the $15.5 million of additional support from theUSF, as a result of the Hurricanes. In other international markets, we recognized an increase in broadband datarevenues as a result of subscriber growth. Within our International Telecom segment, we anticipate that wireline revenue may increase (excluding the impactof the additional $15.5 million of USF funding received during 2018) in the next few quarters as we continue to recover fromthe impact of the Hurricanes in the U.S. Virgin Islands. However, returning revenues to levels reported prior to the Hurricaneswill take longer, or may never occur, as a result of the damage caused by the Hurricanes to the economy of the U.S. VirginIslands and our customer base in that market. In all of our international markets we may incur a decline in video revenues as aresult of subscribers using alternative methods to receive video content. We anticipate that wireline revenue from ourinternational long‑distance business in Guyana will continue to decrease as consumers seek to use alternative technologyservices to place calls as well as a result of the loss of market share should we cease to be the exclusive provider of domesticfixed and international long‑distance service in Guyana, whether by reason of the Government of Guyana implementingrecently-passed legislation or new regulations or the lack of enforcement of our exclusive rights. While the loss of ourexclusive rights will likely cause an immediate reduction in our wireline revenue, over the longer term such declines may beoffset by increased revenue from broadband services to consumers and enterprises in Guyana or an increase in regulated localcalling rates in Guyana. We currently cannot predict when or if the Government of Guyana will take any action to implementsuch legislation or any other action that would otherwise affect our exclusive rights in Guyana. See Note 14 to theConsolidated Financial Statements included in this Report. Renewable energy revenue. Our Power Purchase Agreements (“PPAs”), which are typically priced at or below localretail electricity rates and allow our customers to secure electricity at predictable and stable prices over the duration of theirlong-term contract, provide us with high-quality contracted cash flows. Internationally, renewable energy revenue includesthe generation of power through PPAs from our solar plants in India. In the United States, until the sale of those operationson November 6, 2018, renewable energy revenue represented revenue from the sale of electricity through PPAs and the saleof Solar Renewable Energy Credits (“SRECs”). During the years ended December 31, 2018 and 2017, our renewable energyoperations within the United States generated $16.8 million and $18.7 million of revenue, respectively. Renewable energy revenue increased by $1.3 million, or 6.2%, to $22.2 million from $20.9 million for the yearsended December 31, 2018 and 2017, respectively, primarily as a result of the increase in revenue from our newly completedsolar power plants in India, partially offset by a $1.9 million decrease in our U.S. operations primarily as a result of the U.S.Solar Transaction, the expiration of certain incentive energy credits from the state of California and adverse weatherconditions in the northeast United States. We expect that renewable energy will decrease in future periods as compared to 2018 as a result of the U.S. SolarTransaction. However, our renewable energy revenue in India may have moderate growth as additional solar plants in Indiabecome operational. Termination and access fee expenses. Termination and access fee expenses are charges that we pay for voice anddata transport circuits (in particular, the circuits between our wireless sites and our switches), internet capacity,50 Table of Contentsvideo programming costs, other access fees we pay to terminate our calls, telecommunication spectrum fees and direct costsassociated with our managed services and technology business and Renewable Energy segment. Termination and access feesalso include the cost of handsets and customer resale equipment incurred by our retail businesses. Termination and access fees decreased by $6.1 million, or 5.1%, to $114.5 million from $120.6 million for the yearsended December 31, 2018 and 2017, respectively. Net decreases in termination and access fees, within our segments,consisted of the following: ·U.S. Telecom. Termination and access fees within our U.S. Telecom segment decreased by $4.9 million, or 11.2%, to$38.9 million from $43.8 million, for the years ended December 31, 2018 and 2017, respectively. Of this decrease,$2.2 million was related to the effects of the Sovernet Transaction within our wireline operations. Additionally, adecrease in traffic volume within our wholesale long-distance voice services business resulted in a decrease intermination and access fees of $0.7 million within that business with the remaining $1.9 million decrease beingattributable to decreased traffic volume in our U.S. wireless business.·International Telecom. Within our International Telecom segment, termination and access fees decreased by $1.5million, or 2.0%, to $74.0 million from $75.5 million, for the years ended December 31, 2018 and 2017,respectively. Of this decrease, $3.8 million was caused by a reduction in television programming and other variablecosts that were not incurred as a result of the impact of the Hurricanes and the sale of our operations in the BritishVirgin Islands. These decreases were partially offset by the additional costs incurred by our new managed servicesand technology platform, which began operations in September 2017, and within our other international markets. ·Renewable Energy. Termination and access fees within our Renewable Energy increased $0.4 million, or 28.6%, to$1.8 million from $1.4 million for the years ended December 31, 2018 and 2017, respectively, as a result ofincreased activity in our India operations. We expect that termination and access fee expenses will remain fairly consistent as a percentage of revenues infuture periods. Engineering and operations expenses. Engineering and operations expenses include the expenses associated withdeveloping, operating and supporting our expanding telecommunications networks and renewable energy operations,including the salaries and benefits paid to employees directly involved in the development and operation of our networksand renewable energy operations. Engineering and operations expenses decreased by $1.6 million, or 2.1%, to $73.0 million from $74.6 million forthe years ended December 31, 2018 and 2017, respectively. The net decrease in engineering and operations, within oursegments, consisted of the following: ·U.S. Telecom. Engineering and operations expenses decreased within our U.S. Telecom segment by $0.7 million, or5.2%, to $12.7 million from $13.4 million, for the years ended December 31, 2018 and 2017, respectively, primarilyas a result of the Sovernet Transaction, which resulted in a decrease of $0.6 million, and operating efficiencieswithin our wireless businesses. These decreases were partially offset by $0.4 million of aggregate expenses incurredwithin our new in-building and large-scale fiber network businesses.·International Telecom. Within our International Telecom segment, engineering and operations expenses decreasedby $0.8 million, or 1.3%, to $59.5 million from $60.3 million, for the years ended December 31, 2018 and 2017,respectively. This decrease was primarily related to operational efficiencies in some of our international marketspartially offset by expenses within our new managed services and technology platform which began operations inSeptember 2017. ·Renewable Energy. Engineering expenses within our Renewable Energy segment decreased $0.3 million, or 75.0%,to $0.1 million from $0.4 million for the years ended December 31, 2018 and 2017, respectively. 51 Table of Contents·Corporate Overhead. Engineering expenses within our corporate overhead increased $0.1 million, or 16.7%, to $0.7million from $0.6 million for the years ended December 31, 2018 and 2017, respectively. We expect that engineering and operations expenses may increase over the next twelve months as a result ofcontinued post-Hurricane recovery efforts in the U.S. Virgin Islands and then to remain fairly consistent thereafter as apercentage of revenues. Sales and marketing expenses. Sales and marketing expenses include salaries and benefits we pay to salespersonnel, customer service expenses, sales commissions and the costs associated with the development and implementationof our promotion and marketing campaigns. Sales and marketing expenses remained unchanged at $35.2 million for the year ended December 31, 2018 and2017. The changes in sales and marketing expenses, within our segments, consisted of the following: ·U.S. Telecom. Sales and marketing expenses decreased within our U.S. Telecom segment by $0.2 million, or 6.1%, to$3.1 million from $3.3 million, for the years ended December 31, 2018 and 2017, respectively, primarily as a resultof a decrease in marketing and advertising within the retail operations of our wireless business and the effects of theSovernet Transaction. These decreases were partially offset by $0.3 million of aggregate expenses incurred withinour new in-building and large-scale fiber network businesses.·International Telecom. Within our International Telecom segment, our sales and marketing expenses increased by$0.3 million, or 0.9%, to $32.1 million from $31.8 million for the years ended December 31, 2018 and 2017,respectively. The increase reported from most of our international markets, primarily related to the promotion of ournew broadband products, was offset by a decrease of $0.9 million in our U.S. Virgin Islands operations, caused as aresult of the Hurricanes. We expect sales and marketing expenses to remain fairly consistent as a percentage of revenues in the longer termbut these expenses may increase in the next several quarters to help support the operations that were impacted by theHurricanes. General and administrative expenses. General and administrative expenses include salaries, benefits and relatedcosts for general corporate functions including executive management, finance and administration, legal and regulatory,facilities, information technology and human resources. General and administrative expenses also include internal costsassociated with our performance of due-diligence in connection with acquisition activities. General and administrative expenses increased by $2.0 million, or 2.0%, to $104.3 million from $102.3 million forthe years ended December 31, 2018 and 2017, respectively. Net increases in general and administrative expenses, within oursegments, consisted of the following: ·U.S. Telecom. General and administrative expenses increased by $1.8 million, or 12.7%, to $16.0 million from $14.2million primarily to support our wireless operations and the addition of new in-building and large scale fibernetwork businesses partially offset by the $0.5 million impact of the Sovernet Transaction. ·International Telecom. General and administrative expenses increased within our International Telecom segment by$0.2 million, or 0.4%, to $53.5 million from $53.3 million, for the years ended December 31, 2018 and 2017,respectively. The increase was primarily related to our new managed services and technology platform partiallyoffset by operational efficiencies in some of our other markets. ·Renewable Energy. General and administrative expenses within our Renewable Energy segment decreased by $0.7million, or 9.6%, to $6.6 million from $7.3 million for the years ended December 31, 2018 and 2017,respectively. This decrease was primarily related to U.S. Solar Transaction.52 Table of Contents·Corporate Overhead. General and administrative expenses increased within our corporate overhead by $0.6million, or 2.2%, to $28.1 million from $27.5 million, for the years ended December 31, 2018 and 2017,respectively, primarily related to an increase in information technology expenditures to further enhance our cyberand network security. We expect general and administrative expenses to increase over the next several quarters as a result of continuedpost-Hurricane recovery effects in our networks in our International Telecom segment. We also expect to incur additionalgeneral and administrative expenses to support our new managed services and technology platform, our new in-buildingtelecom operations, our new large scale fiber network platform and the continued build of our solar operations in India. Transaction-related charges. Transaction-related charges include the external costs, such as legal, tax, accountingand 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 inconnection with acquisitions or dispositions or any integration-related costs. We incurred $2.6 million and $1.0 million of transaction‑related charges during the years ended December 31, 2018and 2017, respectively. The transaction-related charges during the year ended December 31, 2018 were primarily related tothe U.S. Solar Transaction within our Renewable Energy segment as well as our new in-building and large scale fiber networkplatforms within our U.S. Telecom segment. Substantially all of the 2017 expenses were related to the Sovernet Transaction. Restructuring charges. During the year ended December 31, 2018, we incurred $0.5 million of restructuringcharges which were primarily related to the U.S. Solar Transaction. During the year ended December 31, 2017, we incurred$1.2 million of restructuring charges within our Viya operations in connection with the integration of those operations withour legacy operations in the U.S. Virgin Islands. Depreciation and amortization expenses. Depreciation and amortization expenses represent the depreciation andamortization charges we record on our property and equipment and on certain intangible assets. Depreciation and amortization expenses decreased by $1.2 million, or 1.4%, to $85.7 million from $86.9 million forthe years ended December 31, 2018 and 2017, respectively. Net decreases in depreciation and amortization expenses, withinour segments, consisted primarily of the following: ·U.S. Telecom. Depreciation and amortization expenses decreased within our U.S. Telecom segment by $1.0 million,or 3.9%, to $24.6 million from $25.6 million, for the years ended December 31, 2018 and 2017, respectively, as aresult of the completion of the previously disclosed sale of approximately 100 cell sites within our U.S. wirelessoperations which reduced depreciation expense by $1.9 million and by the effects of the Sovernet Transactionwhich reduced depreciation and amortization expenses by $0.6 million. These decreases were partially offset bynetwork expansions and upgrades within other geographic areas of our U.S. wireless operations.·International Telecom. Depreciation and amortization expenses decreased within our International Telecomsegment by $1.1 million, or 2.2%, to $48.9 million from $50.0 million, for the years ended December 31, 2018 and2017, respectively. This decrease was primarily related to a $4.5 million reduction in depreciation expense withinour U.S. Virgin Islands market on assets that were damaged and written off as a result of the Hurricanes partiallyoffset by the expansion and upgrades of our network assets in our other International Telecom markets. ·Renewable Energy. Depreciation and amortization expenses within our Renewable Energy segment decreased by$0.1 million, or 1.5%, to $6.6 million from $6.7 million, for the years ended December 31, 2018 and 2017,respectively, as a result of the U.S. Solar Transaction partially offset by capital expenditures primarily related to theconstruction of our solar operations in India.53 Table of Contents·Corporate Overhead. Depreciation and amortization expenses increased by $0.9 million or 19.1% to $5.6 millionfrom $4.7 million for the years ended December 31, 2018 and 2017, respectively, as a result of certain tangible assetsbeing placed into service. We expect depreciation expense to increase as we rebuild our networks in the International Telecom segment thatwere impacted by the Hurricanes and as we acquire more tangible assets to expand or upgrade our other telecommunicationsnetworks, build or acquire solar power generating facilities and amortize intangible assets recorded in connection withacquisitions. (Gain) loss on disposition of long-lived assets. During the year ended December 31, 2018, we recorded a gain onthe disposition of long-lived assets of $26.4 million. Within our U.S. Telecom segment, we recorded a gain of $17.2 millionprimarily as the result of a $15.2 million gain on the previously disclosed sale of approximately 100 cell sites and a $2.9million gain on the sale of certain telecommunication licenses. Within our Renewable Energy segment, we recorded a gainon the U.S. Solar Transaction of $12.4 million. These gains were partially offset by a $3.2 million loss recorded in connectionwith certain asset disposals and settlement agreements within our Renewable Energy segment and a $1.1 million loss on thedisposal of miscellaneous assets within our U.S. wireless operations. Loss on damaged assets and other Hurricane-related charges. During September 2017, the economy, ourcustomer base and our operations in the U.S. Virgin Islands were severely impacted by the Hurricanes. During the year ended December 31, 2018, we incurred $0.8 million in expenses associated with the procurement ofcontinued building maintenance, security services, the supply of alternative power and related professional fees. During the year ended December 31, 2017, we recorded a net pre-tax loss within our consolidated statement ofoperations of $4.0 million. This loss consisted of $35.4 million for the write off of damaged assets, net of insurancerecoveries of $34.6 million received in February 2018. This loss also included $3.2 million of additional operating expensesthat we specifically incurred to address the impact of the Hurricanes. Interest income. Interest income represents interest earned on our cash, cash equivalents, restricted cash and shortterm investment balances. Interest income increased to $1.8 million from $1.6 million for the years ended December 31, 2018 and 2017,respectively. The increase was primarily related to an increase in the return on our cash, cash equivalents and marketablesecurities as compared to the previous year. Interest expense. We incur interest expense on the Viya, One Communications and Ahana debt, commitment fees,letter of credit fees, amortization of debt issuance costs and interest incurred on our outstanding credit facilities. Interest expense decreased by $0.8 million, or 9.1%, to $8.0 million from $8.8 million primarily as a result of theU.S. Solar Transaction which resulted in the acquirer’s assumption of $57.3 million of our long-term debt. Loss on deconsolidation of subsidiary. During the year ended December 31, 2017, we recorded a $0.5 million losson the deconsolidation of a portion our U.S. wireline operations upon the completion of the Sovernet Transaction. Other income (expense), net. Other income (expense), net represents miscellaneous non-operational income earnedand expenses incurred. For the year ended December 31, 2018, other income (expense) was an expense of $1.1 million whichwas primarily related to $2.4 million in losses on foreign currency transactions partially offset by $1.3 million in incomerelated to some of our employee benefit plans. For the year ended December 31, 2017, other income (expense) was anexpense of $1.8 million which was primarily related to a loss on our equity method investment in our Aruba operations of$1.9 million and the net loss on foreign currency transactions of $0.7 million, partially offset by a gain on the sale ofmarketable securities of $0.8 million. 54 Table of ContentsIncome taxes. Our effective tax rate for the years ended December 31, 2018 and 2017 was 35.1% and (2.8)%,respectively. The effective tax rate for the year ended December 31, 2018 was primarily impacted by the following items: (i)a $10.6 million net increase of unrecognized tax positions, (ii) a $4.7 million net benefit to record a return to accrualadjustment, (iii) a $1.2 million benefit to recognize a capital loss carryover due to capital gains on sale of wireless licenses,(iv) a $1.4 million net benefit to record a valuation allowance release on an indefinite lived intangible asset, (v) a $1.7million provision associated with the intercompany sale of assets from the U.S. to the U.S. Virgin Islands, and (vi) the mix ofincome generated among the jurisdictions in which we operate along with the exclusion of losses in jurisdictions where wecannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S. Virgin Islands and India. The effective tax rate for the year ended December 31, 2017 was primarily impacted by the following items: (i) a$10.6 million benefit for the net impact of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) which includes lowering theU.S. corporate income tax rate to 21% effective in 2018 resulting in an $18.0 million benefit from the remeasurement of thedeferred tax assets and liabilities, which was partially offset by a provision of $7.4 million on the deemed repatriation ofundistributed foreign earnings (ii) a $3.9 million benefit for the net capital transactions related to our businesses in NewEngland, New York, BVI and St. Maarten, (iii) a $3.4 million benefit for an amended return refund claim filed for tax year2013, (iv) a $4.4 million increase (net) in unrecognized tax benefits related to current year and prior year positions, (v) a $6.1million provision (net) to record the change in valuation allowance and, (vi) the mix of income generated among thejurisdictions in which we operate. Our effective tax rate is based upon estimated income before provision for income taxes for the year, composition ofthe 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 transactionalor one-time items in the future and the mix of income in any given year generated among the jurisdictions in which weoperate. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we madereasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements as of December31, 2017. During 2018 we made adjustments to the provisional amounts, including continued refinements to our deferredtaxes of a $0.4 million provision from the $18 million benefit recorded at year-end and a $3.2 million provision on thedeemed repatriation of undistributed foreign earnings in addition to the $7.4 million provision recorded at year-end. Theaccounting for the tax effects of the Tax Act has been completed as of December 22, 2018 as required by Staff AccountingBulletin No. 118 (“SAB 118”). While we believe we have adequately provided for all tax positions, amounts asserted bytaxing authorities could materially differ from our accrued positions as a result of uncertain and complex application of taxlaw and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgmentby management. Accordingly, we could record additional provisions or benefits for U.S. federal, state, and foreign tax mattersin future periods as new information becomes available. Net income attributable to non-controlling interests, net of tax. Net income attributable to non-controllinginterests reflected an allocation of $15.1 million and $17.4 million of income generated by our less than wholly-ownedsubsidiaries for the years ended December 31, 2018 and 2017, respectively, a decrease of $2.3 million or 13.2%. Changes innet income attributable to non-controlling interests, net of tax, within our segments, consisted of the following: ·U.S. Telecom. Net income attributable to non-controlling interests, net of tax decreased by $3.9 million, or 54.9%, to$3.2 million from $7.1 million for the years ended December 31, 2018 and 2017, respectively, primarily as a resultof decreased profitability at certain less than wholly owned subsidiaries within our U.S. wireless retail operations.·International Telecom. Net income attributable to non-controlling interests, net of tax increased by $0.6 million, or6.5%, to $9.8 million from $9.2 million, primarily as a result of increased profitability in our less than wholly ownedsubsidiaries within our international operations. ·Renewable Energy. Net income attributable to non-controlling interests, net of tax increased by $1.0 million, or90.9% to $2.1 million from $1.1 million for the years ended December 31, 2018 and 2017, respectively,55 Table of Contentsprimarily as a result of the allocation a portion of the gain we recognized on the U.S. Solar Transaction to the non-controlling shareholders of those operations. Net income (loss) attributable to ATN International, Inc. stockholders. Net income (loss) attributable to ATNInternational, Inc. stockholders was income of $19.8 million and $31.5 million for the years ended December 31, 2018 and2017, respectively. On a per share basis, net income (loss) was income of $1.24 and $1.94 per diluted share for the years endedDecember 31, 2018 and 2017, respectively. Selected Segment Financial Information The following represents selected segment information for the years ended December 31, 2017 and 2016 (in thousands): For the Year Ended December 31, 2017 U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedRevenue Wireless $143,028 $89,473 $ — $ — $232,501Wireline 12,695 215,132 — — 227,827Renewable Energy — — 20,865 — 20,865Total Revenue 155,723 304,605 20,865 — 481,193 Operating income (loss) 55,317 28,308 5,179 (33,496) 55,308 For the Year Ended December 31, 2016 U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedRevenue Wireless $150,044 $94,360 $ — $ — $244,404Wireline 26,683 163,915 — — 190,598Renewable Energy — — 22,001 — 22,001Total Revenue 176,727 258,275 22,001 — 457,003 Operating income (loss) 49,078 36,910 (246) (34,472) 51,270(1)Reconciling items refer to corporate overhead costs and consolidating adjustmentsA year over year summary of our segment results is as follows: U.S. Telecom. Revenues within our U.S. Telecom segment decreased by $21.0 million, or 11.9%, to $155.7 millionfrom $176.7 million for the years ended December 31, 2017 and 2016, respectively. Of this decrease, $6.0 million wasattributable to our wholesale wireless operations which were subject to reduced wholesale roaming rates and revenue capswith certain carrier customers. This decrease was partially offset by the increase in the number of our base stations and theincrease data traffic volumes. In addition, revenue from our retail wireless business decreased $1.5 million as a result ofdecreased subscribers and traffic volumes. In our wireline businesses, the Sovernet Transaction resulted in a decrease inrevenue of $17.0 million which was partially offset by an increase in our wholesale long distance voice services of $3.8million. Operating expenses within our U.S. Telecom segment decreased $27.2 million, or 21.3%, to $100.4 million from$127.6 million for the years ended December 31, 2017 and 2016, respectively. This decrease was primarily related to a $16.8million reduction in operating expenses as a result of the impact of the Sovernet Transaction, expense reductions ofapproximately $6.0 million implemented over the last several quarters and $3.9 million in expense offsets56 Table of Contentsfrom funds received under the Phase I Mobility Funds partially offset by the effects of the expansions and upgrades of ournetworks. As a result of the above, our U.S. Telecom segment’s operating income increased $6.2 million, or 12.6%, to $55.3million from $49.1 million for the year ended December 31, 2017 and 2016, respectively. International Telecom. Revenues within our International Telecom segment increased $46.3 million, or 17.9%, to$304.6 million from $258.3 million for the years ended December 31, 2017 and 2016, respectively. This increase was relatedto the timing of the 2016 International Telecom Acquisitions. This increase was partially offset by the $19.8 million netimpact of the Hurricanes, our sale of our operations in St. Maarten and the British Virgin Islands, and the deconsolidation ofour Aruba operations.Operating expenses within our International Telecom segment increased by $54.7 million, or 24.7%, to $276.1million from $221.4 million for the years ended December 31, 2017 and 2016, respectively. This increase was related to thetiming of the 2016 International Telecom Acquisitions. The increase also includes $4.0 million related to the net impact ofthe Hurricanes which consisted of a $35.4 million write off of damaged assets, net of insurance recoveries of $34.6 million,and $3.2 million of additional operating expenses. These increases were partially offset by operating efficiencies, the effectsof the sale of our operations in St. Maarten and the British Virgin Islands and the deconsolidation of operations in Aruba. As a result, our International Telecom segment’s operating income decreased $8.4 million, or 22.8%, to $28.5million from $36.9 million for the years ended December 31, 2017 and 2016, respectively.Renewable Energy. Revenues within our Renewable Energy segment decreased $1.1 million, or 5.0%, to $20.9million from $22.0 million for the year ended December 31, 2017 and 2016, respectively, primarily as a result of theexpiration of certain incentive energy credits from the state of California and decreased production due to weather conditionsin California partially offset by the increase in revenue from our India operations of $1.7 million. Operating expenses within our Renewable Energy segment decreased $6.5 million, or 29.3%, to $15.7 million from$22.2 million for the years ended December 31, 2017 and 2016, respectively. This decrease in expenses was primarilyassociated with acquisition-related expenses incurred during 2016 as a part of our Vibrant Energy Acquisition partially offsetby increased operating expenses incurred for Vibrant Energy in 2017. As a result, our Renewable Energy segment’s operating income increased by $5.4 million to income of $5.2 millionfrom a loss of $0.2 million for the years ended December 31, 2017 and 2016, respectively. 57 Table of ContentsThe following represents a year over year discussion and analysis of our results of operations for the years ended December 31, 2017 and 2016 (in thousands): Year Ended Amount of Percent December 31, Increase Increase 2017 2016 (Decrease) (Decrease) REVENUE: Wireless $232,501 $244,404 $(11,903) (4.9)% Wireline 227,827 190,598 37,229 19.5 Renewable Energy 20,865 22,001 (1,136) (5.2) Total revenue 481,193 457,003 24,190 5.3 OPERATING EXPENSES (excluding depreciation and amortizationunless otherwise indicated): Termination and access fees 120,624 126,443 (5,819) (4.6) Engineering and operations 74,614 60,414 14,200 23.5 Sales and marketing 35,184 30,253 4,931 16.3 General and administrative 102,294 90,431 11,863 13.1 Transaction-related charges 1,009 18,064 (17,055) (94.4) Restructuring charges 1,169 — 1,169 100.0 Depreciation and amortization 86,934 75,980 10,954 14.4 Impairment of long-lived assets — 11,425 (11,425) (100.0) Bargain purchase gain — (7,304) 7,304 (100.0) (Gain) loss on disposition of long-lived assets 101 27 74 274.1 Loss on damaged assets and other hurricane related charges, net ofinsurance recovery 3,956 — 3,956 100.0 Total operating expenses 425,885 405,733 20,152 5.0 Income from operations 55,308 51,270 4,038 7.9 OTHER INCOME (EXPENSE): Interest income 1,613 1,239 374 30.2 Interest expense (8,838) (5,362) (3,476) 64.8 Loss on deconsolidation of subsidiary (529) — (529) (100.0) Other expense, net (1) (1,773) 1,772 (99.9) Other expense, net (7,755) (5,896) (1,859) 31.5 INCOME FROM CONTINUING OPERATIONS BEFORE INCOMETAXES 47,553 45,374 2,179 4.8 Income tax provisions (benefit) (1,341) 21,160 (22,501) (106.3) NET INCOME 48,894 24,214 24,680 101.9 Net income attributable to non‑controlling interests, net of tax: (17,406) (12,113) (5,293) 43.7 NET INCOME ATTRIBUTABLE TO ATNINTERNATIONAL, INC. STOCKHOLDERS $31,488 $12,101 $19,387 160.2% Wireless revenue. Wireless revenue decreased by $11.9 million, or 4.9%, to $232.5 million for the year endedDecember 31, 2017 from $244.4 million for the year ended December 31, 2016. The decreases in wireless revenue, withinour segments, consisted of the following: ·U.S. Telecom. Wireless revenue within our U.S. Telecom segment decreased by $7.0 million, or 4.7%, to $143.0million from $150.0 million, for the year ended December 31, 2017 and 2016, respectively. Wholesale wirelessrevenue decreased by $6.0 million or 4.6%, to $123.3 million from $129.3 million for the years ended December 31,2017 and 2016, respectively, as a result of a reduction in wholesale roaming rates and the impact of contractualrevenue caps with certain carrier customers. This decrease was partially offset by growth in data traffic volumes as aresult of capacity and technology upgrades to our network. Our U.S. Telecom’s retail operations reported a decreasein wireless revenues of $1.0 million, or 5.1%, to $19.7 million from $20.758 Table of Contentsmillion for the years ended December 31, 2017 and 2016, respectively, as a result of a decrease in subscribers andtraffic volumes. ·International Telecom. Within our International Telecom segment, wireless revenue decreased by $4.9 million, or5.5%, to $89.5 million for the year ended December 31, 2017 from $94.4 million for the year ended December 31,2016. This decrease was primarily related to the decline in roaming revenues within many of our internationalmarkets and the deconsolidation of our operations in Aruba. These decreases were partially offset by an increase inwireless subscribers in Guyana. Wireline revenue. Wireline revenue increased by $37.2 million, or 19.5%, to $227.8 million from $190.6 millionfor the years ended December 31, 2017 and 2016, respectively. The increases in wireline revenue, within our segments,consisted of the following: ·U.S. Telecom. Wireline revenue decreased within our U.S. Telecom segment by $14.0 million, or 52.4%, to $12.7million from $26.7 million, for the years ended December 31, 2017 and 2016, respectively, primarily as a result ofthe effects the Sovernet Transaction which negatively impacted revenue by $17.0 million. This decrease waspartially offset by a $3.1 million increase in revenue from our wholesale long distance voice services. ·International Telecom. Within our International Telecom segment, wireline revenue increased by $51.2 million, or31.2%, to $215.1 million from $163.9 million, for the years ended December 31, 2017 and 2016, respectively. Thisincrease was related to the timing of the 2016 International Telecom Acquisitions partially offset by the $19.8million net impact of the Hurricanes, the sale of our operations in St. Maarten and the British Virgin Islands and thedeconsolidation of our Aruba operations. Renewable energy revenue. Renewable energy revenue decreased $1.1 million, or 5.0%, to $20.9 million from$22.0 million for the years ended December 31, 2017 and 2016, respectively. The decrease was primarily the result of theexpiration of certain incentive energy credits from the state of California and decreased production due to weather conditionsin California. This decrease was partially offset by a $1.7 million increase in revenue recognized by our Vibrant Energyoperations in India. Termination and access fee expenses. Termination and access fees decreased by $5.8 million, or 4.6%, to $120.6million from $126.4 million for the years ended December 31, 2017 and 2016, respectively. Decreases in termination andaccess fees, within our segments, consisted of the following: ·U.S. Telecom. Termination and access fees within our U.S. Telecom segment decreased by $10.1 million, or 18.7%,to $43.8 million from $53.9 million, for the years ended December 31, 2017 and 2016, respectively. Of thisdecrease, $9.5 million was primarily related to the effects of the Sovernet Transaction within our wirelineoperations. Additionally, our wholesale wireless operations recognized a decrease as a result of expense reductionsimplemented and $3.9 million in expense offsets from funds received under the Phase I Mobility Funds. Thesedecreases were partially offset by the increase in traffic volume within our wireline wholesale long distances voiceservices which increased expenses by $3.5 million.·International Telecom. Within our International Telecom segment, termination and access fees increased by $4.3million, or 6.0%, to $75.5 million from $71.2 million, for the years ended December 31, 2017 and 2016,respectively. This increase was related to the timing of the 2016 International Telecom Acquisitions partially offsetby a reduction in television programming and other variable costs which were not incurred as a result of the impactof the Hurricanes, the sale of our operations in St. Maarten and the British Virgin Islands and the deconsolidation ofour operations in Aruba. ·Renewable Energy. Termination and access fees within our Renewable Energy segment remained consistent at $1.4million for the years ended December 31, 2017 and 2016. 59 Table of ContentsEngineering and operations expenses. Engineering and operations expenses increased by $14.2 million, or 23.5%,to $74.6 million from $60.4 million for the years ended December 31, 2017 and 2016, respectively. The net increase inengineering and operations, within our segments, consisted of the following: ·U.S. Telecom. Engineering and operations expenses decreased within our U.S. Telecom segment by $3.8 million, or22.1%, to $13.4 million from $17.2 million, for the years ended December 31, 2017 and 2016, respectively,primarily as a result of the Sovernet Transaction, which cause engineering and operations expense to decrease by$2.6 million, and operating efficiencies within our wireless businesses.·International Telecom. Within our International Telecom segment, engineering and operations expenses increasedby $18.4 million, or 43.9%, to $60.3 million from $41.9 million, for the years ended December 31, 2017 and 2016,respectively. This increase was primarily related to the timing of the 2016 International Telecom Acquisitions aswell as the restoration work done in the U.S. Virgin Islands as a result of the Hurricanes. ·Renewable Energy. Engineering and operations expenses within our Renewable Energy segment decreased slightlyto $0.4 million from $0.5 million for the years ended December 31, 2017 and 2016, respectively. Sales and marketing expenses. Sales and marketing expenses increased by $4.9 million, or 16.2%, to $35.2million from $30.3 million for the years ended December 31, 2017 and 2016, respectively. The net increase in sales andmarketing expenses, within our segments, consisted of the following: ·U.S. Telecom. Sales and marketing expenses decreased within our U.S. Telecom segment by $2.0 million, or 37.7%,to $3.3 million from $5.3 million, for the years ended December 31, 2017 and 2016, respectively, primarily as aresult of a decrease in promotions and advertising within the retail operations of our wireless business and areduction of $1.0 million relating to the effects of the Sovernet Transaction.·International Telecom. Within our International Telecom segment, our sales and marketing expenses increased by$6.8 million, or 27.2%, to $31.8 million from $25.0 million, for the years ended December 31, 2017 and 2016,respectively. This increase was related to the timing of the 2016 International Telecom Acquisitions and increasedmarketing and promotional activities in our other markets. General and administrative expenses. General and administrative expenses increased by $11.9 million, or 13.2%,to $102.3 million from $90.4 million for the years ended December 31, 2017 and 2016, respectively. Net increases in generaland administrative expenses, within our segments, consisted of the following: ·U.S. Telecom. General and administrative expenses decreased within our U.S. Telecom segment by $1.5 million, or9.6%, to $14.2 million from $15.7 million, for the years ended December 31, 2017 and 2016, respectively, as a resultof a decrease of $3.7 million relating to the effects of the Sovernet Transaction partially offset by an increase in ourwireless businesses to support their expanding wireless networks.·International Telecom. General and administrative expenses increased within our International Telecom segment by$8.9 million, or 20.0%, to $53.3 million from $44.4 million, for the years ended December 31, 2017 and 2016,respectively. This increase was primarily related to the timing of the 2016 International Telecom Acquisitions. ·Renewable Energy. General and administrative expenses within our Renewable Energy segment increased by $2.0million, or 37.7%, to $7.3 million from $5.3 million for the years ended December 31, 2017 and 2016, respectively,as a result of overhead and operating expenses incurred for the development of our India operations.·Corporate Overhead. General and administrative expenses increased within our corporate overhead by $2.4million, or 9.6%, to $27.5 million from $25.1 million, for the years ended December 31, 2017 and 2016,respectively, in order to support our expanding operations. 60 Table of Contents Transaction-related charges. We incurred $1.0 million and $16.3 million of transaction‑related charges duringthe years ended December 31, 2017 and 2016, respectively. Substantially all of the 2017 expenses were related to theSovernet Transaction. For the year ended December 31, 2016, substantially all of the expenses were related to our 2016International Telecom and Vibrant Energy Acquisitions. Restructuring Charges. During the year ended December 31, 2017, we incurred $1.2 million of restructuringcharges within our Viya operations. During the year ended 31, 2016, we incurred $1.8 million restructuring costs within ourOne Communications operations. These charges were incurred in connection with the integration of these businesses withATN’s legacy operations in those locations. Depreciation and amortization expenses. Depreciation and amortization expenses increased by $10.9 million, or14.3%, to $86.9 million from $76.0 million for the year ended December 31, 2017 and 2016, respectively. Increases indepreciation and amortization expenses, within our segments, consisted primarily of the following: ·U.S. Telecom. Depreciation and amortization expenses increased within our U.S. Telecom segment by $1.1 million,or 4.5%, to $25.6 million from $24.5 million, for the year ended December 31, 2017 and 2016, respectively, as aresult of certain wireless network expansions and upgrades partially offset by the effects of the Sovernet Transaction.