Liberty Latin America Reports Q3 2021 Results

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–(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,						Increase/(decrease)				September 30,						Increase/(decrease)
	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,								Increase (decrease)				September 30,								Increase (decrease)
	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		—		$	1,359.4			$	1,056.7			29		4

Operating income margin	11.5		%		9.8		%						13.5			%	(0.4		)	%

Adjusted OIBDA margin	37.4		%		40.6		%						38.6			%	39.6		%

Our reported Adjusted OIBDA for the three and nine months ended September 30, 2021 increased by 24% and 29%, respectively.

Reported Adjusted OIBDA increases in Q3 2021 and YTD 2021 were largely driven by (1) the addition of $77 million and $261 million, respectively, contributed by Liberty Mobile, and (2) organic growth in Liberty Puerto Rico, C&W Caribbean & Networks, and C&W Panama. These increases were partially offset by declines in VTR.

Q3 2021 Adjusted OIBDA Growth – Segment Highlights

C&W Caribbean and Networks: Adjusted OIBDA increased on a reported and rebased basis by 2% and 3%, respectively. Rebased growth was driven by the aforementioned rebased revenue performance. Direct costs increased year-over-year due to higher volumes of traffic across our networks. Other operating costs and expenses were also higher, as compared to the prior-year period, due to network-related costs, including the impact of subsea cable repairs, and promotional activity which increased commercial costs.
C&W Panama: Adjusted OIBDA was 11% higher on a reported and rebased basis. Performance was driven by revenue growth and management of other operating costs and expenses, which remained flat year-over-year. Direct costs increased due to higher equipment sales and non-recurring project revenue. Our Adjusted OIBDA margin improved by 100 basis points (on a reported basis) year-over-year.
Liberty Puerto Rico: reported and rebased Adjusted OIBDA growth of 145% and 3%, respectively. Reported growth was driven by the inclusion of Liberty Mobile in the quarter. Rebased performance was driven by the previously mentioned revenue growth, partly offset by the net impact of higher: mobile roaming expenses, video programming rates, and labor costs; and lower equipment costs. We incurred integration costs of $2 million related to the Liberty Mobile acquisition in the quarter mainly related to our rebranding, and expect to incur approximately $10 million of additional integration costs in the fourth quarter.
VTR: Adjusted OIBDA declined by 18% on both a reported and rebased basis. The rebased decline was driven by the aforementioned revenue decline and higher costs. Direct costs increased year-over-year driven by higher programming expenses as live soccer matches returned following cancellations due to COVID-19 in the prior year. Other operating costs and expenses were relatively flat on a rebased basis as lower bad debt provisions year-over-year and cost savings from a restructuring program earlier in the year were offset by increased network and commercial activities.
- Relative to Q2, we had a modest increase in Adjusted OIBDA in local currency.
Costa Rica: reported Adjusted OIBDA growth of 74% and rebased growth of 13%. Reported growth benefited from the inclusion of Telefónica’s Costa Rica operations in the quarter. Our rebased performance was driven by the aforementioned revenue growth.

Net Earnings (Loss) Attributable to Shareholders

Net earnings (loss) attributable to shareholders was $78 million and ($85 million) for the three months ended September 30, 2021 and 2020, respectively, and $170 million and ($658 million) for the nine months ended September 30, 2021 and 2020, respectively.

Property & Equipment Additions and Capital Expenditures

The table below highlights the categories of the property and equipment additions (P&E Additions) for the indicated periods and reconciles to cash paid for capital expenditures.

	Three months ended						Nine months ended
	September 30,						September 30,
	2021			2020			2021			2020
	USD in millions

Customer Premises Equipment	$	84.1		$	61.4		$	235.2		$	185.4
New Build & Upgrade	53.1			15.7			111.7			72.9
Capacity	41.4			40.5			95.1			68.6
Baseline	32.8			25.8			104.4			72.0
Product & Enablers	20.5			13.5			52.6			44.2
Property & equipment additions	231.9			156.9			599.0			443.1
Assets acquired under capital-related vendor financing arrangements	(26.7		)	(27.2		)	(65.0		)	(80.5		)
Changes in current liabilities related to capital expenditures	5.3			17.2			10.7			55.7
Capital expenditures	$	210.5		$	146.9		$	544.7		$	418.3
Property & equipment additions as % of revenue		19.5	%		17.7	%		17.0	%		16.6	%

Property & Equipment Additions:
C&W Caribbean & Networks	$	68.1	$	60.8	$	190.9	$	181.8
C&W Panama	33.7		21.3		64.5		52.3
Liberty Puerto Rico	54.2		19.4		139.1		52.3
VTR	55.5		42.5		158.0		126.7
Costa Rica	11.0		6.8		25.6		17.7
Corporate	9.4		6.1		20.9		12.3
Property & equipment additions	$	231.9	$	156.9	$	599.0	$	443.1

Property & Equipment Additions as a Percentage of Revenue by Reportable Segment:
C&W Caribbean & Networks	15.7	%	14.4	%	14.7	%	14.2	%
C&W Panama	26.1	%	17.9	%	17.0	%	14.2	%
Liberty Puerto Rico	15.1	%	17.0	%	12.9	%	15.9	%
VTR	28.7	%	21.1	%	25.8	%	21.1	%
Costa Rica	14.3	%	19.4	%	17.1	%	17.1	%

New Build and Homes Upgraded by Reportable Segment:
C&W Caribbean & Networks	40,300	22,400	103,000	57,300
C&W Panama	44,600	25,000	104,800	86,700
Liberty Puerto Rico	4,400	4,800	13,100	18,100
VTR	125,400	11,300	336,700	45,200
Costa Rica	16,900	15,200	33,200	23,900
Total	231,600	78,700	590,800	231,200

Summary of Debt, Finance Lease Obligations and Cash and Cash Equivalents

The following table details the U.S. dollar equivalent balances of the outstanding principal amounts of our debt and finance lease obligations, and cash and cash equivalents at September 30, 2021:

	Debt		Finance lease obligations		Debt and finance lease obligations		Cash and cash equivalents
	in millions

Liberty Latin America¹	$	404.0	$	1.1	$	405.1	$	147.9
C&W²	4,203.9		0.4		4,204.3		548.1
Liberty Puerto Rico	2,610.0		10.8		2,620.8		163.3
VTR³	1,526.4		—		1,526.4		175.3
Costa Rica	411.7		—		411.7		36.4
Total	$	9,156.0	$	12.3	$	9,168.3	$	1,071.0

Consolidated Leverage and Liquidity Information:					September 30, 2021		June 30, 2021
Consolidated debt and finance lease obligations to operating income ratio					15.2x		13.0x
Consolidated net debt and finance lease obligations to operating income ratio					13.4x		11.1x
Consolidated gross leverage ratio^4,5					5.0x		5.0x
Consolidated net leverage ratio^4,5					4.4x		4.2x
Average debt tenor⁶					5.9 years		6.3 years
Fully-swapped borrowing costs					6.1%		6.0%
Unused borrowing capacity (in millions)⁷					$1,220.0		$1,210.6

Represents the amount held by Liberty Latin America on a standalone basis plus the aggregate amount held by subsidiaries of Liberty Latin America that are outside our borrowing groups.
Represents the C&W borrowing group, including the C&W Caribbean & Networks and C&W Panama reporting segments.
Represents the debt and finance lease obligations of the VTR borrowing group, which are classified as held for sale on our September 30, 2021 condensed consolidated balance sheet. The cash and cash equivalents amount also includes $154 million that is included in assets held for sale on our September 30, 2021 condensed consolidated balance sheet. In addition, the consolidated leverage and liquidity information includes the impact of the VTR borrowing group.
Consolidated leverage ratios are non-GAAP measures. For additional information, including definitions of our consolidated leverage ratios, required reconciliations, see Non-GAAP Reconciliations below.
The consolidated leverage ratios include the impact of Telefónica Costa Rica’s Adjusted OIBDA for the post-acquisition period, August 9, 2021 to September 30, 2021, and do not include Adjusted OIBDA for the period prior to the close of the acquisition, which would have an estimated impact of 0.2x and 0.1x on the consolidated gross and net leverage ratio, respectively.
For purposes of calculating our average tenor, total debt excludes vendor financing and finance lease obligations.
At September 30, 2021, the full amount of unused borrowing capacity (inclusive of $256 million related to VTR) under our subsidiaries’ revolving credit facilities was available to be borrowed, both before and after completion of the September 30, 2021 compliance reporting requirements. For information regarding limitations on our ability to access this liquidity, see the discussion under “Material Changes in Financial Condition” in our recently filed Quarterly Report on Form 10-Q.

Quarterly Subscriber Variance

	Fixed and Mobile Subscriber Variance Table — September 30, 2021 vs June 30, 2021
	Homes Passed	Two-way Homes Passed	Fixed-line Customer Relationships		Video RGUs		Internet RGUs		Telephony RGUs		Total RGUs		Prepaid		Postpaid		Total Mobile Subscribers
	Homes Passed	Two-way Homes Passed	Fixed-line Customer Relationships		Video RGUs		Internet RGUs		Telephony RGUs		Total RGUs		Prepaid		Postpaid		Total Mobile Subscribers
C&W Caribbean & Networks:
Jamaica	6,800	6,800	8,300		2,600		10,000		11,300		23,900		19,000		4,700		23,700
The Bahamas	—	—	2,900		800		2,100		—		2,900		(2,400	)	(200	)	(2,600	)
Trinidad and Tobago	200	200	300		(600	)	400		(600	)	(800	)	—		—		—
Barbados	—	—	200		500		700		(100	)	1,100		1,300		1,200		2,500
Other	—	—	(7,100	)	700		200		(3,500	)	(2,600	)	(2,900	)	3,300		400
Total C&W Caribbean & Networks	7,000	7,000	4,600		4,000		13,400		7,100		24,500		15,000		9,000		24,000
C&W Panama	30,400	30,400	9,400		9,700		10,500		9,700		29,900		17,000		6,500		23,500
Total C&W	37,400	37,400	14,000		13,700		23,900		16,800		54,400		32,000		15,500		47,500
Liberty Puerto Rico	4,400	4,400	8,000		1,700		9,100		2,400		13,200		(17,000	)	14,000		(3,000	)
VTR	85,400	125,400	(18,300	)	1,600		(16,700	)	19,500		4,400		(700	)	(6,000	)	(6,700	)
Costa Rica	10,200	10,200	7,200		1,600		7,900		2,300		11,800		21,800		14,800		36,600
Total Net Adds	137,400	177,400	10,900		18,600		24,200		41,000		83,800		36,100		38,300		74,400


Q3 2021 Adjustments:
Costa Rica¹	—	—	2,300		—		2,300		—		2,300		1,939,600		656,000		2,595,600
Net Adds	137,400	177,400	13,200		18,600		26,500		41,000		86,100		1,975,700		694,300		2,670,000

Costa Rica’s non-organic adjustment relates to the addition of mobile subscribers on August 9, 2021 following the close of the Telefónica Costa Rica acquisition.

Contacts

Investor Relations

Kunal Patel ir@lla.com

Corporate Communications

Claudia Restrepo llacommunications@lla.com

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