Liberty Latin America Reports Q3 2024 Results

Reported revenue of $1.1bn; sequential financial improvement

Positioned to accelerate financial performance in Q4

Delivered successful $1bn debt refinancing in C&W credit silo

Cultivated an FTTH Peruvian broadband investment with ~3m homes passed

Completed acquisition of mobile spectrum and prepaid subscribers in PR & USVI

Liberty Latin America Ltd. (“Liberty Latin America” or “LLA”) (NASDAQ: LILA and LILAK, OTC Link: LILAB) today announced its financial and operating results for the three months (“Q3”) and nine months (“YTD”) ended September 30, 2024.

CEO Balan Nair commented, “We are continuing our strategy to connect communities and drive broadband and postpaid mobile penetration across our markets. We are encouraged by our transformation programs, which are increasingly gaining momentum and enabling us to connect with our customers through their channels of choice.”

“In the third quarter, our businesses in Costa Rica and Panama demonstrated continued operational execution, adding nearly 50,000 broadband and postpaid subscribers, roughly double the prior-year period. Although C&W Caribbean experienced adverse operational impacts from Hurricane Beryl during the quarter, financial performance was resilient, outperforming our expectations as we delivered sequential and year-over-year reported Adj. OIBDA growth.”

“Importantly, we grew Adj. OIBDA in Puerto Rico sequentially in the third quarter, however churn from the migration was higher than anticipated. We are seeing improved sales and customer sentiment. Our operating team is focused on the customer and growing our business back. In Q4, we expect to see acceleration in our Adj. OIBDA performance, but at this point, and given that the recovery is taking longer than previously anticipated, we no longer expect to achieve a monthly Adj. OIBDA of $45 million by year-end. As we look to 2025, the completion of our acquisition of spectrum and prepaid subscribers from Echostar will further underpin our growth prospects.”

“Additionally, we are highlighting an investment in Peru that we have been cultivating since 2021. This FTTH business, WOW, in which we own nearly 50%, passes 3 million homes and has been successful in driving broadband market share primarily in areas outside Lima.”

“Beyond our existing business, we are excited about the prospects for growth and value creation related to our announced submarine expansion with two strategic partners, connecting Colombia, Panama, Mexico and the USA. Together with our new landing station in Florida, we expect to see strong traffic growth driven by hyperscalers.”

“Turning to the fourth quarter, we plan to deliver a strong performance driven by B2B growth and further progress in the recovery of our Puerto Rican operations, and we aim to produce our strongest quarter in cash flow generation this year.”

Q3 Business Highlights

• C&W Caribbean: robust performance despite impacts from Hurricane Beryl
  • Flat YoY revenue performance, including $5m negative impact from Hurricane Beryl
  • YoY reported and rebased Adj. OIBDA growth of 5%
• C&W Panama: strong operating and financial progress
  • 12,000 broadband and mobile postpaid additions
  • YoY Adj. OIBDA growth of 17%
• Liberty Networks: stable underlying performance
  • Growing recurring revenue across wholesale and enterprise businesses
  • Performance impacted by IRU amortization and contract timing
• Liberty Puerto Rico: turnaround underway
  • LOOP converged proposition launched in September 2024; improving NPS
  • Sequential Adj. OIBDA growth
• Liberty Costa Rica: continued subscriber momentum, postpaid base now above 1 million
  • Q3 postpaid net adds 23% higher YoY, over 125,000 adds LTM
  • Reported Q3 revenue and Adj. OIBDA growth

Financial and Operating Highlights

Amounts may not recalculate due to rounding.

N.M. – Not Meaningful.

Revenue Highlights

The following table presents (i) revenue of each of our segments and corporate operations for the periods indicated and (ii) the percentage change from period-to-period on both a reported and rebased basis:

N.M. – Not Meaningful.

• Reported revenue for the three and nine months ended September 30, 2024 was 3% and 1% lower, respectively, as compared to the corresponding prior-year periods.
  • Reported revenue declined in Q3 primarily driven by an organic reduction in Liberty Puerto Rico, which was partly offset by organic growth in Liberty Costa Rica.
  • Reported revenue was lower YTD mostly due to reduced revenue in Liberty Puerto Rico, partly offset by: (1) net organic growth in Liberty Costa Rica, C&W Caribbean and C&W Panama and (2) net foreign exchange benefits of $26 million.

