ATLANTIC TELE NETWORK INC /DE - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31,
1999

OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
OF 1934 [NO FEE REQUIRED] For the transition period from to .

Commission file number 0-19551
__________________
Atlantic Tele-Network, Inc.
(Exact name of registrant as specified in its charter)

Delaware 19 Estate Thomas
(State or other jurisdiction of Havensite
incorporation or organization) P.O. Box 12030
St. Thomas, U.S. Virgin Islands
(Address of principal executive offices)

47-0728886 00801
(I.R.S. Employer Identification No.) (Zip Code)

(340) 777-8000
(Registrant's telephone number, including area code)
__________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
Common Stock, American Stock Exchange
Par Value $.01 per Share

Securities registered pursuant to Section 12(g) of the Act:

Title of each class
__________________
None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K ((S)229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [_] The aggregate
market value of the shares of all classes of voting stock of the registrant
held by non-affiliates of the registrant on March 27, 2000, was approximately
$21,791,232 computed upon the basis of the closing sales price of the Common
Stock on that date. For purposes of this computation, shares held by directors
(and shares held by any entities in which they serve as officers) and officers
of the registrant have been excluded. Such exclusion is not intended, nor
shall it be deemed, to be an admission that such persons are affiliates of the
registrant.

As of March 27, 2000, there were outstanding 4,699,700 shares of Common
Stock, $.01 par value, of the registrant.

Documents Incorporated by Reference

Portions of the proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A for the registrant's 2000
annual meeting of stockholders are incorporated by reference into Part III of
this Form 10-K.

ATLANTIC TELE-NETWORK, INC. ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1999

Page

PART I

Item 1. Business 2
Item 2. Properties 12
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a vote of Security Holders 13
Executive Officers of the Registrant 13

PART II

Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 14
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 8. Financial Statements and Supplementary Data 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 22

PART III

Item 10. Directors and Executive Officers of the Registrant 23
Item 11. Executive Compensation 23
Item 12. Security Ownership of Certain Beneficial Owners and
Management 23
Item 13. Certain Relationships and Related Transactions 23

PART IV

Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8K 24

SIGNATURES 26

Index to Combined and Consolidated Financial Statements F-1

1

PART I

Item 1. Business

Introduction

Atlantic Tele Network, Inc. ("the Company") was established in 1987 as a
holding company to acquire the Virgin Islands Telephone Corporation from ITT
Corporation. In January 1991 the Company acquired 80% of the stock of the
Guyana Telephone & Telegraph Company Limited ("GT&T"). The Company became a
public company in November of that year.

On December 30, 1997, the Company was split into two separate public
companies. One, a new company, Emerging Communications, Inc., contained all of
the Company's telephone operations in the U.S. Virgin Islands and was spun off
to Jeffrey J. Prosser and the public stockholders of the Company. The other,
the Company, continued to own GT&T. In connection with the transaction, the
number of outstanding shares of the Company's capital stock was reduced by 60%
(in effect, a reverse stock split of 1:2.5).

The Company from time to time evaluates opportunities for establishing or
acquiring other telecommunications business through privatization of
government-owned business or otherwise in the Caribbean area and in developing
countries in other parts of the world, and may make investments in such
businesses in the future. The Company has focused its attention on wireline
and cellular telephone businesses and cable and "wireless cable" television
businesses. In 1998, the Company acquired a 75% interest (increased to 80% in
1999) in Digicom, S.A., which provides dispatch radio, wireless data, network
and paging services in Haiti; and a 30% interest in Bermuda Digital
Communications, which, operating under the name "Cellular One" is the sole
cellular and PCS competitor in Bermuda to the Bermuda Telephone Company.
During 1999 the Company organized a wholly owned subsidiary, Wireless World,
LLC., and Wireless World, LLC. acquired VI Access the largest internet service
provider in the U. S. Virgin Islands. In December 1999, Wireless World, LLC.
agreed to acquire Antilles Wireless Cable T.V. Company, which holds MMDS and
LMDS licenses for the U. S. Virgin Islands and provides wireless cable
television services there.

Cornelius P. Prior, Jr., Chairman of the Board and Chief Executive
Officer of the Company, is the owner of approximately 60% of the outstanding
common stock of the Company.

GT&T

General. GT&T supplies all public telecommunications service in Guyana.
GT&T is the successor to the Guyana Telecommunication Corporation ("GTC"), a
corporation wholly owned by the government of Guyana, which prior to 1991 had
been the exclusive provider of telecommunications services in Guyana for more
than 20 years.

International Traffic. GT&T's revenues and earnings are highly dependent
upon international long-distance calls originating outside of Guyana and
collect calls from Guyana to foreign points. The following table sets forth
data with respect to the volume of GT&T's international traffic for the past
three years:

International Traffic
(in thousands of minutes)
1997 1998 1999
---- ---- ----
Inbound Paid and
Outbound Collect 44,456 (27%) 49,796 (41%) 59,509 (51%)
Audiotext 97,913 (59%) 55,776 (46%) 41,500 (35%)
Total Inbound 142,369 (86%) 105,572 (87%) 101,009 (86%)
Outbound 24,120 (14%) 16,440 (13%) 16,061 (14%)
------ --- ------ --- ------ ---
Total 166,489 (100%) 122,012 (100%) 117,070 (100%)
======= ==== ======= ==== ======= ====

2

GT&T has agreements with foreign telecommunications administrations and
private carriers covering all international calls into or out of Guyana. These
agreements include negotiated "accounting rates" which govern the rates of
payment by GT&T to the foreign carriers for the use of their facilities in
connecting international calls billed in Guyana, and by the foreign carriers
to GT&T for the use of its facilities in connecting international calls billed
abroad.

The different classes of international traffic described in the above
table produce significantly different profit margins for GT&T. In the case of
regular inbound traffic and outbound collect traffic, GT&T receives a
"settlement rate" payment from the foreign telecommunications carrier
generally equal to one-half of the applicable "accounting rate" (e.g., in the
case of traffic from the United States, a payment of 85 cents per minute), and
GT&T has no significant direct expenses associated with such traffic except
for earth station and satellite system costs which are applicable to all of
GT&T's international traffic. In the case of audiotext traffic, GT&T receives
a settlement rate payment from the foreign carrier which is generally equal to
one-half of the applicable accounting rate, and GT&T pays a fee or commission
to the audiotext traffic provider at rates which are negotiated from time to
time and are typically more than half of the amount received by GT&T from the
foreign carrier. In the case of outbound international traffic, GT&T must
generally pay the foreign carrier a settlement rate payment equal to one-half
of the applicable international accounting rate, and GT&T collects from its
subscriber a rate which is regulated by the PUC. In 1997 and earlier, the
amount which GT&T collected from its subscribers for outbound international
traffic was usually significantly less than the amount which GT&T was required
to pay the foreign carrier (e.g., throughout most of 1997, for the United
States, GT&T collected approximately $.74 per minute and paid the U.S. carrier
$.85 per minute). Since February 1, 1998, when a temporary rate increase from
the Public Utility Commission ("PUC") went into effect, amounts collected by
GT&T for outbound international traffic have in the aggregate slightly
exceeded the payments due to foreign carriers for such traffic. GT&T does not
allow a significant volume of collect calls into Guyana.

Historically, the volume of calls into Guyana from the United States,
Canada and the United Kingdom (including credit card and collect calls from
Guyana) has greatly exceeded the volume of paid outbound calls from Guyana to
these countries. Except for audiotext traffic, the volume of traffic with
other countries has been more evenly balanced. Management of GT&T believes
that the disparity in traffic with these countries, which has produced a
steady stream of hard currency revenues for GT&T, stems from the fact that the
vast majority of GT&T's traffic with these countries consists of personal
calls between Guyanese expatriates and their friends and family in Guyana and
that the average income of most Guyanese residents is substantially lower than
that of their Guyanese expatriate friends or relatives in these countries.
There can be no assurance that, as GT&T expands and improves its local
telephone facilities and changes occur in the Guyanese economy, inbound
international traffic will continue to be as significant a part of GT&T's
total revenues.

3

The U.S. FCC has issued an order which has the effect of prohibiting U.S.
carriers from paying a settlement rate in excess of 23 cents per minute to
GT&T after January 1, 2002, effective December 31, 1999, GT&T's operating
agreement and circuits with AT&T terminated as a result of AT&T's insistence
that GT&T agree to a substantial reduction in the settlement rate for traffic
between the U.S. and Guyana prior to January 1, 2002. See
"Business--Regulation." Any decrease in the net margin of inbound over
outbound traffic or in the accounting rate applicable to traffic between
Guyana and the United States is likely to have an adverse effect on GT&T's
earnings unless GT&T is able to achieve a compensating increase in its
regulated rates for local and outbound international service.

A significant portion of GT&T's international traffic arises from the
provision by GT&T of telecommunications services to audiotext providers in a
number of foreign countries, although the volume of such traffic has been
declining in the past three years. Management attributes the continuing
decline in audiotext traffic to increased competition from other terminating
country carriers, from domestic audiotext traffic and from the internet. As a
result of the decline in audiotext traffic revenues and profitability, on
December 31, 1997, GT&T filed an application to the PUC for a substantial
increase in rates from local service and outbound international calls and was
awarded a significant temporary increase in these rates effective February 1,
1998. GT&T filed an amended application in October 1998. Proceedings for a
permanent increase in these rates are still pending. See "Business --
Regulation".

Audiotext providers offer telephone information services comparable to
those available in the United States on an area code 900 basis. By making a
telephone call, the caller can obtain information (generally in the form of a
recorded message) on subjects such as weather, sports, business news or
material of a sexual nature. Some audiotext providers also establish "chat
lines" on which the callers can talk to one another. Audiotext traffic
utilizes only excess capacity on GT&T's international circuits and GT&T's main
switch in Georgetown. No use of GT&T's local network within Guyana is
involved, and none of the telephone numbers assigned to audiotext providers by
GT&T can be accessed by a normal telephone call made in Guyana.

At the present time, in the United States and many other countries
audiotext calls to GT&T or another foreign telecommunications carrier are
treated as ordinary international traffic and are not subject to the
regulations applicable to domestic audiotext traffic. However, the U.S.
Federal Trade Commission has issued for comments a proposed rule which could
change this. See "Business Regulation". GT&T's agreements with audiotext
providers obligate such providers to comply with applicable regulations in the
countries in which they advertise their services and to refrain from using
obscene or indecent material. From time to time a country's regulatory
authorities or national telecommunications carrier have taken steps to
restrict or eliminate international audiotext traffic.

Domestic Service. At December 31, 1999, GT&T had approximately 64,000
subscriber access lines in service. This number of access lines represents
approximately 8 lines per 100 inhabitants. Of all lines in service, 85% were
in the largest urban areas, consisting of Georgetown, Linden, New Amsterdam,
Diamond and Beterverwagting. During 1999, GT&T extended service to a number of
small communities. However, most rural areas still do not have telephone
service.

4

In the past, GT&T's revenues from local telephone and other services have
not been significant (e.g. in 1997 local service revenues amounted to
approximately $2.9 million). In December 1997 and October 1998, GT&T applied
for rate increases to enable it to earn a 15% rate of return on its rate base.
In response to GT&T's December 1997 application, the PUC granted GT&T a
temporary rate increase in January 1998, which was subsequently reduced by the
PUC in March 1998, pending a final decision on GT&T's application. As a result
of the temporary rates for local service in effect throughout most of 1998 and
all of 1999, GT&T's local service revenues increased to approximately
$9.4 million in 1998 and $8.7 million in 1999.

GT&T's revenues for local service are derived from installation charges
for new lines, monthly line rental charges, monthly measured service charges
based on the number and duration of calls and other charges for maintenance
and other customer services. For each category of revenues, rates differ for
residential and commercial customers. Residential and commercial customers
have contributed approximately equally to GT&T s revenues from local service.
As of the end of 1999, GT&T's basic monthly charge per access line was
approximately $1.40 for residential customers and approximately $5.55 for
business customers, and the average monthly bill for residential and business
service (excluding charges for international calls and cellular service) was
$7.13 and $15.06, respectively.

GT&T currently provides mobile cellular telephone service in the
Georgetown area and along a portion of Guyana's coastal plain. GT&T plans to
complete cellular coverage of the coastal plain in 2000. Cellular subscribers
are offered various calling plans and are charged a monthly fee plus airtime
based on the selected plan. GT&T's current average monthly charge per cellular
subscriber is approximately $63.99, including monthly rental and airtime
charges. As of December 31, 1999, GT&T had approximately 2,900 active mobile
cellular subscribers.

Expansion. Since the Company acquired its interest in GT&T in January
1991, GT&T has significantly expanded and rebuilt its telecommunications
network. The number of access lines has increased from approximately 13,000
working lines in January 1991 to approximately 64,000 lines at December 31,
1999. Substantially all of GT&T's access lines are now digitally switched
lines. The Intelsat B earth station, which provides the principal link with
Guyana and the rest of the world, was upgraded and digitalized to increase the
number of available circuits from 75 in January 1991 to 1,266 currently. In
1997, GT&T installed a second Standard B earth station, which is currently
used to provide service through an Intelsat satellite to a number of
localities in the interior of Guyana. This earth station and the Intelsat
satellite may also be used in the future to provide a second satellite link
from Guyana for international traffic.

In the second quarter of 1997, GT&T completed a test installation of a
Northern Telecom Proximity I fixed wireless network in a rural area about 60
kilometers west of Georgetown. GT&T currently utilizes this technology to
provide wireless telephone service to about 1,800 subscribers in this area.
The installation of these services began in December 1999 and will continue
through the first quarter of 2000. The normal rates for land line telephones
apply to GT&T's fixed cellular and fixed wireless network services.

5

GT&T has installed over 400 public telephones in locations across the
country providing telecommunications for both local and international calls in
areas that had not previously enjoyed service. Currently, in addition to the
public telephones, GT&T maintains three public "telephone centers" at which
the public can, upon payment of the charges in cash to GT&T personnel who
staff these centers, use an ordinary residential-type telephone to make
international and domestic calls.

GT&T has purchased capacity in two international fiber optic cables - the
Americas I cable, which runs from Brazil to Trinidad, the United States Virgin
Islands and the United States mainland, and the Columbus II cable, which runs
from the Caribbean region to the Azores and Spain. The Company is presently
participating with other international carriers to build a third cable,
Americas II, that would provide a leg to Guyana, Suriname and French Guyana.
Americas II is planned to be operational by May 2000.

If and when GT&T's current regulatory and tax issues are resolved, the
Company anticipates that GT&T will further significantly expand its
facilities. GT&T is currently involved in a proceeding with regard to delays
in completing its original expansion program (the "Expansion Plan") and is
subject to a PUC order requiring additional expansion of services that GT&T
has not met. See "Business -- Regulation".

Other Services. GT&T is also licensed to provide various
telephone-related services that extend beyond basic telephone service,
including yellow pages and other directory services, and it has an exclusive
license to sell, lease or service various kinds of telecommunications
equipment. Under its license from the Government of Guyana (the "License"),
GT&T's rates for most of these services must be specified in a tariff approved
by the PUC. See "Business--Regulation."

Significant Revenue Sources

Revenues from the following carriers of international traffic to Guyana
constituted the following percentages of GT&T's revenues in the past three
years:

1997 1998 1999
AT&T................................... 31% 27% 24%
MCI 11% 11% 18%
British Telecom........................ 9% 9% 8%
Teleglobe (Canada)..................... 18% 18% 14%

A significant portion of GT&T's international long distance revenue
discussed above is generated by certain of GT&T's audiotext providers which
operate as service bureaus or intermediaries for a number of audiotext
information providers. The following service bureaus accounted for more than
10% of GT&T's total revenues in the years indicated below:

1997 1998 1999
Beylen Telecommunications, Ltd. 33% 20% 14%
Islands Telephone Company Limited 15% 11% 6%

No other revenue source accounted for more than 10% of GT&T's total
revenues in 1997, 1998 or 1999.

Competition

Pursuant to its franchise from the government of Guyana, GT&T has the
exclusive right to provide, and is the sole provider of, local, domestic
long-distance and international telephone service in Guyana, except for
cellular radio telephone service. One other company began providing local,
mobile cellular service near the end of 1998. Another company has been seeking
a license to provide fixed wireless service as well as mobile service and to
provide wireless international services. GT&T has been opposing this
application to the extent it goes beyond local, mobile wireless service on the
grounds that the other services are within the exclusive rights granted GT&T
in its franchise.

6

GT&T has the exclusive franchise to provide telephone directories and
directory advertising and to supply a wide variety of telecommunications
equipment in Guyana. GT&T's revenues from directory advertising and the sale
of telecommunications equipment have not been significant to the Company.

The provision of telecommunication services to international audiotext
providers is highly competitive. GT&T competes with many telephone companies
around the world that provide telecommunications services to international
audiotext providers. GT&T's contracts with audiotext providers are all
terminable on short notice, and such providers can quickly shift their traffic
to another foreign telecommunications carrier which offers higher compensation
or better services merely by changing the telephone numbers in their
advertisements. . Regulation

GT&T is subject to regulation in Guyana under the provisions of its
License and under the Guyana Public Utilities Commission Act of 1999 ("PUClaw")
and the Guyana Telecommunications Act 1990 ("Telecommunications Law").
GT&T also has certain significant rights and obligations under the agreement
(the "GT&T Agreement") pursuant to which the Company acquired its interest in
GT&T in 1991.

License. The License, which was issued on December 19, 1990, grants GT&T
an exclusive franchise to provide in Guyana (i) for a period of 20 years
(renewable for an additional 20 years at the option of GT&T), public
telephone, radio telephone (except private radio telephone systems which do
not interconnect with GT&T's network) and pay station telephone services and
national and international voice and data transmission, sale of advertising in
any directories of telephone subscribers and switched or non-switched private
line service; and (ii) for a period of 10 years (renewable for an additional
10 years on a non-exclusive basis at the option of GT&T) supply of terminal
and customer premises equipment and telefax, telex and telegraph service and
telefax network service (without prejudice to the right of any other person to
undertake any of the following activities: (a) sale of telefax or teleprinter
machines, (b) maintenance of telefax or teleprinter equipment, or (c)
operation of any facility for the sending or receiving of telefax copies or
teleprinter messages). In addition, GT&T was granted a non-exclusive license
to provide, for a period of 20 years (renewable for an additional 20 years at
the option of GT&T), cellular radio telephone service.

GT&T Agreement. Under the GT&T Agreement GT&T undertook to complete a
substantial Expansion Plan by a date which, after giving effect to certain
agreed upon extensions, was February 28, 1995, and GT&T was entitled to a
specified minimum return. Subject to certain limitations applicable to the
years 1991-1994, GT&T is entitled, pursuant to the GT&T Agreement, to a
minimum return of 15% per annum on its capital dedicated to public use ("rate
base"). Absent mutual agreement by the government of Guyana and the Company
(and there has been no such agreement) on a rate of return methodology, rates
are to be calculated on the basis of GT&T's entire property, plant and
equipment pursuant to a rate of return methodology consistent with the
practices and procedures of the United States Federal Communications
Commission. GT&T believes that its rate base at December 31, 1999 was
approximately $108.8 million, although the PUC in various orders or staff
reports has thrown out or challenged several million dollars of franchise
rights and working capital which are included in the foregoing figure. GT&T
believes that its 15% per annum minimum return is to be calculated after all
of GT&T's operating expenses (including income taxes) other than interest
expense. However, the PUC has disallowed as an expense for rate making
purposes management fees equal to 6% of GT&T's revenues which GT&T pays to the
Company pursuant to an agreement approved by representatives of the government
at the time of the Company's acquisition of its interest in GT&T.

7

Under the GT&T Agreement, upon non-renewal or termination of the License,
the government of Guyana will be entitled to purchase the Company's interest
in GT&T or the assets of GT&T upon such terms as may be agreed to by the
Company and the government or, absent such agreement, as may be determined by
arbitration before the International Center for the Settlement of Investment
Disputes.

PUC Law and Telecommunications Law. The PUC Law and the
Telecommunications Law provide the general framework for the regulation of
telecommunications services in Guyana. The Public Utilities Commission of
Guyana ("PUC") is an independent statutory body with the principal
responsibility for regulating telecommunications services in Guyana. The PUC
has authority to set rates and has broad powers to monitor GT&T's compliance
with the License and to require GT&T to supply it with such technical,
administrative and financial information as it may request. The PUC also has
broad authority to review and amend any GT&T program for development and
expansion of facilities or services.

Although, under the current PUC Law and predecessor statutes which have
been in effect since 1990, the PUC is obligated to honor the provisions of the
GT&T Agreement on rates, in the Company's opinion, the PUC has consistently
failed to do so:

o In April 1991, GT&T sought a 184% rate increase to which it was
entitled under the GT&T Agreement to compensate for a devaluation of the
Guyana currency. The PUC delayed its decision until November 1991 when it
awarded only a part of the increase sought, and then further delayed
authorizing GT&T to collect various portions of the increased rates until
1995. A small portion of the increased rates awarded in November 1991 was
never authorized for collection.

o In May 1995, GT&T applied to the PUC for a substantial increase in all
of its local rates to enable it to earn the minimum 15% return specified in
the GT&T Agreement. In October 1995, the PUC rejected GT&T's application and
substantially reduced rates in an order ultimately voided by the Guyana High
Court on grounds that the PUC's hearing procedures violated "principles of
natural justice."

o On December 31, 1997, GT&T again applied to the PUC for a significant
increase in rates so as to enable GT&T to earn a 15% return on its rate base.
The PUC first awarded GT&T on a temporary basis a substantial increase in
rates and then without holding any hearings, as are required under the PUC
Law, some ten weeks later, ordered a substantial reduction in the interim rate
increase.

o On October 27, 1998 to reflect changed conditions since December 31,
1997, GT&T filed for an additional rate increase designed to generate $19.0
million in additional revenues over and above the interim rates currently in
effect. GT&T's two applications for a permanent rate increase are still
pending before the PUC.

o In January 1999, the chairman of the PUC held a press conference which
dealt extensively with the rate issues under consideration by the PUC. GT&T
applied to the Guyana High Court for an order prohibiting the chairman from
further participation in the rate case on the grounds that this press
conference and his statements at the press conference revealed a
predetermination and bias by the chairman against GT&T on the pending issues.
In response to this application, the Guyana High Court issued an order
directing the chairman and the PUC to show cause why such an order of
prohibition should not be issued. In the Company's opinion, the Guyana High
Court's order had the legal effect of barring the chairman, but not the other
members of the PUC, from further participation in the rate case pending a
determination by the Guyana High Court of the merits of GT&T's application.
The PUC, however, took the position that all of its members were barred from
further participation in the rate case during the pendency of the High Court's
order to show cause, and the PUC declined to schedule any further hearings in
the rate case. On March 28, 2000, the High Court found that the chairman's
statements at the press conference provided a reasonable basis to suspect the
chairman of having a bias against GT&T, and the Court barred the chairman of
the PUC from further rate case proceedings.

8

In addition to the two pending rate cases, GT&T has a number of other
significant matters pending before the PUC:

o Since March 1995 the PUC has had pending a proceeding initiated by the
minister of telecommunications of Guyana, with regard to the noncompletion of
the Expansion Plan by its scheduled completion date of February 28, 1995. It
is GT&T's position that its failure to receive timely rate increases, to which
GT&T was entitled, to compensate for the devaluation in Guyana currency which
occurred in 1991 provides legal justification for GT&T's delay in completing
the Expansion Plan. If the PUC concludes that GT&T failed or refused to
complete the Expansion Plan in a timely manner without legal justification, it
may impose a fine, which could range from $56 (G $10,000) up to the cost of
completing the portion of the Expansion Plan which was unfinished on February
28, 1995 (which GT&T estimates to be no more that $5 million). The PUC could
also recommend to the government that it cancel the License. The Guyana
government is not bound to act on a PUC recommendation. GT&T will have the
right of appeal to the Guyana courts from any adverse ruling of the PUC.

o In October 1997, the PUC ordered GT&T to increase the number of
telephone lines in service to a total of 69,278 lines by the end of 1998,
89,054 lines by the end of 1999 and 102,126 by the end of the year 2000, to
allocate and connect an additional 9,331 telephone lines before the end of
1998 and to provide to subscribers who request them facilities for call
diversion, call waiting, reminder call and three-way calling by the end of the
year 1998. In issuing this order, the PUC did not hear evidence or make any
findings on the cost of providing these lines and services, the adjustment in
telephone rates which may be necessary to give GT&T a fair return on its
investment or the ways and means of financing the requirements of the PUC's
order as required by the PUC Law then in effect. GT&T has filed a motion
against the PUC's order in the Guyana High Court and has appealed the order on
different grounds to the Guyana Court of Appeal. No stay currently exists
against this order, and the PUC has recently scheduled a hearing to inquire
into GT&T's compliance or noncompliance with this order.

o In July 1998, the PUC gave notice that it would hold a public hearing
on August 25, 1998 in respect of the following matters; (i) "the validity of
the grant of monopoly rights to any owner or provider of services in the
public utility sector, having regard to the laws in force in Guyana at the
relevant time;" and (ii) "whether the Commission has power to request the
Government to issue a license to a new provider of services in the public
utility sector, where the existing provider in that sector fails to refuse to
meet reasonable demands for service in that public utility sector." While the
PUC's notice did not name GT&T as the service provider in question, the
Company believes that GT&T is the service provider which will be the subject
of the hearing. This intended hearing has been stayed by an order issued by
the Guyana High Court on an application by GT&T pending a hearing on the
merits of GT&T's application.

o In 1997 after the Guyana High Court voided a PUC order of October 1995
reducing GT&T's rates for outbound long distance calls to various countries,
GT&T put into effect a surcharge to recover the approximately $9.5 million of
lost revenues from the period of October 1995 to the date of the High Court's
order. The Guyana Consumer Advisory Bureau, a non-governmental group,
instituted a suit challenging GT&T's rights to institute this surcharge
without PUC approval, and in the fourth quarter of 1999, the Guyana High Court
ruled that GT&T should have first obtained PUC's permission for such
surcharge. Substantially all of the $9.5 million of lost revenues were
collected prior to the court's ruling, and it is unclear whether GT&T will be
required to make any refund since the High Court did not rule on GT&T's
contention that it was entitled to recover these lost revenues.

9

o In February 2000 GT&T received notices of five separate hearings from
the PUC relating to various issues, including GT&T's failure to comply with
the October 1997 order to increase the number of lines in service, and
information requests on the amount of surcharges collected by GT&T as a result
of the High Court's voiding of the PUC's October 1995 rate reduction order.
GT&T has filed with the Guyana High Court a petition to bar the Chairman of
the PUC on the grounds of bias from participating in any matters involving
GT&T.

At the date of this report, the fixed term of office of all of the
members of the PUC has expired, and the government of Guyana has the authority
to replace any or all of the members.

FTC Matters. On October 30, 1998, the U.S. Federal Trade Commission
("FTC") issued for comment a proposed rule which would expand the definition
of "pay-per-call" services to include international audiotext services such as
those which GT&T terminates in Guyana. If adopted in its present form the
FTC's proposed rule would require, among other things, that a caller must
receive a short preamble at the beginning of the call advising the caller of
the cost of the call and permitting the caller to terminate the call without
charge if terminated immediately. Although GT&T has not completed its study of
the ways and means of possibly complying with this requirement, it may be
technically impossible for recipients of international audiotext traffic, such
as GT&T, to separate audiotext traffic from other incoming international
traffic and permit a free preamble for audiotext calls. The FTC's proposed
rule would have the effect of prohibiting a local telephone company from
disconnecting a subscriber's telephone service for failure to pay charges for
an international audiotext call. This requirement currently applies to area
code 900 domestic audiotext. The proposed rule would also include several
requirements which, if adopted, could make it more difficult to bill and
collect for international audiotext calls. If the proposed regulations are
adopted, they may have a significant adverse impact on international audiotext
traffic from the United States to Guyana and other non-U.S. termination
points.

FCC Matters. The U.S. Federal Communications Commission ("FCC") has
issued a Report and Order in a rule making proceeding in which it adopted
mandatory international accounting and settlement rate benchmarks for many
countries. The FCC adopted a mandatory settlement rate benchmark of $.23 per
minute for low-income countries such as Guyana and required that settlement
rates between the U.S. and low-income countries be reduced to $.23 per minute
by January 1, 2002. The current settlement rate is $.85 per minute. The FCC
stated in the Report and Order that it expects U.S. licensed carriers to
negotiate proportionate annual reductions prior to 2002.

In accordance with this FCC policy, AT&T sought a reduction in the
settlement rate for traffic between Guyana and the United States, GT&T
declined to agree to such a reduction, and effective December 31, 1999 GT&T's
operating agreement and all direct circuits with AT&T were terminated. In
anticipation of the termination of the AT&T agreement, GT&T has sought to
bring on circuits with other carriers to handle the traffic previously
received from AT&T and to restructure its operating agreements with carriers
around the world so that GT&T will receive approximately $.85 per minute as a
termination fee for international traffic from all countries, with the
exception of Canada and certain Caribbean countries which will continue to be
able to send normal volumes of traffic to GT&T at the lower rates which
traditionally have been in effect with these countries.

It is likely that international settlement rates between Guyana and the
United States and other countries around the world will decline significantly
on or prior to January 1, 2002. Any significant reduction in the settlement
rates for U.S. - Guyana traffic could have a significant adverse impact on
GT&T's earnings. While such an event would provide GT&T with basis to seek a
rate increase from the PUC so as to permit GT&T to earn its contractually
provided 15% rate of return, there can be no assurances as to when or whether
GT&T would receive such a rate increase.

10

Taxation -United States

As a U.S. corporation, the Company is subject to U.S. federal income tax
on its worldwide net income, currently at rates up to 35%. GT&T is a
controlled foreign corporation ("CFC") for purposes of the Subpart F
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
Under those provisions, the Company may be required to include in income
certain earnings and profits ("E&P") of a CFC subsidiary at the time such E&P
are earned by the subsidiary, or at certain other times prior to their being
distributed to the Company. At present, no material amount of such subsidiary
E&P is includible in the U.S. taxable income of the Company before being
distributed to it. Pursuant to the foreign tax credit provisions of the Code,
and subject to complex limitations contained in those provisions, the Company
would be entitled to credit foreign withholding taxes on dividends or interest
received, and foreign corporate income taxes of its subsidiaries paid with
respect to income distributed as dividends or deemed distributed under Subpart
F from such subsidiaries, against the Company's U.S. federal income tax.

