NASDAQ:LILA Liberty Latin America Q2 2023 Earnings Report $5.57 -0.01 (-0.18%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$5.56 0.00 (-0.09%) As of 04/25/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Liberty Latin America EPS ResultsActual EPS$0.17Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ALiberty Latin America Revenue ResultsActual Revenue$1.12 billionExpected Revenue$1.13 billionBeat/MissMissed by -$4.11 millionYoY Revenue GrowthN/ALiberty Latin America Announcement DetailsQuarterQ2 2023Date8/8/2023TimeN/AConference Call DateWednesday, August 9, 2023Conference Call Time8:30AM ETUpcoming EarningsLiberty Latin America's Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled on Wednesday, May 7, 2025 at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Liberty Latin America Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 9, 2023 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded. I'll now turn the call over to Steven Price, Country Manager of Jamaica. Speaker 100:00:09Good morning, and welcome to Liberty Latin America's Q2 2023 investor call. At this time, all participants are in listen mode only. Today's formal presentation materials Can be found under the Investors section of Liberty Latin America's website at www.lla.com. Following today's formal presentation, instructions will be given for a question and answer session. As a reminder, This call is being recorded and will be available under the Investors section of our website. Speaker 100:00:47Today's remarks may include forward looking statements, Including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical fact, Actual results may differ materially from those expressed or implied by these statements. For more information, Please refer to the risk factors discussed in Liberty Latin America's most recently filed reports on Form 10 ks And the quarterly report on Form 10Q most recently filed with the SEC along with the associated press release. Liberty Latin America disclaims any obligation to update any forward looking statements or information to reflect any change in its expectations or in the conditions on which any such statement or information is based. In addition, on this call, we will refer to certain non GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation, which is accessible under the Investors section of our website. I would now like to turn the call over to our CEO, Mr. Speaker 100:02:00Balan Nair. Speaker 200:02:03Thank you, Steven, And welcome everyone to Liberty Latin America's 2nd quarter results presentation. I'll begin with our group highlights and an overview of our operating results by reporting segment. Chris Noyes, our CFO, will then follow with a review of the company's financial performance. After that, we will get straight to your questions. As always, I am joined by my executive team from across the region, And I will invite them to contribute as needed during the Q and A following our prepared remarks. Speaker 200:02:35As a point of housekeeping, We will both be working from slides, which you can find on our website at www.lla.com. Starting on Slide 4 and our highlights for the Q2. We continued our operational momentum with another solid Order in broadband and mobile postpaid, adding 52,000 subscribers to our base. Another quarter of solid performance in Cable and Wireless Caribbean, especially Jamaica and in Cable and Wireless, Panama. The positive results are driven by our focus on FMC With a 2 percentage point increase in penetration in both Jamaica and Panama in the first half of the year. Speaker 200:03:21We are the leading grower in fixed RGUs and one of the top in broadband growth among LatAm and North American operators. We have also made substantial progress with our GigaNet initiative. 77% of our home suppliers are currently gig ready, A 9 percentage point increase versus Q4 2022, and the goal is to reach 80% of the base by the end of this year. We reported adjusted OIBDA of $445,000,000 in the quarter for the group representing a 4% year over year increase. This is underpinned by 1% year over year rebased revenue growth adjusting for the discontinuation Of the slightly negative margin transit business as discussed last quarter, sequentially, our Q2 adjusted OIBDA grew by 10% reflecting positive financial momentum. Speaker 200:04:18These are some of the best numbers among telecom operators for the quarter. In addition, our OIBDA margin is now at 40% with operating leverage as shown by the revenue and OIBDA growth. We made significant steps forward in our equity buyback, repurchasing 132,000,000 across our equity and convertible bond in the quarter. Since the beginning of the year, we have repurchased 82,000,000 of shares And reduce the convert outstanding amount by quarter with the balance currently below 300,000,000 Finally, our integration work has continued to move forward with Costa Rica now close to finalize and Panama and Puerto Rico progressing well. In Puerto Rico, our new 5 gs Mobile Core and IT stack are operational. Speaker 200:05:13We have already migrated 35,000 prepaid customers representing a quarter of the base and we have started migrating the 1st postpaid customers. We are working with leading global suppliers such as Salesforce and Ericsson to create cutting edge infrastructure for the market. Turning to Slide 5. I'll begin our operating review with Cable and Wireless Caribbean. The solid rebound of tourism in our islands continued in Q2, continuing the trend we observed in Q1 and supporting the segment's performance. Speaker 200:05:50On the left of the slide, we display our Internet and mobile postpaid additions. Internet additions of 7,000 compared Positively year over year representing an increase of nearly 70%. The main contributor was Jamaica. However, Bahamas is the fastest growing market in percentage terms with 7% subscriber growth sequentially and 15% since the beginning of the year. The good performance in mobile with 16,000 postpaid ads this quarter was mainly driven by Jamaica, where our continued focus on FMC And postpaid product is bearing fruit. Speaker 200:06:29Across fixed and mobile, we implemented strategic price increases in several markets, Which have landed as planned with no material impact to churn. Moving to the center of the slide and our revenue by product. The pie chart here depicts the well diversified nature of Cable and Wireless Caribbean's revenue with B2B and consumer fixed The largest elements followed by consumer mobile. We reported sequential growth in both mobile and fixed subscription revenue, Driven by both volume and ARPU. Year over year rebased revenue growth was flat in the quarter. Speaker 200:07:07Adjusting for the discontinuation of the transit business, this would have been 280 basis points higher. Organic growth was driven by higher mobile and fixed subscription revenue benefiting from increased FMC penetration. Moving to Slide 6 and our C and W Panama segment. Starting on the left of the slide. Internet RGU ads were in line with Q1 and 75% higher versus the prior year. Speaker 200:07:37Our subscriber base is up 6% since the beginning of the year, supporting financial momentum. In mobile, Our strategy of focusing on postpaid and high value prepaid is yielding positive results as we delivered a modest increase in our postpaid base And prepaid losses were lower sequentially and year over year. Moving to the center of the slide and our revenue by product. In Panama, our largest products by revenue are mobile and B2B. Fixed is the smallest product area, but one of the fastest growing. Speaker 200:08:12Following the positive momentum in Q1, both fixed and B2B recorded strong rebased revenue growth in the 2nd quarter, Posting rebase increases of 8% and 7% year over year respectively. Growth in fixed revenue was supported Higher broadband ARPU driven by customers contracting higher speed plans and higher tier bundles. We are also making good progress decommissioning our copper network in Panama and are on track to have this completed by the end of next year. In mobile, we saw improved recharge levels and usage for prepaid and lower acquisition and retention discounts in postpaid. Finally to our integration update outlined in the lower right of the slide. Speaker 200:09:00We are making good progress with the integration of Claro Panama's operations. The focus in Q2 was defining and implementing our client migration strategy and planning on network integration to modernize infrastructure And expand capacity and coverage. Given our progress with these initiatives, we are on track to deliver our synergy