·International Telecom. Depreciation and amortization expenses increased within our International Telecom segmentby $9.5 million, or 23.5%, to $50.0 million from $40.5 million, for the year ended December 31, 2017 and 2016,respectively. This increase was primarily related to the timing of the 2016 International Telecom Acquisitionspartially offset by a reduction in depreciation expense on assets which were damaged and written off as a result ofthe Hurricanes. ·Renewable Energy. Depreciation and amortization expenses within our Renewable Energy segment increased by$1.7 million, or 34.0%, to $6.7 million from $5.0 million as a result of capital expenditures primarily related to theconstruction of our Vibrant Energy operations.·Corporate Overhead. Depreciation and amortization expenses decreased by $1.3 million or 21.7% to $4.7 millionfrom $6.0 million for the year ended December 31, 2017 and 2016, respectively, as a result of certain tangible assetsbecoming fully depreciated. Impairment of long-lived assets. During 2016, as a result of industry consolidation activities and a review ofstrategic alternatives for our U.S. wireline business in the Northeast, we identified factors indicating the carrying amount ofcertain assets may not be recoverable. More specifically, the factors included the competitive environment, recent industryconsolidation and our view of future opportunities in the market which began to evolve in the second quarter of 2016. As aresult of these factors, the analysis concluded that certain wireline assets in the U.S. Telecom segment were overvalued. As aresult, we recorded a non-cash impairment charge of $11.4 million during the year ended December 31, 2016. Theimpairment reduced the carrying values of long lived assets by $3.6 million, goodwill by $7.5 million and a tradename by$0.3 million. Bargain purchase gain. In connection with the One Communications Acquisition, we recorded a bargain purchasegain of $7.3 million during the year ended December 31, 2016. The purchase price and resulting bargain purchase gain werethe result of the market conditions and competitive environment in which One Communications operates along with theCompany's strategic position and resources in those same markets. Both companies realized that their combined resourceswould accelerate the transformation of both companies to better serve customers in these markets. The bargain purchase gainis included in operating income within our International Telecom segment in the accompanying income statement for theyear ended December 31, 2016. 61 Table of ContentsLoss on damaged assets and other Hurricane-related charges, net of insurance recovery. During September2017, our operations and customers in the U.S. Virgin Islands were severely impacted by the Hurricanes. Both our wirelessand wireline networks and commercial operations were severely damaged by these storms. As a result of the Hurricanes, we recorded a net pre-tax loss within our consolidated statement of operations of $4.0million during the year ended December 31, 2017. This loss consists of $35.4 million for the write off of damaged assets, netof insurance recoveries of $34.6 million for which we received the proceeds in February 2018. This net loss also includes$3.2 million of additional operating expenses that we specifically incurred to address the impact of the Hurricanes. Interest income. Interest income increased to $1.6 million from $1.2 million for the year ended December 31, 2017and 2016, respectively. The effects of an increase in the return on our cash, cash equivalents and marketable securities werepartially offset by a decrease in those assets as compared to the previous year. Interest expense. Interest expense increased by $3.5 million to $8.8 million from $5.4 million for the year endedDecember 31, 2017 and 2016, respectively. The increase predominantly reflects the interest incurred on debt used to financea portion of the Viya Acquisition, the term loans assumed with the One Communications Acquisition, refinanced on May 22,2017 and the increased loan balance on the Ahana Debt which was refinanced on December 19, 2016. Loss on deconsolidation of subsidiary. During the year ended December 31, 2017, we recorded a $0.5 million losson the deconsolidation of our U.S. wireline operations upon the completion of the Sovernet Transaction. Other income (expense), net. For the year ended December 31, 2017, other income (expense) was a nominal amountwhich was primarily related to gains on foreign currency transactions of $0.9 million and from the sales of marketablesecurities of $0.9 million. These gains were partially offset by the losses of an unconsolidated affiliate of $1.9 million. Forthe year ended December 31, 2016, other income (expense) was an expense of $1.8 million which was primarily related to$1.5 million of expenses associated with certain employee benefit plans and the losses of an unconsolidated affiliate of $0.8million partially offset by a $0.5 million gain on a foreign currency transaction. Income taxes. Our effective tax rate for the years ended December 31, 2017 and 2016 was (2.8)% and 46.6%,respectively. The effective tax rate for the year ended December 31, 2017 was primarily impacted by the following items:(i) a $10.6 million benefit for the net impact of Tax Act which included lowering the U.S. corporate income tax rate to 21%effective in 2018 resulting in an $18.0 million benefit from the remeasurement of the deferred tax assets and liabilities, whichwas partially offset by a provision of $7.4 million on the deemed repatriation of undistributed foreign earnings, (ii) a $3.9million benefit for the net capital transactions related to our businesses in New England, New York, British Virgin Islandsand St. Maarten, (iii) a $3.4 million benefit for an amended return refund claim filed for tax year 2013, (iv) a $4.4 millionincrease (net) in unrecognized tax benefits related to current year and prior year positions, (v) a $6.1 million provision (net)to record the change in valuation allowance and, (vi) the mix of income generated among the jurisdictions in which weoperate. The effective tax rate for the year ended December 31, 2016 was impacted by the following items: (i) a $3.1 millionprovision related to certain transactional charges incurred in connection with our acquisitions that had no tax benefit, (ii) a$2.6 million provision related to an impairment charge to write down the value of assets related to our wireline business, (iii)a $2.5 million provision related to the write-off of an unrecoverable tax receivable and (iv) the mix of income generatedamong the jurisdictions in which we operate. Our effective tax rate is based upon estimated income before provision forincome taxes for the year, composition of the income in different countries, and adjustments, if any, in the applicablequarterly periods for potential tax consequences, benefits and/or resolutions of tax contingencies. Our consolidated tax ratewill continue to be impacted by any transactional or one-time items in the future and the mix of income in any given yeargenerated among the jurisdictions in which we operate. 62 Table of ContentsNet income attributable to non-controlling interests. Net income attributable to non-controlling interests reflectedan allocation of $17.4 million and $12.1 million of income generated by our less than wholly-owned subsidiaries for theyears ended December 31, 2017 and 2016, respectively, an increase of $5.3 million or 43.7%. Changes in net incomeattributable to non-controlling interests, within our segments, consisted of the following: ·U.S. Telecom. Net income attributable to non-controlling interests increased by $1.3 million, or 22.4%, to $7.1million from $5.8 million for the years ended December 31, 2017 and 2016, respectively, primarily as a result of theeffects of the Sovernet Transaction.·International Telecom. Net income attributable to non-controlling interests increased by $4.8 million, or 109.1% to$9.2 million from $4.4 million, primarily as a result of an increase in profits in our Bermuda operations as a result ofour One Communications acquisition partially offset by the effects of the deconsolidation of our operations inAruba. ·Renewable Energy. Net income attributable to non-controlling interests decreased by $0.8 million, or 42.1%, to $1.1million from $1.9 million, as a result of decreased profitability and our increased ownership within our domesticsolar operations. Net income (loss) attributable to ATN International, Inc. stockholders. Net income attributable to ATNInternational, Inc. stockholders was $31.5 and $12.1 million for the years ended December 31, 2017 and 2016, respectively. On a per share basis, net income was $1.94 and $0.75 per diluted share for the years ended December 31, 2017 and2016, 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 ofthese proceedings could have a material adverse impact on our financial condition and future operations. For discussion ofongoing proceedings, see Note 14 to the Consolidated Financial Statements in this Report. Tax Reform The Tax Cuts and Jobs Act of 2017 (“2017 Tax Act” also commonly referred to as U.S. tax reform), which wassigned into law on December 22, 2017, has resulted in significant changes to the U.S. corporate income tax system and theU.S. Virgin Islands mirror code which replaces “United States” with “U.S. Virgin Islands” throughout the Internal RevenueCode. These changes include a U.S. federal statutory rate reduction from 35% to 21%, which results in a U.S. Virgin Islandsrate change of 38.5% to 23.1% under the mirror tax code which allows for a 10% surcharge on the U.S. federal tax rate, 100%expensing of certain qualified capital investments, the elimination or reduction of the alternative minimum tax regime,certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The Tax Act also transitions international taxation from a worldwide system to a modified territorial system andincludes two base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings ofour foreign subsidiaries to U.S. taxation as global intangible low taxed income (“GILTI”) and eliminates the deduction ofcertain payments made to related foreign corporations, and imposes a minimum tax if greater than regular tax under the base-erosion and anti-abuse tax (“BEAT”). These changes became effective beginning in 2018. The Tax Act also includes a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (“theTransition Toll Tax”). Transition Toll Tax The Tax Act eliminates the deferral of U.S. income tax on the historical unrepatriated earnings by imposing theTransition Toll Tax, which is a one-time mandatory deemed repatriation tax on undistributed foreign earnings. The63 Table of ContentsTransition Toll Tax is assessed on the U.S. shareholder's share of the foreign corporation's accumulated foreign earnings thathave not previously been taxed. Earnings in the form of cash and cash equivalents will be taxed at a rate of 15.5% and allother earnings will be taxed at a rate of 8.0%. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we madereasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements as of December31, 2017. During 2018, we made adjustments to the provisional amounts, including a $3.2 million provision on the deemedrepatriation of undistributed foreign earnings in addition to the $7.4 million provision recorded at year-end. We havecompleted our determination of the accounting implications for charges related to the Transition Toll Tax. At December 31, 2018, we continue to assert our earnings are permanently reinvested outside the U.S.. Cashdividends from Guyana were made in 2018, however these distributions are not subject to Guyanese withholding tax and theU.S. state tax impact is minimal. Effect on Deferred Tax Assets and Liabilities and other Adjustments Our deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these temporarydifferences are expected to be realized or settled. As the Company’s deferred tax liabilities exceed the balance of its deferredtax assets at the date of enactment, the Company has recorded a tax benefit of $18.0 million, reflecting the decrease in theU.S. and U.S. Virgin Islands corporate income tax rates, including the state impact, net of federal benefit. An additionaladjustment of $0.4 million was recorded in the three-month period ending September 30, 2018 for temporary differencesfinalized with the filing of the 2017 tax return. We have completed our accounting for the measurement of deferred taxes. The BEAT provisions in the Tax Act eliminate the deduction of certain base-erosion payments made to relatedforeign corporations, and impose a minimum tax if greater than regular tax. We do not expect we will be subject to this taxand therefore have not included any tax impacts of BEAT in our consolidated financial statements for the year endedDecember 31, 2018. Based on our calculation under the GILTI rules, we do not have an inclusion as of December 31, 2018. Status of our Assessment In accordance with SAB 118, we have completed our determination of the accounting implications of the Tax Act asof December 22, 2018. Liquidity and Capital Resources Historically, we have met our operational liquidity needs through a combination of cash on hand and internallygenerated funds and have funded capital expenditures and acquisitions with a combination of internally generated funds,cash on hand, proceeds from dispositions, borrowings under our credit facilities and seller financing. We believe our currentcash, cash equivalents, short term investments and availability under our current credit facility will be sufficient to meet ourcash needs for at least the next twelve months for working capital needs and capital expenditures.Uses of Cash Acquisitions and investments. Historically, we have funded our acquisitions with a combination of cash on hand,borrowings under our credit facilities and seller financing. We continue to explore opportunities to expand our telecommunications and our international renewable energybusinesses or acquire new businesses and licenses in the United States, the Caribbean and elsewhere. Such acquisitions,including acquisitions of renewable energy assets, may require external financing. While there can be no assurance as towhether, when or on what terms we will be able to acquire any such businesses or licenses or make such investments, suchacquisitions may be accomplished through the issuance of shares of our capital stock, payment of cash or64 Table of Contentsincurrence of additional debt. From time to time, we may raise capital ahead of any definitive use of proceeds to allow us tomove more quickly and opportunistically if an attractive investment materializes.As of December 31, 2018, we had approximately $192.9 million in cash, cash equivalents and restricted cash. Of thisamount, $28.2 million was held by our foreign subsidiaries and is indefinitely invested outside the United States. Theamount held by our foreign subsidiaries decreased $85.7 million from the December 31, 2017 balance of $113.9 millionprimarily as the result of $64.5 million in dividends paid by our Guyana subsidiary of which $51.6 million was paid to us(and eliminated in consolidation) while the remaining $12.9 million was paid to that subsidiary’s minority shareholder. Asthe Tax Act resulted in a one-time transition tax on the deemed repatriation of foreign earnings for federal tax purposes, thetax impact of subsequent cash distributions will be primarily limited to foreign withholding tax, foreign exchange gain orloss, where applicable, and state taxes. In addition, we had approximately $91.0 million of debt, net of unamortized deferredfinancing costs, as of December 31, 2018. How and when we deploy our balance sheet capacity will figure prominently in ourlonger-term growth prospects and stockholder returns.Capital expenditures. Historically, a significant use of our cash has been for capital expenditures to expand andupgrade our telecommunications networks and to expand our renewable energy operations.For the years ended December 31, 2018 and 2017, we spent approximately $185.9 million and $142.4 million,respectively, on capital expenditures. The following notes our capital expenditures, by operating segment, for these periods(in thousands): Capital Expenditures U.S. International Renewable Corporateand Year ended December 31, Telecom Telecom Energy Other (1) Consolidated 2018 $13,389 $160,013(2)$4,515 $8,004 $185,921 2017 22,230 80,912 32,738 6,491 142,371 (1)Corporate and other items refer to corporate overhead accosts and consolidating adjustments. (2)Includes $80.2 million of expenditures used for network repairs and resiliency enhancements in the U.S. Virgin Islandswhich were impacted by the Hurricanes. These expenditures were financed, in part, by the $34.6 million of insuranceproceeds we received during the first quarter of 2018 and cash from operations. We are continuing to invest in our telecommunication networks along with our operating and business supportsystems in many of our markets. Such investments include the upgrade and expansion of both our wireline and wirelesstelecommunications networks as well as our service delivery platforms. We expect 2019 capital expenditures for ourInternational Telecom segment to be approximately $50 million to $55 million. In our U.S. Telecom segment, we expectcapital expenditures to be approximately $13 million to $15 million excluding our new initiatives and early-stage businessspending. To a smaller extent we also continue to invest in expanding our renewable energy assets in India, however,continued expansion in the India market is largely dependent on our ability to secure local financing and the timing, termsand conditions of such financing, which are difficult to estimate at this time. We expect to fund our current capital expenditures primarily from our current cash balances and cash generated fromoperations but may secure additional financing to support renewable energy capital expenditures in India. Income taxes. We have historically used cash‑on‑hand to make payments for income taxes. Our policy is to allocatecapital where we believe we will get the best returns and to date has been to indefinitely reinvest the undistributed earningsof our foreign subsidiaries. As we continue to reinvest our remaining foreign earnings, outside of dividends from Guyanamade in 2018, no additional provision for income taxes has been made on accumulated earnings of foreign subsidiaries. 65 Table of ContentsDividends. We use cash-on-hand to make dividend payments to our stockholders when declared by our Board ofDirectors. For the year ended December 31, 2018, our Board declared $10.9 million of dividends to our stockholders, whichincludes a $0.17 per share dividend declared on December 12, 2018 and paid on January 10, 2019. We have declaredquarterly dividends for the last 81 fiscal quarters. Stock Repurchase Plan. On September 19, 2016, our Board of Directors authorized the repurchase of up to $50.0million of our common stock from time to time on the open market or in privately negotiated transactions (the “2016Repurchase Plan”). During the year ended December 31, 2018, we repurchased $1.6 million under the 2016 Repurchase Planand have $37.7 million available to be repurchased under that plan as of December 31, 2018. Debt Service and Other Contractual Commitments Table. The following table discloses aggregate informationabout our debt, lease and other obligations as of December 31, 2018 and the periods in which payments are due: Less Than More Than Contractual Obligations Total 1 Year 1 – 3 Years 4 – 5 Years 5 Years (In thousands) Debt $90,982 $4,688 $7,513 $19,459 $59,322 Pension obligations 46,734 5,022 13,823 4,355 23,534 Operating lease obligations 71,759 21,941 31,219 12,608 5,991 Total $209,475 $31,651 $52,555 $36,422 $88,847 We have omitted uncertain income tax liabilities from this table due to the inherent uncertainty regarding thetiming of potential issue resolution. Specifically, either the underlying positions have not been fully developed enoughunder audit to quantify at this time or the years relating to the issues for certain jurisdictions are not currently under audit. AtDecember 31, 2018, we had $34.0 million of gross unrecognized tax benefits of which $29.0 million is included in “OtherLiabilities” and $5.0 million is included in “Accrued Taxes” in the consolidated balance sheet.Sources of Cash Total liquidity. As of December 31, 2018, we had approximately $192.9 million in cash, cash equivalents andrestricted cash which represents a decrease of $34.1 million from the December 31, 2017 balance of $227.0 million. Thedecrease is primarily attributable to cash used for capital expenditures of $185.9 million (including $80.2 million for thenetwork repairs and resiliency enhancements of our network in the U.S. Virgin Islands following the Hurricanes),distributions to our minority shareholders of $18.8 million (which includes distributions to the minority shareholder of ourGuyana subsidiary of $12.9 million), dividends paid on our common stock of $10.9 million, the repurchase of our commonstock of $6.2 million, the principal repayment of our debt of $9.8 million, the repurchase of non-controlling interests of $9.7million and $3.0 million used for certain strategic investments. These amounts were partially offset by cash provided by ouroperations of $115.9 million, the receipt of $34.6 million of insurance proceeds relating to the damages we incurred as aresult of the Hurricanes, the aggregate net proceeds from the sale of assets and investments of $61.7 million (including $47.3million received from the U.S. Solar Transaction) and receipt of government grants of $5.4 million. Cash provided by operations. Cash provided by operating activities was $115.9 million for the year endedDecember 31, 2018 as compared to $145.7 million for the year ended December 31, 2017. The decrease of $29.8 million wasprimarily related to a decrease of $31.9 million within our U.S. Telecom segment which was primarily the result of thedecrease in wireless revenues due to the reduction in wholesale roaming revenue rates and the impact of the July 2018 sale of100 cell sites, a decrease of $1.9 million within our International Telecom segment primarily related to the impact of theHurricanes and a decrease of $4.5 million within our renewable energy segment. These decreases were partially offset by anincrease in cash flow from operations of $7.7 million as a result of the timing of payments made for accounts payable andincome taxes. Cash used in investing activities. Cash used in investing activities was $87.3 million and $172.3 million for theyears ended December 31, 2018 and 2017, respectively. The year ended December 31, 2018 included $34.6 million ofinsurance proceeds relating to business interruptions and damages incurred as a result of the Hurricanes, $5.4 million of66 Table of Contentscash received for government grants, $47.3 million in proceeds from the U.S. Solar Transaction and $13.4 million receivedfor the aggregate proceeds on the sale of marketable securities and other investments. The year ended December 31, 2017included aggregate proceeds of $22.4 million received from the Sovernet Transaction and the sale of our operations in St.Maarten. These cash receipts were offset by capital expenditures of $185.9 million (including $80.2 million for the rebuildof our network in the U.S. Virgin Islands which was impacted by the Hurricanes) during the year ended December 31, 2018 ascompared to $142.4 million used for capital expenditures during the year ended December 31, 2017. Cash used in financing activities. Cash used in financing activities was $55.2 million and $42.1 million during theyears ended December 31, 2018 and 2017, respectively. The increase in cash used for financing activities of $13.1 millionwas primarily related to an $11.9 million increase in the distributions made to minority shareholders (primarily the minorityshareholder of our Guyana subsidiary) and a $7.6 million increase in the repurchases of non-controlling interests. Theseincreases were partially offset by an $8.4 million decrease in the dividends paid to our stockholders, a $6.7 million reductionin the amounts we paid to repurchase our common stock and the effects of the refinancing of the One Communications debtwhich was completed in 2017. Credit facility. We have a credit facility with CoBank, ACB and a syndicate of other lenders to provide for a $225million revolving credit facility (the “Credit Facility”) that includes (i) up to $10 million under the Credit Facility forstandby or trade letters of credit, (ii) up to $25 million under the Credit Facility for letters of credit that are necessary ordesirable to qualify for disbursements from the FCC’s mobility fund and (iii) up to $10 million under a Swingline sub-facility. The Credit Facility has a maturity date of December 31, 2019 and currently we expect to enter into a new agreementbefore the maturity date. The Credit Facility also provides for the incurrence by us of incremental term loan facilities, whencombined with increases to revolving loan commitments, in an aggregate amount not to exceed $200 million (the“Accordion”). Amounts that we may borrow under the Credit Facility bear interest at a rate equal to, at our option, either (i) theLondon Interbank Offered Rate (LIBOR) plus an applicable margin ranging between 1.50% to 1.75% or (ii) a base rate plusan applicable margin ranging from 0.50% to 0.75%. Swingline Loans will bear interest at the base rate plus the applicablemargin for base rate loans. The base rate is equal to the higher of (i) 1.00% plus the higher of (x) the one-week LIBOR and(y) the one-month LIBOR; (ii) the federal funds effective rate (as defined in the Credit Facility) plus 0.50% per annum; and(iii) the prime rate (as defined in the Credit Facility). The applicable margin is determined based on the ratio (as furtherdefined in the Credit Facility) of our indebtedness to EBITDA. Under the terms of the Credit Facility, we must also pay a feeranging from 0.175% to 0.250% of the average daily unused portion of the Credit Facility over each calendar quarter. The Credit Facility contains customary representations, warranties and covenants, including a financial covenantthat 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 withaffiliates and fundamental changes. Our investment in “unrestricted” subsidiaries is limited to $400 Million less theaggregate amount of certain dividend payments to our stockholders. Amounts borrowed under the Accordion are alsosubject to proforma compliance with a net leverage ratio financial covenant. As of December 31, 2018, we were incompliance with all of the financial covenants of the Credit Facility. As of December 31, 2018, we had no borrowings under the Credit Facility. Ahana Debt On December 24, 2014, in connection with the Ahana Acquisition, we assumed $38.9 million in long-term debt (the“Original Ahana Debt”). The Original Ahana Debt included multiple loan agreements with banks that bore interest at ratesbetween 4.5% and 6.0%, matured at various times between 2018 and 2023 and were secured by certain solarfacilities. Repayment of the Original Ahana Debt was being made in cash on a monthly basis until maturity. The Original Ahana Debt also included a loan from Public Service Electric & Gas (the “PSE&G Loan”). The PSE&GLoan bore interest at 11.3%, matured in 2027, and was secured by certain solar facilities. Repayment of the67 Table of ContentsOriginal Ahana Debt with PSE&G could be made in either cash or SRECs, at our discretion, with the value of the SRECsbeing fixed at the time of the loan’s closing. Historically, we had made all repayments of the PSE&G Loan using SRECs. On December 19, 2016, Ahana’s wholly-owned subsidiary, Ahana Operations, issued $20.6 million in aggregateprincipal amount of 4.427% senior notes due 2029 (the “Series A Notes”) and $45.2 million in aggregate principal amount of5.327% senior notes due 2031 (the “Series B Notes” and collectively with the Series A Notes and the PSE&G Loan, the“Ahana Debt”). Interest and principal were payable semi-annually, until the respective maturity dates of March 31, 2029 (forthe Series A Notes) and December 31, 2031 (for the Series B Notes). Cash flows generated by the solar projects that securedthe Series A Notes and Series B Notes were only available for payment of such debt and were not available to pay otherobligations or the claims of the creditors of Ahana or its subsidiaries. However, subject to certain restrictions, AhanaOperations held the right to the excess cash flows not needed to pay the Series A Notes and Series B Notes and otherobligations arising out of the securitizations. The Series A Notes and Series B Notes were secured by certain assets of Ahanaand were guaranteed by certain of its subsidiaries. A portion of the proceeds from the issuances of the Series A Notes and Series B Notes was used to repay the OriginalAhana Debt in full except for the PSE&G Loan which remained outstanding after the refinancing. We capitalized $2.8 million of fees associated with the Series A Notes and Series B Notes which were recorded as areduction to the debt carrying amount to be amortized over the life of the notes. On November 6, 2018, we consummated the U.S. Solar Transaction, which included the transfer of the PSE&G Loan,the Series A Notes and Series B Notes to the purchaser. Refer to Note 9 to the Consolidated Financial Statements in thisReport. One Communications DebtIn connection with the One Communications Acquisition on May 3, 2016, we assumed $35.4 million in debt (the“One Communications Debt”) in the form of a loan from HSBC Bank Bermuda Limited. The One Communications Debt wasscheduled to mature in 2021, was bearing interest at the three-month LIBOR rate plus a margin of 3.25%, and was repaidquarterly. The One Communications Debt contained customary representations, warranties and affirmative and negativecovenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that limitedthe maximum ratio of indebtedness less cash to annual operating cash flow. On May 22, 2017, we amended and restated the One Communications Debt to increase the original facility by $8.6million to $37.5 million. The amended and restated debt is scheduled to mature on May 22, 2022 and bears interest at thethree-month LIBOR plus a margin ranging between 2.5% to 2.75% paid quarterly. The amended and restated OneCommunications Debt contains customary representations, warranties and affirmative and negative covenants (includinglimitations on additional debt, guaranties, sale of assets and liens) and financial covenants that limit the ratio of tangible networth to long term debt and total net debt to EBITDA and require a minimum debt service coverage ratio (net cash generatedfrom operating activities plus interest expense less net capital expenditures to debt repayments plus interest expense). Wewere in compliance with its covenants as of December 31, 2018. As a condition of the amendment of the One Communications Debt, within 90 days of the refinancing we wererequired to enter into a hedging arrangement with a notional amount equal to at least 30% of the outstanding loanbalance and a term corresponding to the term of the One Communications Debt. In July 2017, we entered into an amortizinginterest rate swap. This swap has been designated as a cash flow hedge, had an original notional amount of $11.0 million,has an interest rate of 1.874%, and expires in March 2022. As of December 31, 2018, the swap has an unamortized balance of$9.6 million. In connection with the amendment of the One Communications Debt, we increased the limit of its overdraft facilityfrom $5.0 million to $10.0 million. This facility has an interest rate of three-month LIBOR plus 1.75%. 68 Table of ContentsWe capitalized $0.3 million of fees associated with the One Communications Debt in 2017, which is recorded as areduction to the debt carrying amount and will be amortized over the life of the debt. As of December 31, 2018, $31.9 million of the One Communications Debt was outstanding, there were noborrowings under the overdraft facility, and $0.2 million of the capitalized fees remain unamortized. As of December 31, 2018, One Communications was in compliance with its financial covenants. Viya Debt (formerly Innovative Debt) On July 1, 2016, we and certain of our subsidiaries entered into a $60.0 million loan agreement (the “Viya Debt”)with Rural Telephone Finance Cooperative (“RTFC”). The Viya Debt agreement contains customary representations,warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets andliens) 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 afixed rate of 4.0% and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt maybe subject to a fee under certain circumstances. The debt is secured by certain assets of our Viya subsidiaries and isguaranteed by us. Earlier in 2018, we began funding the restoration of Viya’s network following the Hurricanes through anintercompany loan arrangement which exceeded certain limitations on Viya incurring additional debt. RTFC consented tothese intercompany advances and increased the intercompany debt limit to $50.0 million. Subsequent to the end of thesecond quarter end, RTFC increased the limit to $75.0 million at our request due to an increase in the on-going restorationand resiliency costs. We were not in compliance with the Net Leverage Ratio covenant for the year ending December 31,2018 and received a waiver from the RTFC on February 25, 2019. 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. Thefee was recorded as a reduction to the Viya debt carrying amount and will be amortized over the life of the loan. As of December 31, 2018, $60.0 million of the Viya Debt remained outstanding and $0.7 million of the rate lock feewas unamortized. Factors Affecting Sources of LiquidityInternally 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 industrytrends within the telecommunications and renewable energy industries. Restrictions under Credit Facility. Our Credit Facility contains customary representations, warranties andcovenants, including covenants limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantialasset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. In addition, the Credit Facility contains a financial covenant that imposes a maximum ratio of indebtedness toEBITDA. As of December 31, 2018, we were in compliance with all of the financial covenants of the Credit Facility. Capital markets. Our ability to raise funds in the capital markets depends on, among other things, general economicconditions, the conditions of the telecommunications and renewable energy industries, our financial performance, the state ofthe capital markets and our compliance with Securities and Exchange Commission (“SEC”) requirements for the offering ofsecurities. On May 12, 2017, the SEC declared effective our “universal” shelf registration statement. This filing registeredpotential future offerings of our securities 69 Table of ContentsForeign Currency We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies,primarily the Indian Rupee and the Guyana Dollar, to U.S. dollars at the appropriate 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 foreigncurrency translation adjustment, a component of Accumulated Other Comprehensive Income on our balance sheet. Incomestatement accounts are translated using the monthly average exchange rates during the year. During the year endedDecember 31, 2018, we recorded a $2.4 million loss on foreign currency transactions. We will continue to assess the impactof 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 periodspresented in this Report. We have based our discussion and analysis of our financial condition and results of operations on our ConsolidatedFinancial Statements, which have been prepared in accordance with accounting principles generally accepted in the UnitedStates of America (or GAAP). We base our estimates on our operating experience and on various conditions existing in themarket and we believe them to be reasonable under the circumstances. Our estimates form the basis for making judgmentsabout the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differmaterially from these estimates under different assumptions or conditions.Critical Accounting Estimates We have identified the critical accounting estimates that we believe require significant judgment in the preparationof our Consolidated Financial Statements. We consider these accounting estimates to be critical because changes in theassumptions or estimates we have selected have the potential of materially impacting our financial statements.Revenue Recognition. In determining the appropriate amount of revenue to recognize for a particular transaction,we apply the criteria established by the authoritative guidance for revenue recognition and defer those items that do not meetthe recognition criteria. As a result of the cutoff times of our billing cycles, we are often required to estimate the amount ofrevenues earned but not billed from the end of each billing cycle to the end of each reporting period. These estimates arebased primarily on rate plans in effect and historical evidence with each customer or carrier. Adjustments affecting revenuecan and occasionally do occur in periods subsequent to the period when the services were provided, billed and recorded asrevenue, however historically these adjustments have not been material.We apply judgment when assessing the ultimate realization of receivables, including assessing the probability ofcollection and the current credit‑ worthiness of customers. We establish an allowance for doubtful accounts sufficient tocover probable and reasonably estimable losses. Our estimate of the allowance for doubtful accounts considers collectionexperience, aging of the accounts receivable, the credit quality of customer and, where necessary, other macro‑economicfactors.Goodwill and Long‑Lived Intangible Assets. In accordance with the authoritative guidance regarding theaccounting for impairments or disposals of long‑lived assets and the authoritative guidance for the accounting for goodwilland other intangible assets, we evaluate the carrying value of our long‑lived assets, including property and equipment,whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Animpairment loss exists when estimated undiscounted cash flows attributable to non‑current assets subject to depreciation andamortization and discounted cash flows for intangible assets not subject to amortization are less than their carrying amount.For long lived assets other than goodwill, if an asset is deemed to be impaired, the amount of the impairment loss recognizedrepresents the excess of the asset’s carrying value as compared to its estimated fair value, based on management’sassumptions and projections. 70 Table of ContentsOur estimates of the future cash flows attributable to our long‑lived assets and the fair value of our businessesinvolve significant uncertainty. Those estimates are based on management’s assumptions of future results, growth trends andindustry conditions. If those estimates are not met, we could have additional impairment charges in the future, and theamounts may be material.We also assess the carrying value of goodwill and indefinite‑lived intangible assets on an annual basis or morefrequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. Thecarrying value of each reporting unit, including goodwill assigned to that reporting unit, is compared to its fair value. If thecarrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit an impairment charge isrecorded equal to the excess, but not more than the total amount of goodwill allocated to the reporting unit.We assess the recoverability of the value of our telecommunications licenses using a market approach. We believethat our telecommunications licenses generally have an indefinite life based on historical ability to renew such licenses, thatsuch renewals may be obtained indefinitely and at little cost, and that the related technology used is not expected to bereplaced in the foreseeable future. If the value of these assets was impaired by some factor, such as an adverse change in thesubsidiary’s operating market, we may be required to record an impairment charge. We test the impairment of ourtelecommunications licenses annually or more frequently if events or changes in circumstances indicate that such assetsmight be impaired. The impairment test consists of a comparison of the fair value of telecommunications licenses with theircarrying amount on a license by license basis.In the third quarter of 2017, we determined that the damage caused by the Hurricanes caused a triggering eventrequiring us to assess the related reporting unit’s goodwill and indefinite lived intangible assets for impairment. Afterconsideration of the write-downs of fixed assets within the reporting unit, the impairment test for goodwill and indefinitelived intangible assets was performed by comparing the fair value of the reporting unit to its carrying amount. We calculatedthe fair value of the reporting unit by utilizing an income approach, with Level 3 valuation inputs, including a cash flowdiscount rate of 14.5%. Determining fair value requires the exercise of significant judgment, including judgments aboutappropriate discount rates, perpetual growth rates, and the amount and timing of expected future cash flows. The discountrate was based on a weighted‑average cost of capital, which represents the average rate the business would pay its providersof debt and equity. The cash flows employed in the discounted cash flow analysis were derived from internal and externalforecasts. The impairment assessment concluded that no impairment was required for the goodwill and indefinite livedintangible assets because the fair value of the reporting unit exceeded its carrying amount. We also performed our annual impairment assessment of our goodwill and telecommunications licenses as ofDecember 31, 2018 for all of our reporting units and determined that no impairment relating to our goodwill andtelecommunications licenses existed during the year ended December 31, 2018. Contingencies. We are subject to proceedings, lawsuits, tax audits and other claims related to lawsuits and otherlegal and regulatory proceedings that arise in the ordinary course of business as further described in Note 14 to theConsolidated Financial Statements included in this Report. We are required to assess the likelihood of any adversejudgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of lossaccruals required, if any, for these contingencies are made after careful analysis of each individual issue. We consult withlegal counsel and other experts where necessary in connection with our assessment of any contingencies. The requiredaccrual for any such contingency may change materially in the future due to new developments or changes in each matter.We estimate these contingencies amount to approximately $44.0 million at December 31, 2018. We believe that someadverse outcome is probable and have accordingly accrued $5.0 million as of December 31, 2018 for these matters.Recent Accounting PronouncementsSee Note 2 to the Consolidated Financial Statements included in this Report. 