ATN International Inc (ATNI) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the ATN International Third Quarter 2017 Earnings Conference Call. (Operator Instructions)

I would now like to introduce your host for today's presentation, Mr. Justin Benincasa, Chief Financial Officer. Sir, please begin.

Thank you, operator. Good morning, everyone, and thank you for joining us on our call to review our third quarter 2017 results. With me here is Michael Prior, ATN's President and Chief Executive Officer. And as usual, during the call, I'll be covering the relevant financial information, and Michael will be providing an update on the business and outlook.

Before I turn the call over to Michael for his comments, I'd like to point out that this call and our press release contain forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results and are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also, in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliations to comparable GAAP measures and for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at atni.com or to the 8-K filing provided to the SEC.

And with that, I'd like to turn the call over to Michael for his comments.

All right. Thanks, Justin. Good morning all. Well, it's hard to start this discussion of the third quarter without first talking about the hurricanes, the 2 hurricanes that hit the Virgin Islands in September. But let me try to at least summarize some of the other things first. So outside of those events, we had solid results for the quarter and some developments and decisions that we believe bode well for the future, including a shift in our approach to capital allocation between dividends and stock buybacks and some signs of progress in India. Prior to the hurricanes, our International Telecom segment was turning in solid results with modest organic growth, when you exclude some smaller businesses we sold or discontinued, improving margins and steady progress on integration and business turnarounds.

As to the hurricanes, I'll have more to say in a minute, but despite the devastating impact to the people and very substantial damage to our network and to the island infrastructure in general, we are optimistic for the longer-term prospects for both the community and our investments, and we are committed to put that belief to work as we invest in and help guide the rebuilding process. U.S. Telecom was slightly better than we expected despite the year-on-year declines due to reasons covered in prior quarters. We've been busy restructuring this business to better position it for the future. In Renewable Energy, we turned in results in line with the first half of the year, but as mentioned, we've made some progress on securing the regulatory approvals necessary to bring our completed solar power plant in India into the revenue-generation stage. Outside the existing segments, we also made some smaller-scale investments and a disposition, and we were able to buy back about $10 million of the company's common stock in the quarter.

So with that summary, I'll turn now to some more specifics, starting with International Telecom. And as I noted, and I think we noted in the release that prehurricane revenues and EBITDA for the segment were in line with our expectations. But our expectations certainly do not include Irma and Maria. These hurricanes were unusually bad in every respect. First, they each were among the most powerful storms recorded for the region. Second, Irma hit the Northern Islands of St. Thomas and St. John especially severely, while Maria came a bit to the south, causing catastrophic destruction in St. Croix. Third, coming one after the other meant that the damage was far worse. And fourth, the -- also, terrible damage to Puerto Rico also disabled the airport and seaports of San Juan that were so critical in the initial stages of recovery from Irma. So, as a result, almost all of our wireline customers in the territory as well as much of the networks serving them suffered damages, and most remained off-line. On the wireless side, we were preparing to launch a new wireless offering as a part of a brand-new LTE network, utilizing the spectrum and other resources of the business combination we closed on last year.

We're still assessing the damage and working on repairs, repair plans and strategies, as well as working with regulators to ensure the rebuild is intelligent and efficient, so that we can bring the maximum number of customers back to prestorm service levels as soon as possible and to quickly regain ground on the service improvements and expansions Viya was undertaking. Viya management and staff are also coordinating with the local power authority to cooperatively plan strategies for a faster recovery. A restored and well-functioning electrical grid is critical in bringing our customers back online and returning things to normal. And this aspect is also harder for us to predict.

The net-net of all that is that we believe it will take 6 months to 1 year for the wireline network to get back to normal function and revenue. And the impacts on households and the economy may mean that fully operational levels are lower than prestorm. On the wireless side, it will come back much faster due to a lesser reliance on the grid, no need for drops to the premises, as we call them, and the work we've been able to do over the last month. This was a small part of our revenue prestorm for the market, but we expect to grow it.

Last, and apologies here for the length of all this, I want to express our appreciation here at ATN for a number of things. First, our employees in the Virgin Islands all came through the storms safe and sound despite the damage to their households. Second, the Viya leadership team and the staff have done tremendous good work caring for their colleagues, the community and the business. They have indeed been leaders in the recovery, and they were ably supported by personnel at ATN level, affiliated employees and, indeed, even friends of the company. Third, we've been heartened by the dedication and practical can-do attitude of many in government from some of the FEMA personnel, to the FCC, to members of the Congress and their staff, to commissioners on the local Public Service Commission. We are very thankful and encouraged.

Now outside the hurricanes for this segment, there are no major positive or negative movements in operating cash flows, or were none, as reductions in certain expense areas were offset by higher marketing expenses overall. Wireless subscribers were flat year-on-year and down slightly on a consecutive quarter basis at approximately 302,000 to end the period. ARPU was up slightly, wireless ARPU, but unfortunately blended churn was as well, rising to 2.9% from 2.5% a year earlier. Data subscribers totaled about 102,000 at the end of the period, up more than 9% over the same quarter last year. This is nice growth and reflects the first apples-to-apples comparison for this segment, adjusted for the sales of some of our smaller operations. All of the submarkets within this segment experienced year-on-year growth in this category. On the other side, video subscribers totaled about 47,000 for the end of the quarter, a decline of 4.9% over the past year, mainly due to cord cutting.

The quarter saw continued progress on our capital improvement plans that we have covered previously. However, we did experience some delays and, as a result, some of the spending and activity may extend farther into 2018 than planned, even outside the hurricane-related repairs in the Virgin Islands.

In U.S. Telecom, the third quarter was relatively quiet, a quiet one for this business as far as revenue developments. We saw small increases over expectations for revenues and operating margins. But otherwise, we still see the declines next quarter and for 2018 that we detailed last quarter, and we have no update on that front.

The question is really what are we doing to improve the business and adjust to those changing conditions? And the answer so far is that we've begun to restructure the business from an expense side, including restructuring and reducing the workforce in the third quarter, and reviewing and reducing planned capital expenditures that no longer have a solid business rationale. But I don't want to give you the impression that it's all defensive. We still like our shared infrastructure value proposition, and we also believe that we can generate additional value out of our deployed network. The U.S. Telecom team is working hard on this repositioning, though it'll likely be some quarters before we will see if those efforts pay off. In short, stay tuned.

In the Renewable Energy segment, the quarter -- this quarter was similar to the first 2 quarters. U.S. solar revenues were down on a year-on -- year-over-year basis because of expiring state solar subsidy payments in California, and EBITDA was also negatively impacted by the India operational expenses without material offsetting revenue.

In India, the good news is that we now have roughly 39 megawatts of plants operational and generating power to the grid, all with customers under contract. We've received the final regulatory approvals necessary to begin billing for close to 1/3 of that amount, although less than that, and are not so patiently awaiting approvals for the remaining 28 megawatts. Despite the regulatory and other delays, we are continuing at the completion of our Phase 1 builds, which should increase the total by more than 1/3 by the first quarter of 2018. This is behind our original goal, but is a sign of progress, nonetheless. And I think we have a lot of hard-earned experience now in operating in this segment of the Indian energy market, which we still think is a very attractive place to be.

We continue to make progress as well on placing debt on these projects, and we'll have more to say once the deal is executed and funded. In another areas, investors will have noticed that our board cut the quarterly dividend in half last month. This is after more than 20 consecutive years of annual increases. At the same time, in the third quarter alone, we spent roughly the same amount as the implied annual reduction in the dividend to buy back shares of the company's common stock. These decisions and activities are consistent with the purposeful shift in our approach to capital allocation. While dividends can be a good instrument for delivering value to shareholders, and some of our shareholders do favor dividends, we believed that there are potentially more efficient, better ways to create value for shareholders with the company's cash reserves and cash flow, given our current mix of businesses, opportunities and market positioning. A related shift is a greater willingness to make minority investments where the opportunity and the coinvestors align with our strategy. Whether we will be in control or others will, the fundamental question is whether we think the position is well positioned -- the business, sorry, is well positioned to execute on their plan. In the case of our recent investment in Australia, we think we can add value without being in control, given our experience in the shared infrastructure segment of the communications mark -- market. And on the flip side, we're confident in the management team and impressed with the experience and accomplishments of the local co-investors.

