Justin Benincasa - Chief Financial Officer Michael Prior - President and Chief Executive Officer

Richard Prentiss - Raymond James Christopher King - Stifel Nicolaus & Company, Inc. Hamed Khorsand - BWS Financial Adam France - Keane Capital Management Inc.

Thank you for joining us on our quarterly investor call as we review our second-quarter results. With me here is Michael Prior, ATN's President and Chief Executive Officer.

During the call I will be covering the relative financial information for the quarter, and Michael will be providing operational updates. Let me first start with the cautionary language housekeeping.

This call may contain forward-looking statements concerning our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions and other statements that are not of historical fact. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including the factors referenced in the earnings press release issued yesterday and those described in Item 1A: Risk Factors in our Form 10-K for the year ended September 31, 2007 and in our other SEC filings.

We undertake no obligation to update the information contained in this call to reflect subsequently occurring events or circumstances. With that out of the way, I would like to talk a little bit about the financial performance for the quarter.

The second quarter was another good quarter for us with strong year-over-year growth in both operating income and net income. We are very pleased with the revenue growth shown by Commnet this quarter as the completion of the, or the completion of a record number of new base station deployments in the first six months of the year are now coming online, helping us to offset the revenue loss with the 59 sites we sold at the end of last year.

As we discussed in our earnings release, the results for the quarter also reflect the consolidation of our wireless operations in Bermuda as of May 15, and just as a reminder, prior to May 15, we own 43% of Bermuda and accounted for it using the equity method. Following May 15 we increased our ownership to approximately 58% and began consolidating this operation.

For the quarter we generated revenue of $50.4 million, up $5.2 million or 12% from the same quarter in 2007. Wireless revenue was $24.8 million, up $4.9 million or approximately 25% compared to 2007.

Local telephone and data revenue totaled $12.3 million, which was an increase of $0.9 million or 8%, and ILD or International Long Distance revenue was $12.4 million compared to $12.8 million in 2007, which was a decrease of 3%. Operating income for the quarter totaled $18.1 million, up $2.1 million or 13% from the same quarter in 2007.

Non-cash charges for the quarter were $7.4 million of depreciation and amortization expense and $276,000 of non-cash stock-based compensation which is included in our general and administrative expense. Net income from the quarter was up approximately 13% from $9 million in the second quarter of 2007 to $10.2 million this quarter, giving us earnings per share of $0.67 compared to $0.59 in 2007.

As noted in our release, if you excluded the onetime fixed gain associated or the gains associated with the onetime items in the second quarter of 2007, operating income and net income would have risen 21 and 28% respectively. For the quarter capital expenditures totaled approximately $9.9 million, consistent with past quarters.

About two-thirds of that was spent by Commnet. Included in the total capital expenditures year-to-date for Commnet was the completion of the 70-site network build commitments that were simultaneously entered into with the sales of 59 sites I mentioned earlier.

In the second quarter, Commnet added 39 new GSM CDMA base stations and decommissioned the remaining 26 older TDMA analog base stations, ending the quarter with a total of 367 base stations at 273 sites. Year-to-date Commnet has completed 101 new base stations, and the most of the remaining capital expenditures, which I just mentioned, about a third were spent in Guyana.

We anticipate capital expenditures in 2008 to be at the high end of our range, which was $45 million as the total will now include Bermuda. We are continuing to move forward with plans to land the submarine cable in Guyana, which could increase 2008 capital expenditures by up to $10 million.

Turning to the balance sheet as of June 30, we had cash and investments of $60.5 million, which include $5.4 million of longer-term certificates of deposits that are accounted for in other current assets. Our $50 million term loan continues to be the only debt outstanding, leaving us with a net cash position of over $10 million.

I should note the reduction in cash this quarter from last quarter was due to the tender offer completed in Bermuda and our additional ownership as I discussed earlier. Lastly, I just wanted to provide some of the supplemental segment information in advance of our 10-K filing.

Segment revenue and operating results for the quarter were as follows. Rural wireless segment had revenues of $16.9 million and operating income of $8.4 million, which included $2.2 million of depreciation and amortization.

International integrated telephony generated revenues of $24.7 million, had operating income of $10.8 million which included 4.2 million of depreciation and amortization. The domestic telephony segment had revenue of $3.7 million, operating income of $553,000 and depreciation and amortization expense of $422,000.

Wireless television and data revenue were $2.2 million and had operating loss of $385,000 and depreciation and amortization expense of $275,000. We are still working through the segment reporting in our 10-Q associated with the consolidation of Bermuda, but as we mentioned in the press release, Bermuda operations for the month and a half added about $3 million in revenue and $1 million of operating income, which included $275,000 of depreciation and amortization.

