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Liberty Latin America Reports Q3 2021 Results

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·11 min read
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Continued subscriber momentum; 158,000 fixed and mobile additions in Q3

Revenue up 32% YTD driven by Puerto Rico acquisition, rebased revenue up 4%

Strong YoY growth in cash flows from operating activities and Adjusted FCF

~600,000 homes passed or upgraded YTD; 99% fiber-to-the-home

Announced Panama and Chile transactions; anticipate significant synergies

DENVER, Colorado, November 02, 2021--(BUSINESS WIRE)--Liberty Latin America Ltd. ("Liberty Latin America" or "LLA") (NASDAQ: LILA and LILAK, OTC Link: LILAB) today announced its financial and operating results for the three months ("Q3") and nine months ("YTD") ended September 30, 2021.

CEO Balan Nair commented, "Since reporting our first half results in August, we have made significant progress with our strategic objectives and enhanced our medium-term prospects through operational improvements and accretive M&A transactions."

"From an organic perspective, we have continued to generate healthy fixed subscriber growth with 84,000 RGU additions in the third quarter, including positive contributions from each of our reporting segments. Panama had a particularly strong performance, adding more subscribers in the third quarter than the first half of the year as we gained traction with our broadband-led bundled propositions. In mobile, we grew our base by 74,000 subscribers, with postpaid representing approximately half of the additions."

"The penetration of fixed and mobile data services remains relatively low across our markets and we are committed to investing in our networks and product offerings to deliver greater access to high-speed connectivity solutions for our customers. In the year-to-date period, we added or upgraded approximately 600,000 homes."

"Our cash flow from operations and Adjusted Free Cash Flow, in the first nine months of the year, were $718 million and $149 million, respectively, representing strong growth year-over-year, and we are on-track to exceed our 2021 Adjusted Free Cash Flow guidance of approximately $200 million. We also doubled our share repurchase activity in Q3 as compared to Q2."

"Our inorganic strategy is an important driver of value creation and we were pleased to complete the acquisition of Telefónica's Costa Rica operations as well as announcing the acquisition of América Móvil's Panama business and a 50/50 joint venture with América Móvil in Chile, both of which are expected to close next year. These transactions will enable us to improve our networks and customer propositions, including completing our product portfolios to create converged businesses in Costa Rica and Chile, while also generating significant synergies."

"As we approach the end of the year, we are focused on delivering our guidance targets and establishing a platform for sustained organic growth across our operations. We are also working diligently to integrate the operations we have acquired in Puerto Rico and Costa Rica as well as to close the transactions announced in Panama and Chile. We remain confident that together, these actions will create additional value and position us to deliver higher Adjusted Free Cash Flow in the coming years."

Business Highlights

  • C&W Caribbean & Networks: solid operating and financial performance

    • Q3 fixed and mobile additions of 49,000 driven by continued growth in Jamaica

    • YTD reported and rebased Adj. OIBDA growth of 4% and 5%, respectively

  • C&W Panama: improving fixed momentum; financial recovery from 2020 COVID-19 impacts

    • RGU additions of 30,000 in Q3, higher than H1 performance

    • Strong YTD reported and rebased Adj. OIBDA growth of 9% and 10%, respectively

  • Liberty Puerto Rico: fixed and mobile postpaid subscriber additions; new brand launched

    • Fixed subscriber growth driven by broadband; strong mobile postpaid additions

    • Unified brand for Liberty Puerto Rico fixed and mobile operations launched in September

  • VTR: Adjusted OIBDA in CLP stable sequentially; market remains highly competitive

    • 50/50 JV agreed with América Móvil to create a full-service, scale operator in Chile

    • Added ~125,000 new build / upgraded homes in the quarter

  • Costa Rica: quad-play operator following acquisition of Telefónica Costa Rica's operations

    • Record Q3 performance with 12,000 RGU additions led by broadband

    • Strong start for mobile operations, adding 37,000 subscribers in Q3

Reconfirming LLA 2021 Financial Guidance

  • P&E additions as a percentage of revenue at ~18%

  • Adding or upgrading over 700,000 homes

  • Adjusted FCF guidance of ~$200 million

Additional information, including historic quarterly revenue, adjusted OIBDA, and P&E additions under our updated reporting segments, can be found on our website at https://www.lla.com/investors.