Q3 2024 Revenue Growth – Segment Highlights

• C&W Caribbean: revenue was flat on both a reported and rebased basis, year-over-year, as mobile revenue growth was offset by declines in fixed and B2B where we saw negative impacts from Hurricane Beryl in the quarter.
  • Fixed residential revenue declined by 3% on a reported and rebased basis. Performance was driven by a $5m negative impact related to Hurricane Beryl, primarily in Jamaica.
  • Mobile residential revenue increased by 7% on both a reported and rebased basis. Performance resulted from an organic increase of over 50,000 postpaid subscribers year-over-year, driven by our fixed-mobile convergence propositions, and higher prepaid ARPU following price increases. Prepaid subscriber additions in Jamaica were driven by demand prior to Hurricane Beryl.
  • B2B revenue was 3% and 2% lower, respectively, on a reported and rebased basis. The decrease was mainly driven by a reduction in fixed and managed services, mostly due to impacts related to Hurricane Beryl.
• C&W Panama: revenue was broadly stable, declining by 1% on a reported and rebased basis, year-over-year.
  • Fixed residential revenue was up 5%, driven by broadband RGU additions following expansion of our FTTH networks, products and commercial activities.
  • Mobile residential revenue grew by 9%, driven in part by improved prepaid ARPU as our products and promotions led to increased recharge activity as well as increased handset sales.
  • B2B revenue fell by 13% primarily due to lower revenue from government-related projects, some of which we anticipate to be executed in the fourth quarter.
• Liberty Networks: revenue declined by 2% on both a reported and rebased basis. The year-over-year decline was driven by lower wholesale network revenue associated with a reduction of $4 million in non-cash IRU revenue primarily due to lower amortization year-over-year. This was partly offset by higher enterprise revenue due primarily to continued growth in managed services and B2B connectivity.
• Liberty Puerto Rico: revenue was 12% and 13% lower on a reported and rebased basis, respectively, year-over-year. The rebased comparison includes the acquisition of Echostar's Puerto Rico and USVI prepaid mobile customer base on September 3, 2024, which contributed $3 million of revenue in each of the current and prior-period quarters.
  • Residential fixed revenue declined by 4% year-over-year, on both a reported and rebased basis, primarily due to lower ARPU caused by retention-related discounts. The year-over-year decline also includes the impact of credits issued to customers following Hurricane Ernesto, which impacted Puerto Rico in August 2024.
  • Residential mobile revenue was 21% and 22% lower compared to the prior-year period on a reported and rebased basis, respectively. This was driven by a reduction in mobile subscribers, year-over-year, impacted by disruption related to the migration of customers to our mobile network, and lower equipment sales due to the reduced customer base and higher volumes related to the iPhone 15 launch in 2023 as compared to the iPhone 16 launch in 2024.
  • B2B revenue declined by 5% year-over-year, on both a reported and rebased basis, primarily reflecting the cancellation of the FCC's Emergency Connectivity Fund (ECF) which led to a reduction of 74,000 mobile postpaid subs over the past year as well as a reduction in subscribers related to migration.
  • Other revenue declined by $2 million as compared to the prior-year quarter due to a reduction in revenue recognized on funds received from the FCC.

Sequentially, revenue was flat on a reported basis and prepaid subscribers grew organically for the second consecutive quarter.

• Liberty Costa Rica: revenue grew by 8% on a reported basis and 5% on a rebased basis, year-over-year. Reported performance benefited from a $5 million positive foreign exchange impact as the Costa Rican colon appreciated against the U.S. dollar. The strong year-over-year rebased performance was mainly driven by higher mobile revenue primarily due to postpaid subscriber growth.

Operating Income (loss)

• Operating income (loss) was ($380 million) and $163 million for the three months ended September 30, 2024 and 2023, respectively, and ($176 million) and $405 million for the nine months ended September 30, 2024 and 2023, respectively.
  • We reported operating losses during the three and nine months ended September 30, 2024, as compared to operating income during the corresponding periods in 2023, primarily due to (i) the impairment of the goodwill balance at Liberty Puerto Rico and (ii) declines in Adjusted OIBDA.

