Liberty Latin America Reports Q4 & FY 2023 Results

186,000 organic broadband and postpaid mobile subscriber net adds in 2023

Operating income of $518 million; Adj. OIBDA rebased growth of 6% to $1.7 billion

Puerto Rico integration >80% complete; >800,000 mobile subscribers migrated

Cash provided by operating activities of $897 million; reported Adj. FCF before distributions to noncontrolling interests of $273 million

Repurchased $300 million in equity and convertible notes during the year

DENVER, Colorado–(BUSINESS WIRE)–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 (“Q4”) and twelve months (“YTD” and “FY”) ended December 31, 2023.

CEO Balan Nair commented, “We ended the year well, generating healthy subscriber and Adjusted OIBDA growth and delivering Adjusted FCF before distributions to noncontrolling interests of $273 million, 43% higher than the prior year.”

“Our commitment to investing in leading infrastructure has created robust, high-speed networks across our fixed, mobile and subsea platforms. At the end of 2023, over 80% of our fixed networks had been upgraded to enable speeds in excess of 1 Gbps and this investment helped us add 81,000 broadband subscribers during the year. Our postpaid mobile base also grew strongly as we added 105,000 subscribers, primarily in Liberty Costa Rica and C&W Caribbean.”

“In addition to our significant organic opportunities, completing the migration of mobile customers in Puerto Rico and the USVI is expected to be a key driver of LLA’s future growth. We are on-track to achieve this goal by the end of April, enabling us to conclude our TSA with AT&T by the end of June, which will create significant cost savings and also allow us to drive our mobile business more effectively, removing restrictions that currently impact our commercial flexibility.”

“As we approach the completion of key migration activities we feel it is the right moment to share our medium-term outlook for LLA. We anticipate delivering a mid to high single digit Adjusted OIBDA rebased CAGR and aggregate Adjusted FCF before distributions to noncontrolling interests of more than $1 billion over the next three years. We are confident that through this performance and disciplined capital allocation we will deliver robust stakeholder value growth.”

Business Highlights

• C&W Caribbean: operating momentum and double-digit Adj. OIBDA growth
  • ~100,000 internet and mobile postpaid organic adds in 2023
  • FY reported and rebased Adj. OIBDA growth of 12%
• C&W Panama: Claro Panamá acquisition synergies drive significant annual growth
  • FY reported and rebased revenue growth of 16% and 5%, respectively
  • FY reported and rebased Adj. OIBDA growth of 21% and 25%, respectively
• Liberty Networks: solid top-line performance
  • FY reported and rebased revenue growth of 1% and 2%, respectively
  • Strong enterprise services growth
• Liberty Puerto Rico: continued broadband growth; entering final months of mobile integration
  • 23,000 broadband net adds over last twelve months
  • >800,000 mobile subscribers migrated to LPR platform
• Liberty Costa Rica: postpaid momentum, B2B and strong currency drive Adj. OIBDA growth
  • Strongest postpaid net adds quarter of 2023; 87,000 total postpaid net adds in year
  • FY Adj. OIBDA up 51% and 23% on a reported and rebased basis, respectively

Tower Monetization Transaction Update

• During Q4 2023, we completed the monetization of tower assets across Panama, Jamaica, Puerto Rico, Barbados and the British Virgin Islands
  • Received $244 million of proceeds associated with the Tower Transactions in Q4, reflected as debt in our financial statements
  • Anticipate Bahamas portion of the transaction will complete in the first half of 2024, generating additional proceeds of ~$70 million

LLA Medium-Term Financial Guidance (3 years ending FY 2026)

• Adjusted OIBDA: mid-to-high single digit rebased CAGR
  • Expected to drive reduction in group net leverage
• P&E additions as a percentage of revenue at ~16% annually
• Aggregate Adjusted FCF of >$1 billion, before distributions to noncontrolling interests

Financial and Operating Highlights

N.M. – Not Meaningful.

Amounts may not recalculate due to rounding.

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 months and the year ended December 31, 2023 was flat and declined by 6%, respectively, as compared to the corresponding prior-year periods.
  • Reported revenue in Q4 was flat as (1) net organic growth driven by Liberty Costa Rica and C&W Panama and (2) net foreign exchange benefits of $21 million, were offset by organic declines in Liberty Puerto Rico and Liberty Networks.
  • Reported revenue declined in FY 2023 as (1) net foreign exchange benefits of $84 million, (2) the addition of $70 million from the acquisition of América Móvil’s Panama operations (Claro Panamá) on July 1, 2022 and (3) net organic growth driven by C&W Panama and Liberty Costa Rica, were more than offset by the negative year-over-year impact of $451 million related to VTR’s deconsolidation and organic decline in Liberty Puerto Rico.

