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

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

* 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:

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:

• 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.

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:

Quarterly Subscriber Variance

1. VTR's non-organic adjustment relates to RGUs that were disconnected prior to April 1, 2021.

C&W Caribbean & Networks

• Fixed additions led by Jamaica with 26,000 RGUs added in the quarter and close to 100,000 over the last twelve months.
• Mobile subscribers grew by 58,000, a significant swing as compared to the prior year quarter where COVID-19 led to a loss in subscribers. The result also represented an improvement compared to our seasonally soft Q1. Jamaica drove the segment performance with 55,000 net additions.

C&W Panama

• Panama continued to grow its RGU base, adding 9,000 subscribers in the quarter.
• Mobile operations delivered a consistent and strong quarter with 60,000 subscriber additions. Panama has now added over 200,000 subscribers in the last twelve months following a significant loss in Q2 2020.

Liberty Puerto Rico

• Fixed additions of 22,000 RGUs represented continuing momentum in Puerto Rico with growth led by increased broadband penetration.
• Liberty Mobile delivered 6,000 net subscriber additions, with gains in postpaid more than offsetting a small loss in prepaid.

VTR

• VTR's RGU base was stable in the quarter. We continue to expand our footprint in Chile with a focus on differentiated customer service and products.
• We reported 7,000 fewer mobile subscribers in Q2 as COVID-19 continued to impact retail activity.

Cabletica

• RGU additions in Cabletica totaled 11,000 and were up 70% year-over-year as broadband penetration continued to drive the business.

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:

N.M. – Not Meaningful.

Forward-Looking Statements and Disclaimer

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our strategies, priorities and objectives, performance and guidance, growth expectations, and Adjusted Free Cash Flow expectations for 2021; expected new build and upgrade activity in 2021 and estimated P&E additions as a percent of revenue; the anticipated impact of the COVID-19 pandemic (including the rollout of vaccines) on our business and financial results, and for the countries in which we operate; our digital strategy, product innovation and commercial plans and projects; expectations on demand for connectivity in the region; our anticipated integration plans, synergies, opportunities and integration costs in Puerto Rico following the AT&T Acquisition; the timing and impact of the acquisition of Telefónica's Costa Rica business; the strength of our balance sheet and tenor of our debt; and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include events that are outside of our control, such as hurricanes and other natural disasters, political or social events, and pandemics, such as COVID-19, the uncertainties surrounding such events and efforts to contain any pandemic, the ability and cost to restore networks in the markets impacted by hurricanes or generally to respond to any such events; the continued use by subscribers and potential subscribers of our services and their willingness to upgrade to our more advanced offerings; our ability to meet challenges from competition, to manage rapid technological change or to maintain or increase rates to our subscribers or to pass through increased costs to our subscribers; the effects of changes in laws or regulation; general economic factors; our ability to obtain regulatory approval and satisfy conditions associated with acquisitions and dispositions, including the acquisition of Telefónica's Costa Rica business; our ability to successfully acquire and integrate new businesses and realize anticipated efficiencies from acquired businesses; the availability of attractive programming for our video services and the costs associated with such programming; our ability to achieve forecasted financial and operating targets; the outcome of any pending or threatened litigation; the ability of our operating companies to access cash of their respective subsidiaries; the impact of our operating companies' future financial performance, or market conditions generally, on the availability, terms and deployment of capital; fluctuations in currency exchange and interest rates; the ability of suppliers and vendors (including our third-party wireless network provider under our MVNO arrangement) to timely deliver quality products, equipment, software, services and access; our ability to adequately forecast and plan future network requirements including the costs and benefits associated with network expansions; and other factors detailed from time to time in our filings with the Securities and Exchange Commission, including our most recently filed Form 10-K and Form 10-Q. These forward-looking statements speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About Liberty Latin America

Liberty Latin America is a leading communications company operating in over 20 countries across Latin America and the Caribbean under the consumer brands VTR, Flow, Liberty, Más Móvil, BTC, and Cabletica. The communications and entertainment services that we offer to our residential and business customers in the region include digital video, broadband internet, telephony and mobile services. Our business products and services include enterprise-grade connectivity, data center, hosting and managed solutions, as well as information technology solutions with customers ranging from small and medium enterprises to international companies and governmental agencies. In addition, Liberty Latin America operates a subsea and terrestrial fiber optic cable network that connects over 40 markets in the region.

Liberty Latin America has three separate classes of common shares, which are traded on the NASDAQ Global Select Market under the symbols “LILA” (Class A) and “LILAK” (Class C), and on the OTC link under the symbol “LILAB” (Class B).

For more information, please visit www.lla.com

Footnotes

1. Rebased growth rates are a non-GAAP measure. The indicated growth rates are rebased for the estimated impacts of (i) acquisitions, (ii) dispositions and (iii) FX. See Non-GAAP Reconciliations below.
2. Adjusted OIBDA is a non-GAAP measure. For the definition of Adjusted OIBDA and required reconciliations, see Non-GAAP Reconciliations below.
3. Adjusted Free Cash Flow (“Adjusted FCF”) is a non-GAAP measure. For the definition of Adjusted FCFand required reconciliations, see Non-GAAP Reconciliations below.
4. See Glossary for the definition of RGUs and mobile subscribers. Organic figures exclude RGUs and mobile subscribers of acquired entities at the date of acquisition and other nonorganic adjustments, but include the impact of changes in RGUs and mobile subscribers from the date of acquisition. All subscriber / RGU additions or losses refer to net organic changes, unless otherwise noted.
5. The FX-Neutral change represents the percentage change on a year-over-year basis adjusted for FX impacts and is calculated by adjusting the current-year figures to reflect translation at the foreign currency rates used to translate the prior year amounts.

Additional Information | Cable & Wireless Borrowing Group

The following tables reflect preliminary unaudited selected financial results, on a consolidated C&W basis, for the periods indicated, in accordance with U.S. GAAP.

The following table details the U.S. dollar equivalent of the nominal amount outstanding of C&W's third-party debt, finance lease obligations and cash and cash equivalents:

• At June 30, 2021, our third-party total and proportionate net debt was $3.6 billion, our Fully-swapped Borrowing Cost was 5.6%, and the average tenor of our debt obligations (excluding vendor financing) was approximately 6.0 years.
• Our portion of Adjusted OIBDA, after deducting the noncontrolling interests' share, (“Proportionate Adjusted OIBDA”) was $200 million for Q2 2021 and $178 million for Q2 2020.
• Based on Q2 results, our Proportionate Net Leverage Ratio was 4.3x, calculated in accordance with C&W's Credit Agreement. At June 30, 2021, we had maximum undrawn commitments of $775 million, including $145 million under our regional facilities. At June 30, 2021, the full amount of unused borrowing capacity under our credit facilities (including regional facilities) was available to be borrowed, both before and after completion of the June 30, 2021 compliance reporting requirements.
• We expect P&E additions as a percentage of revenue in 2021 to be approximately 16%, at the upper end of our previously announced range.

Liberty Puerto Rico (LPR) Borrowing Group

The following table details the nominal amount outstanding of Liberty Puerto Rico's debt, finance lease obligations and cash and cash equivalents: