ATN International Inc (ATNI) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Atlantic Tele-Network 2009 earnings conference. All participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder this conference is being recorded.

I would like to introduce your host, Mr. Justin Benincasa, ATN's CFO.

Thank you, operator. Good morning, everyone. Thank you for joining us on our quarterly investor call, as we review our fourth quarter and full-year results. As usual, with me here is Michael Prior, ATN's President and Chief Executive Officer. During the call, I will be covering the relevant financial information for the quarter, and Michael will be providing operational updates.

Let me first start off with the cautionary language concerning forward-looking statements. 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 December 31, 2008, 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.

And with that out of the way, let me talk a little bit about the financial performance for the quarter. As noted in our press release, our US wireless business was again our growth driver in the fourth quarter and full year 2009. Finishing the year with 35% year over year revenue growth and continued strong operating margins. We're also pleased to see growth in our Guyana wireless operations as subscribers grew for the fourth consecutive quarter. International revenue in Guyana has continued to slide which is a trend we think may continue into 2010.

During the fourth quarter, we generated revenue of $59.5 million, up $4.1 million or 7% from the same quarter in 2008. Wireless revenue was $35.9 million for the quarter, up $5.9 million or approximately 20% compared to Q4 2008. Local telephone and data revenue totaled $14.8 million, which was an increase of $1.5 million or 11%, and international long-distance revenue was $8.8 million compared to $11.1 million in 2008, which is a decline of 21%. For the full year, total revenues grew over 17% from $207.3 million in 2008, to $241.7 million in 2009. As I mentioned earlier, wireless revenue was the largest contributor to that growth, increasing from $105 million in 2008, to $147 million in 2009, which is an increase of $42 million or 40%.

Operating income for the quarter totaled $11.7 million, down from $15.5 million for the same quarter in 2008. However, as we noted in our release, we incurred $4.7 million for the quarter and $7.2 million year to date of transaction costs related to our pending acquisition of the Alltel assets. These costs consist primarily of legal expenses related to closing the deal and consulting and other related costs in building our Little Rock team and system in preparation for closing and transitioning the properties. We do anticipate monthly transaction costs in the first quarter this year to be similar to what we incurred in the fourth quarter, plus some additional costs once we close that are related to the transaction. Noncash stock-based compensation expense of $386,000 was also included in our operating expenses for the quarter.

Reported net income for the quarter declined by approximately 21% from $6.6 million in the fourth quarter of 2008 to $5.2 million this quarter, giving us earnings per share of $0.33 compared to $0.43 in 2008. However, net income, excluding acquisition related charges, was $8 million or $0.52 per share, up 11% from $7.2 million in 2008. Capital expenditures totaled approximately $19.4 million for the quarter and $59.7 million for the year which takes into account $13.4 million spent on the undersea cable into Guyana. For the quarter, Com Net spent about $6.2 million and put 16 new base stations into service. This puts their final 2009 capital expenditures at $24.7 million with the completion of 107 new base stations this year and a total of 580 base stations and 406 cell sites. Capital expenditures in Guyana ended the year at approximately $25 million, which, as I mentioned earlier, includes the $13.4 million towards the construction of the cable.

Looking ahead into 2010, and assuming we close the Alltel transaction in the next month or two, we anticipate capital expenditures to be in the range of $100 million. This includes our preliminary estimate of Alltel's capital expenditure plans, which is slightly less than half of the total estimate, and consists primarily of one-time costs related to network migration and systems and IT expenditures.

Turning to the balance sheet, as of December 31, 2009, we had cash balances of $95.4 million which include $5.2 million of cash escrowed for payments on the cable. We anticipate using between $40 million and $50 million of our cash on hand to close the Alltel transaction. As we mentioned in January, we closed the new $300 million loan facility which provides us a new $150 million single draw term loan for the Alltel transaction. We also anticipate that he we will likely need to initially draw down on some portion of our $75 million revolver to fund the balance of the purchase price and closing costs and adjustments.

And then lastly, I wanted to provide with you some of the supplemental segment information in advance of our 10-K filings. Segment revenue and operating results for the quarter were as follows. Our US rural wireless segment had revenues of $25.4 million and operating income of $11.6 million which includes $4 million of depreciation and amortization. International integrated telephony generated revenue of $22.9 million and produced operating income of $8.6 million which includes $4.2 million of depreciation and amortization. Our Island segment, which includes Bermuda and Turks and Caicos, had revenues of $4.6 million operating loss of $976,000, depreciation of $1 million. The domestic telephony segment had revenue of $4.8 million, operating income of $3,000, so pretty flat, and depreciation and amortization expense of $682,000. Wireless data revenue was $1.8 million, had an operating loss of $213,000 and which included depreciation expense of $263,000.

And just as a reminder, when considering the impact of these segments on our earnings, we have minority interest partners of 20% in our international integrated telephony segment and approximately 42% in our Island segment. And with that, I'd like to turn it over to Michael to give you an update on operations.

Thank you, Justin. Good morning, everyone. As usual, I will add some additional operating information and analysis, and I will start with the US wireless business. At the end of that I will give an update on the pending Alltel asset purchase.

Diving into wireless first minutes of use, we generated about 160 million MOUs in the US for the quarter. That compares to 121 million in the fourth quarter last year, 2008, that's a 32% increase. As expected, on a consecutive quarter basis, minute volumes declined by 22% which mainly reflect the seasonal strength of the third quarter. This typical seasonal change was lot more apparent in 2009 because our network expansion slowed as the year progressed with just 16 new base stations added in the fourth quarter. Year on year growth also benefited from the full year buildout in acquisition of base stations heavily loaded towards the first half of the year as noted above.

We ended the year with 580 base stations. That compares to about 473 a year ago, and that's 23% expansion. Data was 22% of US wireless revenue, up substantially compared to 13% of revenue a year ago. As we noted in our press release, we expect slower growth for this business in 2010, as we will lose significant traffic and revenue in some areas of AT&T, complete this acquisition of certain ex-Alltel properties. It's going to be a challenge to replace that traffic and revenue in the short term.

In Bermuda, subscribers ended the quarter at 20,500, which is essentially flat on a year-on-year basis but up 4% on a consecutive quarter basis. And that uptick from the third quarter is really reflects the hard launch of our new UMPS system in Bermuda. In Guyana, wireless subscribers increased 4% on a consecutive quarter basis, ending the quarter 289,000, and with similar growth in previous quarters, this resulted in a roughly 17% increase for the full year. We're very happy to see this growth in the wireless business in Guyana, although as noted in our press release, and I will get to the overall business, it's a little more challenging, at least in the near term. On that note, let me move on to the other elements of our business in Guyana.

First with local, we continued to add access lines. We ended the year with 147,000 access lines, and that compares to 139,000 access lines a year ago. So that's about a 6% annual increase. Of course, the big story was the international long-distance business in Guyana continued to decline. And at a pretty significant rate.

Overall traffic was down 17% for the full year, but there was an even larger decline of 24% in the traffic for the quarter, year on year. And as we've said many times previously, we believe this is largely a result of the illegal bypass. We will continue to do our best to fight these unlawful activities and see what we can do to recover traffic or halt the slide. Also, kind of hard to put a finger on exactly to what extent, but there is likely some bit of that decline that results from economic situation in the US communities, the Guyanese diaspora as in the rest of the industry there's undoubtedly an overall trend to data communication from voice communication that's at least a small factor behind the numbers.

And at the same time, we were finally able to win approval to lower prices on our outbound international calls in January. This should boost volumes, provide a more attractive alternative, and we had been pushing for this for some time from the regulators. But it likely will reduce revenue further, or at least put further pressure on it, because we don't think the elasticity will recover completely the price drop. Ultimately, of course, voice revenue should be overtaking data revenues here, as in everywhere else. It may take a little longer for that to occur, given the macroeconomic conditions, but our new undersea fiberoptic cable at Guyana that we expect to land -- was landed already -- but we expect to make operational midyear this year is the first step in our strategy to dramatically expand the available, reliability and affordability of high-speed data in that country. And we do think that we'll become a very significant revenue stream over time. But it will take some time to build.

