Liberty Latin America Q3 2024 Earnings Report

Liberty Latin America EPS Results

• Actual EPS: -$2.22
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: $0.29

Liberty Latin America Revenue Results

• Actual Revenue: $1.09 billion
• Expected Revenue: $1.11 billion
• Beat/Miss: Missed by -$16.97 million
• YoY Revenue Growth: N/A

Liberty Latin America Announcement Details

• Quarter: Q3 2024
• Date: 11/6/2024
• Time: After Market Closes
• Conference Call Date: Thursday, November 7, 2024
• Conference Call Time: 8:30AM ET

Liberty 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.

Liberty Latin America Q3 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by.

[Operator]

Today's call is being recorded. I will now turn the call over to Bill Greeley, Head of Compliance and Ethics, Liberty Latin America.

[William Brierly, Vice President, Head of Compliance & Ethics at Liberty Latin America Ltd]

Good morning, and welcome to Liberty Latin America's Q3 2024 Investor Call. At this time, all participants are in listen only mode. Today's formal presentation materials can be found under the Investor Relations 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.

[William Brierly, Vice President, Head of Compliance & Ethics at Liberty Latin America Ltd]

Today'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 annual report on Form 10 ks and quarterly report on Form 10 Q, 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.

[William Brierly, Vice President, Head of Compliance & Ethics at Liberty Latin America Ltd]

I would now like to turn the call over to our CEO, Mr. Balan Nair.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Thank you, Bill, and welcome everybody to Liberty Latin America's 3rd 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'm joined by my executive team from across the region, I'll invite them to contribute as needed during the Q and A following our prepared remarks.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

As 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. We have added over 50,000 high speed broadband and postpaid mobile subscribers year to date. This figure was a robust 225,000 ads excluding Puerto Rico where we have begun to recover following our complex migration project. I'll share further color on our progress later in the presentation.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

We also experienced some negative net adds in Cable and Wireless Caribbean during the quarter as a result of Hurricane Beryl. We reported adjusted OIBDA of $1,200,000,000 year to date. This includes rebased growth in C&W Caribbean, C&W Panama and Liberty Costa Rica. We expect adjusted OIBDA performance to accelerate in Q4 driven by B2B and anticipated improved results in our Puerto Rican operations. We successfully refinanced $1,000,000,000 of our cable and wireless credit silo senior notes last month.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

The issuance was significantly oversubscribed, reflecting the silos strength. Finally, we continue to explore inorganic ways to drive shareholder value and are excited to provide more details regarding an investment that we've been cultivating in Peru. This is a large and growing market where we have built significant fiber footprint and see potential to create value. We are also pleased to announce the addition of Sparkle to our new pan regional subsea system. Turning to Slide 5.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

I'll begin our operating review with C&W Caribbean. On the left of the slide, we present our Internet and mobile postpaid additions. Q3 broadband adds were negatively affected by Hurricane Bharat, which impacted our operations in Jamaica, Grenada, St. Vincent and the Grenadines in early July. Adjusting for this event, we would have added 3,000 broadband RGUs in the quarter.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

We anticipate further impacts to net adds in Q4, but are working hard to minimize them. Postpaid mobile adds, although positive, were lower sequentially and year over year as barrel impacted sales efforts. There was however an increase in prepaid ads as customers wanted to ensure access to mobile networks in the event of any outages, particularly in Jamaica. Moving to the center of the slide, we generated 2% rebased revenue growth year to date, driven by our continued consumer momentum, particularly in mobile. Finally, I want to recognize our colleagues in C&W for delivering adjusted OIBDA growth both sequentially and year over year in Q3 despite the challenges they faced in the quarter.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Moving to Slide 6 and our C&W Panama segment. Starting on the left of the slide, we continue to drive penetration of our fixed footprint and delivered another solid quarter of Internet subscriber adds and robust revenue growth. Our fixed network provides high speed connectivity across more than 95% of our homes passed, with the majority of those homes passed via FTTH infrastructure. In mobile, we continue to grow our postpaid base, however, return to a more normalized rate of ads, following an exceptional second quarter driven by Digicel's exit from the market. We mentioned our successful 5 gs trials during our last earnings presentation.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

And last month, we became the 1st operator to launch 5 gs in Panama, highlighting our technology leadership in the market. Moving to the center of the slide, we have driven 3% top line growth year to date with positive contributions coming from all our product areas. Overall, we continue to build momentum in Panama and anticipate continued growth.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Turning to Slide 7 and Liberty Costa Rica.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Starting on the left of the slide, we delivered another quarter of solid broadband subscriber adds against a challenging competitive backdrop in Costa Rica. We continue to work towards completing our agreed combination with Millicom, which we anticipate will close by the end of 2025. In mobile, we reported another strong quarter. We moved above the milestone of 1,000,000 subscribers with net postpaid ads higher both year over year and sequentially. Over the last 12 months, we've now added over 125,000 postpaid subs in the market, representing an almost 15% growth in our base.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Moving to the center of the slide, we reported healthy rebased revenue growth of 5% year to date led by mobile. Next to Slide 8 and Liberty Networks. On the left of the slide, we present year to date revenue for the current and prior year periods. Enterprise continues to be a fastest area of growth in this segment and was 8% higher on a rebased basis. As in prior quarters, for Liberty Networks and the wholesale business specifically, we highlight the $17,000,000 year over year impact of non cash IRU declines.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Despite this headwind from lower IRU non cash revenues, our underlying wholesale business continued to demonstrate resilience growing modestly. Overall, we are building a strong foundation of recurring revenue, which underpins our future prospects. The metrics shown beneath the bars reflect the unique cash conversion characteristics in Liberty Networks. This is an infrastructure business with growing cash OIBDA and over 40% OFCF conversion of revenue. Given these characteristics, Liberty Networks has a very attractive financial profile and we have spoken previously about the opportunities to invest further in this segment.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

On the right side of the slide, we highlight an investment that will create a new pan regional subsea cable system. We're excited to share that in addition to Gold Data, we will partner with Sparkle, a wholly owned subsidiary of Telecom Italia on this project. This will enhance the system's value given Sparkle's extensive presence in the region. Other highlights of the new system will be its size spanning over 5,500 kilometers, low latency with 6 new access points connecting major data hubs, new routes, the landing in Veracruz and Apalache creates vital routes between Mexico and the United States, integrating and enhancing our powerful mesh infrastructure and ensuring we are future proof ready. We are building a system that will serve the incredible growth in demand from hyperscalers and the rise in traffic requirements related to the ongoing shift to the cloud and AI innovations from the USA to Latin America and the Caribbean.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Turning to Slide 9 and Liberty Puerto Rico. Starting on the left of the slide. We reported a stable quarter of Internet subscriber adds adjusting for the impact of ACP related share. As previously indicated, we managed to keep most ACP subscribers through targeted retention offers. However, there has been some impact with 6,000 subscribers lost in Q3 and adds to the 4,000 who left during the first half.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Adjusting for this impact, we would have had net broadband subscriber adds in the quarter. We continue to invest in strengthening our leading fixed business in Puerto Rico and aim to have approximately 200,000 fiber to the homes passed by the end of the year, representing over 15% of our total footprint. In mobile, our postpaid base was lower during the Q3, partly driven by a migration adjustment of approximately 20,000 lines. We have begun to see some encouraging signs now that the migration is complete. I'll talk to these green shoots on the following slide, but of note, we've now launched our new converged commercial proposition called

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Loop.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Owning leading fixed and mobile platforms is a core differentiating feature for Liberty Puerto Rico, and our strategy is centered on leveraging this as we have done successfully in other parts of LLA. In prepaid, we had more success with the 2nd consecutive quarter of net adds in Q3. This momentum should be further bolstered by the addition of EchoStar's Boost subscribers following the close of that transaction in early September. In the center of the slide, we show the revenue mix by product in Puerto Rico and the year to date decline of 12%. Chris will cover the financial performance in greater detail within his section.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Moving to Slide 10. We wanted to share some of the early indicators that we feel represent signs of our mobile operations turning around, Starting with the left chart and our average sales per month. Here we can see the drop off in sales as we started to focus our efforts on migration in 2023 and into the first half of this year. This impact was the result of our sales force needing to spend more time managing migration related queries, thereby having less time to sell, while navigating some customer experience challenges. Encouragingly, Q3 2024 showed significant improvements across postpaid and prepaid, with prepaid now back above 2022 levels.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

In October, we saw postpaid sales eclipsing 2022 levels as well, which is very encouraging. In the center of the slide, we show our NPS progression, which is a leading performance indicator that we track closely. We are now above pre migration levels and significantly better than the low points at the end of the year for both postpaid and prepaid. Importantly, we have seen a significant increase in promoters with our postpaid promoter percentage in October, 3 times above the December low. Lastly, on the right of the slide, the customer sentiment.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

This metric has more than doubled from pre migration levels, reflecting the work we have been doing to improve customer experience. The complexity of this integration stems from the carve out nature of this transaction with AT and T where we needed to build a whole new network and a whole new billing stack. This coupled with migrating from a legacy platform within a large corporation brought many unanticipated problems. However, as with our other acquisitions, we are now through the technical phase and positioned to improve our commercial execution. Having said that, the larger than expected churn has delayed our recovery to pre migration EBITDA.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

To get there, we will cut costs as required and with improving NPS and improved platforms, we will recapture market share. The commercial recovery will require investments in 2025, which we are planning for. Leveraging our FMC capabilities combined with achieving targeted cost savings sets us up for future adjusted OIBDA expansion. We remain confident of our longer term plans and the opportunity to grow in Puerto Rico. On Slide 11, we highlight our track record of organic and inorganic growth across CNW Caribbean, CNW Panama and Liberty Costa Rica segments.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Firstly, taking C&W Caribbean on the left of the slide as an example of strong operational execution. In the period shown from full year 2020 to the last 12 months, we have achieved an adjusted OIBDA CAGR of over 30%. This has been driven by the effective creation and implementation of converged product offerings, which has resulted in over 350,000 broadband and postpaid mobile net apps. We have also focused on driving cost efficiencies, achieving an 8 percentage point improvement in OFCF margin over the period. Moving to C&W Panama in the center of the slide and the significant financial benefits of the acquisition in 2022 of Claro's mobile business.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

This is an example of a successful integration. By the middle of this year, we had migrated customers to a common platform and adjusted significant cost synergies. The business we acquired from Claro had minimal adjusted OIBDA when closed the acquisition and so the growth shown here reflects synergies we achieved through integration. OFCF is expected to improve further in Q4 and rise above 2020 levels as a percentage of revenue. We also see this as an exciting organic story for coming periods given the constructive market structure and our underway position in the fixed market.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Finally, to Liberty Costa Rica on the right of the slide. We initially entered the Costa Rican market through our acquisition of a controlling stake in Cabletica in 2018. Through the acquisition of Telefonica's mobile operations in 2021, we created a leading converged operator. This is another example of a successful integration, which we completed during 2023. At the time of acquisition, the Telefonica business was generating approximately $70,000,000 to $80,000,000 of adjusted OIBDA a year.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

And so we've driven significant additional value through synergies. We've continued to grow the mobile operations at a tremendous pace, surpassing 1,000,000 postpaid subscribers and launching 5 gs earlier this year to further cement our position as the forefront of the market. Our track record shows that we have successfully integrated and grown operations. The nature of our Puerto Rico acquisition is much more complex compared to the transactions noted on this slide, which is the primary reason why this has taken longer than we had anticipated to achieve our targets. However, our experience and track record gives us confidence that we will begin to see improved results in Puerto Rico as we have in other markets.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Finally, to Slide 12, and an exciting inorganic move we have made in Peru. We began investing in the greenfield fiber to the home business alongside a local partner in 2021 and through an aggressive bill now pass approximately 3,000,000 homes in the market with fiber. Peru has significant growth potential given its low internet penetration at around 40% and it provides exposure to market much larger than those in our current footprint. Wow! Has been very successful driving penetration in its footprint, which is mostly outside Lima.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

In a short period, Wow achieved an approximate 15% broadband market share nationally and 25% in the provinces outside Lima. With 34,000,000 people and 10,000,000 homes in total, Peru presents a large market opportunity. It is more than 6 times the size of our largest consolidated market. In line with the region, also has a young demographic with a population median age of 34. Finally, we are creating a leading business and brand.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

This was exemplified as Wow! Was awarded LATAM Fiber Operator of the Year in the 2024 Fiber Connect LATAM Awards. We are excited about this investment. With that, I'll pass you over to Chris Noyes, our Chief Financial Officer, who will take you through our financial performance before we move on to your questions. Chris?

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Thanks, Balan. I'll now take you through our financial results starting with our group revenue and adjusted OIBDA performance on Slide 14. Sequentially, reported revenue 3% lower at $1,100,000,000 and adjusted OIBDA grew by 4% to $403,000,000 in the 3rd quarter. The sequential decline in reported revenue from Q2 was driven by lower revenue in Cable and Wireless, partly due to the impact of Hurricane Beryl in the quarter and in Panama and Liberty Networks related to lower project revenue and less IRU accelerations, respectively. Adjusted OIBDA growth was driven by improvement in Puerto Rico and Panama.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Turning to year over year, revenue was 4% lower on a rebased basis and adjusted OIBDA declined by 6%. Revenue performance was primarily driven by an organic reduction in Liberty Puerto Rico, partly offset by organic growth in Liberty Costa Rica. With respect to adjusted OIBDA, organic growth in Panama and C and W Caribbean was more than offset by reductions in Liberty Puerto Rico. Moving to Slide 15 and our P and E additions and adjusted FCF results for the Q3. On the left of the slide, we incurred P and E additions of $171,000,000 in Q3 or 16% of revenue.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

