Liberty Latin America Ltd. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Subscriber Additions: Added 44,000 broadband and postpaid mobile subscribers in total in Q1. Notable progress in postpaid mobile in Costa Rica and Caribbean.
• FMC Penetration: In most successful markets, FMC penetration over 30%, driving lower churn and predictable revenue.
• Adjusted OIBDA Growth: Group adjusted OIBDA rebased growth 8% year-over-year in Q1, driven by double-digit growth in C&W Caribbean and C&W Panama.
• Cost Management: Cost management efforts driving margin expansion. Lower P&E additions in Q1 than prior year, contributing to adjusted OIBDA less P&E additions growth of 20% year-over-year.
• Cable & Wireless Segments: C&W Caribbean had good operating momentum and strong financial execution; C&W Panama had 5% rebased revenue growth and 15% rebased adjusted OIBDA growth; Liberty Networks had strong wholesale and enterprise performance with exceptional free cash flow generation.
• Liberty Costa Rica: Continued quarterly broadband additions, growing postpaid mobile base, FMC penetration up to almost 35%.
• Liberty Puerto Rico: Lost 3,000 fixed broadband customers, focusing on cost-cutting, new distribution channels, and improving postpaid mobile trends.

Segment Performance

• Cable & Wireless credit silo:
  • C&W Caribbean: Reported $364 million of revenue in Q1 with flat rebased growth. Adjusted OIBDA was $173 million, representing 16% rebased growth.
  • C&W Panama: Generated $177 million in revenue and $65 million in adjusted OIBDA in Q1, reflecting 5% rebased revenue growth and 15% rebased adjusted OIBDA growth.
  • Liberty Networks: Generated $110 million in revenue and $58 million in adjusted OIBDA, resulting in rebased growth of 3% in revenue and rebased decline of 2% in adjusted OIBDA.
• Liberty Costa Rica: Delivered Q1 revenue of $158 million and adjusted OIBDA of $59 million, reflecting 2% rebased revenue growth and a 1% decline in rebased adjusted OIBDA.
• Liberty Puerto Rico: Q1 revenue was $298 million, reflecting an 11% rebased decline year-over-year. Adjusted OIBDA grew year-over-year to $82 million, a 16% rebased increase.

Guidance

• Withdrew 3-year guidance for LLA from 2024 to 2026 due to challenging migration in 2024 and slower recovery in 2025 in Puerto Rico.
• Expect 14% CapEx to sales in 2025 and 2026, equally distributed across regions.
• Anticipate better postpaid mobile KPI trends in the second half of 2025 for Puerto Rico.
• Expect lower cost structure in Puerto Rico's second half and completion of Boost migrations.

Risks

• Competitive Environment in Puerto Rico: T-Mobile is aggressive with handset subsidies on mobile; fixed side competes with Claro.
• Macroeconomic Factors in Puerto Rico: Uncertainty around Federal support and net migration, though not overly dependent on government subsidies.
• Puerto Rico Business Challenges: Slower recovery than hoped for in 2025, requiring time to turn around operational and financial results.

Question and Answer

Q: On Puerto Rico's competitive environment and CapEx distribution?

A: Balan Nair said T-Mobile is most aggressive on handset subsidies in Puerto Rico's mobile market; CapEx of 14% is sustainable and equally distributed across regions, with Puerto Rico trending closer to mid to high-15% range.

Q: On CapEx sustainability in Puerto Rico and refinancing?

A: Balan Nair noted Puerto Rico's CapEx is not under-spent, with corporate-level spends allocated; Chris Noyes said focus is on improving operations and financial results for mid-to-late 2026 refinancing.

Q: On prior multiyear guide, Puerto Rico's macro outlook, and EBITDA aspiration?

A: Balan Nair said Puerto Rico is a good market with great macros and competitive environment; focused on internal EBITDA targets for management team.

Q: On work-based compensation, buybacks, and interest expenses?

A: Chris Noyes said interest expense higher due to refinancings but hedged on floating rate exposure; stock comp typically runs in first half, similar to prior years.