So in summary, International Telecom was proceeding more or less as expected until the hurricanes hit us hard in one of our major markets. We feel good about our odds of recovering the lost short-term value over the longer term by continuing to strengthen our brand and operational efficiencies in that market, but that short-term impact in revenues and cash flows is certainly material. U.S. Telecom is repositioning and restructuring in the face of legacy revenue declines, and this is a work in progress. India is showing signs of moving forward despite a complex and challenging operating environment, but we still have much to accomplish to ensure we receive good value for our investments. On the capital investment and allocation front, we made some important changes to our approach to dividends and buybacks, as we just discussed, and some smaller investments we feel good about.

So that's all for me. Now to you, Justin.

Great. Thank you, Michael. For the quarter, total consolidated revenues were $122.1 million, down from $138.8 million in the prior year. And this was due primarily to 3 factors: The anticipated decline in our domestic wholesale revenues, the sale of our domestic wireline business earlier this year and the hurricane effect on our USVI operations in September. Adjusted EBITDA was $37.7 million, and that represents a 31% margin.

Included in our results for the quarter were $700,000 of other expenses, which is the net impact of FX losses in India and Guyana, and $600,000 gain related to the finalization of the sale for -- sale of the U.S. wireline business sold earlier this year. I'll cover the specifics around the financial impact with the hurricanes when I go through the numbers for the International Telecom segment.

Starting with the U.S. Telecom segment, revenues were $40.1 million, down from $47.6 million in the prior year, and adjusted EBITDA was $21.7 million, down from $24.3 million in 2016. The revenue difference this quarter includes $5.3 million in wireline revenue going away from the sale of the Northeast wireline business I just mentioned, that closed in the first quarter, and $3.2 million reduction in domestic wholesale wireless revenues, largely reflecting impact of lower contractual rates and revenue caps that we've discussed previously.

The EBITDA impact year-over-year from the wireline business sale was negligible, but we've been focused on cost reductions on the wireless side of the business to help mitigate the EBITDA impact of the revenue declines, and you can see some of that coming through this quarter. We continue to be free cash flow focused in this segment and will be judicious in our capital spending.

In the International Telecom segment, revenues were $77 million, down from $85.3 million last year, and adjusted EBITDA was $20.3 million, down from $24.7 million in the prior year. Approximately $2 million of the revenue difference was related to the businesses we sold in St. Martin, in the British Virgin Islands. And as we noted in our press release, we processed $4.4 million of customer credits in September for hurricane-related service outages in the U.S. Virgin Islands. There were some variable cost reductions offsetting the revenue credits, but the sum of it all is that even after adjusting for the damage losses and the extra expenses, this has still led to an EBITDA loss of the Virgin Islands for September, impacting our results for the quarter.

As Michael noted, we expect EBITDA losses from severe -- service outages to be most prominent in the fourth quarter with progressive improvement monthly in 2018, as commercial power is restored, and we repair damages to our network. As we noted in our release, we do have insurance coverage on a per-named-storm basis for property damage, extra expenses and business interruption up to a combined maximum of approximately $34 million in coverage. Unfortunately, we do expect total losses associated with these islands to exceed our coverage limits, but the positive OpEx from the insurance proceeds will likely be a 2018 event.

In the Renewable Energy segment, revenues were slightly ahead of second quarter, as India is starting to generate revenues with the regulatory approvals Michael spoke about. Year-over-year total revenues for this segment decreased 15% to $5 million from the same period last year, and adjusted EBITDA was down $1.4 million to $2.6 million year-on-year. Much of the year-on-year decreases is from the scheduled exploration of the state energy credits we discussed in prior quarters. Increases in the operating expenses for this segment were costs associated with operations in India.

For the consolidated company, adjusting for the loss on damage to assets and other hurricane expenses, operating income for the quarter was $17 million and net income was $11.9 million or $0.73 per share. Also included in operating income was $1.7 million of noncash, stock-based compensation expense for the quarter. The effective tax rate for the quarter looks unusual because it's impacted by the hurricane-related charges that are basically not tax affected. Adjusting for those items, the rate is similar to the prior quarters of approximately 21%.

Looking at the balance sheet. At September, we ended the period with cash and short-term investments of $250 million. And for the 9 months ended September, cash from operations was $121.4 million compared to $92.8 million in the prior year. And we ended the quarter with total debt outstanding of $159.7 million. As Michael noted earlier, during the quarter, we repurchased more than 200,000 shares of our common stock for $10.6 million at an average price of $52.67 per share. We've also paid $16.5 million in common stock dividends to shareholders year-to-date.

Capital expenditures for the quarter totaled $29.2 million, of which approximately $6 million was incurred by the U.S. Telecom operations, $17.7 million by our International Telecom segment and $5.7 million in Renewable Energy. Year-to-date, capital expenditures were $107.7 million, of which $71.5 million was incurred by the Telecom segment, and $32.3 million was related to construction of solar projects. We do anticipate additional telecom capital spending above our guidance of $95 million to $110 million, starting in the fourth quarter, as we begin repairing network from the hurricane damage, some of which will be offset by insurance proceeds that are expected in 2018, as I mentioned earlier.

And with that, operator, we'd like to open the call up for questions.

(Operator Instructions) Our first question or comment comes from the line of Ric Francis (sic) [Ric Prentiss] from Raymond James.

It's Ric Prentiss. First, as a native Floridian, ridden through many hurricanes, thoughts are with you guys. This was, like you pointed out, a particularly powerful set of events that really layered on to each other. So good luck to your people. The spirit of service has been in telecom for many years, and I'm glad to see you carrying that forward.

Appreciate that.

Specifically, to some of the numbers, putting on the financial hat, can you help us unpack a little bit the hurricane charges that you booked in the quarter or hurricane-related charges, the $36.6 million? And it seems like, if I'm reading it right, the $4.4 million for September service credits might not be in that number. But just help us understand what's in that number. And as you kind of frame for us what the similar or what the line item would look like as we go into 4Q and next year.

Yes. So the bigger number -- the $36 million is mostly the write-off of the network damage, right? So we've kind of done a walkout of the network and taken a percentage of that and written off the historical book values, all right? And then the -- there's also -- we had sold the BVI, and we had an interest on that. So we wrote that off as well, as part of it. But there's just various pieces that go into -- most of that is the network. And then, there is extra expenses, which are really just one time. We incurred them right out of the gate in terms of mitigating damage or trying to assess things, extra expenses. It does not include the $4.4 million of service credits. Those go through -- those are just running through normal revenue and EBITDA.

Sure. Okay. And then, as we think about the recovery efforts then -- yes, just how should we think about it? Obviously, there will be some portion -- there might even be a large portion that you capitalized. And just trying to think of the magnitude of what the spending might be and how it might split between an EBITDA amount versus a CapEx amount? And I know you mentioned there might be more details in the Q, but just trying to get a sense of the magnitudes.

Yes. We probably -- the details in the Q, it's more of an update of the numbers, but we were just trying to make sure if we have any better information on this -- on them -- the write-off of plant -- damaged plant, we'd update them in the Q. But basically, you're right. The rebuilding of the plant will be capital expenditures. The -- any insurance proceeds that are received for either rebuilding the plant, extra expenses or business interruption will be a -- will come back through the P&L, when we -- when probable and determinable, if you will. So that will not offset the CapEx. The CapEx will just be spent as like a normal CapEx on a network build. The service credits will run through the P&L.

And yes, I think you mentioned it, Justin, but it's worth making clear that we will be evaluating how the claim is made and in what portion, because it covers...

Multiple of these.

Revenue losses as well as damage to property.