Adjusted OIBDA Highlights

The following table presents (i) Adjusted OIBDA of each of our reportable segments and our corporate category for the periods indicated and (ii) the percentage change from period-to-period on both a reported and rebased basis:

N.M. – Not Meaningful.

• Reported Adjusted OIBDA for the three and nine months ended September 30, 2024 decreased by 6% and 8%, respectively, as compared to the corresponding prior-year periods.
  • Reported Adjusted OIBDA declined in Q3 and YTD as organic reductions in Liberty Puerto Rico were partly offset by growth in C&W Panama and C&W Caribbean.

Q3 2024 Adjusted OIBDA Growth – Segment Highlights

• C&W Caribbean: Adjusted OIBDA increased by 5% on a reported and rebased basis. Our Adjusted OIBDA margin improved by over 200 basis points year-over-year to 43.9%.

• C&W Panama: Adjusted OIBDA increased by 17% on both a reported and rebased basis, driven by lower project-related costs and synergies from the Claro Panama acquisition.

• Liberty Networks: Adjusted OIBDA decreased by 8% on both a reported and rebased basis. Our rebased performance was driven primarily by the aforementioned non-cash related revenue decline in the quarter, and higher bad debt expense mostly driven by an adjustment for a large customer.

• Liberty Puerto Rico: Adjusted OIBDA declined by 24% on a reported and rebased basis. The performance was driven primarily by the net impact of our aforementioned revenue decline, and lower direct costs, primarily due to lower handset sales. TSA and integration costs related to the migration were $3 million in the quarter.

• Liberty Costa Rica: Adjusted OIBDA grew by 2% and declined by 1% on a reported and rebased basis, respectively. Rebased performance resulted from the aforementioned revenue growth being more than offset by higher direct costs, and operating costs related to bad debt expense, mainly associated with installment plans on equipment sales, and higher operating lease expense associated with an increase in tower leases.

Net Earnings (Loss) Attributable to Shareholders

• Net earnings (loss) attributable to shareholders was ($436 million) and ($479 million) for the three and nine months ended September 30, 2024, respectively, and $60 million and $29 million for the three and nine months ended September 30, 2023, respectively.

Property & Equipment Additions and Capital Expenditures

The table below highlights the categories of the property and equipment additions (P&E Additions) for the indicated periods and reconciles to cash paid for capital expenditures, net.

1. Table excludes Liberty Networks as that segment only provides B2B-related services.

Summary of Debt, Finance Lease Obligations and Cash & Cash Equivalents

The following table details the U.S. dollar equivalent balances of the outstanding principal amounts of our debt and finance lease obligations, and cash and cash equivalents at September 30, 2024:

1. Represents the aggregate amount held by subsidiaries of Liberty Latin America that are outside our borrowing groups.
2. Represents the C&W borrowing group, including the C&W Caribbean, Liberty Networks and C&W Panama reportable segments.
3. Cash amount includes restricted cash that serves as collateral against certain letters of credit associated with the funding received from the FCC to continue to expand and improve our fixed network in Puerto Rico.
4. Consolidated leverage ratios are non-GAAP measures. For additional information, including definitions of our consolidated leverage ratios and required reconciliations, see Non-GAAP Reconciliations below.
5. For purposes of calculating our weighted average tenor, total debt excludes vendor financing, debt related to the Tower Transactions, other debt and finance lease obligations.
6. At September 30, 2024, the full amount of unused borrowing capacity under our subsidiaries' revolving credit facilities was available to be borrowed, both before and after completion of the September 30, 2024 compliance reporting requirements.

Quarterly Subscriber Variance

1. The decrease in homes passed at the other C&W Caribbean markets is due to Hurricane Beryl, which resulted in the loss of 4,700 homes passed during Q3 2024.
2. Jamaica prepaid adjustment relates to mobile 2G shutdown, which was completed during the third quarter of 2024.
3. Liberty Puerto Rico adjustment relates to the addition of mobile subscribers on September 3, 2024 related to the close of the acquisition of spectrum and prepaid subscribers in Puerto Rico and USVI from EchoStar.