I would now like to turn the call over to Michael to give you some of the operational updates.

As Justin noted, we had another I would add the adjective very good quarter. The operating and net income growth was particularly strong given the onetime gains from 2007, and we are very pleased with the overall results.

We are also happy to complete the transaction in Bermuda. We have talked about this before, but it bears mentioning as we have concluded in May.

And we are also happy to provide our equity partners with some measure of liquidity. Now let me move onto the operational specifics in detail.

First, wireless. Rural wireless we generated about $103 million MOUs in the US for the quarter, and that compared to about 82 million in the second quarter of last year, a 26% increase despite the sale of 59 base stations in late December.

The growth in minute volumes noted from the numbers Justin gave is really the result of the rapid buildup in the past three quarters, and it is also affected by same site minutes growth. We continue to add technologies.

We are also particularly successful growing traffic with multiple carriers. On a consecutive quarter basis, minute volume rose about 18%, which reflects the rapid buildout in the first quarter, and also as you know from prior years, there is some seasonality, second and third quarters typically being our strongest.

Data revenue also grew reflecting the trends in the industry and our recent investments in data capacity and coverage at more sites. And then now for the first time in this part of the discussion, we will talk about Bermuda.

As Justin noted, it is now reflected in our wireless revenue line or at least half the quarter for this quarter. Bermuda at the subscriber's end of the quarter in just over 20,000.

That is about a 3% decline from a year earlier, but it is about 3% increase on a consecutive quarter basis. I am happy to see that trend, and we hope to continue to move things in that direction the rest of the year.

The government of Bermuda also appears to be moving forward with the universal domestic license regime. We talked about this before, and we believe that that would be a positive for the market and for BDC and its customers.

But it is still likely a 2009 event at best. Next is the wireless business in Guyana.

Not quite as happy a quarter. In fact, unhappy quarter there.

Our GSM subscriber base had its first year-on-year decline. We ended the quarter at about 277,000 subscribers compared to about 305,000 in 2007 second quarter.

That is a 16% decline, and it is also an 8% decline from the first quarter of 2008. Now, as you can see from the numbers that Justin read out, the loss of subscribers did not have a major effect on profitability, even in Guyana because of reduced handset subsidies and other lower marketing costs.

And I think we also managed to cut costs in some other areas as well. But that really is cold comfort to us.

We are not happy with the trend. We certainly do not want to see the trend continue on the subscriber base.

We have always said we watched the bottom line. We do but we also want to maintain a reasonable market share.

Moving on to the other elements of our business in Guyana, local and international, access lines. We had at the end of the quarter about 135,000 access lines, and that compares to 124,000 access lines a year ago.

That is a 9% increase, but interestingly it is up only about 1000 over the first quarter. It is still a nice thing to grow access lines, but given the very low local rate and other capital spending priorities down there, we did not expect to add a significant number of lines in the second half.

As to international, traffic declined almost 4% when compared to the second quarter last year. Second quarter last year, of course, benefited in April from the International Cricket World Cup activity.

And our best guess is that without the World Cup, we would have been essentially flat. However, on a negative side here, we did see bypass activities increase markedly as we noted in our release.

It is hard to quantify what that contributed to the decrease, but it certainly could have and probably did have an effect. And with government cooperation and other activities we are taking on, we hope to reduce this unlicensed activity going forward.

Lastly, discussions continue with the government of Guyana on modifying the exclusivity provisions of our license. But in keeping with our approach to date, we are going to respect the process and not attempt to predict outcomes at this time.

For our local telephone and data business in New England, we ended the quarter with about 34,000 business lines. That is a 14% increase year on year, and we are still very pleased with the direction and the ongoing ship to the greater and greater proportion of revenue from this core market segment.

The Sovernet staff and Vermont/New Hampshire, those have been actively preparing to launch new services and products to businesses using the upgraded capabilities of the network. Lastly, in the US Virgin Islands, our wireless broadband subscriber base is still growing strong.

We saw a 30% increase over a year earlier and a 4% consecutive quarter increase. Now I think we are ready for questions.

And no, we will not comment on the Red Sox trade of Manny Ramirez. I think there have been enough comments on that in this area.

So we are ready for questions.

Let us hit a couple of things on Commnet. Very good results obviously, very strong adding cell sites but also big MOU growth.

The concern out there I think might be with gas prices. What is summertime travel going to be like?

You have already seen second quarter, so part of the summer is in there. But, as you look into July, you have seen a lot of July already, are you seeing any impact from high gas prices impacting MOUs as you look into your big third quarter?

I agree with the logic. The logic would say there is a potential impact.

To date we have not seen it. All we can do is theorize that there for everybody who is driving less, there are other people who are because the economy not flying and doing a driving vacation, but we do not know.

There is a lot to come, and it certainly could have an effect upon us. But again, to date we have not seen that at all.

You guys have no doubt looked at the Verizon/Alltel transaction, also with probably the proposed divestitures. How do you think Verizon/Alltel impacts your businesses?

Well, it really depends on how it changes over time. The spectrum can go from a positive impact to no impact to a negative impact really depending on what happens, what markets are divested, who acquires them, what their strategy is.

So, there are areas of promise because it takes away a solution for others that we could provide, and there are areas of negative where it could fill in for a solution we are providing. But it is really hard to try to quantify that at this time.

On Bermuda will you be able to give us some historical numbers so we can get our models all build out appropriately on some year-over-year stuff? Do you anticipate being able to offer any of that up?

Where we would offer that I guess, I am trying to think of whether we would have any of that, anything historical in the Q [cross talking]. I guess we have not traditionally.

We have not thought about doing that yet. But I think you can take the numbers in the quarter that we gave and probably give a pretty good idea.

It is a fairly level business. It has some seasonality in the second and third quarter, but it is not enormous.

We will take a look at what we can do. You have to realize, of course, the numbers under the equity method had different levels attention from the auditors.

And so we have to operate within the restrictions in terms of historicals. But we will look at that and see if there is something we can do.

We appreciate the issue.

And in regards to international, can you talk a little bit about how the bypass is occurring, and also Justin, I think you said there might be a $10 million CapEx for a submarine cable. How does return on capital, the government negotiations and this bypass kind of all play into your thoughts about spending $10 million on a submarine cable?

I think that the cable does not directly affect the bypass issue. The bypass is mainly coming through really small operators.

It is very poor quality. It is doing things like using what they call SIM banks and satellite to try to bypass the international network.

There are ways to stop it, but you know we need the government to help if we want to make it really effective. But so it is really not affected by the cable.

The way we look at the cable is as data continues to grow and Guyana is behind many markets, but it is growing. Covering that with excess capacity on satellite, particularly redundancy is prohibitively expensive.

And it will not allow us to offer the right price point for the market. So it is a longer-term play, but if you look at cable and wireless markets in the Caribbean and other comparable markets, you will see that broadband growth can be significant.

For cable wireless, even when they were losing lines and even wireless subs, the growth that was there was big enough to overcome that. So it is a combination of better redundancy because the satellite can offer efficiently full redundancy on voice, but it is harder to offer effective redundancy for data as it grows.

And so [cross talking] we are looking at the return on that, too. It is additional revenue; plus, it is also the elimination of costs, currently incurred by GT&T, so it would have backup satellite.

So the return kind of comes from two sides' revenue, as well as reduced expenses. But it is not going to generate immediate top short-term returns.

The returns properly managed, properly financed, the returns look reasonable, but it requires that growth over time.

And is there any way to hook that into the kind of discussion with the government on the exclusivities?

Absolutely. We think it would be a very big win strategically for Guyana, a country the size of Guyana, the land, fiber-optic cable there, and we think it will allow the President to go forward with some of his plans in terms of growing technology and computer use in the country.

So we do think it is a positive and should be viewed as a positive.

With respect to free cash flow by our estimates, you guys are generating a decent amount of free cash flow. Just on a quarterly basis, I was just wondering how you guys view the current M&A landscape out there in terms of assets that you may be looking at either inside or outside of the US very broadly speaking and how you are weighing that with your current capital structure and possible share buybacks or any other opportunities that you see out there?

And the second quick question for you was with Guyana and the wireless situation there. We have seen over the course of the last several quarters really some increasing competitive activity on the wireless side in many Latin American markets across the board.

I was just wondering if you do continue to see Guyana has kind of a market share land grab at least from a very high-level standpoint may decide to get more aggressive in terms of some of your promotional activity to maintain market share versus your competitor there?

We will help you get them to pronounce your name Stifel rather than Stifle. The answer to the M&A is I cannot give a much different answer than before than we have talked about on previous quarters.

Certainly we believe we are in a very good position with our cash flows and balance sheet in a market where debt availability for a lot of acquirers is limited. We still are not going to end up buying anything that a large telco is attracted to and has great synergies with because we cannot compete with their level of synergies.

But we absolutely do believe that it is part of our future to continue to grow strategically as well as organically, and so we are actively out there in the market looking at things. But we will hopefully never ever pull a trigger that we do not believe is just for the sake of pulling a trigger just because we can.

So it has got to be a good strategic fit, a good cultural fit, and we have got to believe the returns are strong. On your second question on the wireless activity, the competitive activity, that is, of course, the toughest question I think an operator deals with, which is to what extent the U-value market share over profitability, and if you are not falling down on your job, it is really a question of near-time profitability versus long-term profitability and it is how you weigh it.

I think we knew well that [Digitel] coming in the market, they are making no secret about how they do it. They come in and they could care less how much money they lose or spend for the first year, year and a half, two years, it depends.

I think it is, we see it as that kind of duopoly where they are absolutely intent on having substantial market share. That said, it is not a good thing to just lay down and so we fought them hard.

We fought them very hard last year, but we are constantly reassessing, and we look at things like handset subsidies, and you say, well, we can do handset subsidies. But what level, at what point does everybody who is any kind of reasonable generator of revenue have a handset from both companies already.

And at what point are you just throwing money at them that really you cannot have a direct return on. So we weigh that carefully, and we will continue.

We want…I do not think we will form a hard and fast opinion. We will continue to try different things.

If they do not work, try other things, but look at everything we do with the idea that it is it cannot be just to gain share for the sake of share. You have got to believe the return is there ultimately.

But I do not see, I think some markets are going to be heavier, much heavier competition for longer than ours just because ours is never going to be attractive to three or four carriers. It is that small a market.

What percentage of MOUs came from the new markets for Commnet?

We do not break down the Commnet numbers by market. We have never done that, and I do not think we are going to.

I think that the bulk of the new sites were in the new markets, but we did add sites to old markets, and as we said, we did have same site minutes growth as well. And lastly is we mentioned data revenue, those will continue to grow.

But keep in mind that we just, I mean most of those sites we built on the new market there are just getting going. So they came on these first six months.

So it is not the majority.

What do you consider the new markets to be from a completion of footprint standpoint?

The new markets in the Midwest are probably 70% of where we see near-term them being in terms of total.

In terms of sites, that is not necessarily to going to translate into minutes of revenue because they are different numbers per site.

And then why did Sovernet's operating decline from Q1? What kind of a decline are you experiencing from dial-up customers compared to new business customer adds?

I think they were, Sovernet was flat, and basically the dialogue continues to decline almost on a 20% year-on-year at least in terms of subscribers. Obviously going forward that will have less and less of an impact unless we acquire additional dial-up subscribers.

So it will just become a smaller part of a whole.

In terms of the number of base stations or cell sites that we have to construct in the second half, did you give that number and I missed it, or is that something you could speak to?

For the second half, we have not given that number, but I would say that number would be fairly consistent with…it will probably be the third quarter probably fairly consistent with the second quarter and then a little bit down in the fourth.

I am going to guess you will probably pass on this question, but are there any new issues that have come up in negotiating with the government of Guyana that have delayed or made this process move faster?

Well, I am not going to talk to issues I think that the process is taking time, and it is possible that and maybe even probable that it will not conclude in '08. But all of that was a big caution because it is very hard by the nature to define the processes in terms of timing or even the substantive outcome.

I wanted to probe a little further on the M&A. As you guys look at M&A, how would you prioritize first the segment that you would be interested in as far as wireless versus integrated telephony versus CLECs?

And second, how would you prioritize regions of the world as far as how you would express interest or what you would think as for as staffing up as you look around the world?

Well, I guess the answer to that is that it mostly affects valuation. Because if you start with just start with technologies as you did or the way you deliver services, wireless certainly is more attractive to us than other technologies because we have a lot of people have been very successful at it.

We have a lot of know-how, and just in a very, very much in a vacuum, it is a better technology for the kinds of markets we operate in because it is a lower cost to put it up. It is a lower cost to maintain.

However, markets are reasonably efficient, so the sellers of assets like that or licenses, you know that is usually built into the price. So because we also operate wire line assets, fiber-optic assets, those kinds of things, we do look at those as well.

But like most people, we will put in a further discount on some of those things depending on what they are. It is the same thing with the regions.

We certainly would prefer to be in the rural US and in the Caribbean because those are the markets we know, and we certainly prefer to add things to give additional operating assets to management teams we know well and are doing well. But we never, but what that mainly does is affect how hard we will go after something and what kind of price we will pay.

And I think the same is true for anybody else looking at those assets. If you are talking about going into regions we do not operate in, what we said in the past and it is still true today is it would have to be bigger and the valuation would take into account an offset to us of an execution risk of going in there in a new market.

And we also would not do that without strong local partners. So those tend to be on the bottom of the pile unless they are extremely compelling both in size and valuation.

So thank you, everybody, and we will see you next quarter.

Thank you.