For our local telephone and data business in the northeastern US, we ended the quarter with about 42,000 business lines. That's a 15% increase year on year and a 5% increase on a consecutive quarter basis. It's nice growth, core business, off set in large part by declines in the legacy dwindling legacy dial-up business but that factor will become smaller and smaller over time. And we continue to invest in upgrading and expanding switch capability and capacity and the fiber back haul network in that market. And more importantly, we were delighted to announce in December that we were awarded one of the larger broadband stimulus grants, $40 million, about $40 million for ION and its partner, which is called Dank. And that was for the buildout of at least 1300 additional miles of a fiber middle mile broadband network which will connect key communities and anchor institutions in upstate New York for our existing 2200 fiber mile network in New York.

As I said, mostly upstate New York. We will connect certain communities along the New York border in Pennsylvania and Vermont, and we will also inter connect as well with our Vermont fiber network. And we are still looking at additional opportunities to expand our data services to rural America. We're looking at other government incentive programs and funding programs, and we will continue to look for anything where we see an opportunity to go into a very much underserved area.

As to our pending acquisition of certain former Alltel wireless properties, as we noted in the press release, we expect to close in one to two months. So far our predictions have been overly optimistic on the timing here, so we still do not have a date certain. We continue to expect to receive approval. The process is obviously taking a bit longer than we expected or I think our counter party had expected. But the one thing I want to emphasize, and it's borne out with some of the expenses running through our P&L, we are make going use of this time. We're spending a great deal of time and resources on preparing for close, transition logistics, and I think that will very much benefit us and our customers when we do eventually close the deal, which we expect to do.

And along those lines, we also had a nice benefit to setting up the organization when we received significant financial incentives, ultimately up to about $10 million from the state of Arkansas to locate the headquarters for this business in little rock and take advantage of the talent that resides in that area. Also provides an opportunity for many of those whose jobs were made redundant by the Verizon Alltel combination. So overall, we are building a talented team. We expect to compete vigorously and well, and we are very much looking forward to the opportunity to work with the former Alltel employees in the rural mark, mainly in the southeast and midwest. So with that, operator, I think we're probably ready for questions.

(Operator Instructions). Our first question is from the line of Ric Prentiss of Raymond James.

Good morning, guys.

Good morning.

Couple questions for you. First on the US rural business, as you look at the 32% growth in minutes year over year, or fourth quarter over fourth quarter, how much effect do you think the economy has had? Have you noticed any slowing of the growth from the economy, not just the seasonal stuff, but economy driven?

It's tough to say. We haven't seen that much of it, but I will say seasonally adjusted, it felt like some of those areas dropped off faster in the fourth quarter than we might have seen in prior years. It just seems like seasonally, we knew it would, but it seemed like it dropped off quicker.

Okay. And then I think you mentioned, Michael, the slower growth in that line of business in 2010, as you maybe lose the AT&T Alltel -- some business because of that daily closing at some point also, how should we think about the growth rate impact of that? How significant could that be?

Well, I think it could be significant enough to hold that business flat in the year for kind of our status quo, but a lot depends, Ric, on the timing of not just their close, but what they do with those networks and how it may be -- the drop may be spread out over a longer period than we expected. It may be more muted. But we think, all things being equal what we know today, it could be significant enough to hold the business flat.

And the other thing we don't know is on the other side of it. Obviously the business doesn't run on a neat yearly calendar year cycle, and there are potential for other opportunities, network growth opportunities that aren't in our basic planning and the CapEx figures Justin gave you, but if those things materialize or materialize faster than expected that could help on the growth side. I was also going to point out, there's also, with volume growth, you asked about it before, there's always some counter to the volume growth in price declines. A lot of those which are built into our relationships with some of the bigger carriers, as volumes grow, they can hit tiers of lower prices.