A U.S. corporation is classified as a Personal Holding Company ("PHC") if
(a) more than 50% of its capital stock is owned directly or indirectly by or
for five or fewer individuals (or pension plans); and (b) at least 60% of its
adjusted ordinary gross income consists of certain types of income
(principally passive income, including interest and dividends) included in the
Code definition of "PHC Income." For any taxable year that a corporation is a
PHC, the "undistributed personal holding company income" of such corporation
for that year (i.e., the net income of the corporation as reflected on its
U.S. corporate income tax return, with certain adjustments, minus, in general,
federal income tax and dividends distributed or deemed distributed for this
purpose) would be subject to an additional PHC tax of 39.6%. The Company
currently satisfies the above ownership criterion but the Company believes
that it does not satisfy the income criterion for classification as a PHC.
Taxation - Guyana

GT&T's worldwide income is subject to Guyanese tax at an overall rate of
45%. The GT&T Agreement provides that the repatriation of dividends to the
Company and the payment of interest on GT&T debt denominated in foreign
currency are not subject to withholding taxes. It also provides that fees
payable by GT&T to the Company or any of its subsidiaries for management
services they are engaged to render shall be payable in foreign currency and
that their repatriation to the United States shall not be subject to currency
restrictions or withholding or other Guyana taxes.

In May 1997, GT&T received a letter from the Guyana Commissioner of
Inland Revenue indicating that GT&T's tax returns for 1992 through 1996 had
been selected for an audit under the direct supervision of the Trade Minister
with particular focus on the withholding tax on payments to international
audiotext providers. In March and April 1997, the Guyanese Trade Minister
publicly announced that he had appointed a task force to probe whether GT&T
should pay withholding taxes on fees paid by GT&T to international audiotext
providers. The Minister announced that if GT&T were found guilty of tax
evasion it could owe as much as $40 million in back taxes. In July 1997, GT&T
applied to the Guyana High Court for an order prohibiting this audit on the
grounds that the decision of the Minister of Trade to set up this task force
and to control and direct its investigation was beyond his authority, violated
the provisions of the Guyanese Income Tax Act, interfered with the
independence of the Commissioner of Inland Revenue and was done in bad faith,
and the court issued an order effectively staying the audit pending a
determination by the court of the merits of GT&T's application.

11

In June 1997, GT&T received an assessment of the current equivalent of
approximately $3 million from the Guyana Commissioner of Inland Revenue for
taxes for 1996 based on the disallowance as a deduction for income tax
purposes of five-sixths of the advisory fees payable by GT&T to the Company
and for the timing of the taxation on certain surcharges to be billed by GT&T.
The deductibility of these advisory fees and the deferral of these surcharges
until they are actually billed had been upheld for an earlier year in a
decision of the High Court in August 1995. In July 1997, GT&T applied to the
High Court for an order prohibiting the Commissioner of Inland Revenue from
further proceeding with this assessment on the grounds that the assessment was
arbitrary and unreasonable and capriciously contrary to the August 1995
decision of the Guyana High Court, and GT&T obtained an order of the High
Court effectively prohibiting any action on the assessment pending the
determination by the court of the merits of GT&T's application.

In November 1997, GT&T received assessments totaling the current
equivalent of approximately $11 million from the Guyana Commissioner of Inland
Revenue for taxes for the years 1991 through 1996. It is GT&T's understanding
that these assessments stem from the same audit commenced in May 1997 which
the Guyana High Court stayed in its July 1997 order referred to above.
Apparently because the audit was cut short as a result of the Court's July
1997 order, GT&T did not receive notice of and an opportunity to respond to
the proposed assessments as is the customary practice in Guyana, and
substantially all of the issues raised in the assessments appear to be based
on mistaken facts. GT&T has applied to the Guyana High Court for an order
prohibiting the Commissioner of Inland Revenue from enforcing the assessments
on the grounds that the origin of the audit with the Minister of Trade and the
failure to give GT&T notice of and opportunity to respond to the proposed
assessment violated Guyana law. The Guyana High Court has issued an order
effectively prohibiting any action on the assessment pending the determination
by the Court of the merits of GT&T's application.

There can be no assurance as to the ultimate outcome of any of the above
described pending tax issues.

Employees

As of December 31, 1999, GT&T employed approximately 670 persons of whom
approximately 499 are represented by the Guyana Postal and Telecommunications
Workers Union. GT&T's current contract with this union expires on September
30, 2000. The Company considers its employee relations to be satisfactory.

Item 2. Properties

At December 31, 1999, GT&T utilized approximately 254,000 square feet of
building space on approximately 41 acres of land in various locations
throughout Guyana, all of which is owned by GT&T. In addition, GT&T leases
approximately 3,000 square feet of office space in Georgetown, Guyana. For
additional information, see "Business--GT&T--Expansion". GT&T carries insurance
against damage to equipment and buildings, but not to outside plant.

Item 3. Legal Proceedings

GT&T is involved in various regulatory and court proceedings in Guyana
which are discussed in Item 1. "Business -- Regulation" and "Business --
Taxation Guyana."

The Company is involved in various other litigation, the ultimate
disposition of which, in the opinion of the Company's management, will not
have a material adverse effect on the financial position or operations of the
Company.

12

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the
fourth quarter of 1999.

Executive Officers of the Registrant

Set forth below are the executive officers of the Company as of the date
hereof:

Name Age Position
Cornelius B. Prior, Jr. 66 Chief Executive Officer, Chairman of the
Board and Secretary of the Company;
Chairman of the Board of GT&T
Lewis A. Stern 65 Vice President - Finance and
Chief Financial Officer
Steven M. Ross 40 Treasurer and Chief Accounting Officer
Lawrence M. Fuccella 36 Vice President - Special Projects
Richard A. Hanscom 58 Vice President - Technology and Engineering
Sonita Jagan 34 General Manager - GT&T

Cornelius B. Prior, Jr. has been Chief Executive Officer and Chairman of
the Board of the Company since December 30, 1997. From June 30, 1987 to
December 1997 he was Co-Chief Executive Officer and President of the Company.
He was Chairman of the Board of Virgin Islands Telephone Corporation from June
1987 to March 1997 and became Chairman of the Board of GT&T in April 1997.
From 1980 until June 1987, Mr. Prior was a managing director and stockholder
of Kidder, Peabody & Co. Incorporated, where he directed the
Telecommunications Finance Group.

Lewis A. Stern joined the Company in March 2000 and was appointed as Vice
President - Finance and Chief Financial Officer on March 10, 2000. For more
than five years prior to his joining the Company Mr. Stern was a partner
through a professional corporation in the law firm of Fried Frank, Harris,
Shriver and Jacobson.

Steven M. Ross joined the Company in August 1993 as assistant controller.
He was appointed Acting Chief Financial Officer, Chief Accounting Officer and
Controller in July 1999. Mr. Ross was appointed Treasurer on March 10, 2000.
Mr. Ross graduated from West Virginia University in 1981 receiving a B.S.B.A.,
majoring in accounting, and holds a Master of Professional Accountancy from
West Virginia University.

Lawrence M. Fuccella became a Vice President of the Company in 1998. Mr.
Fuccella joined GT&T as assistant finance controller in July 1992 after
receiving his MBA from Virginia Commonwealth University. He became finance
controller of GT&T in 1993. Since 1994 he has been Special Projects Director
with responsibility for managing the Company's audiotext operations and its
relationships with foreign telecommunications administrations.

Richard A. Hanscom, Sr. was appointed as Vice President - Technology and
Engineering of the Company in March 2000. He has 39 years of experience in the
telecommunications industry. He joined ITT in 1974, and was working at Vitelco
when the Company acquired it in 1987 and has held various management positions
with the company since that time. He has a degree in Electrical Engineering
from Rochester Institute of Technology.

Sonita Jagan was appointed General Manager of GT&T on February 24, 2000.
Ms. Jagan joined GT&T in March 1993 as Assistant Financial Controller, she was
promoted to Financial Controller in 1994 and was further promoted to General
Manager - Internal Affairs in June 1999. Ms. Jagan received a Bachelor of Arts
in Administration and Commerce from the University of Western Ontario, Canada.

13

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters

The Company's Common Stock, $.01 par value, is listed on the American
Stock Exchange ("AMEX") under the symbol "ANK". The following table sets forth
quarterly market price ranges for the Company's Common Stock in 1998 and 1999:

1998 Quarters High Low
1st........................................ 151/2 75/8
2nd 161/4 107/8
3rd 141/8 63/4
4th 121/2 73/8

1999 Quarters High Low
1st........................................ 1111/16 8
2nd 105/8 81/4
3rd 103/4 95/16
4th 101/2 77/8

The approximate number of holders of record of Common Stock as of March
27, 2000 was 68.

Dividends

On December 15, 1998 the Board of Directors of the Company adopted a
policy of paying quarterly dividends at the rate of $0.15 per share on the
Company's Common Stock and declared a dividend at that rate payable in January
1999. Dividends at this rate were declared in and paid for the four quarters
of 1999. On March 10, 2000 the Board of Directors of the Company modified the
policy to increase the quarterly dividend payments to the rate of $0.175 per
share on the Company's Common Stock, and declared a dividend at that rate
payable in April 2000.

The declaration and payment of dividends on the Common Stock is at the
discretion of the Board of Directors of the Company. The continuation or
modification of the Company's current dividend policy will be dependent upon
future results of operations, financial condition, capital requirements,
contractual restrictions, regulatory actions, and profitability of the Company
and its subsidiaries and other factors deemed relevant at that time by the
Board of Directors.

14

Item 6. Selected Financial Data

SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data have been derived from
and are qualified by reference to, the audited combined and consolidated
financial statements of the Company. The selected historical combined and
consolidated financial data should be read in conjunction with the audited
combined and consolidated financial statements and related notes thereto of
the Company for the years ended December 31, 1997, 1998 and 1999. All dollar
amounts are in thousands, except per share data.

Years Ended December 31,
--------------------------------------------------------------
1995 1996 1997 1998 1999
---------------------- ---------- ------------------------

Combined Consolidated
----------------------------------- --------------------------

Statement of Operations Data:
Telephone operations
Revenues:
International long-distance revenues 128,939 145,080 113,865 84,028 73,737
Local exchange service revenues $1,631 $2,463 $2,933 $9,444 $8,692
Other revenues 600 710 817 1,172 1,602
------------ ---------- ---------- ----------- ----------
Total revenue 131,170 148,253 117,615 94,644 84,031
Total operating expenses 99,879 121,469 99,473 63,095 60,165
------------ ---------- ---------- ----------- ----------
Income from telephone operations 31,291 26,784 18,142 31,549 23,866
Loss from other operations - - - (373) (599)
Other income (expense), net (2,544) (1,502) (1,117) 2,930 (28)
------------ ---------- ---------- ----------- ----------
Income from operations before income taxes
and minority interest 28,747 25,282 17,025 34,106 23,239
Income taxes 13,619 10,824 7,718 15,913 11,898
------------ ---------- ---------- ----------- ----------
Income from operations before minority
interest 15,128 14,458 9,307 18,193 11,341
Minority interest (2,390) (2,096) (1,372) (2,281) (1,676)
------------ ---------- ---------- ----------- ----------
------------ ---------- ---------- ----------- ----------
Income from operations $12,738 $12,362 $7,935 $15,912 $9,665
============ ========== ========== =========== ==========
Basic net income per share $3.25 $2.05
=========== ==========
Diluted net income per share $3.23 $2.05
=========== ==========

Pro Forma Net Income Per Share $1.69
==========

Years Ended December 31,
--------------------------------------------------------------
1995 1996 1997 1998 1999
---------------------- ---------- ----------- ----------

Combined Consolidated
---------------------- -------------------------------------

Balance Sheet Data:
Fixed Assets, net $92,102 $97,780 $36,042 $46,431 $56,451
Total assets 185,481 194,493 108,049 126,260 131,448
Short-term debt (including current portion of
long-term debt) 15,626 11,047 3,298 3,403 3,410
Long-term debt, net 25,969 20,398 14,536 11,394 7,969
Stockholders' equity 98,264 110,626 54,244 68,874 74,934

Historical income per share amounts for 1997 and earlier years have not
been presented, as this information is not considered meaningful.

15

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Forward Looking Statements and Analysts' Reports

This report contains forward looking statements within the meaning of the
federal securities laws, including statements concerning future rates,
revenues, costs, capital expenditures, and financing needs and availability
and statements of management's expectations and beliefs. Actual results could
differ materially from these statements as a result of many factors, including
future economic and political conditions in Guyana, the matters discussed in
the "Business -- Regulation" section of this Report and in Notes 11 and 12 to
the Financial Statements included in this Report.

Investors should also be aware that while the Company does, from time to
time, communicate with securities analysts, it is against the Company's policy
to disclose to them any material non-public information or other confidential
information. Accordingly, shareholders should not assume that the Company
agrees with any statement or report issued by an analyst irrespective of the
content of the statement or report. Furthermore, the Company has a policy
against issuing or confirming financial forecasts or projections issued by
others. Thus, to the extent that reports issued by securities analysts contain
any projections, forecasts or opinions, such reports are not the
responsibility of the Company.

Introduction

The Company's revenues and income from operations are derived principally
from the operations of its telephone subsidiary, GT&T. GT&T derives almost all
of its revenues from international telephone services. In June 1998, the
Company acquired a 75% interest (increased to 80% in December 1999) in Digicom
S.A., a Haitian corporation principally engaged in dispatch radio, mobile
telecommunications and paging, for $1.7 million in cash. In July 1998, the
Company acquired for $1.0 million in cash a 30% interest, with certain options
to increase that interest to 40%, in Bermuda Digital Communications, Ltd., a
Bermuda corporation which operates under the name "Cellular One" and is the
sole cellular and PCS competitor in Bermuda to the Bermuda Telephone Company.
The Company also provided a loan to Bermuda Digital Communications, Ltd. of
$3.0 million at Citibank prime, which was 8.5% at December 31, 1999, plus 3%.
During 1999, the Company organized a wholly owned subsidiary, Wireless World,
LLC., and Wireless World, LLC. acquired VI Access the largest internet service
provider in the U.S. Virgin Islands. In December 1999, Wireless World, LLC.
ageed to acquire Antilles Wireless Cable T.V. Company, which holds MMDS and
LMDS licenses for the U.S. Virgin Islands and provides wireless cable
television services there. The Company has signed advisory fee contracts with
Bermuda Digital Communications Ltd. and each of its operating subsidiaries
compensating it at 6% of gross revenues for management services provided. The
assets, liabilities, and operations of Digicom S.A., Bermuda Digital
Communications, Ltd., Wireless World, LLC. and Antilles Wireless Cable T.V.
Company, individually and in the aggregate, are not currently material to the
assets, liabilities, and operations of the Company on a consolidated basis.

The principal components of operating expenses for the Company's
telephone operations are plant specific operations expenses, plant
non-specific operations expenses, customer operations expenses, corporate
operations expenses, international long-distance expenses, taxes other than
income taxes and general and administrative expenses. These categories are
consistent with FCC accounting practices. Plant specific operations expenses
relate to support and maintenance of telephone plant and equipment and include
vehicle expense, land and building expense, central office switching expense
and cable and wire expense. Plant non-specific operations expenses consist of
depreciation charges for telephone plant and equipment and expenses related to
telephone plant and network administration, engineering, power, materials and
supplies, provisioning and plant network testing. Customer operations expenses
relate to marketing, providing operator services for call completion and
directory assistance, and establishing and servicing customer accounts.
Corporate operations expenses include GT&T's expenses for executive management
and administration, corporate planning, accounting and finance, external
relations, personnel, labor relations, data processing, legal services,
procurement and general insurance. International long-distance expenses
consist principally of charges from international carriers for outbound
international calls from Guyana and payments to audiotext providers from whom
GT&T derives international audiotext traffic. Taxes other than income taxes
include gross receipts taxes, property taxes, and other miscellaneous taxes.
General and administrative expenses consist principally of parent company
overheads and amortization.

For accounting purposes, the December 1997 split up transaction of the
Company into two separate publicly held companies (the Company and the
Emerging Communications, Inc.) has been treated as a non pro rata split off of
a business in which the split off entity is to be accounted for at fair value.
The Company was considered to be the split off entity since Emerging

16

Communications, Inc. had the greater market capitalization and greater asset
value immediately after the transaction, retained more of the pre-transaction
top management of the Company and had greater net income in 1997. Accordingly,
the balance sheet of the Company at December 31, 1997 was adjusted to fair
value as evidenced by the market capitalization of the Company immediately
after the consummation of the transaction. This adjustment included an
approximately $60 million reduction in the Company's consolidated net fixed
assets, and an approximately $45 million reduction in the Company's
consolidated stockholders' equity. The fair value adjustment reduced the
carrying value on the Company's consolidated financial statements of its fixed
assets significantly below their historical cost and replacement value.
Therefore, depreciation expense for periods after December 31, 1997 is not a
reliable indicator of the Company's cost of replenishing its assets.

The combined financial statements included in this report are the
separate financial statements relating to Atlantic Tele-Network, Inc.'s
business and operations in Guyana including its majority owned subsidiary,
GT&T, and ATN's activities as the parent company of all of its subsidiaries
during the year ended December 31, 1997. These combined financial statements
do not reflect the fair valuation adjustment arising from the split up
transaction. Moreover, the combined statement of operations includes interest
income from indebtedness of subsidiaries which were transferred with such
indebtedness to Emerging Communications, Inc. in the split up transaction and
certain expenses for the period from May 1, 1997 to December 31, 1997 which
were reimbursed by Emerging Communications, Inc. as part of the split up
transaction.

As a result of the decline in 1997 in GT&T revenues and profits from
audiotext traffic, on December 31, 1997 GT&T filed an application with the PUC
for a significant increase in rates for local and outbound international
long-distance service so as to enable GT&T to earn a 15% return on its rate
base. Effective February 1, 1998, GT&T was awarded an interim increase in
rates. Subsequently on March 27, 1998, the PUC reduced its interim rate
increase effective in part on April 1, 1998 and in part on May 1, 1998. The
reduced rates represented a substantial increase over the rates in effect
during 1997 and earlier years. On October 27, 1998, to reflect changed
conditions since December 31, 1997, GT&T filed for an additional rate increase
designed to generate $19.0 million in additional revenues over and above the
interim rates currently in effect. GT&T's two applications for a permanent
rate increase are still pending before the PUC. No assurance can be given as
to what permanent rates the PUC will award GT&T or as to what changes the PUC
may make in the current interim rates. In January 1999, the Chairman of the
PUC held a press conference which dealt extensively with the rate issues under
consideration by the PUC. GT&T then applied to the Guyana High Court for an
order prohibiting the Chairman from further participating in the rate case on
the grounds that this press conference and his statements at the press
conference revealed a predetermination and bias by the Chairman against GT&T
on the pending issues. In response to this application, the Guyana High Court
issued an order directing the Chairman and the PUC to show cause why such an
order of prohibition should not be issued. The Guyana High Court's order has
the legal effect of barring the Chairman from further participation in the
rate case pending a determination by the Guyana High Court of the merits of
GT&T's application and, thus, is likely to further delay a decision by the PUC
on GT&T's pending applications.

17

RESULTS OF OPERATIONS

Years Ended December 31, 1998 and 1999

Telephone operating revenues for the year ended December 31, 1999 were
$84.0 million as compared to $94.6 million for 1998. Net income for 1999 was
$9.7 million, or $2.05 per share, as compared to $15.9 million, or $3.25 per
share, for 1998.

Operating results for fourth quarter 1999 includes $710,000 of revenue
recognized from the settlement of a dispute with an international
telecommunications carrier resulting in a net gain of $293,000, or $.06 per
share.

Operating results for 1998 include a fourth-quarter net gain to ATN of
$1.0 million arising from the devaluation during 1998 of the Guyana dollar,
$4.5 million of revenues recognized in the third quarter as a result of a
settlement with a foreign telecommunications carrier of a claim for the
interruption of international long-distance dial service to Guyana during
1995, and approximately $3.8 million in other non-operating income in the
first quarter of 1998 as a result of the settlement of a claim arising from
the cancellation of an insurance policy. After excluding these unusual items,
the Company's core operating revenues and earnings for 1998 were $90.1 million
and $10.6 million, respectively, or $2.16 per share.

Excluding the one-time items in 1999 and 1998 discussed above, core
revenues in 1999 decreased by $6.8 million or 7.6%. This decrease in revenues
was attributable primarily to the continued decline in audiotext traffic
through 1999. In the four quarters of 1998, audiotext traffic averaged
approximately 5.3 million, 5.0 million, 4.5 million, and 3.9 million minutes
per month, respectively. In the four quarters of 1999, audiotext traffic
averaged 3.9 million, 3.5 million, 2.7 million and 3.7 million minutes per
month, respectively. The decline in revenues in the second and third quarters
of 1999 was due in part to an increase in the "refiling" or mislabeling of
traffic from the United States and United Kingdom to Guyana. Offsetting the
decrease in audiotext traffic, regular inbound international minutes increased
from 49.8 million in 1998 to 59.5 million in 1999. The Company expects that
audiotext traffic volumes will continue to decline, although the Company is
unable to predict future audiotext revenues and traffic volumes with any
degree of certainty.

Local exchange service revenues decreased by $752,000 or 8% during 1999
as a result of the currency devaluation in the Guyana dollar in 1998. During
1998 the Guyana dollar declined from 142:1 US dollar to 180:1 US dollar and
local revenues for 1998 were accounted for on a weighted average of these
currency rates. For 1999 local revenues were calculated at the rate of 180:1.
This decrease in exchange rate which affected the local exchange service
revenues was partially offset by increased lines in service which rose to
64,000 at December 31, 1999 from 60,000 lines in service at December 31, 1998,
an increase of 4,000 lines or 7%.

18

International long-distance inbound revenues other than audiotext
increased to $37.2 million in 1999 from $31 million in 1998. Excluding the
$710,000 of revenue recognized from the settlement mentioned above, this
represents an increase of $5.5 million or 18% and correlates to an increase in
inbound minutes of traffic from 49.8 million in 1998 to 59.5 million in 1999,
an increase of 9.7 million minutes or 20%. Management believes that this
increase in inbound telephone traffic other than audiotext is indirectly the
result of the increase in temporary rates for outbound long-distance traffic
granted by the PUC in early 1998. Because a substantial portion of GT&T's
international traffic, other than audiotext, consists of personal calls
between Guyanese expatriates and their friends and families in Guyana,
management believes that an increase in rates for outbound calls results not
only in a decrease in the volume of outbound calls but an increase in the
volume of inbound calls.

As is noted elsewhere in this report (see "Business -- Regulation"), the
FCC has adopted mandatory international settlement rate benchmarks for
payments by U.S. telecommunications carriers to telecommunications carriers in
other countries including Guyana, and GT&T's operating agreement and circuits
with AT&T were terminate effective December 31, 1999. Any significant
reduction in the volume of inbound traffic from the United States to Guyana or
in the settlement rate for this traffic could have a significant adverse
impact on GT&T's earnings. Any of these events would provide GT&T with a basis
to seek an increase in rates for local and outbound international service so
as to permit GT&T to earn its contractually provided 15% rate of return.
However, there can be no assurance as to when or whether GT&T would receive
such a rate increase.

International long-distance outbound revenues decreased from $15.1
million in 1998 to $12.7 million in 1999, a decrease of $2.4 million or 16%.
This decrease in international long-distance outbound revenues is primarily
related to the decrease in the Guyanese dollar exchange rate from 142:1 US
dollar to 180:1 US dollar discussed above, as the volume of outbound
international long-distance traffic declined only slightly from 16.4 million
minutes during 1998 to 16.1 million for 1999, a decline of approximately 2%.

Telephone operating expenses were $60.2 million for 1999 as compared to
$63.1 million for 1998. After eliminating the 1998 gain of $3 million from the
devaluation of the Guyana dollar (which reduced operating expenses) core
telephone operating expenses were $66.1 million in 1998. This represents a
decrease of $5.9 million or 9% in core telephone operating expense. This
decrease was due principally to a decrease in audiotext traffic expense at
GT&T of $5.4 million due to decreased traffic volumes. Core telephone
operating expenses were approximately 72% of core telephone operating revenues
in 1999 as compared to approximately 73% of core telephone operating revenues
in 1998 (excluding from core operating revenues in each year and from core
operating expenses in 1998 the effects of the one-time items discussed above).

Other operations revenues and expenses represent the operations of
Digicom S.A. and Wireless World, LLC. and are not material. The Company
acquired a 75% interest in Digicom on June 2, 1998 and an additional 5% in
December of 1999. Wireless World, LLC. commenced operations with the
acquisition of VI Access on October 5, 1999.

19

Income from operations before interest expense, income taxes and minority
interest for 1999 was $23.2 million as compared to $31.1 million for 1998.
This represents a decrease of $7.9 million or 25% and is principally a result
of the factors affecting revenues and operating expenses discussed above.

The Company's effective tax rate for the year ended December 31, 1999 was
51.2% as compared to 46.7% for 1998. The minority interest in earnings
consists primarily of the Guyana government's 20% interest in GT&T.

Years Ended December 31, 1997 and 1998

Telephone operating revenues for the year ended December 31, 1998 were
$94.6 million as compared to $117.6 million for 1997. Consolidated net income
for 1998 was $15.9 million or $3.25 per share ($3.23 per share on a fully
diluted basis). Pro forma net income for 1997 was $8.3 million or $1.69 per
share. The 1997 pro forma results give effect to the December 30, 1997
split-off transaction as if it had been completed at the beginning of 1997.

Operating results for 1998 include a fourth-quarter net gain to ATN of
$1.0 million arising from the devaluation during 1998 of the Guyana dollar,
$4.5 million of revenues recognized in the third quarter as a result of a
settlement with a foreign telecommunications carrier of a claim for the
interruption of international long-distance dial service to Guyana during
1995, and approximately $3.8 million in other non-operating income in the
first quarter of 1998 as a result of the settlement of a claim arising from
the cancellation of an insurance policy. After excluding these unusual items,
the Company's core operating revenues and earnings for 1998 were $90.1 million
and $10.6 million respectively or $2.16 per share.

The Company's revenues and pro forma net income for 1997 included the
recognition of $9.5 million of outbound international long-distance revenues
by GT&T for the period from October 1995 to January 1997 as a result of a
Guyana High Court decision in 1997. After excluding this unusual item, the
Company's core operating revenues and pro forma net income for 1997 were
$108.1 million and $4.0 million or $0.81 per share.

Excluding the one-time items in 1998 and 1997 discussed above, core
revenues in 1998 decreased by $18.0 million or 17%. This decrease was due
primarily to the expected decline in audiotext revenues at GT&T. GT&T's volume
of audiotext traffic fluctuated between 8 and 9 million minutes per month in
the first three quarters of 1997. In the fourth quarter of 1997, the volume of
audiotext traffic declined to approximately 6.6 million minutes per month. In
the four quarters of 1998, audiotext traffic further declined to an average of
approximately 5.3 million, 5.0 million, 4.5 million, and 3.9 million minutes
per month, respectively.

The decrease in audiotext revenues was partially offset by an increase in
local exchange services, which increased from $2.9 million in 1997 to
$9.4 million in 1998, an increase of $6.5 million or 222%. This increase in
local exchange service revenues was primarily the result of the temporary
rates granted by the PUC in response to a rate increase application filed by
GT&T with the PUC on December 31, 1997. The increase is also partially
attributable to an increase in lines in service to 60,000 at December 31, 1998
from approximately 55,000 at December 31, 1997, an increase of 5,000 lines or
9%.

20

International long-distance inbound revenues other than audiotext
increased to $31.0 million as compared to $25.1 million in 1997. This
represents an increase in $5.9 million or 24% and correlates to an increase in
inbound minutes of traffic from 44.5 million in 1997 to 49.8 million in 1998;
an increase of 5.4 million minutes or 12%. The balance of the increase is due
to changes in traffic mix and other factors. Management believes that this
increase in inbound telephone traffic other than audiotext is indirectly the
result of the increase in temporary rates for outbound long-distance traffic
granted by the PUC in early 1998. Because a substantial portion of GT&T's
international traffic, other than audiotext, consists of personal calls
between Guyanese expatriates and their friends and families in Guyana,
management believes that an increase in rates for outbound calls results not
only in a decrease in the volume of outbound calls, but that decrease in
outbound calls in turn stimulates an increase in the volume of inbound calls.

Excluding the one-time accrual of $9.5 million of revenue in 1997
discussed above, international long-distance outbound revenues decreased from
$17.1 million in 1997 to $15.1 million in 1998, a decrease of $2.0 million or
12%. This decrease in core international long-distance outbound revenues is
primarily related to the increased rates awarded by the PUC, as the volume of
outbound international long-distance traffic declined approximately 32% in
1998.

After eliminating a $3 million gain from devaluation of the Guyana dollar
(which after Guyana tax expense arising from the devaluation and minority
interest results in the net gain to the Company of $1 million previously
mentioned), core telephone operating expenses were $66.1 million in 1998
compared to $99.5 million in 1997. This represents a decrease of $33.4 million
or 34%. This decrease was due principally to a decrease in audiotext and
outbound traffic expense at GT&T of $31.4 million due to decreased traffic
volumes. Core telephone operating expenses were approximately 73% of core
telephone operating revenues in 1998 as compared to approximately 92% of core
telephone operating revenues in 1997 (excluding from core operating revenues
in each year and from core operating expenses in 1998 the effects of the
one-time items discussed above). The decrease in core operating expense as a
percentage of core operating revenues from 1997 to 1998 is due primarily to
the decline in audiotext revenues, the decline in outbound traffic and
associated international long-distance expenses, and the increases in local
revenues as a result of the temporary rate increase awarded by the PUC.

Other operations, revenues and expenses represent the operations of
Digicom S.A. and are not material. The Company acquired a 75% interest in
Digicom on June 2, 1998.

Income from operations before interest expense, income taxes and minority
interest for 1998 was $31.1 million as compared to $18.1 million for 1997.
This represents an increase of $13 million or 72% and is principally a result
of the factors affecting revenues and operating expenses discussed above.

The Company's effective tax rate for the year ended December 31, 1998 was
46.7% as compared to 45.3% for 1997. The minority interest in earnings
consists primarily of the Guyana government's 20% interest in GT&T.

Regulatory and Tax Issues

The Company is involved in a number of regulatory and tax proceedings.
See Notes 11 and 12 to the Company's Combined and Consolidated Financial
Statements included in this Report. A material and adverse outcome in one or
more of these proceedings could have a material adverse impact on the
Company's financial condition and future operations.

21

Liquidity and Capital Resources

The Company believes its existing liquidity and capital resources are
adequate to meet current operating and capital needs. The Company's current
primary source of funds at the parent company level is advisory fees from
GT&T. If and when the tax and regulatory issues discussed in Notes 11 and 12
to the Combined and Consolidated Financial Statement included in this Report
are resolved, the Company anticipates that GT&T may begin paying dividends to
its stockholders, the Company and the Government of Guyana. These tax and
regulatory issues could have a material adverse impact on the Company's
liquidity. GT&T is not subject to any contractual restrictions on the payment
of dividends.

If and when the Company settles outstanding tax and regulatory issues
with the Guyana government and the PUC, GT&T may require additional external
financing to enable GT&T to further expand its telecommunications facilities.
The Company has not estimated the cost to comply with the October 1997 PUC
order to increase the number of telephone lines in service, but believes such
a project would require significant capital expenditures that would require
external financing. There can be no assurance that the Company will be able to
obtain any such financing.

The continued expansion of GT&T's network is dependent upon the ability
of GT&T to purchase equipment with U.S. dollars. A portion of GT&T's taxes in
Guyana may be payable in U.S. dollars or other hard currencies. The Company
believes that the majority of GT&T's revenues will continue to be denominated
in U.S. dollars or other hard currencies. However, as a result of the rate
increases recently awarded to and currently sought by GT&T and the efforts of
the U.S. FCC, AT&T and carriers in other countries to reduce international
accounting rates, it is likely that an increasing portion of the Company's
revenues will be earned in Guyana currency. While there are no legal
restrictions on the conversion of Guyana currency into U.S. dollars or other
hard currencies, or on the expatriation of Guyana currency or foreign currency
from Guyana, there is little liquidity in the foreign currency markets in
Guyana. While the Company believes that it has, and will continue to have,
adequate cash flows denominated in hard currency to meet its current
operating, debt service and capital requirements, there can be no assurance
that GT&T will be able to convert its Guyana currency earnings into hard
currency to meet such obligations. At December 31, 1999, approximately
$6.2 million of the Company's total cash balances consisted of balances
denominated in Guyana dollars.

The Company is currently exploring several opportunities to acquire
communications properties or licenses in the Caribbean and elsewhere. Such
acquisitions may require external financing. There can be no assurance as to
whether, when or on what terms the Company will be able to acquire any of the
businesses or licenses it is currently seeking.

Impact of Devaluation and Inflation

Although the majority of GT&T's revenues and expenditures are transacted
in U.S. dollars or other hard currencies, the results of operations
nevertheless may be affected by changes in the value of the Guyana dollar.
From February 1991 until early 1994, the Guyana dollar remained relatively
stable at the rate of approximately 125 to the U.S. dollar. In 1994, the
Guyana dollar declined in value to approximately 142 to the U.S. dollar. It
remained relatively stable at approximately that rate through 1997. From
December 31, 1997, through December 31, 1998 the Guyana dollar further
declined in value to approximately 180 to the U.S. dollar. Through December
31, 1999 the value of the Guyana dollar has remained stable at approximately
180 to the U.S. dollar.

The effect of devaluation and inflation on the Company's financial
results has not been significant in the periods presented, except that, as is
previously discussed in the comparisons of 1999, 1998, and 1997 operating
results, the Company recognized a net gain of $1.0 million in 1998 as a result
of the devaluation of the Guyana dollar during 1998.

Item 8. Financial Statements and Supplementary Data

Combined and consolidated financial statements of the Company and its
subsidiaries are submitted as a separate section of this Annual Report. See
Index to Financial Statements and Schedules which appears on page F-1 hereof.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None not previously reported.

22

PART III

Item 10. Directors and Executive Officers of the Registrant

The information required by this item will be included in the Company's
definitive proxy statement for its 2000 Annual Meeting of Stockholders (the
"Proxy Statement"), or by an amendment to this report to be filed on or before
April 30, 2000, and such information is incorporated herein by reference,
except that the information regarding the Company's executive officers called
for by this item is included in Part I under the heading "Executive Officers
of the Registrant."

Item 11. Executive Compensation

The information required by this item will be included in the Proxy
Statement, and such information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this item will be included in the Proxy
Statement, and such information is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

The information required by this item will be included in the Proxy
Statement, and such information is incorporated herein by reference.

23

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) 1. Financial Statements

Combined and consolidated financial statements of the Company and its
subsidiaries are submitted as a separate section of this Annual Report. See
Index to Financial Statements and Schedules which appears on page F-1 hereof.

2. Financial Statement Schedules

Financial statement schedules for the Company and its subsidiaries are
submitted as a separate section of this Annual Report. See Index to Financial
Statements and Schedules which appears on page F-1 hereof.

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the last quarter of 1999.

(c) Exhibits

Exhibit No. Description

3. (a) Restated Certificate of Incorporation of the Company. 3

(b) By-Laws of the Company. 3

4. (a) Specimen Form of Company's Common Stock Certificate. 1

10. Material contracts:

(a) Subscription Agreement, dated as of August 11, 1997,
between the Company and Emerging Communications,Inc. 4

(b) Repurchase and Recapitalization Agreement, dated as of
August 11, 1997, among the Company, Cornelius B. Prior, Jr.,
individually and as trustee of the 1994 Prior Charitable
Remainder Trust, and Jeffrey J. Prosser. 4

(c) Agreement and Plan of Merger, dated as of August 11, 1997,
between ATN Merger Co, and the Company. 4

(d) Technical Assistance Agreement, dated as of December 30,
1997, among Atlantic Tele-Network, Inc., Atlantic
Tele-Network Co., Virgin Islands Telephone Corporation and
Vitelcom Cellular Inc. 4

(e) Non-Competition Agreement, dated as of December 30, 1997,
among Emerging Communications, Inc., Atlantic
Tele-Network, Inc., and Jeffery J. Prosser. 4

(f) Indemnity Agreement, dated as of December 30, 1997,
among Atlantic Tele-Network, Inc., Emerging Communications,
Inc., Cornelius B. Prior, Jr. and Jeffrey J. Prosser. 4

(g) Employee Benefits Agreements, dated as of December 30, 1997,
between Emerging Communications, Inc. and
Atlantic Tele-Network, Inc. 4

(h) Tax Sharing and Indemnification Agreement, dated as of
December 30, 1997, among Atlantic Tele-Network, Inc.,
Emerging Communications, Inc., Cornelius B. Prior, Jr.
and Jeffrey J. Prosser. 4

24

Exhibit No. Description

(i) Equipment Financing Agreement, dated as of January 28, 1991,
among Guyana Telephone and Telegraph Company Limited, Atlantic
Tele-Network, Inc. and Northern Telecom International
Finance B.V. (excluding exhibits). 1

(j) First Amendment to Equipment Financing Agreement, dated as of
January 28, 1991, among Guyana Telephone and Telegraph Company
Limited, Atlantic Tele-Network, Inc. and Northern Telecom
International Finance B.V. 1

(k) Second Amendment to Equipment Financing Agreement, dated as
of November 21, 1991, among Guyana Telephone and Telegraph
Company Limited, Atlantic Tele-Network, Inc. and Northern
Telecom International Finance B.V. 2

(l) 1998 Stock Option Plan

(m) Amendments adopted March 10, 2000 to 1998 Stock Option Plan

(n) Plan and Agreement of Reorganization for the Acquisition of
Antilles Wireless Cable T.V. Company dated January 24, 2000
by and among Antilles Wireless Cable T.V., Inc., Calypso-Com
Ltd., Wireless World, LLC., Cornelius B. Prior, Jr. and Atlantic
Tele-Network, Inc.

(o) Directors' Remuneration Plan

21. Subsidiaries of the Company.
_______________
1.Filed as an exhibit to the Company's Registration Statement (File No.
33-43012) and incorporated herein by reference.

2.Filed as an exhibit to the Company's Annual Report on Form 10K for
1991 and incorporated herein by reference.

3.Filed as an exhibit on Form 8-K dated February 16, 1996 and
incorporated herein by reference.

4.Filed as an exhibit to the Company's Annual Report on Form 10K for
1998 and incorporated herein by reference.

25

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

ATLANTIC TELE-NETWORK, INC.

March 25, 2000

By:/s/ Cornelius B. Prior, Jr.
------------------------------
Cornelius B. Prior, Jr.
Chief Executive Officer, Chairman of the
Board and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature Title Date
- --------------------------------------------------------------------------

/s/ Cornelius B. Prior, Jr. Chief Executive Officer, Chairman March 25, 2000
- --------------------------- of the Board and Secretary --------------
Cornelius B. Prior, Jr.

/s/ Lewis A. Stern Vice President - Finance and March 25, 2000
- ------------------ Chief Financial Officer --------------
Lewis A. Stern

/s/ Steven M. Ross Treasurer and Chief March 25, 2000
- ------------------ ------------------- --------------
Steven M. Ross Accounting Officer

/s/ James B. Ellis Director March 25, 2000
- ------------------ -------- --------------
James B. Ellis

/s/ Ernst Burri Director March 25, 2000
- --------------- -------- --------------
Ernst Burri

/s/ Henry Wheatley Director March 25, 2000
- ------------------ -------- --------------
Henry Wheatley

26

Atlantic Tele-Network, Inc. and Subsidiaries

Combined and Consolidated Financial Statements
and Financial Statement Schedules
for the years ended December 31, 1997, 1998, and 1999
Together With the Audit Report

INDEX

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2

FINANCIAL STATEMENTS

Consolidated Balance Sheets--December 31, 1998 and 1999 F-4

Combined and Consolidated Statements of Operations for the Years
Ended December 31, 1997, 1998, and 1999 F-5

Combined and Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1997,1998, and 1999 F-6

Combined and Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997, 1998, and 1999 F-7

Notes to Combined and Consolidated financial statements F-8

FINANCIAL STATEMENT SCHEDULES

Schedule II--Valuation and Qualifying Accounts for
the Years Ended December 31, 1997, 1998, and 1999 F-26

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Atlantic Tele-Network, Inc.:

We have audited the accompanying consolidated balance sheets of ATLANTIC
TELE-NETWORK, INC. (a Delaware corporation) AND SUBSIDIARIES as of December
31, 1998 and 1999 and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the two years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Atlantic
Tele-Network, Inc. and subsidiaries as of December 31, 1998 and 1999 and the
results of their operations and their cash flows for each of the two years
then ended in conformity with accounting principles generally accepted in the
United States.

/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP

Atlanta, Georgia
February 28, 2000

F-2

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Atlantic Tele-Network, Inc. and Subsidiary

We have audited the accompanying combined statements of operations,
stockholders' equity and cash flows for the year ended December 31, 1997. Our
audit also included the financial statement schedules listed in the Index on
Item 14 for this period. These financial statements are the responsibility of
Atlantic Tele-Network, Inc. and subsidiary's management. Our responsibility is
to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such combined financial statements present fairly, in all
material respects, the results of operations of Atlantic Tele-Network, Inc.
and subsidiary and their cash flows for the year ended December 31, 1997, in
conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to
the basic financial statements as a whole, present fairly, in all material
respects, the information set forth therein.

DELOITTE & TOUCHE LLP

Omaha, Nebraska
March 20, 1998

F-3

Atlantic Tele-Network, Inc. and Subsidiaries

Consolidated Balance sheets

December 31, 1998 and 1999

(Columnar Amounts in Thousands)

1998 1999
---- ----

Assets
Current assets:
Cash and cash equivalents $ 35,116 $ 31,463
Accounts receivable, net 24,448 20,512
Materials and supplies 4,988 4,853
Prepayments and other current assets 1,861 4,285
----- -----
Total current assets 66,413 61,113
Fixed assets:
Property, plant, and equipment 51,126 66,739
Less accumulated depreciation (4,695) (10,288)
------ -------
Net fixed assets 46,431 56,451
Uncollected surcharges, net of current portion 1,802 1,428
Investment in and advances to bermuda digital communications, ltd. 3,944 4,710
Other assets 7,670 7,746
----- -----
Total assets $126,260 $131,448
======== ========

Liabilities and stockholders' equity

Current liabilities:
Accounts payable and accrued liabilities $ 11,863 $ 7,905
Accrued taxes 8,636 7,823
Advance payments and deposits 969 1,353
Other current liabilities 1,924 4,651
Current portion of long-term debt 3,403 3,410
----- -----
Total current liabilities 26,795 25,142

Deferred income taxes 502 3,032

Long-term debt, excluding current portion 11,394 7,969
Total liabilities 38,691 36,143
Minority interests 18,695 20,371
Contingencies and commitments (Notes 11 and 12)

Stockholders' equity:
Preferred stock, $.01 par value per share; 10,000,000 shares authorized, none
issued and outstanding 0 0
Common stock, $.01 par value per share; 20,000,000 shares authorized; 4,909,000
shares issued and 4,847,400 and 4,756,700 shares outstanding in 1998 and 1999,
respectively 49 49
Treasury stock, at cost (555) (1,418)
Additional paid-in capital 54,195 54,263
Retained earnings 15,185 22,040
------ ------
Total stockholders' equity 68,874 74,934
------ ------
Total liabilities and stockholders' equity $126,260 $131,448
======== ========

The accompanying notes are an integral part of these consolidated balance
sheets.

F-4

Atlantic Tele-Network, Inc. and Subsidiaries

Combined and Consolidated statements of operations

for the years ended December 31, 1997, 1998, and 1999

(Columnar Amounts in Thousands, Except Per Share Data)

1997 1998 1999
---- ---- ----
(Combined) (Consolidated)
-------------------------------

Telephone operations:
Operating revenues:
International long-distance revenues $113,865 $84,028 $73,737
Local exchange service revenues 2,933 9,444 8,692
Other revenues 817 1,172 1,602
--- ----- -----
Total operating revenues 117,615 94,644 84,031
Operating expenses:
International long-distance expenses 70,094 38,689 33,319
Plant-specific operations 5,707 6,450 5,099
Plant-nonspecific operations 7,099 6,377 7,211
Customer operations 2,538 2,799 2,705
Corporate operations 6,061 2,753 4,857
Taxes other than income taxes 657 941 836
General and administrative expenses 7,317 5,086 6,138
----- ----- -----
Total operating expenses 99,473 63,095 60,165
------ ------ ------
Income from telephone operations 18,142 31,549 23,866
Other operations:
Revenues of other operations 0 1,011 1,741
Expenses of other operations 0 1,384 2,340
- ----- -----
Loss from other operations 0 (373) (599)
Other income (expense):
Interest expense (3,794) (2,290) (1,875)
Interest income 2,677 1,643 2,321
Other income (expense), net 0 3,577 (474)
- ----- ----
Other income (expense), net (1,117) 2,930 (28)
------ ----- ---
Income before income taxes and minority interests 17,025 34,106 23,239

Income taxes 7,718 15,913 11,898
Income before minority interests 9,307 18,193 11,341
----- ------ ------

Minority interests (1,372) (2,281) (1,676)
------ ------ ------
Net income $7,935 $15,912 $ 9,665
====== ======= ========

Net income per share:
Basic $3.25 $2.05
===== =====

Diluted $3.23 $2.05
===== =====

Weighted average common stock outstanding:
Basic 4,901 4,705
===== =====

Diluted 4,923 4,715
===== =====

The accompanying notes are an integral part of these combined and
consolidated financial statements.

