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Liberty Latin America Reports Q4 & FY 2022 Results

By Business Wire

Business Wire
Overall Rating

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

Financial Highlights

Q4 2022

Q4 2021

YoY Growth /
(Decline)

YoY Rebased
Growth /
(Decline)1

FY 2022

FY 2021

YoY Growth /
(Decline)

YoY Rebased
Growth /
(Decline)1

(USD in millions)

Revenue

$

1,161

$

1,281

(9

%)

1

%

$

4,815

$

4,815

%

1

%

Revenue (excluding VTR)2

$

1,161

$

1,106

5

%

1

%

$

4,365

$

4,027

8

%

3

%

Adjusted OIBDA3

$

405

$

464

(13

%)

(1

%)

$

1,718

$

1,815

(5

%)

(3

%)

Adjusted OIBDA3 (excluding VTR)2

$

405

$

408

(1

%)

(1

%)

$

1,602

$

1,556

3

%

%

Operating income (loss)

$

110

$

(418

)

(126

%)

$

94

$

67

40

%

Property & equipment additions

$

225

$

257

(12

%)

$

816

$

856

(5

%)

As a percentage of revenue

19

%

20

%

17

%

18

%

Adjusted FCF4

$

210

$

51

$

189

$

200

Cash provided by operating activities

$

377

$

298

$

869

$

1,016

Cash used by investing activities

$

(378

)

$

(193

)

$

(1,123

)

$

(1,269

)

Cash provided (used) by financing activities

$

(51

)

$

(104

)

$

(29

)

$

427

Operating Highlights5

Q4 2022

Q4 2021

Total customers

1,924,700

3,226,400

Organic customer losses

(3,300

)

(10,300

)

Fixed RGUs

3,819,500

6,441,000

Organic RGU additions

31,300

35,800

Organic internet additions

24,700

5,200

Mobile subscribers

8,169,500

7,540,300

Organic mobile additions

59,000

246,400

Organic postpaid additions

58,200

68,700

*

Q4 2022 figures include mobile subscribers related to the Claro Panama Acquisition, which was completed on July 1, 2022, and are therefore not included in Q4 2021 subscriber data. Q4 2022 excludes VTR as it has been deconsolidated as further described above.

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)

Year ended

Increase/(decrease)

December 31,

December 31,

2022

2021

%

Rebased %

2022

2021

%

Rebased %

in millions, except % amounts

C&W Caribbean

$

367.3

$

356.9

3

3

$

1,436.8

$

1,389.9

3

4

C&W Panama

201.4

173.6

16

(3

)

642.7

568.1

13

1

C&W Networks & LatAm

124.0

111.9

11

14

450.8

431.9

4

7

Liberty Puerto Rico

373.7

371.2

1

1,470.1

1,449.7

1

1

Liberty Costa Rica

116.7

108.2

8

3

441.3

258.5

71

7

VTR

174.8

N.M.

N.M.

450.6

787.5

(43

)

(15

)

Corporate

5.7

5.4

6

6

22.2

21.6

3

3

Eliminations

(28.1

)

(21.4

)

N.M.

N.M.

(99.4

)

(92.4

)

N.M.

N.M.

Total

$

1,160.7

$

1,280.6

(9

)

1

$

4,815.1

$

4,814.8

1

Less: VTR

174.8

450.6

787.5

Total excluding VTR2

$

1,160.7

$

1,105.8

5

1

$

4,364.5

$

4,027.3

8

3

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:

Three months ended

Year ended

December 31,

Increase (decrease)

December 31,

Increase (decrease)

2022

2021

%

Rebased %

2022

2021

%

Rebased %

in millions, except % amounts

C&W Caribbean

$

138.1

$

125.0

10

10

$

535.2

$

482.9

11

11

C&W Panama

57.2

62.6

(9

)

(10

)

188.8

200.1

(6

)

(7

)

C&W Networks & LatAm

79.7

71.2

12

13

276.3

264.3

5

5

Liberty Puerto Rico

120.2

135.3

(11

)

(11

)

538.4

580.9

(7

)

(8

)

Liberty Costa Rica

36.1

29.4

23

17

134.7

80.2

68

10

VTR

55.3

N.M.

N.M.

115.6

259.6

(55

)

(34

)

Corporate

(26.1

)

(15.2

)

(72

)

(72

)

(71.5

)

(52.9

)

(35

)

(35

)

Total

$

405.2

$

463.6

(13

)

(1

)

$

1,717.5

$

1,815.1

(5

)

(3

)

Less: VTR

55.3

115.6

259.6

Total excluding VTR2

$

405.2

$

408.3

(1

)

(1

)

$

1,601.9

$

1,555.5

3

Operating income (loss) margin

9.4

%

(32.6

) %

2.0

%

1.4

%

Adjusted OIBDA margin

34.9

%

36.2

%

35.7

%

37.7

%

Adjusted OIBDA margin excl. VTR2

34.9

%

36.9

%

36.7

%

38.6

%

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.

Three months ended

Year ended

December 31,

December 31,

2022

2021

2022

2021

USD in millions

Customer Premises Equipment

$

40.9

$

61.0

$

246.3

$

296.2

New Build & Upgrade

44.9

51.5

156.7

163.2

Capacity

41.4

35.8

127.3

130.9

Baseline

71.6

68.3

210.8

172.7

Product & Enablers

26.4

40.3

75.2

92.9

Property & equipment additions

225.2

256.9

816.3

855.9

Assets acquired under capital-related vendor financing arrangements

(46.9

)

(35.5

)

(161.1

)

(100.5

)

Changes in current liabilities related to capital expenditures and other

(12.3

)

(29.8

)

4.9

(19.1

)

Capital expenditures, net

$

166.0

$

191.6

$

660.1

$

736.3

Property & equipment additions as % of revenue

19.4

%

20.1

%

17.0

%

17.8

%

Property & Equipment Additions:

C&W Caribbean

$

79.3

$

67.4

$

230.7

$

222.9

C&W Panama

26.8

24.4

98.4

88.9

C&W Networks & LatAm

8.2

9.9

40.2

45.3

Liberty Puerto Rico

78.7

80.1

233.5

219.2

Liberty Costa Rica

19.8

19.4

65.5

45.0

VTR

41.1

107.3

199.1

Corporate

12.4

14.6

40.7

35.5

Property & equipment additions

$

225.2

$

256.9

$

816.3

$

855.9

Property & Equipment Additions as a Percentage of Revenue by Reportable Segment:

C&W Caribbean

21.6

%

18.9

%

16.1

%

16.0

%

C&W Panama

13.3

%

14.1

%

15.3

%

15.6

%

C&W Networks & LatAm

6.6

%

8.8

%

8.9

%

10.5

%

Liberty Puerto Rico

21.1

%

21.6

%

15.9

%

15.1

%

Liberty Costa Rica

17.0

%

17.9

%

14.8

%

17.4

%

VTR

%

23.5

%

23.8

%

25.3

%

New Build and Homes Upgraded by Reportable Segment1:

C&W Caribbean

15,800

47,100

106,700

150,100

C&W Panama

19,100

16,600

148,400

121,400

Liberty Puerto Rico

16,900

9,500

41,800

22,600

Liberty Costa Rica

11,000

10,600

50,300

43,800

VTR

64,200

137,400

400,900

Total

62,800

148,000

484,600

738,800

1.

Table excludes C&W Networks & LatAm as that segment only provides B2B-related services.

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:

Debt

Finance lease
obligations

Debt and
finance lease
obligations

Cash and
cash
equivalents

in millions

Liberty Latin America1

$ 403.4

$ —

$ 403.4

$ 156.5

C&W2

4,519.6

4,519.6

536.2

Liberty Puerto Rico

2,617.7

5.7

2,623.4

72.3

Liberty Costa Rica

425.4

2.9

428.3

16.0

Total

$ 7,966.1

$ 8.6

$ 7,974.7

$ 781.0

Consolidated Leverage and Liquidity Information:

December 31,
2022

September 30,
2022

Consolidated debt and finance lease obligations to operating income (loss) ratio

15.0x

(23.1)x

Consolidated net debt and finance lease obligations to operating income (loss) ratio

13.5x

(21.1)x

Consolidated gross leverage ratio3

5.1x

4.9x

Consolidated net leverage ratio3

4.6x

4.5x

Average debt tenor4

4.9 years

5.2 years

Fully-swapped borrowing costs

5.7%

5.6%

Unused borrowing capacity (in millions)5

$898.7

$971.7

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, C&W Networks & LatAm and C&W Panama reporting segments.

3.

Consolidated leverage ratios are non-GAAP measures. The leverage ratios exclude the Adjusted OIBDA of VTR in light of the deconsolidation of VTR and the fact that our December, 31, 2022 balance sheet does not include any VTR debt. For additional information, including definitions of our consolidated leverage ratios and required reconciliations, see Non-GAAP Reconciliations below.

4.

For purposes of calculating our average tenor, total debt excludes vendor financing, finance lease obligations and, as of September 30, 2022, VTR debt.

5.

At December 31, 2022, 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 December 31, 2022 compliance reporting requirements. The September 30, 2022 amount excludes VTR's then unused borrowing capacity of $247 million.

Quarterly Subscriber Variance

Fixed and Mobile Subscriber Variance Table — December 31, 2022 vs September 30, 2022

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:

Jamaica

6,900

6,900

2,600

(400

)

4,100

4,600

8,300

18,900

8,800

27,700

The Bahamas

(7,900

)

(200

)

(100

)

(900

)

(1,200

)

4,500

(600

)

3,900

Trinidad and Tobago

(800

)

(600

)

(1,100

)

600

(1,100

)

Barbados

400

300

900

(100

)

1,100

1,200

2,600

3,800

Other

200

100

2,700

500

3,900

400

4,800

200

11,500

11,700

Total C&W Caribbean

7,100

7,000

(3,000

)

(400

)

7,700

4,600

11,900

24,800

22,300

47,100

C&W Panama

4,900

4,900

600

600

5,400

5,100

11,100

(65,900

)

8,700

(57,200

)

Total C&W

12,000

11,900

(2,400

)

200

13,100

9,700

23,000

(41,100

)

31,000

(10,100

)

Liberty Puerto Rico1

4,100

4,100

(3,100

)

(4,700

)

10,400

(3,300

)

2,400

(5,300

)

17,000

11,700

Liberty Costa Rica

8,600

8,600

2,200

1,200

4,700

5,900

47,200

10,200

57,400

VTR

Total Organic Change

24,700

24,600

(3,300

)

(4,500

)

24,700

11,100

31,300

800

58,200

59,000

Q4 2022 Adjustments:

C&W Caribbean - Jamaica

(14,400

)

(14,400

)

C&W Caribbean - Bahamas

1,300

(3,800

)

(8,400

)

3,400

(8,800

)

(6,500

)

(6,500

)

C&W Caribbean - Other

5,800

5,800

C&W Panama

18,700

18,700

VTR2

(4,292,100

)

(3,926,500

)

(1,311,500

)

(967,900

)

(1,171,800

)

(486,100

)

(2,625,800

)

(6,300

)

(257,900

)

(264,200

)

Total Q4 2022 Adjustments:

(4,286,300

)

(3,920,700

)

(1,310,200

)

(971,700

)

(1,180,200

)

(482,700

)

(2,634,600

)

(20,700

)

(245,700

)

(266,400

)

Net Adds

(4,261,600

)

(3,896,100

)

(1,313,500

)

(976,200

)

(1,155,500

)

(471,600

)

(2,603,300

)

(19,900

)

(187,500

)

(207,400

)

1.

Included in Liberty Puerto Rico's mobile prepaid organic loss is a decrease of 3,300 mobile reseller subscribers.

2.

During October 2022, we contributed our Chilean operation into a joint venture with Claro Chile, which resulted in a non-organic adjustment that represents the removal of VTR from our consolidated subscriber balances.

ARPU per Customer Relationship

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

Three months ended December 31,

FX-Neutral1

2022

2021

% Change

% Change

Reportable Segment:

C&W Caribbean

$

48.81

$

48.13

1

%

1

%

C&W Panama

$

36.68

$

38.97

(6

%)

(6

%)

Liberty Puerto Rico

$

74.29

$

75.90

(2

%)

(2

%)

Liberty Costa Rica2

$

40.27

$

41.62

(3

%)

(8

%)

Cable & Wireless Borrowing Group

$

45.97

$

46.36

(1

%)

(1

%)

Mobile ARPU

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

Three months ended December 31,

FX-Neutral1

2022

2021

% Change

% Change

Reportable Segment:

C&W Caribbean

$

14.31

$

14.36

%

%

C&W Panama

$

9.97

$

8.73

14

%

14

%

Liberty Puerto Rico3

$

38.91

$

46.04

(15

%)

(15

%)

Liberty Costa Rica4

$

5.90

$

5.49

7

%

3

%

Cable & Wireless Borrowing Group

$

11.98

$

11.65

3

%

3

%


Contacts

Investor Relations
Kunal Patel ir@lla.com

Corporate Communications
Kim Larson llacommunications@lla.com


Read full story here

First published on Thu, Feb 23, 2023

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