I might have misheard, when you were talking about the Alltel/AT&T impact, were you talking about impacting on your building of the business or building of new base stations or the building itself? I was a little confused there.

Say that again.

When you were saying the AT&T/Alltel transaction would impact your building of the business did you mean building of new cell sites or did you mean literally the bottom line of the revenue?

I think that the impact of their building those sites, if I'm hearing you repeat me--.

Change in the technology.

They would be changing the technology. These are areas where AT&T used Comnet but Alltel existed or at least existed in part with the CDMA network. And so as they move over to a GSM or UMTS network, there will be some -- we will obviously lose that traffic in those areas where there's overlapping coverage.

Got you. So right now Alltel had a CDMA network, Alltel was running on there, AT&T did not have a network, they were roaming on your GSM network, so the expectation is over some time frame AT&T comes in and overbuilds the CDMA network that they now own and the GSM which would take traffic off of you.

That's right, and we think they will do that fairly quickly, certainly in the bigger areas but we don't have any particular insight to their build plans. It's just logical and consistent with their other acquisitions.

Then on the international front, pricing and outlook for there, expecting down impact -- just trying to step back from roaming, AT&T, Alltel line and the ILD business, saying, do you expect the total Company's growth to be somewhat flat then given those two major items?

Yes, I think -- that's right, I think if we don't -- if you just -- if you exclude Alltel purchase, yes, I think overall we think it would be relatively flat.

Just wanted to clarify. Thanks, guys.

Thank you, sir. Our next question is from the line of Hamed Khorsand of BWS Financial.

Let me start with the easy question. What was the subscribers for BDC?

20,500.

All right. Then I'm trying to get an understanding, your P&L here is four and change related to the acquisition costs, but then when I'm going through the other OpEx numbers, there was quite a bit of increase in G&A and sales and marketing, and I'm just trying to get an understanding, where those costs come from? Is that going to be the going forward rate? If you could just provide some insight into that, please.

Well, part of it is the growth, as the Company has grown, we've had to grow some of the corporate -- some of our corporate overhead just to service and improve our execution in some of these markets. So that's part of it. And that would -- and I think that the acquisition related costs that we highlighted are only the external costs. So it doesn't include those expenses that -- there's personnel right now related to Alltel on running through our numbers that aren't in those external acquisition costs. So we are carrying -- our actual Alltel costs, if you will, are actually greater than the 4.7 and the 7.2. But we just kind of broke out the external costs.

Okay. So, I mean, if I take out the -- much of the quarter-over-quarter difference, would that give me understanding on how the business really operated during the fourth quarter?

Yes, I'm not sure if I fully understand your question, but, yes, if you back out the acquisition related charges, then yes.

I think he's saying the G&A uptick. I think, substantial majority of the increase in G&A with the increased internal costs related to Alltel.

Okay. All right. And then -- just going forward, are we going to expect OpEx to increase further before the Alltel deal closes, or is this pretty much going to be the OpEx until then?

It's probably consistent. We're bringing on more people each month, so there will be more costs in there, but we'll probably break that number out as well in our external communications, too, so people can see it at the end of the first quarter.

Okay. Just shifting to Comnet, the CapEx plan with the base stations, has the weather these past two months hurt the base station build in Q1?

We haven't heard, no. I think for the most part, they were pretty good this year in planning builds around the weather. So we didn't -- we're not building anything in Washington, D.C. and Baltimore. That would have been a problem. So I don't think our areas were particularly hard-hit.

Okay. And then last question, as far as revenue goes for Comnet, should we expect the same seasonality as last few years until the AT&T/Alltel deal closes, from a revenue standpoint?

Yes, I think that's consistent.

Thank you.

Yes.

Thank you, sir. Our next question is from the line of Kevin Rowe of Rowe Equity Research.

