Liberty Latin America Reports Q2 & H1 2021 Results

Operating momentum with ~190,000 fixed and mobile subscribers added in Q2

Strong growth across key financial metrics as markets recover from COVID-19

~360,000 homes passed / upgraded YTD, full-year target raised to over 700,000

Expect to close acquisition of Telefónica Costa Rica’s operations by mid-August

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 (“Q2”) and six months (“YTD” or “H1 2021”) ended June 30, 2021.

CEO Balan Nair commented, “Building on a strong start to the year, we continued to drive healthy subscriber additions in Q2 across both our fixed and mobile products. Fixed RGU additions of 73,000 in the quarter took our first half performance to 149,000, nearly twice the amount we added in H1 2020. In mobile, we reported a best ever quarter for the group with 118,000 subscriber additions, compared to losses in the prior year where we experienced the initial impacts of COVID-19. These results are particularly encouraging as our markets continue to be affected to varying degrees by the pandemic and are yet to fully recover.”

“There is a clear opportunity to increase penetration of fixed services across our markets, led by broadband, and during H1 we added or upgraded approximately 360,000 homes with fiber technologies, representing our highest ever six-month period of activity. I’m pleased to confirm our new target for the year of over 700,000 homes to be added or upgraded while maintaining our guidance for P&E additions as a percentage of revenue at approximately 18%. We remain committed to bringing high-speed connectivity to more customers in the region.”

“The group reported $1.2 billion in revenue, $160 million of operating income, and $464 million in Adjusted OIBDA in the second quarter. We delivered operating income growth of 178%, reported Adjusted OIBDA growth of 40%, and double-digit rebased Adjusted OIBDA growth of 10%, as our largest markets returned to pre-COVID levels, with the exception of VTR where we are stabilizing performance following a challenging period last year. In addition to a strong performance compared to the prior-year quarter, which was our weakest financially since the pandemic began, revenue and Adjusted OIBDA were also higher sequentially, evidencing continued progress.”

“Our first half cash flow from operations and Adjusted Free Cash Flow were $444 million and $93 million, respectively, representing solid growth over the prior-year period as we continue to focus on improving cash generation. During the quarter, we recommenced share repurchases under our previously announced program.”

“Our inorganic strategy is an important driver of stakeholder value and we are excited to have received the required authorizations to acquire Telefónica Costa Rica’s operations, with closing to follow shortly. The transaction will create an innovative converged provider in the country. Combined with our fixed business, Cabletica, we plan to deliver added value to customers through expanded product offerings, state-of-the-art infrastructure, and outstanding customer service levels.”

“As we enter the second half of 2021, we are focused on maintaining our positive momentum through the delivery of compelling consumer propositions across our expanding fixed footprint. Our organic opportunity is bolstered by last year’s acquisition of Liberty Mobile in Puerto Rico and the upcoming addition of Telefónica Costa Rica’s operations, with the respective in-market combinations expected to generate significant synergies and improved full-service product suites.”

Business Highlights

• C&W Caribbean & Networks: strong subscriber growth and financial results
  • Record Q2 RGU additions; 119,000 subscribers added over the last twelve months
  • Reported and rebased Adj. OIBDA growth of 13% and 14%, respectively

• C&W Panama: continued operating & financial recovery following severe impacts of COVID-19
  • Q2 RGU additions of 9,000 and mobile subscriber additions of 60,000
  • Double-digit reported and rebased revenue and Adj. OIBDA growth

• Liberty Puerto Rico: another strong quarter across both fixed and mobile operations
  • Broadband penetration growth drove 22,000 RGU additions in Q2
  • Strong reported and rebased Adj. OIBDA growth of 208% and 21%, respectively

• VTR: sequential stabilization; network expansion and improved service levels
  • Subscriber base stable following challenges in H2 2020
  • Added >130,000 new build / upgraded homes in the quarter, nearly double Q1 activity

• Cabletica: positioned to become a leading full-service operator in Costa Rica
  • Record Q2 RGU additions of 11,000, driven by broadband
  • Combination with Telefónica’s mobile business to create compelling converged provider

