Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded. I'll now turn the call over to Gagandeep Sethi, Vice President of Operations. .

Good morning, ladies and gentlemen, and welcome to Liberty Latin America's First Quarter 2019 Investor Call.

This call and the associated webcast are the property of Liberty Latin America, and any distribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Latin America is strictly prohibited..

[Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Latin America's website at www.lla.com. Following today's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this call is being recorded on this date, May 8, 2019. .

Page 2 of the slides details the company's safe harbor statements regarding forward-looking statements.

Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and any other information and statements that are not historical fact.

These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed from time to time in Liberty Latin America's filings with the Securities and Exchange Commission, including its most recently filed Form 10-K and Form 10-Q.

Liberty Latin America disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. .

In addition, on this call, we will refer to certain non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation and on our Investor Relations website. Also note that nothing stated on today's call constitutes an offer of any securities for sale..

I would now like to turn over the call to Liberty Latin America's CEO, Mr. Balan Nair. .

Thank you, Gagandeep, and welcome, everybody, to our first quarter results presentation. I'm once again joined by my senior leadership teams from across the region, and I will get them involved as needed during the Q&A. .

For our agenda today, I'll start by taking you through our highlights for the first quarter and then provide some greater detail on progress we are making across the group, including some exciting commercial launches which have led to good operational results and positions us well for future quarters.

Chris Noyes, our Chief Financial Officer, will then follow with some prepared remarks reviewing our financial performance during the quarter. And after that, we will get straight to your questions. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com. .

Let me start on Slide 4 with our key highlights for the quarter. Firstly, we are starting to see some real improvements in our subscriber trends. In our fixed line business, we had a record first quarter performance, adding over 70,000 RGUs, while in mobile, we saw first positive net adds quarter in 2 years, including in Cable & Wireless.

Second, from a financial perspective, we saw strong year-over-year rebased revenue and OCF growth of 4% and 9%, respectively, driven by another excellent quarter in Puerto Rico. Third, we are continuing to upgrade and expand our fixed networks. Having added 330,000 homes last year, we passed or upgraded more than 80,000 homes in first quarter.

These investments deliver great returns for us and will drive growth as we progress through the year. Moving to point four. Adjusted free cash flow is a key deliverable for us, and at $48 million, it was up significantly compared to the prior year.

Finally, on the M&A front, we were excited to complete the acquisition of UTS at the end of the quarter and are really pleased with Cabletica's performance to date, which is ahead of our expectations and a testament to our disciplined approach..

In the next few slides, I'll provide an update on our consumer fixed and mobile businesses. So turning to Slide 5. Let me start by taking you through our fixed business, starting on the left with RGU additions, where we saw our best-ever Q1 performance with 73,000 net adds.

Notably, this was also our best performance in LLA in any quarter over a decade. From a product perspective, this was driven by broadband additions of 50,000, and we continue to add video and telephony RGUs as the markets we operate in remain relatively underpenetrated.

Geographically, Cable & Wireless contributed just over 40% of the net additions, which was its best performance in 2 years. Across the segment, we beat our internal estimates as our operational improvements, combined with high speeds and improved bundles, drove strong results. And I covered some of this during our last earnings call.

Other leading performers in the quarter were Puerto Rico, where we continued the momentum we generated in the second half of 2018, adding 22,000 RGUs; and Cabletica, which is delivering good additions in only second quarter as part of LLA..

On the right-hand side, we wanted to highlight how we've been able to leverage our superior networks to provide our customers with market-leading propositions. Speed remains a key differentiator for broadband services with our customers in Chile now enjoying average download speeds of over 200 megabits per second.

Further, in Chile, over 3/4 of our customers also have our next-generation wireless modem, which enables superior in-home connectivity. We also focus on delivering leading speeds across our other markets. In Puerto Rico, we were recently awarded the Ookla award for the fastest fixed network for the second consecutive year.

And across Cable & Wireless, we raised top speeds in January and now offer 1 gigabits per second in selected areas while meaningfully raising speeds across our base. .