F-5

Atlantic Tele-Network, Inc. and Subsidiaries

Combined and Consolidated statements of stockholders' equity

for the years ended December 31, 1997, 1998 and 1999

(Columnar Amounts in Thousands)

Additional Total
Common Treasury Paid-In Retained STockholders'
Stock Stock Capital Earnings Equity
-----------------------------------------------------------

Combined balance, December 31, 1996 $123 0 $81,852 $28,651 $110,626
==== = ======= ======= ========

Purchase and cancellation of 765,562 shares of
company common stock (8) 0 0 (17,392) (17,400)
Split-off of subsidiaries and fair valuation of
net assets (66) 0 (27,657) (19,194) (46,917)
Net income 0 0 0 7,935 7,935
- - - ----- -----
Consolidated balance, December 31, 1997 49 0 54,195 0 54,244
== = ====== = ======

Purchase of 61,600 shares of common stock 0 (555) 0 0 (555)
Dividends on common stock 0 0 0 (727) (727)
Net income 0 0 0 15,912 15,912
- - - ------ ------
Consolidated balance, December 31, 1998 49 (555) 54,195 15,185 68,874
== ==== ====== ====== ======

Purchase of 190,700 shares of common stock 0 (1,795) 0 0 (1,795)
Reissuance of 100,000 shares of common stock
for acquisition 0 932 68 0 1,000
Dividends on common stock 0 0 0 (2,810) (2,810)
Net income 0 0 0 9,665 9,665
- - - ----- -----
Consolidated BALANCE, December 31, 1999 $ 49 $(1,418) $54,263 $22,040 $74,934
===== ======= ======= ======= =======

The accompanying notes are an integral part of these combined and
consolidated financial statements.

F-6

Atlantic Tele-Network, Inc. and Subsidiaries

Combined and Consolidated statements of cash flows

for the years ended December 31, 1997, 1998, and 1999

(Columnar Amounts in Thousands)

1997 1998 1999
-----------------------------
(Combined) (Consolidated)

Cash flows from operating activities:
Net income $ 7,935 $15,912 $ 9,665
Adjustments to reconcile net income to net cash flows provided by
operating activities (excluding the effects of acquisitions):
Depreciation and amortization 5,289 4,307 5,731
Deferred income taxes 2,961 (2,897) 2,530
Minority interests 1,372 2,281 1,676
Equity in losses of Bermuda Digital Communications, Ltd. 0 209 454
Changes in operating assets and liabilities:
Accounts receivable, net 11,187 11,556 3,936
Materials and supplies, prepayments, and other current assets (894) (1,293) (2,337)
Uncollected surcharges (2,822) 6,327 3,646
Accounts payable and accrued liabilities (4,038) 1,352 (3,187)
Accrued taxes 1,970 5,210 (813)
Other 2,200 (2,279) 1,569
----- ------ -----
Net cash flows provided by operating activities 25,160 40,685 22,870
====== ====== ======
Cash flows from investing activities:
Capital expenditures (7,633) (9,994) (14,807)
Acquisitions, net of cash received 0 (1,842) (875)
Investment in and advances to Bermuda Digital Communications, Ltd. 0 (4,153) (750)
Split-off transaction costs (4,509) 0 0
Change in affiliate borrowings 19,918 0 0
Other investments 0 (750) (2,068)
- ---- ------
Net cash flows provided by (used in) investing activities 7,776 (16,739) (18,500)
===== ======= =======
Cash flows from financing activities:
Repayment of long-term debt (7,693) (3,351) (3,418)
Repayments on notes (222) 0 0
Purchase of common stock (17,400) (555) (1,795)
Dividends declared on common stock 0 (727) (2,810)
Net cash flows used in financing activities (25,315) (4,633) (8,023)
------- ------ ------
Net change in cash and cash equivalents 7,621 19,313 (3,653)
===== ====== ======

Cash and cash equivalents, beginning of year 8,182 15,803 35,116
===== ====== ======
Cash and cash equivalents, end of year $15,803 $35,116 $31,463
======= ======= =======

Supplemental cash flow information:
Interest paid $ 3,035 $ 1,747 $ 1,860
======== ======== ========

Income taxes paid $ 4,093 $ 7,784 $10,593
======== ======== =======

Noncash activities:

Split-off of subsidiaries and fair valuation of net assets $42,408 0 0
======= = =

Issuance of common stock--VI Access acquisition 0 0 $ 1,000
= = ========

The accompanying notes are an integral part of these combined and
consolidated financial statements.

F-7

Atlantic Tele-Network, Inc. and Subsidiaries

Notes to Combined and Consolidated Financial Statements

December 31, 1997, 1998, and 1999

1. ORGANIZATION AND BUSINESS OPERATIONS

Atlantic Tele-Network, Inc. (the "Company" or "ATN"), a Delaware
corporation, is engaged principally through its 80%-owned subsidiary, Guyana
Telephone & Telegraph Company, Limited ("GT&T"), in providing
telecommunications services, including local telephone service, long-distance
services, and cellular service in the Cooperative Republic of Guyana
("Guyana") and international telecommunications service to and from Guyana.
The Company's wholly-owned subsidiary, Wireless World, LLC ("Wireless World")
began operations in October 1999 when it acquired VI Access, Inc. which is an
internet service provider in the U.S. Virgin Islands. The Company also owns an
80% interest in Digicom S.A. ("Digicom"), a Haitian corporation principally
engaged in dispatch radio, mobile telecommunications, and paging, and a 30%
interest in Bermuda Digital Communications, Ltd. ("BDC"), a Bermuda
corporation which operates under the name "Cellular One" and is the sole
cellular and PCS competitor in Bermuda to the Bermuda Telephone Company. ATN
provides management, technical, financial, regulatory, and marketing services
for GT&T, Digicom, BDC, and Wireless World for a management fee equal to 6% of
gross revenues.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Effective December 30, 1997, ATN split off into two separate public
companies (the "Transaction"). One, Emerging Communications, Inc. ("ECI"),
contained all of the operations of the Company and its subsidiaries in the
U.S. Virgin Islands. The other, ATN, continued the business and operations of
the Company in Guyana, including ownership of its 80%-owned subsidiary, GT&T.
The financial statements of ATN for the year ended December 31, 1997 are the
separate financial statements relating to ATN's business and operations in
Guyana, including its 80%-owned subsidiary GT&T, and ATN's activities as the
parent company of all of its subsidiaries. ATN's investment in subsidiaries
other than GT&T and operations of these other subsidiaries have been carved
out of these financial statements.

The Transaction was accounted for as a non-pro rata split-off of ATN from
the consolidated Company as it previously existed. Accordingly, ATN assets and
liabilities at December 31, 1997 have been accounted for in accordance with
Accounting Principles Board ("APB") Opinion No. 29, "Accounting for
Nonmonetary Transactions," and Emerging Issues Task Force ("EITF") 96-4,
"Accounting for Reorganizations Involving a Non-Pro Rata Split-Off of Certain
Nonmonetary Assets to Owners," at values as determined by market
capitalization of ATN subsequent to the Transaction. The excess of original
cost over fair value was allocated to reduce the values assigned to long-term
assets, primarily property, plant, and equipment and intangibles.

The accompanying combined financial statements of ATN present the results
of operations and cash flows for the year ended December 31, 1997 as if the
business, operations, and activities were conducted by a separate entity. The
accompanying consolidated balance sheets as of December 31, 1998 and 1999 and
the results of operations and cash flows for the two years then ended include
the accounts of the Company and its majority-owned subsidiaries, GT&T and
Digicom, and its wholly-owned subsidiary, Wireless World. All material
intercompany transactions and balances have been eliminated in consolidation.

F-8

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all
investments with a maturity at acquisition of three months or less to be cash
equivalents.

Materials and Supplies

Materials and supplies are carried in inventory principally at weighted
average cost.

Fixed Assets

The cost of fixed assets in service and under construction includes an
allocation of indirect costs applicable to construction. The Company provides
for depreciation using the straight-line method. This has resulted in a
composite annualized rate of 4.5%, 9.2%, and 9.5% for GT&T for the years ended
December 31, 1997, 1998, and 1999, respectively. With respect to GT&T, the
cost of depreciable property retired, together with removal cost less any
salvage realized, is charged to accumulated depreciation. No gain or loss is
recognized in connection with ordinary retirements of depreciable property.
Repairs and replacements of minor items of property are charged to maintenance
expense. At January 1, 1998, GT&T adopted new and generally shorter lives in
connection with a tariff application filed on December 31, 1997 with the
Guyana Public Utilities Commission ("PUC"). The lives adopted have neither
been approved nor disapproved by the PUC as of the date of this report.

Long-Lived Assets

In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," the Company evaluates the carrying value
of property, plant, and equipment and intangibles in relation to the operating
performance and future undiscounted cash flows of the underlying business. The
Company adjusts the net book value of the underlying assets if the sum of
expected future cash flows is less than book value. Management believes that
long-lived assets in the accompanying consolidated balance sheets are
appropriately valued.

Revenue Recognition

Local exchange service and international long-distance revenues are
recognized when earned, regardless of the period in which they are billed. In
determining revenue, the Company estimates the country of origin of traffic it
receives from foreign carriers to determine the appropriate rate to apply to
minutes of long-distance traffic carried by the Company. Additionally, the
Company establishes reserves for possible unreported or uncollectible minutes
from foreign carriers and doubtful accounts from customers. The amounts the
Company will ultimately realize upon settlement could differ significantly in
the near term from the amounts assumed in estimating these revenues and the
related accounts receivable.

Income Taxes

The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred taxes are determined based on the
difference between the financial and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse.

F-9

Credit Concentrations and Significant Customers

Revenues from AT&T, MCI WorldCom, and Teleglobe, consisting of
international long-distance revenues, comprised approximately 31%, 11%, and
18%, respectively, of total revenues for 1997, 27%, 11%, and 18%,
respectively, of total revenues for 1998, and 24%, 18%, and 14%, respectively,
of total revenues for 1999. No other customers accounted for more than 10% of
total revenues. The majority of the connecting companies' accounts receivable
are due from these companies.

A significant portion of the Company's international long-distance
revenue discussed above is generated by GT&T's audiotext providers, which
operate as service bureaus or intermediaries for a number of audiotext
information providers. One such audiotext provider accounted for $39 million,
$19 million, and $12 million of these revenues for the years ended
December 31, 1997, 1998, and 1999, respectively, and another audiotext
provider accounted for $18 million, $10 million, and $5 million of these
revenues for the years ended December 31, 1997, 1998, and 1999, respectively.

Foreign Currency Gains and Losses

With regard to GT&T operations, for which the U.S. dollar is the
functional currency, foreign currency transaction gains and losses are
included in determining net income for the period in which the transaction is
settled. At each balance sheet date, balances denominated in foreign currency
are adjusted to reflect the current exchange rate. For the years ended
December 31, 1997 and 1999, foreign currency losses related primarily to
settlements with foreign carriers and approximated $1.5 million and $30,000,
respectively. In the year ended December 31, 1998, foreign currency gains and
losses arose primarily from the devaluation of the Guyana dollar during 1998
and amounted to a net gain of approximately $1 million. All of the foregoing
gains and losses are included in the accompanying combined and consolidated
statements of operations.

Regulatory Accounting

GT&T accounts for costs in accordance with the accounting principles for
regulated enterprises prescribed by SFAS No. 71, "Accounting for the Effects
of Certain Types of Regulation." This accounting recognizes the economic
effects of rate regulation by recording cost and a return on investment, as
such amounts are recovered through rates authorized by regulatory authorities.
Accordingly, under SFAS No. 71, plant and equipment are depreciated over lives
approved by regulators, and certain costs and obligations are deferred based
on approvals received from regulators to permit recovery of such amounts in
future years. GT&T's audiotext revenues are not subject to regulation but are
taken into account by the regulator in setting regulated rates which permit
the recovery of GT&T's costs and a return on investment. These unregulated
revenues and any costs which pertain solely to these unregulated revenues are
not accounted for under SFAS No. 71 principles.

Business Segment Information

The Company and its subsidiaries operate primarily in three reportable
segments. The three segments are the telephone operations segment which
relates to GT&T, the internet segment which relates to Wireless World, and the
radio and paging segment which relates to Digicom. For 1998 and 1999, the
radio and paging segment and internet segment are not material for separate
disclosure under SFAS No. 131, "Disclosure About Segments of an Enterprise and
Related Information."

Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalents,
debt, and other short-term assets and liabilities. The fair value of long-term
debt is established using a discounted cash flow analysis. As of December 31,
1998 and 1999, the estimated fair value of the Company's financial instruments
approximates their carrying value.

F-10

Pro Forma Net Income Per Share

Historical income per share is not presented in the financial statements
for the year ended December 31, 1997, as the information is not considered
meaningful. Unaudited pro forma net income per share as if the Transaction had
occurred on January 1, 1997 is calculated as follows (in thousands, except per
share data)(unaudited):

1997
(Unaudited)
-----------

Net income as reported $7,935
Reduction in depreciation 2,712
Elimination of interest income from subsidiary,
net of interest expense on debt transferred to ECI (1,716)
Tax effect (637)
----
Pro forma net income $8,294
======

Pro forma net income per share $1.69
=====

Pro forma shares outstanding 4,909
=====

F-11

Net Income Per Share

Net income per share is computed in accordance with SFAS No. 128,
"Earnings Per Share." Basic net income per share is computed by dividing net
income available to common shareholders by the weighted average number of
common shares outstanding during the period and does not include any other
potentially dilutive securities. Diluted net income per share gives effect to
all potentially dilutive securities. The Company's stock options are
potentially dilutive securities. In the years ended December 31, 1998 and
1999, potentially dilutive securities were dilutive and, therefore, are
included in diluted net income per share. A reconciliation of basic net income
per share to diluted net income per share for the years ended December 31,
1998 and 1999 is as follows (in thousands, except per share data):

1998 1999
-----------------------------------------------------------------------
Weighted Net Net Weighted Net
Net Average Income Net Average Income
Income Shares Per Share Income Shares Per Share
------ ------ --------- ------ ------ ---------

Basic net income $15,912 4,901 $3.25 $9,665 4,705 $2.05
Dilutive securities:
Stock options 0 22 (0.02) 0 10 (0.00)
- -- ----- - -- -----
Diluted net income $15,912 4,923 $3.23 $9,665 4,715 $2.05
======= ===== ===== ====== ===== =====

New Accounting Pronouncements

The Financial Accounting Standards Board has issued SFAS No. 133 and SFAS
No. 137, "Accounting for Derivative Instruments and Hedging Activities," which
must be adopted by January 2001. These statements establish accounting and
reporting standards for derivative instruments including certain derivative
instruments embedded in other contracts and for hedging activities. SFAS
No. 133 and SFAS No. 137 are not to be applied retroactively to financial
statements of prior periods. The Company expects no material impact to its
financial position upon adoption of SFAS No. 133 and SFAS No. 137.

3. ACQUISITIONS

Bermuda Digital Communications, Ltd.