This compares to $187,000,000 or 17 percent of revenue in the prior year period. During Q3, we built or upgraded nearly 135,000 homes and launched 5 gs services in Panama. On the right, we reported adjusted FCF before partner distributions of $77,000,000 Distributions to our partners totaled $12,000,000 in the quarter with $10,000,000 in Panama and $2,000,000 in Costa Rica. Adjusted FCF after these distributions was $66,000,000 in Q3. This result compares to adjusted FCF of $33,000,000 for Q3 2023.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Looking to the Q4, we should deliver our strongest cash flow performance of the year driven by improved adjusted OIBDA as well as seasonally positive working capital. Slide 16 recaps our segment results. Starting with C&W Caribbean, we reported $360,000,000 of revenue in Q3, flat year over year on a rebased basis. 7% growth in mobile was offset by declines of 3% and 2% in fixed and B2B respectively on a rebased basis. Mobile performance was driven by an organic increase of over 50,000 postpaid subscribers year over year as we increased penetration of our fixed mobile convergence propositions and higher prepaid ARPU following price increases.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Hurricane Barrel drove the reduction in fixed revenue and B2B. We posted adjusted OIBDA of $158,000,000 representing 5% rebased growth, a very good result given the storm adversely impacted adjusted OIBDA in the quarter. Management's focus on reducing operating costs is contributing to its adjusted OIBDA expansion. Our adjusted OIBDA margin improved by over 200 basis points year over year to 44%. Next, moving to Cable and Wireless Panama.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

CWP generated $188,000,000 of revenue, declining 1% year over year. Top line growth of 9% in mobile and 5% in fixed was more than offset by a decrease of 13% in B2B revenue. Growth in fixed was driven by broadband RGU additions and mobile fueled by increases in ARPU and handset sales. B2B revenue declined due to lower revenue from government related projects, some of which we anticipate will be executed in the Q4. We posted $69,000,000 of adjusted OIBDA in Q3, representing 17% year on year growth, driven by phasing of project related costs and synergies from the Claro Panama acquisition.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Turning to Liberty Networks. We generated $110,000,000 in revenue $59,000,000 in adjusted OIBDA, resulting in fee based declines of 2% 8%, respectively. Top line performance was driven by a reduction of $4,000,000 in non cash IRU revenue, primarily due to lower amortization year over year, partly offset by higher enterprise revenue from continued growth in managed services and B2B Connectivity. Rebased adjusted OIBDA was impacted by the non cash IRU related revenue decline in the quarter and higher bad debt expense driven by 1 large customer. 2nd from the right, Liberty Puerto Rico.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Q3 revenue was $308,000,000 reflecting a 13% rebased decline year over year. Residential fixed revenue was down 4% on a rebased basis. The decline was driven by lower ARPU following retention related discounts and the impact of credits issued to customers following Hurricane Ernesto, which impacted Puerto Rico in August 2024. Mobile revenue declined by 22% on a rebased basis. This was driven by our lower mobile subscriber base following disruption related to the migration of customers and lower equipment sales related to reduced volumes for the iPhone 16 launch in September 2024 compared to the iPhone 15 in the previous year.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

B2B revenue declined 5% on a rebased basis, primarily reflecting the cancellation of the FCC's Emergency Connectivity Fund, which led to reduction of 74,000 mobile postpaid subs over the past year in addition to migration related churn. We reported $88,000,000 of adjusted OIBDA during the quarter, representing a rebased decline of 24% as compared to Q3 2023. Negative performance year on year was mainly driven by lower revenue, partly offset by direct cost reductions related to lower handset sales. On a sequential basis, adjusted OIBDA improved by 24%, driven by lower indirect costs, including lower bad debt, reduced TSA costs and the benefits of our H1 reorganization. Concluding with Costa Rica on the far right, we delivered Q3 revenue of $146,000,000 and adjusted OIBDA of $51,000,000 reflecting 5% rebased revenue growth and a 1% rebased decline in adjusted OIBDA.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