ARPU per Customer Relationship

The following table provides ARPU per customer relationship for the indicated periods:

Mobile ARPU

The following table provides ARPU per mobile subscriber for the indicated periods:

1. The FX-Neutral change represents the percentage change on a sequential basis adjusted for FX impacts and is calculated by adjusting the current-period figures to reflect translation at the foreign currency rates used to translate the prior quarter amounts.
2. The ARPU per customer relationship amounts in Costa Rican colones for the three months ended September 30, 2024 and June 30, 2024 were CRC 21,888 and CRC 22,261, respectively.
3. The mobile ARPU amount for the three months ended June 30, 2024 excludes the impact of 39,300 ECF subscribers that were disconnected on April 1.
4. The mobile ARPU for the three months ended June 30, 2024 does not include the revenue and mobile subscribers associated with the LPR Acquisition (acquisition of spectrum and prepaid subscribers in Puerto Rico and USVI from EchoStar) as the LPR Acquisition closed on September 3, 2024. Excluding the LPR Acquisition, ARPU would have increased sequentially by 3% on a reported and FX-Neutral basis during the three months ended September 30, 2024.
5. The mobile ARPU amount in Costa Rican colones for the three months ended September 30, 2024 and June 30, 2024 were CRC 3,666 and CRC 3,652, respectively.

Forward-Looking Statements and Disclaimer

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our strategies, priorities and objectives, performance, guidance and growth expectations; our digital strategy, product innovation and commercial plans and projects; subscriber growth; expectations on demand for connectivity in the region; the recovery by our Puerto Rico operations; the anticipated benefits of our acquisition of spectrum and prepaid subscribers in Puerto Rico and USVI from EchoStar, our FTTH broadband investment in Peru and our announced submarine expansion with two strategic partners, connecting Colombia, Panama, Mexico and the USA; the strength of our balance sheet and tenor of our debt; our share repurchase program; the impact of Hurricane Beryl on our business; and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include events that are outside of our control, such as hurricanes and other natural disasters, political or social events, and pandemics, such as COVID-19, the uncertainties surrounding such events, the ability and cost to restore networks in the markets impacted by hurricanes or generally to respond to any such events; the continued use by subscribers and potential subscribers of our services and their willingness to upgrade to our more advanced offerings; our ability to meet challenges from competition, to manage rapid technological change or to maintain or increase rates to our subscribers or to pass through increased costs to our subscribers; the effects of changes in laws or regulation; general economic factors; our ability to successfully acquire and integrate new businesses and realize anticipated efficiencies from acquired businesses; the ability to obtain regulatory approvals and satisfy the other conditions to closing with respect to the transaction with Millicom in Costa Rica; the availability of attractive programming for our video services and the costs associated with such programming; our ability to achieve forecasted financial and operating targets; the outcome of any pending or threatened litigation; the ability of our operating companies to access cash of their respective subsidiaries; the impact of our operating companies' future financial performance, or market conditions generally, on the availability, terms and deployment of capital; fluctuations in currency exchange and interest rates; the ability of suppliers and vendors to timely deliver quality products, equipment, software, services and access; our ability to adequately forecast and plan future network requirements including the costs and benefits associated with network expansions; and other factors detailed from time to time in our filings with the Securities and Exchange Commission, including our most recently filed Form 10-K and Form 10-Q. These forward-looking statements speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About Liberty Latin America

Liberty Latin America is a leading communications company operating in over 20 countries across Latin America and the Caribbean under the consumer brands BTC, Flow, Liberty and Más Móvil. The communications and entertainment services that we offer to our residential and business customers in the region include digital video, broadband internet, telephony and mobile services. Our business products and services include enterprise-grade connectivity, data center, hosting and managed solutions, as well as information technology solutions with customers ranging from small and medium enterprises to international companies and governmental agencies. In addition, Liberty Latin America operates a subsea and terrestrial fiber optic cable network that connects approximately 40 markets in the region.

Liberty Latin America has three separate classes of common shares, which are traded on the NASDAQ Global Select Market under the symbols “LILA” (Class A) and “LILAK” (Class C), and on the OTC link under the symbol “LILAB” (Class B).

For more information, please visit www.lla.com.

Footnotes

1. Rebased growth rates are a non-GAAP measure. The indicated growth rates are rebased for the estimated impacts of FX and acquisition. See Non-GAAP Reconciliations below.
2. Consolidated Adjusted OIBDA is a non-GAAP measure. For the definition of Adjusted OIBDA and required reconciliations, see Non-GAAP Reconciliations below.
3. Adjusted Free Cash Flow (“Adjusted FCF”) is a non-GAAP measure. For the definition of Adjusted FCF and required reconciliations, see Non-GAAP Reconciliations below.
4. See Glossary for the definition of RGUs and mobile subscribers. Organic figures exclude RGUs and mobile subscribers of acquired entities at the date of acquisition and other non-organic adjustments, but include the impact of changes in RGUs and mobile subscribers from the date of acquisition. All subscriber / RGU additions or losses refer to net organic changes, unless otherwise noted.

Additional Information | Cable & Wireless Borrowing Group

The following tables reflect preliminary unaudited selected financial results, on a consolidated C&W basis, for the periods indicated, in accordance with U.S. GAAP.

^1. Indicated growth rates are rebased for the estimated impacts of FX.

The following table details the U.S. dollar equivalent of the nominal amount outstanding of C&W's third-party debt and cash and cash equivalents:

• At September 30, 2024, our third-party total and proportionate net debt was $4.5 billion and $4.2 billion, respectively, our Fully-swapped Borrowing Cost was 5.5%, and the average tenor of our debt obligations (excluding vendor financing and debt related to the Tower Transactions) was approximately 3.3 years.

• Our portion of Adjusted OIBDA, after deducting the noncontrolling interests' share, (“Proportionate Adjusted OIBDA”) was $238 million for Q3 2024.

• C&W's Covenant Proportionate Net Leverage Ratio was 4.0x, which is calculated by annualizing the last two quarters of Covenant EBITDA in accordance with C&W's Credit Agreement.

• At September 30, 2024, we had maximum undrawn commitments of $534 million, including $80 million under our regional facilities. At September 30, 2024, the full amount of unused borrowing capacity under our credit facilities (including regional facilities) was available to be borrowed, both before and after completion of the September 30, 2024 compliance reporting requirements.

• In September 2024, an extension agreement was executed on the C&W Revolving Credit Facility which extends the maturity date to: (i) July 31, 2027 upon the refinancing of the 2027 C&W Senior Secured Notes and 2027 C&W Senior Notes in full, (ii) then April 15, 2029, upon the refinancing of the C&W Term Loan B-5 Facility and (iii) then September 24, 2029, upon the refinancing of the C&W Term Loan B-6 Facility.

• In October 2024, C&W issued $1 billion principal amount of 7.125% senior secured notes due October 15, 2032. The 2032 C&W Senior Secured Notes were issued at par. The proceeds from the 2032 C&W Senior Secured Notes were primarily used to (i) fully repay $495 million of the 2027 C&W Senior Secured Notes and (ii) repay $485 million of the 2027 C&W Senior Notes.

Liberty Puerto Rico (LPR) Borrowing Group

The following tables reflect preliminary unaudited selected financial results, on a consolidated Liberty Puerto Rico basis, for the periods indicated, in accordance with U.S. GAAP:

^1. Indicated growth rates are rebased for the estimated impacts of an acquisition.

The following table details the nominal amount outstanding of Liberty Puerto Rico's third-party debt, finance lease obligations and cash and cash equivalents:

1. Cash amounts include restricted cash that serves as collateral against certain letters of credit associated with funding received from the FCC to continue to expand and improve our fixed network in Puerto Rico.

• At September 30, 2024, our Fully-swapped Borrowing Cost was 6.2% and the average tenor of our debt (excluding vendor financing, debt related to the Tower Transactions and other debt) was approximately 3.8 years.

• LPR's Covenant Consolidated Net Leverage Ratio was 7.4x, which is calculated by annualizing the last two quarters of Covenant EBITDA in accordance with LPR’s Group Credit Agreement.

• At September 30, 2024, we had maximum undrawn commitments of $123 million. At September 30, 2024, the full amount of unused borrowing capacity under our revolving credit facility was available to be borrowed, both before and after completion of the September 30, 2024 compliance reporting requirements.

• Subsequent to September 30, 2024, we borrowed $20 million on the LPR Revolving Credit Facility.

Liberty Costa Rica Borrowing Group

The following tables reflect preliminary unaudited selected financial results, on a consolidated Liberty Costa Rica basis, for the periods indicated, in accordance with U.S. GAAP:

The following table details the borrowing currency and Costa Rican colón equivalent of the nominal amount outstanding of Liberty Costa Rica's third-party debt and cash and cash equivalents: