Liberty Latin America Reports First Quarter 2021 Results
05/05/2021 - 04:37 PM
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 (“Q1”) ended March 31, 2021.
CEO Balan Nair commented, “We had a strong start to the year as our focus on volume resulted in record Q1 RGU additions of 76,000, over 25% higher than the prior year, as well as continued recovery in our mobile operations. Overall, our markets are beginning to recover from the worst impacts of the pandemic, however, the operating environment remains challenging given reduced tourism and government imposed lockdowns and restrictions continuing during the quarter.”
“Fixed subscribers grew across all of our markets, with particularly strong performance in Puerto Rico where we maintained momentum from 2020 and saw close to three times as many RGU additions in the first quarter as compared to the prior-year period. There remains a significant broadband penetration opportunity across our region and during the first quarter we added or upgraded approximately 130,000 homes using fiber technologies to bring high-speed connectivity to more customers. Mobile additions were also particularly strong for the first quarter, driven by over 60,000 adds in Panama.”
“We reported $1.2 billion in revenue, $178 million of operating income and $449 million in Adjusted OIBDA in the first quarter. Despite the ongoing impact of the pandemic on our financial performance, particularly across our mobile and B2B operations, we delivered rebased Adjusted OIBDA growth of 3%, our strongest result in a year. Furthermore, we had a record Q1 in terms of cash flow from operations and Adjusted Free Cash Flow, posting $204 million and $58 million, respectively.”
“As part of our proactive balance sheet management, we successfully refinanced over $1 billion of our debt across Puerto Rico and Chile in March. These financings improved our average debt tenor, reduced our borrowing costs, and added $250 million of incremental capital to our corporate balance sheet.”
“Overall, we started the year well and anticipate that the regional operating environment will improve as vaccination rates increase and local economies recover in the coming months and quarters. In addition to our organic growth opportunities, we continue to drive the integration of AT&T's Puerto Rico and USVI operations and are working towards a summer completion of the acquisition of Telefónica's Costa Rica assets.”
Business Highlights
C&W Caribbean & Networks: strong operating and improving sequential financial results
Record Q1 additions of 28,000 RGUs, up 12% YoY, driven by broadband
Continued mobile recovery with Q1 additions higher YoY, led by Jamaica
C&W Panama: resilient operating metrics
Robust RGU additions of 10,000 and record Q1 mobile subscriber additions of 61,000
Investing in fixed connectivity opportunity, added / upgraded over 20,000 homes
Liberty Puerto Rico: strong start to year; first full quarter including Liberty Mobile
Continued broadband demand drove record Q1 RGU additions of 25,000
Strong reported and rebased Adj. OIBDA growth of 197% and 26%, respectively
VTR: COVID-19 mobility restrictions and 2020 subscriber losses set up challenging start to year
Improved subscriber results in Q1, RGU adds following two consecutive quarters of loss
Added over 75,000 new build / upgraded homes in the quarter
Cabletica: positive opening to 2021 with continued growth in subscribers and financial results
RGU additions 9% higher YoY, driven by broadband
Reported and rebased Adj. OIBDA growth of 6% and 14%, respectively
Organizational Update
As a result of organizational changes during the first quarter of 2021, VTR and Cabletica are now separate operating and reportable segments. Accordingly, as of March 31, 2021, our reportable segments are as follows:
C&W Caribbean & Networks
C&W Panama
Liberty Puerto Rico
VTR
Cabletica
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
Q1 2021
Q1 2020
YoY Growth
YoY Rebase Growth1
(USD in millions)
Revenue
$
1,160
$
931
25
%
—
%
Adjusted OIBDA2
$
449
$
364
23
%
3
%
Operating income
$
178
$
108
65
%
Property & equipment additions
$
152
$
133
15
%
As a percentage of revenue
13.1
%
14.3
%
Adjusted FCF3
$
58
$
(49)
Cash provided by operating activities
$
204
$
115
Cash used by investing activities
$
(126)
$
(147)
Cash provided by financing activities
$
333
$
455
Operating Highlights4
Q1 2021
Q1 2020
YoY Growth
YoY FX-Neutral Growth5
Total Customers
3,217,400
3,177,900
1
%
Organic customer adds
12,800
31,100
Total RGUs
6,262,300
6,101,600
3
%
Organic RGU adds
76,000
60,000
Broadband
34,000
48,400
Video
6,100
4,600
Telephony
35,900
7,000
Mobile subscribers*
4,506,200
3,619,800
24
%
Organic mobile adds (losses)
54,900
(38,700)
Fixed ARPU
$
49.58
$
47.61
4
%
1
%
Mobile ARPU
$
19.51
$
12.60
55
%
55
%
* Q1 2021 figure includes 1,020,700 mobile subscribers related to operations in Puerto Rico and USVI. These operations were acquired on October 31, 2020 and therefore not included in Q1 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)
March 31,
2021
2020
%
Rebased %
in millions, except % amounts
C&W Caribbean & Networks
$
429.8
$
452.0
(5)
(4)
C&W Panama
122.0
138.3
(12)
(11)
Liberty Puerto Rico
361.3
104.6
245
14
VTR
210.3
206.4
2
(8)
Cabletica
36.2
33.7
7
15
Corporate
5.4
—
N.M.