Q4 2023 Revenue Growth – Segment Highlights

• C&W Caribbean: revenue was flat on both a reported and rebased basis, year-over-year.
  • Fixed residential revenue increased by 2% and 3%, respectively on a reported and rebased basis. Rebased revenue growth was driven by higher broadband ARPU and subscribers, primarily in Jamaica where we added 23,000 RGUs over the last twelve months. This was partly offset by lower ARPU from video and telephony services due to fixed-mobile convergence incentives.
  • Mobile residential revenue increased by 5% on a reported and rebased basis. The increase followed our focus on fixed-mobile convergence propositions which drove 70,000 postpaid mobile additions in the year. We have also continued to see an increase in inbound roaming revenue as tourism has recovered in the region.
  • B2B revenue was 6% lower on both a reported and rebased basis. The discontinuation of a non-core transit services agreement at the beginning of 2023 at C&W Jamaica had a $10 million negative impact on revenue as compared to the prior year quarter. This translates to an approximately 300 basis point and 700 basis point impact on C&W Caribbean’s total revenue and B2B revenue rebased growth rates, respectively, and more than offset underlying B2B growth in the period.
• C&W Panama: revenue grew by 2% on a reported and rebased basis.
  • Fixed residential revenue was up 6% as we added 62,000 RGUs over the past twelve months, following investments in our networks, products and commercial activities.
  • Mobile residential revenue decreased by 5%, driven by lower prepaid volume including the impacts of disruptions from the mining protests, partially offset by higher prepaid ARPU.
  • B2B revenue grew by 8% driven by increased revenue from government-related projects and data and managed services.
• Liberty Networks: revenue declined by 8% and 9% on a reported and rebased basis, respectively. The year-over-year decline was driven by (i) lower wholesale network revenue associated with a significant customer that is recognized on a cash basis and (ii) a reduction in non-cash IRU revenue due to lower amortization year-over-year. This was partly offset by higher enterprise revenue due to an increase in new contracts and continued growth in B2B connectivity and managed services.
• Liberty Puerto Rico: revenue was 5% lower on a reported and rebased basis.
  • Residential fixed revenue growth of 5% was driven by 23,000 net broadband subscriber additions over the past twelve months and higher ARPU following rate increases.
  • Residential mobile revenue was 11% lower compared to the prior-year period. This was driven by: (1) reduced equipment sales due in part to migration activities, (2) a decline in the average number of prepaid mobile subscribers as compared to the prior year period, and (3) lower roaming revenue.
  • Other revenue declined by $3 million as compared to the prior-year quarter due to a reduction in revenue recognized on funds received from the FCC.
• Liberty Costa Rica: revenue grew by 28% on a reported basis and 10% on a rebased basis. Reported performance benefited from an $18 million positive foreign exchange impact year-over-year, as the Costa Rican colon appreciated against the U.S. dollar. The strong year-over-year rebased performance was driven by higher B2B service revenue and higher mobile revenue due to postpaid subscriber growth and equipment sales.

Operating Income

• Operating income was $113 million and $107 million for the three months ended December 31, 2023 and 2022, respectively, and $518 million and $87 million for the year ended December 31, 2023 and 2022, respectively.
  • The increase for the three-month comparison is primarily due to the net effect of (i) lower impairment, restructuring and other operating items, net, (ii) higher Adjusted OIBDA and (iii) higher depreciation and amortization. The increase for the twelve-month comparison is primarily due to the net impact of (i) lower impairment, restructuring and other operating items, net, mostly due to goodwill impairments recorded during the second quarter of 2022 and (ii) higher depreciation and amortization.

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 months and year ended December 31, 2023 increased by 7% and was flat, respectively, as compared to the corresponding prior-year periods.
  • Reported Adjusted OIBDA was higher in Q4, driven by (1) organic growth in C&W Caribbean, Liberty Costa Rica, and C&W Panama, and (2) the appreciation of the Costa Rican colon, which were partly offset by organic declines in Liberty Networks and Liberty Puerto Rico.
  • Reported Adjusted OIBDA was flat YTD as (1) organic growth in C&W Caribbean, C&W Panama, and Liberty Costa Rica, and (2) the appreciation of the Costa Rican colon, were offset by the deconsolidation of VTR and organic decline in Liberty Puerto Rico.

Q4 2023 Adjusted OIBDA Growth – Segment Highlights

• C&W Caribbean: Adjusted OIBDA increased by 16% on a reported and rebased basis, respectively. Performance was driven by lower direct costs, including declines in handset and programming expenses, and lower bad debt expense. Our Adjusted OIBDA margin improved by over 600 basis points year-over-year to 44%.

• C&W Panama: Adjusted OIBDA increased by 17% on a reported and rebased basis. The performance was driven by revenue growth, lower bad debt expense and value capture activities related to the Claro Panamá acquisition, partly offset by higher direct costs related to government-related projects.

• Liberty Networks: Adjusted OIBDA decreased by 23% and 22% on a reported and rebased basis, respectively. Our rebased performance was driven by the aforementioned revenue decline in the quarter.

• Liberty Puerto Rico: Adjusted OIBDA declined by 12% on a reported and rebased basis. The performance was driven by the net impact of our aforementioned revenue decline, lower direct costs, primarily due to lower gross sales, and higher other operating costs mainly related to migration and integration activities, year-over-year.

• Liberty Costa Rica: Adjusted OIBDA grew by 60% and 36% on a reported and rebased basis, respectively. Rebased performance was driven by the aforementioned revenue growth, favorable foreign exchange movements on non-CRC denominated costs and execution of our integration plan.

• Corporate: Adjusted OIBDA improved by 31% on a reported and rebased basis, respectively, driven by lower bonus costs.

Net Earnings (Loss) Attributable to Shareholders

• Net earnings (loss) attributable to shareholders was ($103 million) and $139 million for the three months ended December 31, 2023 and 2022, respectively, and ($74 million) and ($171 million) for the year ended December 31, 2023 and 2022, 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 and 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 December 31, 2023:

1. Represents the amount held by Liberty Latin America on a standalone basis plus 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 lines 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 December 31, 2023, 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 December 31, 2023 compliance reporting requirements.

Quarterly Subscriber Variance

1. Primarily relates to homes passed adjustments through the network upgrade process. Jamaica prepaid adjustment relates to mobile 2G shutdown.

 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:

Contacts

Investor Relations

Kunal Patel

[email protected]

Corporate Communications

Kim Larson

[email protected]

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