ATN International: A Hidden Gem in the Telecom Sector

ATN International (ATNI), a telecommunications company with a footprint spanning North America and select international markets, is currently trading at a valuation that understates its structural improvements. Despite a challenging year marked by the expiration of U.S. government subsidies and soft revenue growth, ATN has quietly built a fortress balance sheet, slashed capital spending, and expanded its high-speed broadband network—factors that position it for sustained cash flow resilience. Investors who focus on short-term revenue headwinds risk overlooking a turnaround in progress.

The Cash Flow Turnaround
The most compelling metric for ATN's repositioning is its 16% year-over-year surge in net cash from operating activities to $129.2 million in 2024, up from $111.6 million in 2023. This growth, driven by cost discipline and improved working capital management, has outpaced declining revenues, which fell 4% to $729.1 million in 2024 due to the loss of the Emergency Connectivity Fund (ECF) and Affordable Connectivity Program (ACP). While revenue headwinds persist, the company's focus on trimming expenses—such as reducing SG&A costs and transitioning its U.S. business toward higher-margin enterprise and carrier solutions—has insulated profitability. Adjusted EBITDA, a key measure of operational health, held steady at $184.1 million in 2024, barely down 3% from 2023.

Capital Spending Discipline: A Strategic Pivot
ATN's decision to slash capital expenditures (capex) to a projected $90–$100 million in 2025 (net of reimbursements) from $110.4 million in 2024 marks a critical inflection point. Historically, the company relied on heavy capex to expand its fiber networks, but this strategy has now shifted toward monetizing existing infrastructure. The reduction in capex—coupled with government grants covering ~90% of remaining investments—will free up cash to pay down debt and strengthen liquidity.

The company's Net Debt Ratio, a key indicator of financial health, fell to 2.52x at the end of Q1 2025 from 2.54x at the end of 2024. Management aims to stabilize this ratio or achieve marginal improvement by year-end, signaling confidence in its ability to deleverage without sacrificing growth.

Network Expansion: A Foundation for Future Growth
While ATN's U.S. revenue stumbled in 2024, its broadband expansion remains a bright spot. The company added 16% more high-speed broadband homes passed year-over-year, reaching 426,100 by Q4 2024. This expansion, driven by strategic investments in rural and underserved markets, is a long-term asset. Though total broadband subscribers dipped 6% in 2024—likely due to a shift away from subsidized residential plans—the focus on enterprise and carrier services (which command higher margins) could offset this decline.

Why the Stock Is Undervalued
Despite these positives, ATN's stock has lagged. As of June 2025, it trades at just 6.5x EV/EBITDA, well below the sector average of ~8x. This disconnect reflects market skepticism about the sustainability of its revenue model post-subsidy withdrawal. However, two factors suggest this skepticism is misplaced:

1. Margin Expansion Potential: As ATN shifts its U.S. business toward enterprise and carrier solutions, which typically carry 20–30% higher margins than legacy residential services, EBITDA could rebound sharply. The company's Q1 2025 results showed a 2% EBITDA margin improvement, hinting at this transition's early success.

2. Balance Sheet Strength: With $97.3 million in cash and a disciplined capex plan, ATN is well-positioned to weather near-term revenue softness. Its reduced leverage and stable net debt ratio reduce refinancing risks, while its dividend (yielding ~2.5%) offers downside protection.

Investment Thesis
ATN's stock is a contrarian play on value. The market has yet to price in the benefits of its reduced capex, improving cash flow, and margin upside. Risks include execution delays in its strategic shift and further subsidy losses, but the company's focus on profitability over growth makes it resilient to these headwinds.

Bottom Line
ATN International's balance sheet and strategic moves signal a company transitioning from infrastructure builder to cash-generating machine. Investors who buy now at depressed valuations may profit as the market recognizes the durability of its cash flows and the potential for margin recovery. Consider accumulating a position with a 12-month price target of $15–$18, assuming EBITDA multiples normalize to 7.5x.

Risk Factors: Prolonged weakness in U.S. telecom demand, regulatory hurdles for network expansion, or a sharp rise in interest rates could pressure margins and debt costs.

This article presents ATN International as a compelling value opportunity, emphasizing its underappreciated cash flow strength and disciplined execution. The stock's current undervaluation relative to its improving fundamentals suggests a favorable risk-reward profile for long-term investors.