N.M.
Eliminations
(5.1)
(4.0)
N.M.
N.M.
Total
$
1,159.9
$
931.0
25
—
N.M. – Not Meaningful.
Our reported revenue for the three months ended March 31, 2021 increased by 25%.
Reported revenue growth was driven by (1) the addition of $240 million from Liberty Mobile, which was acquired on October 31, 2020, (2) double-digit growth in our legacy Liberty Puerto Rico operations, and (3) a net positive foreign exchange ("FX") impact of $11 million. These increases were partially offset by organic declines across C&W Panama, VTR and C&W Caribbean & Networks.
Q1 2021 Revenue Growth – Segment Highlights
C&W Caribbean & Networks: revenue declined on a reported and rebased basis by 5% and 4%, respectively. The higher reported decline was primarily driven by adverse currency movements.
B2B revenue declined 4% on both a reported and rebased basis, as compared to the prior-year period. The year-over-year decline continued to be driven by reduced or suspended service across our markets as a result of a decline in economic activity following COVID-19 restrictions. Our subsea network performance was also lower in the quarter, primarily due to revenue recognized on a cash basis for services to a significant customer in the prior-year period.
Fixed residential revenue was 2% lower on a reported basis and flat on a rebased basis, as compared to the prior-year period. Rebased performance was driven by the addition of 106,000 RGUs in the past twelve months, of which 66,000 were broadband subscribers as customers sought improved connectivity to support work and education from home. Volume growth was offset by lower ARPUs primarily across telephony and video products and by a decline in non-subscription revenue due to lower interconnect volumes.
Mobile revenue declined 10% on a reported basis and 8% on a rebased basis, as compared to the prior-year period. The decrease was driven by lower average numbers of mobile subscribers due to COVID-19 impacts, including reduced retail and acquisition activities, and lower ARPU from mobile services as lockdowns and travel restrictions reduced outbound roaming and usage.
C&W Panama: revenue declined by 12% on a reported basis and 11% on a rebased basis as our operations in Panama continued to be impacted by COVID-19. Sequential performance was relatively stable, excluding the impact of reduced non-recurring B2B revenue in Q1 2021 as compared to a strong performance in Q4 2020.
B2B revenue was 13% lower on a reported basis, primarily due to reduced non-recurring revenue compared to the prior-year period where we secured some notable Government-related projects.
Fixed residential revenue was 9% lower on a reported basis. Subscription revenue declined as volume growth across all products was offset by lower ARPU in telephony and video services. Non-subscription revenue drove the overall decline, primarily due to lower payphone usage.
Mobile revenue declined 11% on a reported basis, driven by continued reduction in recharge activity and fewer subscribers year-over-year following COVID-19 lockdowns.
Liberty Puerto Rico: revenue grew by 245% and 14% 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 136,000 RGU additions and increased ARPU over the last twelve months.
VTR: revenue increased by 2% on a reported basis and declined by 8% on a rebased basis. The higher reported growth as compared to the prior-year period was driven by a 10% depreciation of the U.S. dollar relative to the Chilean peso. Despite fixed additions in the current quarter, carryover effects from subscriber losses during the second half of 2020 continue to impact rebased revenue performance. Increased competitive intensity has further led to discounting of bundles and associated lower ARPUs.
Cabletica: revenue grew by 7% and 15% on a reported and rebased basis, respectively. This was driven by increased broadband subscribers and overall ARPU growth over the year.
Operating Income
Operating income was $178 million and $108 million for the three months ended March 31, 2021 and 2020, respectively.
We reported higher operating income during Q1 2021, as compared with the corresponding period during 2020, primarily due to the net effect of (i) an increase in Adjusted OIBDA as further discussed below, (ii) an increase in depreciation and amortization expense and (iii) a decrease in impairment, restructuring and other operating items, net.
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)
March 31,
2021
2020
%
Rebased %
in millions, except % amounts
C&W Caribbean & Networks
$
181.3
$
187.0
(3)
(2)
C&W Panama
44.0
45.8
(4)
(3)
Liberty Puerto Rico
149.9
50.5
197
26
VTR
70.5
80.1
(12)
(20)
Cabletica
14.1
13.3
6
14
Corporate
(10.5)
(12.8)
18
18
Total
$
449.3
$
363.9
23
3
Operating income margin
15.4
%
11.6
%
Adjusted OIBDA margin
38.7
%
39.1
%
Our reported Adjusted OIBDA for the three months ended March 31, 2021 increased by 23%.
