Liberty Latin America Ltd. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Group Highlights: Believes share price doesn't fully reflect intrinsic value; plans to separate Liberty Puerto Rico from LLA. Continued growth in high-speed broadband and postpaid mobile base in first half, adding 70,000 subscribers total. Reported $2.2 billion revenue in first half of 2025. Adjusted OIBDA $822 million, up 8% year-over-year on rebased basis.
• Operating Results by Credit Silo: Liberty Caribbean rebranded, saw mobile growth and fixed revenue impact from Hurricane Beryl. C&W Panama had strong postpaid adds and broadband subscriber growth but fixed ARPU decline. Liberty Networks showed resilience in subsea business despite IRU timing. Liberty Costa Rica had strong mobile performance but modest broadband net adds. Liberty Puerto Rico saw mobile improvement and fixed revenue impact from ACP program discontinuation.
• Financial Performance Review: Q2 2025 revenue $1.1 billion, 3% lower rebased YOY. Adjusted OIBDA $415 million, 7% rebased increase YOY. Adjusted OIBDA less P&E additions $265 million, 26% increase YOY.
• Separation of Liberty Puerto Rico: Intends to separate Puerto Rico from LLA to enhance positioning of businesses. Post-separation, remaining LLA business expected to have lower leverage and potential for capital returns like share repurchases and dividends.
• Liability Management: Actively working on liability management exercise for Liberty Puerto Rico to position it with strong capital structure post-separation.

Segment Performance

• Liberty Caribbean: In Q2 2025, revenue was $366 million with flat rebased growth year-over-year. Residential mobile grew 6%, while B2B and residential fixed declined by 3% and 1% respectively. Adjusted OIBDA was $174 million, representing 11% rebased growth year-over-year.
• C&W Panama: Q2 revenue was $177 million, with a 10% rebased decline year-over-year. Mobile revenue grew 6% due to postpaid adds, and residential fixed revenue increased 2% driven by broadband RGU additions. Adjusted OIBDA was $69 million, a 6% rebased growth year-over-year.
• Liberty Networks: Q2 revenue was $115 million, with a 3% rebased decline year-over-year. Wholesale revenue fell 3% and Enterprise revenue dropped 1% due to timing of noncash IRU accelerations. Adjusted OIBDA was $61 million, a 3% rebased decline year-over-year.
• Liberty Costa Rica: Q2 revenue was $151 million, with 1% rebased growth year-over-year. Mobile revenue grew 5% due to strong postpaid performance, while broadband net adds were modest and fixed ARPU declined. Adjusted OIBDA was $54 million, flat rebased growth year-over-year.
• Liberty Puerto Rico: Q2 revenue was $301 million, with a 5% rebased decline year-over-year. Residential fixed revenue fell 1% due to lower volumes, mobile residential revenue declined 3% (partially mitigated by higher nonsubscription revenue), and B2B revenue dropped 18%. Adjusted OIBDA was $87 million, a 21% rebased growth year-over-year.

Guidance

• Expect continued momentum in residential revenue in second half following new customer value propositions.
• Anticipate better B2B revenue momentum in second half across regions as governments invest in digitization.
• Focus on successful execution of Project MANTA, expected to complete in 2027 and enhance long-term profitability for Liberty Networks.
• Expect robust cash flow generation in second half, particularly in fourth quarter.

Risks

• Potential impact of working capital swings, including timing on key collections from government customers.
• Timing of B2B project revenues affecting revenue phasing.
• Embedded valuation discount affecting equity trading price, which the company aims to address through separation and other corporate actions.

Question and Answer

Q: Could you give more color on B2B headwinds in Panama?

A: B2B headwinds primarily due to strong comparison in Q2 2024 and delayed recognition of government project revenues. Margin expansion due to OpEx efficiencies and CapEx efficiencies.

Q: Clarify assets involved in spinning out Puerto Rico?

A: Focus on strong assets within group, but not specifying exact assets yet; team focused on running business and improving operational metrics.

Q: Could you give more color on impairment in Puerto Rico?

A: Impairment related to spectrum from AT&T acquisition, with third-party assessment showing higher carrying value than DISH spectrum.

Q: Change in management team in Puerto Rico and initial traction of new offers?

A: Management changes focus on operations, network/technology, and commercial go-to-market. New offers like Liberty Mix showing initial traction with increased ARPUs, MRC, and store traffic.