Liberty Latin America Ltd. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Highlights: Added over 225,000 high-speed broadband and postpaid mobile subscribers year-to-date (excluding Puerto Rico). Successfully refinanced $1 billion of Cable & Wireless credit silo senior notes. Exploring inorganic growth in Peru and added Sparkle to a new pan-regional subsea system.
• Segment-Specific: C&W Caribbean was negatively affected by Hurricane Beryl; CWP drove growth via mobile and fixed subscriber additions; Liberty Networks saw enterprise growth; Liberty Puerto Rico faced migration challenges but showed improving NPS; Liberty Costa Rica had solid broadband and mobile subscriber adds.

Segment Performance

• C&W Caribbean: Q3 2023 revenue was $360 million, flat year-over-year on a rebased basis. Mobile saw 7% growth, offset by 3% decline in fixed and 2% decline in B2B on a rebased basis. Adjusted OIBDA was $158 million, representing 5% rebased growth, with an adjusted OIBDA margin improving by over 200 basis points year-over-year to 44%.
• Cable & Wireless Panama (CWP): Generated $188 million in revenue, declining 1% year-over-year. Mobile saw 9% topline growth and fixed 5% growth, offset by a 13% decline in B2B revenue. Adjusted OIBDA was $69 million, a 17% year-on-year growth.
• Liberty Networks: Generated $110 million in revenue and $59 million in adjusted OIBDA, with rebased declines of 2% and 8%, respectively. Impacted by noncash REU and IRU revenue declines and higher bad debt expense.
• Liberty Puerto Rico: Q3 revenue was $308 million, reflecting a 13% rebased decline year-over-year. Adjusted OIBDA was $88 million, a rebased decline of 24% compared to Q3 2023.
• Liberty Costa Rica: Delivered Q3 revenue of $146 million and adjusted OIBDA of $51 million, with 5% rebased revenue growth and a 1% rebased decline in adjusted OIBDA.

Guidance

• Expect adjusted OIBDA performance to accelerate in Q4, driven by B2B and anticipated improved results in Puerto Rican operations. Q4 is expected to be the strongest cash flow quarter of the year, driven by improved adjusted OIBDA and seasonally positive working capital.

Risks

• Hurricane Beryl impacted C&W Caribbean's operations. Complex migration in Puerto Rico led to higher-than-expected churn and delayed recovery to pre-migration EBITDA. Intense competition in the Puerto Rico market poses challenges to revenue growth.

Question and Answer

• Q: Related to capital allocation for Puerto Rico and Peru. A: Balan Nair and Chris Noyes discussed operating Puerto Rico on cash with cost cuts and revenue initiatives, and Peru has received ~$100M in capital over 3 years with a focus on outside Lima.
• Q: About converged bundles and 5G upgrades. A: Balan and Inge Smidts talked about converged bundles working in regions like C&W Caribbean and Costa Rica, and 5G launched in multiple markets with judicious investment based on market readiness.
• Q: Concern about Puerto Rico EBITDA recovery. A: Balan Nair discussed cost cutting, sales growth, and B2B opportunities as key drivers for EBITDA recovery in Puerto Rico.
• Q: Currency implications and Trump election. A: Balan and Chris Noyes mentioned hedging strategies and monitoring currency effects, with most operations having sufficient liquidity and hedging in place.