LLA 2021 Financial Guidance – Update

• Reconfirming P&E additions as a percentage of revenue at ~18%; including:
  • Increasing homes passed added or upgraded to over 700,000 from ~600,000
• Reconfirming our 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		Q2 2021					Q2 2020					YoY Growth			YoY Rebase Growth1			H1 2021					H1 2020					YoY Growth			YoY Rebase Growth1
(USD in millions)
Revenue		$	1,168				$	849				38	%		8	%		$	2,328				$	1,780				31	%		4	%
Adjusted OIBDA2		$	464				$	333				40	%		10	%		$	913				$	697				31	%		6	%
Operating income (loss)		$	160				$	(206	)			178	%					$	338				$	(98	)			445	%
Property & equipment additions		$	215				$	153				40	%					$	367				$	286				28	%
As a percentage of revenue		18.4			%		18.1			%								15.8			%		16.1			%
Adjusted FCF3		$	35				$	130										$	93				$	81
Cash provided by operating activities		$	240				$	239										$	444				$	354
Cash used by investing activities		$	(215	)			$	(116	)									$	(341	)			$	(263	)
Cash provided (used) by financing activities		$	(30	)			$	132										$	303				$	587

Operating Highlights4		Q2 2021				Q2 2020					YoY Growth			YoY FX-Neutral Growth5
Total Customers		3,233,500				3,198,500					1	%
Organic customer adds		18,800				20,600
Total RGUs		6,332,700				6,120,300					3	%
Organic RGU adds (losses)		73,200				18,700
Broadband		24,800				46,700
Video		12,100				(15,800		)
Telephony		36,300				(12,200		)
Mobile subscribers*		4,623,900				3,309,700					40	%
Organic mobile adds (losses)		117,700				(310,100		)
Fixed ARPU		$	49.66			$	46.35				7	%		3	%
Mobile ARPU*		$	19.14			$	11.38				68	%		68	%

* Q2 2021 figures include mobile subscribers and ARPU related to operations in Puerto Rico and USVI. These operations were acquired on October 31, 2020 and therefore not included in Q2 2020 subscriber data.

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)							Six months ended										Increase/(decrease)
	June 30,																	June 30,
	2021					2020					%			Rebased %				2021					2020					%			Rebased %
	in millions, except % amounts
C&W Caribbean & Networks	$	434.2				$	404.9				7			8				$	864.0				$	856.9				1			2
C&W Panama	128.1					112.2					14			15				250.1					250.5					—			—
Liberty Puerto Rico	360.4					109.1					230			11				721.7					213.7					238			13
VTR	209.3					193.1					8			(6	)			419.6					399.5					5			(7	)
Cabletica	36.3					34.6					5			13				72.5					68.3					6			14
Corporate	5.4					—					N.M.			N.M.				10.8					—					N.M.			N.M.
Eliminations	(5.7		)			(5.0		)			N.M.			N.M.				(10.8		)			(9.0		)			N.M.			N.M.
Total	$	1,168.0				$	848.9				38			8				$	2,327.9				$	1,779.9				31			4

N.M. – Not Meaningful.

• Our reported revenue for the three and six months ended June 30, 2021 increased by 38% and 31%, respectively.

• Reported revenue growth in Q2 2021 and H1 2021 was driven by (1) the addition of $236 million and $476 million, respectively, from Liberty Mobile, which was acquired on October 31, 2020, (2) double-digit growth in our legacy Liberty Puerto Rico operations, (3) organic growth across C&W Caribbean & Networks and, for the three month comparison, C&W Panama, and (4) net positive foreign exchange (“FX”) impacts of $19 million and $29 million, respectively. These increases were partially offset by organic declines in VTR.

Q2 2021 Revenue Growth – Segment Highlights

• C&W Caribbean & Networks: revenue grew on a reported and rebased basis by 7% and 8%, respectively, as markets continued to recover from the initial impacts of COVID-19. The lower reported growth was primarily driven by adverse currency movements.
  • B2B revenue grew 6% on both a reported and rebased basis, as compared to the prior-year period. Year-over-year growth was driven by continued recovery in mobile usage and demand for data services across business customers as economic activity and mobility improved. The prior year was also negatively impacted by temporary credits provided to customers. Our subsea network contributed to year-over-year growth.
  • Fixed residential revenue was 4% and 5% higher on a reported and rebased basis, respectively, as compared to the prior-year period. Rebased performance continued to be driven by volume growth as 119,000 RGUs, 8% of the total base, were added over the past twelve months, over half of which were broadband subscribers.
  • Mobile revenue performance was strong in the quarter, up by 16% on a reported basis and 19% on a rebased basis, as compared to the prior-year period. The increase was driven by ARPU primarily due to the relaxing of COVID-19 lockdowns and restrictions in most of our markets. Inbound roaming revenue was also higher in the quarter following the relaxing of travel restrictions.