Reported Adjusted OIBDA increase in Q1 2021 was largely driven by (1) the addition of $86 million contributed by Liberty Mobile, (2) strong growth in our legacy Liberty Puerto Rico operations, and (3) a net positive FX impact of $3 million. These increases were partially offset by declines in VTR, C&W Caribbean & Networks and C&W Panama.
Q1 2021 Adjusted OIBDA Growth – Segment Highlights
C&W Caribbean and Networks: Adjusted OIBDA declined on a reported and rebased basis by 3% and 2%, respectively. Our rebased performance was driven by the aforementioned rebased revenue decline, partly offset by lower costs. Direct costs were lower due to reduced wholesale call volumes. Other operating costs and expenses were lower as (i) reduced personnel costs due to ongoing restructuring activities and (ii) lower travel and entertainment and marketing costs given COVID-19 related mobility restrictions were partly offset by increased network maintenance costs as usage increased.
C&W Panama: Adjusted OIBDA declined by 4% on a reported basis and 3% on a rebased basis. Performance was driven by the aforementioned revenue decline, partly offset by lower direct and operating costs. Direct costs decreased due to certain non-recurring projects that have been put on hold due to economic uncertainty related to COVID-19, and lower handset sales due to lockdown restrictions. Other operating costs and expenses were lower year-over-year, due to (i) the benefits of certain ongoing restructuring activities, (ii) reduced bad debt provisions, and (iii) lower network maintenance costs due to the renegotiation of certain vendor contracts and reduced expense as we upgrade legacy networks.
Liberty Puerto Rico: reported and rebased Adjusted OIBDA growth of 197% and 26%, 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 a higher number of video subscribers, and (ii) higher labor and commercial costs, including commissions associated with increased sales. Liberty Mobile also posted strong rebased Adjusted OIBDA growth driven by higher gross profit due to improved equipment sales margins and higher net roaming income.
VTR: Adjusted OIBDA declined on a reported and rebased basis by 12% and 20%, 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 other operating costs and expenses, slightly offset by lower direct costs driven by lower interconnect rates and equipment sales. Other operating costs and expenses were higher in the quarter, primarily due to increased network and commercial activities.
Cabletica: reported and rebased Adjusted OIBDA growth of 6% and 14%, respectively. Rebased growth was driven by the previously mentioned revenue growth and stable Adjusted OIBDA margin of 39%.
Net Earnings (Loss) Attributable to Shareholders
Net earnings (loss) attributable to shareholders was $88 million and ($181 million) for the three months ended March 31, 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
March 31,
2021
2020
in millions, except % amounts
Customer Premises Equipment
$
73.6
$
67.1
New Build & Upgrade
25.5
28.2
Capacity
17.1
6.1
Baseline
26.9
19.6
Product & Enablers
9.3
11.9
Property & equipment additions
152.4
132.9
Assets acquired under capital-related vendor financing arrangements
(18.8)
(23.6)
Changes in current liabilities related to capital expenditures
2.0
39.9
Capital expenditures
$
135.6
$
149.2
Property & equipment additions as % of revenue
13.1
%
14.3
%
Property & Equipment Additions:
C&W Caribbean & Networks
$
49.6
$
57.3
C&W Panama
10.7
13.2
Liberty Puerto Rico
33.7
13.3
VTR
46.7
40.9
Cabletica
7.3
4.0
Corporate
4.4
4.2
Property & equipment additions
$
152.4
$
132.9
Property & Equipment Additions as a Percentage of Revenue by Reportable Segment:
C&W Caribbean & Networks
11.5
%
12.7
%
C&W Panama
8.8
%
9.5
%
Liberty Puerto Rico
9.3
%
12.7
%
VTR
22.2
%
19.8
%
Cabletica
20.2
%
11.9
%
New Build and Homes Upgraded by Reportable Segment:
C&W Caribbean & Networks
21,000
17,200
C&W Panama
21,500
25,200
Liberty Puerto Rico
2,100
7,200
VTR
76,700
29,300
Cabletica
6,600
1,500
Total
127,900
80,400
Q1 2021 Property & Equipment Additions and Capital Expenditures – Segment Highlights
C&W Caribbean & Networks: the year-over-year decrease was mainly driven by (i) the Bahamas hurricane Dorian recovery capex spend in the prior-year period and (ii) the impact of COVID-19 restrictions on sales in certain markets.
C&W Panama: P&E additions were lower year-over-year due to (i) reduced CPE expenditures as gross adds declined and unit pricing and installation efficiency improved.
Liberty Puerto Rico: the year-over-year increase in expenditure and decline in P&E additions as a percentage of revenue was driven by the inclusion of Liberty Mobile in Q1 2021.
VTR: P&E additions were higher year-over-year driven by increased CPE, new build activity and capacity investments.
Cabletica: P&E additions increased as compared to the prior-year period due to higher CPE costs related to sales and higher cost of new set-top boxes.
Summary of Debt, Finance Lease Obligations, Cash and Cash Equivalents & Restricted Cash
The following table details the U.S. dollar equivalent balances of the outstanding principal amounts of our debt and finance lease obligations, and cash, cash equivalents and restricted cash at March 31, 2021:
Debt
Finance lease
obligations
Debt and
finance lease
obligations
Cash and cash
equivalents
in millions
Liberty Latin America1
$
404.8
$
1.1
$
405.9
$
557.1
C&W
4,193.9
1.2
4,195.1
474.7
Liberty Puerto Rico
2,610.0
10.8
2,620.8
128.1
VTR
1,597.4
—
1,597.4
138.5
Cabletica
119.7
—
119.7
7.2
Total
$
8,925.8
$
13.1
$
8,938.9
$
1,305.6
Consolidated Leverage and Liquidity Information:
March 31, 2021
December 31,
2020
Consolidated gross leverage ratio2
5.0x
4.8x
Consolidated net leverage ratio2
4.3x
4.3x
Average debt tenor3
6.5 years
6.2 years
Fully-swapped borrowing costs
6.0%
6.3%
Unused borrowing capacity (in millions)4
$
1,219.7
$
1,172.9
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.
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.
For purposes of calculating our average tenor, total debt excludes vendor financing and finance lease obligations.
At March 31, 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 March 31, 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 Subscriber Variance Table — March 31, 2021 vs December 31, 2020
Homes
Passed
Two-way
Homes
Passed
Fixed-line
Customer
Relationships
Video
RGUs
Internet
RGUs
Telephony
RGUs
Total
RGUs
Total Mobile
Subscribers
C&W Caribbean & Networks:
Jamaica
7,400
7,400
6,600
1,900
9,100
11,000
22,000
10,100
The Bahamas
—
—
(500)
600
1,400
(700)
1,300
(1,000)
Trinidad and Tobago
600
600
500
—
1,400
1,100
2,500
—
Barbados
—
—
200
700
900
(100)
1,500
(3,700)
Other
1,900
1,900
(2,200)
(3,000)
3,200
200
400
(3,300)
Total C&W Caribbean & Networks
9,900
9,900
4,600
200
16,000
11,500
27,700
2,100
C&W Panama1
16,200
16,200
3,900
1,400
5,100
3,500
10,000
61,100
Total C&W
26,100
26,100
8,500
1,600
21,100
15,000
37,700
63,200
Liberty Puerto Rico2,3
2,300
2,300
11,800
3,200
15,200
6,200
24,600
(1,900)
VTR
76,000
77,000
(10,500)
1,700
(8,200)
13,000
6,500
(6,400)
Cabletica4
6,600
6,600
3,000
(400)
5,900
1,700
7,200
—
Total Net Adds
111,000
112,000
12,800
6,100
34,000
35,900
76,000
54,900
Mobile Subscriber Variance Table — March 31, 2021 vs December 31, 2020
Consolidated Operating Data — March 31, 2021
Q1 Organic Subscriber Variance
Prepaid
Postpaid
Total
Prepaid
Postpaid
Total
C&W Caribbean & Networks:
Jamaica
977,200
25,200
1,002,400
7,200
2,900
10,100
The Bahamas
147,400
32,700
180,100
(3,400)
2,400
(1,000)
Barbados
84,100
30,800
114,900
(4,300)
600
Liberty Latin America Ltd
LILAB Rankings
N/A Ranked by Stock Gains
LILAB Stock Data
Industry
Satellite Telecommunications
Sector
Information
Tags
Cable/Satellite TV, Consumer Services, Information, Satellite Telecommunications
Country
US
City
Denver
About LILAB
liberty latin america ltd., together with its subsidiaries, provides fixed, mobile, and subsea telecommunications services. it offers communications and entertainment services, including video, broadband internet, fixed-line telephony, and mobile services to residential and business customers; and business products and services that include enterprise-grade connectivity, data center, hosting, and managed solutions, as well as information technology solutions for small and medium enterprises, international companies, and governmental agencies. the company also operates a sub-sea and terrestrial fiber optic cable network that connects approximately 40 markets. it provides its services in approximately 20 countries in latin america, the caribbean, chile, and costa rica under the brands of c&w, vtr, liberty puerto rico, cabletica, btc, uts, flow, and mã³vil. liberty latin america ltd. was founded in 2017 and is based in denver, colorado.