Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded. And I'll now turn the call over to Aamir Hussain, Chief Technology and Product Officer of Liberty Latin America..

Good morning, and welcome to Liberty Latin America's Full Year 2022 Investor Call. At this time, all participants are in listen-only mode. 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 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 facts. Actual results may differ materially from those expressed or implied by these statements.

For more information, please refer to the risk factor 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 conditions on which 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..

Thank you, Aamir, and welcome, everybody to Liberty Latin America's Full Year Results Presentation. I'll begin with our group highlights and an overview of our operating results by reporting segment. Chris Noyes, our CFO, will then follow with a review of the company's financial performance. After that, we will get straight to your questions.

As always, I'm joined by my executive team from across the region, and I will invite them to contribute as needed during the Q&A following our prepared remarks. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com. Starting on Slide 4 and our highlights for the year.

The group reported revenues of $4.8 billion in 2022. Without VTR, which was still consolidated until the end of Q3, our revenue would have been $4.4 billion and up by 3% on a rebased basis, driven by top line growth across all reporting segments particularly our Liberty Costa Rica, C&W Networks and Lat Am and our C&W Caribbean businesses.

We continued our operating momentum, adding 445,000 broadband and mobile postpaid subscribers in the year. We delivered Internet RGU growth across our segments with the largest contributions from Puerto Rico, where we added 36,000 subscribers despite some sales disruption from Hurricane Fiona.

In mobile postpaid, we had a record year adding 344,000 subscribers. This was more than double our 2021 results, again, with growth across all of our operations. Our principal financial guidance metric for 2022 was adjusted free cash flow, and we broadly met our target of approximately $200 million as we delivered $189 million in the year.

Notably, we had a record Q4 generating $210 million in that quarter. We made significant progress with our inorganic strategy in the year as we acquired Claro Panama and finalize our 50-50 joint venture in Chile with America Movil.

We are focused on completing our integrations of acquisitions we have made over the past years, and this will drive significant value for stakeholders. Finally, we accelerated our buyback activity in the year, repurchasing $170 million of stock.

Since we began the program in 2020, our buyback has exceeded $240 million, and we continue to hold the view that the most compelling capital returns are in our own company. Turning to Slide 5. I'll start our operating review with C&W Caribbean. On the left of the slide, we present our Internet and mobile postpaid additions throughout the year.

Internet adds had a slow start in the first quarter, but momentum has been building, particularly in Jamaica, which is our largest market in this segment. Growth has been driven by continued network investments, and in 2022, we upgraded or added [over] 100,000 homes in Cable & Wireless's Caribbean markets.

In mobile, we delivered record postpaid additions of 74,000 subscribers in 2022, 84% higher than in the prior year. We continue to be focused on growing our postpaid base with a key driver being increased penetration of FMC products. In Jamaica, we more than doubled FMC penetration in our fixed customer base during the year.

Moving to the center of the slide and our revenue by product. The pie chart here depicts the well-diversified nature of C&W's Caribbean revenue with B2B and consumer fixed being the largest element followed by consumer mobile.

Importantly, we saw healthy growth across each of these products in the year, contributing to C&W Caribbean's 4% overall revenue growth on a rebased basis. Finally, to the right of the slide.

As we look ahead to 2023, we are focused on continuing our operating momentum through network upgrades and expansion investments, higher FMC penetration and opportunities in segments such as small, medium businesses. Moving to Slide 6 and our C&W Panama segment, starting on the left of the slide.

We added our highest-ever number of Internet RGUs in Panama during the year as we drove penetration across our footprint. We have made significant investments in our network, and this should provide a platform for continued growth.

At the end of 2022, 96% of our footprint was high speed, either HFC or fiber-to-the-home compared to 76% at the end of 2020. Our overall footprint has grown by 20% over the last 2 years. In mobile, we recorded record postpaid additions of 70,000 in 2022, driven by a strong first half performance.

In line with our group strategy, we continue to be focused on growing our postpaid base with a driver, again, being increased penetration of our FMC products, which was 4 percentage points higher year-over-year. Moving to the center of the slide and our revenue by product. In Panama, our largest products by revenue are mobile and B2B.

Consumer fixed is the smallest of the 3, but our fastest-growing area with 8% revenue expansion in 2022. Finally, to our 2023 priorities and integration updates on the right of the slide. In addition to continuing our organic consumer momentum, we are focused on integrating the Claro Panama operations.

Total run rate synergies from the acquisition including CapEx benefits of approximately $15 million are approximately $70 million. As of last month, we are now able to combine our sales channels, stores and brand.

We are finalizing our organizational and commercial structure, and we are consolidating infrastructure and benefiting from associated savings. Next to Slide 7 and Liberty Puerto Rico, our largest single market. Starting on the left of the slide, our Internet base grew steadily through the year, delivering 36,000 RGU adds.

We continue to invest to expand our network with fiber-to-the-home, utilizing FCC allocated funds to make our infrastructure more resilient. In mobile, Puerto Rico was another market where we recorded record postpaid adds in the year, adding 85,000 subscribers.

We continue to maintain very low levels of churn at around 1% a month for our postpaid base helped by the quality of our network and FMC offerings. Moving to the center of the slide. Consumer mobile is our largest product in Puerto Rico with just under 50% share. This is followed by our fixed business, representing 1/3 of the total and B2B at 15%.

Internet RGU adds drove fixed revenue growth. However, mobile was slightly lower year-over-year as postpaid subscriber growth was offset by ARPU and prepaid subscriber declines as well as the impact of increased subsidies in 2022. Finally, to our 2023 priorities and integration updates on the right of the slide.

In addition to stabilizing our mobile performance and continuing to grow our consumer fixed business, our 2023 focus is on completing the integration of AT&T's operations in Puerto Rico. Total run rate synergies from the combination are expected to be approximately $70 million by 2024.

We completed a key milestone by setting up and engaging our mobile core at the end of last year. Our focus is now deployment of the IT stack and migrating customers into our platforms, thereby replacing services currently provided by AT&T under our TSA. Consistent with our acquisition plan, we aim to complete the integration by the end of this year.

Turning to Slide 8 and Liberty Costa Rica, starting on the left of the slide. Our Internet base grew through the year, delivering 25,000 data RGU adds. We continue to invest in our network, adding or upgrading 50,000 homes in 2022, a 15% increase year-over-year.

Liberty Costa Rica generated the highest postpaid mobile adds across LLA with 115,000 net new subscribers. Moving to the center of the slide. Consumer mobile is our largest product with close to 60% share of revenue This is followed by our consumer fixed business, representing just under 1/3 and then a small but fast-growing B2B operation.

We generated growth across all segments with particularly strong in B2B and mobile. Finally, to our 2023 priorities and the integration updates on the right of the slide. In addition to our strong operating and financial performance in 2022, we also successfully completed the rebranding of our operations.

As with Panama and Puerto Rico, in addition to executing against ongoing commercial objectives, we are focused on integration activities in Costa Rica. Total run rate synergies from the acquisition are approximately $15 million. Similar to Puerto Rico, we are now deploying systems so that we can migrate fully to our own platforms and exit our TSA.

Next to Slide 9, in our C&W Networks and Lat Am segment. Starting with Networks on the left-hand side. We've consistently grown this business since inception over 20 years ago, driven by significant increases in capacity demanded by customers as the chart highlights for the last couple of years.

Set against it, the pricing of capacity typically dropped each year, driven by the declining cost of delivering increased bandwidth. The dynamic of increased demand, quantity, offset by declining prices has consistently yielded a net growth in the low single digits year-over-year with a 6% revenue increase in 2022.

A combination of our available capacity, unique network topology, low latency and mesh architecture, which enables router resilient and the ability to provide end-to-end solutions differentiates our proposition in this area. Looking to 2023, continued growth should be supported by increasing broadband penetration across our markets.

In the center of the slide, you can see that subsea accounts for the majority of revenue with a 75% share. This drives a strong U.S. dollar rating in the Networks and Lat Am segments with over 80% of our revenue generated in U.S. dollars.

Although a smaller slice, our Lat Am B2B business is one of our fastest-growing areas across the group with revenue 9% higher in 2022. On the right side of the slide, we provide some more color on this area. The chart here shows 2 different major product groups within our Lat Am B2B business. The largest element remains connectivity.

However, the highest growth area is value-added and managed services, which include cloud-based solutions, Disaster Recovery-as-a-Service, Software-as-a-Service and others. We expect the value-added services area to continue its strong growth trajectory, representing a larger share of B2B revenue over time.

We anticipate customers will look to increase the sophistication of the IT platforms and products and digital drive penetration of our offerings. Moving to Slide 10, and an overview of our infrastructure assets.

On the left of the slide, you can see that across our consumer markets, 93% of our networks are capable of supporting very high speed through either hybrid fiber-coax or fiber-to-the-home. We have continued to build fiber and migrate our customers from copper to fiber technology.

Over the past 4 years, our FTTH proportion has increased by 22 percentage points as we have expanded our footprint and upgraded our copper plant. Upgrading our networks is a key focus for us, as you can see in the center of the slide. We are committed to getting all our networks to gigabit readiness, capable of delivering speeds of 1 gig and above.

Having begun our journey with 7% of our network at this standard in 2018, we made great strides to reach over 2/3 of network readiness at the end of 2022.

And by the end of 2024, we anticipate a nearly 30 percentage points further improvement where approximately 95% of our footprint will have achieved gig readiness through either fiber-to-the-home or DOCSIS 3.1 technology.

We are also making our network much more resilient through investments in power resiliency, which is a key challenge in our markets. Finally, on the right of the slide, we have LTE in all our markets and 5G in Puerto Rico and the U.S. Virgin Islands. We have already enabled 5G core in all markets.

5G build will follow over time as 5G handset penetration improves. Finally, to Slide 11 and our strategic focus areas as we look to 2023 and longer shareholder value creation. The priorities are split across 3 pillars, consistent with the priorities we identified a year ago. First, networks and IT.

As mentioned, this will include expanding and upgrading our fixed networks through our [Giganet] initiative. In 2023, we are focused on wireless core transformation, integration activity as well as establishing new IT stacks to consolidate platforms and support our business operations. Second, our commercial approach. We are focused on reducing churn.

This is a material value driver for us commercially and a KPI for our management team. Product development includes delivering a great in-home Wi-Fi experience, eSIM, 5G, fintech and B2B products. This will improve service and reduce costs.

Through a greater use of digital channels, we seek to improve our customer journey, reducing friction in buying our products, increasing efficiency of our search engine optimization, search engine marketing and social networks marketing in the future. This should increase sales and reduce channel costs for the future.

Additionally, following the initial success noted earlier, we are pushing FMC hard in our markets, leveraging a key competitive edge that we have. That full-service capability should also enable us to expand our B2B penetration. Third and finally, capital allocation. Integration progress and completion is our key focus this year.

We have closed some very accretive transactions and need to complete their integration so that we can deliver significant synergies and optimize top line performance in turn driving adjusted OIBDA and adjusted free cash flow growth in the future.

We accelerated our share buyback in 2022 and continue to see this as a core part of capital allocation going forward. As at the end of the year, we had $57 million remaining for our last authorization through the end of 2024. We will obviously need to get reauthorization sometime this year. We will continue to consider inorganic opportunities.

However, our focus this year is completing the integration projects as mentioned. Overall, we expect our strategy to drive mid to high single-digit adjusted OIBDA growth in 2023, which in turn supports our free cash flow guidance.

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?.

Thanks, Balan. I will focus on Q4 performance on this slide. Two items to note. First, we deconsolidated our Chilean business at the start of Q4; second, our Q4 results in Puerto Rico continued to be impacted by Hurricane Fiona.

Q4 revenue totaled $1.16 billion, representing a reported decline of 9% from Q4 2021, which included $175 million of revenue associated with VTR. Excluding VTR, our revenue increased year-over-year by $55 million helped in part by the contribution from our Q3 acquisition of Claro Panama and modest rebased growth of 1%.

On a full year basis, excluding VTR, revenue was up 8% on a reported basis and 3% on a rebased basis to $4.4 billion as each of our 5 operating segments grew year-over-year, especially our Costa Rica and C&W Networks and Lat Am businesses. In terms of adjusted OIBDA, we delivered $405 million in Q4, which reflects a 13% reported decline.