Moving to Slide 6 and our mobile operations, starting with subscriber performances on the left. The majority of our mobile subscriber base is at C&W, and we've been focused on improving trends there. Our networks are strong across these markets, so our focus has been on our customer value proposition and go-to-market.

To that end, we've launched a number of new campaigns and propositions starting late in 2018, which have revitalized and refocused our offerings, and we're starting to see results with our first positive mobile additions in 2 years at Cable & Wireless this last quarter.

This includes 21,000 adds in Panama which are first market to launch the new Moments that Move Us campaign. VTR continued to steadily add mainly postpaid subscribers in the competitive Chilean market. .

However, the 2 areas where we are challenged on mobile are the Bahamas and Panama. In Panama, we see that turnaround coming in now with positive net adds, and we feel that the market will consolidate and be rational. Our operations in Panama is very strong, and I am positive about the future there. .

There were elections in Panama over the weekend, and I'd like to take this opportunity to firstly thank President Varela, who has done an outstanding job for the country and to congratulate the President-elect Cortizo on his victory.

We look forward to partnering with the new administration to grow Cable & Wireless Panama and continue investing in and advancing the country's telecommunications infrastructure..

In the Bahamas, we also see strong possibilities, and we are working with our partners in the government and the unions to turn that business around. It has been in structural decline due to being a monopoly that has not adjusted to competition. It is our most inefficient business, but we know how to turn it around and make it a growth business again.

All in all, our mobile business is now adding subscribers. And with pricing stability, this can start to grow again. .

Moving to the right-hand side of the slide and one of our focus areas, driving LTE growth. As shown in the chart, our LTE base has grown by 43% over the last 12 months, reaching the 40% threshold in penetration of our mobile subscriber base, or 12 percentage points up on the prior year.

This has been helped by our strong networks where we are speed leaders in key markets..

And this is driving data usage as well. From December to March, we saw average usage increase by about 25% across Cable & Wireless. Robust networks, national coverage and attractive propositions with great go-to-market aligned to strong brand is a winning combination, which I'll cover in greater detail on the next slide. .

So turning to Slide 7 and adding some more color on our campaigns across Cable & Wireless, where we are leveraging common marketing toolkits across our markets, starting with Panama on the left, which as I mentioned was the first market to launch in late 2018.

Here, we focus on refreshing our brands and ensuring our propositions are closely aligned with our customer needs. In January this year, we then took another step by combining our fixed and mobile brands under Más Móvil, the national mobile leader.

The early subscriber results bear out the effectiveness of the campaigns as we have delivered good gains in both mobile and fixed.

For fixed, we leveraged our improved speeds and service quality and was successful in selling bundled products, while in mobile, we managed to post positive net adds where our campaign, La Señal de Panama, resonated with customers. .

Moving to Jamaica in the center of the slide. We launched our Paint Jamaica Blue campaign in early April, so only a few weeks ago. We are still in the early execution phase, however, seeing very good initial results. The key to our new proposition here is simplicity.

In a market, which is predominantly prepaid with a large number of mobile package combinations, we have chosen to simplify our various offers into 2 lead packs, which we think will resonate with customers and, at the same time, help us improve ARPUs over time. .

Finally, on the right side of the slide, we strengthened our office in the Bahamas in the first quarter and, more recently, in Barbados and a number of other Cable & Wireless markets in April, leveraging tools and experiences in previous launches.

Barbados with its 100% fiber-to-the-home network would be a good example of how improvements in our commercial execution can generate returns from previously invested capital.

Overall, we're pleased with the early results of our campaigns and anticipate that these customer-focused actions will drive improved performance at Cable & Wireless across both fixed and mobile in the coming quarters. .

Moving next to Slide 8 and levers of growth in addition to our consumer businesses, starting on the left side with our B2B business. B2B revenues for the group was up 4% on a rebased basis in the first quarter. And as you can see from the chart, over 90% of our B2B revenue is generated by Cable & Wireless, which includes our subsea business.

Within the mix, our Cable & Wireless B2B operations have grown consistently for a number of years. This has been underpinned by increasing demand for bandwidth capacity, driving our subsea business and a mixture of incumbent and attacker markets growing through increased managed services..

In the first quarter, Cable & Wireless grew by 2% despite a difficult comp. In Puerto Rico and VTR, while smaller contributors to the group, have been growing strongly and were each over 40% higher in the first quarter on a rebased basis.

In these markets, we have historically targeted small businesses primarily offering connectivity with differentiated service levels at higher ARPUs compared to a typical residential connection.

While we still have plenty of runway in this segment, we are also looking to leverage our extensive product portfolio and resilient networks to target larger businesses. .

Moving to our inorganic growth drivers on the right-hand side of the slide. We were pleased to complete the acquisition of 87.5% in UTS at the end of March. We think this is a great transaction for a number of reasons. Firstly, it creates a national champion in Curaçao, bringing together a leading island-wide cable footprint in UTS' LTE network.

The acquisition was also struck at a good valuation, particularly noting the synergies available through in-market consolidation. And Curaçao is an economically stable market situated outside the hurricane belt. So it's a great business in a great area with great people. .

Finally, on this slide, I wanted to note that Cabletica, which joined our group in the fourth quarter last year, is integrating well into LLA and performing ahead of what we had expected for the business, which in turn is enabling Cabletica to delever its balance sheet.

This is a good example of our disciplined approach creating value for shareholders. .

On Slide 9, I wanted to wrap up by sharing my key business priorities for 2019, which are consistent and familiar with previous messaging. Firstly, we truly believe that having the right team and culture in our organization is a core requirement for us to build a business that will be successful for many, many years.

In our first year post the split off, my new executive team has been hard at work to create a collaborative and high-performing culture across the group, including creating more pan-LLA roles, which is important as it not only drives efficiencies but also brings our separate businesses closer to a common vision and objectives. .

Next, driving our performance. We worked hard through 2018 to establish the right platform for subscriber growth and saw some good early signs of that working, driving commercial performance in the first quarter. There is more to do, but we are making progress and expect continued commercial momentum to drive financial results later in the year..

Thirdly, as I covered extensively last quarter, we are committed to transform the business. This involves preparing for the future by optimizing our operating model through driving scale, leveraging common technologies and balancing our shared and local expertise.

Initiatives related to this priority includes the establishment of our Panama operations center and digitizing our business. This will create a functional operating model with a single technology and innovation team across the group to create products and deploy our digital strategy.

We are also thinking creatively about how we can drive programming costs lower. And we announced a joint venture with Digicel earlier this week, which will benefit our customers and improve our content cost profile.

The key message from this JV is that we are acting rationally and prepared to work with partners to create value for our customers and our shareholders..

Fourth, we are actively looking at opportunities to grow inorganically. We will remain disciplined in this area. As discussed in prior calls, we are all about value creation. Getting bigger is not our goal. Creating value is our goal..

And lastly, running a levered equity model. The strength of our balance sheet, including the proactive management of future maturities, is key. .

We've done some good work early this year, which Chris Noyes, our Chief Financial Officer, will take you through. And I'll now pass you over to him.

Chris?.

Thank you, Balan. I will start on Slide 11 with a summary of our Q1 consolidated quarterly financial results. Important to note that we will begin consolidating the operating results of UTS in Q2. We delivered $943 million in revenue and $366 million in OCF, resulting in rebased revenue growth of 4% and rebased OCF growth of 9%.

This growth was helped by continued momentum in Puerto Rico following the restoration of our own network last year. Our P&E additions totaled $139 million in Q1 or 15% of revenue as compared to $194 million or 21% of revenue last year. The prior year quarter included approximately $70 million of hurricane restoration spend in Puerto Rico and C&W.

Finally, adjusted free cash flow was a positive $48 million in the quarter, significantly above the prior year period driven by higher insurance recoveries, lower CapEx and improved cash flow from operations.

With respect to insurance specifically, we received $67 million in Q1 2019 from our final settlement payout as compared to a $30 million advance in Q1 2018..

Moving to Slide 12. I will summarize the Q1 performance for each of our 3 operating segments. On the left-hand side of the slide, Cable & Wireless posted $570 million of revenue, slightly down on a rebased basis.

Our top line performance continues to be impacted by declines in mobile revenue driven by reductions in ARPU and in our mobile subscriber base, principally in Panama and Bahamas. However, as Balan highlighted, we've begun to see some signs of stabilization in these markets.

On the positive side, we delivered rebased revenue growth of 5% in fixed residential, fueled by over 100,000 subscriber additions over the last 12 months, and we posted top line growth of 2% in B2B. Q1 OCF was $223 million, which is slightly lower on a rebased basis compared to the prior year, largely following the revenue result.

Both revenue and OCF growth were impacted by a $5 million headwind from a change in timing of directory revenue within the year. And additionally, year-over-year OCF growth was also impacted by a $3 million recovery in Q1 2018 related to the release of provisions established in connection with the 2017 hurricanes.

C&W's P&E additions were $64 million or 11% of revenue, which is consistent with the prior year and included over 35,000 new or upgraded homes during the quarter..

Moving to VTR in Chile and Cabletica in Costa Rica. Note that we did not own Cabletica in the prior year period, however, growth rates are on a rebased basis, adjusting the prior period to include Cabletica's results.

We reported revenue of $277 million, up 4% year-over-year on a rebased basis, which was driven by an increase in ARPU per fixed subscriber and strong growth in B2B service revenue. On OCF, we delivered $107 million, representing 3% rebased growth as a result of strong performance of Cabletica.

VTR was broadly flat year-over-year on a rebased basis driven in part by increased costs related to our digitization initiatives, higher sales and marketing and increased costs in our volumes. Our P&E additions were $54 million, reflecting 20% of revenue in Q1. During the quarter, we added over 40,000 new or upgraded homes..

Finishing on the right, reflecting significant year-over-year rebased growth, Liberty Puerto Rico generated $99 million of revenue an OCF of $48 million. As illustrated in the inset chart, our revenue is nearly back to pre-hurricane levels. Additionally, our Q1 revenue grew sequentially by 5% or about $5 million as compared to Q4 2018 levels.

With respect to P&E additions, we reported $20 million or 20% of revenue. These results are substantially lower than Q1 2018 as the prior year quarter included spend related to our network restoration..

Turning to Slide 13. Following on from Balan's comment earlier, I'll provide more details on how we are strengthening our balance sheet. The hexagons on the left of the slide summarize a number of important facts.

We finished Q1 with a liquidity position of roughly $1.5 billion, including over $500 million of cash and $900 million in undrawn credit facilities. Our fully swapped cost of debt sits comfortably at 6.4% and nearly all of our debt is fixed, which gives us a high level of cash flow certainty.

Our leverage was 3.9x on a net reported basis at the end of Q1. Of our aggregate $6.8 billion of total debt, approximately 85% is denominated in our swap to match our functional currencies, a key risk management philosophy, which I believe sets us apart from our peers. .

We have taken recent steps to strengthen our capital structure since closing the books for Q1. As highlighted on the right of the slide, in April, we completed 2 refinancing transactions at C&W, improving our average tenor to nearly 6 years for LLA.

We issued $300 million of 6 7/8% senior notes due 2027 and $400 million of 5 3/4% senior secured notes due 2027. The proceeds were used to repay $265 million of C&W's 2022 notes, $235 million of its 2026 term loan and $170 million in drawn RCF related to the UTS acquisition..

Finally, moving to Slide 14 and our conclusions. We remain on track to deliver upon our 2019 guidance targets that we provided 2.5 months ago on our 2018 year-end earnings call.

Our recently launched fixed and mobile campaigns are leading to improved operational performance as evidenced by our subscriber additions for the quarter, and we expect this to drive financial performance through the year. We are excited about the momentum within our B2B business and continue to see opportunities for growth.

As we look out to the remainder of 2019, there are a number of cost opportunities which we expect will drive and support our OCF progression. These include our transformational initiatives, which are in full swing, as well as improvement in certain of our content arrangements.

And finally, we remain disciplined in our capital allocations to create value for our stakeholders. .

With that, operator, we are ready to take questions. .

[Operator Instructions] And we'll go first to Amy Yong with Macquarie. .

I was wondering if you could spend a little bit of time just talking about the competitive landscape facing VTR and also Cable & Wireless. I understand that Telefónica is pushing a little bit more aggressively. And then maybe if you could talk a little about what you're seeing from Digicel.

And then Chris, what kind of financial contributions should we expect from UTS?.

one, on our pricing proposition; two, the product quality; and three, retention. And in all of fronts, I think we did a pretty good job there. .

On the Cable & Wireless side, it's really a tale of many stories. It's Panama. It's really the intensity of the mobile competition, and we started to see that beginning in second quarter of last year when most of the players started to go unlimited. And there has been a lot of disruption in the mobile market in Panama.

In the Bahamas, as I've indicated on previous calls, it's really, us being a monopoly and suddenly a competitor shows up in the mobile front in 2017. And we think we'll start losing -- we'll lose subscribers, and it will bottom up -- bottom out in about -- at about 35%, which I've said before.

And then it should remain stable on the mobile front there. And so that's kind of a little bit of an overview on the competitive landscape. .

Digicel, by the way, is -- where we compete with them, they are a good competitor, a good company and it's very rational. And so we feel fine competing with Digicel, and I think they feel the same way about us. .

Now I'll pass on to Chris to answer the questions on UTS. .

Yes. Amy, on the financial contribution, it will be -- as I mentioned, it'll be included just for 9 months, so start April 1. And the best way to think about it is we gave an enterprise value for the whole business of $189 million and a 6x pre-synergized multiple. So if you just divide that, you'll get roughly $30 million of annual OCF or EBITDA.

And if you just quarter-ized that, that's not a bad way to think about it. It is a business that has significant upside. So from a margin perspective, it'll be a margin much lower out of the gate than our other businesses.

There is a restructuring that we inherited that's in flight that will significantly help the business as we go out, but it will drag on the margin, on free cash flow in the first few quarters. But we'll absorb that within our free cash flow envelope. .

And so we stay within guidance. .

We'll move now to James Ratcliffe with Evercore. .

Two, if I could. First of all, you mentioned a part in Chile of making investment around digitization and the like.

Can you talk about the magnitude of those investments and when and where we'd see the impact, either on top line or cost structure there?.

And secondly, regarding the ongoing LTE migration. What are the benefits you get when a customer actually becomes an LTE customer? Do you see changes in ARPU, churn, et cetera? Any color on that would be great. .

Okay. I'll take both questions separately. The LTE migration is very accretive to us. On an average, customers that use LTE, the ARPU is more than 1.5x what our existing prepaid subscribers are -- or just non-LTE subscribers, and they consume 2 to 3x more data. That's what we see. So all in all, it's a good thing. .

The challenge in our market, of course, is handsets. And handsets have been really a barrier for people to want to move to LTE. But our networks are fully covered. .

I'll ask Vivek Khemka, who's our Chief Technology and Product Officer. Maybe a comment from you, Vivek. .

Yes. It's -- I think benefits from migrating to LTE, like Balan said, ARPU, data usage, better customer satisfaction, access to some of the newer apps and features and functions that we see customers wanting to use. Also a benefit, as we migrate customers off from 3G, we can reform some of the spectrum.

So those would be the additional benefits as we start moving to LTE, and then the 3G spectrum could be applied towards LTE or even future 5G builds. .

Great. And on the -- on Chile, on digitization. Digitization is something that's very important for our company, in transforming not only our cost structure but the way customers want to interact with us.

And we started our first project in Chile, which we should complete by the end of this summer, and you'll see a lot of that costs rolling off as well. .

And I have Guillermo on the bridge as well from Chile. And maybe Guillermo, you can touch on some of the key operational savings or actually operational opportunities as well as the benefits to customers. .

Of course. Thank you, Balan. Our digitization project is going to help us, first of all, streamline the relationship with consumers. So let me just give you an example.

The way we manage all the technical service technicians to the field it will be more aligned to modern services using applications, sending notifications to customers and making their relationship more simple and more streamlined. That's one example. It will also bring efficiency to call centers and other interactions like billing and the like.

Not only that front but also the internal front will be helped by digitization. And we, as Balan mentioned, should be able to roll up the -- and finish up the main part of the project in 2 to 3 months. And after that, we'll start to see the benefits of it. .

We'll move now to Soomit Datta with New Street Research. .

A couple of questions, please. Just sticking with Chile for a second. Thanks for the quick run-through as to what's happening in the market. But in terms of the competitive landscape, we've seen the competitors have a flurry of activity and gone quiet again, it sounds like.

Why do you think that's happened? And are they going to come back for round 2 at some point? It seems like -- with Telefónica being a little bit more aggressive, is there anybody else in the market you're seeing which is also trying to win some share?.

And then secondly, if I could just follow up on the wireless activities, I guess, in Panama and in the Bahamas. How confident are you that the competitors are now easing off somewhat? Obviously, we've seen ARPU down. Prices have come down. You're protecting your share well in the meantime, which is great news.

But is there any risk you think of, again, extra competition coming further down the road?.

Okay. I'll answer the wireless question now and go to Chile. And I'll also ask Inge and Guillermo to think about your responses as well. .

So let me give you my view. So on the wireless side, I wouldn't say that the intensity of competition is going down. I think in Panama, like I said, starting second quarter last year, most of our competitors have gone to unlimited reduced pricing. .

And our strategy on value creation was to, at first, keep the pricing at levels not to see any ARPU deterioration and try to hold the line. Very quickly by -- in a couple of quarters, we realized that we either can start losing revenue or start losing net adds.

And so we take -- we took a different tack, and you'll start seeing -- and you start to see it already in the fourth quarter last year and the first quarter this year. We're now starting to get net adds, which kind of means that the ARPU that we are at is kind of leveling off.

So once you start having ARPUs and you're starting to see net adds, you know you've got the right price. And the campaigns that we've put in place have been very strong. .

In the Bahamas, it's a duopoly market on mobile. And our competitor's good, and they've taught our team a number of things. And it's really up to us on how we want to respond, and I think we're responding it -- we're responding correctly in trying to preserve value in that market.

But we will see, still, another 4 or 5 more points of top line challenge on the mobile front because we'll bottom out at like 35% or so as I indicated. Now Inge, maybe you want to add a little bit more color to what I just said. .

Yes. Thank you, Balan. I think competition will always be there. I think the big difference versus before is we have the right teams in place. We have the right propositions in the markets, which we did not have before. We have the right marketing plans, and that will allow us to really be much more ahead of the game. .

On top, we have the best networks, both in Panama, and that you will see also behind the campaign we just launched with La Señal de Panama, and also in the Bahamas. So it is up to us to really make sure that from a commercial point of view, we really harvest that piece, and we are fully ready for that. .

Thanks, Inge. On Chile, this is probably our most competitive market. You've got Telefónica. You've got Claro. You've got Entel. These are giants. And they've -- over the last 10 years, as long as I've been associated with that business, they've been coming at us, overbilled us. They've done a whole bunch of different things that -- fiber-to-the-home.

Every single playbook from the telco side, they've played. And our team on the ground, led by Guillermo, we've done -- we've been very nimble in responding, and we've seen these ups and downs over the many years. And at every turn, we've responded back, and we've made sure that we preserve value there. .

And to your question around them retreating and why wouldn't they come back, I'll -- let me maybe ask Guillermo to give you a little bit more color on the status on the ground. .

[Technical Difficulty].

Guillermo? Sorry. We -- Guillermo got dropped off the call. But yes -- so the answer remains that we're not that -- too terribly concerned, but we are always very cautious. And we treat our competitors there with the full respect, and we know they can come back at us. But we have a great network with a great product.

We've got a really good value proposition on the ground. And don't forget, we are also building extensively in Chile, and that new construction there is bringing us very good volume as well. .

And we'll move now to Kevin Roe with Roe Equity Research. .

As we think about the improvement in quarterly OCF implied by your full year OCF guidance, can you discuss the Cable & Wireless margin upside potential and the key levers there? And related to that question, if you could also discuss your new Cable & Wireless Premier League agreement and its impact on the Cable & Wireless margin expansion. .

Sure. Thanks, Kevin. They're both kind of related. We -- there's a few things that's driving Cable & Wireless. Inge talked about our really good campaigns that are starting to drive operational improvements in both our efficiency as well as the net adds.

And all those net adds that we put -- piling on in Cable & Wireless is going to show up in -- on the financials. And our operating leverage there is improving as well as our programming costs that's going down, and they'll go down quite a bit in the second half of the year..

The EPL -- I think when you look at the EPL agreement that we did with Digicel, look at it 2 ways. One, we are very rational, and we are willing to partner with anyone to create value. And that's what we did there. Secondly, you can imagine that the cost of that has gone down from what we used to have plus you divide it by 2.

So this is quite an improvement to us from a cost structure standpoint. So we are very confident in the second half of this year in expanding the margins and expanding the bottom line at Cable & Wireless. .

And we'll move now to Matthew Harrigan with Buckingham. .

Most of my specific questions were answered. But I was curious if you could comment on the macro in Panama and particularly -- it seems like relative to [indiscernible], and if you have [indiscernible] 6% norm for a good number of years.

And then in Chile, where there's a lot of focus on China and the copper prices and how it affects currency and all that, I know you got a very nice runway and -- irrespective of mild variations and economic growth. But I think China and Chile probably affects how your stock behaves sometimes. .

Sure. The macros on both places are extremely good, and they're good because political stability, very pro-business governments. The population is really in the middle, upper-middle class. And if you go to either Panama or Chile, I think you'll leave feeling wow.

You land in Panama, you think you just landed in Hong Kong or something, right? It is an amazing country. And with the recent elections as well, we feel really good about the future of that country and our business in that country.

And you saw last year, the government passed a bill to allow for consolidation on the mobile networks, and that's very positive. And we think with the new administration, all signals we've heard is, not only do they support it but I think they'll make it even easier for consolidation to occur. .

And in Chile, we feel the same way as well, both on the government side and the population and the local economics. You are absolutely right. It's a commodity-based economy, copper specifically, and it's tied to construction. And China drives that construction a lot. And those are things we can't control, and we try to model it as best in our LRP.

But really, the good news here is that Chris has done a really good job on -- with the currencies and hedging, et cetera. So I think we are fine there. .

I think one of the cabinet, maybe, ministers is making noise to the fact that Panama has always been very U.S.-centric, but you're seeing more interest by China. And if U.S. doesn't pay attention, you could actually see somewhat of a pivot toward -- more of a pivot towards China in the region.

Is that anything that could affect you? Or is that just something you see as a stimulant to further economic activity?.

I'll make a more personal commentary here that -- I see that. We all see that across all of Latin America. It's not specific to Panama. China is investing in those countries, and they're doing a really good job. And we see the economic stimulation in Latin America and in the Caribbean, by the way.

If you look at any of the major road constructions, highways and all, they're being built by Chinese money and Chinese expertise as well. .

And I think what you can put in the commentary, I think the U.S. government can do more for the region and be supportive of it. We have lots of clients. We talk to a lot of people in the -- on the U.S. side.

And -- but we don't see it as a downside having China being an investor in those areas because they are doing a really good job, and it is stimulating the economy. And there is a lot of demand for broadband and services that we provide. .

I apologize for going off on a bit of a tangent. .

No worries, Matt. .

And that will conclude today's question-and-answer session. I'd like to hand back to Balan Nair for any additional or closing remarks. .

Thank you so much, operator. I feel good about the first quarter and then certainly the first half of the year as it sets a really good platform for us for the second half of this year and where you will see a significant improvement. And when Chris said we reiterate our guidance for the year, I mean we say that with full confidence.

And we see the upside is coming at us for the rest of the year. .

So thank you, everybody. Thank you for your support, and have a great day. .

Ladies and gentlemen, this concludes Liberty Latin America's First Quarter 2019 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America's website at www.lla.com. There, you can also find a copy of today's presentation materials..