- Adjusted OIBDA: $763 million in the first half.
- Revenue Growth: 4% in the first half for Cable & Wireless Caribbean.
- Subscriber Additions: 62,000 high-speed broadband and postpaid mobile subscribers in the first half.
- Buyback Activity: Over $300 million of equity and convertible notes repurchased.
- Revenue: $1.1 billion in Q2, a 2% sequential increase.
- Adjusted OIBDA Margin: Improved by 75 basis points to 34.8% in Q2.
- Revenue Decline: 1% year-over-year on a rebase basis.
- Adjusted OIBDA Decline: 12% year-over-year.
- Capital Expenditures: $180 million in Q2, 16% of revenue.
- Adjusted Free Cash Flow: Negative $18 million in Q2.
- Revenue for Cable & Wireless Caribbean: $368 million in Q2, 4% rebase growth.
- Adjusted OIBDA for Cable & Wireless Caribbean: $157 million, 8% rebase growth.
- Revenue for Cable & Wireless Panama: $197 million, 9% rebase growth.
- Adjusted OIBDA for Cable & Wireless Panama: $65 million, 10% rebase growth.
- Revenue for Liberty Networks: $119 million, 1% rebase decline.
- Adjusted OIBDA for Liberty Networks: $63 million, 13% rebase decline.
- Revenue for Liberty Puerto Rico: $309 million, 12% rebase decline.
- Adjusted OIBDA for Liberty Puerto Rico: $71 million, 48% rebase decline.
- Revenue for Liberty Costa Rica: $147 million, 4% rebase growth.
- Adjusted OIBDA for Liberty Costa Rica: $53 million, 1% rebase growth.
- Total Debt: $8.1 billion.
- Cash: $600 million.
- Availability under Revolving Credit Lines: $800 million.
- Gross Leverage: 5.3 times.
- Net Leverage: 4.9 times.
- Equity Repurchases: $22 million in Q2, $83 million year-to-date.
- Parametric Weather Derivative Program: Expected $44 million net proceeds in Q3 due to Hurricane Beryl.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Liberty Latin America Ltd (LILA, Financial) added 62,000 high-speed broadband and postpaid mobile subscribers in the first half of 2024.
- Adjusted OIBDA for the first half of 2024 was $763 million, with double-digit rebased growth in Panama and Costa Rica.
- The company has been aggressive with buyback activity, repurchasing over $300 million of equity and convertible notes.
- Liberty Latin America Ltd (LILA) announced a combination with Millicom in Costa Rica, expected to drive synergies and improve market structure.
- The company reported 4% revenue growth in the first half of 2024 for Cable & Wireless Caribbean, driven by strong B2B performance.
Negative Points
- Liberty Latin America Ltd (LILA) faced challenges in Puerto Rico, including mobile subscriber migration issues and the sunset of the ECF program, leading to subscriber losses.
- Hurricane Beryl caused infrastructure damage in Jamaica, Grenada, and Saint Vincent, impacting revenue and adjusted OIBDA.
- Liberty Puerto Rico reported a year-over-year revenue decline of 11% in the first half of 2024, with significant declines in mobile and B2B segments.
- The company incurred $12 million in bad debt write-offs in Puerto Rico due to billing and collection issues post-migration.
- Adjusted OIBDA for Liberty Puerto Rico decreased by 48% year-over-year in Q2 2024, impacted by higher operational costs and subscriber losses.
Q & A Highlights
Q: Can you provide more color on the retention discounts applied to ACP subscribers in Puerto Rico and the potential risks of churn or bad debt issues in Q3?
A: Balan Nair, CEO, explained that Liberty Latin America has around 85,000 fixed ACP subscribers and about 3,000 mobile ACP subscribers. The effective discount provided was around $14-$15. The company has retained over 90% of its ACP customers. Eduardo Corona, SVP and GM of Liberty Puerto Rico, added that the ARPU reduction was about 4%, with some customers downgrading their plans. The company is confident in its retention strategy and expects minimal bad debt issues.
Q: What are the drivers for the expected EBITDA improvement in Puerto Rico in the second half of the year?
A: Balan Nair, CEO, highlighted several drivers, including the drop-off of TSA costs, one-off costs not recurring, and cost takeout initiatives. The company has completed a headcount reduction of about 300 in Puerto Rico. Additionally, new campaigns and customer acquisition efforts are expected to drive revenue and bottom-line growth in Q4.
Q: Does the expectation to reach a monthly run rate of $45 million in Puerto Rico translate to an annual EBITDA contribution of roughly $540 million for 2025?
A: Balan Nair, CEO, clarified that the $45 million target is for the end of 2024, and the company expects growth beyond that in 2025. The opening balance of subscribers and operational improvements will drive further growth, and the company aims for better numbers by the end of 2025.
Q: Will Liberty Latin America achieve positive rebase revenue growth for the entire portfolio in 2025?
A: Balan Nair, CEO, expressed confidence in achieving positive rebase revenue growth in 2025. He cited strong performance and investments in Cable & Wireless Caribbean, Panama, Costa Rica, and Liberty Networks. The company expects significant growth in Puerto Rico as well, following the completion of migrations and new commercial initiatives.
Q: What is the impact of the hurricane season on your operations, particularly in Jamaica and other affected regions?
A: Balan Nair, CEO, explained that Hurricane Beryl impacted operations in Grenada, Saint Vincent, and Jamaica, primarily due to power outages. The company is rebuilding and undergrounding its backbone network. The financial impact is expected to be minimal due to the parametric insurance coverage, which will cover the damage costs.
Q: Are there any opportunities or challenges from political or regulatory changes in the region, particularly in Venezuela?
A: Balan Nair, CEO, stated that while the company has no immediate plans to enter Venezuela, it monitors political changes closely. The company has a good business relationship with Venezuela through its subsea operations. Future opportunities may arise if political conditions improve.
Q: Can you provide more details on the data center business and its potential growth?
A: Balan Nair, CEO, and Ray Collins, SVP of Infrastructure & Corporate Strategy, discussed the company's data center operations in Curacao and other regions. They highlighted the focus on providing data center-to-data center connectivity and the potential for growth in Panama, Costa Rica, and Mexico. The company is building new routes to support hyperscale data center traffic.
Q: What are the expected impacts of the hurricane season on your financial performance?
A: Balan Nair, CEO, reiterated that the financial impact of Hurricane Beryl is expected to be minimal due to the parametric insurance coverage. The company is focused on rebuilding and providing credits to customers affected by power outages. The overall financial performance is expected to remain strong.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
