Liberty Latin America Ltd. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Highlights: First quarter added 44,000 broadband and postpaid mobile subscribers. C&W silo had double-digit growth. C&W credit silo FMC penetration over 30% driving lower churn. Group adjusted OIBDA rebased growth 8% YOY. Lower P&E additions in Q1 drove adjusted OIBDA less P&E growth 20% YOY.
• C&W Caribbean: Return to growth in fixed broadband RGUs, added 15,000 mobile subscribers, FMC penetration up 4 percentage points to over 35%, launching loyalty programs.
• C&W Panama: Mobile growth benefited from larger subscriber base and pricing actions, market structures improved with consolidation from 4 to 2 players.
• Liberty Networks: Wholesale had strong quarter with 7% rebased growth, Enterprise grew 4% rebased, announced MANTA subsea cable contract.
• Liberty Costa Rica: Continued quarterly broadband additions, mobile base growth, FMC penetration up 6 percentage points.
• Liberty Puerto Rico: Started cost-cutting exercise, focusing on new distribution channels for FMC proposition Loop.

Segment Performance

• Cable & Wireless (C&W) Credit Silo:
  • C&W Caribbean: Q1 had good operating momentum and strong financial execution. Delivered 5% growth in mobile, offset by 3% reduction in B2B on a rebased basis. Adjusted OIBDA was $173 million with 16% rebased growth. Revenue was $364 million with flat rebased growth. FMC penetration rose to over 35%.
  • C&W Panama: Generated $177 million in revenue and $65 million in adjusted OIBDA in Q1. Reflects 5% rebased revenue growth and 15% rebased adjusted OIBDA growth. Driven by 16% growth in mobile and 3% increase in residential fixed, offset by 6% decline in B2B. Adjusted OIBDA margin expanded to 37%.
  • Liberty Networks: Generated $110 million in revenue and $58 million in adjusted OIBDA. Rebased growth of 3% in revenue, but adjusted OIBDA had 2% rebased decline. Wholesale had 7% rebased growth, Enterprise grew 4% rebased. Announced contract with SubCom for MANTA subsea cable system. Adjusted OIBDA less P&E margin was 36%.
• Liberty Costa Rica: Q1 had continued quarterly broadband additions. Mobile added 30,000 postpaid subscribers. Consumer mobile is largest revenue category (>60% share), followed by consumer fixed (~30%). FMC penetration grew 6 percentage points to almost 35%. Q1 revenue $158 million, adjusted OIBDA $59 million, 2% rebased revenue growth and 1% decline in adjusted OIBDA.
• Liberty Puerto Rico: Q1 lost 3,000 fixed broadband customers. Postpaid churn lowered but gross adds lighter. Revenue $298 million, 11% rebased decline. Residential fixed revenue declined 1%, mobile residential revenue 16% rebased decline. Adjusted OIBDA $82 million, 16% rebased increase. Started cost-cutting exercise, expects second half lower cost structure and postpaid growth.

Guidance

• Withdrew 3-year guidance from 2024 to 2026 for LLA due to challenging migration in Puerto Rico in 2024 and slower recovery in 2025.
• Anticipates better postpaid mobile KPI trends in second half of 2025.
• Pursuing aggressive cost reduction, expects to positively impact run rate performance in H2.
• Positions LLA for significant year-over-year growth in adjusted OIBDA and adjusted FCF before partner distributions in 2025.

Risks

• Puerto Rico business recovery slower than expected.
• Competitive environment in Puerto Rico with T-Mobile being aggressive on handset subsidies.
• Potential challenges in refinancing Puerto Rico debt due to its financial results trajectory.

Question and Answer

Q: On Puerto Rico, color on competitive environment, especially handset discounts, and on CapEx guidance of 14% to sales.

A: On competitive environment, compete with Claro (fixed) and Claro, T-Mobile (mobile); T-Mobile most aggressive on handset subsidies. On CapEx, 14% CapEx to sales is expected, equally distributed across business, due to maturity in businesses' fiber-to-the-home and mobile upgrades.

Q: Follow-up on CapEx in Puerto Rico, sustainability and use of assets for refinancing.

A: Puerto Rico CapEx trending closer to mid to high-15% range, not under-spending. Focus in 2026 mid to late for refinancing, work in mobile and fixed business to crystallize value.

Q: Within prior multiyear guide, growth from Puerto Rico relative to rest, and capital structure.

A: Rest of business is strong, but Puerto Rico had challenges. Silos are separate credit structures, parent will decide capital allocation based on Liberty Way.

Q: Puerto Rico macro outlook and EBITDA monthly aspiration.

A: Puerto Rico has good macros, competitive environment, great network. Focus on internal EBITDA targets, operations key to improving EBITDA.

Q: Work-based compensation trend, buybacks, and interest expenses.

A: Interest expense higher due to refinancings, but hedged on floating rate exposure. Stock comp typically runs similar to prior years.