objectives, which also underpins growth in the second half. Next to Slide 7 and Liberty, Puerto Rico, Our largest single market. Starting on the left of the slide, we reported another quarter of Internet ads As our March price increases landed well, we churn stable at about 1%. Speaker 200:09:46This is a testament to Strong customer service and network reliability underpinned by our investments in fiber to the home. Since Q2 last year, we increased our fiber homes by 70%. In addition, we successfully launched our 1 gigabit speed across majority of our HFC footprint using DOCSIS 3.1. The take rate and upgrades have exceeded our expectations. Turning to mobile. Speaker 200:10:14Sequentially, Our postpaid base stayed relatively flat, while we experienced a similar level of losses in prepay. We are in a transitional phase. We plan to revamp our prepaid strategy and launch customer centric postpaid Customer value propositions as soon as migrations are completed. In this regard, with the help of our commercial partners, We are working hard to build beach spot platforms that will enable us to be more effective in the market through custom FMC bundles And offering STAYLIT specifically for the Puerto Rico and U. S. Speaker 200:10:48VI market. Moving to the center of this slide. Consumer mobile is our largest product in Puerto Rico, with just under 50% of our revenue. This is followed by our fixed business, Representing a third of the total and B2B at 16%. In Q2, fixed revenue was up 5% year over year, Driven by the steady growth in our broadband base. Speaker 200:11:15Mobile subscription revenue remained flat sequentially, however, was lower year over year. Finally, to our integration updates on the lower right of the slide. We are continuing to migrate our prepaid customers to our new platforms. On the postpaid side, we have just started to bring across our first batches of customers and the migration rate will ramp up in the coming weeks months. We are working closely with partners, including AT and T and Apple and expect to finalize the integration by end of the year. Speaker 200:11:48However, the process is clearly complex and we are proceeding with customer experience being our first and foremost priority. Turning to Slide 8 and Liberty Costa Rica. Starting on the left of the slide. Our fixed subscriber base remained broadly flat in Q2 with a small increase in churn following a price increase in May. In mobile, we recorded strong postpaid additions in the quarter, driven by our prepaid to postpaid migration strategy. Speaker 200:12:20According to the latest report by the regulator, in 2022, we reconfirm our leadership at 40% to 6% of market share, With postpaid market share increasing 5 percentage points versus 2021. Moving to the center of the slide, Consumer mobile is our largest product with close to 60% share of revenue. This is followed by our consumer fixed business representing just over 30% And then a small but fast growing B2B operations. Finally, to our integration update in the lower right of the slide, Integration activities continue to be on track. We expect to roll off the PSA and hit our run rate synergy target of $15,000,000 by the end of the year. Speaker 200:13:08Finally, to Slide 9 in our Liberty Networks segment. Starting from the left hand side of the slide, I am pleased to announce that in Q2, we successfully completed our rebranding from CNW Networks to Liberty Networks, A single brand across wholesale and enterprise, providing greater scale and consistency on messaging across multiple segments. The new brand with its fresh look conveys customer centricity, innovation, reliability and performance, Which are the foundations of our competitive edge and growth potential. We are driving this segment in the region And hello, inaugural LINK's leadership event in Mexico earlier this year. With our top 100 customers, Industry and global thought leaders where we discuss hot topics such as the impact of AI in LatAm and the Caribbean, FinTech and technology disruption. Speaker 200:14:05Running through the wholesale and enterprise highlights on the right hand side of the slide. Wholesale accounting for 3 quarters of this segment's revenue Delivered 3% growth in the first half, mainly driven by capacity increases and upselling our existing customers and new capacity sales. Steady growth, mostly U. S. Dollar denominated revenue and low CapEx requirements underpins high cash flow conversion. Speaker 200:14:32Our unique multi ring infrastructure remains a differentiating factor in relation to other networks in the region and a synonym for reliability. On the bottom right, Enterprise representing the remaining quarter of revenue posted a 13% increase Driven by higher demand for our connectivity, active churn management and cross and upselling of value added services. Following our rebranding, we anticipate our solid pipeline to convert new customers in the months to come. Overall, Q2 was another solid quarter from a commercial and operational perspective, And we expect more progress in the second half of the year as we move towards finalization of our integration projects And drive greater free cash flow generation. We also plan to continue delivering value to our shareholders through our equity buyback program. Speaker 200:15:28With that, I'll pass you over to Chris Noyes, our Chief Financial Officer, who will talk you through our financial performance before we take your questions. Chris? Speaker 300:15:40Thanks, Bowen. I'll now take you through our financial performance in greater detail, Starting with our sequential performance on the left hand side of Slide 11. Sequentially, on a reported basis in U. S. Dollars, our revenue grew by 2% and adjusted OIBDA by 10% in the 2nd quarter as compared to Q1, with our Panamanian business feeling the step up as we have had good operating momentum and integration progress. Speaker 300:16:07As we look to improved H2 performance, all of our segments contributed Moving to year over year performance on the right hand side of the slide. As a reminder, we deconsolidated our Chilean business at the start of Q4 2022. So our reported results in 2023 do not include the operating results of VTR. Additionally, our 2023 results include the results of Claro Panama, but do not include them in Q2 2022 as we began consolidation in last year's Q3. So a number of moving pieces, but overall, a solid performance with stable revenue and 4% rebased growth on adjusted OIBDA. Speaker 300:16:49As mentioned last quarter, C and W Caribbean reported revenue was impacted by decision to discontinue a legacy non core B2B voice transit arrangement in Q1 2023, which was accounting for about $10,000,000 of quarterly revenue and will have a similar impact in each of Q3 and Q4 until we start lapping the move next year. Adjusting for this, Q2 2023 revenue would have grown by 1% on a rebased basis year over year. For the full year 2023, we continue to target mid to high single digit rebased adjusted OIBDA growth for LLA. Slide 12 highlights our segment results. Beginning on the left with C and W Caribbean, we reported $356,000,000 of revenue in reflecting flat performance and $146,000,000 of adjusted OIBDA, resulting in 8% rebased growth. Speaker 300:17:44Adjusting for the transit impact in the prior year period, revenue would have been 3% higher on a rebased basis. Our primary driver of growth was through residential mobile with service revenue expansion led by our postpaid efforts and higher inbound roaming. Our strong adjusted OIBDA rebased growth was largely fueled by lower direct costs, including programming and improved operating leverage across many of our islands. We finished the quarter with a margin over 41%, more than 300 basis points higher than the prior year quarter. Moving to Cable and Wireless Panama. Speaker 300:18:21CWP contributed $181,000,000 of revenue $59,000,000 of adjusted OIBDA in Q2, reflecting 4% rebased revenue growth and 42% rebased adjusted OIBDA growth. Rebased top line growth was driven by residential fixed and B2B. Adjusted OIBDA grew strongly in Q2 as we captured value from the Claro Panama integration. Turning to the middle column, Liberty Networks. We generated $119,000,000 in revenue or 5% rebased growth And $72,000,000 in adjusted OIBDA for a 2% rebased decline. Speaker 300:18:58Year over year, rebased revenue growth Within our wholesale operations was driven by a significant customer that is recognized on a cash basis. While we reported strong growth across Enterprise related connectivity and managed services as Balan highlighted. Adjusted OIBDA experienced a rebase decline year over year as costs increased due in part to higher software licenses and lower capitalizable costs. Importantly, our adjusted OIBDA margin was above 60% for the quarter And our operating free cash flow margin stood at a very robust 50% of revenue. 