Thank you, good morning.

Good morning.

Following up on Rick's questions on AT&T/Alltel, can you give us a sense when that transaction closes how big that revenue is as a percent of your total wireless business?

Well, we've said that we anticipate service revenue from that transaction to be between 450 and 500.

Oh, no, the AT&T, I'm sorry, AT&T/Alltel.

No, I think the better way to tell you, because that number is a bit soft, right, it's not when we can precisely predict, so I think it's -- we're more comfortable thinking about it in the concept of what it does for the potential for growth.

Let me ask it another way. If your assumption that it could hold the business flat for 2010 versus 2009, how much -- what would be the dollar amount that would go away because the business is also still organically growing, right?

The business is still organically growing. If we were going to say -- obviously that's another way to say the same number. I don't think we're going to specify that number because there are a number of factors at play, so I think we're comfortable with the statement that when you take the mix of all those factors, where you think it would be relatively flat.

It's just hard to pin down, based on the timing, how they overbuild, what technology, there's a lot of moving parts to try to predict the number.

Right. I'm not looking for a prediction, I'm just curious what the book ends are on the potential exposure here, sort of low end, high end. But, anyway, I'll move on. For the approval process, with the Alltel transaction, what's been the -- what's been a greater challenge than you've expected, and in your release, you used the word that you were optimistic. That it would close in the next month or two. What gives that you optimism now that it would actually close in the next month or two?

We don't see in front of us any real impediments to approval. We don't think that -- we think we're a buyer that the Department of Justice and the SEC are comfortable with. I mean, they don't decide on the buyer, but they determine whether that buyer meets their standards and requirements, and they have discretion to do it. We've seen nothing that leads us to believe that we don't fulfill the requirements and -- but what we were not understanding is the process and the length of time it would take initially there it seemed like it would move faster in Washington, and it did not. And that's probably a combination of our being overly optimistic on timing and just other factors. And I don't think it's -- I think you have to keep in mind, too, that there are two transactions, two divestiture transactions happening. One is the divestiture of Alltel assets that Verizon was -- agreed not to divest to AT&T, and one is the smaller grouping that they're divesting to us, agreed to divest to us. So I think to some extent, it's a bigger transaction than our transaction looks on its own, and that could have been part of being a little slower than we expected.

I see. And lastly, last conference call you mentioned that the U.S. wireline business was impacted by Fairpoint's difficulty in provisioning lines. Is that still an issue in the fourth quarter?

I think there's still been some issue, yes. They are in bankruptcy I believe still, and that situation created some difficulties. I guess it can create -- difficulties provisioning. I think it probably creates opportunities on the sales side, and -- so I don't know that a change in that will dramatically up lift the rate that we had customers there. I don't think that we expect it to be that significant. It's more of a tough operating environment that our teams have to work through.

Got it. So it's improving, but it's still having a minor impact.

Yes, I think that's fair to say.

And two-thirds through the quarter, the organic growth that we've been seeing out of US wireless, as it continued at a similar ramp through the two-thirds of this quarter?

Well, we don't give indications on current quarters. I suppose it's possible we would one if it's something dramatic, but we generally don't do that.

Thank you, that's helpful.

Sure.

Thank you. Our next question is from the line of Chris King of Stifel Nicolaus.

Hi, actually this is Melanie Lambert for Chris King. I have a question regarding your LTE plans. Do you have any indication specifically after the acquisition of the Verizon assets?

No, we don't have any specific thoughts to share. We are looking at technology evolution and network evolution, like everybody out there. So, it's certainly something we look at, and you want to remain very competitive for your customers and be providing them what they need, so you have to always look at new technologies, and LTE is on everybody's radar to evaluate, if they're not already building.

Also, could you expand a little bit on the macroeconomic trends going on in Guyana? I know you mentioned that in the call, but do you have any more specific?