Financial and Operating Highlights

Financial Highlights

Q3 2021

Q3 2020

YoY Growth

YoY Rebase
Growth1

YTD 2021

YTD 2020

YoY
Growth

YoY
Rebase Growth1

(USD in millions)

Revenue

$

1,192

$

888

34

%

3

%

$

3,520

$

2,667

32

%

4

%

Adjusted OIBDA2

$

446

$

360

24

%

%

$

1,359

$

1,057

29

%

4

%

Operating income (loss)

$

137

$

87

59

%

$

476

$

(12

)

N.M.

Property & equipment additions

$

232

$

157

48

%

$

599

$

443

35

%

As a percentage of revenue

19.5

%

17.7

%

17.0

%

16.6

%

Adjusted FCF3

$

56

$

(22

)

$

149

$

59

Cash provided by operating activities

$

274

$

137

$

718

$

491

Cash used by investing activities

$

(734

)

$

(156

)

$

(1,075

)

$

(419

)

Cash provided (used) by financing activities

$

227

$

(123

)

$

531

$

465

Operating Highlights4

Q3 2021

Q3 2020

YoY Growth

YoY FX-
Neutral
Growth5

Total Customers

3,246,700

3,201,700

1

%

Organic customer adds

10,900

3,200

Fixed RGUs

6,418,800

6,144,200

4

%

Organic RGU additions

83,800

34,500

Mobile subscribers*

7,293,900

3,378,500

116

%

Organic mobile additions

74,400

68,800

Fixed ARPU

$

48.19

$

47.40

2

%

2

%

Mobile ARPU*

$

13.26

$

12.41

7

%

8

%

*

Q3 2021 figures include: (i) mobile subscribers and ARPU related to operations in Puerto Rico and USVI, which were acquired on October 31, 2020 and therefore not included in Q3 2020 subscriber data and (ii) mobile subscribers and ARPU related to operations in Costa Rica, which were acquired on August 9, 2021 and therefore not included in Q3 2020 subscriber data. Subscriber information related to our August 9, 2021 acquisition in Costa Rica is preliminary and subject to adjustment until we have completed our review of such information and determined that it is presented in accordance with our policies.

Revenue Highlights

The following table presents (i) revenue of each of our segments and corporate operations for the periods indicated, and (ii) the percentage change from period-to-period on both a reported and rebased basis:

Three months ended

Increase/(decrease)

Nine months ended

Increase/(decrease)

September 30,

September 30,

2021

2020

%

Rebased %

2021

2020

%

Rebased %

in millions, except % amounts

C&W Caribbean & Networks

$

434.5

$

421.7

3

4

$

1,298.5

$

1,278.6

2

3

C&W Panama

128.9

118.9

8

9

379.0

369.4

3

3

Liberty Puerto Rico

359.0

114.4

214

2

1,080.7

328.1

229

9

VTR

193.1

201.8

(4

)

(5

)

612.7

601.3

2

(6

)

Costa Rica

76.9

35.1

119

11

149.4

103.4

44

13

Corporate

5.4

N.M.

N.M.

16.2

N.M.

N.M.

Eliminations

(5.8

)

(4.4

)

N.M.

N.M.

(16.6

)

(13.4

)

N.M.

N.M.

Total

$

1,192.0

$

887.5

34

3

$

3,519.9

$

2,667.4

32

4

N.M. – Not Meaningful.

  • Our reported revenue for the three and nine months ended September 30, 2021 increased by 34% and 32%, respectively.

  • Reported revenue growth in Q3 2021 and YTD 2021 was driven by (1) the addition of $232 million and $708 million, respectively, from Liberty Mobile, which was acquired on October 31, 2020, (2) $41 million for each comparative period from the acquisition of Telefónica's Costa Rica operations on August 9, 2021, (3) organic growth across Liberty Puerto Rico, C&W Caribbean & Networks and C&W Panama, (4) organic declines at VTR and (5) net foreign exchange ("FX") impacts of ($5 million) and $24 million, respectively.

Q3 2021 Revenue Growth – Segment Highlights

  • C&W Caribbean & Networks: revenue grew on a reported and rebased basis by 3% and 4%, respectively. The lower reported growth was primarily driven by adverse currency movements.

  • B2B revenue was 2% and 3% higher on a reported and rebased basis, respectively, as compared to the prior-year period. Performance was driven by growth in revenue from fixed and mobile B2B services and increased demand for capacity over our subsea network as economic activity continues to steadily recover.

  • Fixed residential revenue grew by 2% and 3% on a reported and rebased basis, respectively, as compared to the prior-year period. Our investments to expand and upgrade our networks are helping to drive volume growth which was the driver of performance. Within the segment, Jamaica was once again the largest contributor, adding 24,000 RGUs in the quarter and 100,000 RGUs over the past twelve months.

  • Mobile was the best performing product in the quarter, as revenue rose by 8% on a reported basis and 9% on a rebased basis, as compared to the prior-year period. Growth was driven by higher average numbers of mobile subscribers, mostly due to sales initiatives, including converged offerings.

  • C&W Panama: revenue increased by 8% on a reported basis and 9% on a rebased basis.

  • B2B revenue was 15% higher on a reported and rebased basis, primarily due to increased revenue related to long-term projects, including Government-related projects, and growth in mobile services revenue.

  • Fixed residential revenue was 9% and 10% higher on a reported and rebased basis, respectively. This was driven by volume growth as we added 70,000 subscribers in the past twelve months, and gained traction with our high-speed data propositions.

  • Mobile revenue grew by 2% on a reported and rebased basis. Subscription revenue was relatively flat year-over-year as growth in subscribers was offset by lower prepaid ARPU as we stopped providing certain value-added services. Non-subscription revenue grew through handset sales and increased inbound roaming as travel restrictions related to COVID-19 were relaxed.

  • Liberty Puerto Rico: revenue grew by 214% and 2% on a reported and rebased basis, respectively. Reported growth benefited from the inclusion of Liberty Mobile in the quarter. Rebased revenue performance was driven by double-digit growth in our legacy fixed operations partly offset by a decline at Liberty Mobile as subscription revenue growth was offset by lower equipment, B2B and roaming revenue year-over-year.

  • VTR: revenue was 4% and 5% lower on a reported and rebased basis, respectively. While our fixed subscriber base was stable over the last quarter, competitive pressures have led to declines in subscribers and ARPU levels over the last twelve months, negatively impacting year-over-year performance.

  • Costa Rica: revenue grew by 119% and 11% on a reported and rebased basis, respectively. Reported growth benefited from the inclusion of Telefónica's Costa Rica operations for part of the quarter. The double-digit rebased increase was driven by volume growth in both our mobile and fixed businesses.

Operating Income (Loss)

  • Operating income (loss) was $137 million and $87 million for the three months ended September 30, 2021 and 2020, respectively, and $476 million and ($12 million) for the nine months ended September 30, 2021 and 2020, respectively.

  • We reported higher operating income during three and nine months ended September 30, 2021, as compared with the corresponding periods during 2020, primarily due to increases in Adjusted OIBDA, as further discussed below, and for the nine-month comparison, lower impairment, restructuring and other operating items, net. During the third quarter of 2020, we incurred goodwill impairment charges totaling $279 million at C&W Panama and various reporting units within the C&W Caribbean and Networks segment. These improvements were partially offset by higher depreciation and amortization.

Adjusted OIBDA Highlights

The following table presents (i) Adjusted OIBDA of each of our reportable segments and our corporate category for the periods indicated, and (ii) the percentage change from period-to-period on both a reported and rebased basis:

Three months ended

Increase (decrease)

Nine months ended

Increase (decrease)

September 30,

September 30,

2021

2020

%

Rebased %

2021

2020

%

Rebased %

in millions, except % amounts

C&W Caribbean & Networks

$

181.6

$

177.3

2

3

$

551.0

$

531.0

4

5

C&W Panama

47.9

43.1

11

11

137.5

125.8

9

10

Liberty Puerto Rico

142.2

58.1

145

3

453.5

161.0

182

16

VTR

65.1

79.1

(18

)

(18

)

204.3

232.3

(12

)

(19

)

Costa Rica

24.0

13.8

74

13

50.8

40.3

26

11

Corporate

(14.7

)

(11.2

)

(31

)

(31

)

(37.7

)

(33.7

)

(12

)

(12

)

Total

$

446.1

$

360.2

24

$