• C&W Panama: revenue increased by 14% on a reported basis and 15% on a rebased basis as our operations in Panama continued to recover from the impacts COVID-19.
  • B2B revenue was 29% higher on a reported and rebased basis, primarily due to increased non-recurring revenue, including Government-related projects responding to COVID-19 and providing services such as video surveillance. Higher demand from corporate and Government customers also drove growth in mobile services revenue.
  • Fixed residential revenue was 2% lower on a reported basis and 1% higher on a rebased basis as volume growth was offset by lower ARPU year-over-year where there was an increase in out-of-bundle usage in the prior year, and retention activity led to moves to lower plans.
  • Mobile revenue grew 10% on both a reported and rebased basis, primarily due to a higher average number of mobile subscribers on prepaid plans and increased volumes of handset sales, as COVID-19 related lockdowns in 2020 negatively impacted customers’ ability to purchase handsets.

• Liberty Puerto Rico: revenue grew by 230% and 11% on a reported and rebased basis, respectively. Reported growth benefited from the inclusion of Liberty Mobile in the quarter. Our legacy Puerto Rico business delivered double-digit revenue growth driven by volume growth as we added 124,000 RGUs over the last twelve months while also increasing ARPU for broadband services as customers moved to higher tier plans. Liberty Mobile grew by 7% year-over-year on a rebased basis driven by higher ARPU and increased handset sales.

• VTR: revenue increased by 8% on a reported basis and declined by 6% on a rebased basis. The higher reported growth as compared to the prior-year period was driven by a 13% depreciation of the U.S. dollar relative to the Chilean peso. We reported a stable fixed subscriber base in Q2, however, carryover effects from subscriber losses during the second half of 2020 continued to impact rebased revenue performance. ARPU was relatively flat year-over-year on an FX-neutral basis as competitive intensity leading to discounting of bundles was offset by higher video ARPU as premium sports resumed.

• Cabletica: revenue grew by 5% and 13% on a reported and rebased basis, respectively. This was driven by increased broadband subscribers and ARPU growth.

Operating Income (Loss)

• Operating income (loss) was $160 million and ($206 million) for the three months ended June 30, 2021 and 2020, respectively, and $338 million and ($98 million) for the six months ended June 30, 2021 and 2020, respectively.
  • We reported operating income during the three and six months ended June 30, 2021, as compared with operating losses for the corresponding periods during 2020, primarily driven by the benefits of (i) increases in Adjusted OIBDA, as further discussed below, and (ii) lower impairment, restructuring and other operating items, net, as we incurred impairment charges totaling $276 million during the second quarter of 2020 at C&W Panama and various reporting units within the C&W Caribbean and Networks segment.

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)								Six months ended										Increase (decrease)
	June 30,																	June 30,
	2021				2020					%				Rebased %				2021					2020					%				Rebased %
	in millions, except % amounts
C&W Caribbean & Networks	$	188.1			$166.7					13				14				$	369.4				$	353.7				4				5
C&W Panama	45.6				36.9					24				24				89.6					82.7					8				9
Liberty Puerto Rico	161.4				52.4					208				21				311.3					102.9					203				24
VTR	68.7				73.1					(6	)			(18	)			139.2					153.2					(9	)			(19	)
Cabletica	12.7				13.2					(4	)			3				26.8					26.5					1				9
Corporate	(12.5		)		(9.7		)			(29	)			(29	)			(23.0		)			(22.5		)			(2	)			(2	)
Total	$	464.0			$332.6					40				10				$	913.3				$	696.5				31				6
Operating income margin	13.7	%			(24.3	)	%											14.5			%		(5.5		)	%
Adjusted OIBDA margin	39.7	%			39.2		%											39.2			%		39.1			%

• Our reported Adjusted OIBDA for the three and six months ended June 30, 2021 increased by 40% and 31%, respectively.
  • Reported Adjusted OIBDA increases in Q2 2021 and H1 2021 were largely driven by (1) the addition of $98 million and $184 million, respectively, contributed by Liberty Mobile (2) strong organic growth in our legacy Liberty Puerto Rico operations, C&W Caribbean & Networks and C&W Panama, and (3) net positive FX impacts of $5 million and $9 million, respectively. These increases were partially offset by declines in VTR.

Q2 2021 Adjusted OIBDA Growth – Segment Highlights

• C&W Caribbean and Networks: Adjusted OIBDA increased on a reported and rebased basis by 13% and 14%, respectively. Rebased growth was driven by the aforementioned rebased revenue performance, combined with robust cost management as Adjusted OIBDA margin improved by over 200 basis points (on a reported basis) year-over-year. Direct costs were higher year-over-year as (i) certain premium programming had been postponed in the prior-year period due to the pandemic, and (ii) we had higher equipment sales in the current year as COVID-19 related restrictions were eased. Other operating costs and expenses rose overall as reduced bad debt charges and lower personnel costs due to ongoing restructuring activities were more than offset by increased network costs and higher marketing and sales costs from promotional activities, which had been reduced in the prior year period.
• C&W Panama: Adjusted OIBDA was 24% higher on a reported and rebased basis. Performance was driven by the aforementioned revenue growth, and cost management with Adjusted OIBDA margin improving by over 250 basis points (on a reported basis) year-over-year. Direct costs increased due to the higher non-recurring project revenue and equipment sales. Other operating costs and expenses reduced year-over-year as lower bad debt provisions more than offset increased personnel costs as operating activity recovered.
• Liberty Puerto Rico: reported and rebased Adjusted OIBDA growth of 208% and 21%, respectively. Reported growth was driven by the inclusion of Liberty Mobile in the quarter. For our legacy operations, rebased growth was driven by the previously mentioned revenue growth, partly offset by (i) annual increases in programming rates and (ii) higher labor and commercial costs. Liberty Mobile reported double-digit rebased Adjusted OIBDA growth driven by revenue growth and lower overall costs. We have incurred modest integration costs of $3 million related to the Liberty Mobile acquisition year-to-date, and anticipate these will increase in the second half as we expect to spend a total of approximately $20 million in 2021.
• VTR: Adjusted OIBDA declined on a reported and rebased basis by 6% and 18%, respectively. The lower reported year-over-year decline was driven by a depreciation of the U.S. dollar relative to the Chilean peso. The rebased Adjusted OIBDA decline was driven by the aforementioned revenue impacts and higher costs. Direct costs increased as higher content costs were only partly offset by reduced MVNO rates. Other operating costs and expenses were lower in the quarter, as lower bad debt provisions and cost savings from a restructuring program implemented earlier in the year were partly offset by increased network activities.
• Cabletica: reported Adjusted OIBDA decline of 4% and rebased growth of 3%. Rebased growth was driven by the previously mentioned revenue growth.

Net Earnings (Loss) Attributable to Shareholders

• Net earnings (loss) attributable to shareholders was $4 million and ($393 million) for the three months ended June 30, 2021 and 2020, respectively, and $92 million and ($574 million) for the six months ended June 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										Six months ended
	June 30,										June 30,
	2021					2020					2021					2020
	USD in millions
Customer Premises Equipment	$	77.5				$	56.9				$	151.1				$	124.0
New Build & Upgrade	33.1					29.0					58.6					57.2
Capacity	36.6					22.0					53.7					28.1
Baseline	44.7					26.6					71.6					46.2
Product & Enablers	22.8					18.8					32.1					30.7
Property & equipment additions	214.7					153.3					367.1					286.2
Assets acquired under capital-related vendor financing arrangements	(19.5		)			(29.7		)			(38.3		)			(53.3		)
Changes in current liabilities related to capital expenditures	3.4					(1.4		)			5.4					38.5
Capital expenditures	$	198.6				$	122.2				$	334.2				$	271.4
Property & equipment additions as % of revenue		18.4	%				18.1	%				15.8	%				16.1	%

Property & Equipment Additions:
C&W Caribbean & Networks	$	73.2			$	63.7			$	122.8			$	121.0
C&W Panama	20.1				17.8				30.8				31.0
Liberty Puerto Rico	51.2				19.6				84.9				32.9
VTR	55.8				43.3				102.5				84.2
Cabletica	7.3				6.9				14.6				10.9
Corporate	7.1				2.0				11.5				6.2
Property & equipment additions	$	214.7			$	153.3			$	367.1			$	286.2

