Liberty Latin America Reports Q2 & H1 2024 Results

Sequential financial growth with Q2 reported revenue up 2%

Continued strong Adjusted OIBDA growth in C&W Panama & C&W Caribbean

Post-migration impacts in Puerto Rico; performance to improve in H2

Agreement to combine operations with Tigo in Costa Rica

>$300 million across share repurchases & convertible redemption to date in 2024

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 (“Q2”) and six months (“YTD” or “H1 2024”) ended June 30, 2024.

CEO Balan Nair commented, “We continued to drive operational and financial growth across most of our businesses in the second quarter with notably strong performances in Panama, Costa Rica and the Caribbean. In Puerto Rico, whilst we experienced additional challenges following completion of the mobile subscriber migration, we remain confident of improved performance in the second half.”

“Our focus on broadband and postpaid mobile additions continued to drive positive results with over 100,000 net subscribers added in the second quarter across Central America and C&W Caribbean. This was more than double the prior-year and 28% higher than the first quarter. The results were driven by strong mobile growth in Panama, where we successfully won customers following the exit of a competitor, and continued momentum in Costa Rica. We also recently announced the combination of our business in Costa Rica with Tigo, which we will control following closing.”

“Costa Rica is a great country to operate in and Liberty Costa Rica is a strong business for us. By combining Liberty and Tigo, the fixed operations will accelerate the transition to FTTH and will enable us to deliver exceptional high-speed services for consumers, provide enhanced customer experiences, drive innovation, and offer growth opportunities for our people. In addition we just launched 5G across the country and are gaining traction in the market as shown by our mobile growth.”

“Looking to the second half of the year, we anticipate a significant inflection in financial performance as we move past impacts from our Puerto Rico migration and begin to execute on our growth plans in that market, while maintaining healthy positive momentum across the rest of the group. In Puerto Rico, we now expect synergies, operating cost improvements and top line sequential growth will drive Adjusted OIBDA to more than $45 million per month towards the end of the second half.”

“We remain confident in achieving our medium term targets, and repurchased 12 million shares in the first half of the year, as well as redeeming our convertible notes that were due in July. In aggregate, this represents over $300 million of capital, which is equivalent to our entire spend in 2023.”

Q2 Business Highlights

• C&W Caribbean: continued financial momentum
  • YoY reported and rebased revenue growth of 3% and 4%, respectively
  • YoY reported and rebased Adj. OIBDA growth of 7% and 8%, respectively
• C&W Panama: strong subscriber growth and financial performance
  • 51,000 postpaid mobile subscriber additions as competitor exits market
  • YoY revenue and Adj. OIBDA growth of 9% and 10%, respectively
• Liberty Networks: Strong enterprise growth
  • Resilient MRR performance in wholesale business with steady growth
  • YoY reported enterprise revenue up 17%
• Liberty Puerto Rico: additional impacts following migration
  • Post migration operational challenges stabilizing
  • Operating and financial performance to significantly improve in H2 2024
• Liberty Costa Rica: mobile momentum driving growth
  • Postpaid net adds 65% higher YoY
  • YoY reported and rebased revenue growth of 9% and 4%, respectively

Hurricane Beryl

In July 2024, Hurricane Beryl impacted our Jamaica operation and certain smaller operations within C&W Caribbean, resulting in varying degrees of damage to homes, businesses and infrastructure in these markets. In connection with Hurricane Beryl, we expect to experience adverse subscriber and financial impacts during the remainder of 2024. We currently estimate that due to Hurricane Beryl:

• Revenue and Adjusted OIBDA will be negatively impacted by between $10 million and $20 million for the remainder of 2024, primarily during the third quarter, based on certain factors, such as when power is fully restored to the impacted areas.

• We will incur property and equipment additions of approximately $10 million to $20 million to replace infrastructure and equipment that has been damaged beyond repair or to enhance network resiliency.

Hurricane Beryl triggered our weather derivatives and we expect to receive net third-party proceeds of approximately $44 million that will be reflected as a derivative gain in our financial statements. We are still in the process of assessing the impact of Hurricane Beryl on our homes passed and subscribers.

Stock Repurchase Activity & Convertible Bond Redemption

During the quarter, we repurchased $22 million worth of stock, bringing the YTD 2024 total to $83 million and representing 12 million shares.

In June 2024, we entered into a series of capped call option contracts on a total of 6 million Liberty Latin America Class A and Class C common shares with expiration of 12 to 18 months.

Subsequent to June 30, 2024, we repurchased and cancelled the remaining $140 million of Convertible Notes upon maturity.

Liberty Latin America and Millicom Agree to Combine Operations in Costa Rica

Liberty Latin America and Millicom International Cellular S.A. ("Millicom") announced on August 1, 2024, that they had entered into an agreement to combine their respective operations in Costa Rica. Under the terms of the all-stock agreement, Liberty Latin America and its minority partner in Costa Rica will hold an approximate 86% interest and Millicom 14% in the joint operations with the final ownership percentage to be confirmed at closing.

The transaction reinforces the parties’ commitment to Costa Rica by creating a scaled platform and accelerating investments in fiber network expansion. In a market that is undergoing rapid technological advancements with the deployment of fiber networks by multiple operators, this combination increases fiber competition ensuring high-quality, good value services and access to the digital economy.

The transaction is subject to customary closing conditions, including regulatory authorizations, and we expect the transaction to be completed during the second half of 2025.

Financial and Operating Highlights

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 six months ended June 30, 2024 was flat as compared to the corresponding prior-year periods.
  • Reported revenue in Q2 and H1 2024 was flat as (1) net organic growth driven by C&W Caribbean and C&W Panama and (2) net foreign exchange benefits of $8 million and $24 million, respectively, were offset by organic declines in Liberty Puerto Rico.

Q2 2024 Revenue Growth – Segment Highlights

• C&W Caribbean: revenue grew 3% on a reported basis and 4% on a rebased basis, year-over-year, driven by growth across all product areas.
  • Fixed residential revenue increased by 1% on a reported basis and by 2% on a rebased basis. Rebased performance was driven by ARPU growth mainly due to price increases across a number of markets, and supported by broadband subscriber growth, primarily in Jamaica.
  • Mobile residential revenue increased by 4% on a reported basis and by 5% on a rebased basis. Performance resulted from an increase in postpaid subscribers year-over-year driven by our fixed-mobile convergence propositions and higher prepaid ARPU following price increases.
  • B2B revenue was 5% higher on both a reported and rebased basis. Growth was driven by higher project-related revenue.
• C&W Panama: revenue grew by 9% on a reported and rebased basis, year-over-year.
  • Fixed residential revenue was up 4%, driven by broadband RGU additions following expansion of our FTTH networks, products and commercial activities.
  • Mobile residential revenue grew by 4%, driven by improved prepaid ARPU as our products and promotions led to increased recharge activity. This was partly offset by decreases in prepaid mobile subscribers over the past twelve months, driven by the net impact of (i) churn related to the migration of customers to our network following the Claro Panama Acquisition, and (ii) the addition of customers to our base following the exit of a competitor from our market.
  • B2B revenue increased by 17% primarily due to increased revenue from government-related projects.
• Liberty Networks: revenue was flat and declined by 1% on a reported and rebased basis, respectively. The year-over-year rebased decline was driven by lower wholesale network revenue associated with a reduction of $6 million in non-cash IRU revenue primarily due to lower amortization year-over-year. This was partly offset by higher enterprise revenue due to continued growth in managed services and B2B connectivity.
• Liberty Puerto Rico: revenue was 12% lower on a reported and rebased basis, year-over-year.
  • Residential fixed revenue was broadly stable year-over-year, declining by 1%, as broadband subscriber additions over the past twelve months were more than offset by lower ARPU, primarily due to retention discounts, including for customers previously receiving subsidized services through the Affordable Connectivity Program (ACP).
  • Residential mobile revenue was 21% lower compared to the prior-year period. This was driven by a reduction in mobile subscribers, impacted by disruption related to the migration of customers to our mobile network and a reduction in roaming revenue.
  • B2B revenue declined by 6% year-over-year, 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.
  • Other revenue declined by $4 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 9% on a reported basis and 4% on a rebased basis, year-over-year. Reported performance benefited from a $7 million positive foreign exchange impact as the Costa Rican colon appreciated against the U.S. dollar. The strong year-over-year rebased performance was driven by higher mobile revenue due to increased equipment sales and postpaid subscriber growth.

Operating Income

• Operating income was $111 million and $135 million for the three months ended June 30, 2024 and 2023, respectively, and $204 million and $242 million for the six months ended June 30, 2024 and 2023, respectively.
  • We reported lower operating income during the three and six months ended June 30, 2024, as compared to the corresponding periods in 2023, primarily due to the net impact of (i) declines in Adjusted OIBDA and (ii) decreases in impairment, restructuring and other operating items, net.

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 six months ended June 30, 2024 decreased by 12% and 9%, respectively, as compared to the corresponding prior-year periods.
  • Reported Adjusted OIBDA declined in Q2 and H1 2024 as organic growth in C&W Panama and C&W Caribbean, was more than offset by reductions in Liberty Puerto Rico and Liberty Networks.

Q2 2024 Adjusted OIBDA Growth – Segment Highlights

• C&W Caribbean: Adjusted OIBDA increased by 7% on a reported and 8% rebased basis, respectively, primarily driven by the aforementioned revenue growth and supported by cost containment. Our Adjusted OIBDA margin improved by over 150 basis points year-over-year to 42.6%.

• C&W Panama: Adjusted OIBDA increased by 10% on both a reported and rebased basis, driven by the aforementioned revenue growth.

• Liberty Networks: Adjusted OIBDA decreased by 13% 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 adjustments for two large customers.

• Liberty Puerto Rico: Adjusted OIBDA declined by 48% on a reported and rebased basis. The performance was driven by the net impact of: (i) our aforementioned revenue decline, (ii) lower direct costs, primarily due to lower TSA and roaming costs, and (iii) higher other operating costs mainly related to (a) migration activities, including a $12 million increase in bad debt expense related to billing and collection issues, (b) higher information technology service and license expenses, as we transitioned mobile customers to our internal systems and (c) an $8 million credit related to the CARES Act received in the prior-year period. TSA, integration and inventory costs related to the migration were $16 million in the quarter.

• Liberty Costa Rica: Adjusted OIBDA grew by 7% and 1% on a reported and rebased basis, respectively. Rebased performance was driven by the aforementioned revenue growth and favorable foreign exchange movements on non-CRC denominated costs, partly offset by higher operating costs related to sales activity.

Net Earnings (Loss) Attributable to Shareholders

• Net earnings (loss) attributable to shareholders was ($43 million) for each of the three and six months ended June 30, 2024, and $35 million and ($31 million) for the three and six months ended June 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 June 30, 2024:

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 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 June 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 June 30, 2024 compliance reporting requirements.

Quarterly Subscriber Variance

1. 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 June 30, 2024 and March 31, 2024 were CRC 22,261 and CRC 22,947, 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 amount in Costa Rican colones for the three months ended June 30, 2024 and March 31, 2024 were CRC 3,652 and CRC 3,641, 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 synergies, opportunities and integration costs in Puerto Rico following the AT&T Acquisition; the timing, benefits and expected impact of the transaction with Millicom; 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 DISH in Puerto Rico and USVI and 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, 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 FX. 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 table reflects 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 June 30, 2024, our third-party total and proportionate net debt was $4.3 billion and $4.1 billion, respectively, our Fully-swapped Borrowing Cost was 5.4%, and the average tenor of our debt obligations (excluding vendor financing and debt related to the Tower Transactions) was approximately 3.6 years.

• Our portion of Adjusted OIBDA, after deducting the noncontrolling interests' share, (“Proportionate Adjusted OIBDA”) was $236 million for Q2 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 June 30, 2024, we had maximum undrawn commitments of $636 million, including $80 million under our regional facilities. At June 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 June 30, 2024 compliance reporting requirements.

Liberty Puerto Rico (LPR) Borrowing Group

The following table reflects 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 letters of credit associated with funding received from the FCC to continue to expand and improve our fixed network in Puerto Rico.

• At June 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 4.0 years.
• LPR's Covenant Consolidated Net Leverage Ratio was 7.6x, which is calculated by annualizing the last two quarters of Covenant EBITDA in accordance with LPR’s Group Credit Agreement.
• At June 30, 2024, we had maximum undrawn commitments of $148 million. At June 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 June 30, 2024 compliance reporting requirements.

Liberty Costa Rica Borrowing Group

The following table reflects 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:

1. From July 15, 2028 and thereafter, the interest rate is subject to increase by 0.125% per annum for each of the two Sustainability Performance Targets (as defined in the credit agreement) not achieved by Liberty Costa Rica by no later than December 31, 2027.
2. Forward-looking term rate based on SOFR as published by CME Group Benchmark Administration Limited.

• At June 30, 2024, our Fully-swapped Borrowing Cost was 10.9% and the average tenor of our debt was approximately 6.5 years.

• LCR's Covenant Consolidated Net Leverage Ratio was 2.0x, which is calculated by annualizing the last two quarters of Covenant EBITDA in accordance with LCR’s Credit Agreement.

• At June 30, 2024, we had maximum undrawn commitments of $60 million. At June 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 June 30, 2024 compliance reporting requirements.

Subscriber Table