We delivered positive performance across all three business lines in the quarter. Adjusted OIBDA decreased slightly as a result of higher bad debt expense in light of increasing equipment sales and higher tower and labor expenses on a year over year basis. Slide 17 lays out our last three quarters in Puerto Rico in terms of both revenue and adjusted OIBDA. For revenue, Q3 reported revenue was stable relative to Q2 and I wanted to call out a few items. Residential fixed revenue was $123,000,000 in Q3 or about 40% of the $308,000,000 total.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Relative to Q2, fixed declined $3,000,000 due in part to a $1,000,000 credit we gave customers for Hurricane Ernesto and the impact of lower ARPUs. Similar to fixed revenue, residential mobile revenue was $125,000,000 in Q3 or 40% of the total. The $3,000,000 increase in Q3 was driven by the inclusion of the acquired Boost subscribers in September. Excluding that, mobile revenue was broadly flat with higher roaming revenue offsetting slightly lower postpaid and equipment revenue. The remaining $60,000,000 or 20 percent of revenue consists of B2B and other and was flat to Q2 levels.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Our FCC revenue declined sequentially by $1,000,000 Turning to adjusted OIBDA, the sequential improvement was $17,000,000 from Q2, Q2, consistent with our quarterly decline in operating expenses. Impacting the $88,000,000 we still have elevated bad debt as we work through the last components of the migration and billing and collection processes, especially with B2B customers. Compared to Q2, bad debt was $6,000,000 improved, but still about $5,000,000 higher than what would we consider a more normalized baseline. Additionally, we had $3,000,000 of TSA and integration related expenses in the quarter, which dropped significantly from the prior quarter. Turning to Slide 18.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

At the end of Q3 on a consolidated basis, we had $8,200,000,000 of total debt, dollars 600,000,000 of cash and $700,000,000 of availability under our revolving credit lines. We had gross leverage of 5.2 times and net leverage of 4.8 times, a modest improvement from Q2 driven by Q3 adjusted OIBDA. Following the quarter end in October, we refinanced more than 50% of our outstanding Cable and Wireless 2027 bonds with a new senior secured notes issuance, which was well received by the market as Balan highlighted earlier. We raised $1,000,000,000 at a 7.125 percent coupon maturing in October 2,032. The net proceeds were used to redeem in full $495,000,000 of our 20 27 senior secured notes and in part $485,000,000 of our $1,200,000,000 2027 senior notes.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

As a result, we extended our weighted average life at LA to over 4 years and only a roughly 10 basis point increase to our weighted average cost of debt as of September 2024. We actively monitor credit market conditions and would expect to refinance the remaining 2027 Cable and Wallace bonds within the next 12 months, further improving our capital structure. Moving to the final slide and our closing remarks. Operation momentum is building in many of our operations. Year over year subscriber growth coupled with seasonal strength in both B2B and mobile should underpin our Q4 financial performance.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

In Puerto Rico, clearly the pace of recovery has been much slower and tougher than we had previously anticipated. Our consumer value propositions that became available this fall are attractively positioned. We are focused on regaining commercial momentum in the coming quarters and we expect to see improved adjusted OIBDA performance in Q4. Finally, in terms of capital deployment, we had a very active quarter with 2 items accounting for about $240,000,000 of cash use. We repaid our remaining outstanding convertible bond of $140,000,000 and funded the roughly $100,000,000 initial installment of the EchoStar transaction in Puerto Rico and the USVI.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

And as Balan mentioned, we are excited about our Peruvian opportunity and have been investing to support the build out of this fiber rich business. Overall for LLA, we are driving to have our strongest quarter of the year in the Q4 and look forward to sharing with everyone our results next February. With that operator, please open it up for questions.

[Operator]

Thank you. The question and answer session will be conducted electronically. In order to accommodate everyone, we request that you only ask The first question goes to Vitor Tamita of Goldman Sachs. Vitor, please go ahead.

[Vitor Tomita, Analyst at Goldman Sachs]

Hello, can you hear me?

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Yes, we can.

[Vitor Tomita, Analyst at Goldman Sachs]

Okay, perfect. So my question is related to capital allocation. I would ask if you would be open to injecting capital from the group to support the Puerto Rico operation in the event that it needs such support in the future given the slower than expected recovery in there? Also already asking a follow-up related to capital allocation, though not really related to Puerto Rico. The Peruvian business has reached a relevant market share in a fairly short time, became a fairly relevant operator in there.

[Vitor Tomita, Analyst at Goldman Sachs]

Could you give more color on your strategy for that business and on how much capital has been allocated to Peru over the last 3 years to build that investment? Thank you.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Sure. On the Puerto Rico, and I'll ask Chris to jump in here in a bit as well. Our intent in Puerto Rico is to operate our way there on the cash side. We are implementing cost cuts. We are working really hard on the revenue line and very targeted commercial acquisitions.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

We don't anticipate at this point of having to support Puerto Rico from any other stack. Before I jump into my Peru answer, maybe Chris, do you want to add to that?

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

No. I mean, I think that's accurate. We keep a close watch on the liquidity and we've been able to manage I think quite well just with the additional spend that we had in the first half of the year. The one thing we did do in Puerto Rico in Q3 is we did a handset securitization and we've done several of those now that we're off the AT and T stack, we can continue to manage working capital in a more effective way in that business.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Thanks, Chris. And on Peru, yes, so we've been at it now for about 3 years. And the total equity that we bought, the total cash that we put into the business is about $100,000,000 And clearly, our partners have also contributed some. And the bill has been fast. We put in a very, very entrepreneurial team there.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

We are working with some really interesting technologies there that drive our costs a lot lower on a per bill per home pass basis. And we purposefully targeted outside of Lima. And the reason for that being the very low penetration of broadband, less competition for sure, less investments in those areas. And clearly, we've been I think that strategy is paying off quite well. And we're very excited about that investment and the future prospects in Peru.

[Vitor Tomita, Analyst at Goldman Sachs]

Very clear. Thank you both very much.

[Operator]

Thank you. And the next question goes to Roberta Berciani of Citigroup. Roberta, please go ahead.

[Roberta Versiani, Equity Research Senior Associate at Citi]

Thank you. I just wanted to understand how Liberty is looking at opportunities and offering converged bundles in the current market? And if you could share metrics on how convergence could impact operational and financial performance going forward? And second one would be, if I may, on if you can share any updates on how far along you are in the main markets at upgrading 5 gs upgrading to 5 gs and to 4 gs and how these upgrades could expand addressable markets or impact subs and revenue? Thank you.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Sure. And I'll ask maybe Inge to help me on the converged part as well to give some more color because we've been a lot more advanced in the Liberty Caribbean area. Even though I must say on a convergence, I'll say 2 things. 1, the reason we made the AT and T acquisition, the Telefonica acquisition in Costa Rica and other acquisitions that we've made, even in Curacao and strengthening it in Panama with the Claro acquisition is to have a converged bundle. And the idea is that we would have a very high speed 4 gs, 5 gs mobile network with a very high speed fiber to the home adapters 3.1 network.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

That is our play, and it is working really well. And in the case of Puerto Rico, as I indicated earlier, we've launched this thing called Liberty Loop that Eduardo, our General Manager, has championed together with his team where we are bundling both our high speed broadband and our mobile very high speed 5 gs mobile network there. And of course, the same thing applies in Costa Rica, in Panama and Liberty, Caribbean. I'm going to answer your question on 5 gs, then I'm going to ask Inge to give you a little bit more color on the success we've been having and how we sell it. You'll find it very interesting because we've approached it in Liberty, Caribbean through our digital channels.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

So on upgrading 5 gs, we are upgrading for we've certainly got 5 gs in Puerto Rico. We've launched it in Costa Rica, Panama and now in Cayman as well. We are very judicious about where we make our 5 gs investments. It is a function of when the market is ready, meaning do we have enough handsets in the market that can support 5 gs and also where we stand in that market. Clearly, in Costa Rica and Panama, we are the leaders in mobile, both in volume, in value as well as in technology, and we continue to invest there.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

In terms of the markets where we think that 4 gs is sufficient, we're going to be very, very careful with our capital spend and make sure that we don't spend too far ahead of where the consumers are ready. Having said that, Inge, can you jump in and talk a little bit about your success in FMC?

[Inge Smidts, SVP - Caribbean Markets at Liberty Latin America Ltd]

Yes, Balon. Good morning, everybody. Good morning, Roberta. Yes, so we've been in the last 3, 4 years within the Caribbean, the whole region, we've been really pursuing converged offers, which we adapt in every single market because every single market, of course, is different. We are today more or less averagely reaching a percentage of 25%, so we can still go and we will do that and we really looked at the consumer segments and then we adapt our offering like for example, Jamaica, we really have a converged offer between data and postpaid and it's really, really it's called Yada Road and it's been executed over the last 3 years and it's really working for us.

[Inge Smidts, SVP - Caribbean Markets at Liberty Latin America Ltd]

Similar, for example, in Cayman, we launched a converged offer including 5 gs. It's called FlowMania. And so country per country, we go converged offerings and we adapt it. Sometimes we do fixed mobile conversion, sometimes times we do mobile fixed conversion and we really start from the consumer and from the consumer out we go and adapt our go to market and it's been really working for us.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Thank you, Inge.

[Roberta Versiani, Equity Research Senior Associate at Citi]

Thank you so much.

[Operator]

Thank you. We have a question from Matthew Robilliard of Barclays. Matthew, please go ahead.

[Mathieu Robilliard, Analyst at Barclays Capital]

Yes, good morning and thank you for the presentation. I had a follow-up question on Puerto Rico. So when I look at the slide deck from the Q2 and the slide deck from Q3 and trying to understand how things have developed, I think at the Q2 time, you had identified sort of migration related costs of around $28,000,000 in the Q2, and it led you to an EBITDA of 71. In Q3, the revenues have not really moved, but the EBITDA has grown by about 17,000,000 euros So it suggests that if the revenues don't really move, you only have $11,000,000 of costs to take away in order to improve the EBITDA. But then in order to reach the 45 target, which I understand is not anymore actual, you really need a big acceleration in the top line.

