What happened

Niche telecom company ATN International (ATNI 2.69%) attracted much interest this week. As a result, its share price was up by nearly 16% week to date as of Thursday evening, according to data compiled by S&P Global Market Intelligence. A hefty dividend raise was the action that shined the spotlight on the stock.

So what

If you're a relatively obscure, publicly traded business, one of the best ways to get noticed is to make a dramatic move with your dividend. On Monday, ATN pulled the trigger on one of the most substantial quarterly dividend raises in its history, boosting the payout by 24% to $0.21 per share. The new distribution, to be paid next Jan. 6 to investors of record as of this coming Dec. 31, would yield 1.8% at the stock's most recent closing price. 

ATN is an offbeat telecom play that concentrates on providing services to relatively remote and under-served areas. This is a challenging business, and while the company has posted top-line growth recently (with revenue rising by 9% year over year in the most recently reported quarter), it tends to book regular net losses.

Free cash flow (FCF) has also been negative of late, although ATN had nearly $77 million in cash and equivalents at the end of said quarter. Annual dividend payouts had been costing it just under $11 million; the 24% dividend raise puts that figure at around $13.6 million.

Now what

So investors clearly feel confident that ATN can maintain its distribution, plus fund the "selective" share repurchases it mentioned -- but didn't provide any details about -- concurrent with its dividend raise announcement. I wouldn't be so sure. Those consistently red FCF numbers are concerning, and I can't foresee any great leap in this niche of the telecom business. Caution is warranted here, in my view.