71 Table of Contents ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Translation and Remeasurement, We translate the assets and liabilities of our foreign subsidiaries from theirrespective functional currencies, primarily the Indian Rupee and the Guyana Dollar, to U.S. dollars at the appropriate rates asof the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in rates arerecognized in foreign currency translation adjustment, a component of Accumulated Other Comprehensive Income on ourbalance 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 functionalcurrency must first be remeasured from the applicable currency to the legal entity’s functional currency. The effect of thisremeasurement process is reported in other income on our income statement. Employee Benefit Plan. We sponsor pension and other postretirement benefit plans for employees of certainsubsidiaries. Net periodic pension expense is recognized in our income statement. We recognize a pension or otherpostretirement plan’s funded status as either an asset or liability in our consolidated balance sheet. Actuarial gains and lossesare reported as a component of other comprehensive income and amortized through other income in subsequent periods. Interest Rate Sensitivity. As of December 31, 2018, we had $31.9 million of variable rate debt outstanding, whichis subject to fluctuations in interest rates. Our interest expense may be affected by changes in interest rates. We believe thata 10% increase in the interest rates on our variable rate debt would have an immaterial impact on our FinancialStatements. We may have additional exposure to fluctuations in interest rates if we again borrow amounts under our revolverloan within our Credit Facility ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe response to this item is submitted as a separate section to this Report. See “Item 15. Exhibits, FinancialStatement Schedules.” ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURENone. ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated theeffectiveness of our disclosure controls and procedures as of December 31, 2018. Disclosure controls and procedures, asdefined 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 theissuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported withinthe time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls andprocedures include, without limitation, controls and procedures designed to ensure that information required to be disclosedby an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’smanagement, including its principal executive and principal financial officers, or persons performing similar functions asappropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls andprocedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectivesand management necessarily applies its judgment in evaluating the cost‑benefit relationship of possible controls andprocedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2018, our Chief ExecutiveOfficer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective atthe reasonable assurance level.72 Table of ContentsManagement’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting.Internal control over financial reporting is defined in Rules 13a‑15(f) and 15d‑15(f) promulgated under the Exchange Act, asa process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer or personsperforming similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles and includes those policies and procedures that:·Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions anddispositions of our assets;·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, and that our receipts and expendituresare being made only in accordance with authorizations of our management and directors; and·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use ordisposition of our assets that could have a material effect on the financial statements.Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018.In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (“COSO”) in Internal Control—Integrated Framework (2013). Based on its assessment, managementconcluded that, as of December 31, 2018, our internal control over financial reporting was effective based on those criteria. Our internal control over financial reporting as of December 31, 2018 has been audited byPricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears onpage F‑2.Changes in Internal Control Over Financial Reporting.There were no changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f)under the Exchange Act) that occurred during the quarter ended December 31, 2018 that have materially affected, or arereasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION On July 1, 2016, we and certain of our subsidiaries entered into a $60.0 million loan agreement (the “Viya Debt”)with Rural Telephone Finance Cooperative (“RTFC”). The Viya Debt agreement contains customary representations,warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets andliens) 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 afixed rate of 4.0% and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt maybe subject to a fee under certain circumstances. The debt is secured by certain assets of our Viya subsidiaries and isguaranteed by us. Earlier in 2018, we began funding the restoration of Viya’s network following the Hurricanes through anintercompany loan arrangement which exceeded certain limitations on Viya incurring additional debt. RTFC consented tothese intercompany advances and increased the intercompany debt limit to $50.0 million. Subsequent to the end of thesecond quarter end, RTFC increased the limit to $75.0 million at our request due to an increase in the on-going restorationand resiliency costs. We were not in compliance with the Net Leverage Ratio covenant for the year ending December 31,2018 and received a waiver from the RTFC on February 25, 2019.73 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe following table sets forth information regarding our executive officers and directors as of February 28, 2019:Name Age PositionMichael T. Prior 54 Chairman, President, Chief Executive Officer, and DirectorJustin D. Benincasa 56 Chief Financial OfficerBrad Martin 43 Executive Vice President, Business OperationsWilliam F. Kreisher 56 Senior Vice President, Corporate DevelopmentMary Mabey 37 Senior Vice President, General Counsel and SecretaryMartin L. Budd 78 DirectorBernard Bulkin 76 DirectorMichael T. Flynn 70 DirectorRichard J. Ganong 55 DirectorJohn C. Kennedy 54 DirectorLiane J. Pelletier 61 DirectorCharles J. Roesslein 70 DirectorExecutive OfficersMichael T. Prior is the chairman of the Board of Directors and has been our President and Chief Executive Officersince December 2005 and an officer of the Company since June 2003. He was elected to the Board in May 2008. Previous tojoining the Company, Mr. Prior was a partner with Q Advisors LLC, a Denver based investment banking and financialadvisory firm focused on the technology and telecommunications sectors. Mr. Prior began his career as a corporate attorneywith Cleary Gottlieb Steen & Hamilton LLP in London and New York. He received a B.A. degree from Vassar College and aJ.D. degree summa cum laude from Brooklyn Law School. Mr. Prior currently serves on the Board of Directors of theCompetitive Carriers Association. In 2008, Mr. Prior was named Entrepreneur of the Year for the New England Region byErnst & Young LLP and One of America’s Best CEOs by DeMarche Associates, Inc.Justin D. Benincasa is our Chief Financial Officer. Prior to joining us in May 2006, Mr. Benincasa was a Principalat Windover Development, LLC since 2004. From 1998 to 2004, he was Executive Vice President of Finance andAdministration at American Tower Corporation, a leading wireless and broadcast communications infrastructure company,where he managed finance and accounting, treasury, IT, tax, lease administration and property management. Prior to that, hewas Vice President and Corporate Controller at American Radio Systems Corporation and held accounting and financepositions at American Cablesystems Corporation. Mr. Benincasa holds an M.B.A. degree from Bentley University and a B.A.degree from the University of Massachusetts.Brad Martin is our Executive Vice President, Business Operations. Prior to joining us in 2018, he previouslyserved as Chief Operating Officer for Senet Inc., a leading "low power wide area" network (LPWAN) operator and globalservice provider. From 2013 through 2015, Mr. Martin served as Senior Vice President and Chief Quality Officer withExtreme Networks, a global leader in software-driven networking solutions for Enterprise and Service Providercustomers. Between 2008 and 2013, Mr. Martin served as Vice President of Engineering Operations and Quality withSiemens Enterprise Communications and Enterasys Networks, delivering voice and data networking hardware and softwaresolutions to global enterprises. Mr. Martin holds a Bachelor of Science, Mechanical Engineering from the University ofMaine, is a published author and featured industry speaker. William F. Kreisher is our Senior Vice President, Corporate Development. Prior to joining us in 2007, Mr. Kreisherwas Vice President—Corporate Development at Cingular Wireless (now AT&T Mobility) since 2004. He was part of thecorporate development team at Cingular since its formation and spent five years at BellSouth before that as a Director ofFinance, the acting Chief Financial Officer at its broadband and video division, and as a senior manager in its mergers andacquisitions group. Mr. Kreisher is a more than twenty‑five year veteran of the telecommunications74 Table of Contentsindustry, having also worked with MCI Telecommunications and SITA (Equant). Mr. Kreisher holds a Masters in BusinessAdministration from Fordham University and a Bachelor of Arts degree from the Catholic University of America.Mary Mabey is our Senior Vice President and General Counsel. Ms. Mabey joined us in 2009 and previouslyserved as our Deputy General Counsel. Prior to joining us, Ms. Mabey was with the law firm of Edwards Angell Palmer &Dodge LLP (now Locke Lord LLP) in Boston, where she advised public and private companies in domestic and internationaltransactions on corporate and securities law matters, merger, acquisition and financing transactions, corporate governance,and other general corporate matters. Ms. Mabey received a B.A. degree from the University of Notre Dame and a J.D. degreefrom the University of Texas School of Law.Non-Employee DirectorsMartin L. Budd has been a director of ours since May 2007, and is the Chair of our Compensation Committee. Heretired as a partner of the law firm of Day, Berry and Howard LLP (now Day Pitney LLP) effective December 31, 2006. Mr.Budd chaired that firm’s Business Law Department and its Business Section and had particular expertise in federal securitieslaws, merger and acquisition transactions and strategic joint ventures. Mr. Budd is Chairman of the Connecticut AppleseedCenter for Law and Justice and has served on the Legal Advisory Board of the National Association of Securities Dealers. Heis a member of the Board of Trustees of the Hartford Seminary. Mr. Budd also serves on the Board of the "I Have a Dream"Foundation. Mr. Budd earned his legal degree from the Harvard Law School.Dr. Bernard Bulkin has been a director of our since March 2016 and is the Chair of our Nominating and CorporateGovernance Committee. Dr. Bulkin brings particular expertise in the field of renewable energy. He held several seniormanagement roles throughout his approximately twenty-year career at British Petroleum, including Director of the refiningbusiness, Vice President Environmental Affairs, and Chief Scientist, and left BP in 2003. He is currently a Director of K3SolarLtd., IDSolar Power Ltd, and Sustainable Power Ltd,. Dr. Bulkin has served on the boards of Severn Trent plc, LudgateInvestments Limited, HMN Colmworth Ltd., Chemrec AB and REAC Fuel AB, each a Swedish biofuel technology developer,and Ze-gen Corporation, a renewable energy company, and chaired the boards of two UK public companies: AEATechnology plc (from 2005 until 2009), and Pursuit Dynamics Plc (from 2011 until 2013). Dr. Bulkin served as Chair of theUK Office of Renewable Energy from 2010 until 2013, was a member of the FTSE Environmental Markets AdvisoryCommittee (2010-2017) and has held several other UK government roles in sustainable energy and transport. He earned aB.S. in Chemistry from the Polytechnic Institute of Brooklyn and a Ph.D. in Physical Chemistry from Purdue University. Dr.Bulkin is a Professorial Fellow at the University of Cambridge and is the author of Crash Course, published in March2015. He was awarded the Honour of Officer of the Order of the British Empire (OBE) in the 2017 New Year Honours List.Michael T. Flynn has been a director of ours since June 2010 and is a member of our Audit and Nominating andCorporate Governance Committees. He is currently a director of Airspan Networks, Inc., a provider of wireless broadbandequipment and CALIX, Inc., a manufacturer of broadband equipment. Mr. Flynn has forty years of experience in thetelecommunications wireline and wireless businesses, and spent ten years as an officer at Alltel Corporation prior to hisretirement in 2004. He also previously served as an officer of Southwestern Bell Telephone Co. and its parent SBCCommunications from 1987 to 1994. Mr. Flynn has previously served on the board of directors of WebEx Communications,Inc., a provider of internet collaboration services, Equity Media Holding Corporation, an owner and operator of televisionstations throughout the United States, iLinc Communications, Inc., a provider of SaS web collaboration and GENBAND, aworldwide leader of next generation network systems. Mr. Flynn received a Bachelor of Science degree in IndustrialEngineering from Texas A&M University and attended the Dartmouth Institute and the Harvard Graduate School ofBusiness’ Advanced Management Program.Richard J. Ganong has been a director of ours since June 2018 and is a member of our Audit Committee. Mr.Ganong has more than 25 years of experience in the financial services industry with a focus on venture capital and hedgefund investing. He was a Partner at the Tudor Investment Corporation from 1993 to 2009, an internationally recognizeddiversified investment management firm, and was a founding General Partner of the Tudor Venture Group which managed aseries of funds providing growth capital to private companies in various information technology industries.75 Table of ContentsMr. Ganong was the Senior Vice President of Development and Alumni Relations at Bowdoin College from 2014 to 2016and most recently founded Five Pine Partners, where he focuses on advising and investing in emerging companies in theinformation technology, consumer and food sectors. Mr. Ganong also is an emeritus member of the Board of Overseers at TheTuck School at Dartmouth. He is currently a member of the Board of Directors for The Maine Technology Institute, The Gulfof Maine Research Institute, and Wolfe's Neck Center for Agriculture and the Environment, all private entities. Mr. Ganongholds a Bachelor of Arts from Bowdoin College and an MBA from the Tuck School at Dartmouth.John C. Kennedy has been a director of ours since June 2018 and is a member of our Compensation Committee. Mr.Kennedy is the founder and CEO of Platform Science, Inc., an emerging company in the connected vehicle and transportationtechnology space. Previously, he was the President of Qualcomm Enterprise Services and the President of Omnitracs, Inc. Mr.Kennedy is a veteran of News Corp., where he served as Executive Vice President of Operations—Digital Media, from 2009to 2012. From 2007 to 2008 he served as Executive Vice President of Strategy and Corporate Development at Fox InteractiveMedia and began his career at Fox as a Senior Vice President of Corporate Development at Fox Networks Group, where hewas part of the joint Fox/NBC Universal team that created the joint venture now known as "Hulu". His background includesmultiple leadership and strategic roles with technology start-ups, including satellite broadband start-up Teledesic;pioneering online video site Load Media Network, where Mr. Kennedy served as Chief Executive Officer; Leap Wireless, andWireless Facilities International. He began his business career as a venture capital associate with Idanta Partners. Mr.Kennedy retired as a Commander in the U.S. Navy Reserves in 2016, after serving as a founding team member of DiUX, theDepartment of Defense's recently established Silicon Valley presence. He served on the staff of U.S. Senator John McCain;the Aide de Camp to the vice chairman of the Joint Chiefs of Staff; and was a naval aviator in the first Gulf War. Mr. Kennedyholds a BS in Economics and Engineering from the United States Naval Academy and an MBA from the Harvard BusinessSchool, and was a Legis Fellow of the Brookings Institution.Liane J. Pelletier has been a director of ours since June 2012, is the Independent Lead Director of our Board ofDirectors and a member of our Nominating and Corporate Governance and Compensation Committees. Ms. Pelletier has overtwenty-five years of experience in the telecommunications industry. From October 2003 through April 2011, she served asthe Chief Executive Officer and Chairman of Alaska Communications Systems, and prior to that time served as the formerSenior Vice President of Corporate Strategy and Business Development for Sprint Corporation. Ms. Pelletier earned her M.S.in Management at the Sloan School of Business at the Massachusetts Institute of Technology and a B.A. in Economics,magna cum laude, from Wellesley College. Ms. Pelletier currently serves as Chairman of the Nominating and CorporateGovernance Committee of the Board of Expeditors International and is Chairman of the National Association of CorporateDirectors (“NACD”), Northwest Chapter. Ms. Pelletier is a NACD Board Leadership Fellow and has earned the CERTCertificate in Cybersecurity Oversight from the Software Engineering Institute of Carnegie Mellon.Charles J. Roesslein has been a director of ours since April 2002 and is the Chair of our Audit Committee. He hasbeen a director of National Instruments Corporation since July 2000 and is the Co-Founder of Austin Tele-Services Partners,LP, a telecommunications provider, for whom he served as Chief Executive Officer from 2004 to January 2016. He is a retiredofficer of SBC Communications. Mr. Roesslein previously served as Chairman of the Board of Directors, President and ChiefExecutive Officer of Prodigy Communications Corporation from June of 2000 until December of 2000. He served asPresident and Chief Executive Officer of SBC-CATV from October 1999 until May 2000, and as President and ChiefExecutive Officer of SBC Technology Resources from August 1997 to October 1999. Mr. Roesslein holds a BS inMechanical Engineering from the University of Missouri-Columbia and a master’s degree in Finance from the University ofMissouri-Kansas City.Additional information required by this Item 10 will be set forth in our Definitive Proxy Statement for the 2019Annual Meeting of Stockholders (the “2019 Proxy Statement”) and is incorporated herein by reference. Information regarding our Code of Ethics applicable to our principal executive officer, our principal financialofficer, our controller and other senior financial officers appears in Item 1 of this Report under the caption “Business—Available Information.” 76 Table of Contents ITEM 11. EXECUTIVE COMPENSATIONInformation required by this Item 11 will be set forth in our 2019 Proxy Statement and is incorporated herein byreference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERSInformation required by this Item 12 will be set forth in our 2019 Proxy Statement and is incorporated herein byreference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEInformation required by this Item 13 will be set forth in our 2019 Proxy Statement and is incorporated herein byreference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESInformation required by this Item 14 will be set forth in our 2019 Proxy Statement and is incorporated herein byreference.77 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a)The following documents are filed as part of this Report:(1)Financial Statements. See Index to Consolidated Financial Statements, which appears on page F‑1 hereof. Thefinancial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewithin response to this Item 15.(2)Schedule II. Valuation and Qualifying Accounts for the years ended December 31, 2016, 2017, and 2018 whichappears on page F-60 hereof.(3)Exhibits. The exhibits listed below are filed herewith in response to this Item 15.EXHIBIT INDEXto Form 10‑K for the Year Ended December 31, 2018 2.1 Purchase Agreement, effective as of September 30, 2015, by and among Caribbean Asset Holdings, LLC,National Rural Utilities Cooperative Finance Corporation, ATN VI Holdings, LLC and ATN International,Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q (FileNo. 001-12593) for the quarterly period ended September 30, 2015 filed on November 9, 2015).2.2 Amendment No. 1 to the Purchase Agreement, dated as of July 1, 2016, by and among National RuralUtilities Cooperative Finance Corporation, Caribbean Asset Holdings, LLC, ATN VI Holdings, LLC, andATN International, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q (file No. 001-12593) for the quarterly period ended June 30, 2016 filed on August 9, 2016).2.3 Transaction Agreement, dated as of October 5, 2015, by and among ATN International, Inc., ATN CaribbeanHoldings, Ltd., ATN Bermuda Holdings Ltd., KeyTech Limited and Chancery Holdings Limited(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-12593)filed on October 6, 2015).3.1 Restated Certificate of Incorporation of ATN International, Inc. (incorporated by reference to Exhibit 4.1 tothe Company’s Registration Statement on Form S‑8 (File No. 333‑62416) filed on June 6, 2001).3.2 Certificate of Amendment to the Restated Certificate of Incorporation of ATN International, Inc., as filed withthe Delaware Secretary of State on August 14, 2006 (incorporated by reference to Exhibit 3.2 to theCompany’s Quarterly Report on Form 10‑Q (File No. 001‑12593) for the quarterly period ended June 30,2006 filed on August 14, 2006).3.3 Certificate of Amendment to the Company’s Restated Certificate of Incorporation, filed June 10, 2016 andeffective June 21, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Periodic Report on Form8-K (File No. 001-12593) filed on June 27, 2016).3.4**Amended and Restated By-Laws, effective as of February 27, 2017.10.1*ATN International, Inc. 1998 Stock Option Plan (as amended May 24, 2007 incorporated by reference toAppendix A to the Company’s Proxy Statement on Schedule 14A (File No. 001‑12593) filed on April 30,2007).10.2*Director’s Remuneration Plan as amended as of November 2, 1999 (incorporated by reference to Exhibit 4.7to the Company’s Registration Statement on Form S‑8 (File No. 333‑62416) filed on June 6, 2001).10.3*Form of Incentive Stock Option Agreement under 1998 Stock Option Plan (incorporated by reference toExhibit 4.8 to the Company’s Registration Statement on Form S‑8 (File No. 333‑62416) filed on June 6,2001).10.4*2005 Restricted Stock and Incentive Plan (incorporated by reference to Exhibit 4.5 to the Company’sRegistration Statement on Form S‑8 (File No. 333‑62416) filed on May 24, 2005).78 Table of Contents10.5*ATN International, Inc. 2008 Equity Incentive Plan, as amended and restated (incorporated by reference toAppendix C of the Definitive Proxy Statement on Schedule 14A (File No. 001‑12593) filed on May 2, 2011).10.6*Form of Notice of Grant of Restricted Stock and Restricted Stock Agreement under 2008 Equity IncentivePlan (Non‑Employee Directors) (incorporated by reference to Exhibit 10.2 to the Company’s Current Reporton Form 8‑K (File No. 001‑12593) filed on May 21, 2008).10.7*Form of Notice of Grant of Restricted Stock and Restricted Stock Agreement under 2008 Equity IncentivePlan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8‑K (File No. 001‑12593) filed on May 21, 2008).10.8*Form of Notice of Grant of Incentive Stock Option and Option Agreement under 2008 Equity Incentive Plan(incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8‑K (File No. 001‑12593) filed on May 21, 2008).10.9*Form of Notice of Grant of Nonqualified Stock Option and Option Agreement under 2008 Equity IncentivePlan (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8‑K (File No. 001‑12593) filed on May 21, 2008).10.10*Deferred Compensation Plan for Select Employees of ATN International, Inc. (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8‑K (File No. 001‑12593) filed on January 6, 2009).10.11 Fourth Amended and Restated Credit Agreement dated as of December 19, 2014 by and among the Company,as Borrower, CoBank, ACB, as Administrative Agent, Lead Arranger, Swingline Lender, an Issuing Lenderand a Lender, Fifth Third Bank, as a Joint Lead Arranger, MUFG Union Bank, N.A., as a Joint Lead Arrangerand an Issuing Lender, the Guarantors named therein and the other Lenders named therein (incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K (File No. 001‑12593) filed onDecember 23, 2014).10.12 Amendment, Consent and Confirmation Agreement, dated January 11, 2016, by and among ATNInternational, Inc., as Borrower, CoBank, ACB, as Administrative Agent, and the Guarantors and otherLenders named therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8‑K (File No. 001‑12593) filed on January 15, 2016).10.13 Agreement between the Government of the Co-Operative Republic of Guyana and Atlantic Tele- Network,Inc., dated June 18, 1990 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report onForm 10-Q (File No. 001-12593) for the quarterly period ended March 31, 2006 filed on May 15, 2006).10.14 Amendment to the Agreement between the Government of the Co‑Operative Republic of Guyana and ATNInternational, Inc., dated November 2, 2012 (incorporated by reference to Exhibit 10.20 to the Company’sAnnual Report on Form 10‑K (File No. 001‑12593) for the year ended December 31, 2012 filed on March 18,2013).10.15*Form of Severance Agreement executed between the Company and Mssrs. Benincasa, Slap, Kreisher, andFougere dated as of February 26, 2016 (incorporated by reference to Exhibit 10.20 to the Company’s AnnualReport on Form 10-K (File No. 001-12593) filed on February 29, 2016).10.16*Severance Agreement between the Company and Mr. Michael Prior, dated as of February 26, 2016(incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K (File No. 001-12593) filed on February 29, 2016).10.17 Loan Agreement, dated as of July 1, 2016, by and among ATN VI Holdings, LLC, Caribbean Asset HoldingsLLC, and Rural Telephone Finance Cooperative (incorporated by reference to Exhibit 10.2 to the Company’sQuarterly Report on Form 10-Q (File No. 001-12593) for the quarterly period ended June 30, 2016 filed onAugust 9, 2016).10.18 Limited Waiver of Net Leverage Ratio dated as of February 27, 2018, between ATN VI Holdings, LLC andthe Rural Telephone Finance Cooperative (incorporated by reference to Exhibit 10.25 to the Company’sAnnual Report on Form 10-K (File No. 001-12593) filed on February 28, 2018).10.19**Limited Waiver of Net Leverage Ratio dated as of February 25, 2019, between ATN VI Holdings, LLC andthe Rural Telephone Finance Cooperative (filed herewith).79 Table of Contents10.20 Offer Letter by and between ATN International, Inc. and Brad Martin, dated April 4, 2018. (incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-12593) filed on April19, 2018).10.21 Consent and Waiver between Rural Telephone Finance Cooperative, Caribbean Asset Holdings, LLC andDTR Holdings, LLC, dated May 7, 2018. (incorporated by reference to Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q (File No. 001-12593) filed on May 9, 2018)10.22 Form of Restricted Stock Unit Agreement under the 2008 Equity Incentive Plan (Non-Employee Directors)(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-12593) filed on May 9, 2018).10.23 Consent and Waiver between Rural Telephone Finance Cooperative, Caribbean Asset Holdings, LLC andDTR Holdings, LLC, dated August 3, 2018. (incorporated by reference to Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q (File No. 001-12593) filed on August 8, 2018).10.24Purchase and Sale Agreement by and between Ahana Renewables, LLC and CleanCapital Holdco 4, LLC,dated as of September 9, 2018, (incorporated by reference to Exhibit 10.1 to the Company’s Current Reporton Form 8-K (File No. 001-12593) filed on September 9, 2018).21 **Subsidiaries of ATN International, Inc.23.1**Consent of Independent Registered Public Accounting Firm—PricewaterhouseCoopers LLP.31.1**Certification of Principal Executive Officer pursuant to Rule 13a‑ 14(a) of the Securities Exchange Act of1934, as adopted pursuant to Rule 302 of the Sarbanes‑Oxley Act of 2002.31.2**Certification of Principal Financial Officer pursuant to Rule 13a‑ 14(a) of the Securities Exchange Act of1934, as adopted pursuant to Rule 302 of the Sarbanes‑Oxley Act of 2002.32.1***Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes‑Oxley Act of 2002.32.2***Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes‑Oxley Act of 2002.101.INS**XBRL Instance Document101.SCH**XBRL Taxonomy Extension Schema Document101.CAL**XBRL Taxonomy Extension Calculation Linkbase Document101.DEF**XBRL Taxonomy Extension Definition Linkbase Document101.LAB**XBRL Taxonomy Extension Label Linkbase Document101.PRE**XBRL Taxonomy Extension Presentation Linkbase Document*Management contract or compensatory plan or arrangement.**Filed herewith. ***The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Report and will notbe deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extentthat the company specifically incorporates it by reference. ITEM 16. FORM 10-K SUMMARYNone 80 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Beverly, Massachusettson the 28 day of February, 2019. ATN International, Inc. By:/s/ Michael T. Prior Michael T. Prior Chairman, President and Chief ExecutiveOfficer Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by thefollowing persons on behalf of the registrant and in the capacities indicated on the 28 day of February, 2019.Signature Title/s/ Michael T. Prior Chairman, President and Chief Executive OfficerMichael T. Prior (Principal Executive Officer) /s/ Justin D. Benincasa Chief Financial OfficerJustin D. Benincasa (Principal Financial and Accounting Officer) /s/ Martin L. Budd DirectorMartin L. Budd /s/ Bernard J. Bulkin DirectorBernard J. Bulkin /s/ Michael T. Flynn DirectorMichael T. Flynn /s/ Richard J. Ganong DirectorRichard J. Ganong /s/ John C. Kennedy DirectorJohn C. Kennedy /s/ Liane J. Pelletier DirectorLiane J. Pelletier /s/ Charles J. Roesslein DirectorCharles J. Roesslein 81 ThThTable of ContentsATN INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULEDecember 31, 2018, 2017 and 2016INDEXREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2FINANCIAL STATEMENTS Consolidated Balance Sheets—December 31, 2018 and 2017 F‑4Consolidated Income Statements for the Years Ended December 31, 2018, 2017 and 2016 F‑5Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017 and2016 F‑6Consolidated Statements of Equity for the Years Ended December 31, 2018, 2017 and 2016 F‑7Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016 F‑8NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F‑9FINANCIAL STATEMENT SCHEDULE Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2018, 2017 and 2016 F‑59 F-1 Table of ContentsReport of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders ofATN International, Inc.: Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of ATN International, Inc. and its subsidiaries (“theCompany”) as of December 31, 2018 and 2017, and the related consolidated income statements, statements ofcomprehensive income, of equity, and of cash flows for each of the three years in the period ended December 31, 2018,including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectivelyreferred to as the “consolidated financial statements”). We also have audited the Company's internal control over financialreporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows foreach of the three years in the period ended December 31, 2018 in conformity with accounting principles generally acceptedin the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2018 based on criteria established in Internal Control - IntegratedFramework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which itaccounts for revenues from contracts with customers in 2018. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effectiveinternal control over financial reporting, and for its assessment of the effectiveness of internal control over financialreporting, included in Management's Report on Internal Control over Financial Reporting under Item 9A. Our responsibilityis to express opinions on the Company’s consolidated financial statements and on the Company's internal control overfinancial reporting based on our audits. We are a public accounting firm registered with the Public Company AccountingOversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordancewith the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission andthe PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of materialmisstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained inall material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of materialmisstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respondto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in theconsolidated financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Ouraudit of internal control over financial reporting included obtaining an understanding of internal control over financialreporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. F-2 Table of ContentsDefinition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal control over financial reporting includes those policiesand procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate. /s/PricewaterhouseCoopers LLP Boston, MassachusettsFebruary 28, 2019 We have served as the Company’s auditor since 2002. F-3 Table of ContentsATN INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDecember 31, 2018 and 2017(In Thousands, Except Share Data) December 31, December 31, 2018 2017 ASSETS Current Assets: Cash and cash equivalents $191,836 $207,956 Restricted cash 1,071 833 Short-term investments 393 7,076 Accounts receivable, net of allowances of $16.5 million and $15.0 million, respectively 38,305 43,529 Inventory, materials and supplies 6,305 15,398 Prepayments and other current assets 37,855 68,136 Total current assets 275,765 342,928 Fixed Assets: Property, plant and equipment 1,188,916 1,169,806 Less accumulated depreciation (562,064) (526,660) Net fixed assets 626,852 643,146 Telecommunication licenses, net 93,686 95,952 Goodwill 63,970 63,970 Customer relationships, net 9,323 11,734 Restricted cash — 11,101 Other assets 37,708 36,774 Total assets $1,107,304 $1,205,605 LIABILITIES AND EQUITY Current Liabilities: Current portion of long-term debt $4,688 $10,919 Accounts payable and accrued liabilities 80,873 116,133 Dividends payable 2,720 2,724 Accrued taxes 31,795 6,751 Advance payments and deposits 20,574 25,178 Total current liabilities 140,650 161,705 Deferred income taxes 10,276 31,732 Other liabilities 46,760 37,072 Long-term debt, excluding current portion 86,294 144,873 Total liabilities 283,980 375,382 Commitments and contingencies (Note 14) ATN International, Inc. Stockholders’ Equity: Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued andoutstanding — — Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,274,215 and17,102,530 shares issued, respectively, 16,002,699 and 16,025,745 shares outstandingrespectively 172 170 Treasury stock, at cost; 1,271,516 and 1,076,785 shares, respectively (48,547) (36,110) Additional paid-in capital 181,778 167,973 Retained earnings 563,593 552,948 Accumulated other comprehensive income (1,609) 3,746 Total ATN International, Inc. stockholders’ equity 695,387 688,727 Non-controlling interests 127,937 141,496 Total equity 823,324 830,223 Total liabilities and equity $1,107,304 $1,205,605 The accompanying notes are an integral part of these consolidated financial statements.F-4 Table of ContentsATN INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED INCOME STATEMENTSFor the Years Ended December 31, 2018, 2017 and 2016(In Thousands, Except Per Share Data) December 31, 2018 2017 2016 REVENUE: Wireless $198,824 $232,501 $244,404 Wireline 230,225 227,827 190,598 Renewable energy 22,158 20,865 22,001 Total revenue 451,207 481,193 457,003 OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated): Termination and access fees 114,478 120,624 126,443 Engineering and operations 73,031 74,614 60,414 Sales, marketing and customer service 35,207 35,184 30,253 General and administrative 104,267 102,294 90,431 Transaction-related charges 2,642 1,009 18,064 Restructuring charges 515 1,169 — Depreciation and amortization 85,719 86,934 75,980 Impairment of intangible assets — — 11,425 Bargain purchase gain — — (7,304) (Gain) loss on disposition of long-lived assets (26,425) 101 27 Loss on damaged assets and other hurricane related charges, net of insurance recovery 750 3,956 — Total operating expenses 390,184 425,885 405,733 Income from operations 61,023 55,308 51,270 OTHER INCOME (EXPENSE) Interest income 1,811 1,613 1,239 Interest expense (7,973) (8,838) (5,362) Loss on deconsolidation of subsidiary — (529) — Other expenses (1,119) (1) (1,773) Other expense, net (7,281) (7,755) (5,896) INCOME BEFORE INCOME TAXES 53,742 47,553 45,374 Income tax provisions (benefit) 18,870 (1,341) 21,160 NET INCOME 34,872 48,894 24,214 Net income attributable to non-controlling interests, net of tax expense of $1.5 million, $1.0 million, and $1.3 million,respectively. (15,057) (17,406) (12,113) NET INCOME ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS $19,815 $31,488 $12,101 NET INCOME PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC.STOCKHOLDERS: Basic 1.24 1.95 0.75 Diluted 1.24 1.94 0.75 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 15,988 16,138 16,131 Diluted 16,042 16,210 16,227 DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK $0.68 $1.02 $1.32 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of ContentsATN INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFor the Years Ended December 31, 2018, 2017, and 2016(in thousands) Year Ended December 31, 2018 2017 2016 Net income $34,872 $48,894 $24,214 Other comprehensive income: Foreign currency translation adjustment (4,390) 1,265 (687) Reclassifications of gains on sale of marketable securities to net income — (1,044) — Unrealized gain on securities 78 440 868 Projected pension benefit obligation, net of tax expense of $0.6 million, $0.7million and $0.7 million (840) 1,357 5,251 Other comprehensive income (loss), net of tax (5,152) 2,018 5,432 Comprehensive income 29,720 50,912 29,646 Less: Comprehensive income attributable to non-controlling interests (15,057) (17,406) (12,113) Comprehensive income attributable to ATN International, Inc. $14,663 $33,506 $17,533 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of ContentsATN INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EQUITYFor the Years Ended December 31, 2016, 2017, and 2018(In Thousands, Except 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, 2015 $168 $(18,254) $154,768 $547,321 $(3,704) $680,299 $81,425 $761,724 Issuance of 100,005 restricted shares of common stock — — (1) — — (1) — (1) Issuance of 43,053 shares of common stock upon exercise of stock options 1 — 1,408 — — 1,409 — 1,409 Purchase of 70,686 shares of common stock — (4,873) — — — (4,873) — (4,873) Stock-based compensation — — 6,440 — — 6,440 — 6,440 Dividends declared on common stock — — — (21,313) — (21,313) (8,848) (30,161) Excess tax benefits from share-based compensation — — 592 — — 592 — 592 Non-controlling interest in equity acquired — — (4,106) — — (4,106) 29,998 25,892 Investments made by minority shareholders — — — — — — 22,409 22,409 Deconsolidation of subsidiary — — — — — — (310) (310) Repurchase of non-controlling interests — — 1,075 — — 1,075 (4,673) (3,598) Comprehensive income: — Net income — — — 12,101 — 12,101 12,113 24,214 Other comprehensive loss, net of tax of $677 — — — — 5,432 5,432 — 5,432 Total comprehensive income — — — — — 17,533 12,113 29,646 Balance, December 31, 2016 169 (23,127) 160,176 538,109 1,728 677,055 132,114 809,169 Issuance of 95,095 restricted shares of common stock 1 — — — — 1 — 1 Issuance of 35,081 shares of common stock upon exercise of stock options — — 1,156 — — 1,156 — 1,156 Purchase of 234,746 shares of common stock — (12,983) — — — (12,983) — (12,983) Stock-based compensation — — 6,970 — — 6,970 — 6,970 Dividends declared on common stock — — — (16,465) — (16,465) (7,318) (23,783) Investments made by minority shareholders — — — — — — 123 123 Deconsolidation of subsidiary — — — — — — 529 529 Repurchase of non-controlling interests — — (670) — — (670) (1,356) (2,026) Cumulative effect adjustment due to adoption of new accounting pronouncements — — 341 (186) — 155 — 155 Comprehensive income: Net income — — — 31,490 — 31,490 17,404 48,894 Other comprehensive loss, net of tax of $679 — — — — 2,018 2,018 — 2,018 Total comprehensive income — — — — — 33,508 17,404 50,912 Balance, December 31, 2017 170 (36,110) 167,973 552,948 3,746 688,727 141,496 830,223 Issuance of 13,664 restricted shares of common stock 2 — — — — 2 — 2 Issuance of 158,021 shares of common stock upon exercise of stock options — — 6,319 — — 6,319 — 6,319 Purchase of 171,907 shares of common stock — (12,437) — — — (12,437) — (12,437) Stock-based compensation — — 6,420 — — 6,420 — 6,420 Dividends declared on common stock — — — (10,863) — (10,863) (19,033) (29,896) Repurchase of non-controlling interests — — 1,066 — — 1,066 (10,729) (9,663) Cumulative effect adjustment due to adoption of new accounting pronouncements — — 1,693 (203) 1,490 1,146 2,636 Comprehensive income: Net income — — — 19,815 — 19,815 15,057 34,872 Other comprehensive loss, net of tax of $637 — — — — (5,152) (5,152) — (5,152) Total comprehensive income — — — — — 14,663 15,057 29,720 Balance, December 31, 2018 $172 $(48,547) $181,778 $563,593 $(1,609) $695,387 $127,937 $823,324 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of ContentsATN INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2018, 2017 and 2016(In Thousands) Year Ended December 31, 2018 2017 2016Cash flows from operating activities: Net income$34,872 $48,894 $24,214Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization 85,719 86,934 75,980Provision for doubtful accounts 5,134 3,993 2,454Amortization and write off of debt discount and debt issuance costs 