On July 17, 1998, the Company acquired a 30% equity interest, plus
warrants which would enable the Company to increase its investment up to 40%
under certain circumstances, in BDC for $1 million in cash. The Company also
provided a loan to BDC of $3 million at Citibank prime plus 3% (11.5% at
December 31, 1999). During 1999, the Company provided additional loans to BDC
amounting to $750,000. The Company has an advisory fee contract with BDC
compensating it at 6% of gross revenues for management services provided,
effective from the acquisition date. This investment is accounted for under
the equity method of accounting. For the years ended December 31, 1998 and
1999, the Company recorded equity in losses of BDC of $209,000 and $454,000,
respectively, which are included in the accompanying consolidated statements
of operations as other income (expense), net.

Wireless World, LLC

On October 4, 1999, Wireless World acquired the internet service provider
business and certain other assets of VI Access from Ackley Caribbean
Enterprises, Inc. for a purchase price of $875,000 in cash and 100,000 shares
of ATN common stock. The acquisition has been accounted for as a purchase in
accordance with APB Opinion No. 16. The purchase price allocation for this
acquisition is preliminary and further refinements are likely to be made based
on the completion of final valuation studies. The excess of the cost over the
estimated fair value of the net tangible assets acquired amounts to
approximately $1.4 million and has been included in other assets in the
accompanying consolidated balance sheets and is being amortized on a
straight-line basis over ten years. The Company also contracted to acquire the
specialized mobile radio business and the paging business of VI Access for
$625,000 in cash, subject to certain regulatory approvals.

F-12

Digicom S.A.

Effective June 2, 1998, the Company acquired a 75% interest in Digicom, a
Haitian corporation for $1.8 million in cash and a commitment to issue in the
future 15,873 shares of ATN common stock. During 1999, the Company determined
that issuance of 15,873 shares of ATN common stock was not warranted and
accordingly adjusted the original purchase price allocation. The acquisition
has been accounted for as a purchase in accordance with APB Opinion No. 16.
Accordingly, the purchase price has been allocated to the assets acquired
based on the estimated fair values as of the acquisition date. The excess of
the cost over the estimated fair value of the net tangible assets acquired
amounts to approximately $668,000 and has been included in other assets in the
accompanying consolidated balance sheets and is being amortized on a
straight-line basis over 15 years.

During October 1999, the Company acquired an additional 5% interest in
Digicom in settlement of claims under the acquisition agreement.

The following unaudited pro forma consolidated results of operations for
the years ended December 31, 1998 and 1999 assume that the acquisitions of VI
Access and Digicom completed during 1998 and 1999, which were accounted for as
purchases, occurred as of January 1, 1998 (in thousands, except per share
data).

1998 1999
---- ----

Revenues (telephone and other operations) $97,497 $87,012
Net income 15,762 9,749
Basic net income per share $3.22 $2.07
Diluted net income per share 3.20 2.07

4. ACCOUNTS RECEIVABLE

As of December 31, 1998 and 1999, accounts receivable consist of the
following (columnar amounts in thousands):

1998 1999
---- ----

Subscribers, net of allowance for doubtful accounts of $651,000
and $640,000 in 1998 and 1999, respectively $ 2,878 $ 3,136
Connecting companies, net of allowance for doubtful accounts of
$2,000,000 and $2,875,000 in 1998 and 1999, respectively 17,884 16,799
Uncollected surcharges--current portion 3,291 19
Other 395 558
--- ---
Total accounts receivable, net $24,448 $20,512
======= =======

5. FIXED ASSETS

As of December 31, 1998 and 1999, property, plant, and equipment consist
of the following (in thousands):

1998 1999
---- ----

Outside plant $19,914 $24,494
Central office equipment 22,025 26,639
Land and building 4,428 4,476
Station equipment 1,715 2,074
Furniture and office equipment 899 2,214
Construction in progress 983 2,998
Other 1,162 3,844
----- -----
Total property, plant, and equipment $51,126 $66,739
======= =======

F-13

As a result of the valuation of net assets in the split-off Transaction
in accordance with APB Opinion No. 29 and EITF 96-4, net property values at
December 31, 1997 were reduced by approximately $49.2 million from their
previous carrying value, which was based primarily on historical cost. The
reduced carrying value of property, plant, and equipment is significantly
below replacement value.

6. OTHER ASSETS

As of December 31, 1998 and 1999, other assets consist of the following
(columnar amounts in thousands):

1998 1999
---- ----

Debt service reserve fund and escrow account $3,900 $3,900
Goodwill, net of accumulated amortization of $34,000
and $,000 respectively 840 1,719
Prepaid pension 497 767
Other 2,433 1,360
----- -----
Total other assets $7,670 $7,746
====== ======

7. LONG-TERM DEBT

As of December 31, 1998 and 1999, long-term debt consists of the
following (columnar amounts in thousands):

1998 1999
---- ----

Notes payable to Northern Telecom International Finance B.V. by
GT&T under a $34 million equipment financing agreement (the
"GT&T Equipment Loan") $14,536 $11,237
Other 261 142
--- ---
14,797 11,379
Less current portion 3,403 3,410
----- -----
Total long-term debt $11,394 $ 7,969
======= ========

The GT&T Equipment Loan requires monthly principal payments totaling
$275,000 plus interest with all outstanding balances maturing in 2004. The
interest rates on the GT&T Equipment Loan are at fixed rates ranging from
9.17% to 11.29% as of December 31, 1998 and 1999, respectively.

The GT&T Equipment Loan is guaranteed by ATN and secured by a pledge of
all the GT&T stock owned by ATN and a security interest in all net toll
revenues due to GT&T from significant carriers. GT&T is also required to
maintain a debt service reserve fund under this loan agreement. The balance of
this fund, included in other assets in the accompanying consolidated balance
sheets, was $3.9 million at December 31, 1998 and 1999.

Future maturities of the long-term debt at December 31, 1999 are as
follows (in thousands):

2000 $ 3,410
2001 3,272
2002 2,742
2003 1,496
2004 459
---- ---
$11,379
=======

F-14

8. EQUITY

Common Stock

In December 1998 and March, June, September, and December 1999, the board
of directors of the Company declared quarterly dividends of $.15 per share.
The declared dividend in December 1998 and 1999 are included in accounts
payable and accrued liabilities in the accompanying consolidated balance
sheets as of December 31, 1998 and 1999.

Treasury Stock

In September 1998, the Company's board of directors authorized the
repurchase of up to 250,000 shares of the Company's common stock for use in
the Company's 1998 Stock Option Plan (the "Option Plan"). In 1998 and 1999,
the Company repurchased 61,600 and 188,400 shares, respectively, of its common
stock pursuant to this authorization at an aggregate cost of approximately
$555,000, or an average price of $9.01 per share in 1998 and at an aggregate
cost of approximately $1,776,000, or an average price of $9.43 per share in
1999. The Company completed these stock repurchases in February 1999.

In October 1999, the Company used 100,000 of these shares in connection
with Wireless World's acquisition of VI Access, and in November 1999, the
board of directors authorized additional repurchases to restore the number of
shares of treasury stock to 250,000.

During November and December 1999, the Company repurchased an additional
2,300 shares of its common stock at an aggregate cost of $19,000 or an average
price of $8.26 per share.

Stock Options

In 1998, the board of directors of the Company adopted the 1998 Stock
Option Plan for the Company, reserved 250,000 shares of common stock for
options to be granted under the plan, and granted options to employees to
purchase 130,000 shares of the Company's common stock at an exercise price of
$9.625 per share (the estimated fair value per share of the common stock at
the date of grant). The options have terms of ten years and vest ratably over
a period of four years.

In 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which defines a fair value-based
method of accounting for employee stock options or similar equity instruments
and encourages all entities to adopt that method of accounting for all of
their employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the method of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Entities electing to remain with the accounting methodology
required by APB Opinion No. 25 must make pro forma disclosures of net income
and earnings per share as if the fair value-based method of accounting defined
in SFAS No. 123 was used.

The Company has elected to continue to account for its Option Plan under
APB Opinion No. 25, under which the Company has recognized no compensation
cost. However, the Company has computed, for pro forma disclosure purposes,
the estimated fair value of all options for shares of the Company's common
stock granted to employees during the years ended December 31, 1998 and 1999
using the Black-Scholes option pricing model, as allowed under SFAS No. 123
and based on the following assumptions:

F-15

1998 1999
---- ----
Risk-free interest rate 4.49% 4.49%
Expected dividend yield 6% 6%
Expected lives Five years Four years
Expected volatility 72% 72%

The following table summarizes the transactions under the Plan:

Number
--------------
of
Options

Outstanding at December 31, 1997 0
Granted 130,000
-------
Outstanding at December 31, 1998 130,000
Forfeited 120,000
-------
Outstanding at December 31, 1999 10,000
======

At December 31, 1998 and 1999, there were 130,000 and 10,000 options
outstanding, respectively, with a weighted average remaining contractual life
of 9.8 and 9 years, respectively, and a weighted average exercise price of
$9.625 per share. The weighted average fair value of options granted during
the year ended December 31, 1998 was $3.95 per share subject to option, or
$514,000 in aggregate. During 1999, 120,000 options were forfeited due to
certain employees leaving the company. If the Company had accounted for the
outstanding options in accordance with SFAS No. 123, the Company would have
amortized this fair value over the vesting period of the options resulting in
$9,000 and $7,000 compensation expense for the years ended December 31, 1998
and 1999, respectively. The Company's reported net income and net income per
share for the year ended December 31, 1998 and 1999 would have been as follows
(in thousands, except per share data):

1998 1999

Net income:
As reported--basic and diluted $15,912 $9,665
------- ------

Pro forma--basic and diluted $15,903 $9,658
------- ------

Earnings per share:
As reported and pro forma--basic $3.25 $2.05
----- -----

As reported and pro forma--diluted $3.23 $2.05
----- -----

F-16

9. INCOME TAXES

The following is a reconciliation from the tax computed at statutory
income tax rates to the Company's income tax expense for the years ended
December 31, 1997, 1998, and 1999 (in thousands):

1997 1998 1999
---- ---- ----

Tax computed at statutory U.S. federal income tax
rates $5,959 $11,937 $ 8,134
Foreign income taxes in excess of statutory U.S.
rates 1,314 2,914 2,217
Other, net 445 1,062 1,547
--- ----- -----
Income tax expense $7,718 $15,913 $11,898
====== ======= =======

The components of income tax expense are comprised of the following for
the years ended December 31, 1997, 1998, and 1999 (in thousands):

1997 1998 1999
---- ---- ----

Current:

United States $1,445 $ 2,087 $ 345
Foreign 3,312 12,142 9,649
Deferred 2,961 1,684 1,904
----- ----- -----
$7,718 $15,913 $11,898
====== ======= =======

The significant components of deferred tax assets and liabilities are as
follows as of December 31, 1998 and 1999 (in thousands):

1998 1999
---- ----

Deferred tax assets:
Differences between book and tax basis of property $ 308 $ -
Nondeductible expense 1,534 1,878
----- -----
1,842 1,878
===== =====
Deferred tax liabilities:
Differences between book and tax basis of property - 2,388
Revenues not recognized for tax purposes 1,035 867
----- ---
1,035 3,255
===== =====
Net deferred tax assets (liabilities) 807 (1,377)
Portion included in current assets 1,309 1,655
----- -----
Noncurrent deferred tax liabilities $ (502) $(3,032)
======= =======

F-17

At December 31, 1998 and 1999, unremitted earnings of foreign
subsidiaries were approximately $57 million and $64.3 million, respectively.
Since it is the Company's intention to indefinitely reinvest these earnings,
no U.S. taxes have been provided for. The determination of the amount of U.S.
tax which would be payable if such unremitted foreign earnings were
repatriated through dividend remittances is not practicable in that any U.S.
taxes payable on such dividends would be significantly offset by foreign tax
credits. Pursuant to the terms of the purchase agreement with the government
of Guyana, there are no withholding taxes applicable to distributions from
GT&T.

10. retirement plans

The Company has a noncontributory defined benefit pension plan for
eligible employees of GT&T who meet certain age and employment criteria.
Contributions are intended to provide not only for benefits attributed for
service to date but also for those expected to be earned in the future. The
Company's funding policy is to contribute to the plan such amounts as are
actuarially determined to meet funding requirements. The benefits are based on
the participants' average salary or hourly wages during the last three years
of employment and credited service years. In 1998, the Company adopted SFAS
No. 132, "Employers' Disclosure About Pensions and Other Postretirement
Benefits," which revises employers' disclosures about pension and other
postretirement benefit plans. It does not change the measurement or
recognition of those plans.

The weighted average rates assumed in the actuarial calculations for the
pension plan are as follows as of December 31, 1998 and 1999:

1998 1999
---- ----

Discount 10.50% 12.50%
Annual salary increase 7.50 7.50
Expected long-term return on plan assets 9.25 9.25

Changes during the year in the projected benefit obligations and in the
fair value of plan assets are as follows as of December 31, 1998 and 1999 (in
thousands):

1998 1999
---- ----

Projected benefit obligations:
Balance at beginning of year $2,266 $1,267
Adjustments at the beginning of the year (240) 0
Service cost 294 185
Interest cost 146 142
Benefits paid (59) (13)
Foreign currency exchange rate changes (459) 0
Actuarial (gain) loss (681) (359)
---- ----
Balance at end of year $1,267 $1,222
====== ======

Plan assets:
Balance at beginning of year $1,328 $1,580
Actual return on plan assets 126 99
Company contributions 603 443
Benefits paid (66) (13)
Foreign currency exchange rate changes (411) 0
---- -
Balance at end of year $1,580 $2,109
====== ======

F-18

The prepaid pension costs recognized in the accompanying consolidated
balance sheets as other assets are as follows as of December 31, 1998 and 1999
(in thousands):

1998 1999
---- ----

Funded status $313 $887
Unrecognized prior service cost 168 155
Unrecognized net actuarial loss 16 (275)
-- ----
Prepaid asset recognized in the accompanying
consolidated balance sheets $497 $767
==== ====

Components of the plan's net periodic pension cost are as follows for the
years ended December 31, 1997, 1998, and 1999 (in thousands):

1997 1998 1999
---- ---- ----

Service cost $168 $294 $185
Interest cost 131 146 142
Expected return on plan assets (62) (131) (166)
Net amortization 17 45 13
-- -- --
Net periodic pension cost $254 $354 $174
==== ==== ====

11. REGULATORY MATTERS

GT&T is subject to regulation in Guyana under the provisions of its
License and under the Guyana Public Utilities Commission Act of 1999 ("PUC
law") and the Guyana Telecommunications Act of 1990 ("Telecommunications
Law"). GT&T also has certain significant rights and obligations under the
agreement pursuant to which the Company acquired its interest in GT&T in 1991.

F-19

On December 31, 1997, GT&T applied to the PUC for a significant increase
in rates for local and outbound international long-distance service so as to
enable GT&T to earn a 15% return on its rate base. Effective February 1, 1998,
GT&T was awarded an interim increase in rates which represented a substantial
increase over the rates in effect during 1997 and earlier years. Subsequently,
on March 27, 1998, the PUC reduced the interim rate increase effective in part
on April 1, 1998 and in part on May 1, 1998. On October 27, 1998, to reflect
changed conditions since December 31, 1997, GT&T filed for an additional rate
increase designed to generate $19 million in additional revenues over and
above the interim rates currently in effect. GT&T's two applications for a
permanent rate increase are still pending before the PUC.