Right. So there's business front to it as well as the capital. Okay. And so as you think of the repair and replacement efforts, is there a possibility to kind of jump ahead with technology? Fiber? What are your thoughts as far as look at almost somewhat of a unfortunately clean slate in some areas maybe?

Yes, I think that -- you put your finger on it, Ric. You've been around the industry for a while. That's exactly right. You look at this -- you have a somewhat -- a tension between a desire and an obligation to get people back up and connected as quickly as possible. And that is absolutely the #1 priority. But at the same time, you want to do it intelligently because you're doing sections of this almost as if new. And so we are examining all sorts of things in that regard. And some of them involve conversations with regulators as to what makes sense, right, for -- in the area. So an example of that would be, how do you push fiber deeper into the nodes. You're not going to replace copper with copper. You're not going to -- you're going to tend to replace a lot of coax with fiber. And -- but then it gets to fundamentals about design, and it even can go to do -- we do some of the drops in a fixed wireless way or the like. And really all those things are on the table. And that's one of those things where you take all the hit upfront. But I think there will be some benefit if we execute right on that to end up with a more efficient network, better service levels for customers, et cetera.

Okay. And then just one final one for me on India, then. You mentioned the billing on your 11 megawatts. Has that started within the quarter, or when did that start? And you mentioned that debt project -- or debt on the project is progressing. When can we look forward to understanding a lot more about the revenue, the expenses, just kind of the whole way to model the India business?

Yes, the -- for the revenue -- the revenue is for the quarter on the 11. So I'll just say that, I guess. It -- I won't get -- it's a little more complicated, but it's probably just to say, it's for the quarter.

There's some catch-up. I mean the complication, Ric, is there is some catch-up depending on when some of these plants come online. We may or may not get credit for some of the power already produced. And so the fourth and first quarter could be a little complicated with those items as opposed to a run level. But we haven't -- beyond what we've done before, we haven't tried to give guidance as to really where that revenue is going, ultimately, because a lot of it depends on how much further we build. At this stage, it's not yet material, right? And the -- once we have kind of a sense of, okay, where it's going to end up, and what we think the levels are going to be, then it's going to be easier to talk to.

And so "the easier to talk to," is that something we're looking at in the next 3 months, the next 3 quarters? Just kind of help us understand that.

Yes, I think, when we next talk to investors is late February, typically. Next year, we should have a lot better view to share in terms of where we see that going and what we see that delivering, at least for investments made today.

That would be great. As you know the telecom really well, a long history, but I'm not as up on the renewable energy in India, so I could use some help in understanding what you guys are doing there. Appreciate it.

Sure, sure.

Our next question or comment comes from the line of Allen Klee from Sidoti.

Just following up on India. Could you explain again how many megawatts you billed for the quarter? And how that compares to how much you have available right now to ultimately bill?

We have -- probably be able to say, we are recognizing revenue on a 11 megawatt, and we have 28 that's -- 28 that is next to come, if you will.

But it's not -- we told before, I mean, we're not going to publicize pricing. But India build costs are significantly lower than U.S. build costs, but the revenue related to a given megawatt of DC is also lower because rates are lower.

Okay. And then in terms of the spending required to rebuilding the networks that were hit by the hurricane. Is it reasonable to look at kind of the write-downs that you're taking as a proxy for what those type of cost-plus expenses are? Or would you recommend something else?

I would probably -- the write-down is a depreciated plan, if you will. So it's likely to be a little bit lower, but I would just say, it's all -- some of it's kind of an estimate at this point as well. So...

Okay. And then, in your press release, you put out a non-GAAP earnings number, and you add back up the hurricane-related charges. But it's taxed at a -- it looks like it's taxed at a very low rate. Can you explain maybe the -- how that's -- how you came up with the tax rate used in the non-GAAP part of the press release?

The -- it's really the -- there is a -- if you would take out the hurricane -- the hurricane damage number is not tax affected as an expense. So that you almost have to just take that out, and then there is a small -- there would be a small, I guess, corresponding benefit. But you really just -- the best thing to do is just assume that the tax impact is -- there is no tax impact on the GAAP numbers related to the hurricane-damage number.

Okay. So is it reasonable to think that if you had around 1 month of hurricane damages in 3Q, the impact we see in 4Q is around 3x that?

It's a little hard to say that, because there is some puts and take in that, but -- takes in that. But the -- it's going to be substantially larger, we expect, the revenue shortfall. But it's a little -- there is some offset.

Okay. And then the -- your other International Telecom segments that were not affected by the hurricane. Can you just comment on kind of what you saw happening there?

It's, I would say for the most part, kind of steady state. There were some areas where our expenses were a little high, and we still want to improve upon, but there were some movements in terms of data growth and some movement on -- positive movements on the wireless side as well. So it was not -- I wouldn't say it was a remarkable quarter in any direction. The -- in places like Bermuda, there is still a lot of work on the integration, postacquisition stuff and some of the identified network upgrades that we saw when we made the investment. So we made some good progress on that, some of it we'd like to go faster. But, overall, relatively steady quarter.

Okay. And then the minority investment in the Australian telecom-related business. Can you just give a little more color on what that business is?

We don't -- yes, I mean, I -- the investment, it's -- the stage it's in we don't really want to give a lot more detail or it's not our detail to give. But it's in the areas of shared infrastructure, a lot of the things we've both done and looked at in the U.S. in terms of -- so all the things you can think of like that, whether it's in-building work or towers or the like. And the business is really examining opportunities in all that areas. So it's -- easier thing to tell you is it's not a retail business.

Our next question or comment comes from the line of Barry Sine from Drexel Hamilton.

First of all, on the Virgin Islands. I'm just trying to -- I know that your information flow is pretty limited at this point. Trying to just understand what you know at this point. Have actually visited the Virgin Islands? And then what have you seen if you've gone down there?

I have not, because there is a rule right now that they want boots, not suits, I guess. But the other members -- joking aside, a number of other members, including members of the senior leadership team have been down there. It is actually very hard even finding housing for people of any sort to do it, because what hotel room capacity is there is being filled with federal workers and others. And -- but there's been, suffice it to say, a near constant communication. And it's that. I mean, it is -- it was -- the islands were hit very, very hard. Roads were damaged in addition to poles and the cables on them, and the power grid was substantially damaged and knocked out. And -- so it's similar to what you hear in Puerto Rico. There's a lot more news coverage about that. But it's not -- it doesn't have the remote area. So Puerto Rico is probably the biggest difference. So there is not communities -- lots of communities kind of cut off. And it's, therefore, a little bit easier, bite-size, on the reparations work. And we gave our network stats. I mean, I don't think our network -- some of the physical plant is better off than we might have expected. And a lot of it we still think in terms of when wireline customers get back on, it's going to be driven by the timing of the power grid being back. And the last thing I'd add to that is, the biggest -- the kind of slowest damage to replace and the biggest -- and the most damage on the wireline side are the actual drops to the houses. So if you think of it is, route miles of the network, that's really what we're talking about, when we say, roughly 1/3 of it was damaged. Our core and most of our nodes came through well. We had people in all those places during the storm, riding it out and making smart decisions to release vacuum and protect from water. So -- but the community as a whole is -- it's a tougher thing. And tourism, they rely on a great deal, and that's going to be a while before that comes back. It's not going to come back in any strong way this season. Hopefully, some will come back faster than others, the cruise ships will start to return, but it's going to be a tough recovery.

Just historically on the wireline portion of that business, is that mainly residential or business? Do you have any breakdown? Because my sense is that business will come back faster than all the houses that are destroyed.

Yes, yes. Yes, I think that's right, and some of the priorities we've been making there, the numbers are critical things, from schools to health clinics, to government offices, to some of the federal workers who're down there, we've had to prioritize and have had a -- got a number of them up and connected. So that's faster and sort of necessary. And then you also have on the residences, you have damaged houses. Some houses, are they going to be there? Do they have in-building wiring to repair? All of that.

