Liberty Latin America Reports Q4 & FY 2022 Results

FY 2022 reported revenue flat YoY at $4.8 billion and up 1% on rebased basis; 3% rebased growth ex VTR

445,000 organic broadband and postpaid mobile adds in 2022, ex VTR

Executing inorganic strategy and advancing integration efforts

Repurchased a record $170 million of shares in the year

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 (“Q4”) and twelve months (“YTD” and “FY”) ended December 31, 2022.

CEO Balan Nair commented, “We continued to drive top-line growth in the fourth quarter, led by strong performances in our C&W Caribbean and Networks & LatAm operations and in Costa Rica. Puerto Rico’s performance was impacted by residual negative impacts from Hurricane Fiona, and higher levels of promotional activity.”

“Subscriber growth underpinned our performance with continued broadband additions across our reporting segments. Mobile postpaid additions also more than doubled as compared to the prior year, fueled by our convergent offers and focus on prepaid to postpaid migration.”

“Inorganically, we have now completed our outstanding transactions and are focused on integration activities in Puerto Rico, Panama and Costa Rica, which are set to deliver significant value for stakeholders.”

“We have continued to be aggressive with our share buyback activity, purchasing a record amount during the year and taking our total since commencing activity to over $240 million as we remain confident in our plans and outlook for the business.”

“Overall, we continued to drive operating momentum in 2022 and are well positioned to create value in 2023. Our focus this year is on delivering further broadband and postpaid mobile subscriber growth, and making significant progress towards the successful integration of our acquisitions in Puerto Rico, Costa Rica and Panama. Through these actions, we expect to generate mid-to-high single digit adjusted OIBDA expansion in 2023 and strong adjusted free cash flow growth.”

Business Highlights

• C&W Caribbean: strong growth in FY 2022
  • Subscriber adds drove reported and rebased revenue up 3% and 4%, respectively
  • Reported and rebased Adj. OIBDA growth of 11% for the year

• C&W Panama: strong fixed operating momentum
  • 25,000 broadband adds in the year drove fixed service revenue growth
  • Claro Panama acquisition completed; integration and synergy capture underway

• C&W Networks & LatAm: top-line and Adj. OIBDA growth with strong margins in FY 2022
  • Reported and rebased revenue growth of 4% and 7%, respectively
  • Reported and rebased Adj. OIBDA growth of 5%

• Liberty Puerto Rico: fixed growth driven by continued subscriber additions
  • 36,000 broadband adds in 2022, Q4 up 35% YoY
  • Adj. OIBDA impacted by Hurricane Fiona and increased promotional activity

• Liberty Costa Rica: subscriber additions and cost control driving Adj. OIBDA growth
  • Reported and rebased revenue growth of 71% and 7%, respectively, YTD
  • Adj. OIBDA up 68% and 10% on a reported and rebased basis, respectively, YTD

FY 2023 LLA Financial Guidance

• Adjusted OIBDA mid-to-high single digit rebased growth
• P&E additions as a percentage of revenue at ~16%
• Adjusted FCF of ~$300 million, before distributions to noncontrolling interests

50/50 Joint Venture with América Móvil in Chile

VTR has been deconsolidated from Liberty Latin America effective upon our contribution of VTR into the Chile JV, at the beginning of October 2022.

Financial and Operating Highlights

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:

N.M. – Not Meaningful.

• Reported revenue for the three months and year ended December 31, 2022 declined by 9% and was flat, respectively.
  • Reported revenue declined in Q4 2022 as (1) the addition of $35 million from the acquisition of América Móvil’s Panama operations (Claro Panama) on July 1, 2022, and (2) organic growth in C&W Networks & LatAm and C&W Caribbean, were more than offset by the negative year-over-year impact of VTR’s deconsolidation further to the formation of the Chile JV in October 2022.
  • Reported revenue performance in FY 2022 was driven by (1) the addition of $239 million, from the acquisitions of Telefónica’s Costa Rica operations and América Móvil’s Panama operations, (2) the impact of VTR’s deconsolidation, (3) organic growth in C&W Caribbean, C&W Networks & LatAm and Liberty Costa Rica, (4) a net negative FX impact of $94 million, and (5) organic declines at VTR. The FX impact was driven by depreciation of the Chilean peso in the nine months ended September 30, 2022 as compared to the corresponding prior-year period.

Q4 2022 Revenue Growth – Segment Highlights

• C&W Caribbean: revenue grew by 3% on a reported and rebased basis.
  • Fixed residential revenue was flat on a reported and rebased basis, as subscription revenue growth was offset by lower interconnect and other revenue year-over-year.
  • Mobile revenue was up 5% on a reported and rebased basis, as compared to the prior-year period. Rebased growth was primarily driven by a higher average number of mobile subscribers, resulting from sales initiatives, including converged offerings. Inbound roaming also grew year-over-year, as a recovery in tourism led to increased traffic.
  • B2B revenue was 4% higher on both a reported and rebased basis. Performance was driven by internet services-related growth as well as mobile subscriber growth.

• C&W Panama: revenue grew by 16% and declined by 3% on a reported and rebased basis, respectively. Reported performance benefited from the inclusion of América Móvil’s Panama operations in the quarter.
  • Fixed residential revenue was up 15% and 5% on a reported and rebased basis, respectively. Rebased growth was driven by more than 60,000 RGU additions over the past twelve months, resulting from investments in our networks, products and commercial activities.
  • Mobile revenue increased by 45% on a reported basis and was 1% lower on a rebased basis. Revenue declined slightly on a rebased basis as postpaid service revenue growth in our legacy C&W Panama operation was more than offset by year-over-year declines in our newly acquired business.
  • B2B revenue declined by 1% and 7% on a reported and rebased basis, respectively. The year-over-year rebased decline was driven by the successful award of certain infrastructure projects in the prior-year period.

• C&W Networks & LatAm: revenue grew by 11% and 14% on a reported and rebased basis, respectively. Growth on a rebased basis was driven by higher revenue associated with a significant subsea network customer that is recognized on a cash basis, increased affiliate revenue, and growth in B2B service-related connectivity and managed services. This growth was partially offset by higher IRU accelerations in Q4 2021.

• Liberty Puerto Rico: revenue grew by 1% on a reported basis and was flat on a rebased basis. Reported performance benefited from the inclusion of our fixed operations in the USVI in the quarter.
  • On a rebased basis, residential fixed revenue growth was driven by subscriber additions as we added nearly 40,000 RGUs in the year, partly offset by the negative impact of $5 million of customer credits following Hurricane Fiona.
  • Residential mobile revenue was broadly flat compared to the prior-year period, as higher volumes of handset sales were offset by (1) lower ARPU from mobile services, including the impact of higher contract asset amortization driven by increases in handset sales and subsidy levels, and (2) a decline in the average number of prepaid mobile subscribers.

• Liberty Costa Rica: revenue grew by 8% and 3% on a reported and rebased basis, respectively. Rebased growth was driven by strong subscriber additions across both our mobile and fixed businesses over the past twelve months.

Operating Income (Loss)

• Operating income (loss) was $110 million and ($418 million) for the three months ended December 31, 2022 and 2021, respectively, and $94 million and $67 million for the year ended December 31, 2022 and 2021, respectively.
  • We reported operating income during the three months ended December 31, 2022 compared with an operating loss during the corresponding period in 2021. The increase during the three-month comparison is due to lower expenses associated with impairment, restructuring and other operating items, net, which were partially offset by a decline in Adjusted OIBDA.
  • We reported higher operating income during the year ended December 31, 2022 compared with the corresponding period in 2021, primarily due to the net effect of (i) decreases in depreciation and amortization, goodwill impairments and stock-based compensation expense and (ii) a decline in Adjusted OIBDA. We experienced a decrease in depreciation and amortization expense as we ceased recording depreciation expense for the Chile JV Entities during the third quarter of 2021 when we began accounting for them as held for sale.

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:

N.M. – Not Meaningful.

• Our reported Adjusted OIBDA for the three months and year ended December 31, 2022 was 13% and 5% lower, respectively, as compared to the corresponding prior-year periods.
  • Reported Adjusted OIBDA performance in Q4 was primarily driven by the deconsolidation of VTR.
  • Reported Adjusted OIBDA performance YTD was primarily driven by (1) organic declines in Chile and Puerto Rico partly offset by growth in C&W Caribbean, and (2) FX headwinds in Chile.

Q4 2022 Adjusted OIBDA Growth – Segment Highlights

• C&W Caribbean: Adjusted OIBDA increased by 10% on a reported and rebased basis. Performance was driven by the aforementioned rebased revenue growth. Our Adjusted OIBDA margin improved by ~250 basis points year-over-year to 38%.

• C&W Panama: Adjusted OIBDA decreased on a reported and rebased basis by 9% and 10%, respectively. The rebased decline was driven by lower revenue and higher bad debt provisions, including the cost of factoring certain receivables, year-over-year.

• C&W Networks & LatAm: Adjusted OIBDA increased on a reported and rebased basis by 12% and 13%, respectively. Our rebased performance was driven by the aforementioned revenue growth.

• Liberty Puerto Rico: Adjusted OIBDA declined by 11% on a reported and rebased basis. The decline in the quarter was driven by (i) $7 million in revenue credits and costs associated with Hurricane Fiona (aforementioned revenue credits and increased network-related expenses), (ii) increased facilities costs driven by higher electricity and maintenance expense, (iii) higher personnel costs including higher commissions expense impacted by the accounting for the AT&T acquisition, and (iv) increased negative margins on equipment sales driven by a higher volume of handset sales and promotions.

• Liberty Costa Rica: Adjusted OIBDA grew by 23% and 17% on a reported and rebased basis, respectively. Rebased performance was driven by the aforementioned rebased revenue growth and cost control driving a nearly 400 basis point improvement in Adjusted OIBDA margin, year-over-year.

Net Earnings (Loss) Attributable to Shareholders

• Net earnings (loss) attributable to shareholders was $135 million and ($612 million) for the three months ended December 31, 2022 and 2021, respectively, and ($176 million) and ($438 million) for the year ended December 31, 2022 and 2021, 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, net.

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 December 31, 2022:

Quarterly Subscriber Variance

ARPU per Customer Relationship

The following table provides ARPU per customer relationship for the indicated periods:

Mobile ARPU

The following table provides ARPU per mobile subscriber for the indicated periods:

Contacts

Investor Relations

Kunal Patel [email protected]

Corporate Communications

Kim Larson [email protected]

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