Sure. It's interesting. It's not so much in Guyana. There are ups and downs in Guyana, although the economy I believe is still growing there. I don't think -- I'm not 100% sure on this but I don't believe that I've seen a statistic that it ever entered into a technical recession. But as in a lot of the smaller countries in the hemisphere, there is a large -- expatriate is the wrong word, but population of Guyanese working elsewhere in the Caribbean, in the US i in Canada, in Europe, so there's a fairly large connection in terms of the economics of those areas where they're working, in terms of remittances, whether direct or indirect or remittances. And they estimate that there's something like a million Guyanese outside of Guyana with close ties, and there's about 750,000 in Guyana in the average wage of those outside Guyana are higher, so you have a lot -- it has a big effect when there's a recession in the US and Canada and Europe.

Okay, great, thank you very much.

Sure.

Thank you. Our next question is a follow-up from the line of Ric Prentiss of Raymond James.

Wanted to get back on the FCC timing question of Kevin. Michael you mentioned obviously two deals between AT&T buying the vast majority and you guys buying kind of the cleanups. Do you feel that AT&T has to get approved earlier or the same time as yours or could you jump ahead of theirs? Are they a gating factor for you?

I don't know if they're a formal gating factor, but I think it certainly earlier in the process, overall, they're a factor. Just a factor in how -- the speed at which Verizon moves on various things, because obviously they have to deal with both, and it's a lot of the same people. So I think it's more of that. I don't know that there's any -- I was not trying to say that there is a clear gating item amongst the regulators. I think it's more just practical on the Verizon side and with the properties themselves.

If you look at some of the ex parte filings, it seems like some of the people are complaining about those and just lumping you in there together and it certainly seems like if people are trying to suggest that small regional minority disadvantage should have precedence. I don't know why you guys aren't dramatically different than AT&T and couldn't jump ahead maybe.

Obviously our view is we want to close our deal. We certainly wouldn't want to be held back by the other deal. That's not surprising that that's our view. But I think the regulators are working with us, they're working with Verizon. I think we sense progress, and we don't think there's any kind of formal gating item, as you say. I think it's really much more, Ric, the practical aspects that I talked about.

So you haven't it anything from the commission saying this one has to go first, you're second? You haven't had anything explicitly tell you that?

To my knowledge, we have not. I don't want to get into the back and forth of regulators, but to my knowledge we have not heard anything like that.

Another follow-up question on the CapEx side. The approximate $100 million for 2010, I think you said slightly less than half of that is going to be at the Alltel properties. Can you give us a little more color? I think you said most of that is going to be one-time items like network migration and IT systems. Just trying to get a sense, looking out into 2011, of how much of that drops away of the one-time type.

I think, Ric, if all things are static, there could be a fairly significant drop. But what I don't think we're prepared to predict right now is to what extent we might kind of round the contours in large -- build deeper, but all other things being equal, our current expectation would be, yes, it's higher than it would be in 2010 because of these transition items and migration issues. So if there's no serious geographic expansion in 2011 that would seem to say the CapEx should go down.

And then within 2010, can you give us any more color within that CapEx how much was going to Comnet, how much was going to Guyana, the fiber build should be dropping off, I would guess.

There's still -- it's actually fairly consistent with 2009. Guyana still has some cost on the cable. Comnet comes down off of 2009, but the two biggest parts of the balance are still Guyana and Comnet for the most part, and some Ireland stuff.

Final question. Not sure if you can provide this yet. But as you look at that the Alltel properties that you will be picking up, have you had a chance to kind of get into the details on what data ARPU looks like or how much -- what percent of the base is smartphones? Just wondering what might be involved there.

Yes, I think when I -- we may, as we've talked about before shortly after close or right around close, we will -- we may try to provide some additional baseline statistics and information, but I'm not prepared to do that now, but I think what we could tell you is, certainly in those properties, you are seeing the growth of data as you see everywhere else. I mean, it's data growth is -- you know better than we do the statistics in the industry, and these properties are no exception.

And still comfortable with the 800,000 customers or so? No significant changes, given the economic and competitive and pending deal transaction issues?

No, nothing more to add on that front at this time.

Okay, thanks.

Sure.

Thank you, sir. Our next question is from the line of David Lambert of Canaccord Adams.

Yes, hi, thanks. Just wondering if you can talk about your grant, how would that -- when do you get the cash, when does it start to get deployed, and when do you start to see some revenues from that?

Well, I think as far as the cash goes, we're still working through all the final paperwork, I'll call it, on getting that done. There are parts of that bill that are pretty much shovel ready and ready to go. And the way that it works, it's really a reimbursement of capital. You can get the cash, as far as we know, fairly quickly. So if we sign a PO, they will fund the P.O. And so I think the cash will come fairly quickly. As far as revenues.

I mean, I think the build is slated to take a couple of years, so there's some big chunks that will move fast, and others come along. I think that revenue impact in 2010 will be fairly small. Certainly break in as a whole, it will be small and it should start to build from there.

Okay. Is it going to show as CapEx?

It will show -- well, we've got to figure out the whole reporting on it still, but it's like a reimbursement of CapEx is kind of how we're looking at it. I guess it could show up as a CapEx and then a reimbursement underneath, is I think how you actually report. But we kind of look at it net. It's not in the forecasted number. The part that we're getting reimbursed with the government is not in the forecasted CapEx for 2010. That's net.

Okay. But the network is going to be yours?

It is. It's a grant. That's the way it works.

Okay. Great. Thanks.

Thank you.

Thank you. (Operator Instructions). Our next question in queue is a follow-up from the line of Hamed Khorsand of BWS Financial.

Just one question here. As long as this deal is pending, will you guys just continue to incur acquisition related charges of $4.7 million a quarter?

Yes, that's what I was saying earlier that our run rate kind of is on a monthly basis, so we -- we don't anticipate them to be much different than. That we're still incurring the costs in there.

And we'll have additional one-time costs at closing, so that's kind of the transition run rate, and then there will be additional one-time costs, fees, closing adjustments and the like.

Keep in mind, though, that these costs, because of accounting rule changes, now run through the P&L a year ago or two years ago or whatever. Those used to be capitalized as part of the deal. So some of this has changed in accounting.

Okay.

I think this is the first year.

Great, thanks.

Yes.

Thank you, sir. We have another question in queue from the line of Eric Malis of Raymond James.

Good morning. Quick question about Bermuda. Obviously everyone likes talking about Guyana, Comnet, and Alltel, but Bermuda had a pretty sharp drop, it looks like, in revenues. Obviously the EBITDA took a hit because of the UMTS buildup. I'm curious what you're seeing on the revenue side. Was it drop in roaming? Are you seeing a drop in ARPU? What competition and the economy doing down there? And what are you thinking about in regards to BDP in 2010?

Sure. Couple clarifications. The drop in EBITDA is really driven largely or at least the single biggest factor is the getting things ready in Turks and Caicos for a launch of the MTS network there. So it's sort of it's prelaunch costs there, is the main drag on their EBITDA. As to the revenue factor, Bermuda certainly saw a significant decline in roaming revenue, and that's two ways. Both Bermudans traveling outside Bermuda, which they do frequently in normal times, and tourist visits. And probably some drop in business visitors, which Bermuda gets a lot of, given the financial service and insurance components where some of the areas were very hard hit in the recession.

Okay, great. Question on one of the smaller items. The business in the Virgin Islands saw a nice sharp increase in data. You think that's sustainable into 2010, and what are you guys doing to capitalize on that opportunity?

I think what we're doing is we're enlarging our network there. I think that could have been relatively anomalous pickup but for the fact that we have plans to enlarge our network and expand our services there. So we do think data revenues will be growing in 2010 and beyond, in that market.

Great, thanks, guys, good luck.

Sure.

Thanks. I show no further questions in queue at this time.

Okay, I think that's all we've got, operator, so thank you everybody for joining. We'll talk to you shortly.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may now disconnect. Everyone have a good week.