Property & Equipment Additions as a Percentage of Revenue by Reportable Segment:
C&W Caribbean & Networks	16.9	%		15.7	%		14.2	%		14.1	%
C&W Panama	15.7	%		15.9	%		12.3	%		12.4	%
Liberty Puerto Rico	14.2	%		18.0	%		11.8	%		15.4	%
VTR	26.7	%		22.4	%		24.4	%		21.1	%
Cabletica	20.1	%		19.9	%		20.1	%		16.0	%

New Build and Homes Upgraded by Reportable Segment:
C&W Caribbean & Networks	41,700			17,700			62,700			34,900
C&W Panama	38,700			36,500			60,200			61,700
Liberty Puerto Rico	6,600			6,200			8,700			13,400
VTR	134,600			4,600			211,300			33,900
Cabletica	9,700			7,100			16,300			8,600
Total	231,300			72,100			359,200			152,500

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 June 30, 2021:

	Debt			Finance lease obligations			Debt and finance lease obligations				Cash and cash equivalents
	in millions
Liberty Latin America1	$	404.7		$	1.1		$	405.8			$	411.0
C&W2	4,196.7			0.8			4,197.5				534.3
Liberty Puerto Rico	2,610.0			10.8			2,620.8				112.8
VTR	1,595.6			—			1,595.6				247.5
Cabletica	126.9			—			126.9				5.5
Total	$	8,933.9		$	12.7		$	8,946.6			$	1,311.1
Consolidated Leverage and Liquidity Information:							June 30, 2021				March 31, 2021
Consolidated gross leverage ratio3							5.0x				5.0x
Consolidated net leverage ratio3							4.2x				4.3x
Average debt tenor4							6.3 years				6.5 years
Fully-swapped borrowing costs							6.0%				6.0%
Unused borrowing capacity (in millions)5							$1,210.6				$1,219.7

(1)	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.
(2)	Represents the C&W borrowing group, including the C&W Caribbean & Networks and C&W Panama reporting segments.
(3)	Consolidated leverage ratios are non-GAAP measures. For additional information, including definitions of our consolidated leverage ratios, required reconciliations and the impact of Liberty Mobile on the ratios, see Non-GAAP Reconciliations below.
(4)	For purposes of calculating our average tenor, total debt excludes vendor financing and finance lease obligations.
(5)	At June 30, 2021, the full amount of unused borrowing capacity under our subsidiaries’ revolving credit facilities was available to be borrowed, both before and after completion of the June 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 — June 30, 2021 vs March 31, 2021
	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	7,900			7,900			9,700				2,400				11,200				12,700				26,300					50,400				4,500				54,900
The Bahamas	—			—			2,300				700				1,300				900				2,900					(2,800	)			400				(2,400	)
Trinidad and Tobago	1,000			1,000			200				(900	)			—				1,000				100					—				—				—
Barbados	—			—			300				1,000				900				300				2,200					2,000				900				2,900
Other	400			400			(2,600	)			(100	)			(400	)			700				200					(1,100	)			3,800				2,700
Total C&W Caribbean & Networks	9,300			9,300			9,900				3,100				13,000				15,600				31,700					48,500				9,600				58,100
C&W Panama	26,800			26,800			(600	)			2,200				3,800				2,800				8,800					52,800				7,300				60,100
Total C&W	36,100			36,100			9,300				5,300				16,800				18,400				40,500					101,300				16,900				118,200
Liberty Puerto Rico	6,400			6,400			16,300				3,800				12,600				5,400				21,800					(5,000	)			11,000				6,000
VTR	117,000			130,500			(11,000	)			2,000				(11,200	)			9,200				—					(700	)			(5,800	)			(6,500	)
Cabletica	7,800			7,800			4,200				1,000				6,600				3,300				10,900					—				—				—
Total Net Adds	167,300			180,800			18,800				12,100				24,800				36,300				73,200					95,600				22,100				117,700
Q2 2021 Adjustments:
VTR1	—			—			(2,700	)			(300	)			(400	)			(2,100	)			(2,800	)				—				—				—
Net Adds	167,300			180,800			16,100				11,800				24,400				34,200				70,400					95,600				22,100				117,700

Contacts

Investor Relations

Kunal Patel, [email protected]

Corporate Communications

Claudia Restrepo, [email protected]

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