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 Asad Nabi, VP, IT, Business Partner, Liberty Latin America..

Good morning and welcome to Liberty Latin America's Full Year 2024 Investor Call. At this time, all participants are in listen-only mode. Today's formal presentation materials can be found under the Investors section of Liberty Latin America's website at www.lla.com.

Following today's formal presentation, instructions will be given for a question-and-answer session. As a reminder, this call is being recorded.

Today's remarks may include forward-looking statements, including the company's expectations with respect to its outlook, and future growth prospects and other information and statements that are not historical fact. Actual results may differ materially from those expressed or implied by these statements.

For more information, please refer to the risk factors discussed in Liberty Latin America's most recently filed annual report on Form 10-K, along with the associated press release.

Liberty Latin America disclaims any obligation to update any forward-looking statements or information to reflect any change in its expectations or in the conditions, on which any such statement or information 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, which is accessible under the Investors section of our website. I would now like to turn the call over to our CEO, Mr. Balan Nair..

First, Network and IT. We are investing in leading infrastructure to support our customers in the region, as I covered on the previous slide. We will continue to do this, while at the same time having an opportunity to reduce our capital intensity as Chris will cover in his section. Second, our Commercial Strategy.

We saw traction across our converge offers, closing the year with over 30% FMC penetration in Panama, Jamaica and Costa Rica, which represents an increase of between six and eight percentage points year-over-year. In 2025, we will focus on driving penetration through refreshed converge offerings.

In 2024, we successfully completed price increases in both Fixed and Mobile across our main markets, with churn in line or below expectations. This will provide a lever to drive top line future in future years.

We believe that delivering a strong digital platform is vital to meeting our customers where they want to interact with us, improving the customer journey and a driver of cost efficiencies. In 2024, we achieved 25% digital sales across the group, exceeding our goal for the year and our target is to approach the 30s in 2025.

I also want to note that we continue to see significant opportunity to grow our B2B business in the region including through targeting specific segments such as hospitality where we can leverage our leading infrastructure and balance sheet strength. Third and finally, operational and capital allocation.

In 2024, we reinforced our mobile operations in Puerto Rico by completing the acquisition of Spectrum and subscribers from EchoStar. We started the process of future-proofing our capital structure at C&W which we have now completed.

We invested over $300 million in our equity through the redemption of the remainder of our convertible note and stock purchases. In 2025 our operational priority will be rebuilding Liberty Puerto Rico.

In addition we believe we have a substantial margin opportunity across our business and are working on several cost reduction initiatives to increase operational leverage as Chris will cover in more detail in his section. This was a success story in 2024 and will provide further tailwinds in the coming years.

Finally, we are excited about our opportunities in Peru. The business finished the year with over 3.1 million homes passed and approximately 0.5 million Internet RGUs. According to the latest data from the regulator Wow is the fastest-growing broadband provider in Peru.

Overall, we appreciate the overhang Liberty Puerto Rico has created and it is on us to demonstrate value. But I tell you we still believe that the true worth of our company is not reflected in the current stock price.

With that I'll pass you over to Chris Noyes our Chief Financial Officer who will talk you through our financial performance before we take your questions.

Chris?.

$1 billion in senior secure notes during Q4; and $1.5 billion in term loans; and $755 million in senior notes post year-end. The C&W credit silo's maturity profiles pre- and post-refinancings are highlighted in the two charts and clearly show the significant improvement in weighted average life.

For the silo, we now have an approximate weighted average life of 6.5 years with more than 75% of our silo debt maturing in 2032 and beyond. Not shown, but adjusting for the refinancings, LLA on a consolidated basis has close to 70% of its debt due 2029 and beyond. Moving to the final slide and our closing remarks.

As Balan highlighted, subscriber losses in Puerto Rico have begun to moderate. We are strengthening our CVPs and further improving our retention efforts on postpaid mobile. Our fixed and prepaid business lines have been moving in the right direction.

Obviously, we still have work to do on improving operations in Puerto Rico and it is a significant focus of both local and LLA management. We are actively engaged in driving OpEx lower through efficiency gains and expect our efforts to build throughout the year.

This is a key component combined with subscriber performance to enable us to return to adjusted OIBDA growth in the near-term. Beyond Puerto Rico, our other operations are executing well. We continue to build subscriber volumes through our FMC plans and other strategies that target both broadband and postpaid volumes.

As I highlighted, we believe our Caribbean and Central American businesses have significant opportunity to further drive margin expansion as our efforts in 2024 will carry over in 2025 and we continue to find ways to improve our service delivery and customer journeys.

Additionally, we believe the completion of the TIGO Costa Rica transaction will be quite value accretive, given the synergy opportunity. As we flagged earlier, our Peruvian investment has gained considerable scale quickly and certainly presents us with a range of attractive strategic and operating options.

To recap, 2024 is a tough year for us, given the PR migration but our other businesses performed well, demonstrating resilience and growth. Key for us in 2025 is to drive both adjusted OIBDA and FCF growth across the company as well as continue to reduce our leverage levels through adjusted OIBDA expansion.

We remain focused on achieving our previously announced three-year guidance targets on adjusted OIBDA and adjusted FCF, before partner distributions; and as noted earlier, we'll look to drive capital intensity lower. With eight quarters to go we are obviously behind where we hope to be after year one, given Puerto Rico.

So driving outperformance in other businesses and returning Puerto Rico to sustained growth are critical. Notwithstanding that LLA, we feel very good about our 2025 prospects overall, and have good momentum carrying into the year. With that operator please open it up for questions..

Thank you. [Operator Instructions] Our first question will be from the line of Michael Rollins with Citigroup. Your line is open..

Thanks and good morning. A couple of questions on Puerto Rico. The first you mentioned the bad debt picked up in the fourth quarter.

And curious does that infer that churn could be worse in the first quarter before it gets better as that bad debt could just turn into some disconnect risk? And then within that if you're able just to share if you have some visibility, I think, you did mention you're expecting trends to get better.

What are you seeing in the details of the analytics on your customers that are encouraging in terms of where that performance may be going? And then just secondly on -- also on Puerto Rico you previously described I believe a monthly EBITDA target of $45 million.

Curious if you could give us an update on whether that's still the target that Liberty is pursuing? And what's the trend to get there whether it's in the first quarter or over the course of 2025? Thank you..

Sure. Good morning, everybody. Thanks. Good questions. On the bad debt -- the bad debt issue was really a catch-up. We did record the churn first quarter, second quarter you saw the numbers.

And there was an element in the bad debt that we had to catch up relative not so much to subscriber movements but as much as to the acceleration of our equipment installation plans and – sorry, installment plans.

And those EIP catch-up happens because when a customer disconnects the handset that they owe us on left us and our ability to collect them as it turns out was quite challenging. And so there was a bunch of handset really catch up which is what happened.

And we think we've got that mostly under control, but it's something that was the leakage that happened to us. And two ways that we are trying to fix that, of course, clearly one with the collection agencies and the credit ratings; and two a better way in our process when somebody ports out from our base.

So a lot of the bad debt issues were not so much whether we did capture the right amount of churn. It's just the right amount of leakage was not captured. Secondly on green shoots, you saw the numbers on NPS. NPS is kind of a leading indicator. Usually it's a couple of months before it actually shows up operating-wise but the trends are very positive.

One of the leading problems for us in our customer dissatisfaction was not so much just the technology in our IT systems, but some of the processes that we had in actually capturing the right billing amount for our customers. And there were a lot of credits going back and forth.

When we migrated customers from AT&T there were a lot of failures in the way the data was transferred to us. So in our systems we didn't capture some of the discounts that our customers were enjoying in the prior billing systems. So in the new billing systems some of the codes for the discounts were not there. So it's not so much a technology issue.

It was the data transfer issue when we did the migration and we're catching up on that as well. So you're fixing a lot of the billing issues. We're seeing the NPS improve. You saw me talk about our coverage in Puerto Rico. We have the best network. And may I highlight -- when you look at the NPS numbers you saw that the big jump in 2023.

And a big part of that is really coming -- sorry 2022 a big part of that is coming from the hurricane recovery, which shows two things. One, our commitment to the island, but two our network was actually one of the best network because we have batteries everywhere. During the hurricanes, we were the ones that's up.

And our network continues to be the best network. And so we just need to capture that. The best fixed network the best mobile network, we got to fix a lot of the basics and then we go out with a good proposition for our customers. So we're seeing some green shoots there as well. Now to your last question on the $45 million on EBITDA.

I think in the last call, I indicated there's a lot of things that we need to fix in Puerto Rico a lot of the back-office systems. I just talked about the customer experience as well. So there's a number of moving parts here, which is why I said you know what I'm not going to give any more guidance on it.

But since you asked me I'll tell you that our target is to get to a full handle back again on EBITDA. You clearly saw we didn't do that in the fourth quarter. But the target is to get back into a full handle and the team is quite focused on that..

Thank you..

Our next question will be from the line of Vitor Tomita with Goldman Sachs. Please go ahead. Your line is now open..

Hello. Good morning and thanks for taking our questions. Two quick questions. The first one is on the CapEx guidance. If you could give us a little more color on the rationale for it to reduce CapEx to sales to a level that is lower than most telcos globally or in the region.

Just to confirm my understanding is that the goal is to approach 13% in 2025 and 2026 to average out 14% in the three-year guidance period but correct me if I got this wrong.

Have you been able to achieve your planned network improvement with less cash than expected? Or is this mostly driven by reprioritizing projects that you had planned? And should we see this as a more temporary reduction over the next few years to build up cash flow? Or do you see this level as sustainable in the longer run? And our second question would be on Puerto Rico.

You discussed a bit that bad debt impact related to equipment installment sales mostly related to past sales in the context of the migration? And also the earnings release cites some billing adjustments into B2B clients that were also relevant to B2B revenue reduction in the quarter.

Can you give some more color on how relevant those were for Q4 since those are impacts that I believe maybe -- might not have to expect in Q1? Thank you very much..

Sure. On the first one on the CapEx guidance, I think what we plan on doing and what we meant to say is that it's going to drop to 14%. And we may get to 13% in 2026, but my goal is to do 14%, 14%. That's the plan.

And the reason we could drop by two points is one a lot of our builds and upgrades and primarily the upgrades from our copper plant is complete. We just have some stragglers left, but it's mostly complete. This is like a six-year project. Secondly we've expanded our mobile networks as well.

When we took over this business we were literally less than 50% LTE. So we've upgraded LTE and we've upgraded to 5G in our key markets. I don't expect us to do many other 5G upgrades in the next 24 months partly because in a lot of these other locations even the handsets are not even 5G. It's like 60%, 70% of the handsets are not 5G.

As a matter of fact, we still have a whole bunch of 3G handsets in those areas. So it makes no sense for us to do a 5G upgrade. So for where I want to upgrade my mobile network my fixed network, we've done it. Now listen when we did the fiber-to-the-home upgrades the strategy was very clear.

It's to upgrade from our copper twisted plan twisted copper plan not from our HFC even though we've done some of that in Puerto Rico and Costa Rica. And -- but going forward I think we have a great network already. The second part of where the CapEx helps us as well is our CPE. Our cost of CPE continues to drop. And our focus right now is on mobile.

You'll see and you saw it in our numbers our growth is in postpaid and that's a lot less capital intensive. So when we look at our numbers 14% will be -- this is going to be a good year in investments and running the business with that number. And of course, clearly, it also is going to contribute towards our free cash flow guidance.

Now on your question on the EIP in Puerto Rico and the B2B bad debt, I think more what you would -- the way you should think bout this on the B2B side, it's mostly on credit. So for some of our large customers, we gave them credits during the period. And this is in reflection of some of the errors in our billing systems.

But for the most part most of the credits are all tapering off. So I don't expect to see big adjustments in the first quarter. And we feel, I think, on a good trajectory for the next four quarters. There may be still a little bit of noise but not to the extent that you saw in 2024 on any adjustments like that.

And then we're going to try to wean off a lot of the credits that we've been giving out to fix some of the setbacks we had in our billing systems. And then on the EIP, I think we've got a lot of work going on in our teams.

We just recently just this last week, loaded up again to the credit agencies loads of customers that have taken our handsets and not paid us for it. So work is going on that front. And 2024, I think we're going to go into -- sorry 2025 -- going into 2025 with a lot better operating principles than we did in 2024..

Very clear. Thank you very much..

Our next question will be from the line of Andres Coello with Scotiabank. Please go ahead. Your line is open..

Thank you. So, there's been a number of press articles mentioning LLA as interesting in a number of M&A transactions in the region. I think that there was an article saying that you could sell your Puerto Rico business to Verizon. And there were other articles saying that you could buy the Telefonica businesses in Argentina and Peru.

So I'm wondering what are your thoughts on M&A for this year? Thank you..

Thank you, Andres. On the Puerto Rico rumors, we came out and said, we don't confirm or deny. Listen, if we were going to do something, I would have said something on this call. There's nothing going on there. We are focused on fixing the business and staging a really nice comeback in Puerto Rico. That is our plan.

And clearly, if you look at our EBITDA right now, it's suboptimal for me to trade that asset at this point. We are going to fix it. We're going to grow that EBITDA, and I think it's going to be a great asset for anybody. Now on the Telefonica front, clearly you know all the issues.

Just to reassure everybody in this call, the Telefonica Peru asset has a lot of tax liabilities. It's in insolvency right now. It's not one that is of any interest to us. And the second one Argentina, listen, you can't put any debt in Argentina, and it's all going to be in U.S. dollars and you can't hedge it.

So, clearly in a levered equity model that doesn't work for us. So hopefully that kind of answers the questions..

Understood. Thank you..

Our next question will be from the line of Matthew Harrigan with The Benchmark Company. Please go ahead. Your line is open..

Thank you. Notwithstanding the more moderate approach on the CapEx side, you've got a fair amount of FTTH in place.

And I know it's early, but can you talk empirically about what you think are the benefits on a long-term pricing and the functionality of the network and the cost improvements that you see? I mean assuming more durable reliable networks clearly over a period of time.

And then how much does it cost to actually connect customers relative to what you have on the traditional HFC topology? Thank you..

Sure. Hey Matt. Two things. On pricing, I would say, pricing is really in many ways not related to the network. It's really related to how many people operate in that market. And where we had challenges in pricing, I can go back to Chile. It had nothing to do with our network or anybody else had fiber-to-the-home.

Remember, we competed with three other fiber-to-the-home network for years and we were fine. It's when the fifth and sixth operators showed up and started playing the price game, that's when we had problems. Now back to our business today. In Panama, it's a duopoly. In Puerto Rico, it's a duopoly on the fixed network.

In most of all the Caribbean, it's a duopoly. In Costa Rica, I indicated earlier, we have a lot of fixed operators there but we started the consolidation process with Tigo and us coming together. And I hope that this starts a wave of consolidation in Costa Rica. And that's how we stabilize pricing and then you get pricing power.

It's the number of competitors not so much the network. Having said that, we also have the best network. So I think we're in a very good position. And one thing that I am very happy with our strategy over the last four years have been on volume not on price. So we actually do have a nice positive price arbitrage against our competitors.

In most markets, we do have pricing power now and we do actually have room between us and our competitors. And we fully intend to take advantage of it and we've talked about price increases already. So we focus a lot on volume and then now we're pivoting to volume and price.

And I think that strategy is working and you can see really the tailwinds that came into 2024 and now coming into 2025. And so this is the flywheel that we were looking for and it is working. So I feel really good about pricing going forward and the market structures everywhere we operate. Your second question was on connecting and the cost to connect.

Clearly in HFC, the cost to connect is a lot lower only because it's a plant that we've owned and we already have drops to most homes. The cost to get a new customer in fiber-to-the-home is a little bit higher right now, because it's a newer network. And when a customer calls us for service more often than not, we have to pull a drop to the home.

So it's a drop to home. One interesting data point for you would be Matt -- would be that the cost of CPE in fiber-to-the-home is actually now a lot less than it is in HFC. Who would have thought? And so it's the cost of drop and then now the CPE and the CPE is much lower cost.

And there are reasons for that we can get into with broadcom and the chips and all that. But we are now sitting a lot better and it's a much more competitive market in fiber-to-the-home with our vendors. So we've got the costs really well on fiber-to-the-home. And like I said it's cheaper on HFC because there's no drops..

Thanks, Balan. I'm glad you realized it's not a good time to sell the Puerto Rican operation and have a great year..

Thanks..

[Operator Instructions] And our next question will be from the line of Mathieu Robilliard with Barclays. Please go ahead. Your line is open..

Good morning and thank you for the presentation. I had two questions. One is around Puerto Rico but not about all the questions that have been asked before but really about the Echostar integration.

How is it going? I think at the Q3 call you had flagged that you may have to face some interoperability issues between the handsets of the customers that you acquired and your technology. If you can clarify that and how it's going? And then just a very quick one on guidance. I realize you reiterated guidance.

But can you confirm that the ranges and the numbers that you've put in your Q4 2023 presentation are still valid because maybe I missed it, but I haven't seen it anywhere in the 2024 docs. Thank you..

Sure. I think let me answer your second question first. As Chris indicated right, we are reconfirming our guidance on free cash flow. If you recall, we had originally guided to greater than $1 billion in free cash flow. What we're saying it's going to be about $1 billion.

And the difference is like Chris said 2024 was a challenging year for us in Puerto Rico. Now I'll tell you when I put a guidance out, we don't just put the $1 billion out. We actually have buffers against that $1 billion. And I must say that the challenges in Puerto Rico in 2024 pretty much ate up most of my buffers.

But the path to $1 billion in free cash flow is still clear to us. And the other parts of the guidance the EBITDA was supposed to be in the mid-single digit mid- to high-single digit we're going to be around the hoop there on those numbers. You'll see 2025 performance and 2026 performance. It will come in around that guidance.

And finally on CapEx as Chris indicated we're going to drop our CapEx. We originally were planning on 16%. We did spend a little north of 16% in 2024. We expect to spend 14% in 2025 and probably come in around 14% in 2026 as well. And that's kind of where it's going to lay out in the guidance.

On Puerto Rico in the EchoStar integration, I'll tell you Eduardo our lead in Puerto Rico our General Manager he's got a full handle on this. Remember, he came to us from TracFone where he did a huge prepaid migration between TracFone and Verizon. And he's assembled a team that helped him do that migration in Puerto Rico.

And because remember the EchoStar migration here from Boost it's all prepaid. Prepaid is a lot easier to migrate than postpaid. That's why when you look at our Puerto Rico migration from AT&T our prepaid business, our NPS has remained high. Those customers have come in. We're actually growing that business. It was the postpaid that we ran into issues.

So in the EchoStar integration I feel a lot more confident because one is prepaid; and two I have Eduardo there and the team that he has built around it. And the issue on handset interoperability remains. There will be handset interoperability. We have budgeted in our plans a migration of handsets.

People would come into our stores or as people upgrade or change plans they would get a new handset. And that is in our budget already. So -- and we do have a good plan on how we would do that operationally for our customers.

As you can see right now most of our customers that come in on prepaid when they upgrade, we put them on our platform as opposed on the existing platform. So we've already started the work and a lot more work will happen in the second and third quarters this year and we expect to get it all mostly completed in the fourth quarter of this year.

Hopefully that answers your question, Mathieu..

Thank you very much. Absolutely. Thanks..

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

Yeah. Well, a few things I want to say. Thank you so much operator. Firstly, you saw that we had a lot of challenges in Puerto Rico. And it is a cloud on not only how the business performed and our equity but also, I guess on the management team a lot of us take this very seriously. This is something we know we've let you down on in 2024.

I am focused 100% in 2025 to fix a lot of the challenges we had in '24. We've built a strong team. We've made a number of changes in the fourth quarter and earlier this year as well in the team to put us on a different trajectory in 2025. But I must also point out to you we have a great business.

The cloud on Puerto Rico has somehow distorted the fact that the rest of our business are killing it, Costa Rica, Panama, the Caribbean Islands, our Subsea Networks business, a lot of those businesses. If you remember when we started this journey we're not where they are today. Panama missed their budgets every year for like five years in a row.

We've turned that business around. It is a strong business. We fixed the market structure, put in great management. It is running really well. It's a good flywheel. Costa Rica, who would have thought? We integrated the whole business there from Telefonica smoothly without much disruption to our customers.

It is now a good growth in a highly competitive market we're growing our fixed business. And we were number three in mobile in Costa Rica and we are now number one. We know how to operate businesses. The Caribbean Islands, this was one that from way back when we bought this have never achieved its full potential.

But today it has more than exceeded the potential that we even thought there. Our management team there is doing a great job. The flywheel is great. And if you look at the string of competitors that compete with us, many of them have challenges, some of them have gone bankrupt, some of them are no longer in business. We are strong.

We know what we're doing. We had a hiccup in Puerto Rico. We're going to fix it. And '25 is when we are going to show you that we will fix it. And I am eternally optimistic about this business. The rest of our business is going great. I just need to fix Puerto Rico and I tell you, this business will do very well.

So I thank you for your support and your patience with this. This management team is going to work really hard for you. Thank you..

Ladies and gentlemen, this concludes Liberty Latin America's Full Year 2024 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..