763 670 505Stock-based compensation 6,420 6,977 6,410Unrealized loss on foreign currency 1,342 (1,209) —Deferred income taxes (23,242) (13,505) (5,636)Loss on equity method investments — 2,033 —Bargain purchase gain — — (7,304)Loss on damaged assets from Hurricanes — 35,443 —Insurance recovery related to hurricane claims — (34,606) —(Gain) Loss on disposition of long-lived assets (26,425) 101 27Gain on sale of investments — (826) —Impairment of long-lived assets — — 11,425Pension funding required by Viya acquisition — — (22,494)Loss on deconsolidation of subsidiary — 529 —Other non-cash activity 308 424 566Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions: Accounts receivable (1,682) (4,074) 2,601Materials and supplies, prepayments, and other current assets 5,924 1,002 (8,410)Prepaid income taxes 3,147 996 —Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities (7,044) 4,649 6,522Accrued taxes 29,089 (1,385) 21,547Other assets (238) 4,102 (12,122)Other liabilities 1,778 4,583 15,371Net cash provided by operating activities 115,865 145,725 111,656Cash flows from investing activities: Capital expenditures (105,769) (133,786) (124,282)Hurricane rebuild capital expenditures (80,152) (8,585) —Hurricane insurance proceeds 34,606 — —Receipt of government grants 5,400 — —Purchase of strategic investments (3,000) (18,107) (2,000)Divestiture of businesses, net of transferred cash of $11.5 million and $2.1 million, respectively 48,270 22,381 —Acquisition of businesses, net of acquired cash of $0.0 million and $12.6 million, respectively — (1,183) (146,395)Purchases of spectrum licenses and other intangible assets, including deposits — (36,832) (10,860)Acquisition of non-controlling interest in subsidiary — — (7,045)Purchase of short-term investments (138) — (7,422)Proceeds from sale of investments 6,564 3,794 —Proceeds from disposition of long-lived assets 6,900 — 1,424Net cash used in investing activities (87,319) (172,318) (296,580)Cash flows from financing activities: Dividends paid on common stock (10,866) (19,227) (20,965)Proceeds from new borrowings — 8,571 125,800Distribution to non-controlling interests (18,780) (6,858) (8,632)Payment of debt issuance costs — (326) (2,763)Proceeds from stock option exercises 72 1,030 649Principal repayments of term loan (9,795) (9,355) (33,564)Repurchase of common stock (6,198) (12,855) (4,114)Acquisition of businesses, net of acquired cash of $0.0 million — (1,178) —Repurchases of non-controlling interests (9,663) (2,025) (3,485)Investments made by minority shareholders in consolidated affiliates — 122 22,408Net cash used in provided by financing activities (55,230) (42,101) 75,334Effect of foreign currency exchange rates on cash and cash equivalents (299) 226 (626)Net change in cash, cash equivalents, and restricted cash (26,983) (68,468) (110,216)Total cash, cash equivalents, and restricted cash, beginning of period 219,890 288,358 398,574Total cash, cash equivalents, and restricted cash, end of period$192,907 $219,890 $288,358Supplemental cash flow information: Interest paid$7,235 $7,411 $4,451Taxes paid$12,486 $13,685 $8,237Dividends declared, not paid$2,720 $2,724 $5,487Noncash investing activity: Transfer from inventory, materials and supplies to property, plant and equipment$6,708 $ — $ —Purchases of property, plant and equipment included in accounts payable and accrued expenses$12,877 $19,466 $16,847The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents1. ORGANIZATION AND BUSINESS OPERATIONSThe Company is a holding company that, directly and through its subsidiaries, owns and operatestelecommunications and renewable energy businesses in North America, India, Bermuda and the Caribbean. The Companywas incorporated in Delaware in 1987, began trading publicly in 1991 and spun off more than a half of its operations tostockholders in 1998. Since that time, the Company has engaged in many strategic acquisitions and investments to helpgrow its operations, using the cash generated from its established operating units to re-invest in its existing businesses and tomake strategic investments in earlier stage businesses. The Company looks for businesses that offer growth opportunities orpotential strategic benefits, but that required additional capital investment in order to execute on their business plans. TheCompany holds controlling positions with respect to some of its investments and minority positions in others. Thesestrategic investments frequently offer a product and service development component in addition to the prospects ofgenerating returns on invested capital. The Company has identified three operating segments to manage and review itsoperations, and to facilitate investor presentations of its results, as follows: ·U.S. Telecom In the United States, the Company offers wireless and wireline services. The Company offerswholesale wireless voice and data roaming services to national, regional, local and selected internationalwireless carriers in rural markets located principally in the Southwest and Midwest United States. The Companyalso provides retail wireless, wireline services and wholesale long-distance voice services totelecommunications carriers in the areas in which it offers wireline services. ·International Telecom. The Company’s international wireless services include voice and data services to retailcustomers in Bermuda, Guyana and the U.S. Virgin Islands. The Company’s international wireline servicesinclude voice and data services in Bermuda, the Cayman Islands, Guyana and the U.S. Virgin Islands, as well asvideo services in Bermuda, the Cayman Islands, and the U.S Virgin Islands. In addition, the Company offerswholesale long‑distance voice services to other telecommunications carriers in the countries in which it offersinternational wireline services. ·Renewable Energy. In India, the Company provides distributed generation solar power to corporate, utilityand municipal customers. Through November 6, 2018, the Company also provided distributed generation solarpower in the United States in Massachusetts, California and New Jersey. The following chart summarizes the operating activities of the Company’s principal subsidiaries, the segments inwhich it reports its revenue and the markets it served as of December 31, 2018: Segment Services Markets Tradenames U.S. Telecom Wireless United States (rural markets) Choice, ChoiceNTUA Wireless,Commnet, WestNet,Geoverse Wireline United States Essextel,Deploycom International Telecom Wireline Bermuda, Cayman Islands,Guyana, U.S. Virgin Islands Fireminds, GTT+,One, Logic, Viya Wireless Bermuda, Guyana, U.S. VirginIslands GTT+, One, Viya Video Services Bermuda, Cayman Islands, U.S.Virgin Islands Logic, One, Viya Renewable Energy Solar India Vibrant Energy 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 considersnon-controlling investments in earlier stage businesses that it considers strategically relevant, and which may offer long-termgrowth potential for the Company, either individually, or as research and development businesses that can support theCompany’s operating subsidiaries in new product and service development and offerings.F-9 Table of ContentsThe Company provides management, technical, financial, regulatory, and marketing services to its subsidiaries and typicallyreceives a management fee equal to a percentage of their revenues, which is eliminated in consolidation. For informationabout the Company’s financial segments and geographical information about its operating revenues and assets see Notes 1and 17 to the Consolidated Financial Statements included in this Report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationThe consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries andcertain 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 isthe primary beneficiary of these entities. Certain reclassifications have been made in the December 31, 2016 financial statements to conform to theCompany’s consolidated income statements to how it analyzes its operations in the current period. These changes did notimpact operating income. For the year ended December 31, 2016 the aggregate impact of the changes included a decrease totermination and access fees of $4.9 million, an increase to engineering and operations expenses of $7.5 million, a decrease tosales and marketing expenses of $0.8 million, an increase to equipment expense of $0.6 million and a decrease to general andadministrative expenses of $2.4 million. Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the UnitedStates requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue andexpenses during the reporting periods. The most significant estimates relate to the allowance for doubtful accounts, usefullives of the Company’s fixed and finite-lived intangible assets, allocation of purchase price to assets acquired and liabilitiesassumed in business combinations, fair value of indefinite-lived intangible assets, goodwill and income taxes. Actual resultscould differ significantly from those estimates. Cash and Cash EquivalentsThe Company considers all investments with an original maturity of three months or less at date of purchase to becash equivalents. The Company places its cash and temporary investments with banks and other institutions that it believeshave a high credit quality. At December 31, 2018, the Company had deposits with banks in excess of FDIC insured limits and$25.2 million of its cash is on deposit with noninsured institutions such as corporate money market issuers and cash held inforeign banks. The Company’s cash and cash equivalents are not subject to any restrictions (see Note 9). As of December 31,2018 and 2017, the Company held $7.5 million and $12.6 million, respectively, of its cash in Guyana dollars. While thereare risks associated with the conversion of Guyana dollars to U.S. dollars due to limited liquidity in the Guyana foreigncurrency markets, to date it has not prevented the Company from converting Guyana dollars into U.S. dollars within a giventhree month period or from converting at a price that reasonably approximates the reported exchange rate.Short Term InvestmentsThe Company's short-term investments consist of corporate bonds, which have remaining maturities of more thanthree months at the date of purchase, and equity securities classified as available for sale, which are stated at fairvalue. Unrealized gains and losses are recorded in other income. The estimated fair values of investments are based onquoted market prices as of the end of the reporting period. F-10 Table of ContentsRestricted CashThe Company generally classifies cash that is legally restricted as to withdrawal or usage as restrictedcash. Generally, the cash is restricted due to debt service obligations, acquisitions, or to support the Company’stelecommunications operations. In 2018, the Company disposed of $8.4 million of restricted cash as a result of the U.S. SolarTransaction described in Note 4. Allowance for Doubtful AccountsThe Company maintains an allowance for doubtful accounts for the estimated probable losses on uncollectibleaccounts receivable. The allowance is based upon a number of factors including the credit worthiness of customers, theCompany’s historical experience with customers, the age of the receivable and current market and economic conditions.Such factors are reviewed and updated by the Company on a quarterly basis. Uncollectible amounts are charged against theallowance account.Inventory, Materials and SuppliesInventory, materials and supplies primarily include handsets and other equipment held for sale to customers. Thesebalances are recorded at the lower of cost or market cost being determined on the basis of specific identification and marketdetermined using replacement.Fixed AssetsThe Company’s fixed assets are recorded at cost and depreciated using the straight‑line method generally between 3and 39 years. Expenditures for major renewals and betterments that extend the useful lives of fixed assets are capitalized.Repairs and replacements of minor items of property are charged to maintenance expense as incurred. The cost of fixed assetsin service and under construction includes an allocation of indirect costs applicable to construction. Grants received for theconstruction of assets are recognized as a reduction of the cost of fixed assets, a reduction of depreciation expense over theuseful lives of the assets and as a reduction of capital expenditures in the statements of cash flows.The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred if areasonable estimate of fair value can be made. In periods subsequent to initial measurement, period‑to‑period changes in theliability for an asset retirement obligation resulting from the passage of time and revisions to either the timing or the amountof the original estimate of undiscounted cash flows are recognized. The increase in the carrying value of the associatedlong‑lived asset is depreciated over the corresponding estimated economic life. The consolidated balance sheets includeaccruals of $3.8 million and $3.9 million as of December 31, 2018 and 2017, respectively, for estimated costs associated withasset retirement obligations.In accordance with the authoritative guidance for the accounting for the impairment or disposal of long‑lived assets,the Company evaluates the carrying value of long‑lived assets, including property and equipment, in relation to theoperating performance and future undiscounted cash flows of the underlying business whenever events or changes incircumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss exists whenestimated undiscounted cash flows attributable to an asset are less than its carrying amount. If an asset is deemed to beimpaired, the amount of the impairment loss recognized represents the excess of the asset’s carrying value as compared to itsestimated fair value, based on management’s assumptions and projections.Management’s estimate of the future cash flows attributable to its long‑lived assets and the fair value of itsbusinesses involve significant uncertainty. Those estimates are based on management’s assumptions of future results, growthtrends and industry conditions. If those estimates are not met, the Company could have additional impairment charges in thefuture, and the amounts may be material.The Company did not record any fixed asset impairments for the year ended December 31, 2018. See Note 3, Impactof Hurricanes Irma and Maria, regarding the Company’s write off of certain damaged fixed assets. See Note 4, F-11 Table of ContentsDisposition- U.S. Telecom, regarding the Company’s impairment of certain fixed assets in the year ended December 31, 2016.Goodwill and Indefinite‑Lived Intangible AssetsGoodwill is recognized in business combinations equal to the amount by which the cost of acquired net assetsexceeded the fair value of those net assets on the date of acquisition. The Company allocates goodwill to reporting units atthe time of acquisition and bases that allocation on which reporting units will benefit from the acquired assets and liabilities.Reporting units are defined as operating segments or one level below an operating segment, referred to as a component. TheCompany has determined that its reporting units are components of its multiple operating segments. The Company assessesgoodwill for impairment on an annual basis in the fourth quarter or more frequently when events and circumstances occurindicating that the recorded goodwill may be impaired. The assessment begins with a qualitative analysis to determinewhether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the reporting unitpasses this analysis, the impairment assessment is complete and no impairment is recorded. If the reporting unit does not passthe analysis, the Company performs additional quantitative analysis by calculating the fair value of the reporting unit. If thefair value exceeds the carrying value, the test is complete and no impairment is recorded. If the carrying value of thereporting unit, including goodwill, exceeds the fair value of the reporting unit an impairment charge is recorded equal to theexcess, but not more than the total amount of goodwill allocated to the reporting unit.A significant majority of the Company’s telecommunications licenses are not amortized and are carried at theirhistorical costs. The Company believes that telecommunications licenses generally have an indefinite life based on thehistorical ability to renew such licenses, that such renewals may be obtained indefinitely and at little cost, and that therelated technology used is not expected to be replaced in the foreseeable future. The Company has elected to perform itsannual testing of its telecommunications licenses in the fourth quarter of each fiscal year, or more often if events orcircumstances indicate that there may be impairment. If the value of these assets were impaired by some factor, such as anadverse change in the subsidiary’s operating market, the Company may be required to record an impairment charge. Theimpairment test consists of a comparison of the fair value of telecommunications licenses with their carrying amount on alicense by license basis and as a part of the test the Company assesses the appropriateness of the application of theindefinite‑lived assertion.As of December 31, 2018 and 2017, the Company performed its annual impairment assessment of its goodwill andindefinite‑lived intangible assets (telecommunications licenses) and determined that no impairment charge was required. SeeNote 8 for a discussion of the Company’s quantitative and qualitative tests of its goodwill. Also, see Note 4, Disposition- U.S.Telecom, regarding the Company’s impairment of goodwill in the year ended December 31, 2016. Other Intangible Assets Intangible assets resulting from the acquisitions of entities accounted for using the purchase method of accountingare estimated by management based on the fair value of assets acquired. These include acquired customer relationships,tradenames, and franchise rights.Customer relationships are amortized over their estimated lives ranging from 7-13 years, which are based on thepattern in which economic benefit of the customer relationship is estimated to be realized.F-12 Table of ContentsDebtDebt is measured at amortized cost. Debt issuance costs on term loans and specified maturity borrowings arerecorded as a reduction to the carrying value of the debt and are amortized as interest expense in the consolidated incomestatements over the period of the debt. Fees related to revolving credit facilities and lines of credit are recorded in other assetsin the consolidated balance sheet and are amortized as interest expense in the consolidated income statements over the life ofthe facility. Except for interest costs incurred for the construction of a qualifying asset which are capitalized during theperiod the assets are prepared for their intended use, interest costs are expensed.Non‑Controlling InterestsThe non‑controlling interests in the accompanying consolidated balance sheets reflect the original investments andsubsequent capital contributions made by the minority stockholders in the Company’s subsidiaries which are less thanwholly-owned. Non-controlling interests acquired in a business combination are initially recorded at fairvalue. Subsequently, all non-controlling interest is adjusted for the minority stockholder’s proportional share of the earningsor losses, net of any distributions.Changes in Accumulated Other Comprehensive Income (Loss)Changes in accumulated other comprehensive income (loss), by component, were as follows (in thousands): Projected Pension Benefit Translation Obligation Adjustment Other Total Balance at December 31, 2015 $(3,481) $(223) $ — $(3,704) Adjust funded status of pension plan, net of tax of $0.7 million 5,251 — — 5,251 Foreign currency translation adjustment — (687) — (687) Unrealized gain on marketable securities — — 868 868 Balance at December 31, 2016 1,770 (910) 868 1,728 Adjust funded status of pension plan, net of tax of $0.7 million 1,357 — — 1,357 Foreign currency translation adjustment — 1,265 — 1,265 Reclassifications of gains on sale of marketable securities to netincome — — (1,044) (1,044) Unrealized gain on marketable securities — — 440 440 Balance at December 31, 2017 3,127 355 264 3,746 Adjust funded status of pension plan, net of tax of $0.6 million (840) — — (840) Foreign currency translation adjustment — (4,390) — (4,390) Adoption of ASU 2016-01 — — (203) (203) Interest rate swap — — 78 78 Balance at December 31, 2018 $2,287 $(4,035) $139 $(1,609) Amounts reclassified from accumulated other comprehensive income to net income were as follows (in thousands): 2018 2017 2016Pension and other postretirement benefit plans $54 $716 $1,300Realized gains on marketable securities — (1,044) —Total $54 $(328) $1,300 F-13 Table of ContentsRevenue RecognitionThe Company earns revenue from its telecommunication and renewable energy operations. The Company recognizesrevenue through the following steps: -Identification of the contract with a customer-Identification of the performance obligations in the contract-Determination of the transaction price-Allocation of the transaction price to the performance obligations in the contract-Recognize revenue when, or as, the Company satisfies performance obligations Revenue Recognition- Telecommunications Wireless revenue consists of wholesale and retail revenue. Wholesale revenue is generated from providing mobilevoice and data services to the customers of other wireless carriers, the provision of network switching services and certaintransport services using the Company’s wireless networks. The transaction price of some wholesale revenue contractsincludes variable consideration in the form of volume discounts. Management uses its judgment based on projectedtransaction volumes to estimate the transaction price and to allocate the transaction price to the performance obligations inthe contract. Revenue is recognized over time as the service is rendered to the customer. Retail revenue is generated fromproviding mobile voice and data services to subscribers as well as roaming services provided to other carriers’ customersroaming into the Company’s retail markets. This revenue is recognized over time as the service is rendered. Lastly, wirelessrevenue includes revenues from equipment sold to customers which is recognized when the equipment is delivered to thecustomer. Management considers transactions where customers purchase subsidized or discounted equipment and mobilevoice or data services to be a single contract. For these contracts, the transaction price is allocated to the equipment andmobile service based on their standalone selling prices. The standalone selling price is based on the amount the Companycharges for the equipment and service to similar customers. Equipment revenue is recognized when the equipment isdelivered to customers and service revenue is recognized as service is rendered. Wireline revenue is generated from access and usage fees for internet, voice and video services charged tosubscribers as well as wholesale long-distance voice services provided to telecommunication carriers at contractedrates. Revenue from these contracts is recognized over time as the service is rendered to the customer. The Company’s wireless and wireline contracts occasionally include promotional discounts such as free serviceperiods or discounted products. If a contract contains a substantive termination penalty, the transaction price is allocated tothe performance obligations based on standalone selling price resulting in accelerated revenue recognition and theestablishment of a contract asset that will be recognized over the life of the contract. If a contract includes a promotionaldiscount but no substantive termination penalty the discount is recorded in the promotional period and no contract asset isestablished. The Company’s customers also have the option to purchase additional telecommunication services. Generally,these options are not performance obligations and are excluded from the transaction price because they do not provide thecustomers with a material right. The Company may charge upfront fees for activation and installation of some of its products and services. Thesefees are reviewed to determine if they represent a separate performance obligation. If they are not a separate performanceobligation, the contract price associated with them is recognized over the life of the customer. If the fees represent aperformance obligation they are recognized when delivered to the customer based on standalone selling price. Sales and use and state excise taxes collected from customers that are remitted to the governmental authorities arereported on a net basis and excluded from the revenues and sales. F-14 Table of ContentsRevenue Recognition-Renewable Energy Revenue from the Company’s Renewable Energy segment is generated from the sale of electricity through powerpurchase agreements (“PPAs”) with various customers that generally range from 10 to 25 years. The Company recognizesrevenue at contractual PPA rates over time as electricity is generated and simultaneously consumed by the customer. In theUnited States, the Company’s Renewable Energy segment also generates revenue from the sale of Solar Renewable EnergyCredits (“SRECs”). Revenue is recognized over time as SRECs are sold through long-term purchase agreements at thecontractual rate specified in the agreement.Contract Acquisition Costs The Company pays sales commissions to its employees and agents for obtaining customer contracts. These costs areincremental because they would not have been incurred if the contract was not obtained. The Company recognizes an assetfor these costs and subsequently amortizes the asset on a systematic basis consistent with the pattern of the transfer of theservices to the customer. The amortization period, which is between 2 and 6 years, considers both the original contractperiod as well as anticipated contract renewals as appropriate. The amortization period also includes renewal commissionswhen those commissions are not commensurate with new commissions. The Company estimates contract renewals based onits actual renewals in recent periods. When the expected amortization period is one year or less the Company utilizes thepractical expedient and expenses the costs as incurred. Operating Expenses Termination and access fee expenses. Termination and access fee expenses are charges that are incurred for voiceand data transport circuits (in particular, the circuits between the Company’s wireless sites and its switches), internetcapacity, video programming costs, other access fees the Company pays to terminate its calls, telecommunication spectrumfees and direct costs associated with the Company’s managed services and technology business as well as within itsRenewable Energy segment. Termination and access fees also include the cost of handsets and customer resale equipmentincurred by the Company’s retail businesses. Engineering and operations expenses. Engineering and operations expenses include the expenses associated withdeveloping, operating and supporting the Company’s expanding telecommunications networks and renewable energyoperations, including the salaries and benefits paid to employees directly involved in the development and operation of theCompany’s networks and renewable energy operations. Sales and marketing expenses. Sales and marketing expenses include salaries and benefits the Company pays tosales personnel, customer service expenses, sales commissions and the costs associated with the development andimplementation of the Company’s promotion and marketing campaigns. General and administrative expenses. General and administrative expenses include salaries, benefits and relatedcosts for general corporate functions including executive management, finance and administration, legal and regulatory,facilities, information technology and human resources. General and administrative expenses also include internal costsassociated with the Company’s performance of due-diligence in connection with acquisition activities. Transaction-related charges. Transaction-related charges include the external costs, such as legal, tax, accountingand 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 inconnection with acquisitions or dispositions or any integration-related costs. Restructuring charges. Restructuring charges are costs incurred as a result of reorganizing the Company’soperating from acquisition or disposition activities. Depreciation and amortization expenses. Depreciation and amortization expenses represent the depreciation andamortization charges the Company records on its property and equipment and on certain intangible assets. F-15 Table of ContentsImpairment of intangible assets. The Company evaluates the carrying value of its long lived assets, includingproperty and equipment, whenever events or changes in circumstances indicate that the carrying amount of an asset may notbe recoverable. An impairment loss exists when estimated undiscounted cash flows attributable to non-current assets subjectto depreciation and amortization and discounted cash flows for intangible assets not subject to amortization are less thantheir carrying amount. For long lived assets other than goodwill, if an asset is deemed to be impaired, the amount of theimpairment loss recognized represents the excess of the asset’s carrying value as compared to its estimated fair value, basedon management’s assumptions and projections. The Company also assesses the carrying value of goodwill and indefinite‑lived intangible assets on an annual basisor more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.The carrying value of each reporting unit, including goodwill assigned to that reporting unit, is compared to its fair value. Ifthe carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit an impairment chargeis recorded equal to the excess, but not more than the total amount of goodwill allocated to the reporting unit. (Gain) loss on disposition of long-lived assets. The Company sells or disposes assets from time to time. A gain orloss is recorded by comparing the carrying amount of the assets to the proceeds received. Loss on damaged assets and other Hurricane-related charges, net of insurance recovery. During September 2017,the Company’s operations and customers in the U.S. Virgin Islands were severely impacted by Hurricanes Irma and Maria (the“Hurricanes”). Loss on damaged assets and other hurricane related charges, net of insurance recovery represents the write offof damaged assets, net of insurance recoveries and also includes additional operating expenses that were specifically incurredto address the impact of the Hurricanes. Accounting for GrantsThe Company receives funding from the U.S. Government and its agencies under Stimulus and Universal ServiceFund and other programs. These funding programs are generally designed to fund telecommunications operations, andinfrastructure expansion into rural or underserved areas. The funding programs are evaluated to determine if they representfunding related to revenue, capital expenditures, or operating activities. Funding for revenue and operating activities arerecorded as revenue or contra expense in the Company’s consolidated income statement as the services areprovided. Funding for capital expenditures is recorded as a reduction to property, plant and equipment on the Company’sconsolidated balance sheets and a future reduction in depreciation expense in the consolidated incomestatements. Government funding related to revenue and operations are recorded as operating cash inflows and grants forcapital expenditures are recorded as investing cash inflows. The Company monitors government funding for grant requirements to ensure that conditions related to grants havebeen met and there is reasonable assurance that the Company will be able to retain the grant proceeds and to ensure that anycontingencies that may arise from not meeting the conditions are appropriately recognized. See Note 10, Government Grants.Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires the recognition ofdeferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financialstatements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between thefinancial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differencesare expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in theperiod that includes the enactment date.The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likelythan not to be realized. In making such a determination, the Company considers all available positive and negativeevidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planningstrategies, and results of recent operations. If the Company determines that it would be able to realize itsF-16 Table of Contentsdeferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to thedeferred tax asset valuation allowance, which would reduce the provision for income taxes.The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step processwhereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis ofthe technical merits of the position and (2) for those tax positions that meet the more‑likely‑than-not recognition threshold,the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimatesettlement with the related authority. It is possible that the ultimate resolution of these uncertain matters may be greater orless than the amount that the Company estimated. If payment of these amounts proves to be unnecessary, the reversal of theliabilities would result in tax benefits being recognized in the period in which it is determined that the liabilities are nolonger necessary. If the estimate of tax liabilities proves to be more than the ultimate assessment, a further charge to expensewould result.The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expenseline in the accompanying consolidated statements of operations. Accrued interest and penalties are included within therelated tax liability line in the consolidated balance sheets.The Company does not provide for United States income taxes on earnings of foreign subsidiaries as such earningsare considered to be indefinitely reinvested. The Tax Cuts and Jobs Act of 2017 resulted in a one-time transition tax on thedeemed repatriation of foreign earnings for federal tax purposes. Credit Concentrations and Significant CustomersHistorically, the Company has been dependent on a limited amount of customers for its wholesale roaming business. For theyear ended December 31, 2018, one customer accounted for 11% of the Company’s consolidated revenue. For the yearsended December 31, 2017, two customers accounted for 13% and 10% of the Company’s consolidated revenue. For the yearended December 31, 2016, two customers accounted for 14% and 12% of the Company’s consolidated revenue. As of December 31, 2018, no customer accounted for more than 10% of the Company’s consolidated accounts receivable. As of December 31, 2017, one customer accounted for 18% of the Company’s consolidated accounts receivable, net ofallowances.Foreign Currency Gains and LossesThe Company translate the assets and liabilities of its foreign subsidiaries from their respective functionalcurrencies, primarily the Indian Rupee and the Guyana Dollar, to U.S. dollars at the appropriate spot rates as of the balancesheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in spot rates arerecognized in foreign currency translation adjustment, a component of accumulated other comprehensive income. Incomestatement 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 functionalcurrency must first be remeasured from the applicable currency to the legal entity’s functional currency. The effect of thisremeasurement process is reported in other income on the income statement. Employee Benefit PlansThe Company sponsors pension and other postretirement benefit plans for employees of certain subsidiaries. Netperiodic pension expense is recognized in the Company’s income statement. The service cost component of net periodicpension expense is presented with other employee compensation within income from operations. Other components of netperiodic pension expense, such as interest cost, expected return on plan assets, and amortization of actuarial gains and lossesare presented in other income. The Company recognizes a pension or other postretirement benefit plan’s funded status aseither an asset or liability in its consolidated balance sheet. Actuarial gains and losses areF-17 Table of Contentsdeferred, reported as a component of other comprehensive income, and amortized through net periodic pension expense insubsequent periods. Fair Value of Financial InstrumentsIn accordance with the provisions of fair value accounting, a fair value measurement assumes that a transaction tosell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principalmarket, 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 useof observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes threelevels of inputs that may be used to measure fair value: Level 1Quoted 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 insufficient frequency and volume to provide pricing information on an ongoing basis.Level 1 assets and liabilities include money market funds, debt and equity securitiesand derivative contracts that are traded in an active exchange market. Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets orliabilities; quoted prices in markets that are not active; or other inputs that areobservable or can be corroborated by observable market data for substantially the fullterm of the assets or liabilities. Level 2 assets and liabilities include debt securities withquoted prices that are traded less frequently than exchange‑traded instruments andderivative contracts whose value is determined using a pricing model with inputs thatare observable in the market or can be derived principally from or corroborated byobservable market data. This category generally includes corporate obligations andnon‑exchange traded derivative contracts. Level 3Unobservable inputs that are supported by little or no market activity and that aresignificant to the fair value of the assets or liabilities. Level 3 assets and liabilitiesinclude financial instruments and intangible assets that have been impaired whosevalue is determined using pricing models, discounted cash flow methodologies, orsimilar techniques, as well as instruments for which the determination of fair valuerequires significant management judgment or estimation. Assets and liabilities of the Company measured at fair value on a recurring basis as of December 31, 2018 and 2017are summarized as follows: December 31, 2018 Significant Other Quoted Prices in Observable Active Markets Inputs Description (Level 1) (Level 2) Total Certificates of deposit $ — $380 $380 Money market funds 2,266 — 2,266 Short term investments 393 — 393 Commercial paper — 13,972 13,972 Interest rate swap — 140 140 Total assets and liabilities measured at fair value $2,659 $14,492 $17,151 F-18 Table of Contents December 31, 2017 Significant Other Quoted Prices in Observable Active Markets Inputs Description (Level 1) (Level 2) Total Certificates of deposit $ — $391 $391 Money market funds 2,894 — 2,894 Short term investments 555 6,521 7,076 Commercial paper — 49,954 49,954 Interest rate swap — 52 52 Total assets and liabilities measured at fair value $3,449 $56,918 $60,367 Certificate of DepositAs of December 31, 2018 and December 31, 2017 this asset class consisted of a time deposit at a financial institutiondenominated in U.S. dollars. The asset class is classified within Level 2 of the fair value hierarchy because the fair value wasbased on observable market data.Money Market FundsAs of December 31, 2018 and December 31, 2017, this asset class consisted of a money market portfolio thatcomprises Federal government and U.S. Treasury securities. The asset class is classified within Level 1 of the fair valuehierarchy because its underlying investments are valued using quoted market prices in active markets for identical assets.Short Term Investments and Commercial Paper As of December 31, 2018 and December 31, 2017, these asset classes consisted of short term foreign and U.S.corporate bonds, equity securities, and commercial paper. Corporate bonds and commercial paper are classified within Level2 of the fair value hierarchy because the fair value is based on observable market data. Equity securities are classified withinLevel 1 because fair value is based on quoted market prices in active markets for identical assets. The Company held equitysecurities with a fair value of $0.3 million and $0.6 million at December 31, 2018 and December 31, 2017, respectively. Netincome for the year ended December 31, 2018 includes $0.3 million of losses on these securities. Other Fair Value DisclosuresThe carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accruedexpenses approximate their fair values because of the relatively short-term maturities of these financial instruments. The fairvalue of the interest rate swap is measured using Level 2 inputs.At December 31, 2018, the Company holds $23.1 million of equity securities consisting of non-controllinginvestments in privately held companies. These investments, over which the Company does not have the ability to exercisesignificant 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 theseinvestments if there are no identified events or changes in circumstances that may have an effect on the fair value of theinvestment. The carrying value of the strategic investments was $23.1 million and $20.1 million at December 31, 2018 andDecember 31, 2017, respectively. As of December 31, 2018 no impairments or price adjustments were recorded on theinvestments. Strategic investments are included with other assets on the consolidated balance sheets.The fair value of long-term debt is estimated using Level 2 inputs. At December 31, 2018, the fair value of long-term debt, including the current portion, was $91.6 million and its book value was $91.0 million. At December 31, 2017, thefair value of long-term debt, including the current portion, was $159.2 million and its book value was $155.8 million.F-19 Table of Contents Net Income Per ShareBasic net income per share is computed by dividing net income attributable to the Company’s stockholders by theweighted‑average number of common shares outstanding during the period and does not include any other potentiallydilutive securities. Diluted net income per share gives effect to all potentially dilutive securities using the treasury stockmethod.The reconciliation from basic to diluted weighted average shares of Common Stock outstanding is as follows (inthousands): Year ended December 31, 2018 2017 2015 Basic weighted-average shares of common stock outstanding 15,988 16,138 16,131 Stock options 54 72 96 Diluted weighted-average shares of common stock outstanding 16,042 16,210 16,227 The following notes the number of potential shares of common stock not included in the above calculation becausethe effects of such were anti‑dilutive (in thousands of shares): For the Year Ended December 31, 2018 2017 2016 Stock options 5 7 5 Total 5 7 5 Stock‑Based CompensationThe Company applies the fair value recognition provisions of the authoritative guidance for the accounting forstock‑based compensation and is expensing the fair value of the grants of options to purchase common stock over theirvesting period of four years. Relating to grants of options, the Company recognized $0.1 million, $0.1 million and $0.1million of non‑cash, share‑based compensation expense during 2018, 2017, and 2016, respectively. See Note 11 forassumptions used to calculate the fair value of the options granted.The Company also issued 111,474 restricted shares of common stock in 2018; 95,095 restricted shares of commonstock in 2017 and 100,005 restricted shares of common stock in 2016. These shares are being charged to income based upontheir fair values over their vesting period of four years. The Company accounts for forfeitures as they occur. Non‑cashequity‑based compensation expense, related to the vesting of restricted shares issued was $6.1 million, $6.6 million and $6.2million in 2018, 2017, and 2016, respectively.In connection with certain acquisitions, the Company issued shares of the acquired company to its localmanagement and recorded $0.2 million, $0.3 million, and $0.1 million of stock based compensation during 2018, 2017 and2016, respectively.Stock‑based compensation expense is recognized within general and administrative expenses within theconsolidated income statements.Business Combinations The Company accounts for business combinations using the acquisition method of accounting, under which thepurchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determinedby management as of the acquisition date. Contingent consideration obligations that are elements of the considerationtransferred are recognized as of the acquisition date as part of the fair value transferred in exchange for theF-20 Table of Contentsacquired business. Acquisition-related costs incurred in connection with a business combination are expensed as incurred. Recent Accounting PronouncementsIn May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts withCustomers” (“ASU 2014-09”), and subsequently issued related updates, (collectively known as ASC 606), which provides asingle, comprehensive revenue recognition model for all contracts with customers. The revenue standard is based on theprinciple that revenue should be recognized to depict the transfer of promised goods or services to customers in an amountthat reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. TheCompany adopted this standard on January 1, 2018. Refer to Note 3 to the Consolidated Financial Statements in this Report. In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud ComputingArrangement”, which provides guidance about whether a cloud computing arrangement includes software and how toaccount for the license for software. The new guidance does not change the accounting for a customer’s accounting forservice contracts. The adoption of ASU 2015-05 by the Company on January 1, 2017 did not have a material impact on theCompany’s financial position, result of operations or cash flows. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognitionand Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which addresses certain aspects ofrecognition, measurement, presentation, and disclosure of financial instruments. The Company adopted this standard onJanuary 1, 2018. Upon adoption the Company held $20.1 million of equity investments that did not have readilydeterminable fair values. As a result these investments are measured at cost less impairments, adjusted for observable pricechanges of similar investments of the same issuer. The Company has not adjusted the cost of these investments sinceacquisition. Upon adoption, the Company held $0.6 million of equity investments with readily determinable fair values andreclassified $0.2 million of unrealized gains on this investment to retained earnings. 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 recognizelease assets and liabilities on the balance sheet as well as disclosure of key information about leasing arrangements. ASU2016-02 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,2018, with early adoption permitted. The Company has implemented new systems, processes and controls to implement theguidance. The Company will adopt the standard on January 1, 2019 by applying the new lease requirements at the effectivedate and will recognize a cumulative-effect adjustment to the opening balance sheet retained earnings in the period ofadoption with no adjustments to prior periods. The Company expects to adopt the package of practical expedients whichallows it to not reassess: i) whether an arrangement contains a lease, ii) operating and capital lease classifications; and iii)previously recorded initial direct costs. The adoption will result in right to use assets and liabilities being recorded on theCompany’s balance sheet. The Company is finalizing quantitative information related to the impact of the guidanceincluding the incremental borrowing rates for classes of leases. The right of use asset and liability balances recorded will bematerial to the Company’s financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvementsto Employee Share-Based Payment Accounting”. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows andforfeitures. The Company adopted ASU 2016-09 on January 1, 2017. The guidance requires the recognition of the incometax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capitalpools. This had no impact on the Company’s historical results. Also as a result of the adoption, the Company changed itspolicy election to account for forfeitures as they occur rather than on an estimated basis. The change resulted in the Companyreclassifying $0.3 million from additional paid-in capital to retained earnings for the net cumulative-effect adjustment instock compensation expense related to prior periods. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of CertainCash Receipts and Cash Payments” (“ASU 2016-15”), which provides further clarification on eight cash flowF-21 Table of Contentsclassification issues. The Company adopted this standard on January 1, 2018. In November 2016, the FASB issued ASU2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” (“ASU 2016-18”). The amendments in ASU 2016-18 areintended to reduce diversity in practice related to the classification and presentation of changes in restricted cash or restrictedcash equivalents on the statement of cash flows. The amendments in ASU 2016-18 require that amounts generally describedas restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling thebeginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted thisstandard on January 1, 2018. The Company’s statement of cash flows reports the cash effects during a period of an entity’s operations, itsinvesting transactions, and its financing transactions. The statement of cash flows explains the change during the period inthe total cash which includes cash equivalents as well as restricted cash. The Company applies the predominance principleto classify separately identifiable cash flows based on the nature of the underlying cash flows. Debt prepayment orextinguishment costs are classified as cash outflows from financing activities. Contingent consideration payments madethree months or less after a business combination are classified as investing activities and those made after that time areclassified as financing activities. Proceeds from the settlement of insurance claims are classified on the basis of the nature ofthe loss. Prior to January 1, 2018, the Company classified all payments made in a business combination as investingactivities and did not include restricted cash in total cash. The adoption of ASU 2016-15 and ASU 2016-18 impacted theCompany’s cash flows for the years ended December 31, 2017 and December 31, 2016 as indicated below (amounts inthousands): Statement of Cash flows Year ended December 31, 2017 Year ended December 31, 2016 Reported Change Underpreviousguidance Reported Change Underpreviousguidance Net cash provided by operating activities$145,725$ —$145,725 $111,656$ —$111,656 Net cash used in investing activities (172,318) 5,525 (166,793) (296,580) (12,108) (308,688) Net cash used in financing activities (42,101) 1,178 (40,923) 75,334 — 75,334 Effect of foreign currency exchange rates on total cash 226 — 226 (626) — (626) Net change in total cash$(68,468)$6,703$(61,765) $(110,216)$(12,108)$(122,324) Total cash, beginning of period 288,358 (18,637) 269,721 398,574 (6,529) 392,045 Total cash, end of period$219,890$(11,934)$207,956 $288,358$(18,637)$269,721 In October 2016 the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers ofAssets Other than Inventory”. The new standard eliminates all intra-entity sales of assets other than inventory, the exceptionunder current standards that permits the tax effects of intra-entity asset transfers to be deferred until the transferred asset issold to a third party or otherwise recovered through use. As a result, a reporting entity would recognize the tax expense fromthe sale of the asset in the seller’s tax jurisdiction when the transfer occurs. Any deferred tax asset that arises in the buyer’sjurisdiction would also be recognized at the time of the transfer. The new standard was effective for the Company on January1, 2018. There was not a material impact to the Company’s Consolidated Financial Statements upon adoption. In January 2017, the FASB issued Accounting Standards Update 2017-01, “Business Combinations (Topic 805):Clarifying the Definition of a Business,” or ASU 2017-01. The amendments in ASU 2017-01 provide a screen to assistentities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses.Under ASU 2017-01, an entity first determines whether substantially all of the fair value of the gross assets acquired isconcentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not abusiness and the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an inputand a substantive process that together significantly contribute to the ability to create outputs. ASU 2017-01 also narrows thedefinition of outputs by more closely aligning it with how outputs are described in ASC 606. ASU 2017-01 is effective forannual reporting periods, including interim periods within those periods, beginning after December 15, 2017, with earlyadoption permitted. The Company prospectively adopted ASU 2017-01 in the fourth quarter of 2016. The Company expectsthat the standard will result in accounting for more transactions as asset acquisitions as opposed to business combination. F-22 Table of ContentsIn January 2017, the FASB issued Accounting Standards Update 2017-04, “Intangibles-Goodwill and Other (Topic350): Simplifying the Test for Goodwill Impairment,” or ASU 2017-04. The amendments in ASU 2017-04 simplify thesubsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fairvalue of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing dateof its assets and liabilities. Instead, under the amendments in ASU 2017-04, an entity performs its annual, or interim,goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizes animpairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not more thanthe total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for annual reporting periods, includinginterim periods within those periods, beginning after December 15, 2019, with early adoption permitted. The Companyadopted this standard in the third quarter of 2017. In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving thePresentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”. The new guidance requires theservice cost component to be presented separately from the other components of net benefit costs. Service cost will bepresented with other employee compensation cost within income from operations. The other components of net benefit cost,such as interest cost, expected return on plan assets, amortization of prior service cost and gains or losses are required to bepresented in other income. The Company adopted this standard on January 1, 2018. Prior to January 1, 2018, all components of pension expense were recognized in operating income. The adoption ofthe standard impacted the Company’s Statement of Operations for year ending December 31, 2017 by increasing operatingexpenses $0.2 million and increasing other income by the same amount. For the year ending December 31, 2016 theadoption decreased operating expenses by $1.4 million and decreased other income by the same amount. There was noimpact on income before income taxes. The Company elected the practical expedient allowing the use of the amountsdisclosed for the various components of net benefit cost in the pension and other postretirement benefit plans footnote as thebasis for the retrospective application. In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815) – Targeted Improvements toAccounting for Hedging Activities” (“ASU 2017-12”). The standard: (a) expands and refines hedge accounting for bothfinancial and non-financial risk components, (b) aligns the recognition and presentation of the effects of hedging instrumentsand hedge items in the financial statements, and (c) includes certain targeted improvements to ease the application of currentguidance related to the assessment of hedge effectiveness. The guidance is effective for public business entities for fiscalyears, and interim periods within those fiscal years, beginning after December 15, 2018. The Company adopted ASU 2017-12on January 1, 2019. There was not a material impact to the Company’s Consolidated Financial Statements upon adoption. In February 2018, the FASB issued ASU 2018-02 “Income Statement – Reporting Comprehensive Income (Topic220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” (“ASU 2018-02”). Thestandard gives entities the option to reclassify to retained earnings tax effects related to items in accumulated othercomprehensive income that were impacted by the 2017 Tax Cuts and Jobs Act. The guidance is effective for all entities forfiscal years beginning after December 31, 2018 and interim periods within those fiscal years. Early adoption is permitted. The guidance may be applied in the period of adoption or retrospectively to each impacted period. The Company haselected to early adopt ASU 2018-02 on its consolidated financial Statements and apply it to the period of adoption. Theimpact of the adoption results in a $0.8 million reclassification from accumulated other comprehensive income to retainedearnings, which is offset by an equivalent valuation allowance, the net impact is zero. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software(Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is aService Contract (“ASU 2018-15”). This standard requires entities that are customers in cloud computing arrangements todefer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance. The guidance may be applied retrospectively or prospectively to implementation costs incurred afterthe date of adoption. ASU 2018-15 is effective for annual and interim reporting periods beginning after December 15, 2019,with early adoption permitted. The Company prospectively adopted this standard in the fourth quarter of 2018. At December31, 2018, the Company capitalized $0.6 million of implementation costs and none of that amount was amortized during thequarter.F-23 Table of Contents 3. REVENUE RECOGNITION The Company adopted ASC 606 on January 1, 2018. The adoption of ASC 606 impacted the accounting forcontract acquisition costs, multiyear retail wireless contracts with promotional discounts, and deferral of certain activationfees as further described below. As a result of the adoption, the company established contract asset and liability balances andbegan capitalizing and subsequently amortizing contract acquisition costs. Contract Assets and Liabilities The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilledamounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount. Inthese contracts the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset isrecorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’sbalance sheet. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retail revenuefor postpaid customers is generally billed one month in advance and recognized over the period that the correspondingservice is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as acontract liability. Prepaid service, including mobile voice and data services, sold to customers is recorded as deferredrevenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on itsbalance sheets. Contract assets and liabilities consisted of the following (amounts in thousands): December 31,2018 January 1,2018 $ Change %ChangeContract asset – current$1,900$1,176$724 62%Contract asset – noncurrent 802 453 349 77%Contract liabilities (13,787) (9,912) (3,875) 39%Net contract liability$(11,085)$(8,283)$(2,802) 34% The contract asset-current is included in prepayments and other current assets, the contract asset – noncurrent isincluded in other assets, and the contract liabilities are included in advance payments and deposits on the Company’sbalance sheet. The increase in the Company’s net contract liability was due to the timing of customer prepayments andcontract billings. During the year ended December 31, 2018, the Company recognized revenue of $8.0 million related to itsJanuary 1, 2018 contract liability and amortized $1.8 million of the January 1, 2018 contract asset into revenue. TheCompany did not recognize any revenue in the year ended December 31, 2018 related to performance obligations that weresatisfied or partially satisfied in previous periods. Contract Acquisition Costs The December 31, 2018 balance sheet includes current contract acquisition costs of $1.4 million in prepaymentsand other current assets and long term contract acquisition costs of $1.0 million in other assets. During the year endedDecember 31, 2018 the Company amortized $1.6 million of contract acquisition cost. Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligationsof certain multiyear retail wireless contracts that include a promotional discount. The transaction price allocated tounsatisfied performance obligations was $12.1 million at December 31, 2018. The Company expects to satisfy the remainingperformance obligations and recognize the transaction price within 24 months. The Company has certain retail, wholesale,and renewable energy contracts where transaction price is allocated to remaining performance obligations. However, theCompany omits these contracts from the disclosure by applying the right to invoice, one year or less, and wholly unsatisfiedperformance obligation practical expedients. F-24 Table of ContentsDisaggregation The Company's revenue is presented on a disaggregated basis in Note 16 based on an evaluation of disclosuresoutside the financial statements, information regularly reviewed by the chief operating decision maker for evaluating thefinancial performance of operating segments and other information that is used for performance evaluation and resourceallocations. This includes revenue from wireline, wireless and renewable energy, as well as domestic versus internationalwireline and wireless services. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty ofrevenue and cash flows are affected by economic factors. Impacts of adoption in the current period The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. The Companyelected the practical expedient to apply the new guidance only to contracts that were not substantially complete at theadoption date. The cumulative effect of adopting ASC 606 resulted in a contract asset of $1.6 million of which $1.2 millionwas recorded in prepayments and other current assets and $0.4 million was recorded in other assets, a contract liability of$0.2 million recorded in advance payments and deposits, contract acquisition costs of $1.5 million of which $0.9 million wasrecorded in prepayments and other current assets and $0.6 million was recorded in other assets, and a deferred tax liability of$0.3 million with the offset of $1.5 million recorded to retained earnings and $1.1 million recorded to minority interest. Thetables below identify changes to the Company’s financial statements as of December 31, 2018 and for the year then ended asa result of the adoption of ASC 606 as compared to previous revenue guidance (amounts in thousands): Balance Sheet - December 31, 2018 Reported Change UnderpreviousguidancePrepayments and other current assets$37,855$(3,319)$34,536 Total current assets 275,765 (3,319) 272,446 Other assets 37,708 (1,785) 35,923 Total assets 1,107,304 (5,104) 1,102,200 Advance payments and deposits 20,574 (337) 20,237Accrued taxes 31,795 (131) 31,664 Total current liabilities 140,650 (468) 140,182 Deferred income taxes 10,276 (302) 9,974 Total liabilities 283,980 (770) 283,210 Retained earnings 563,593 (2,481) 561,112Minority interest 127,937 (1,853) 126,084 Total equity 823,324 (4,334) 818,990 Total liabilities and equity$1,107,304$(5,104)$1,102,200 F-25 Table of Contents Statement of Operations Year ended December 31, 2018 Reported Change Underpreviousguidance Wireless revenue$198,824$(1,075)$197,749 Total revenue 451,207 (1,075) 450,132 Sales, marketing and customer service 35,207 755 35,962 Total operating expenses 390,184 755 390,939 Income from operations 61,023 (1,830) 59,193 Income before taxes 53,742 (1,830) 51,912 Income tax provision 18,870 (131) 18,739 Net income 34,872 (1,699) 33,173 Net income attributable to non-controlling interests (15,057) 706 (14,351) Net income attributable to ATN International, Inc. stockholders$19,815$(993)$18,822 Statement of Comprehensive Loss Year ended December 31, 2018 Reported Change Underpreviousguidance Net income$34,872$(1,699)$33,173 Other comprehensive loss, net of tax (5,152) — (5,152) Comprehensive loss 29,720 (1,699) 28,021 Less: Comprehensive income attributable to non-controlling interests (15,057) 706 (14,351) Comprehensive income (loss) attributable to ATN International, Inc.$14,663$(993)$13,670 Statement of Cash Flows - Year ended December 31, 2018 Reported Change (1) UnderpreviousguidanceNet income$34,872$(1,699)$33,173 Materials and supplies, prepayments and other current assets$5,924$1,243$7,167Accrued taxes 29,089 (131) 28,958Accounts payable and accrued liabilities, advance payments and deposits and othercurrent liabilities (7,044) (107) (7,151)Other assets$(238)$694$456(1)The adoption of ASC 606 had no impact on operating cash flows, investing cash flows, financing cash flows or netchange in total cash. 4. IMPACT OF HURRICANES IRMA AND MARIA During September 2017, the economy, the Company’s customer base and its operations in the U.S. Virgin Islandswere severely impacted by the Hurricanes Irma and Maria. The Company’s wireless and wireline networks as well as itscommercial operations were severely damaged by these storms. As a result of the significant damage to the wireline networkand the lack of consistent commercial power in the territory, the Company was unable to provide most of its wirelineservices, which comprise the majority of revenue in this business, subsequent to the Hurricanes and through a majority of2018.F-26 Table of Contents During the year ended December 31, 2017, the Company recorded a net pre-tax loss within the Company’sconsolidated statement of operations of $4.0 million related to the impact of the Hurricanes. This loss consisted of $35.4million for the write off of damaged assets, net of insurance recoveries of $34.6 million which were received in February2018. This loss also included $3.2 million of additional operating expenses that were specifically incurred to address theimpact of the Hurricanes. During the year ended December 31, 2018, the Company received $15.5 million in additional funding from theFederal Communications Commission’s (“FCC”) Universal Service Fund (“USF”) to further subsidize its operations in theU.S. Virgin Islands that was recorded as revenue. This level of additional funding is not expected to continue in futureperiods. During the years ended December 31, 2017 and 2018, the Company spent $8.6 million and $80.2 million,respectively, for network restoration and resiliency enhancements which allowed the reconnection of a significant majorityof affected households and businesses. The Company believes that the wireline network restoration work is substantiallycomplete, however, returning the Company’s revenue to pre-Hurricane levels may take significant time as a result ofpopulation movements, the economic impact the Hurricanes had on the market, and the Company’s subscriber base’sappetite for continued wireline services. 5. ACQUISITIONS AND DISPOSITIONS International Telecom Acquisitions One Communications (formerly KeyTech Limited) On May 3, 2016, the Company completed its acquisition of a controlling interest in One Communications Ltd.(formerly known as KeyTech Limited, “One Communications”), a publicly held Bermuda company listed on the BermudaStock Exchange (“BSX”) that provides broadband and video services and other telecommunications services to residentialand enterprise customers in Bermuda and the Cayman Islands (the “One Communications Acquisition”). Subsequent to thecompletion of the Company’s acquisition, One Communications changed its legal name from KeyTech Limited and changedits “CellOne” and “Logic” trade names in Bermuda to “One Communications”. Prior to the Company’s acquisition, OneCommunications also owned a minority interest of approximately 43% in the Company’s previously held and consolidatedsubsidiary, Bermuda Digital Communications Ltd. (“BDC”), that provides wireless services in Bermuda. As part of thetransaction, the Company contributed its ownership interest of approximately 43% in BDC and approximately $42 millionin cash in exchange for a 51% ownership interest in One Communications. As part of the transaction, BDC was merged withand into a company within the One Communications group. The approximate 15% interest in BDC held in the aggregate byBDC’s minority shareholders was converted into the right to receive common shares in One Communications. Following thetransaction, BDC became wholly-owned by One Communications, and One Communications continues to be listed on theBSX. A portion of the cash proceeds that One Communications received upon closing was used to fund a one-time specialdividend to One Communications’ existing shareholders and to retire One Communications’ subordinated debt. On May 3,2016, the Company began consolidating the results of One Communications within its financial statements in itsInternational Telecom segment. The One Communications Acquisition was accounted for as a business combination of a controlling interest in OneCommunications in accordance with ASC 805, Business Combinations, and the acquisition of an incremental ownershipinterest in BDC in accordance with ASC 810, Consolidation. The total purchase consideration of $41.6F-27 Table of Contentsmillion of cash was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of theacquisition. Consideration Transferred Cash consideration - One Communications$34,518 Cash consideration - BDC 7,045 Total consideration transferred 41,563 Non-controlling interests - One Communications 32,909 Total value to allocate$74,472 Value to allocate - One Communications$67,427 Value to allocate - BDC 7,045 Purchase price allocation One Communications: Cash 8,185 Accounts receivable 6,451 Other current assets 3,241 Property, plant and equipment 100,892 Identifiable intangible assets 10,590 Other long term assets 3,464 Accounts payable and accrued liabilities (16,051) Advance payments and deposits (6,683) Current debt (6,429) Long term debt (28,929) Net assets acquired 74,731 Gain on One Communications bargain purchase$7,304 Purchase price allocation BDC: Carrying value of BDC non-controlling interest acquired 2,940 Excess of purchase price paid over carrying value of non-controlling interest acquired$4,105 The acquired property, plant and equipment is comprised of telecommunication equipment located in Bermuda andthe Cayman Islands. The property, plant and equipment was valued using the income and cost approaches. Cash flows werediscounted at an approximate 15% rate to determine fair value under the income approach. The property, plant andequipment have useful lives ranging from 3 to 18 years and the customer relationships acquired have useful lives rangingfrom 9 to 12 years. The fair value of the non-controlling interest was determined using the income approach and a discountrate of approximately 15%. The acquired receivables consist of trade receivables incurred in the ordinary course ofbusiness. The Company has subsequently collected the full amount of the receivables. The purchase price and resulting bargain purchase gain are the result of the market conditions and competitiveenvironment in which One Communications operates along with the Company's strategic position and resources in thosesame markets. Each of the Company and One Communications realized that their combined resources could better servecustomers in Bermuda. The bargain purchase gain is included in operating income for the year ended December 31, 2016. The Company’s income statement for the year ended December 31, 2016 includes $55.5 million of revenue and $2.8million of income before taxes attributable to the One Communications Acquisition. The Company incurred $4.3 million oftransaction related charges pertaining to legal, accounting and consulting services associated with theF-28 Table of Contentstransaction, of which $3.4 million was incurred during the year ended December 31, 2016 and $0.9 million was incurredduring the year ended December 31, 2015. Viya (formerly Innovative) Transaction On July 1, 2016, the Company completed its acquisition of all of the membership interests of Caribbean AssetHoldings LLC (“CAH”), the holding company for the group of companies operating video services, Internet, wireless andlandline services in the U.S. Virgin Islands, British Virgin Islands and St. Maarten (collectively, “Viya”), from the NationalRural Utilities Cooperative Finance Corporation (“CFC”). In April 2017, the U.S. Virgin Islands operations and theCompany’s existing wireless operations rebranded their tradenames from “Innovative” and “Choice”, respectively, to “Viya.”The Company acquired the Viya operations for a contractual purchase price of $145.0 million, reduced by purchase priceadjustments of $5.3 million (the “Viya Transaction”). In connection with the transaction, the Company financed$60.0 million of the purchase price with a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative (“RTFC”)on the terms and conditions of a Loan Agreement by and among RTFC, CAH and ATN VI Holdings, LLC, the parent entity ofCAH and a wholly-owned subsidiary of the Company. The Company funded the remaining purchase price with (i) $51.9million in cash paid to CFC, (ii) $22.5 million in additional cash paid directly to fund Viya’ s pension in the fourth quarter of2016, and (iii) $5.3 million to satisfy Viya’ s other postretirement benefit plan liability. On July 1, 2016, the Companybegan consolidating the results of Viya within its financial statements in its International Telecom segment. Subsequent tothe Viya Transaction, the Company sold the acquired businesses in St. Maarten and the British Virgin Islands, as furtherdescribed in “Dispositions” below. The Viya Transaction was accounted as a business combination in accordance with ASC 805. The considerationtransferred to CFC of $111.9 million, and used for the purchase price allocation, differed from the contractual purchase priceof $145.0 million due to certain GAAP purchase price adjustments including a reduction of $5.3 million related to workingcapital adjustments and the Company assuming pension and other postretirement benefit liabilities of $27.8 million asdiscussed above. The Company transferred $51.9 million in cash and $60.0 million in loan proceeds to CFC for totalconsideration of $111.9 million that was allocated to the assets acquired and liabilities assumed at their estimated fair valuesas of the date of the acquisition. The table below represents the allocation of the consideration transferred to the net assets ofViya based on their acquisition date fair values: Consideration Transferred$111,860 Non-controlling interests 221 Total value to allocate 112,081 Purchase price allocation: Cash 4,229 Accounts receivable 6,553 Materials & supplies 6,533 Other current assets 1,927 Property, plant and equipment 108,284 Telecommunication licenses 7,623 Goodwill 20,586 Intangible assets 7,800 Other assets 4,394 Accounts payable and accrued liabilities (15,971) Advance payments and deposits (7,793) Deferred tax liability (2,935) Pension and other postretirement benefit liabilities (29,149) Net assets acquired$112,081 The acquired property, plant and equipment is comprised of telecommunication equipment located in the U.SVirgin Islands, British Virgin Islands and St. Maarten (subsequently disposed, see below). The property, plant andF-29 Table of Contentsequipment was valued using the income and cost approaches. Cash flows were discounted between 14% and 25% based onthe risk associated with the cash flows to determine fair value under the income approach. The property, plant andequipment have useful lives ranging from 1 to 18 years and the customer relationships acquired have useful lives rangingfrom 7 to 13 years. The fair value of the non-controlling interest was determined using the income approach with discountrates ranging from 15% to 25%. The acquired receivables consist of trade receivables incurred in the ordinary course ofbusiness. The Company has collected full amount of the receivables. The Company recorded a liability equal to the fundedstatus of the plans in its purchase price allocation. Discount rates between 3.6% and 3.9% were used to determine thepension and postretirement benefit obligations. The goodwill generated from the Viya Transaction is primarily related to value placed on the acquired employeeworkforces, service offerings, and capabilities of the acquired businesses as well as expected synergies from future combinedoperations. The goodwill is not deductible for income tax purposes. The Company’s income statement for the year ended December 31, 2016 includes $53.0 million of revenue and $1.5million of income before taxes attributable to the Viya Acquisition. The Company incurred $4.1 million of transactionrelated charges pertaining to legal, accounting and consulting services associated with the transaction, of which $2.2 millionwas incurred during the year ended December 31, 2016 and $1.9 million was incurred during the year ended December 31,2015. Disposition On August 18, 2017, the Company completed the sale of the Viya cable operations located in the British VirginIslands. The company did not recognize a gain or loss on the transaction. On January 3, 2017, the Company completed the sale of the Viya cable operations located in St. Maarten for $4.8million and recognized a gain of $0.1 million on the transaction. On December 15, 2016, the Company transferred control of its subsidiary in Aruba to another stockholder in anonreciprocal transfer. Subsequent to that date, it no longer consolidated the results of the operations of the Aruba business.The Company did not recognize a gain or loss on the transaction. The results of the British Virgin Islands, St. Maarten, and Aruba operations are not material to the Company’shistorical results of operations. Since the dispositions do not relate to a strategic shift in its operations, the historical resultsand financial position of the operations are presented within continuing operations. U.S. Telecom Acquisition In July 2016, the Company acquired certain telecommunications fixed assets and the associated operations locatedin the western United States. The acquisition qualified as a business combination for accounting purposes. The Companytransferred $9.1 million of cash consideration in the acquisition. The consideration transferred was allocated to $10.2million of acquired fixed assets, $3.5 million of deferred tax liabilities, and $0.7 million to other net liabilities, and theresulting $3.1 million in goodwill which is not deductible for income tax purposes. Results of operations for the business areincluded in the U.S. Telecom segment and are not material to the Company’s historical results of operations. Disposition On March 8, 2017, the Company completed the sale of its integrated voice and data communications and wholesaletransport businesses in New England and New York for consideration of $25.9 million (the “Sovernet Transaction”). Theconsideration included $2.0 million of contingent consideration which represented the fair value of payments related tocertain operational milestones of the disposed assets. The value of the contingent consideration wasF-30 Table of Contentsup to $4.0 million based on whether or not the operational milestones are achieved by December 31, 2017. The table belowidentifies the assets and liabilities transferred (amounts in thousands): Consideration Received$25,926 Assets and liabilities disposed Cash 1,821 Accounts receivable 1,696 Inventory 639 Prepayments and other current assets 1,034 Property, plant and equipment 25,294 Other assets 288 Accounts payable and accrued liabilities (1,718) Advance payments and deposits (1,897) Net assets disposed 27,157 Consideration less net assets disposed (1,231) Transaction costs (1,156) Loss$(2,387) Prior to the closing of the transaction, the Company repurchased non-controlling interests from minorityshareholders in a Sovernet subsidiary for $0.7 million. The non-controlling interest had a book value of zero. Additionally,the Company recorded a loss on deconsolidation of $0.5 million. The Company incurred $1.2 million of transaction related charges pertaining to legal, accounting and consultingservices associated with the transaction, of which $0.6 million were incurred during the year ended December 31, 2017 and$0.6 million were incurred during the year ended December 31, 2016. Since the Sovernet disposition does not relate to astrategic shift in its operations, the historic results and financial position of the operations are presented within continuingoperations. Subsequent to close of the Sovernet Transaction, management continually monitored and assessed the probabilityof earning the contingent consideration. In September 2017, based on progress toward achieving the operational milestones,and the December 31, 2017 deadline under which to do so, management determined that earning the contingentconsideration was unlikely. As a result, the fair value of the contingent consideration was reduced to zero. The amount wasrecorded as a loss on disposition of assets within operating income during the year ended December 31, 2017. The disposedassets did not achieve the operational milestones by the December 31 deadline. Prior to the Sovernet Transaction, in the second quarter of 2016, the Company recorded an impairment loss of $11.1million on assets related to Sovernet. The impairment consisted of a $3.6 million impairment of property, plant andequipment and $7.5 million impairment of goodwill. Renewable Energy Acquisition On April 7, 2016, the Company completed its acquisition of a solar power development portfolio in India (the“Vibrant Energy Acquisition”). The business operates under the name Vibrant Energy. The projects to be developed initiallyare located in the states of Andhra Pradesh and Telangana and are based on a commercial and industrial business model,similar to the Company’s existing renewable energy operations in the United States. As of April 7, 2016, theF-31 Table of ContentsCompany began consolidating the results of Vibrant Energy in its financial statements within its Renewable Energy segment. The Vibrant Energy Acquisition was accounted for as a business combination in accordance with ASC 805. Thetotal purchase consideration of $6.2 million was allocated to the assets acquired and liabilities assumed at their estimated fairvalues as of the date of the acquisition. The table below represents the allocation of the consideration transferred to the netassets of Vibrant Energy based on their acquisition date fair values (in thousands): Consideration Transferred$6,193Purchase price allocation: Cash 136Prepayments and other assets 636Property, plant and equipment 7,321Goodwill 3,279Accounts payable and accrued liabilities (5,179)Net assets acquired$6,193 The consideration transferred included $3.5 million paid at close of the transaction and $2.7 million of contingentconsideration payable subsequent to that time, which was contingent upon the passage of time and achievement ofproduction milestones that were considered probable. As of December 31, 2018, $1.4 million of the contingentconsideration was paid, $0.2 million remains payable, and $1.1 million was not paid as the operational milestones were notachieved. The acquired property, plant and equipment is comprised of solar equipment and the accounts payable andaccrued liabilities consists mainly of amounts payable for certain asset purchases. The fair value of the property, plant, andequipment was based on recent acquisition costs for the assets, given their recent purchase dates from third parties. Thegoodwill is not deductible for income tax purposes and primarily relates to the assembled workforce of the business acquired. The Company incurred $11.4 million of transaction related charges pertaining to legal, accounting and consultingservices associated with the transaction, of which $10.1 million was incurred during the year ended December 31, 2016 and$1.3 million was incurred during the year ended December 31, 2015. Disposition On November 6, 2018, the Company completed the sale of its U.S. solar business that owns and manages distributedgeneration solar power projects operated under the Ahana name in Massachusetts, California and New Jersey (the “U.S. SolarOperations”) to CleanCapital Holdco 4, LLC. The transaction has a total value of approximately $122.6 million, whichincludes a cash purchase price of $65.3 million and the assumption of approximately $57.3 million in debt, and is subject tocertain other post-closing adjustments (the “U.S. Solar Transaction”). The Company is finalizing working capitaladjustments. Approximately $6.5 million of the purchase price will be held in escrow for a period ofF-32 Table of Contentstwelve months after the closing to secure the Company’s indemnification obligation. The table below identifies the assetsand liabilities transferred (amounts in thousands): Consideration Received$65,286 Assets and liabilities disposed Cash 3,049 Accounts receivable 1,248 Prepayments and other current assets 801 Property, plant and equipment 94,678 Restricted cash 8,407 Other assets 38 Current portion of long-term debt (6,992) Accounts payable and accrued liabilities (938) Accrued taxes 586 Long-term debt, excluding current portion (48,038) Net assets disposed 52,839 Consideration less net assets disposed 12,447 Transaction costs (2,133) Gain$10,314 The Company allocated $1.1 million of the gain to non-controlling interests within the consolidated incomestatement. During the year ended December 31, 2018, the Company incurred $2.1 million of transaction related chargespertaining to legal, accounting and consulting services associated with the transaction. The U.S. Solar Operations do notqualify as a discontinued operation because the disposition does not represent a strategic shift that has a major effect on theCompany’s operations and financial results. As a result, the historical results are included in continuing operations. Pro forma Results The following table reflects unaudited pro forma operating results of the Company for the years ended December 31,2016 and December 31, 2015 as if the One Communications and Viya Transactions occurred on January 1, 2015. Otheracquisitions are not included in the pro forma amounts since the results are immaterial. The pro forma amounts adjust OneCommunications’ and Viya’s results to reflect the depreciation and amortization that would have been recorded assuming thefair value adjustments to property, plant and equipment and intangible assets had been applied from January 1, 2015. Also,the pro forma results were adjusted to reflect changes to the acquired entities’ capital structure related to the transaction. OneCommunications’ results reflect the retirement of $24.7 million of debt. Viya’s results reflect the retirement of $185.8million of debt and the addition of $60 million of purchase price debt. Finally, the Company’s results were adjusted toreflect the Company’s incremental ownership in BDC.F-33 Table of ContentsThe pro forma results for the year ended December 31, 2016 include $5.4 million of impairment charges recorded byOne Communications and Viya prior to the Company’s acquisition of the businesses and were recorded prior to ATN’sacquisition of the entities. The pro forma results for the year ended December 31, 2015 include $168.7 million of impairmentcharges, $85.6 million recorded by One Communications and $83.1 million recorded by Viya. Both the 2016 and 2015impairment charges were recorded prior to ATN’s acquisition of the entities. Amounts are presented in thousands, except pershare data. Year ended December 31,(unaudited) 2016 2015 As Pro- As Pro- Reported Forma Reported FormaRevenue$457,003$535,628$355,369$546,589Net income (loss) attributable toATN International, Inc.Stockholders 12,101 14,660 16,940 (97,102)Earnings per share: Basic 0.75 0.91 1.06 (6.06)Diluted 0.75 0.90 1.05 (6.02) The unaudited pro forma data is presented for illustrative purposes only and is not necessarily indicative of theoperating resulted that would have occurred if the acquisitions had been consummated on these dates or of future operatingresults of the combined company following this transaction. 