ATN International reported third-quarter earnings of $1.09 per share, far above the $0.19 consensus estimate. That is a 473.7% surprise and 505.6% year-over-year growth from $0.18. The headline flatters the quarter, though. Revenue of $183.24 million was unchanged from a year ago and missed the $184.9 million consensus by 0.9%. Much of the EPS jump came from a discrete foreign tax benefit rather than operations. The central tension is that reported growth has stalled while underlying profitability, especially in the International segment, keeps improving.
The quality of the beat deserves scrutiny. Pre-tax income was just $4.9 million, compared with a $1.1 million pre-tax loss a year ago. A $12.3 million income tax benefit then lifted net income attributable to stockholders to $18.6 million. There was genuine operating improvement underneath. GAAP operating income rose 32% to $12.9 million, helped by lower depreciation and amortization and smaller losses on asset dispositions. Interest expense also fell to $8.7 million from $11.5 million as the balance sheet deleveraged. Still, consolidated Adjusted EBITDA was essentially flat at $50.0 million with a 27.3% margin. That compares with Adjusted EBITDA growth of 10% in the first quarter and 9% in the second. Management attributes the slowdown to the U.S. tower portfolio sale, which removed $1.4 million of quarterly tower rent and added related costs. Excluding the sale, Adjusted EBITDA rose 6% and communications services revenue grew about 1%. That growth is real but modest.
The segment story is where the quarter earns its credit. International Telecom revenue rose 2% to $96.9 million despite the loss of a government subsidy. Segment Adjusted EBITDA climbed 9% to $36.3 million, accelerating from 6.6% growth in the second quarter. Margin kept stepping up, from 35.7% in Q1 to 36.9% in Q2 and 37.4% in Q3. The call did temper that, noting the international result included non-recurring carrier and mobility items and opex timing.
US Telecom was weaker on a reported basis. Revenue fell 2% to $86.3 million after 2% gains in each of the first two quarters, hurt by lost tower rent, lower construction revenue and roughly $0.5 million of delayed Southwest subsidy payments. Beneath that, management highlighted 7% growth in US high-speed broadband subscribers, better fiber penetration and lower churn in Alaska and the Southwest. A new Alaska CEO started September 1.
Bears have legitimate ammunition on demand. Consolidated high-speed broadband customers slipped to 139,100 even as homes passed rose 4%, meaning penetration fell overall. International prepaid mobile subscribers dropped to 314,000 from 322,700 in the prior quarter. Management tied part of that decline to a billing system upgrade. Blended mobile churn jumped to 3.77% from 3.48% in Q2 and 3.19% a year ago. Management newly flagged heightened competition in broadband and prepaid, particularly in the US Virgin Islands, along with that territory's unstable power grid. It also cited Starlink as an emerging, though so far limited, competitor. Nine-month operating cash flow fell to $76.7 million from $97.7 million, which management attributed to working capital timing.
Guidance requires careful reading because the signals conflict. Management now expects full-year Adjusted EBITDA at the high end of, or modestly above, its $183-193 million range, a step up from a simple reaffirmation last quarter. Earnings Whispers, however, characterizes the outlook as lowered guidance. That label likely reflects the longer arc: earlier in the year the framework was $190-200 million before the tower sale's expected $6-8 million hit reset it lower. Investors can view the latest update as a modest raise within a reduced baseline. Balance sheet flexibility is not in question. The company holds $351.5 million in cash, net leverage is 0.94x versus 2.36x at year-end, up to $29.6 million in additional tower proceeds remains possible, and the $30 million buyback is untouched.
Investor sentiment remained negative but improved, rising from -0.59 to -0.49 heading into the report. Price action has been less forgiving. Shares at $25.79 are down 7.5% since the opening after the August report and sit about 4.6% below the 200-day moving average of $27.04. The Earnings Whispers trend readings are mixed, with sequential growth positive while AVWAP remains negative.
The bottom line is that ATN's eye-catching EPS beat was largely a tax event, and revenue growth has decelerated to zero as the tower sale and island competition bite. What the quarter did preserve is a credible profitability story: rising international margins, improving US broadband traction, a nudged-up EBITDA outlook and a net-cash-rich balance sheet with largely undeployed capital. Whether that offsets subscriber erosion and rising churn is the question the next few quarters must answer.