2nd from the right, Liberty Puerto Rico. Speaker 300:19:37Q2 revenue was $352,000,000 reflecting a year over year rebased decline of 3%. Residential fixed continued to be robust, Delivering growth on the back of volume gains over the past 12 months and price increases implemented in March. Residential mobile decreased year over year driven by lower ARPU, lower roaming revenue, reduced equipment sales as subsidy levels were lowered and a decline in prepaid subscribers. Sequentially, our mobile service revenue and ARPU continued to be stable, While total mobile revenue was impacted by lower equipment sales due in part to a reduction in subsidies and seasonality factors. Adjusted OIBDA increased from Q1 as we delivered $141,000,000 in the 2nd quarter, which reflected a rebased decline of 3% as compared to Q2 2022. Speaker 300:20:29Several factors contributed to this year over year decline, including the aforementioned decline in mobile service revenue and higher operating costs. The next two quarters are a critical period for us From an integration and migration perspective, as we look to cut over from AT and T and we anticipate increased costs around the migration in H2 as the bulk of the consumer activity is expected to occur over the next several months. Wrapping up with Costa Rica on the far right, We delivered Q2 revenue of $135,000,000 and adjusted OIBDA of $50,000,000 reflecting a rebased revenue decline of 1% and rebased adjusted OIBDA growth of 10%. Revenue performance was impacted by declines in ARPU caused by increased retention discounts And declines in higher ARPU plans. Adjusted OIBDA expanded significantly year over year, benefiting from lower integration spend And the year over year strengthening of the Costa Rican cologne to the U. Speaker 300:21:27S. Dollar as we have certain costs denominated in U. S. Dollars. Slide 13 highlights our results for P and E additions and adjusted FCF and reiterates our 2023 FCF outlook. Speaker 300:21:42In the Q2, we incurred $192,000,000 of P and E additions or 17% of revenue. We built and or upgraded 94,000 homes in Quarter led by activity in the Caribbean and Panama, taking our half year figure to over 180,000. As part of our upgrade and newbuild program, we are also decommissioning copper plant and are on track to complete this by the end of next year. During the quarter, we incurred about $8,000,000 of integration CapEx, mainly in Panama and Puerto Rico and back integration CapEx to remain elevated throughout H2. Finally, year to date, our CapEx as a percentage of revenue was 15% And we remain on track to deliver our 2023 target of 16% of revenue. Speaker 300:22:29In terms of adjusted free cash flow, we posted $31,000,000 A quarter or $72,000,000 before distributions to our partners in certain markets, where we do not own 100 percent of local businesses. Our $41,000,000 of distributions went to our government partners in Panama and Bahamas. Our Q2 Q2 cash flow represents an improvement from Q1, and we expect this to continue in the second half as we progress towards meeting our full year guidance of approximately $300,000,000 for pre distributions. Our 2023 cash flows will continue to be heavily weighted to Q4 As has been typical for us over the last years, given strong Q4 adjusted OIBDA performance and favorable working capital swings. Turning to Slide 14. Speaker 300:23:17At the end of Q2 on a consolidated basis, we had $8,000,000,000 of total debt, over $600,000,000 of cash And $1,000,000,000 of availability under our revolving credit lines. Important to note that 95% of our debt stack is due in 2027 or beyond and 96% has fixed interest rates. The long maturity and fixed interest features of our balance sheet coupled with significant liquidity Result in a robust capital structure for the group. In terms of leverage, we have made good progress reducing levels in the first half. Through principally adjusted OIBDA growth, we have reduced our net consolidated leverage from 4.6 times at year end to 4.3 times at June 30, while also aggressively continuing to repurchase our equity. Speaker 300:24:06Continued adjusted OIBDA growth and free cash flow expansion should further improve our net leverage ratio over the coming quarters. In the bottom right of the slide, it shows our equity and convertible repurchase activity over time. In H1, we repurchased a combined $1,000,000 as Balan highlighted earlier. This includes $132,000,000 in Q2 $50,000,000 in Q1. Our convert purchases in Q2 were facilitated by $69,000,000 in 3 year borrowings at a compelling 6.5% fixed rate, And we applied the proceeds to repurchase the Convert at attractive discounts to par. Speaker 300:24:47Since quarter end, we have been able to further reduce the outstanding balance to below $300,000,000 Moving to the final slide and our closing remarks. We continue to add and key focus areas of broadband Internet and postpaid mobile, while also building our B2B business in the second quarter. Selective strategic price increases have been executed in our markets and together with volume growth should form a good foundation for further top line progression. Integration execution continues to be a primary focus for both our corporate and local operating teams. We are reaching a Key period across a number of projects as we seek to deliver our value capture goals and look forward to reporting further progress in the next earnings call. Speaker 300:25:33Turning to capital allocation. We significantly increased equity activity in the second quarter as the market pricing of both our equity and convertible notes provided us with what we thought were highly accretive opportunities to deploy our excess capital. We'll continue to evaluate these opportunities as we progress in And finally, we remain confident in delivering on our adjusted OIBDA, CapEx and adjusted free cash flow targets for 2023. With that operator, please open it up for questions. Operator00:26:06Thank you. The question and answer session will be conducted electronically. The first question today comes from Vital Tumita from Goldman Sachs. Vital, your line is open. Please go ahead. Speaker 400:26:38Hello, good morning all and thanks for taking our questions. Two questions from our side. The first one is on Puerto Rico. The earnings release cites a reduction in handset subsidy levels that seems to have been a significant factor in results over there. Could you give me some color on that strategic shift on handset subsidies and any drivers for it? Speaker 400:26:59And second question would be 2nd question would be regarding the adjusted free cash flow. If you could give us just a bit more color on seasonality, in particular when it comes to the working Capital seasonality and drivers benefiting Q4. Thank you. Speaker 500:27:16Good morning, and thanks for the questions. So the first one on Puerto Rico and I'll ask, and Najee to jump in here as well, who runs our operations there. As we got to at the end of last year, there was significant promotional activity on handsets and handset subsidies, Mostly in the mainland U. S. A, which kind of bled into Puerto Rico as well. Speaker 500:27:41And we've been kind of experimenting with subsidies. In the first half of the year, you can probably see from our numbers that we've kind of reduced the subsidy levels and in that promotional activity Actually, it was in demographic and mostly around retention. And now we've looked at the results. We've been playing around with it. We've been studying and analyzing it. Speaker 500:28:06Our plans in the second half of the year is going to be slightly different than our first half of the year As we kind of fine tune the subsidy levels. But as you can also see from the Mainland, the AT and T, Verizon, Tmall results For the Q2, it would seem like the subsidy levels are starting to decline a little bit. You brought Speaker 200:28:28to some ridiculous levels towards the end Speaker 500:28:30of last year. And so we're going to be more nimble on it. And Najee, maybe if you want to add any more comments to that. Speaker 600:28:41Yes. Good morning. Thank you, Balan. The only comment I would add is that Part of optimizing the pool of subsidy, we have shifted a lot of the promotion to our higher end plan And providing less promotion to the lower end. So that strategic move allowed us to be able to manage well the subsidies. Speaker 600:29:04But as Johan mentioned, approaching as we enter H2, that dynamic will change before the end of the year for sure. Speaker 500:29:13Thanks, Speaker 200:29:13Ajay. And then on the free Speaker 500:29:15cash flow thing, I'll ask Chris to jump in here as well. But usually in the second half, there's a lot of reversals in the working capital The first half, you like beer vendors and you've got a lot of cost that hits you in the first half that kind of reverses itself in the second half. Chris, maybe you want to give a little bit more color. Yes. Speaker 700:29:32I mean, a couple of other factors. Certainly, adjusted OIBDA tends to be fairly strong in the last Quarter of the year, interest expense for us is the lowest in Q2 and Q4. And in addition, a number of our key collections of large accounts also tend to happen later in the year. And I would say the 4th point kind of marrying what Valens said. CapEx tends to be weighted kind of towards the end of the year. Speaker 700:30:05So that rolls into the first part Of the year when trade working capital unwind. So those would be the factors. But if you look back over the years, Q4 for us has been really the sort of the cash generative quarter for several years. Speaker 500:30:26Thanks, Chris. Speaker 400:30:30Very clear. Thank you. Yes. Operator00:30:35The next question comes from Sumit Datta from New Street Research. Sumit, your line is open. Please go ahead. Speaker 800:30:44Yes. Hi, guys. Thanks for the question. Just a couple for me, please. First of all, on Chile, Can you confirm that there has been no cash contributed into the JV this quarter doesn't appear that is the case. Speaker 800:31:03And so of the recently announced Funding round, which I think was around US600 $1,000,000 Should we assume nothing is coming from Liberty? And is there anything More broadly, we can infer about the future equity ownership of that JV. That would be the first question, Please. And then secondly, on Panama, really good profitability as you highlighted. How much of that was, if you like, synergy in the context of the $70,000,000 guidance, which we've got for that Mark it on a full run rate basis. Speaker 800:31:46How much have we seen so far? Is that running ahead of expectations? And how much more can we see come through in the second half of this year? Thank you very much. Speaker 500:31:59Hey, Sumit, thanks. In Chile, we assess the re disclosing, we can confirm that we did not put Any cash in it? And you can see from the other reporting that we did, it's mostly most of the contributions in the form of, you can say, a convert. And in that at some point later, we will be sitting down with our partners on that. But the equity ownership of that business remains fifty-fifty, and we are quite involved in that business. Speaker 500:32:30On the Panama part, if you look at some of the savings this year or what we just reported, Synergies played a big role in it, but it's not more than like 55%, 60%. And the rest of it is from efficiencies that came out That we worked really hard on, and that's where the margin expansion came from. But synergies will contribute to it, and it will continue to That contribute. 2024 synergies become even larger as we finish the store closures, netbook full network migration. We're actually doing a customer migration in the next 10 days or so. Speaker 500:33:09And so a lot more activity is happening, and we've got a lot more to Perfect there. But one of the good news in that expansion in margins, it's really also really good work by our operating teams on the ground. Speaker 800:33:28Okay, great. So it sounds like there's sort of incremental Savings ahead of the guided to synergies? Speaker 500:33:35Yes. Speaker 800:33:38Yes. Okay. That's great. Thank you. Operator00:33:44The next question comes from Andres Carullo from Scotiabank. Andres, your line is open. Please go ahead. Speaker 900:33:51Yes. Thank you. Just a follow-up on the question on Chile. So what I understood from the press release is that Between you and America Movil, there will be a $600,000,000 cash injection in Chile and that Lilac will pay 50% of that. So is there something Different to that? Speaker 900:34:10Or may I like to contribute in EUR 200,000,000 to EPR? Thank you. Speaker 500:34:16So the contribution is on the The $600,000,000 additional that's been put into the business. And I think Speaker 900:34:27If you Speaker 500:34:27look at our numbers that we just published, you can probably come to the conclusion that we did not put our share in it. And I think the way to look at it is that this contribution is not an equity contribution, but a debt piece of paper. And so that gives everybody a chance to take a look at the business, study it, understand it, contribute to it, both Especially on the operating side. And I suspect in the next couple of years, we'll be more definitive on where things stand. Okay. Speaker 500:35:05Thank Operator00:35:15The next question comes from Matthew Harrigan from Benchmark. Matthew, your line is open. Please go ahead. Speaker 1000:35:22Thank you. I think my Chile questions were answered. But your sister company over in Europe It has created about $3,000,000,000 plus of value on the venture side. I know Latin America is not exactly a hotbed For new venture activity and you prefer to invest in things that weren't incubated in house. But nonetheless, is there some potential there? Speaker 1000:35:46I know Tel Aviv is one of the top U. S. VCs in Mexico. I think they're number 3 or number 4. And clearly, you have a lot of infrastructure that various TMT initiatives benefit from and I know it's small, but I thought it was an interesting point. Speaker 1000:36:02Thanks in advance. Speaker 500:36:05Sure. Hey, Thank you. Let me see if I answered this in a way that makes sense. We have made a couple of very small venture investments, mostly to support A start up start ups that could be beneficial to us. So we've made investments in alternative energy, Made investments in fixed wireless access and but they're relatively small. Speaker 500:36:32It's not a core part of our story nor is this a growth driver for us. It's really where we think there's interesting technologies that can be used in our region, and we need to support them and Nudge it and provide some funding for them to finish the development. We would consider that, but we don't look at this Yes, a separate business unit growth driver. Our business is in communications. It is in fixed broadband. Speaker 500:37:05It is in mobile. And we're going to try to stay very close to what we are really good at. Speaker 1000:37:12And needless to say, content is probably the last bucket you'd invest in because that really would be a considerable Departure from leveraging your existing infrastructure, I assume. Speaker 500:37:24I think that would be a very, very good assumption. Speaker 1000:37:29Okay. Thanks, Barn. Appreciate it. You bet. Operator00:37:36That will conclude today's question and answer session. I'd like to hand back to Balan Nair for any additional or closing remarks. Speaker 500:37:43Thank you, And thanks, everybody, for taking the time this morning on our call. You can see we are making progress. And I suspect As you look at over the last few years and the top GTV of our neighborhood, I think we're on a good path here now, and the second half should be even more exciting than the first half. So thank you so much for your support. Have a great day. Operator00:38:11Ladies and gentlemen, this concludes Liberty Latin America's 2nd quarter 2023 investor call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America's website at www.lla.com. There you can also find a copy of today's presentation materials. You may now disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallLiberty Latin America Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Liberty Latin America Earnings HeadlinesLiberty Latin America Taps CSG to Rocket Wholesale Growth to New HeightsApril 9, 2025 | tmcnet.comThe past three years for Liberty Latin America (NASDAQ:LILA) investors has not been profitableMarch 31, 2025 | finance.yahoo.comReal Americans Don’t Wait on Wall Street’s Next MoveWhat's happening in the markets right now should concern every freedom-loving American who's worked hard and saved smart. Your 401(k) doesn't deserve to be dragged through the mud by tariffs, trade wars, reckless spending, and political standoffs. And you don't have to stand by while Wall Street plays roulette with your future.April 27, 2025 | Premier Gold Co (Ad)Liberty Latin America: WiFi Optimization And Video Enhancements Likely Stock Price DriversMarch 13, 2025 | seekingalpha.comBarclays Downgrades Liberty Latin America (LILA)February 25, 2025 | msn.comBarclays downgrades Liberty Global LiLAC (LILA) to a SellFebruary 25, 2025 | markets.businessinsider.comSee More Liberty Latin America Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Liberty Latin America? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Liberty Latin America and other key companies, straight to your email. Email Address About Liberty Latin AmericaLiberty Latin America (NASDAQ:LILA), together with its subsidiaries, provides fixed, mobile, and subsea telecommunications services. The company operates through C&W Caribbean, C&W Panama, Liberty Networks, Liberty Puerto Rico, and Liberty Costa Rico segments. It offers communications and entertainment services, including video, broadband internet, fixed-line, telephony, and mobiles services to residential and business customers; and business products and services that include enterprise-grade connectivity, data center, hosting, and managed solutions, as well as information technology solutions for small and medium enterprises, international companies, and governmental agencies. The company also operates a sub-sea and terrestrial fiber optic cable network that connects approximately 40 markets. It provides its services under the brands of C&W, Liberty Costa Rica, Liberty Communications, BTC, Flow, and Mas Móvil. The company was incorporated in 2017 and is based in Hamilton, Bermuda.View Liberty Latin America ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of Earnings Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 11 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded. I'll now turn the call over to Steven Price, Country Manager of Jamaica. Speaker 100:00:09Good morning, and welcome to Liberty Latin America's Q2 2023 investor call. At this time, all participants are in listen mode only. Today's formal presentation materials Can be found under the Investors section of Liberty Latin America's website at www.lla.com. Following today's formal presentation, instructions will be given for a question and answer session. As a reminder, This call is being recorded and will be available under the Investors section of our website. Speaker 100:00:47Today's remarks may include forward looking statements, Including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical fact, Actual results may differ materially from those expressed or implied by these statements. For more information, Please refer to the risk factors discussed in Liberty Latin America's most recently filed reports on Form 10 ks And the quarterly report on Form 10Q most recently filed with the SEC along with the associated press release. Liberty Latin America disclaims any obligation to update any forward looking statements or information to reflect any change in its expectations or in the conditions on which any such statement or information is based. In addition, on this call, we will refer to certain non GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation, which is accessible under the Investors section of our website. I would now like to turn the call over to our CEO, Mr. Speaker 100:02:00Balan Nair. Speaker 200:02:03Thank you, Steven, And welcome everyone to Liberty Latin America's 2nd quarter results presentation. I'll begin with our group highlights and an overview of our operating results by reporting segment. Chris Noyes, our CFO, will then follow with a review of the company's financial performance. After that, we will get straight to your questions. As always, I am joined by my executive team from across the region, And I will invite them to contribute as needed during the Q and A following our prepared remarks. Speaker 200:02:35As a point of housekeeping, We will both be working from slides, which you can find on our website at www.lla.com. Starting on Slide 4 and our highlights for the Q2. We continued our operational momentum with another solid Order in broadband and mobile postpaid, adding 52,000 subscribers to our base. Another quarter of solid performance in Cable and Wireless Caribbean, especially Jamaica and in Cable and Wireless, Panama. The positive results are driven by our focus on FMC With a 2 percentage point increase in penetration in both Jamaica and Panama in the first half of the year. Speaker 200:03:21We are the leading grower in fixed RGUs and one of the top in broadband growth among LatAm and North American operators. We have also made substantial progress with our GigaNet initiative. 77% of our home suppliers are currently gig ready, A 9 percentage point increase versus Q4 2022, and the goal is to reach 80% of the base by the end of this year. We reported adjusted OIBDA of $445,000,000 in the quarter for the group representing a 4% year over year increase. This is underpinned by 1% year over year rebased revenue growth adjusting for the discontinuation Of the slightly negative margin transit business as discussed last quarter, sequentially, our Q2 adjusted OIBDA grew by 10% reflecting positive financial momentum. Speaker 200:04:18These are some of the best numbers among telecom operators for the quarter. In addition, our OIBDA margin is now at 40% with operating leverage as shown by the revenue and OIBDA growth. We made significant steps forward in our equity buyback, repurchasing 132,000,000 across our equity and convertible bond in the quarter. Since the beginning of the year, we have repurchased 82,000,000 of shares And reduce the convert outstanding amount by quarter with the balance currently below 300,000,000 Finally, our integration work has continued to move forward with Costa Rica now close to finalize and Panama and Puerto Rico progressing well. In Puerto Rico, our new 5 gs Mobile Core and IT stack are operational. Speaker 200:05:13We have already migrated 35,000 prepaid customers representing a quarter of the base and we have started migrating the 1st postpaid customers. We are working with leading global suppliers such as Salesforce and Ericsson to create cutting edge infrastructure for the market. Turning to Slide 5. I'll begin our operating review with Cable and Wireless Caribbean. The solid rebound of tourism in our islands continued in Q2, continuing the trend we observed in Q1 and supporting the segment's performance. Speaker 200:05:50On the left of the slide, we display our Internet and mobile postpaid additions. Internet additions of 7,000 compared Positively year over year representing an increase of nearly 70%. The main contributor was Jamaica. However, Bahamas is the fastest growing market in percentage terms with 7% subscriber growth sequentially and 15% since the beginning of the year. The good performance in mobile with 16,000 postpaid ads this quarter was mainly driven by Jamaica, where our continued focus on FMC And postpaid product is bearing fruit. Speaker 200:06:29Across fixed and mobile, we implemented strategic price increases in several markets, Which have landed as planned with no material impact to churn. Moving to the center of the slide and our revenue by product. The pie chart here depicts the well diversified nature of Cable and Wireless Caribbean's revenue with B2B and consumer fixed The largest elements followed by consumer mobile. We reported sequential growth in both mobile and fixed subscription revenue, Driven by both volume and ARPU. Year over year rebased revenue growth was flat in the quarter. Speaker 200:07:07Adjusting for the discontinuation of the transit business, this would have been 280 basis points higher. Organic growth was driven by higher mobile and fixed subscription revenue benefiting from increased FMC penetration. Moving to Slide 6 and our C and W Panama segment. Starting on the left of the slide. Internet RGU ads were in line with Q1 and 75% higher versus the prior year. Speaker 200:07:37Our subscriber base is up 6% since the beginning of the year, supporting financial momentum. In mobile, Our strategy of focusing on postpaid and high value prepaid is yielding positive results as we delivered a modest increase in our postpaid base And prepaid losses were lower sequentially and year over year. Moving to the center of the slide and our revenue by product. In Panama, our largest products by revenue are mobile and B2B. Fixed is the smallest product area, but one of the fastest growing. Speaker 200:08:12Following the positive momentum in Q1, both fixed and B2B recorded strong rebased revenue growth in the 2nd quarter, Posting rebase increases of 8% and 7% year over year respectively. Growth in fixed revenue was supported Higher broadband ARPU driven by customers contracting higher speed plans and higher tier bundles. We are also making good progress decommissioning our copper network in Panama and are on track to have this completed by the end of next year. In mobile, we saw improved recharge levels and usage for prepaid and lower acquisition and retention discounts in postpaid. Finally to our integration update outlined in the lower right of the slide. Speaker 200:09:00We are making good progress with the integration of Claro Panama's operations. The focus in Q2 was defining and implementing our client migration strategy and planning on network integration to modernize infrastructure And expand capacity and coverage. Given our progress with these initiatives, we are on track to deliver our synergy objectives, which also underpins growth in the second half. Next to Slide 7 and Liberty, Puerto Rico, Our largest single market. Starting on the left of the slide, we reported another quarter of Internet ads As our March price increases landed well, we churn stable at about 1%. Speaker 200:09:46This is a testament to Strong customer service and network reliability underpinned by our investments in fiber to the home. Since Q2 last year, we increased our fiber homes by 70%. In addition, we successfully launched our 1 gigabit speed across majority of our HFC footprint using DOCSIS 3.1. The take rate and upgrades have exceeded our expectations. Turning to mobile. Speaker 200:10:14Sequentially, Our postpaid base stayed relatively flat, while we experienced a similar level of losses in prepay. We are in a transitional phase. We plan to revamp our prepaid strategy and launch customer centric postpaid Customer value propositions as soon as migrations are completed. In this regard, with the help of our commercial partners, We are working hard to build beach spot platforms that will enable us to be more effective in the market through custom FMC bundles And offering STAYLIT specifically for the Puerto Rico and U. S. Speaker 200:10:48VI market. Moving to the center of this slide. Consumer mobile is our largest product in Puerto Rico, with just under 50% of our revenue. This is followed by our fixed business, Representing a third of the total and B2B at 16%. In Q2, fixed revenue was up 5% year over year, Driven by the steady growth in our broadband base. Speaker 200:11:15Mobile subscription revenue remained flat sequentially, however, was lower year over year. Finally, to our integration updates on the lower right of the slide. We are continuing to migrate our prepaid customers to our new platforms. On the postpaid side, we have just started to bring across our first batches of customers and the migration rate will ramp up in the coming weeks months. We are working closely with partners, including AT and T and Apple and expect to finalize the integration by end of the year. Speaker 200:11:48However, the process is clearly complex and we are proceeding with customer experience being our first and foremost priority. Turning to Slide 8 and Liberty Costa Rica. Starting on the left of the slide. Our fixed subscriber base remained broadly flat in Q2 with a small increase in churn following a price increase in May. In mobile, we recorded strong postpaid additions in the quarter, driven by our prepaid to postpaid migration strategy. Speaker 200:12:20According to the latest report by the regulator, in 2022, we reconfirm our leadership at 40% to 6% of market share, With postpaid market share increasing 5 percentage points versus 2021. Moving to the center of the slide, Consumer mobile is our largest product with close to 60% share of revenue. This is followed by our consumer fixed business representing just over 30% And then a small but fast growing B2B operations. Finally, to our integration update in the lower right of the slide, Integration activities continue to be on track. We expect to roll off the PSA and hit our run rate synergy target of $15,000,000 by the end of the year. Speaker 200:13:08Finally, to Slide 9 in our Liberty Networks segment. Starting from the left hand side of the slide, I am pleased to announce that in Q2, we successfully completed our rebranding from CNW Networks to Liberty Networks, A single brand across wholesale and enterprise, providing greater scale and consistency on messaging across multiple segments. The new brand with its fresh look conveys customer centricity, innovation, reliability and performance, Which are the foundations of our competitive edge and growth potential. We are driving this segment in the region And hello, inaugural LINK's leadership event in Mexico earlier this year. With our top 100 customers, Industry and global thought leaders where we discuss hot topics such as the impact of AI in LatAm and the Caribbean, FinTech and technology disruption. Speaker 200:14:05Running through the wholesale and enterprise highlights on the right hand side of the slide. Wholesale accounting for 3 quarters of this segment's revenue Delivered 3% growth in the first half, mainly driven by capacity increases and upselling our existing customers and new capacity sales. Steady growth, mostly U. S. Dollar denominated revenue and low CapEx requirements underpins high cash flow conversion. Speaker 200:14:32Our unique multi ring infrastructure remains a differentiating factor in relation to other networks in the region and a synonym for reliability. On the bottom right, Enterprise representing the remaining quarter of revenue posted a 13% increase Driven by higher demand for our connectivity, active churn management and cross and upselling of value added services. Following our rebranding, we anticipate our solid pipeline to convert new customers in the months to come. Overall, Q2 was another solid quarter from a commercial and operational perspective, And we expect more progress in the second half of the year as we move towards finalization of our integration projects And drive greater free cash flow generation. We also plan to continue delivering value to our shareholders through our equity buyback program. Speaker 200:15:28With that, I'll pass you over to Chris Noyes, our Chief Financial Officer, who will talk you through our financial performance before we take your questions. Chris? Speaker 300:15:40Thanks, Bowen. I'll now take you through our financial performance in greater detail, Starting with our sequential performance on the left hand side of Slide 11. Sequentially, on a reported basis in U. S. Dollars, our revenue grew by 2% and adjusted OIBDA by 10% in the 2nd quarter as compared to Q1, with our Panamanian business feeling the step up as we have had good operating momentum and integration progress. Speaker 300:16:07As we look to improved H2 performance, all of our segments contributed Moving to year over year performance on the right hand side of the slide. As a reminder, we deconsolidated our Chilean business at the start of Q4 2022. So our reported results in 2023 do not include the operating results of VTR. Additionally, our 2023 results include the results of Claro Panama, but do not include them in Q2 2022 as we began consolidation in last year's Q3. So a number of moving pieces, but overall, a solid performance with stable revenue and 4% rebased growth on adjusted OIBDA. Speaker 300:16:49As mentioned last quarter, C and W Caribbean reported revenue was impacted by decision to discontinue a legacy non core B2B voice transit arrangement in Q1 2023, which was accounting for about $10,000,000 of quarterly revenue and will have a similar impact in each of Q3 and Q4 until we start lapping the move next year. Adjusting for this, Q2 2023 revenue would have grown by 1% on a rebased basis year over year. For the full year 2023, we continue to target mid to high single digit rebased adjusted OIBDA growth for LLA. Slide 12 highlights our segment results. Beginning on the left with C and W Caribbean, we reported $356,000,000 of revenue in reflecting flat performance and $146,000,000 of adjusted OIBDA, resulting in 8% rebased growth. Speaker 300:17:44Adjusting for the transit impact in the prior year period, revenue would have been 3% higher on a rebased basis. Our primary driver of growth was through residential mobile with service revenue expansion led by our postpaid efforts and higher inbound roaming. Our strong adjusted OIBDA rebased growth was largely fueled by lower direct costs, including programming and improved operating leverage across many of our islands. We finished the quarter with a margin over 41%, more than 300 basis points higher than the prior year quarter. Moving to Cable and Wireless Panama. Speaker 300:18:21CWP contributed $181,000,000 of revenue $59,000,000 of adjusted OIBDA in Q2, reflecting 4% rebased revenue growth and 42% rebased adjusted OIBDA growth. Rebased top line growth was driven by residential fixed and B2B. Adjusted OIBDA grew strongly in Q2 as we captured value from the Claro Panama integration. Turning to the middle column, Liberty Networks. We generated $119,000,000 in revenue or 5% rebased growth And $72,000,000 in adjusted OIBDA for a 2% rebased decline. Speaker 300:18:58Year over year, rebased revenue growth Within our wholesale operations was driven by a significant customer that is recognized on a cash basis. While we reported strong growth across Enterprise related connectivity and managed services as Balan highlighted. Adjusted OIBDA experienced a rebase decline year over year as costs increased due in part to higher software licenses and lower capitalizable costs. Importantly, our adjusted OIBDA margin was above 60% for the quarter And our operating free cash flow margin stood at a very robust 50% of revenue. 2nd from the right, Liberty Puerto Rico. Speaker 300:19:37Q2 revenue was $352,000,000 reflecting a year over year rebased decline of 3%. Residential fixed continued to be robust, Delivering growth on the back of volume gains over the past 12 months and price increases implemented in March. Residential mobile decreased year over year driven by lower ARPU, lower roaming revenue, reduced equipment sales as subsidy levels were lowered and a decline in prepaid subscribers. Sequentially, our mobile service revenue and ARPU continued to be stable, While total mobile revenue was impacted by lower equipment sales due in part to a reduction in subsidies and seasonality factors. Adjusted OIBDA increased from Q1 as we delivered $141,000,000 in the 2nd quarter, which reflected a rebased decline of 3% as compared to Q2 2022. Speaker 300:20:29Several factors contributed to this year over year decline, including the aforementioned decline in mobile service revenue and higher operating costs. The next two quarters are a critical period for us From an integration and migration perspective, as we look to cut over from AT and T and we anticipate increased costs around the migration in H2 as the bulk of the consumer activity is expected to occur over the next several months. Wrapping up with Costa Rica on the far right, We delivered Q2 revenue of $135,000,000 and adjusted OIBDA of $50,000,000 reflecting a rebased revenue decline of 1% and rebased adjusted OIBDA growth of 10%. Revenue performance was impacted by declines in ARPU caused by increased retention discounts And declines in higher ARPU plans. Adjusted OIBDA expanded significantly year over year, benefiting from lower integration spend And the year over year strengthening of the Costa Rican cologne to the U. Speaker 300:21:27S. Dollar as we have certain costs denominated in U. S. Dollars. Slide 13 highlights our results for P and E additions and adjusted FCF and reiterates our 2023 FCF outlook. Speaker 300:21:42In the Q2, we incurred $192,000,000 of P and E additions or 17% of revenue. We built and or upgraded 94,000 homes in Quarter led by activity in the Caribbean and Panama, taking our half year figure to over 180,000. As part of our upgrade and newbuild program, we are also decommissioning copper plant and are on track to complete this by the end of next year. During the quarter, we incurred about $8,000,000 of integration CapEx, mainly in Panama and Puerto Rico and back integration CapEx to remain elevated throughout H2. Finally, year to date, our CapEx as a percentage of revenue was 15% And we remain on track to deliver our 2023 target of 16% of revenue. Speaker 300:22:29In terms of adjusted free cash flow, we posted $31,000,000 A quarter or $72,000,000 before distributions to our partners in certain markets, where we do not own 100 percent of local businesses. Our $41,000,000 of distributions went to our government partners in Panama and Bahamas. Our Q2 Q2 cash flow represents an improvement from Q1, and we expect this to continue in the second half as we progress towards meeting our full year guidance of approximately $300,000,000 for pre distributions. Our 2023 cash flows will continue to be heavily weighted to Q4 As has been typical for us over the last years, given strong Q4 adjusted OIBDA performance and favorable working capital swings. Turning to Slide 14. Speaker 300:23:17At the end of Q2 on a consolidated basis, we had $8,000,000,000 of total debt, over $600,000,000 of cash And $1,000,000,000 of availability under our revolving credit lines. Important to note that 95% of our debt stack is due in 2027 or beyond and 96% has fixed interest rates. The long maturity and fixed interest features of our balance sheet coupled with significant liquidity Result in a robust capital structure for the group. In terms of leverage, we have made good progress reducing levels in the first half. Through principally adjusted OIBDA growth, we have reduced our net consolidated leverage from 4.6 times at year end to 4.3 times at June 30, while also aggressively continuing to repurchase our equity. Speaker 300:24:06Continued adjusted OIBDA growth and free cash flow expansion should further improve our net leverage ratio over the coming quarters. In the bottom right of the slide, it shows our equity and convertible repurchase activity over time. In H1, we repurchased a combined $1,000,000 as Balan highlighted earlier. This includes $132,000,000 in Q2 $50,000,000 in Q1. Our convert purchases in Q2 were facilitated by $69,000,000 in 3 year borrowings at a compelling 6.5% fixed rate, And we applied the proceeds to repurchase the Convert at attractive discounts to par. Speaker 300:24:47Since quarter end, we have been able to further reduce the outstanding balance to below $300,000,000 Moving to the final slide and our closing remarks. We continue to add and key focus areas of broadband Internet and postpaid mobile, while also building our B2B business in the second quarter. Selective strategic price increases have been executed in our markets and together with volume growth should form a good foundation for further top line progression. Integration execution continues to be a primary focus for both our corporate and local operating teams. We are reaching a Key period across a number of projects as we seek to deliver our value capture goals and look forward to reporting further progress in the next earnings call. Speaker 300:25:33Turning to capital allocation. We significantly increased equity activity in the second quarter as the market pricing of both our equity and convertible notes provided us with what we thought were highly accretive opportunities to deploy our excess capital. We'll continue to evaluate these opportunities as we progress in And finally, we remain confident in delivering on our adjusted OIBDA, CapEx and adjusted free cash flow targets for 2023. With that operator, please open it up for questions. Operator00:26:06Thank you. The question and answer session will be conducted electronically. The first question today comes from Vital Tumita from Goldman Sachs. Vital, your line is open. Please go ahead. Speaker 400:26:38Hello, good morning all and thanks for taking our questions. Two questions from our side. The first one is on Puerto Rico. The earnings release cites a reduction in handset subsidy levels that seems to have been a significant factor in results over there. Could you give me some color on that strategic shift on handset subsidies and any drivers for it? Speaker 400:26:59And second question would be 2nd question would be regarding the adjusted free cash flow. If you could give us just a bit more color on seasonality, in particular when it comes to the working Capital seasonality and drivers benefiting Q4. Thank you. Speaker 500:27:16Good morning, and thanks for the questions. So the first one on Puerto Rico and I'll ask, and Najee to jump in here as well, who runs our operations there. As we got to at the end of last year, there was significant promotional activity on handsets and handset subsidies, Mostly in the mainland U. S. A, which kind of bled into Puerto Rico as well. Speaker 500:27:41And we've been kind of experimenting with subsidies. In the first half of the year, you can probably see from our numbers that we've kind of reduced the subsidy levels and in that promotional activity Actually, it was in demographic and mostly around retention. And now we've looked at the results. We've been playing around with it. We've been studying and analyzing it. Speaker 500:28:06Our plans in the second half of the year is going to be slightly different than our first half of the year As we kind of fine tune the subsidy levels. But as you can also see from the Mainland, the AT and T, Verizon, Tmall results For the Q2, it would seem like the subsidy levels are starting to decline a little bit. You brought Speaker 200:28:28to some ridiculous levels towards the end Speaker 500:28:30of last year. And so we're going to be more nimble on it. And Najee, maybe if you want to add any more comments to that. Speaker 600:28:41Yes. Good morning. Thank you, Balan. The only comment I would add is that Part of optimizing the pool of subsidy, we have shifted a lot of the promotion to our higher end plan And providing less promotion to the lower end. So that strategic move allowed us to be able to manage well the subsidies. Speaker 600:29:04But as Johan mentioned, approaching as we enter H2, that dynamic will change before the end of the year for sure. Speaker 500:29:13Thanks, Speaker 200:29:13Ajay. And then on the free Speaker 500:29:15cash flow thing, I'll ask Chris to jump in here as well. But usually in the second half, there's a lot of reversals in the working capital The first half, you like beer vendors and you've got a lot of cost that hits you in the first half that kind of reverses itself in the second half. Chris, maybe you want to give a little bit more color. Yes. Speaker 700:29:32I mean, a couple of other factors. Certainly, adjusted OIBDA tends to be fairly strong in the last Quarter of the year, interest expense for us is the lowest in Q2 and Q4. And in addition, a number of our key collections of large accounts also tend to happen later in the year. And I would say the 4th point kind of marrying what Valens said. CapEx tends to be weighted kind of towards the end of the year. Speaker 700:30:05So that rolls into the first part Of the year when trade working capital unwind. So those would be the factors. But if you look back over the years, Q4 for us has been really the sort of the cash generative quarter for several years. Speaker 500:30:26Thanks, Chris. Speaker 400:30:30Very clear. Thank you. Yes. Operator00:30:35The next question comes from Sumit Datta from New Street Research. Sumit, your line is open. Please go ahead. Speaker 800:30:44Yes. Hi, guys. Thanks for the question. Just a couple for me, please. First of all, on Chile, Can you confirm that there has been no cash contributed into the JV this quarter doesn't appear that is the case. Speaker 800:31:03And so of the recently announced Funding round, which I think was around US600 $1,000,000 Should we assume nothing is coming from Liberty? And is there anything More broadly, we can infer about the future equity ownership of that JV. That would be the first question, Please. And then secondly, on Panama, really good profitability as you highlighted. How much of that was, if you like, synergy in the context of the $70,000,000 guidance, which we've got for that Mark it on a full run rate basis. Speaker 800:31:46How much have we seen so far? Is that running ahead of expectations? And how much more can we see come through in the second half of this year? Thank you very much. Speaker 500:31:59Hey, Sumit, thanks. In Chile, we assess the re disclosing, we can confirm that we did not put Any cash in it? And you can see from the other reporting that we did, it's mostly most of the contributions in the form of, you can say, a convert. And in that at some point later, we will be sitting down with our partners on that. But the equity ownership of that business remains fifty-fifty, and we are quite involved in that business. Speaker 500:32:30On the Panama part, if you look at some of the savings this year or what we just reported, Synergies played a big role in it, but it's not more than like 55%, 60%. And the rest of it is from efficiencies that came out That we worked really hard on, and that's where the margin expansion came from. But synergies will contribute to it, and it will continue to That contribute. 2024 synergies become even larger as we finish the store closures, netbook full network migration. We're actually doing a customer migration in the next 10 days or so. Speaker 500:33:09And so a lot more activity is happening, and we've got a lot more to Perfect there. But one of the good news in that expansion in margins, it's really also really good work by our operating teams on the ground. Speaker 800:33:28Okay, great. So it sounds like there's sort of incremental Savings ahead of the guided to synergies? Speaker 500:33:35Yes. Speaker 800:33:38Yes. Okay. That's great. Thank you. Operator00:33:44The next question comes from Andres Carullo from Scotiabank. Andres, your line is open. Please go ahead. Speaker 900:33:51Yes. Thank you. Just a follow-up on the question on Chile. So what I understood from the press release is that Between you and America Movil, there will be a $600,000,000 cash injection in Chile and that Lilac will pay 50% of that. So is there something Different to that? Speaker 900:34:10Or may I like to contribute in EUR 200,000,000 to EPR? Thank you. Speaker 500:34:16So the contribution is on the The $600,000,000 additional that's been put into the business. And I think Speaker 900:34:27If you Speaker 500:34:27look at our numbers that we just published, you can probably come to the conclusion that we did not put our share in it. And I think the way to look at it is that this contribution is not an equity contribution, but a debt piece of paper. And so that gives everybody a chance to take a look at the business, study it, understand it, contribute to it, both Especially on the operating side. And I suspect in the next couple of years, we'll be more definitive on where things stand. Okay. Speaker 500:35:05Thank Operator00:35:15The next question comes from Matthew Harrigan from Benchmark. Matthew, your line is open. Please go ahead. Speaker 1000:35:22Thank you. I think my Chile questions were answered. But your sister company over in Europe It has created about $3,000,000,000 plus of value on the venture side. I know Latin America is not exactly a hotbed For new venture activity and you prefer to invest in things that weren't incubated in house. But nonetheless, is there some potential there? Speaker 1000:35:46I know Tel Aviv is one of the top U. S. VCs in Mexico. I think they're number 3 or number 4. And clearly, you have a lot of infrastructure that various TMT initiatives benefit from and I know it's small, but I thought it was an interesting point. Speaker 1000:36:02Thanks in advance. Speaker 500:36:05Sure. Hey, Thank you. Let me see if I answered this in a way that makes sense. We have made a couple of very small venture investments, mostly to support A start up start ups that could be beneficial to us. So we've made investments in alternative energy, Made investments in fixed wireless access and but they're relatively small. Speaker 500:36:32It's not a core part of our story nor is this a growth driver for us. It's really where we think there's interesting technologies that can be used in our region, and we need to support them and Nudge it and provide some funding for them to finish the development. We would consider that, but we don't look at this Yes, a separate business unit growth driver. Our business is in communications. It is in fixed broadband. Speaker 500:37:05It is in mobile. And we're going to try to stay very close to what we are really good at. Speaker 1000:37:12And needless to say, content is probably the last bucket you'd invest in because that really would be a considerable Departure from leveraging your existing infrastructure, I assume. Speaker 500:37:24I think that would be a very, very good assumption. Speaker 1000:37:29Okay. Thanks, Barn. Appreciate it. You bet. Operator00:37:36That will conclude today's question and answer session. I'd like to hand back to Balan Nair for any additional or closing remarks. Speaker 500:37:43Thank you, And thanks, everybody, for taking the time this morning on our call. You can see we are making progress. And I suspect As you look at over the last few years and the top GTV of our neighborhood, I think we're on a good path here now, and the second half should be even more exciting than the first half. So thank you so much for your support. Have a great day. Operator00:38:11Ladies and gentlemen, this concludes Liberty Latin America's 2nd quarter 2023 investor call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America's website at www.lla.com. There you can also find a copy of today's presentation materials. You may now disconnect your lines.Read morePowered by