6. ACCOUNTS RECEIVABLE:As of December 31, 2018 and 2017, accounts receivable consist of the following (in thousands): 2018 2017 Retail $13,785 $19,530 Wholesale 40,982 39,022 Accounts receivable 54,767 58,552 Less: allowance for doubtful accounts (16,462) (15,023) Total accounts receivable, net $38,305 $43,529 F-34 Table of Contents7. FIXED ASSETS:As of December 31, 2018 and 2017, property, plant and equipment consisted of the following (in thousands): Useful Life (in Years) 2018 2017 Telecommunications equipment and towers 5 -15 $914,276 $774,548 Solar assets 20-23 57 113,218 Office and computer equipment 3 -10 77,085 76,706 Buildings 15-39 48,900 48,058 Transportation vehicles 3 -10 15,039 12,221 Leasehold improvements Shorter of usefullife or lease term 2,033 2,864 Land — 14,728 12,516 Furniture and fixtures 5 -10 9,200 6,674 Total property, plant and equipment 1,081,318 1,046,805 Construction in progress 107,598 123,001 Total property, plant and equipment 1,188,916 1,169,806 Less: Accumulated depreciation (562,064) (526,660) Net fixed assets $626,852 $643,146 Depreciation and amortization of fixed assets, using the straight‑line method over the assets’ estimated useful life,for the years ended December 31, 2018, 2017 and 2016 was $83.0 million, $83.3 million and $73.3 million,respectively. Included within telecommunication equipment and towers are certain right to use assets under capital leasewith a cost of $27.7 million and $30.0 million and net book value of and $20.2 million and $24.4 million, as of December31, 2018 and 2017, respectively. Remaining amounts due under the Indefeasible Rights of Use (“IRUs”) are $1.3 million and$0.6 million as of December 31, 2018 and 2017, respectively.For the years ended December 31, 2017 and 2016, amounts of capital expenditures were offset by grants of$1.5 million and $2.3 million, respectively. There was no such offset for the year ended December 31, 2018. In 2018, the U.S. Telecom segment sold approximately 100 cell sites for $24.0 million. The disposed assets had abook value of $8.8 million and the Company recorded a gain of $15.2 million on the transaction. 8. GOODWILL AND INTANGIBLE ASSETSGoodwillThe Company tests goodwill for impairment at each of its reporting units on an annual basis, which has beendetermined to be as of December 31st of each fiscal year. The Company’s reporting units are one level below its operatingsegments. The Company also tests goodwill between annual tests if an event occurs or circumstances change that indicatethat the fair value of a reporting unit may be below its carrying value.The Company’s qualitative goodwill impairment test includes, but is not limited to, assessing macroeconomicconditions, industry and market considerations, technological changes and trends, overall financial performance of thereporting unit. The Company quantitative test for goodwill impairment involves a comparison of the estimated fair value of areporting unit to its carrying amount, including goodwill. The Company determines the fair value of a reporting unit using adiscounted cash flow (“DCF”) analysis. Determining fair value requires the exercise of significant judgment, includingjudgments about appropriate discount rates, perpetual growth rates, and the amount and timing of expected future cash flows.Discount rates are based on a weighted‑average cost of capital (“WACC”), which represents the average rate a business mustpay its providers of debt and equity. The cash flows employed in the DCF analysis were derived from internal earnings andforecasts and external market forecasts.F-35 Table of ContentsDuring 2018 and 2017, the Company performed qualitative assessments for all of its reporting units except for the2017 trigger based impairment review in its International Telecom segment discussed below. During 2016, the Companyperformed a qualitative assessment for one reporting unit in its International Telecom segment and one reporting unit in itsRenewable Energy segment and determined there was no impairment. Also in 2016, the company performed a quantitativeassessment for one reporting unit in its International Telecom segment and one reporting unit in its US Telecom segmentconcluding no impairment was present. The Company’s annual impairment assessment of its goodwill for all reporting units as of December 31, 2018determined that no impairment relating to its goodwill existed during the year ended December 31, 2018. In the third quarter of 2017, the Company determined that the damage caused by the Hurricanes caused a triggeringevent requiring it to assess the related reporting unit’s goodwill for impairment. After consideration of the disposals of fixedassets within the reporting unit, the impairment test for goodwill was performed by comparing the fair value of the reportingunit to its carrying amount. The Company calculated the fair value of the reporting unit by utilizing an income approach,with Level 3 valuation inputs, including a cash flow discount rate of 14.5%. Determining fair value requires the exercise ofsignificant judgment, including judgments about appropriate discount rates, perpetual growth rates, and the amount andtiming of expected future cash flows. The discount rate was based on a weighted‑average cost of capital, which represents theaverage rate the business would pay its providers of debt and equity. The cash flows employed in the discounted cash flowanalysis were derived from internal and external forecasts. The impairment assessment concluded that no impairment wasrequired for the goodwill because the fair value of the reporting unit exceeded its carrying amount. During June 2016, as a result of recent industry consolidation activities and a review of strategic alternatives for theCompany’s U.S. Wireline business in the Northeast, the Company identified factors indicating the carrying amount of certainassets may not be recoverable. More specifically, the factors included the competitive environment, recent industryconsolidation, and the Company’s view of future opportunities in the market which began to evolve in the second quarter of2016. On August 4, 2016, the Company entered into a stock purchase agreement to sell the majority of its U.S. Wirelinebusiness. The transaction was completed in March 2017. As a result of this transaction and market developments, the Company determined it was appropriate to assess thereporting unit’s assets for impairment. The reporting unit holds three types of assets for purposes of impairment testing: i)other assets such as accounts receivable and inventory, ii) long lived assets such as property plant and equipment, and iii)goodwill. Management first assessed the other assets for impairment and determined no impairment wasappropriate. Second, the property, plant and equipment was assessed for impairment. The impairment test compared theundiscounted cash flows from the use and eventual disposition of the asset group to its carrying amount and determined thecarrying amount was not recoverable. The impairment loss of $3.6 million was equal to the amount by which the carryingamount exceeded the fair value. Third management assessed goodwill for impairment and recorded an impairment of $7.5million. The Company utilized the income approach, with Level 3 valuation inputs, which considered both the purchaseagreement and cash flows discounted at a rate of 14% in its fair value calculations. In total, the Company recorded animpairment charge of $11.1 million. The impairment charge is included in income from operations for the year endedDecember 31, 2016. F-36 Table of ContentsThe table below disclosed goodwill recorded in each of the Company’s segments and accumulated impairmentchanges (in thousands): U.S. International Renewable Telecom Telecom Energy Consolidated Balance at December 31, 2016 $35,268 $24,326 $3,279 $62,873 Acquisitions — 1,097 — 1,097 Balance at December 31, 2017 35,268 25,423 3,279 63,970 Acquisitions — — — — Balance at December 31, 2018 $35,268 $25,423 $3,279 $63,970 U.S. International Renewable Telecom Telecom Energy Consolidated Balance at December 31, 2017 Gross $35,268 $25,423 $3,279 $63,970 Accumulated Impairment — — — — Net 35,268 25,423 3,279 63,970 Balance at December 31, 2018 Gross 35,268 25,423 3,279 63,970 Accumulated Impairment — — — — Net $35,268 $25,423 $3,279 $63,970 Telecommunications LicensesThe Company tests those telecommunications licenses that are indefinite lived for impairment on an annual basis,which has been determined to be as of December 31 of each fiscal year. The Company also tests telecommunication licensesthat are indefinite lived between annual tests if an event occurs or circumstances change that indicate that the fair value of areporting unit may be below its carrying value.The Company’s qualitative impairment test includes, but is not limited to, assessing macroeconomic conditions,industry and market considerations, technological changes and trends, overall financial performance, and legal andregulatory changes. The Company’s quantitative test for impairment involves a comparison of the estimated fair value of anasset to its carrying amount. The Company determines the fair value of a reporting unit using a discounted cash flow analysiswith Level 3 valuation inputs.The Company performed qualitative assessments for its annual impairment assessment of its indefinite livedtelecommunications licenses as of December 31, 2018 and determined that there were no indications of potentialimpairments. The Company performed quantitative and qualitative assessments for its annual impairment assessments of itsindefinite lived telecommunications licenses as of December 31, 2017 and 2016 and determined that there no impairmentswere required.In the third quarter of 2017, the Company determined that the damage caused by the Hurricanes caused a triggeringevent requiring us to assess the related reporting unit’s indefinite lived telecommunications licenses for impairment. Afterconsideration of the write-downs of fixed assets within the reporting unit, the impairment test for telecommunicationslicenses was performed by comparing the fair value of the asset to its carrying amount. The Company performed a qualitativeand quantitative analysis. The Company calculated the fair value by utilizing an income approach, with Level 3 valuationinputs, including a cash flow discount rate of 14.5%. Determining fair value requires the exercise of significant judgment,including judgments about appropriate discount rates, perpetual growth rates, and the amount and timing of expected futurecash flows. The discount rate was based on a weighted‑average cost of capital, which represents the average rate the businesswould pay its providers of debt and equity. The cash flowsF-37 Table of Contentsemployed in the discounted cash flow analysis were derived from internal and external forecasts. The impairment assessmentconcluded that no impairment was required for the indefinite lived telecommunication licenses because the fair valueexceeded its carrying amount. The changes in the carrying amount of the Company’s telecommunications licenses, by operating segment, for thethree years ended December 31, 2018 were as follows (in thousands): U.S. Int'l Telecom Telecom Consolidated Balance at December 31, 2016 $24,944 $23,347 $48,291 Acquired licenses 47,692 — 47,692 Dispositions (31) — (31) Balance at December 31, 2017 $72,605 $23,347 $95,952 Acquired licenses 485 — 485 Dispositions (2,750) — (2,750) Balance at December 31, 2018 $70,340 $23,347 $93,687 The licenses acquired during 2018 and 2017 are expected to be available for use into perpetuity. Customer RelationshipsThe customer relationships, all of which are included in the International Telecom segment, are being amortized onan accelerated basis, over the expected period during which their economic benefits are to be realized. The Companyrecorded $2.4 million, $3.2 million, and $2.0 million of amortization related to customer relationships during year endedDecember 31, 2018, 2017, and 2016, respectfully.Future amortization of customer relationships, in its International Telecom segment, is as follows (in thousands): Future Amortization 2019 $1,897 2020 1,528 2021 1,300 2022 1,143 2023 828 Thereafter 2,627 Total $9,323 Other Intangible Assets The Company has other intangible assets of $4.5 million consisting of $3.0 million of franchise rights and $1.5million of tradenames in its International Telecom segment. These assets are recorded in other assets on the Company’sbalance sheet as of December 31, 2018. In 2016, the Company assessed the value of a tradename and concluded that its bookvalue exceeded its fair value. As a result, the Company recorded a non-cash impairment charge of $0.3 million during theyear ended December 31, 2016. 9. LONG‑TERM DEBTThe Company has a credit facility with CoBank, ACB and a syndicate of other lenders to provide for a $225 millionrevolving credit facility (the “Credit Facility”) that includes (i) up to $10 million under the Credit Facility for standby ortrade letters of credit, (ii) up to $25 million under the Credit Facility for letters of credit that are necessary or desirable toqualify for disbursements from the FCC’s mobility fund and (iii) up to $10 million under a Swingline sub-facility. TheCredit Facility has a maturity date of December 31, 2019 and the Company currently expects to enter into a new agreementbefore the maturity date. The Credit Facility also provides for the incurrence by the Company ofF-38 Table of Contentsincremental term loan facilities, when combined with increases to revolving loan commitments, in an aggregate amount notexceed $200 million (the “Accordion”). Amounts the Company may borrow under the Credit Facility bear interest at a rate equal to, at the Company’soption, either (i) the London Interbank Offered Rate (LIBOR) plus an applicable margin ranging between 1.50% to 1.75% or(ii) a base rate plus an applicable margin ranging from 0.50% to 0.75%. Swingline Loans will bear interest at the base rateplus the applicable margin for base rate loans. The base rate is equal to the higher of (i) 1.00% plus the higher of (x) the one-week LIBOR and (y) the one-month LIBOR; (ii) the federal funds effective rate (as defined in the Credit Facility)plus 0.50% per annum; and (iii) the prime rate (as defined in the Credit Facility). The applicable margin is determined basedon the ratio (as further defined in the Credit Facility) of the Company’s indebtedness to EBITDA. Under the terms of theCredit Facility, the Company must also pay a fee ranging from 0.175% to 0.250% of the average daily unused portion of theCredit Facility over each calendar quarter. The Credit Facility contains customary representations, warranties and covenants, including a financial covenantthat 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 withaffiliates and fundamental changes. The Company’s investment in “unrestricted” subsidiaries is limited to $400 Million lessthe aggregate amount of certain dividend payments to its stockholders. Amounts borrowed under the Accordion are alsosubject to proforma compliance with a net leverage ratio financial covenant. As of December 31, 2018, the Company incompliance with all of the financial covenants of the Credit Facility. As of December 31, 2018, the Company had no borrowings under the Credit Facility. Ahana DebtOn December 24, 2014, in connection with the Ahana Acquisition, the Company assumed $38.9 million in long-term debt (the “Original Ahana Debt”). The Original Ahana Debt included multiple loan agreements with banks that boreinterest at rates between 4.5% and 6.0%, matured at various times between 2018 and 2023 and were secured by certain solarfacilities. Repayment of the Original Ahana Debt was being made in cash on a monthly basis until maturity. The Original Ahana Debt also included a loan from Public Service Electric & Gas (the “PSE&G Loan”). The PSE&GLoan bore interest at 11.3%, matured in 2027, and was secured by certain solar facilities. Repayment of the Original AhanaDebt with PSE&G were able to be made in either cash or SRECs, at the Company’s discretion, with the value of the SRECsbeing fixed at the time of the loan’s closing. Historically, the Company had made all repayments of the PSE&G Loan usingSRECs. On December 19, 2016, Ahana’s wholly owned subsidiary, Ahana Operations, issued $20.6 million in aggregateprincipal amount of 4.427% senior notes due 2029 (the “Series A Notes”) and $45.2 million in aggregate principal amount of5.327% senior notes due 2031 (the “Series B Notes” and collectively with the Series A Notes and the PSE&G Loan, the“Ahana Debt”). Interest and principal were payable semi-annually, until the respective maturity dates of March 31, 2029 (forthe Series A Notes) and December 31, 2031 (for the Series B Notes). Cash flows generated by the solar projects that securedthe Series A Notes and Series B Notes were only available for payment of such debt and were not available to pay otherobligations or the claims of the creditors of Ahana or its subsidiaries. However, subject to certain restrictions, AhanaOperations held the right to the excess cash flows not needed to pay the Series A Notes and Series B Notes and otherobligations arising out of the securitizations. The Series A Notes and Series B Notes were secured by certain assets of Ahanaand were guaranteed by certain of its subsidiaries. A portion of the proceeds from the issuances of the Series A Notes and Series B Notes was used to repay the OriginalAhana Debt in full except for the PSE&G Loan which remained outstanding after the refinancing. The Company capitalized $2.8 million of fees associated with the Series A Notes and Series B Notes which wererecorded as a reduction to the debt carrying amount and was being amortized over the life of the notes. F-39 Table of ContentsOn November 6, 2018, the Company consummated the U.S. Solar Transaction, which included the transfer of theOriginal Ahana Debt, the Series A Notes and Series B Notes to the purchaser. One Communications DebtIn connection with the One Communications Acquisition on May 3, 2016, the Company assumed $35.4 million indebt (the “One Communications Debt”) in the form of a loan from HSBC Bank Bermuda Limited. The One CommunicationsDebt was scheduled to mature in 2021, was bearing interest at the three-month LIBOR rate plus a margin of 3.25%, and wasrepaid quarterly. The One Communications Debt contained customary representations, warranties and affirmative andnegative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenantthat limited the maximum ratio of indebtedness less cash to annual operating cash flow. On May 22, 2017, the Company amended and restated the One Communications Debt to increase the originalfacility by $8.6 million to $37.5 million. The amended and restated debt is scheduled to mature on May 22, 2022 and bearsinterest at the three month LIBOR rate plus an applicable margin rate ranging between 2.5% to 2.75% paid quarterly. Theamended and restated One Communications Debt contains customary representations, warranties and affirmative andnegative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and financial covenantsthat limit the ratio of tangible net worth to long term debt and total net debt to EBITDA and require a minimum debt servicecoverage ratio (net cash generated from operating activities plus interest expense less net capital expenditures to debtrepayments plus interest expense). The Company was in compliance with its covenants as of December 31, 2018. As a condition of the amendment of the One Communications Debt, within 90 days of the refinance date theCompany was required to enter into a hedging arrangement with a notional amount equal to at least 30% of the outstandingloan balance and a term corresponding to the maturity of the One Communications Debt. In July 2017, the Company enteredinto an amortizing interest rate swap. This swap has been designated as a cash flow hedge, had an original notional amountof $11.0 million, has an interest rate of 1.874%, and expires in March 2022. As of December 31, 2018, the swap has anunamortized balance of $9.6 million. In connection with the amendment of the One Communications Debt, the Company increased the limit of itsoverdraft facility from $5.0 million to $10.0 million. This facility has an interest rate of three month LIBOR plus 1.75%. The Company capitalized $0.3 million of fees in 2017 associated with the One Communications Debt, which isrecorded as a reduction to the debt carrying amount and will be amortized over the life of the debt. As of December 31, 2018, $31.9 million of the One Communications Debt was outstanding, there were noborrowings under the overdraft facility, and $0.2 million of the capitalized fees remain unamortized. As of December 31, 2018, One Communications was in compliance with its financial covenants. Viya Debt (formerly Innovative Debt) On July 1, 2016, the Company and certain of its subsidiaries entered into a $60.0 million loan agreement (the “ViyaDebt”) 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 andliens) 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 afixed rate of 4.0% and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt maybe subject to a fee under certain circumstances. The debt is secured by certain assets of the Company’s Viya subsidiaries andis guaranteed by the Company. Earlier in 2018, the Company began funding the restoration of Viya’s network following theHurricanes through an intercompany loan arrangement which exceeded certain limitations on Viya incurring additionaldebt. RTFC consented to these intercompany advances and increased the intercompany debt limit to $50.0million. Subsequent to the end of the second quarter end, RTFC increased the limit to $75.0 million at the Company’srequest due to an increase in the on-going restoration andF-40 Table of Contentsresiliency costs. The Company was not in compliance with the Net Leverage Ratio covenant for the year ending December31, 2018 and received a waiver from the RTFC on February 25, 2019 The Company paid a fee of $0.9 million in 2016 to lock the interest rate at 4% per annum over the term of the Viyadebt. The fee was recorded as a reduction to the Viya debt carrying amount and will be amortized over the life of the loan. As of December 31, 2018, $60.0 million of the Viya Debt remained outstanding and $0.7 million of the rate lock feewas unamortized. 10. GOVERNMENT GRANTSUniversal Service Fund The Federal Universal Service Fund (‘USF’) is a subsidy program managed by the FCC. USF funds are disbursed totelecommunication providers through four programs: the High Cost Program; Low Income Program; Schools and LibrariesProgram (“E-Rate”); and Rural Health Care Program. The Company participates in High Cost Program, Low Income Program,Schools and Libraries Programs, and Rural Health Care Support programs as further described below. All of the fundingprograms are subject to certain operational and reporting compliance requirements. The Company believes it is incompliance will all applicable requirements. The FCC’s Mobility Funds and Connect America Funds are administered through the High Cost Program. TheHigh-Cost Support program subsidizes telecommunications services in rural and remote areas. The FCC created the Phase IMobility Fund (“Phase I Mobility Fund”), a one-time award meant to support wireless coverage in underserved geographicareas in the United States. The Company received $21.1 million of Phase I Mobility Fund support to its wholesale wireless business (the“Mobility Funds”) to be used to expand voice and broadband networks in certain geographic areas in order to offer either 3Gor 4G service. Of these funds, $7.2 million was recorded as an offset to the cost of the property, plant, and equipmentassociated with these projects and, consequentially, a reduction of future depreciation expense. The remaining $13.9 millionreceived offset operating expenses from inception of the program through part of the third quarter of 2018. The MobilityFunds projects and their operating results are included within the Company’s U.S. Telecom segment. As part of the receipt ofthe Mobility Funds, the Company committed to comply with certain additional FCC construction and other requirements. Ifthe requirements are not met the funds may be subject to claw back provisions. The Company currently expects to complywith all applicable requirements related to these funds. During the years ended December 31, 2018, 2017 and 2016, the Company recorded $16.5 million, $16.5 million,and $8.2 million, respectively, of revenue from High Cost Support in its International Telecom segment for its U.S. VirginIslands operations. Also, during each year ended December 31, 2018, 2017 and 2016, the Company recorded $1.2 million ofHigh Cost Support revenue in its US Telecom segment. The Company is subject to certain operational, reporting andconstruction requirements as a result of this funding and the Company believes that it is in compliance with all of theserequirements. In addition, the Company recorded revenue of $15.5 million during the year ended December 31, 2018, fromadditional funding authorized by the FCC following the Hurricanes. In August 2018, the Company was awarded $79.9 million over 10 years under the Connect America Fund Phase IIAuction. The funding requires the Company to provide fixed broadband and voice services to certain eligible areas in theUnited States. The Company is subject to operational and reporting requirements under the program. The Companydetermined the award is a revenue grant and as a result will record the funding as revenue upon receipt. The Companyexpects to begin receiving funds under the Connect America Fund Phase II program during mid-2019. The E-Rate program provides discounted telecommunication access to eligible schools and libraries. The E-Rateprogram awards (i) special construction funding to build network connectivity for eligible participants, and (ii) pays fordiscounted recurring charges for eligible broadband services. The special construction funding is used to reimburseconstruction costs and is distributed upon completion of a project. As of December 31, 2018, the Company was awardedF-41 Table of Contentsapproximately $15.4 million of E-Rate grants with construction completion obligations between June 2019 and June 2020. Once these projects are constructed the Company is obligated to provide service to the E-Rate program participants. TheCompany is in various stages of constructing the networks and has not received any of the funds. The Company expects tomeet all requirements associated with these grants. The Company also receives funding to provide discounted telecommunication services to eligible customers underthe E-Rate, Lifeline, and Rural Health Care Support Programs. During the years ended December 31, 2018, 2017, and 2016the Company recorded revenue of $8.2 million, $10.2 million, and $11.0 million, respectively, in the aggregate from theseprograms. The Company is subject to certain operational and reporting requirements under the above mentioned programsand it believes that it is in compliance with all of these requirements. Tribal Bidding Credit As part of the broadcast television spectrum incentive auction, the FCC implemented a tribal lands bidding credit toencourage deployment of wireless services utilizing 600 MHz spectrum on the lands of federally recognized tribes. TheCompany received a bidding credit of $7.4 million under this program in 2018. A portion of these funds will be used tooffset network capital costs and a portion will be used to offset the costs of supporting the networks. The Company’s currentestimate is that it will use $5.4 million to offset capital costs and, consequently, reduce future depreciation expense and $2.0million to offset the cost of supporting the network which will reduce future operating expense. The credits are subject tocertain requirements, including deploying service by January 2021 and meeting minimum coverage metrics. If therequirements are not met the funds may be subject to claw back provisions. The Company currently expects to comply withall applicable requirements related to these funds. 11. EQUITYCommon StockThe Company has paid quarterly dividends on its common stock since January 1999.Treasury StockIn September 2004, the Company’s Board of Directors approved a $5.0 million stock buyback plan (the “2004Repurchase Plan”). Through September 19, 2016, the Company repurchased $4.1 million of its common stock, under the2004 Repurchase Plan. On September 19, 2016, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of itscommon stock, from time to time, on the open market or in privately negotiated transactions (the “2016 RepurchasePlan”). The 2016 Repurchase Plan replaces the 2004 Repurchase Plan. As of December 31, 2018, the Company has $37.7million available to be repurchased under the 2016 Repurchase Plan. During the years ended December 31, 2018, 2017 and 2016, the Company repurchased the following shares underthe 2004 Repurchase Plan and the 2016 Repurchase Plan: Aggregate Shares Cost Average Year ended December 31, Repurchased (in thousands) Repurchase Price 2018 30,427 $1,577 $51.82 2017 201,932 10,636 52.67 2016 32,407 2,195 64.72 F-42 Table of ContentsDuring the years ended December 31, 2018, 2017 and 2016, the Company repurchased the following shares fromemployees to satisfy tax withholding and stock options exercise obligations incurred in connection with the vesting ofrestricted stock awards and the exercise of stock options: Aggregate Shares Cost Average Year ended December 31, Repurchased (in thousands) Repurchase Price 2018 141,180 $10,859 $76.76 2017 32,814 2,348 71.54 2016 38,279 2,775 72.50 Stock‑Based CompensationThe Company reserved 2,000,000 shares for the grant of stock options, restricted stock awards, restricted stock units,stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture. As of December 31,2018, the Company has approximately 801,000 shares available for grants.Stock OptionsStock options have a term of ten years and vest annually and ratably over a period of four years.The following table summarizes stock option activity for the years ended December 31, 2018 and 2017: Year Ended December 31, 2018 Weighted Average Weighted Avg. Remaining Number of Exercise Contractual Aggregate Options Price Term (Years) Intrinsic Value Outstanding at January 1, 2018 200,021 $41.76 Granted — — Exercised (158,021) 39.95 Outstanding at December 31, 2018 42,000 48.61 4.1 $823,515 Vested and expected to vest at December 31, 2018 42,000 48.61 4.1 $962,840 Exercisable at December 31, 2018 33,250 46.76 3.0 $823,515 Year Ended December 31, 2017 Weighted Average Remaining Number of Weighted Avg. Contractual Aggregate Options Exercise Price Term (Years) Intrinsic Value Outstanding at January 1, 2017 225,822 $39.77 Granted 10,000 52.97 Exercised (35,801) 32.29 Outstanding at December 31, 2017 200,021 41.76 3.6 $2,780,253 Vested and expected to vest at December 31, 2017 200,021 41.76 3.6 $2,780,253 Exercisable at December 31, 2017 187,521 40.77 3.6 $2,757,353 The unvested options as of December 31, 2018 represent $0.1 million in unamortized stock‑based compensationwhich will be recognized over a weighted average term of 2.3 years.F-43 Table of ContentsThe following table summarizes information relating to options granted and exercised during the years endedDecember 31, 2018, 2017 and 2016 (in thousands, except fair value of options granted data): 2018 2017 2016 Weighted-average fair value of options granted $ — $13.77 $ — Aggregate intrinsic value of options exercised 5,927 936 1,591 Cash proceeds received upon exercise of options 72 1,030 649 Excess tax benefits from share-based compensation — — 591 The aggregate intrinsic value represents the total pre‑tax intrinsic value (the difference between the Company’sclosing common stock price on December 31st and the exercise price, multiplied by the number of the in‑the‑money stockoptions) that would have been received by the stock option holders had all stock options holders exercised their stockoptions on December 31st. The amount of aggregate intrinsic value will change based on the fair market value of theCompany’s common stock.The estimated fair value of the options granted during the year ended December 31, 2017 was determined using aBlack Scholes option pricing model, based on the following weighted average assumptions: 2017 Risk-free interest rate1.79% Expected dividend yield1.28% Expected life4.00yearsExpected volatility34.01% The Company did not grant any options during the years ended December 31, 2018 or 2016. The Companyrecognized $0.1 million, $0.1 million and $0.1 million, respectively, of stock compensation expense relating to the grantedoptions during 2018, 2017, and 2016, respectively. Restricted StockRestricted stock issued under the 2008 Equity Investment Plan vest ratably over four years.The following table summarizes restricted stock activity during the year ended December 31, 2018: Weighted Avg. Shares Fair Value Unvested as of January 1, 2018 214,938 $68.62 Granted 111,474 59.52 Forfeited (31,327) 66.53 Vested and issued (94,432) 66.27 Unvested as of December 31, 2018 200,653 $65.21 The following table summarizes restricted stock activity during the year ended December 31, 2017: Weighted Avg. Shares Fair Value Unvested as of January 1, 2017 229,040 $67.13 Granted 95,095 68.09 Forfeited (12,074) 69.71 Vested and issued (97,123) 64.01 Unvested as of December 31, 2017 214,938 $68.62 F-44 Table of ContentsIn connection with the grant of restricted shares, the Company recognized $6.1 million, $6.6 million and$6.2 million of compensation expense within its income statements for the years ended December 31, 2018, 2017, and 2016,respectively. In addition, the Company recognized $0.2 million, $0.3 million, and $0.1 million of compensation expensewithin its income statement for the year ended December 31, 2018, 2017 and 2016, respectively, for shares of the Company’ssubsidiaries granted to the management team of those subsidiaries.The unvested shares as of December 31, 2018 represent $9.0 million in unamortized stock based compensationwhich will be recognized over a weighted average period of 2.5 years. 12. INCOME TAXES Tax Reform The Tax Cuts and Jobs Act of 2017 (“2017 Tax Act” also commonly referred to as U.S. tax reform), which wassigned into law on December 22, 2017, has resulted in significant changes to the U.S. corporate income tax system and theU.S. Virgin Islands mirror code which replaces “United States” with “U.S. Virgin Islands” throughout the Internal RevenueCode. These changes include a U.S. federal statutory rate reduction from 35% to 21%, which results in a U.S. Virgin Islandsrate change of 38.5% to 23.1% under the mirror tax code which allows for a 10% surcharge on the U.S. federal tax rate, 100%expensing of certain qualified capital investments, the elimination or reduction of the alternative minimum tax regime,certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The Tax Act also transitions international taxation from a worldwide system to a modified territorial system andincludes two base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings ofthe Company’s foreign subsidiaries to U.S. taxation as global intangible low taxed income (“GILTI”) and eliminates thededuction of certain payments made to related foreign corporations, and imposes a minimum tax if greater than regular taxunder the base-erosion and anti-abuse tax (“BEAT”). These changes became effective beginning in 2018. The Tax Act alsoincludes a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreignearnings (“the Transition Toll Tax”). Transition Toll Tax The Tax Act eliminates the deferral of U.S. income tax on the historical unrepatriated earnings by imposing theTransition Toll Tax, which is a one-time mandatory deemed repatriation tax on undistributed foreign earnings. TheTransition Toll Tax is assessed on the U.S. shareholder's share of the foreign corporation's accumulated foreign earnings thathave not previously been taxed. Earnings in the form of cash and cash equivalents will be taxed at a rate of 15.5% and allother earnings will be taxed at a rate of 8.0%. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, theCompany made reasonable estimates of the effects and recorded provisional amounts in its consolidated financial statementsas of December 31, 2017. During 2018, the Company made adjustments to the provisional amounts, including a $3.2 millionprovision on the deemed repatriation of undistributed foreign earnings in addition to the $7.4 million provision recorded atyear-end. The Company has completed its determination of the accounting implications for charges related to the TransitionToll Tax. At December 31, 2018, the Company continues to assert its earnings are permanently reinvested outside the U.S.. Cash dividends from Guyana was made in 2018, however these distributions are not subject to Guyanese withholding taxand the U.S. state tax impact is minimal. Effect on Deferred Tax Assets and Liabilities and other Adjustments The Company’s deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when thesetemporary differences are expected to be realized or settled. As the Company’s deferred tax liabilities exceed the balance ofits deferred tax assets at the date of enactment, the Company recorded a tax benefit of $18.0 million in 2017,F-45 Table of Contentsreflecting the decrease in the U.S. and U.S. Virgin Islands corporate income tax rates, including the state impact, net of federalbenefit. An additional adjustment of $0.4 million was recorded in the three-month period ending September 30, 2018 fortemporary differences finalized with the filing of the 2017 tax return. The Company has completed its accounting for themeasurement of deferred taxes. The BEAT provisions in the Tax Act eliminate the deduction of certain base-erosion payments made to relatedforeign corporations, and impose a minimum tax if greater than regular tax. The Company does not expect it will be subjectto this tax and therefore have not included any tax impacts of BEAT in its consolidated financial statements for the yearended December 31, 2018. Based on the Company’s calculation under the GILTI rules, it does not have an inclusion as ofDecember 31, 2018. Status of the Company’s Assessment In accordance with SAB 118, the Company has completed its determination of the accounting implications of theTax Act as of December 22, 2018. The components of income before income taxes for the years ended December 31, 2018, 2017 and 2016 are asfollows (in thousands): 2018 2017 2016 Domestic $28,917 $25,232 $28,047 Foreign 24,825 22,321 17,327 Total $53,742 $47,553 $45,374 The following is a reconciliation from the tax computed at statutory income tax rates to the Company’s income taxexpense for the years ended December 31, 2018, 2017, and 2016 (in thousands): 2018 2017 2016 Tax computed at statutory U.S. federal income tax rates $11,286 $16,644 $15,782 Non-controlling interest (1,114) (2,887) (2,893) Foreign tax rate differential (2,716) (6,621) (3,074) Over (under) provided in prior periods (4,683) (18) 1,069 Nondeductible expenses 1,610 929 1,134 Goodwill Impairment — — 2,622 Capitalized transactions costs 62 53 3,138 Change in tax reserves 10,657 4,433 2,561 State Taxes, net of federal benefit 1,674 1,075 1,853 Change in valuation allowance 1,539 6,137 (7,292) Foreign tax credit expiration — — 4,179 Refund Claim for Domestic Production Deduction 235 (3,382) — Tax Cuts and Jobs Act of 2017 (148) (10,639) — Capital loss 15 (6,990) — Other, net 453 (75) 2,081 Total Income Tax Expense $18,870 $(1,341) $21,160 F-46 Table of ContentsThe components of income tax expense (benefit) for the years ended December 31, 2018, 2017 and 2016 are asfollows (in thousands): 2018 2017 2016 Current: United States—Federal $24,546 $375 $15,763 United States—State 4,506 500 505 Foreign 13,060 11,289 10,528 Total current income tax expense $42,112 $12,164 $26,796 Deferred: United States—Federal $(17,947) $(10,892) $(1,880) United States—State (2,832) 950 (291) Foreign (2,463) (3,563) (3,465) Total deferred income tax expense (benefit) $(23,242) $(13,505) $(5,636) Consolidated: United States—Federal $6,599 $(10,517) $13,883 United States—State 1,674 1,450 214 Foreign 10,597 7,726 7,063 Total income tax expense (benefit) $18,870 $(1,341) $21,160 The significant components of deferred tax assets and liabilities are as follows as of December 31, 2018 and 2017 (inthousands): 2018 2017 Deferred tax assets: Receivables reserve $3,087 $1,524 Temporary differences not currently deductible for tax 9,035 7,869 Deferred compensation 784 1,446 Pension 635 245 Net operating losses 29,496 26,685 Tax Credits 645 8,969 Total deferred tax asset 43,682 46,738 Deferred tax liabilities: Property, plant and equipment, net 14,608 35,630 Intangible assets, net 5,959 5,817 Total deferred tax liabilities 20,567 41,447 Valuation allowance (31,442) (35,829) Net deferred tax liabilities $(8,327) $(30,538) F-47 Table of ContentsDeferred tax assets and liabilities are reflected in the accompanying consolidated balance sheets as follows (inthousands): 2018 2017 Deferred tax assets: Current $ — $ — Long term 1,949 1,194 Total deferred tax asset $1,949 $1,194 Deferred tax liabilities: Current $ — $ — Long term (10,276) (31,732) Total deferred tax liabilities $(10,276) $(31,732) Net deferred tax liabilities $(8,327) $(30,538) The Company's effective tax rate for the year ended December 31, 2018 and 2017 was 35.1% and (2.8)%,respectively. The effective tax rate for the year ended December 31, 2018 was primarily impacted by the following items: (i)a $10.6 million net increase of unrecognized tax positions, (ii) a $4.7 million net benefit to record a return to accrualadjustment, (iii) a $1.2 million benefit to recognize a capital loss carryover due to capital gains on sales of wireless licenses,(iv) a $1.4 million net benefit to record a valuation allowance release on an indefinite lived intangible asset, (v) a$1.7 million provision associated with the intercompany sale of assets from the U.S. to the U.S. Virgin Islands, and (vi) themix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses injurisdictions where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the U.S.Virgin Islands and India. The effective tax rate for the year ended December 31, 2017 was primarily impacted by the following items: (i) a$10.6 million benefit for the net impact of the 2017 Tax Act which includes lowering the U.S. corporate income tax rate to21% effective in 2018 resulting in an $18.0 million benefit from the remeasurement of the deferred tax assets and liabilities,which was partially offset by a provision of $7.4 million on the deemed repatriation of undistributed foreign earnings (ii) a$3.9 million benefit for the net capital transactions related to the Company’s businesses in New England, New York, theBritish Virgin Islands, and St. Maarten, (iii) a $3.4 million benefit for an amended return refund claim filed for tax year 2013,(iv) a $4.4 million increase (net) in unrecognized tax benefits related to current year and prior year positions, (v) a $6.1million provision (net) to record the change in valuation allowance and, (vi) the mix of income generated among thejurisdictions in which the Company operates. As of December 31, 2018, the Company estimated that it had gross federal and foreign net operating loss (“NOL”)carryforwards of $1.2 million and $115.8 million respectively. Of these, $64.0 million will expire between 2024 and 2037and $53.1 million may be carried forward indefinitely. The Company assesses available positive and negative evidence to estimate if sufficient future taxable income willbe generated to realize the existing deferred tax assets. A significant piece of negative evidence evaluated is cumulativelosses incurred in certain reporting jurisdictions over the three-year period ended December 31, 2018. Other negativeevidence examined includes, but is not limited to, losses expected in early future years, a history of tax benefits expiringunused, uncertainties whose unfavorable resolution would adversely affect future results, and brief carryback, carry forwardperiods. On the basis of this evaluation, the Company believed it was more likely than not that the benefit from some ofthese federal, state, and foreign deferred taxes would not be realized. In recognition of this risk at December 31, 2018 the Company has provided a valuation allowance against certainforeign deferred tax assets of $31.4 million. The foreign valuation allowance primarily relates to foreign net operating lossesof $29.1 million, while the remaining $2.3 million is on other net foreign deferred tax assets which the Company does notexpect to be able to realize. At December 31, 2017, the Company’s federal and foreign NOL carryforward valuationallowances were $1.9 million and $24.3 million, respectively. The federal foreign tax credit valuation allowance was $8.2million and the remaining valuation allowance of $1.4 million was applied to the other foreign deferred taxes for entitieswith a full valuation allowance at December 31, 2017. F-48 Table of ContentsAs of December 31, 2018, the Company has approximately $119.7 million of undistributed earnings of its foreignsubsidiaries, which are considered to be indefinitely reinvested. As such, the Company has not provided deferred tax onthose earnings. The Company received $51.6 million of cash distributions from GTT in 2018 but does not anticipatedividends in the future. The Company had unrecognized tax benefits (including interest and penalty) of $34.7 million as of December 31,2018, $24.1 million as of December 31, 2017 and, $20.0 million as of December 31, 2016. The net increase of the reserveduring the year ended December 31, 2018 was attributable to an increase in tax positions for prior periods of $8.8 million, anet increase in tax positions for the current period of $3.4 million and partially offset by a lapse in statute of a prior yearposition of $1.6 million. The following shows the activity related to unrecognized tax benefits (not including interest and penalty) duringthe three years ended December 31, 2018 (in thousands): Gross unrecognized tax benefits at December 31, 2015 $17,216 Increase in unrecognized tax benefits taken during a prior period 561 Increase in unrecognized tax benefits taken during the current period 2,321 Lapse in statute of limitations (1,673) Settlements (521) Gross unrecognized uncertain tax benefits at December 31, 2016 17,904 Increase in unrecognized tax benefits taken during a prior period — Increase in unrecognized tax benefits taken during the current period 3,394 Lapse in statute of limitations (2) Settlements (335) Gross unrecognized uncertain tax benefits at December 31, 2017 20,961 Increase in unrecognized tax benefits taken during a prior period 7,293 Increase in unrecognized tax benefits taken during the current period 3,408 Lapse in statute of limitations (1,430) Settlements — Gross unrecognized uncertain tax benefits at December 31, 2018 $30,232 The Company’s accounting policy is to classify interest and penalties related to income tax matters as part ofincome tax expense. The accrued amounts for interest and penalties are $4.5 million as of December 31, 2018, and $3.1million as of December 31, 2017, and $2.1 million as of December 31, 2016. All $34.7 million of gross unrecognized uncertain tax benefits (including interest and penalty) would impact theeffective tax rate if recognized. The Company and its subsidiaries file income tax returns in the U.S. and in various, state and local and foreignjurisdictions. The statute of limitations related to the consolidated U.S. federal income tax return is closed for all tax years upto and including 2012. The federal tax audits are closed through 2014. There are no tax audits currently in progress. Theexpiration of the statute of limitations related to the various state and foreign income tax returns that the Company andsubsidiaries file varies by jurisdiction. 13. RETIREMENT PLANS The Company has noncontributory defined benefit pension plans for eligible employees of its GTT and Viyasubsidiaries who meet certain age and employment criteria. The Company also has a noncontributory defined medical,dental, vision, and life benefit plan for eligible employees of its Viya subsidiary who meet certain age and employmentcriteria. The Company acquired the Viya plans as a result of the July 2016 Viya Acquisition. The Company reviews thefunded status of its pension plans and makes contributions based on that analysis. The benefits are based on theF-49 Table of Contentsparticipants’ compensation during their employment and the credited service years earned by participants. The Companyfunds the other postretirement benefit plans as benefits are paid.The weighted‑average rates assumed in the actuarial calculations for the pension and other postretirement benefitplans are as follows as of December 31, 2018, 2017 and 2016: 2018 2017 2016 Discount Rate – Pension Benefit Obligation 4.7% 4.2% 4.6%Discount Rate – Pension Benefit Cost 4.3%4.6%4.3%Discount Rate – Postretirement Benefit Obligation 4.5% 3.9% 4.3%Discount Rate – Postretirement Benefit Cost 3.9%4.3%3.9%Annual salary increase 6.5% 6.5% 6.5% Expected long-term return on plan assets 6.1% 6.1% 6.3% The expected long‑term rate of return on plan assets was determined based on several factors including input frompension investment consultants, projected long‑term returns of equity and bond indices, and historical returns over the life ofthe related obligations of the fund. The Company, in conjunction with its pension investment consultants, reviews its assetallocation periodically and rebalances its investments when appropriate in an effort to earn the expected long‑term returns.The Company will continue to evaluate its long‑term rate of return assumptions at least annually and will adjust them asnecessary.The annual salary increase assumption reflects the Company’s estimated long term average rate of salaryincreases. The assumption is not applicable to the Viya pension and other postretirement plans as the obligations associatedwith these plans are not dependent on participant’s salaries.The discount rate was determined based on a review of market data including yields on high quality corporatebonds with maturities approximating the remaining life of the project benefit obligations.The other postretirement benefit plans healthcare cost trend assumptions is based on health care trend rates. The2019 assumed medical health care cost trend rate is 6% trending to an ultimate rate of 4% in 2073. The 2019 and ultimateassumed dental care cost trend rate is 4%. The effect of a one-percentage-point increase in the assumed health care cost trendrates for each future year on the accumulated postretirement benefit obligation for health care benefits and the aggregate ofthe service and interest cost components of net periodic postretirement health care benefit cost is shown below: 2018 2017 Accumulatedpostretirementbenefitobligation Servicecost plusinterestcost Accumulatedpostretirementbenefitobligation Servicecost plusinterestcost At trend 4,013 308 5,308 389 At trend + 1% 4,305 338 5,723 429 Dollar Impact 292 30 415 40 Percentage Impact 7.3% 9.7% 7.8% 10.3%At trend – 1% 3,755 282 4,944 355 Dollar Impact (258) (26) (364) (34) Percentage Impact (6.4)% (8.4)% (6.9)% (8.7)% F-50 Table of ContentsChanges during the year in the projected benefit obligations and in the fair value of plan assets are as follows for 2018 and2017 (in thousands): 2018 2017 PensionBenefits PostretirementBenefits PensionBenefits PostretirementBenefits Projected benefit obligations: Balance at beginning of year: $80,355 $5,307 $76,119 $5,108 Service cost 1,794 147 1,676 183 Interest cost 3,279 161 3,388 206 Benefits and settlements paid (4,524) (360) (3,942) (367) Actuarial (gain) loss (4,295) (272) 3,114 177 Experience (gain) loss 291 (971) — — Balance at end of year $76,900 $4,012 $80,355 $5,307 Plan net assets: Balance at beginning of year: $80,892 $ — $75,331 $ — Actual return on plan assets (730) — 8,789 — Company contributions 1,830 360 842 367 Benefits and settlements paid (4,462) (360) (4,070) (367) Balance at end of year $77,530 $ — $80,892 $ — Over/ (Under) funded status of plan $630 $(4,012) $537 $(5,307) The Company reports an asset or liability on its balance equal to the funded status of its pension and otherpostretirement benefit plans. Plans in an overfunded status are aggregated and recorded as a net benefit asset in otherassets. Plans in an underfunded status are aggregated and recorded as a net benefit liability in other liabilities. The fundedstatus of the Company’s pension and other retirement benefit plans is below (in thousands): 2018 2017 GTTPensionBenefit ViyaPensionBenefit PostretirementBenefits GTTPensionBenefit ViyaPensionBenefit PostretirementBenefits Projected benefit obligation $14,712 $62,188 $4,012 $13,205 $67,150 $5,307 Plan Net Assets 14,105 63,425 — 10,307 70,585 — Over/ (Under) funded status of plan $(607) $1,237 $(4,012) $(2,898) $3,435 $(5,307) The Company’s investment policy for its pension assets is to have a reasonably balanced investment approach, witha long‑term bias toward debt investments. The Company’s strategy allocates plan assets among equity, debt and other assetsto achieve long‑term returns without significant risk to principal. The GTT pension fund has limitations from investing in theequity, debt or other securities of the employer, its subsidiaries or associates of the employer or any company of which theemployer is a subsidiary or an associate. Furthermore, the GTT plan must invest between 70% - 80% of its total plan assetswithin Guyana.F-51 Table of ContentsThe fair values for the pension plan’s net assets, by asset category, at December 31, 2018 are as follows (inthousands):Asset Category Total Level 1 Level 2 Level 3 Cash, cash equivalents, money markets and other $5,173 $5,173 $ — $ — Common stock 23,052 18,760 4,292 — Mutual funds - fixed income 16,444 — 16,444 — Mutual funds - equities 13,099 4,748 8,351 — Fixed income securities 18,095 — 18,095 — Other 1,667 1,177 — 490 Total $77,530 $29,858 $47,182 $490 The fair values for the pension plan’s net assets, by asset category, at December 31, 2017 are as follows (inthousands):Asset Category Total Level 1 Level 2 Level 3 Cash, cash equivalents, money markets and other $6,363 $6,363 $ — $ — Common stock 28,467 25,312 3,155 — Mutual funds - equities 9,248 9,248 — — Exchange traded funds - equities 904 904 — — Fixed income securities 35,414 — 35,414 — Annuities 496 — — 496 Total $80,892 $41,827 $38,569 $496 The plan’s weighted‑average asset allocations at December 31, 2018 and 2017, by asset category are as follows: 2018 2017 Cash, cash equivalents, money markets and other 7% 8%Common stock 30 35 Mutual funds - fixed income 21 — Mutual funds - equities 17 11 Fixed income securities 23 44 Other 2 2 Total 100% 100% Amounts recognized on the Company’s consolidated balance sheets consist of (in thousands): As of December 31, 2018 2017 Pensionbenefits Postretirementbenefits Pensionbenefits Postretirementbenefits Accrued and current liabilities $ — $271 $ — $392 Other Liabilities 744 3,742 2,898 4,915 Other Assets 1,375 — 3,435 — Accumulated other comprehensiveincome, net of tax 938 1,350 2,953 174 F-52 Table of ContentsAmounts recognized in accumulated other comprehensive loss consist of (in thousands): As of December 31, 2018 2017 Pensionbenefits Postretirementbenefits Pensionbenefits Postretirementbenefits Net actuarial gain $30 $1,350 $1,408 $174 Accumulated other comprehensiveincome, pre-tax 30 1,350 1,408 174 Accumulated other comprehensiveincome, net of tax 938 1,350 2,953 174 Components of the plan’s net periodic pension cost are as follows for the years ended December 31, 2018, 2017 and2016 (in thousands): 2018 2017 2016 Pensionbenefits Postretirementbenefits Pensionbenefits Postretirementbenefits Pensionbenefits Postretirementbenefits Service cost $1,794 $147 $1,676 $183 $1,308 $97 Interest cost 3,279 161 3,388 206 2,002 97 Expected return on plan assets (4,835) — (4,470) — (2,024) — Amortization of actuarial (gain) loss 121 (67) 716 — 1,271 — Curtailment — — — — 128 — Net periodic pension cost $359 $241 $1,310 $389 $2,685 $194 The Company does not plan to make any contributions to its pension and postretirement benefit plans during theyear ending December 31, 2019. The following estimated benefits, which reflect expected future service, as appropriate, are expected to be paid overthe next ten years as indicated below (in thousands): Pension PostretirementFiscal Year Benefits Benefits2019 $5,022 $2772020 4,292 2552021 4,452 2372022 5,079 2612023 4,355 2362024-2028 23,534 1,535 $46,734 $2,801 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 inthe ordinary course of business, some of which involve claims for damages and taxes that are substantial in amount. TheCompany believes that, except for the items discussed below, for which the Company is currently unable toF-53 Table of Contentspredict the final outcome, the disposition of proceedings currently pending will not have a material adverse effect on theCompany’s financial position or results of operations. The Company’s Guyana subsidiary, GTT, holds a license to provide domestic fixed services and international voiceand data services in Guyana on an exclusive basis until December 2030. Since 2001, the Government of Guyana has statedits intention to introduce additional competition into Guyana’s telecommunications sector. In connection therewith, theCompany and GTT have met on several occasions with officials of the Government of Guyana to discuss potentialmodifications of GTT’s exclusivity and other rights under the existing agreement and license. On July 18, 2016, the GuyanaParliament passed telecommunications legislation, and on August 5, 2016, the legislation was signed into law thatintroduces material changes to many features of Guyana’s existing telecommunications regulatory regime with the intentionof creating a more competitive market. The legislation does not have the effect of terminating the Company’s exclusivelicense. Instead the legislation as passed requires the Minister of Telecommunications to conduct further proceedings andissue implementing orders to enact the various provisions of the legislation, including the issuance of competinglicenses. The Company cannot predict the manner in which or when the legislation will be implemented by the Minister ofTelecommunications. In January 2018 the Government of Guyana and the Company met to discuss modifications of the Company’sexclusivity rights and other rights under its existing agreement and license. Those discussions are on-going, however, therecan be no assurance that those discussions will be concluded before the Government issues new licenses contemplated by thelegislation or at all, or that such discussions will satisfactorily address the Company’s contractual exclusivityrights. Although the Company believes that it would be entitled to damages or other compensation for any involuntarytermination of its contractual exclusivity rights, it cannot guarantee that the Company would prevail in a proceeding toenforce its rights or that its actions would effectively halt any unilateral action by the Government. Historically, GTT has been subject to other litigation proceedings and disputes in Guyana that, while notconclusively resolved, to the Company’s knowledge have not been the subject of discussions or other significant activity inthe last five years. It is possible, but the Company believes unlikely, that these disputes, as discussed below, may be revived.The Company believes that none of these additional proceedings would, in the event of an adverse outcome, have a materialimpact on the Company’s consolidated financial position, results of operation or liquidity. In a letter dated September 8, 2006, the National Frequency Management Unit (“NFMU”) agreed that total spectrumfees in Guyana should not increase for the years 2006 and 2007. However, that letter implied that spectrum fees in 2008 andonward may be increased beyond the amount GTT agreed to with the Government. GTT has objected to the NFMU’sproposed action and reiterated its position that an increase in fees prior to development of an acceptable methodology wouldviolate 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 inferencethat the amount was payment in full for the specified years as it was NFMU’s continued opinion that the final calculation forspectrum fees was not agreed upon and was still an outstanding issue. By further letter dated November 24, 2011, the NFMUfurther rejected a proposal that was previously submitted jointly by GTT and another communications provider that outlineda recommended methodology for the calculation of these fees. The NFMU stated that it would prepare its ownrecommendation for consideration by the Minister of Telecommunications, who would decide the matter. GTT has paidundisputed spectrum fees according to the methodology used for its 2011 payments, and has reserved amounts payableaccording to this methodology. There have been limited further discussions on this subject and GTT has not had theopportunity to review any recommendation made by the NFMU to the Minister. In November 2007, Caribbean Telecommunications Limited (“CTL”) filed a complaint in the U.S. District Court forthe District of New Jersey against GTT and ATN claiming breach of an interconnection agreement for domestic cellularservices in Guyana and related claims. CTL asserted over $200 million in damages. GTT and ATN moved to dismiss thecomplaint on procedural and jurisdictional grounds. On January 26, 2009, the court granted the motions to dismiss thecomplaint on the grounds asserted. In November 2009 and again in April 2013, CTL filed and then abandoned a similarclaim against GTT and the Public Utility Commission in the High Court of Guyana. CTL once more filed a similar claimagainst the Company in December 2017, seeking damages of $25 million; however, this matter was dismissed in May 2018.CTL made an untimely filing for an appeal thereafter, which the court subsequently denied. The Company continues tobelieve this claim is without merit and intends to vigorously defend against it.F-54 Table of Contents On May 8, 2009, a GTT competitor, Digicel, filed a lawsuit in Guyana challenging the legality of GTT’s exclusivelicense rights under Guyana’s constitution. Digicel initially filed this lawsuit against the Attorney General of Guyana. OnMay 13, 2009, GTT petitioned to intervene in the suit in order to oppose Digicel’s claims and GTT’s petition was granted onMay 18, 2009. GTT filed an answer to the charge on June 22, 2009. The case remains pending. The Company believes thatany legal challenge to GTT’s exclusive license rights granted in 1990 is without merit and the Company intends to defendvigorously against such legal challenge. GTT has filed several lawsuits in the High Court of Guyana asserting that, despite its denials, Digicel is engaged ininternational bypass in violation of GTT’s exclusive license rights, the interconnection agreement between the parties, andthe laws of Guyana. GTT is seeking injunctive relief to stop the illegal bypass activity and money damages. Digicel filedcounterclaims alleging that GTT has violated the terms of the interconnection agreement and Guyana laws. These suits, filedin 2010 and 2012, have been consolidated with Digicel’s constitutional challenge described above and is scheduled toproceed to trial in the second quarter of 2019. GTT intends to prosecute these matters vigorously. GTT is also involved in several legal claims regarding its tax filings with the Guyana Revenue Authority datingback to 1991 regarding the deductibility of intercompany advisory fees as well as other tax assessments. The Companymaintains that any liability GTT might be found to have with respect to the disputed tax assessments, totaling $44.1 million,would be offset in part by the amounts necessary to ensure that GTT’s return on investment was no less than 15% per annumfor the relevant periods. The Company believes that some adverse outcome is probable and has accordingly accrued $5.0million as of December 31, 2018 for these matters. Lease Commitments and Other ObligationsThe Company leases approximately 2.5 million square feet for its operations centers, administrative offices andretail stores as well as certain tower sites under non‑cancelable operating leases. The Company’s obligations for paymentsunder these leases are as follows at December 31, 2018 (in thousands):2019 $21,941 2020 18,813 2021 12,406 2022 8,466 2023 4,142 Thereafter 5,991 Total obligations under operating leases $71,759 Rent expense for the years ended December 31, 2018, 2017 and 2016 was $21.1 million, $20.9 million and $19.8 million, respectively. 15. RELATED‑PARTY TRANSACTIONSIn October 2014, the Company’s U.S. Virgin Islands business, Choice Communications, LLC (“Choice”), enteredinto a tower lease with Tropical Tower Ltd (“Tropical Tower”), an entity 90% owned by Cornelius B. Prior, Jr., the formerChairman of the Company’s Board of Directors. When aggregated with amounts that Choice currently pays to TropicalTower for an existing tower lease entered into in April 2012, Choice will pay approximately $117,000 per year in rentalpayments to Tropical Tower. Each tower lease has an initial term of five years, with two additional five-year renewal periodsand has provisions for an increase in rent by 5% each year. The Company’s Audit Committee reviewed the specific structureand terms of the October 2014 lease, as negotiated by Choice management, and unanimously approved the arrangementdescribed above in accordance with the terms of the Company’s Related Person Transaction Policy. F-55 Table of Contents16. SEGMENT REPORTINGThe Company has the following three reportable and operating segments: i) U.S. Telecom, ii) International Telecom,and iii) Renewable Energy. The following tables provide information for each operating segment (in thousands):For the Year Ended December 31, 2018 U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedRevenue Wireless $108,878 $89,946 $ — $ — $198,824Wireline 6,602 223,623 — — 230,225Renewable Energy — — 22,158 — 22,158Total Revenue 115,480 313,569 22,158 — 451,207Depreciation and amortization 24,615 48,889 6,589 5,626 85,719Non-cash stock-based compensation — 88 105 6,227 6,420Operating income (loss) 36,813 45,022 13,440 (34,252) 61,023 For the Year Ended December 31, 2017 U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedRevenue Wireless $143,028 $89,473 $ — $ — $232,501Wireline 12,695 215,132 — — 227,827Renewable Energy — — 20,865 — 20,865Total Revenue 155,723 304,605 20,865 — 481,193Depreciation and amortization 25,601 50,007 6,668 4,658 86,934Non-cash stock-based compensation — 188 114 6,675 6,977Operating income (loss) 55,317 28,308 5,179 (33,496) 55,308 For the Year Ended December 31, 2016 U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedRevenue Wireless $150,044 $94,360 $ — $ — $244,404Wireline 26,683 163,915 — — 190,598Renewable Energy — — 22,001 — 22,001Total Revenue 176,727 258,275 22,001 — 457,003Depreciation and amortization 24,470 40,493 4,987 6,030 75,980Non-cash stock-based compensation — 22 114 6,274 6,410Operating income (loss) 49,078 36,910 (246) (34,472) 51,270 F-56 Table of Contents U.S. International Renewable Corporateand Telecom Telecom Energy Other (1) ConsolidatedDecember 31, 2018 Cash, Cash equivalents, andInvestments $19,118 $32,390 $62,678 $78,043 $192,229Total current assets 36,801 75,304 80,553 83,107 275,765Fixed assets, net 78,102 482,770 45,599 20,381 626,852Goodwill 35,269 25,421 3,280 — 63,970Total assets 172,634 622,454 130,427 181,789 1,107,304Total current liabilities 15,783 82,575 3,465 38,827 140,650Total debt — 90,970 12 — 90,982December 31, 2017 Cash, Cash equivalents, andInvestments $19,585 $110,700 $8,120 $76,627 $215,032Total current assets 40,975 190,396 18,060 93,497 342,928Fixed assets, net 99,462 367,485 158,447 17,752 643,146Goodwill 35,269 25,421 3,280 — 63,970Total assets 200,142 629,007 192,406 184,050 1,205,605Total current liabilities 41,248 91,887 14,754 13,816 161,705Total debt — 94,577 61,215 — 155,792 Capital Expenditures U.S. International Renewable Corporateand Year ended December 31, Telecom Telecom Energy Other (1) Consolidated 2018 $13,389 $160,013(2)$4,515 $8,004 $185,921 2017 22,230 80,912 32,738 6,491 142,371 (1)Reconciling items refer to corporate overhead expenses and consolidating adjustments. (2)Includes $80.2 million of expenditures used to rebuild the Company’s damaged networks in the U.S. Virgin Islandswhich was impacted by the Hurricanes. These expenditures were financed, in part, by the $34.6 million of insuranceproceeds the Company received during the first quarter of 2018.The table below identifies the Company’s revenues and long-lived assets by geographic location. The Company attributesrevenue to geographic location based on location of the customer (in thousands): 2018 2017 2016 Long-Lived Long-Lived Long-Lived Revenues Assets Revenues Assets Revenues Assets U.S. $132,288 $234,514 $173,632 $358,032 $198,300 $265,528 Guyana 102,056 151,084 93,524 129,909 91,653 132,609 U.S Virgin Islands 79,785 216,173 83,194 137,018 58,431 110,773 Bermuda 103,281 137,992 127,244 165,243 83,006 94,976 Other Foreign Countries 33,797 91,774 3,599 71,282 25,613 76,575 $451,207 $831,538 $481,193 $861,484 $457,003 $680,461 F-57 Table of Contents17. QUARTERLY FINANCIAL DATA (UNAUDITED) Following is a summary of the Company’s quarterly results of operations for the years ended December 31, 2018 and2017 (in thousands): 2018 Consolidated for the Three Months Ended March 31 June 30 September 30 December 31 Total revenue $104,475 $117,788 $121,138 $107,806 Operating expenses 100,266 102,035 90,395 97,488 Income from operations 4,209 15,753 30,743 10,318 Other income (expense), net (2,591) (2,885) (2,823) 1,018 Income from continuing operations before income taxes 1,618 12,868 27,920 11,336 Income taxes 3,921 2,088 7,010 5,851 Net income (loss) (2,303) 10,780 20,910 5,485 Net income attributable to non-controlling interests, net of tax (3,252) (3,564) (3,887) (4,354) Net income (loss) attributable to ATN International, Inc. stockholders $(5,555) $7,216 $17,023 $1,131 Net income (loss) per weighted average basic share attributable to ATNInternational, Inc. stockholders Total (0.35) 0.45 1.07 0.07 Net income (loss) per weighted average diluted share attributable to ATNInternational, Inc. stockholders Total (0.35) 0.45 1.07 0.07 2017 Consolidated for the Three Months Ended March 31 June 30 September 30 December 31Total revenue $128,115 $123,245 $122,132 $107,701Operating expenses 110,359 107,442 141,697 66,387Income from operations 17,756 15,803 (19,565) 41,314Other income (expense), net (3,044) (2,298) (2,295) (118)Income (loss) from continuing operations before income taxes 14,712 13,505 (21,860) 41,196Income taxes 3,128 2,596 (884) (6,181)Net income (loss) 11,584 10,909 (20,976) 47,377Net income attributable to non-controlling interests, net of tax (4,725) (5,026) (3,784) (3,871)Net income (loss) attributable to ATN International, Inc. stockholders $6,859 $5,883 $(24,760) $43,506Net income (loss) per weighted average basic share attributable to ATNInternational, Inc. stockholders Total 0.42 0.36 (1.53) 2.71Net income (loss) per weighted average diluted share attributable to ATNInternational, Inc. stockholders Total 0.42 0.36 (1.53) 2.71 F-58 Table of Contents SCHEDULE IIATN INTERNATIONAL, INC. AND SUBSIDIARIESVALUATION AND QUALIFYING ACCOUNTS(Amounts in Thousands) Balance at Purchase Charged to Balance Beginning Price Costs and at End of Year Accounting Expenses Deductions of Year YEAR ENDED, December 31, 2016 Description: Valuation allowance on foreign tax credit carryforwards $4,180 $ — $ $4,180 $ — Valuation allowance on foreign net operating losses andother deferred taxes 1,672 41,941 217 1,922 41,908 Valuation allowance on state net operating losses 1,962 — — 1,409 553 Allowance for doubtful accounts 9,294 — 5,095 1,240 13,149 $17,108 $41,941 $5,312 $8,751 $55,610 YEAR ENDED, December 31, 2017 Description: Valuation allowance on foreign tax credit carryforwards $ — $ — $8,226 $ — $8,226 Valuation allowance on capital loss carryforwards — — 1,881 — 1,881 Valuation allowance on foreign net operating losses andother deferred taxes 41,908 — 839 17,025 25,722 Valuation allowance on state net operating losses 553 — — 553 — Allowance for doubtful accounts 13,149 — 3,993 2,119 15,023 $55,610 $ — $14,939 $19,697 $50,852 YEAR ENDED, December 31, 2018 Description: Valuation allowance on foreign tax credit carryforwards $8,226 $ — $(8,226) $ — $ — Valuation allowance on capital loss carryforwards 1,881 — (1,881) — — Valuation allowance on foreign net operating losses andother deferred taxes 25,722 — 5,877 157 31,442 Allowance for doubtful accounts 15,023 — 5,134 3,695 16,462 $50,852 $ — $904 $3,852 $47,904 F-59Exhibit 3.4BY-LAWS OFATN INTERNATIONAL, INC.as amended and restated on February 27, 2017(A Delaware Corporation)ARTICLE IOfficesSECTION 1.Registered Office. The registered office of the Corporation within the State ofDelaware shall be in the City of Dover, County of Kent.SECTION 2.Other Offices. The Corporation may also have an office or offices other than saidregistered office at such place or places, either within or without the State of Delaware, as the Board ofDirectors shall from time to time determine or the business of the Corporation may require.ARTICLE IIMeetings of StockholdersSECTION 1.Place of Meetings. All meetings of the stockholders for the election of directors orfor any other purpose shall be held at any such place, either within or without the state of Delaware, asshall be designated from time to time by the Board of Directors and stated in the notice of meeting or in aduly executed waiver thereof.SECTION 2.Annual Meeting. The annual meeting of stockholders, commencing with the year1990, shall be held at such date and at such time as shall be designated from time to time by the Board ofDirectors and stated in the notice of meeting or in a duly executed waiver thereof. At such annual meeting,the stockholders shall elect a Board of Directors and transact such other business as may properly bebrought before the meeting.SECTION 3.Special Meetings. Special meetings of stockholders, unless otherwise prescribed bystatute, may be called at any time by the Board of Directors or the Chairman of the Board, if one shall havebeen elected, or the President and shall be called by the Secretary upon the request in writing of astockholder or stockholders holding of record at least fifty percent of the voting power of the issued andoutstanding shares of stock of the Corporation entitled to vote at such meeting.SECTION 4.Notice of Meetings. Except as otherwise expressly required by statute, written noticeof each annual and special meeting of stockholders stating the date, place and hour of the meeting and, inthe case of a special meeting, the purpose or purposes for which the meeting is called, shall be given toeach stockholder of record entitled to vote thereat not less than ten nor more1 than sixty days before the date of the meeting. Business transacted at any special meeting of stockholdersshall be limited to the purposes stated in the notice. Notice shall be given personally or by mail or facsimilemachine and, if by mail, shall be sent in a postage prepaid envelope, addressed to the stockholder at hisaddress as it appears on the records of the Corporation. Notice by mail shall be deemed given at the timewhen the same shall be deposited in the United States mail, postage prepaid. Notice of any meeting shallnot be required to be given to any person who attends such meeting, except when such person attends themeeting in person or by proxy for the express purpose of objecting, at the beginning of the meeting, to thetransaction of any business because the meeting is not lawfully called or convened, or who, either before orafter the meeting, shall submit a signed written waiver of notice, in person or by proxy. Neither thebusiness to be transacted at, nor the purpose of, an annual or special meeting of stockholders need bespecified in any written waiver of notice.SECTION 5.List of Stockholders. The officer who has charge of the stock ledger of theCorporation shall prepare and make, at least ten days before each meeting of stockholders, a complete listof the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address ofand the number of shares registered in the name of each stockholder. Such list shall be open to theexamination of any stockholder, for any purpose germane to the meeting, during ordinary business hours,for a period of at least ten days prior to the meeting, either at a place within the city, town or village wherethe meeting is to be held, which place shall be specified in the notice of meeting; or, if not specified, at theplace where the meeting is to be held. The list shall be produced and kept at the time and place of themeeting during the whole time thereof, and may be inspected by any stockholder who is present.SECTION 6.Quorum, Adjournments. The holders of a majority of the voting power of the issuedand outstanding stock of the Corporation entitled to vote thereat, present in person or represented by proxy,shall constitute a quorum for the transaction of business at all meetings of stockholders, except as otherwiseprovided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present orrepresented by proxy at any meeting of stockholders, the stockholders entitled to vote thereat, present inperson or represented by proxy, shall have the power to adjourn the meeting from time to time, withoutnotice other than announcement at the meeting, until a quorum shall be present or represented by proxy. Atsuch adjourned meeting at which a quorum shall be present or represented by proxy, any business may betransacted which might have been transacted at the meeting as originally called. If the adjournment is formore than thirty days or, if after adjournment a new record date is set, a notice of the adjourned meetingshall be given to each stockholder of record entitled to vote at the meeting.SECTION 7.Organization. At each meeting of stockholders, the Chairman of the Board, if oneshall have been elected or, in his absence or if one shall not have been elected, the President shall act aschairman of the meeting. The Secretary or, in his absence or inability to act, the person whom thechairman of the meeting shall appoint secretary of the meeting shall act as secretary of the meeting andkeep the minutes thereof.SECTION 8.Order of Business. The order of business at all meetings of the stockholders shall beas determined by the chairman of the meeting.2 SECTION 9.Voting. Except as otherwise provided by statute or the Certificate of Incorporation,each stockholder of the Corporation shall be entitled at each meeting of stockholders to one vote for eachshare of capital stock of the Corporation standing in his name on the record of stockholders of theCorporation:(a)on the date fixed pursuant to the provisions of Section 7 of Article Vof these By-Laws as the record date for the determination of the stockholders who shall be entitledto notice of and to vote at such meeting; or(b)if no such record date shall have been so fixed, then at the close ofbusiness on the day next preceding the day on which notice thereof shall be given, or, if notice iswaived, at the close of business on the date next preceding the day on which the meeting is held.Each stockholder of record entitled to vote at a meeting of stockholders may vote in person(including by means of remote communications, if any, by which stockholders may be deemed to bepresent in person and vote at such meeting) or may authorize another person or persons to vote for suchstockholder by a proxy executed or transmitted in a manner permitted by the General Corporation Law ofthe State of Delaware by the stockholder or the stockholder’s authorized agent and delivered (including bymeans of electronic or telephonic transmission) to the Secretary of the Corporation. No such proxy shall bevoted upon after three years from the date of its execution, unless the proxy expressly provides for a longerperiod. Any such proxy shall be delivered to the secretary of the meeting at or prior to the time designatedin the order of business for so delivering such proxies. When a quorum is present at any meeting, the voteof the holders of a majority of the voting power of the issued and outstanding stock of the Corporationentitled to vote thereon, present in person or represented by proxy, shall decide any question brought beforesuch meeting, unless the question is one upon which by express provision of statute or of the Certificate ofIncorporation or these By-Laws, a different vote is required, in which case such express provision shallgovern and control the decision of such question. Unless required by statute, or determined by thechairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote byballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, andshall state the number of shares voted.SECTION 10.Inspectors. The Board of Directors may, in advance of any meeting ofstockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any ofthe inspectors so appointed shall fail to appear or act, the chairman of the meeting shall, or if inspectorsshall not have been appointed, the chairman of the meeting may, appoint one or more inspectors. Eachinspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to executethe duties of inspector at such meeting with strict impartiality and according to the best of his ability. Theinspectors shall determine the number of shares of capital stock of the corporation outstanding and thevoting power of each, the number of shares represented at the meeting, the existence of a quorum, thevalidity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challengesand questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents,determine the results, and do such acts as are proper to conduct the election or vote with fairness to allstockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing ofany challenge, request or matter determined by them and shall execute a certificate of any fact found bythem. No director or3 candidate for the office of director shall act as an inspector of an election of directors. Inspectors need notbe stockholders.SECTION 11.Action by Consent. Whenever the vote of stockholders at a meeting thereof isrequired or permitted to be taken for or in connection with any corporate action, by any provision of statuteor of the Certificate of Incorporation or of these By-Laws, the meeting and vote of stockholders may bedispensed with, and the action taken without such meeting and vote, if a consent in writing, setting forth theaction so taken, shall be signed by the holders of outstanding stock having not less than the minimumnumber of votes that would be necessary to authorize or take such action at a meeting at which all shares ofstock of the Corporation entitled to vote thereon were present and voted.ARTICLE IIIBoard of DirectorsSECTION 1.General Powers. The business and affairs of the Corporation shall be managed by orunder the direction of the Board of Directors. The Board of Directors may exercise all such authority andpowers of the corporation and do all such lawful acts and things as are not by statute or the Certificate ofIncorporation directed or required to be exercised or done by the stockholders.SECTION 2.Number, Qualifications, Term of Office and Election. The number of directorsconstituting the initial Board of Directors shall be one. Thereafter, the number of directors may be fixed,from time to time, by the affirmative vote of a majority of the entire Board of Directors or by action of thestockholders of the Corporation. Any decrease in the number of directors shall be effective at the time ofthe next succeeding annual meeting of stockholders unless there shall be vacancies in the Board ofDirectors, in which case such decrease may become effective at any time prior to the next succeedingannual meeting to the extent of the number of such vacancies. Directors need not be stockholders. Exceptas otherwise provided by statute or these By-Laws, the directors (other than members of the initial Board ofDirectors) shall be elected at the annual meeting of stockholders. Each director shall hold office until hissuccessor shall have been elected and qualified, or until his death, or until he shall have resigned, or havebeen removed, as hereinafter provided in these By-Laws.Each director shall be elected by the vote of the majority of the votes cast with respect to thatdirector’s election at any meeting for the election of directors at which a quorum is present, provided that ifthe number of nominees exceeds the number of directors to be elected at such meeting (a “contestedelection”), the directors shall be elected by the vote of a plurality of the votes cast. For purposes of thisSection 2, “a majority of the votes cast” shall mean that the number of votes cast “for” a director’s electionexceeds the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election).4 If, in an election that is not a contested election, an incumbent director does not receive a majorityof the votes cast, such director shall submit an irrevocable resignation to the Nominating and CorporateGovernance Committee, or such other committee designated by the Board of Directors pursuant to theseBy-laws. Such committee shall make a recommendation to the Board of Directors as to whether to acceptor reject the resignation of such incumbent director, or whether other action should be taken. The Board ofDirectors shall act on the resignation, taking into account the committee’s recommendation, and publiclydisclose (by filing an appropriate disclosure with the Securities and Exchange Commission) its decisionregarding the resignation within ninety days following certification of the election results. The committee inmaking its recommendation and the Board of Directors in making its decision each may consider anyfactors and other information that they consider appropriate and relevant.If the Board of Directors accepts a director’s resignation pursuant to this Section 2, or if a nomineefor director is not elected and the nominee is not an incumbent director, then the Board of Directors may fillthe resulting vacancy pursuant to Section 11 of Article III of these By-laws.SECTION 3.Place of Meetings. Meetings of the Board of Directors shall be held at such place orplaces, within or without the State of Delaware, as the Board of Directors may from time to time determineor as shall be specified in the notice of any such meeting.SECTION 4.Annual Meeting. The Board of Directors shall meet for the purpose of organization,the election of officers and the transaction of other business, as soon as practicable after each annualmeeting of stockholders, on the same day and at the same place where such annual meeting shall beheld. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annualmeeting of the Board of Directors may be held at such other time or place (within or without the State ofDelaware) as shall be specified in a notice thereof given as hereinafter provided in Section 7 of this ArticleIII.SECTION 5.Regular Meetings. Regular meetings of the Board of Directors shall be held at suchtime and place as the Board of Directors may fix. If any day fixed for a regular meeting shall be a legalholiday at the place where the meeting is to be held, then the meeting which would otherwise be held onthat day shall be held at the same hour on the next succeeding business day. Notice of regular meetings ofthe Board of Directors need not be given except as otherwise required by statute or these By-Laws.SECTION 6.Special Meetings. Special meetings of the Board of Directors may be called by theChairman of the Board, if one shall have been elected, or by two or more directors of the Corporation or bythe President.SECTION 7.Notice of Meetings. Notice of each special meeting of the Board of Directors (and ofeach regular meeting for which notice shall be required) shall be given by the Secretary as hereinafterprovided in this Section 7, in which notice shall be stated the time and place of the meeting. Except asotherwise required by these By-Laws, such notice need not state the purposes of such meeting. Notice ofeach such meeting shall be mailed, postage prepaid, to each director, addressed to him at his residence orusual place of business, by first class mail, at least two days before the day on which such meeting is to beheld, or shall be sent addressed to him at such place by telegraph, cable, telex, telecopier, facsimile or othersimilar means, or be delivered to him personally or be given to him by telephone or other similar means, atleast twenty-four hours before5 the time at which such meeting is to be held. Notice of any such meeting need not be given to any directorwho shall, either before or after the meeting, submit a signed waiver of notice or who shall attend suchmeeting, except when he shall attend for the express purpose of objecting, at the beginning of the meeting,to the transaction of any business because the meeting is not lawfully called or convened.SECTION 8.Quorum and Manner of Acting. A majority of the entire Board of Directors shallconstitute a quorum for the transaction of business at any meeting of the Board of Directors, and, except asotherwise expressly required by statute or the Certificate of Incorporation or these By-Laws, the act of amajority of the directors present at any meeting at which a quorum is present shall be the act of the Boardof Directors. In the absence of a quorum at any meeting of the Board of Directors, a majority of thedirectors present thereat may adjourn such meeting to another time and place. Notice of the time and placeof any such adjourned meeting shall be given to all of the directors unless such time and place wereannounced at the meeting at which the adjournment was taken, in which case such notice shall only begiven to the directors who were not present thereat. At any adjourned meeting at which a quorum ispresent, any business may be transacted which might have been transacted at the meeting as originallycalled. The directors shall act only as a Board of Directors and the individual directors shall have no poweras such.SECTION 9.Organization. At each meeting of the Board of Directors, the Chairman of theBoard, if one shall have been elected, or, in the absence of the Chairman of the Board or if one shall nothave been elected, the President (or, in his absence, another director chosen by a majority of the directorspresent) shall act as chairman of the meeting and preside thereat. The Secretary or, in his absence, anyperson appointed by the chairman shall act as secretary of the meeting and keep the minutes thereof.SECTION 10.Resignations. Any director of the Corporation may resign by delivering aresignation in writing or by electronic transmission to the Corporation at its principal office or to theChairman of the Board, the President or the Secretary. Such resignation shall be effective upon receiptunless it is specified to be effective at some later time or upon the happening of some later event, including,in the case of a resignation delivered pursuant to Section 2 of this Article III, upon the acceptance of suchresignation by the Board of Directors.SECTION 11.Vacancies. Any vacancy in the Board of Directors, whether arising from death,resignation, removal (with or without cause), an increase in the number of directors or any other cause, maybe filled by the vote of a majority of the directors then in office, though less than a quorum, or by the soleremaining director or by the stockholders at the next annual meeting thereof or at a special meetingthereof. Each director so elected shall hold office until his successor shall have been duly elected andqualified.SECTION 12.Removal of Directors. Any director may be removed, either with or without cause,at any time, by the holders of a majority of the voting power of the issued and outstanding capital stock ofthe Corporation entitled to vote at an election of directors.SECTION 13.Compensation. The Board of Directors shall have authority to fix the compensationfor their services as directors and members of committees of the Board of Directors, together withreimbursement of expenses for attendance at meetings of the Board of Directors and for attendance atmeetings of committees of the Board of Directors when such committee meetings6 are held at a time other than in conjunction with the meetings of the Board of Directors. Any director mayalso serve the Corporation in any other capacity and may receive compensation therefor.SECTION 14.Committees. The Board of Directors may, by resolution passed by a majority of theentire Board of Directors, designate one or more committees, including an executive committee, eachcommittee to consist of one or more of the directors of the Corporation. The Board of Directors maydesignate one or more directors as alternate members of any committee, who may replace any absent ordisqualified member at any meeting of the committee. In addition, in the absence or disqualification of amember of a committee, the member or members thereof present at any meeting and not disqualified fromvoting, whether or not he or they constitute a quorum, may unanimously appoint another member of theBoard of Directors to act at the meeting in the place of any such absent or disqualified member.Except to the extent restricted by statute or the Certificate of incorporation, each such committee, tothe extent provided in the resolution creating it, shall have and may exercise all the powers and authority ofthe Board of Directors and may authorize the seal of the Corporation to be affixed to all papers whichrequire it. Each such committee shall serve at the pleasure of the Board of Directors and have such nameas may be determined from time to time by resolution adopted by the Board of Directors. Each committeeshall keep regular minutes of its meetings and report the same to the Board of Directors.SECTION 15.Action by Consent. Unless restricted by the Certificate of Incorporation, any actionrequired or permitted to be taken by the Board of Directors or any committee thereof may be taken withouta meeting if all members of the Board of Directors or such committee, as the case may be, consent theretoin writing or by electronic transmission, and the written consents or electronic transmissions are filed withthe minutes of the proceedings of the Board of Directors or such committee, as the case may be. Suchfiling shall be in paper form if the minutes are maintained in paper form and shall be in electronic form ifthe minutes are maintained in electronic form.SECTION 16.Telephonic Meeting. Unless restricted by the Certificate of Incorporation, any oneor more members of the Board of Directors or any committee thereof may participate in a meeting of theBoard of Directors or such committee by means of a conference telephone or similar communicationsequipment by means of which all persons present at the meeting are able to hear and participate in suchmeeting. Participation by such means shall constitute presence in person at a meeting.ARTICLE IVOfficersSECTION 1.Number and Qualifications. The officers of the Corporation shall be elected by theBoard of Directors and shall include the Chairman of the Board, the President, one or more Vice-Presidents, the Chief Financial Officer, the Treasurer and the Secretary. If the Board of Directors wishes, itmay also elect other officers (including one or more Assistant Treasurers and one or more AssistantSecretaries) as may be necessary or desirable for the business of the Corporation. Any two or more officesmay be held by the same person, and no officer except the Chairman of the Board need be a director. Eachofficer shall hold office until his successor shall7 have been duly elected and shall have qualified, or until his death, or until he shall have resigned or havebeen removed, as hereinafter provided in these By-Laws.SECTION 2.Resignations. Any officer of the Corporation may resign by delivering a resignationin writing or by electronic transmission to the Corporation at its principal office or to the President or theSecretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some latertime or upon the happening of some later event.SECTION 3.Removal. Any officer of the Corporation may be removed, either with or withoutcause, at any time, by the Board of Directors at any meeting thereof.SECTION 4.Chairman of the Board. The Chairman of the Board, if one shall have been elected,shall be a member of the Board of Directors, an officer of the Corporation and, if present, shall preside ateach meeting of the Board of Directors or the stockholders. He shall advise and counsel with the Presidentand, in the President’s absence, with other executives of the Corporation, and shall perform such otherduties as may from time to time be assigned to him by the Board of Directors.SECTION 5.[This section is intentionally omitted.]SECTION 6.The President. The President shall, in the absence of the Chairman of the Board or ifthe Chairman of the Board shall not have been elected, preside at each meeting of the Board of Directors orthe stockholders. The President shall be the chief executive officer of the Corporation and shall perform allduties incident to the office of President and chief executive officer and such other duties as may from timeto time be assigned to him by the Board of Directors.SECTION 7.Vice-President. Each Vice-President shall perform all such duties as from time totime may be assigned to him by the Board of Directors or the President. At the request of the President orin the President’s absence or in the event of the President’s inability or refusal to act, the Vice-President, orif there shall be more than one, the Vice-Presidents in the order determined by the Board of Directors (or ifthere be no such determination, then the Vice-Presidents in the order of their election), shall perform theduties of the President, and, when so acting, shall have the powers of and be subject to the restrictionsplaced upon the President in respect of the performance of such duties.SECTION 8.Chief Financial Officer. The Chief Financial Officer shall perform all such duties asmay from time to time be assigned to him by the Board of Directors.SECTION 9.Treasurer. The Treasurer shall:(a)have charge and custody of, and be responsible for, all the funds andsecurities of the Corporation;(b)keep full and accurate accounts of receipts and disbursements inbooks belonging to the Corporation;8 (c)deposit all moneys and other valuables to the credit of theCorporation in such depositaries as may be designated by the Board of Directors or pursuant to itsdirection;(d)receive, and give receipts for, moneys due and payable to theCorporation from any source whatsoever;(e)disburse the funds of the Corporation and supervise the investmentof its funds, taking proper vouchers therefor;(f)render to the Board of Directors, whenever the Board of Directorsmay require, an account of the financial condition of the Corporation; and(g)in general, perform all duties incident to the office of Treasurer andsuch other duties as from time to time may be assigned to him by the Board of Directors.SECTION 10.Secretary. The Secretary shall:(a)keep or cause to be kept in one or more books provided for thepurpose, the minutes of all meetings of the Board of Directors, the committees of the Board ofDirectors and the stockholders;(b)see that all notices are duly given in accordance with the provisionsof these By-Laws and as required by law;(c)be custodian of the records and the seal of the corporation and affixand attest the seal to all certificates for shares of the Corporation (unless the seal of the Corporationon such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to allother documents to be executed on behalf of the Corporation under its seal;(d)see that the books, reports, statements, certificates and otherdocuments and records required by law to be kept and filed are properly kept and filed; and(e)in general, perform all duties incident to the office of Secretary andsuch other duties as from time to time may be assigned to him by the Board of Directors.SECTION 11.The Assistant Treasurer. The Assistant Treasurer, or if there shall be more thanone, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no suchdetermination, then in the order of their election), shall, in the absence of the Treasurer or in the event of hisinability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall performsuch other duties as from time to time may be assigned by the Board of Directors.SECTION 12.The Assistant Secretary. The Assistant Secretary, or if there shall be more than one,the Assistant Secretaries in the order determined by the Board of Directors (or if there be no suchdetermination, then in the order of their election), shall, in the absence of the secretary or in9 the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary andshall perform such other duties as from time to time may be assigned by the Board of Directors.SECTION 13.Officers’ Bonds or Other Security. If required by the Board of Directors, anyofficer of the Corporation shall give a bond or other security for the faithful performance of his duties, insuch amount and with such surety as the Board of Directors may require.SECTION 14.Compensation. The compensation of the officers of the Corporation for theirservices as such officers shall be fixed from time to time by the Board of Directors. An officer of theCorporation shall not be prevented from receiving compensation by reason of the fact that he is also adirector of the Corporation.ARTICLE VStock Certificates and Their TransferSECTION 1.Stock Certificates. Every holder of stock in the Corporation shall be entitled to havea certificate, signed by, or in the name of the Corporation by, the Chairman of the Board or the President ora Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretaryof the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporationshall be authorized to issue more than one class of stock or more than one series of any class, thedesignations, preferences and relative, participating, optional or other special rights of each class of stock orseries thereof and the qualifications, limitations or restriction of such preferences and/or rights shall be setforth in full or summarized on the face or back of the certificate which the Corporation shall issue torepresent such class or series of stock, provided that, except as otherwise provided in Section 202 of theGeneral Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be setforth on the face or back of the certificate which the Corporation shall issue to represent such class or seriesof stock, a statement that the Corporation will furnish without charge to each stockholder who so requeststhe designations, preferences and relative, participating, optional or other special rights of each class ofstock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.SECTION 2.Facsimile Signatures. Any or all of the signatures on a certificate may be a facsimile.In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placedupon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate isissued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent orregistrar at the date of issue.SECTION 3.Lost Certificates. The Board of Directors may direct a new certificate or certificatesto be issued in place of any certificate or certificates theretofore issued by the corporation alleged to havebeen lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the Boardof Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner ofsuch lost, stolen, or destroyed certificate or certificates, or his legal representative, to: (a) make proof inaffidavit form that it has been lost, destroyed or wrongfully taken; (b) give to the Corporation a bond insuch sum as it may direct sufficient to indemnify it against any claim that may be made against theCorporation on account of the alleged loss, theft or10 destruction of any such certificate or the issuance of such new certificate; or (c) impose any otherreasonable requirements.SECTION 4.Transfers of Stock. Upon surrender to the Corporation or the transfer agent of theCorporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession,assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to theperson entitled thereto, cancel the old certificate and record the transaction upon its records; provided, however, that the corporation shall be entitled to recognize and enforce any lawful restriction ontransfer. Whenever any transfer of stock shall be made for collateral security, and not absolutely, it shall beso expressed in the entry of transfer if, when the certificates are presented to the Corporation for transfer,both the transferor and the transferee request the Corporation to do so.SECTION 5.Transfer Agents and Registrars. The Board of Directors may appoint, or authorizeany officer or officers to appoint, one or more transfer agents and one or more registrars.SECTION 6.Regulations. The Board of Directors may make such additional rules andregulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transferand registration of certificates for shares of stock of the Corporation.SECTION 7.Fixing the Record Date. In order that the Corporation may determine thestockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or toexpress consent to corporate action in writing without a meeting, or entitled to receive payment of anydividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of anychange, conversion or exchange of stock or for the purpose of any other lawful action, the Board ofDirectors may fix, in advance, a record date, which shall not be more than sixty nor less than ten daysbefore the date of such meeting, nor more than sixty days prior to any other action. A determination ofstockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to anyadjournment of the meeting; provided, however, that the Board of Directors may fix a new record date forthe adjourned meeting.SECTION 8.Registered Stockholders. The Corporation shall be entitled to recognize theexclusive right of a person registered on its records as the owner of shares of stock to receive dividends andto vote as such owner, shall be entitled to hold liable, in accordance with Sections 162-63 of the GeneralCorporation Law of the State of Delaware, for calls and assessments a person registered on its records asthe owner of shares of stock, and shall not be bound to recognize any equitable or other claim to or interestin such share or shares of stock on the part of any other person, whether or not it shall have express or othernotice thereof, except as otherwise provided by the laws of Delaware.ARTICLE VIIndemnification of Directors and OfficersSECTION 1.General. The corporation shall indemnify, to the fullest extent permitted by theGeneral Corporation Law of the State of Delaware, any person who was or is a party or is threatened to bemade a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal,administrative or investigative (other than an action by or in the right of the Corporation) by reason of thefact that he is or was a director, officer, employee or agent of the11 corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agentof another corporation, partnership, joint venture, trust or other enterprise, against expenses (includingattorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by himin connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonablybelieved to be in or not opposed to the best interests of the Corporation, and, with respect to any criminalaction or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of anyaction, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of a nolo contendere orits equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in amanner which he reasonably believed to be in or not opposed to the best interests of the corporation and,with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct wasunlawful.SECTION 2.Derivative Actions. The Corporation shall indemnify, to the fullest extent permittedby the General Corporation Law of the State of Delaware, any person who was or is a party or isthreatened to be made a party to any threatened, pending or completed action or suit by or in the right of theCorporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer,employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director,officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise againstexpenses (including attorneys’ fees). actually and reasonably incurred by him in connection with thedefense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believedto be in or not opposed to the best interests of the Corporation, provided that no indemnification shall bemade in respect of any claim, issue or matter as to which such person shall have been adjudged to be liableto the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or thecourt in which such action or suit was brought shall determine upon application that, despite theadjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonablyentitled to indemnity for such expenses which the Court of Chancery or such other court shall deemproper.SECTION 3.Indemnification in Certain cases. To the extent that a director, officer, employee oragent of the Corporation has been successful on the merits or otherwise in defense of any action, suit orproceeding referred to in Sections 1 and 2 of this Article VI, or in defense of any claim, issue or mattertherein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonablyincurred by him in connection therewith.SECTION 4.Procedure. Any indemnification under Sections 1 and 2 of this Article VI (unlessordered by a court) shall be made by the Corporation only as authorized in the specific case upon adetermination that indemnification of the director, officer, employee or agent is proper in the circumstancesbecause he has met the applicable standard of conduct set forth in such Sections 1 and 2. Suchdetermination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting ofdirectors who were not parties to such action, suit or proceeding; or (b) if such a quorum is not obtainableor, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in awritten opinion; or (c) by the stockholders.SECTION 5.Advances for Expenses. Expenses incurred in defending a civil or criminal action,suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit orproceeding upon receipt of an undertaking by or on behalf of the director, officer,12 employee or agent to repay such amount if it shall be ultimately determined that he is not entitled to beindemnified by the corporation as authorized in this Article VI.SECTION 6.Rights Not-Exclusive. The indemnification and advancement of expenses providedby, or granted pursuant to, the other sections of this Article VI shall not be deemed exclusive of any otherrights to which those seeking indemnification or advancement of expenses may be entitled under any law,by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in anofficial capacity and as to action in another capacity while holding such office.SECTION 7.Insurance. The Corporation shall have power to purchase and maintain insurance onbehalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or wasserving at the request of the Corporation as a director, officer, employee or agent of another corporation,partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred byhim in any such capacity, or arising out of his status as such, whether or not the Corporation would havethe power to indemnify him against such liability under the provisions of this Article VI.SECTION 8.Definition of Corporation. For the purposes of this Article VI, references to “theCorporation” include all constituent corporations absorbed in a consolidation or merger as well as theresulting or surviving corporation so that any person who is or was a director, officer, employee or agent ofsuch a constituent corporation or is or was serving at the request of such constituent corporation as adirector, officer, employee or agent of another corporation, partnership, joint venture, trust or otherenterprise shall stand in the same position under the provisions of this Article VI with respect to theresulting or surviving corporation as he would if he had served the resulting or surviving corporation in thesame capacity.SECTION 9.Survival of Rights. The indemnification and advancement of expenses provided by,or granted pursuant to this Article VI shall continue as to a person who has ceased to be a director, officer,employee or agent and shall inure to the benefit of the heirs, executors and administrators of such aperson.SECTION 10.Settlement or Claims. The Corporation shall not be liable to indemnify any director,officer, employee or agent under this Article VI (a) for any amounts paid in settlement of any action orclaim effected without the Corporation’s written consent, which consent shall not be unreasonably withheldor (b) for any judicial award if the Corporation was not given a reasonable and timely opportunity, at itsexpense, to participate in the defense of such action.SECTION 11.Effect of Amendment. Any amendment, repeal, or modification of this Article VIshall not adversely affect any right or protection of any director, officer, employee or agent existing at thetime of such amendment, repeal, or modification.SECTION 12.Subrogation. In the event of payment under this Article VI, the corporation shall besubrogated to the extent of such payment to all of the rights of recovery of the director, officer, employee oragent, as the case may be, who shall execute all papers required and shall do everything that may benecessary to secure such rights, including the execution of such documents necessary to enable theCorporation effectively to bring suit to enforce such rights.13 SECTION 13.No Duplication of Payments. The Corporation shall not be liable under this ArticleVI to make any payment in connection with any claim made against any director, officer, employee oragent to the extent such director, officer, employee or agent has otherwise actually received payment (underany insurance policy, agreement, vote, or otherwise) of the amounts otherwise indemnifiable hereunder.ARTICLE VIIGeneral ProvisionsSECTION 1.Dividends. Subject to the provisions of statute and the Certificate of Incorporation,dividends upon the shares of capital stock of the Corporation may be declared by the Board of Directors atany regular or special meeting. Dividends may be paid in cash, in property or in shares of stock of theCorporation, unless otherwise provided by statute or the Certificate of Incorporation.SECTION 2.Reserves. Before payment of any dividend, there may be set aside out of any fundsof the Corporation available for dividends such sum or sums as the Board of Directors may, from time totime, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizingdividends, or for repairing or maintaining any property of the Corporation or for such other purpose as theBoard of Directors may think conducive to the interests of the Corporation. The Board of Directors maymodify or abolish any such reserves in the manner in which it was created.SECTION 3.Seal. The seal of the Corporation shall be in such form as shall be approved by theBoard of Directors. The Corporate Seal shall be affixed and attached by the Secretary or an AssistantSecretary upon such instruments or documents as may be deemed appropriate, but the presence or absenceof such seal on any instrument shall not affect its character or validity or legal effect in any respect.SECTION 4.Fiscal Year. The fiscal year of the Corporation shall be fixed, and once fixed, maythereafter be changed, by resolution of the Board of Directors.SECTION 5.Checks, Notes, Drafts, Etc. All checks, notes, drafts or other orders for the paymentof money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by suchofficer, officers, person or persons as from time to time may be designated by the Board of Directors or byan officer or officers authorized by the Board of Directors to make such designation.SECTION 6.Execution of Contracts, Deeds, Etc. The Board of Directors may authorize anyofficer or officers, agent or agents, in the name and on behalf of the Corporation to enter into or executeand deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and suchauthority may be general or confined to specific instances.SECTION 7.Voting of Stock in Other Corporations. Unless otherwise provided by resolution ofthe Board of Directors, the Chairman of the Board or the President, from time to time, may (or may appointone or more attorneys or agents to) cast the votes which the Corporation may be entitled to cast as ashareholder or otherwise in any other corporation, any of whose shares or14 securities may be held by the Corporation, at meetings of the holders of the shares or other securities ofsuch other corporation. In the event one or more attorneys or agents are appointed, the Chairman of theBoard or the President may instruct the person or persons so appointed as to the manner of casting suchvotes or giving such consent. The Chairman of the Board or the President may, or may instruct theattorneys or agents appointed to, execute or cause to be executed in the name and on behalf of theCorporation and under its seal or otherwise, such written proxies, consents, waivers or other instruments asmay be necessary or proper in the circumstances.SECTION 8.Exclusive Forum. Unless the Corporation consents in writing to the selection of analternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought onbehalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by anydirector or officer or other employee of the Corporation to the Corporation or the Corporation’sstockholders, (iii) any action asserting a claim against the Corporation or any director or officer or otheremployee of the Corporation arising pursuant to any provision of the Delaware General Corporation Lawor the Corporation’s Certificate of Incorporation or Bylaws (as either may be amended from time to time),or (iv) any action asserting a claim against the Corporation or any director or officer or other employee ofthe Corporation governed by the internal affairs doctrine shall be a state court located within the State ofDelaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district courtfor the District of Delaware).ARTICLE VIIIAmendmentsThese By-Laws may be amended or repealed or new by-laws adopted (a) by action of thestockholders entitled to vote thereon at any annual or special meeting of stockholders or (b) if theCertificate of Incorporation so provides, by action of the Board of Directors at a regular or special meetingthereof. Any by-law made by the Board of Directors may be amended or repealed by action of thestockholders at any annual or special meeting of stockholders.15Exhibit 10.19 20701 Cooperative WayDulles, Virginia 20166703-467-1800 | www.rtfc.coop February 25, 2019Via Email & U.S. MailMs. Michele SatrowskyVice President – Corporate TreasurerATN International, Inc.500 Cummings Center, Suite 2450Beverly, MA 01915Re: Limited Waiver of Net Leverage Ratio Covenant Dear Ms. Satrowsky Rural Telephone Finance Cooperative ("RTFC") has received from ATN VI Holdings, LLC (the "Borrower") a requestto waive compliance with the Borrower's Net Leverage financial ratio requirements that is contained in one or moreloan agreements between RTFC and the Borrower. RTFC hereby waives the Borrower's compliance with the above-referenced financial ratio, subject to the followingconditions: (a)This is a limited waiver with respect to the financial ratio specified herein as calculated for the Borrower'sfiscal year ended December 31, 2018. (b)This limited waiver shall not be construed as a waiver of any other term, condition or provision of any loanagreement or other credit agreement with RTFC. (c)This limited waiver shall not be construed as a waiver of any term, condition or provision of any loanagreement or other credit agreement with RTFC with respect to meeting future financial ratio requirements. (d)Except as specifically waived by RTFC herein, each and every term, condition and provision contained inany loan agreement or other credit agreement with RTFC shall remain unchanged and in full force and effect. If the foregoing accurately describes our mutual understanding of the effect of this limited waiver and the conditionsunder which it is granted, please so indicate by signing this correspondence where indicated and returning the originalto RTFC. If you have any questions, please feel free to call me at 703-467-1624. Ms. Michele SatrowskyATN International, Inc.February 25, 2019Page2Sincerely,/s/ Don Samonte Don Samonte Vice President, Portfolio Management Acknowledged and Agreed: ATN VI Holdings, LLC By:/s/ Michele Satrowsky Name:Michele Satrowsky Title:Assistant Treasurer Exhibit 21SUBSIDIARIES OF ATN INTERNATIONAL, INC. Jurisdiction of Incorporation Other name(s) underwhich entity doesbusinessAhana Renewables, LLC(1) Delaware VibrantATN Horizons, LLC.(3) Delaware Ahana Renewables,VibrantAtlantic Teleconnection Operating CompanyLimited British Virgin Islands GTTAtlantic Teleconnection Holdings CompanyLimited British Virgin Islands GTTGTT International Service SRL Barbados GTTGuyana Telephone and Telegraph CompanyLimited Guyana Cellink, E‑magine, GT&TBermuda Digital Communications, Ltd. Bermuda CellOneOne Communications, LLC(5) Bermuda One CommunicationsATN Overseas Holdings, Ltd Bermuda One CommunicationsATN VI Holdings, LLC(4) Delaware ViyaVirgin Islands Telephone Corp. U.S. Virgin Islands ViyaCommnet Wireless, LLC(2) Delaware Choice Wireless, CommnetCommnet Four Corners, LLC Delaware CommnetCommnet of Nevada, LLC Delaware CommnetTisdale Nebraska, LLC Delaware Commnet (1)Includes fifteen wholly-owned subsidiaries under the “Vibrant Energy” brand name in Cayman, Singapore, andIndia.(2)Includes twenty-one consolidated wholly‑owned subsidiaries also providing wholesale wireless voice and dataservices under the “Commnet” brand name in the United States.(3)Includes one consolidated wholly owned subsidiary also providing renewable energy services under the“Vibrant Energy” brand name in Cayman, Singapore, and India.(4)Includes ten consolidated wholly owned subsidiary also providing wireline and wireless services under the“Innovative” brand name in the U.S. Virgin Islands.(5)Includes ten consolidated wholly owned subsidiary also providing wireline and wireless services under the“One Communications” brand name in the Bermuda and Cayman EXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-217941) and Form S-8 (Nos. 333-62416, 333-125179, 333-150940, and 333-174935) of ATN International, Inc. of ourreport dated February 28, 2019 relating to the financial statements, financial statement schedule and the effectiveness ofinternal control over financial reporting, which appears in this Form 10-K./s/ PricewaterhouseCoopers LLP Boston, MassachusettsFebruary 28, 2019 EXHIBIT 31.1CERTIFICATIONS PURSUANT TORULE 13a‑14(a) OR RULE 15d‑14(a),AS ADOPTED PURSUANT TORULE 302 OF THE SARBANES‑OXLEY ACT OF 2002I, Michael T. Prior, certify that:1.I have reviewed this annual report on Form 10‑K of ATN International, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a‑15(f) and 15d‑15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.Dated: February 28, 2019 By:/s/ Michael T. Prior Michael T. Prior President and Chief Executive Officer EXHIBIT 31.2CERTIFICATIONS PURSUANT TORULE 13a‑14(a) OR RULE 15d‑14(a),AS ADOPTED PURSUANT TORULE 302 OF THE SARBANES‑OXLEY ACT OF 2002I, Justin D. Benincasa, certify that:1.I have reviewed this annual report on Form 10‑K of ATN International, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a‑15(f) and 15d‑15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.ebDated: February 28, 2019 By:/s/ Justin D. Benincasa Justin D. Benincasa Chief Financial Officer EXHIBIT 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002In connection with the annual report on Form 10‑K of ATN International, Inc. (the “Company”) for the periodended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,Michael T. Prior, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, asadopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, that:1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and2.the information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.eDated: February 28, 2019 /s/ Michael T. Prior Michael T. Prior President and Chief Executive Officer EXHIBIT 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002In connection with the annual report on Form 10‑K of ATN International, Inc. (the “Company”) for the periodended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,Justin D. Benincasa, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuantto § 906 of the Sarbanes‑Oxley Act of 2002, that:1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and2.the information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.ebDated: February 28, 2019 /s/ Justin D. Benincasa Justin D. Benincasa Chief Financial Officer 

Continue reading text version or see original annual report in PDF format above