So the electric utility is saying 90% power restoration by Christmas. Is that going to mean you'll be able to restore to most homes or most of the out-of-service to do physical structure damage, not power? What do you know at this point?

No, most of it -- we don't know with precision because our walkout to date is in our assessment, but the granular detail is much more focused on the core, the backbone, et cetera. But I think that the power is the #1 gating item for residences. If you had to pick which is the biggest factor, that is. So if the power is back up to that level by Christmas, that will be very positive for us. And we will work accordingly in terms of restoring to those premises.

And my last Virgin Islands question, St. Croix. You're not providing wireless service. My understanding that AT&T is. So what -- how are they doing something differently than you are? Do they just have more resources with generators and so on in the location?

No, that's not true. We are -- that's old news. So we are providing wireless and, in fact, we're helping support customers from another carrier with added capacity on some legacy network. So I think we're, from a -- in some ways, as Ric alluded to, that folks don't think competitively initially, there's some mutual support. But if you put your competitive hat on, I think we're proud of where we are in comparison to anyone there. And we are looking to really in -- within the next month get that wireless network to at least 80% level. And it's a question of -- it's real question of -- the main question on wireless is again power, right? So you can have cell sites that are up, and you're -- you've got the generators, but the generators occasionally will fail. And then you have a sector, you have a whole -- a number of sectors out while you're doing that, and that's true for all the wireless carriers.

And then shifting to India. Similar to the other question. You've had -- if you could give us a little bit of a tutorial on just the whole regulatory process. So it sounds like, and correct me if I'm wrong, that you have to get the power generation up and running, generating power, before you can apply for licensing to actually recognize the revenue, and then it sounds like there's a several-month lag to get that license before you can recognize the revenue and start billing for it, and then that's taken longer than expected. Do I have that roughly right?

You have it roughly right. It's what has happened. That's not quite the way it's supposed to work. It should be that period between having it up and synchronized with the grid and what's called the open access approvals should be a lot shorter than it has been according to the rules -- the governmental rules on it. But it's -- whether it's a backlog or whatever in terms of bureaucratic delay, it's -- that you have it pretty close on the reality.

So you have to wait until you're actually generating electricity before you can apply to actually start billing for it?

Not quite. There's a couple layers of the application. You've applied beforehand. We wouldn't be building, if we didn't -- we were within the open access regime to begin with and had certain regulatory approvals ahead of time. It's -- there is really a kind of, I don't want to be too strong, Kafkaesque situation, Catch-22, however you want to think about it where you -- you have to have the customer lined up who is buying the power to get that piece of power certified. But you have to have the -- certain level of approvals and synchronization where you can do that. And there's certainly -- there's probably some things that -- and I know there's some things that we learn that we can streamline a little bit. But ultimately, it all comes to the day where you have a piece of paper in an office that is just not getting processed quickly.

Our next question or comment comes from the line of Hamed Khorsand from BWS Financial.

So first off, I wanted to ask you, just given the hurricane damage, you have to do the rebuild. Was there any upgrade that you were planning to do that now you're really able to do because of the whole situation with infrastructure?

There are within it, sure. There are some things that probably wouldn't have made sense, at least quickly, given the network that was there that, as I talked about before, related to where we extend fiber, what the -- how the nodes are built, sort of the resiliency of some of that infrastructure. So it would have been -- some of those things would have been things we would have been blocking and tackling over time. Some of those things we probably wouldn't have done at all. It just would have not made sense, we are doing now. So net-net, I do think the network we end up with at the end will be better and more resilient than the one we had before the storm.

Right. And because you're spending more than the insurance coverage, how does this impact your planning as far as what you designate for investment into other businesses?

Yes. Let me -- Hamed, let me take you back just a second. We said we don't think the insurance coverage will cover all our losses. Some of those losses, a lot of the losses are lost revenue. So we haven't given a number yet on what we think we will spend on the network exactly. So I just want to clarify that. And how does it change? I mean, I don't think it really -- I don't think it is change. I mean, it's a little early. We will definitely have lessons learned on a few things as the desk clears. But I don't think it changes the fundamental value proposition we saw in that market and in similar markets.

