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

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:

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 December 31, 2023 and September 30, 2023 were CRC 23,564 and CRC 24,074, respectively.
3. The mobile ARPU amount in Costa Rican colones for the three months ended December 31, 2023 and September 30, 2023 were CRC 3,580 and CRC 3,544, 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; our anticipated integration plans, including timing for completion, synergies, opportunities and integration costs in Puerto Rico following the AT&T Acquisition; the strength of our balance sheet and tenor of our debt; our share repurchase program; 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 for the transaction with DISH Networks and satisfy the other conditions to closing; 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. 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, and through ClaroVTR, our joint venture in Chile. 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 (i) for the twelve-month comparison, an acquisition and a disposition, (ii) the acquisition by our Liberty Costa Rica segment of the B2B Costa Rican operations within our Liberty Networks segment and (iii) FX. See Non-GAAP Reconciliations below.
2. We provide rebased revenue and Adjusted OIBDA growth rates, each a non-GAAP measure, for Liberty Latin America excluding VTR in light of the October 2022 deconsolidation of VTR that occurred in connection with the closing of our joint venture in Chile with América Móvil. See the tables below for the required non-GAAP reconciliations.
3. Consolidated Adjusted OIBDA is a non-GAAP measure. For the definition of Adjusted OIBDA and required reconciliations, see Non-GAAP Reconciliations below.
4. 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.
5. 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.

N.M. – Not Meaningful.

^1. Indicated growth rates are rebased for the estimated impacts of an acquisition for the twelve-month comparison, FX and the acquisition by the Liberty Costa Rica borrowing group of the B2B Costa Rican operations within our C&W borrowing group.

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:

^1. Amounts include $69 million of amortizing loans which are due in three annual installments beginning in May 2024.

• At December 31, 2023, our third-party total and proportionate net debt was $4.1 billion and $3.8 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 4.1 years.
• Our portion of Adjusted OIBDA, after deducting the noncontrolling interests' share, (“Proportionate Adjusted OIBDA”) was $239 million for Q4 2023.
• C&W's Covenant Proportionate Net Leverage Ratio was 3.6x, which is calculated by annualizing the last two quarters of Covenant EBITDA in accordance with C&W's Credit Agreement.
• At December 31, 2023, we had maximum undrawn commitments of $637 million, including $65 million under our regional facilities. At December 31, 2023, 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 December 31, 2023 compliance reporting requirements.

 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:

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 lines of credit associated with funding received from the FCC to continue to expand and improve our fixed network in Puerto Rico.

• At December 31, 2023, 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 4.6 years.
• LPR's Covenant Consolidated Net Leverage Ratio was 5.2x, which is calculated by annualizing the last two quarters of Covenant EBITDA in accordance with LPR’s Group Credit Agreement.
• At December 31, 2023, we had maximum undrawn commitments of $173 million. At December 31, 2023, the full amount of unused borrowing capacity under our revolving credit facility was available to be borrowed, both before and after completion of the December 31, 2023 compliance reporting requirements.

 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: