Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Liberty Latin America Ltd (NASDAQ:LILA) added nearly 100,000 subscribers in 2024, with broadband and postpaid performance particularly strong.
• The company reported adjusted OIBDA of $1.6 billion, driven by strong growth in the Caribbean and Costa Rica, and double-digit growth in Panama.
• 97% of LILA's fixed footprint is now gigabit ready, exceeding their previous target.
• LILA successfully refinanced $3.3 billion of debt, with over 75% maturing in 2032 and beyond, aligning with their long-term capital structure strategy.
• The company achieved 25% digital sales across the group, exceeding their goal for the year, with a target to approach 30% in 2025.

Negative Points

• Hurricane Beryl negatively impacted broadband subscriber additions in Jamaica, resulting in losses during Q3 and Q4.
• Liberty Puerto Rico faced a challenging year with a 13% revenue decline year over year, primarily due to subscriber reductions and billing issues.
• The company experienced increased bad debt charges in Puerto Rico, partly due to higher default rates on equipment installment receivables.
• Liberty Networks reported a 2% revenue decline due to lower wholesale network revenue and the impact of non-cash IRU declines.
• The integration of EcoStar in Puerto Rico faced challenges with handset interoperability, requiring budgeted migration of handsets.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with LILA.

Q: On Puerto Rico, you mentioned bad debt picked up in Q4. Does this imply churn could worsen in Q1 before improving? Also, is the monthly EBITDA target of $45 million still in place? A: The bad debt issue was a catch-up related to equipment installment plans, not subscriber movements. We are addressing this through collection agencies and better processes. Regarding the EBITDA target, we aim to return to a "4 handle" on EBITDA, though we didn't achieve this in Q4. The team is focused on reaching this target. - Unidentified_7

Q: Can you provide more color on the CapEx guidance reduction to 14% and its sustainability? Also, how relevant were the billing adjustments to B2B revenue reduction in Q4? A: The CapEx reduction to 14% is due to completed network upgrades and a focus on mobile growth, which is less capital-intensive. This level is sustainable. Regarding B2B, most credits are tapering off, and we don't expect significant adjustments in Q1. - Unidentified_7

Q: What are your thoughts on M&A for this year, given rumors about selling Puerto Rico to Verizon and buying Telefonica's businesses in Argentina and Peru? A: We are focused on fixing and growing our Puerto Rico business, not selling it. Regarding Telefonica, the Peru asset has tax liabilities and is in insolvency, and Argentina's economic conditions make it unattractive for us. - Unidentified_7

Q: Can you discuss the benefits of FTTH in terms of pricing, functionality, and cost improvements compared to HFC? A: Pricing is more related to market competition than network type. We have pricing power in duopoly markets. FTTH offers cost benefits, with CPE costs now lower than HFC. The cost to connect is higher for FTTH due to new network drops, but overall, we are well-positioned. - Unidentified_7

Q: How is the EcoStar integration in Puerto Rico going, particularly regarding handset interoperability issues? A: The EcoStar integration is progressing well, with prepaid migration being easier than postpaid. Handset interoperability remains an issue, but we have budgeted for handset migrations and have a plan in place. We expect to complete most of the integration by Q4 2025. - Unidentified_7

For the complete transcript of the earnings call, please refer to the full earnings call transcript.