In January 1999, after the chairman of the PUC held a press conference
which dealt extensively with the rate issues under consideration by the PUC,
GT&T applied to the Guyana High Court for an order prohibiting the chairman
from further participation in the rate case on the grounds that this press
conference and his statements at the press conference revealed a
predetermination and bias by the chairman against GT&T on the pending issues.
In response to this application, the Guyana High Court issued an order
directing the chairman and the PUC to show cause why such an order of
prohibition should not be issued. The Guyana High Court's order has the legal
effect of barring the chairman from further participation in the rate case
pending a determination by the Guyana High Court of the merits of GT&T's
application and, thus, is likely to further delay a decision by the PUC on
GT&T's pending applications. In April 1999, the PUC furnished to GT&T a
preliminary report of the PUC's staff to the Commissioners for a response by
GT&T. In this report, the staff challenged GT&T's computation of rate base and
expense in several respects and concluded with a recommendation that the
temporary rates currently in effect for local service should be reduced by
approximately $2.7 million, rather than being increased as GT&T is seeking.
GT&T has filed a response to the PUC disputing the staff's conclusions. GT&T
and the Company are also involved in discussions with officials at the highest
levels in the Guyana government seeking to resolve all outstanding PUC and
Guyana tax issues affecting GT&T. There can be no assurance as to how or when
any or all of these issues will be resolved.

In 1997, after the Guyana High Court voided a PUC order of October 1995
reducing GT&T's rates for outbound long distance calls to various countries,
GT&T put into effect a surcharge to recover the approximately $9.5 million of
lost revenues from the period of October 1995 to the date of the High Court's
order. The Guyana Consumer Advisory Bureau, a non-governmental group,
instituted a suit challenging GT&T's rights to institute this surcharge
without PUC approval, and in the fourth quarter of 1999, the Guyana High Court
ruled that GT&T should have first obtained PUC's permission for such
surcharge. Substantially all of the $9.5 million of lost revenues were
collected prior to the court's ruling, and it is unclear whether GT&T will be
required to make any refund since the High Court did not rule on GT&T's
contention that it was entitled to recover these lost revenues.

In October 1997, the PUC ordered GT&T to increase the number of telephone
lines in service to a total of 69,278 lines by the end of 1998, 89,054 lines
by the end of 1999, and 102,126 by the end of the year 2000 to allocate and
connect an additional 9,331 telephone lines before the end of 1998 and to
provide to subscribers who request them facilities for call diversion, call
waiting, reminder call, and three-way calling by the end of the year 1998. In
issuing this order, the PUC did not hear evidence or make any findings on the
cost of providing these lines and services, the adjustment in telephone rates
which may be necessary to give GT&T a fair return on its investment, or the
ways and means of financing the requirements of the PUC's order. GT&T has
filed a motion against the PUC's order in the Guyana High Court and has
appealed the order on different grounds to the Guyana Court of Appeal. No stay
currently exists against this order.

In February 2000, GT&T received notices of five separate hearings from
the PUC relating to various issues, including GT&T's failure to comply with
the October 1997 order to increase the number of lines in service and
information requests on the amount of surcharges collected by GT&T as a result
of the High Court's voiding of the PUC's October 1995 rate reduction order.
GT&T has filed with the Guyana High Court a petition to bar the Chairman of
the PUC on the grounds of bias from participating in any matters involving
GT&T.

In July 1998, the PUC gave notice that it would hold a public hearing on
August 25, 1998 in respect of the following matters: (i) "the validity of the
grant of monopoly rights to any owner or provider of services in the public
utility sector, having regard to the laws in force in Guyana at the relevant
time" and (ii) "whether the Commission has power to request the Government to
issue a license to a new provider of services in the public utility sector,
where the existing provider in that sector fails to refuse to meet reasonable
demands for service in that public utility sector." While the PUC's notice did
not name GT&T as the service provider in question, the Company believes that
GT&T is the service provider which will be the subject of the hearing. This
intended hearing has been stayed by an order issued by the Guyana High Court
on an application by GT&T pending a hearing on the merits of GT&T's
application.

F-20

On October 30, 1998, the U.S. Federal Trade Commission ("FTC") issued for
comment a proposed rule which would expand the definition of "pay per call"
services to include audiotext services, such as those which GT&T terminates in
Guyana. If adopted in its present form, the FTC's proposed rule would require,
among other things, that a caller must receive a short preamble at the
beginning of the call advising the caller of the cost of the call and
permitting the caller to terminate the call without charge if terminated
immediately. Although GT&T has not completed its study of the ways and means
of possibly complying with this requirement, it may be technically impossible
for recipients of international audiotext traffic, such as GT&T, to separate
audiotext traffic from other incoming international traffic and permit a free
preamble for audiotext calls. The FTC's proposed rule would have the effect of
prohibiting a local telephone company from disconnecting a subscriber's
telephone service for failure to pay charges for an international audiotext
call. This requirement currently applies to area code 900 domestic audiotext,
but not to international audiotext, and provides a collection advantage for
international audiotext over domestic audiotext. The proposed rule would also
include several requirements which, if adopted, could make it more difficult
to bill and collect for international audiotext calls. If the proposed
regulations are adopted, the provisions described above may have a significant
adverse impact on international audiotext traffic from the United States to
Guyana and other non-U.S. termination points.

The Federal Communication Commission (the "FCC") has issued a Report and
Order in a rule making proceeding in which it adopted mandatory international
accounting and settlement rate benchmarks for many countries. The FCC adopted
a mandatory settlement rate benchmark of $.23 per minute for low-income
countries such as Guyana and required that settlement rates between the U.S.
and low-income countries be reduced to $.23 per minute by January 1, 2002. The
current settlement rate is $.85 per minute. The FCC stated in the Report and
Order that it expects U.S. licensed carriers to negotiate proportionate annual
reductions prior to 2002. In accordance with this FCC policy, AT&T sought a
reduction in the settlement rate for traffic between Guyana and the United
States. GT&T declined to agree to such a reduction, and effective December 31,
1999, GT&T's operating agreement and all direct circuits with AT&T were
terminated. In anticipation of the termination of the AT&T agreement, GT&T has
sought to bring on circuits with other carriers to handle the traffic
previously received from AT&T and to restructure its operating agreements with
carriers around the world so that GT&T will receive approximately $.85 per
minute as a termination fee for international traffic from all countries, with
the exception of Canada and certain Caribbean countries which will continue to
be able to send normal volumes of traffic to GT&T at the lower rates which
traditionally have been in effect with these countries. It is likely, however,
that international settlement rates between Guyana and the United States and
other countries around the world will decline significantly on or prior to
January 1, 2002. Any significant reduction in the settlement rates for the
United States--Guyana traffic could have a significant adverse impact on
GT&T's earnings. While such an event would provide GT&T with basis to seek a
rate increase from the PUC so as to permit GT&T to earn its contractually
provided 15% rate of return, there can be no assurances as to when or whether
GT&T would receive such a rate increase.

12. CONTINGENCIES AND COMMITMENTS

The Company is subject to lawsuits and claims which arise out of the
normal course of business, some of which involve claims for damages and taxes
that are substantial in amount. The Company believes, except for the items
discussed below for which the Company is currently unable to predict the
outcome, the disposition of claims currently pending will not have a material
adverse effect on the Company's financial position or results of operations.

F-21

Upon the acquisition of GT&T in January 1991, ATN entered into an
agreement with the government of Guyana to significantly expand GT&T's
existing facilities and telecommunications operations and to improve service
within a three-year period pursuant to an expansion and service improvement
plan (the "Plan"). The government agreed to permit rate increases in the event
of currency devaluation within the three-year period, but GT&T was unable to
get timely increases when the Guyana currency suffered a sharp decline in
March 1991. The Plan was modified in certain respects, and the date for
completion of the Plan was extended to February 1995. Since 1995, the PUC has
had pending a proceeding initiated by the Minister of Telecommunications of
Guyana with regard to the failure of GT&T to complete the Plan by February
1995. It is GT&T's position that its failure to receive timely rate increases,
to which GT&T was entitled to compensate for the devaluation of currency which
occurred in 1991, provides legal justification for GT&T's delay in completing
the Plan. The PUC is currently holding hearings on this matter. If the PUC
were to find that GT&T was not excused from fulfilling the terms of the Plan
by February 1995, GT&T could be subject to monetary penalties, cancellation of
the license, or other action by the PUC or the government which could have a
material adverse effect on the Company's business and prospects. The
requirements of the Plan have now been substantially completed.

In May 1997, GT&T received a letter from the Commissioner of Inland
Revenue indicating that GT&T's tax returns for 1992 through 1996 had been
selected for an audit under the direct supervision of the Trade Minister with
particular focus on the withholding tax on payments to international audiotext
providers. In March and April 1997, the Guyanese Trade Minister publicly
announced that he had appointed a task force to probe whether GT&T should pay
withholding taxes on fees paid by GT&T to international audiotext providers.
The Minister announced that if GT&T were found guilty of tax evasion, it could
owe as much as $40 million in back taxes. In July 1997, GT&T applied to the
Guyana High Court for an order prohibiting this audit on the grounds that the
decision of the Minister of Trade to set up this task force and to control and
direct its investigation was beyond his authority, violated the provisions of
the Guyanese Income Tax Act, interfered with the independence of the
Commissioner of Inland Revenue, and was done in bad faith. The court issued an
order effectively staying the audit pending a determination by the court of
the merits of GT&T's application.

In June 1997, GT&T received an assessment of the current equivalent of
approximately $3 million from the Commissioner of Inland Revenue for taxes for
1996 based on the disallowance as a deduction for income tax purposes of
five-sixths of the advisory fees payable by GT&T to the Company and for the
timing of the taxation on certain surcharges to be billed by GT&T. The
deductibility of these advisory fees and the deferral of these surcharges
until they are actually billed had been upheld for an earlier year in a
decision of the High Court in August 1995. In July 1997, GT&T applied to the
High Court for an order prohibiting the Commissioner of Inland Revenue from
further proceeding with this assessment on the grounds that the assessment was
arbitrary and unreasonable and capriciously contrary to the August 1995
decision of the Guyana High Court, and GT&T obtained an order of the High
Court effectively prohibiting any action on the assessment pending the
determination by the Court of the merits of GT&T's application.

In November 1997, GT&T received assessments of the current equivalent of
approximately $11 million from the Commissioner of Inland Revenue for taxes
for the years 1991 through 1996. It is GT&T's understanding that these
assessments stem from the same audit commenced in May 1997 which the Guyana
High Court stayed in its July 1997 order referred to above. Apparently because
the audit was cut short as a result of the High Court's July 1997 order, GT&T
did not receive notice of and an opportunity to respond to the proposed
assessments as is the customary practice in Guyana, and substantially all of
the issues raised in the assessments appear to be based on mistaken facts.
GT&T has applied to the Guyana High Court for an order prohibiting the
Commissioner of Inland Revenue from enforcing the assessments on the grounds
that the origin of the audit with the Minister of Trade and the failure to
give GT&T notice of and opportunity to respond to the proposed assessments
violated Guyana law. The Guyana High Court has issued an order effectively
prohibiting any action on the assessments pending the determination by the
Court of the merits of GT&T's application.

F-22

13. RELATED-PARTY TRANSACTIONS

Prior to December 30, 1997, the Company previously shared certain general
and administrative costs with its former affiliate, Atlantic Tele-Network Co.
These shared costs were allocated in approximately the same proportion as
operating revenues of the affiliate bore to total operating revenues of the
Company. Management believes the allocation methods used were reasonable.
However, such allocation was not necessarily indicative of the costs that
would have been incurred if the companies had been operated as unaffiliated
entities. It is not practical to estimate these costs on a stand-alone basis.

During the year ended December 31, 1997, the Company retired interest
bearing notes receivable from its former affiliates of approximately
$25.1 million. Interest income for the year ended December 31, 1997 was
approximately $2.2 million. Interest was not charged on certain other notes
receivable from affiliates.

In December 1999, Wireless World agreed to acquire the assets and
business of Antilles Wireless Cable T.V. Company ("Antilles Wireless") for
consideration of 242,424 shares of ATN common stock and approximately
$1.5 million in cash. Antilles Wireless holds LMDS and MMDS license for the
U.S. Virgin Islands and provides wireless cable T.V. services there. The
entire equity interest in Antilles Wireless is owned by an officer of the
Company.

F-23

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

Following is a summary of the Company's quarterly results of operations
for the years ended December 31, 1998 and 1999 (in thousands):

1998 Consolidated
=========================================================
for the Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------------------

Revenues $22,362 $23,742 $27,308 $21,232
Operating expenses 16,797 17,232 17,336 11,730
------ ------ ------ ------
Income from telephone operations 5,565 6,510 9,972 9,502
Loss from other operations 0 0 (77) (296)
Other income (expense), net 3,407 (112) (147) (218)
----- ---- ---- ----
Income before income taxes and minority
interests 8,972 6,398 9,748 8,988
Income taxes 3,690 2,842 4,445 4,936
Income before minority interests 5,282 3,556 5,303 4,052
Minority interests (411) (461) (856) (553)
---- ---- ---- ----
Net income $ 4,871 $ 3,095 $ 4,447 $ 3,499
======== ======== ======== ========

1999 Consolidated
=========================================================
for the Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------------------

Revenues $20,741 $18,301 $18,753 $26,236
Operating expenses 15,868 14,461 13,518 16,318
------ ------ ------ ------
Income from telephone operations 4,873 3,840 5,235 9,918
Loss from other operations (128) (91) (161) (219)
Other income (expense), net (35) (97) 18 86
--- --- -- --
Income before income taxes and minority
interests 4,710 3,652 5,092 9,785
Income taxes 2,418 1,996 2,649 4,835
----- ----- ----- -----
Income before minority interests 2,292 1,656 2,443 4,950
Minority interests (279) (195) (325) (877)
---- ---- ---- ----
Net income $ 2,013 $ 1,461 $ 2,118 $ 4,073
======== ======== ======== ========

F-24

15. SUBSEQUENT EVENTS (UNAUDITED)

During the period subsequent to December 31, 1999, the Company
repurchased 57,000 shares of its common stock at an aggregate cost of
approximately $530,000, or an average price of $9.30 per share, under a stock
repurchase program authorized by the board of directors in November 1999.

During March, 2000, Wireless World completed the acquisition of the
specialized mobile radio business and the paging business of VI Access for
$625,000 in cash.

On March 10, 2000, the Company announced a 16.7% increase in its
quarterly dividend to $0.175 per share and its board of directors declared a
quarterly dividend on its common stock in that amount payable on April 7, 2000
to shareholders of record as of March 31, 2000.

F-25

Schedule II
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
(Amounts in Thousands)
- -----------------------------------------------------------------------------------------------------------------

Balance at Charged to Net Balance
Beginning Costs and Charge at End
of Period Expenses Offs of Period

YEAR ENDED DECEMBER 31, 1997:
Description:
Allowance for doubtful accounts $ 557 $ 159 $ 214 $ 502

YEAR ENDED DECEMBER 31, 1998:
Description:
Allowance for doubtful accounts $ 502 $ 2,291 $ 142 $ 2,651

YEAR ENDED DECEMBER 31, 1999:
Description:
Allowance for doubtful accounts $ 2,651 $ 1,072 $ 208 $ 3,515

F-26

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES

We have audited in accordance with auditing standards generally accepted
in the United States, the consolidated financial statements of Atlantic
Tele-Network, Inc. and subsidiaries included in this Form 10-K and have issued
our report thereon dated February 28, 2000. Our audits were made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. The schedule listed in the index is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
February 28, 2000