[Mathieu Robilliard, Analyst at Barclays Capital]

And so I guess my question really is how confident can we be that you accelerate that top line also because it seems that the market has become a bit more competitive. I realize NPS and customer sentiment has improved, but at least in my experience, it takes years before these things can translate into financials. Thank you.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Good morning, Matthew. And let me see if I answered it this way. Your math is correct. And the way we are going to approach our recovery in EBITDA comes from a number of different areas. I indicated that we are in addition to some of the synergies we've done from the transaction, given the reduction in revenue, we are also tackling another round of cost cutting in the island.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

And the way we approach the cost cutting is certainly on areas that are non growth related. And so anything and any cost that doesn't touch our growth, we are scrutinizing together with my finance team and my operating team, the combination is going through every line item. And we've identified some costs that we're going to build cost cutting that we're going to build into our 2025 budget. Secondly, as you pointed out, clearly, just taking costs out will not get us there. We do have to invest into growth.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

We anticipate, as you saw in the numbers we shared, we are now selling already at the pre-twenty 22 level and which means that our sales is coming in. Now two things we have to manage too: 1, the cost of that sale. And in the mobile world, clearly, in the postpaid mobile world, the 1st year of sales and acquisition has very low EBITDA contribution. So the way we've been approaching this is we want to grow maximally on sales in 2025, but it will show up only in 26. To a certain degree, that's why the 45,000,000 Secondly, on the sales front, we are also focusing a lot more on B2B, non mobile B2B, and we are looking at a number of different opportunities there.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Our B2B business is about $200,000,000 that will grow a lot more. And so there are a number of projects that we're working on with a number of partners as well to look at growth in our B2B space. And in our fixed business, which has been steady as she goes, that's a really good business where we have very good share and a very, very good product. And the combination of that fixed and mobile, which we've never been able to do throughout the last 3 years when we had the systems with AT and T, we were never able to converge these products. We are now looking at every of our mobile subs to see if they have broadband and every of our broadband subs to see if they have mobile.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

And that is what we call Liberty Loop, which we are now putting in place a number of really exciting commercial initiatives for our customers, but also for our sales team to incent them to sell this product. So there's a lot of different moving parts here on how we want to get back on the EBITDA that I think my management team and I feel is appropriate for this business.

[Mathieu Robilliard, Analyst at Barclays Capital]

That's very helpful. Thank you. If I can follow-up, obviously, you will have the EchoStar subscriber base at some point in 2025. I mean, if I put that in the context of the difficult integration with AT and T, I mean, are there things that you learned? Or do you feel that in any case, it's a much easier transition than what happened with AT and T?

[Mathieu Robilliard, Analyst at Barclays Capital]

I realize you had to operate on their system. But could you I mean, could you give a bit of color as to how you're looking to that upcoming integration?

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Okay. I'll give you 3 specific points why this is going to be a lot more smoother. 1, we already have a network now. We didn't have a mobile network when we bought AT and T, and we had to stand it up and get it operational and scale while we were migrating. That's done.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

So we have the network we can migrate to. 2nd, we have an IT stack now that we didn't have when we bought the AT and T business. We had an IT stack, but it was a fixed network IT stack. Both the mobile network and the IT stack, if you recall, I mean, we actually have that in our business. When we did this migration or this acquisition as part of the conditions on the acquisition, we were not able to use our existing IT stack and mobile network that did not sit in Puerto Rico because this is an American business.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

At that point, we had to change our strategy and build everything from scratch because the AT and T business was within the United States. Or else it would have moved a lot more smoother if we didn't have to build a whole new IT stack and mobile network. And then the third reason is this is all prepaid. So there's more complexity in lots of billing that we experienced with the postpaid migration from AT and T. So those three things makes it a lot easier.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

But to be sure as well, we do have some things that we are working on because there are a number of handsets that worked on the DISH network. It's actually the T Mobile network that may not work in our Ericsson network. So in that sense, our technical teams are going to work very closely. And the handset compatibility is probably the only thing I am really concerned about in that migration.

[Mathieu Robilliard, Analyst at Barclays Capital]

Thanks. Very useful. Thank you.

[Operator]

Thank you. The next question goes to Matthew Harrigan of The Benchmark Company. Matthew, please go ahead.

[Matthew Harrigan, Senior Analyst at The Benchmark Company LLC]

Thank you. There's an assumption in the currency markets that Trump's election implies a strong dollar or at least that's certainly what Trump very vocally prefers. Can you talk about I mean, you had I think at one point you were well above 70% on the U. S. Dollar composition or de facto pegged to the dollar.

[Matthew Harrigan, Senior Analyst at The Benchmark Company LLC]

Can you talk about update us on that? And also any implications in your capital structures to that? And then any operating implications, obviously, Jamaica, I don't think Jamaica is pegged. So presumably, you have a good tourism bump there and then you have the countervailing effect on the translation. But how are you thinking about your business if we did have a significantly stronger dollar?

[Matthew Harrigan, Senior Analyst at The Benchmark Company LLC]

Thank you.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Hey, Matthew. We haven't put like lots of analysis behind this. I'll say a few things. Most as you pointed out, we're already in the 70s, high 70s on U. S.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Dollars. So exposure is a lot less. We don't have Chilean pesos and stuff like that, right? That's very volatile. But having said that, Chris Noyes and our treasury team has hedged we not only hedged the cost, but we also hedged the currency on it.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

And most of where we operate, that's sufficient liquidity to do that. There are a couple of exceptions, but it's not needle moving to us. And so on the currency side, the only thing I would say with the new elections is that the President-elect had publicly indicated that he is going to try to look at a weaker U. S. Dollar going forward.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

How he does it? Who knows? But that, of course, is could be helpful. What could not be helpful is high tariffs because we do import a lot of equipment and equipment from Asia, especially for CPE, there's equipment on handsets, there's equipment on network equipment. That I think is wait and see and we'll learn more.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

We're not adjusting any of our internal budgets to reflect any of this. But it's one that we are going to be watching closely. Chris, do you want to add anything?

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

Yes. I would say, Matt, when you look at our portfolio of operating assets, it's really Jamaica and Costa Rica are the 2 that float for us. Most of our other businesses are U. S. Dollar or U.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

S. Dollar peg linked, etcetera. So we have just a little bit of exposure there. The Costa Rica, Costa Rica has been particularly stable and has actually been strengthened over the last 2 years. And similarly, Jamaica has been been quite a nice currency over the last 5 years, hasn't depreciated much.

[Christopher Noyes, Senior VP & CFO at Liberty Latin America Ltd]

So I think we feel really good from the mix of assets that we have. And we do hedge from a forward perspective when we do have mismatches. And then where we can, we'll hedge components of the debt payment.

[Matthew Harrigan, Senior Analyst at The Benchmark Company LLC]

Thanks, Chris.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Yes. Thanks, Matt.

[Operator]

Thank you. That will now conclude today's question and answer session. I'd like to hand back to Balan Nath for any additional or closing remarks.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Thank you, operator. And maybe I'll say a couple of things before we close. One, clearly, we were all surprised here in the management team on the performance in Puerto Rico between the last quarter and this quarter. There were a number of reasons for that surprise, some with post migration customers that came over was not what we thought it was. And we learned a lot during that period.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

Rest assured, this management team is focused on recovering those losses. The future, I think, in Puerto Rico is really bright. Some have asked me if I had to do that transaction all over again, would I have done it? I would. Clearly, in the migration, we would we are a lot smarter.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

But when you buy something from a very large corporation where their billing systems are legacy and the way they run-in and it's very different than how we would run a business, there are lots of complexities that we did not anticipate. But I can tell you this, we've learned a lot and we are going to fix a lot of the problems. We are already seeing the green shoots. We're going to solve this with top line growth and cost cutting. And then we'll get afterwards.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

The remaining part of our business, you can see all the hard work that we did is paying off. A lot of complex transactions there as well, buying something from Claro and integrating in Panama, buying something from Telefonica and integrating it in Costa Rica, the cost cutting that my management team has done in Liberty, Caribbean, the opportunities of investments in both Peru. And I can tell you, I'm really excited about our subsea network and our general manager that runs it. This new network that we're building that will create huge opportunities in 20 27. So we are planting the seeds for future growth.

[Balan Nair, President, Director & CEO at Liberty Latin America Ltd]

We've already improved a lot of our operations and growing them. We have one operation right now that's challenged, and we're going to fix through it and get through it, and we're going to grow that as well. From that sense, I can tell you we are really excited and bullish about the future. And I thank you for your support.

[Operator]

Thank you, ladies and gentlemen. This concludes Liberty Latin America's 3rd quarter 2024 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. Thank you.

[Operator]

You may now disconnect your lines.

Participants

Executives

• William Brierly, Vice President, Head of Compliance & Ethics
• Balan Nair, President, Director & CEO
• Christopher Noyes, Senior VP & CFO
• Inge Smidts, SVP - Caribbean Markets

Analysts

• Vitor Tomita, Analyst at Goldman Sachs
• Roberta Versiani, Equity Research Senior Associate at Citi
• Mathieu Robilliard, Analyst at Barclays Capital
• Matthew Harrigan, Senior Analyst at The Benchmark Company LLC