But more specific to your question, Hamed, it doesn't -- what we're doing in other markets in Bermuda is not necessarily impacted by what we need to do in the Virgin Islands.

Got it. Okay. And then last question is, are you seeing any opportunity here in the U.S.? Or are you pretty much looking outside U.S. for opportunities now, given how saturated the market is?

We still see some things from time-to-time in the U.S. that pique our interest, but it's lower than we used to see for sure.

Okay. Are you guys putting the spectrum to use that you're participating in the auctions with?

We certainly hope so. And some of it -- or the decent size chunk of it was actually in the Virgin Islands, and we think can be helpful moving forward. But we certainly hope so.

(Operator Instructions) We have a follow-up question from the line of Allen Klee from Sidoti.

Can you remind us the -- prior to the hurricanes, the split in the U.S. Virgin Islands between wireless and wireline revenue?

Yes. We haven't given the figure, but it's a very high percentage. Substantially, all prestorm was wireline. And certainly, from a profitability standpoint, I would say, virtually all. Now, we were planning on changing that with the launch that I referred to, and we think that will change. But that was the case prestorm.

We have a follow-up question from the line of Ric Francis (sic) [Ric Prentiss] from Raymond James.

Couple of other quick ones. On the stock buyback that you did, when did you do it within the quarter? And what should we think about the pacing of that now that you've made the change on the capital structure and capital allocation?

We did it -- we did most of it after the announced decision on the dividend. So just a few weeks in September really, if you look at that. That doesn't mean we're going to be at that pace throughout the year by any means. And we're going to be, as we said in the release, opportunistic. So -- but it just -- we don't have a plan to say there's x dollars we're going to put to work every year no matter what. We're going to look at the mix. Basically, we're putting stock buybacks more prominently on the table as we consider capital allocation between external investments, internal investments and stock purchases.

All right. Is there an authorized amount? You said there's no set for the -- for an annual.

It was $50 million, so we're -- roughly $10 million into that.

Okay. And as we think about the hurricane item. That $36.6 million to go back to that item. That really was for network write-off, if I understood you correctly. You have the $4 million -- $4.4 million service credits in September. And as we think about the impact for 4Q and 1Q, it's more a magnitude on the revenue side, not trying to use the $36.6 million or some kind of extrapolation number. Is that the way we should kind of think of it?

Yes. That's what I'm saying. So that -- most of that number on the $36 million, 95% of it was write-off of damaged plant. So if we're done writing off damaged plant, we won't have that, but we'll still have the revenue impacts we noted.

Right, right. Okay. And one of those, (inaudible) stock buybacks...

The revenue is not in that.

That's right. Just to be clear.

Exactly. So $36.6 million was predominantly asset write-off, which is really a noncash item anyway that you have to replace with CapEx maybe in the future, but the more direct cash item in the quarter was the $4.4 million service revenue credit that you did to include that impact in EBITDA?

Correct.

That's right.

Okay. On the stock buyback, one other kind of nuance to it, you guys -- you're liquidity is not huge anyways. So that's probably also a balancing factor as you look at stock buybacks is trying to keep a balance there to have enough liquidity into the marketplace as well. So should we think about it really as it's a program that's opportunistic on price? Is it really the overarching message there?

Yes, it is. And Ric, you're right. I mean, for many years, the liquidity is an issue. But we just have gotten to the point where we say, look, if we think there is just a great value opportunity, then, I guess, liquidity be damned. Because it's not -- and at these levels, it's not going to have a fundamental impact on that, right?

Right. And then on the Australia one. No details obviously, but they operate in Australia, right? I mean, a lot of Australia infrastructure companies are involved all over the world, including Lendlease coming here to U.S. So this is an opportunity. But might work with a manager in Australia?

Yes, it's 100% focused in Australia at this time.

I'm showing no additional questions in the queue at this time. I would like to turn the conference back over to management for any closing remarks.

No closing remarks. Thank you, everybody, and we'll see you towards the end of February with year-end. Take care.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.