Excluding VTR, we experienced a modest decline of 1% on adjusted OIBDA on both a reported and rebased basis. Our Q4 rebased performance was adversely impacted by Hurricane Fiona by roughly $7 million. On a U.S. dollar basis, our adjusted OIBDA sequentially expanded in Q4 by over $20 million in Q3 levels, excluding VTR's results.

For the full year, excluding VTR, adjusted OIBDA was flat on a rebased basis to $1.6 billion with C&W Caribbean and Costa Rica performing exceptionally well.

Our growth was adversely impacted by $26 million of integration expenses in 2022, reflecting a $10 million increase year-over-year and roughly $19 million of adverse impacts from Hurricane Fiona.

For 2023, we expect to incur over $30 million of integration costs and more importantly, are targeting mid to high single-digit rebased adjusted OIBDA growth for LLA, of which growth will be significantly weighted to H2. Slide 14 recaps our revenue and adjusted OIBDA results by current segment for Q4 and the full year.

Beginning on the left with C&W Caribbean. We reported $367 million of revenue in Q4, reflecting 3% rebased growth and $138 million of adjusted OIBDA or 10% rebased growth. In the quarter, our residential mobile and B2B businesses delivered mid-single-digit rebased growth on the back of volume increases.

Our double-digit rebased adjusted OIBDA growth in Q4 was led by the Bahamas, Cayman and the Dutch Caribbean.

Similar to prior quarters, the business experienced a 250-basis point increase in adjusted OIBDA margin as the higher year-over-year revenue was matched with holding both direct and indirect costs relatively flat which we feel is a very good result given inflationary pressures.

Moving to Cable & Wireless Panama, Q4 revenue and adjusted OIBDA were the highest totals of the year with $201 million and $57 million, respectively. Revenue declined 3% on a rebased basis year-over-year, principally as a result of a 7% rebased decrease in B2B as the prior year period, including a large amount of project-related revenue.

Adjusted OIBDA declined 10% in the quarter, largely as a result of the drop in revenue combined with higher bad debt expense, including the cost of factoring in certain receivables. Importantly, our adjusted OIBDA stepped up by $11 million in Q4 from Q3. Entering 2023, we can now legally integrate the CWP and Claro Panama customer-facing operations.

And as a result, we expect to significantly expand adjusted OIBDA even with integration costs expected to run in excess of $10 million. Turning to the middle column, C&W Networks and Latin America, which is the third operating segment of our Cable & Wireless credit pool. Had a strong Q4 with $124 million in revenue and $80 million in adjusted OIBDA.

Our rebased revenue growth rate of 14% was due to higher revenue associated with the significant subsea network customer that is recognized on a cash basis, increased affiliate revenue and growth in B2B service-related connectivity and managed services. This revenue growth contributed to our 13% rebased growth in adjusted OIBDA.

Second from the right, Liberty Puerto Rico. Our revenue in Q4 was $374 million, reflecting flat year-over-year rebased growth, and a modest increase from Q3 of $7 million. On a rebased basis, residential fixed revenue growth was driven by approximately 40,000 RGU additions during the year, partly offset by the negative impact of Hurricane Fiona.

Residential mobile revenue was broadly flat compared to the prior year period as higher handset sales were offset by lower ARPU and a decline in prepaid mobile subscribers. Adjusted OIBDA was $120 million in Q4, resulting in a rebased decline of 11%.

Several factors contributed to this year-over-year decline, including $7 million in revenue credits and costs associated with Hurricane Fiona, increased facility and maintenance costs and the adverse gross margin impact of robust handset sales in the quarter as compared to last year.

Wrapping up with Costa Rica on the far right, we generated Q4 revenue of $117 million and $36 million of adjusted OIBDA, reflecting strong rebased revenue growth of 3% and an LLA segment leading 17% rebased adjusted OIBDA growth. Revenue is driven to a large extent by increases in residential mobile and broadband subscribers.

Adjusted OIBDA rebased growth was not only helped by the revenue contribution, but tight cost management and a favorable FX in the second half of the year. With our 2022 subscriber additions and a combination of lower integration expenses and higher synergies, we are poised for strong growth in 2023.

Turning to Slide 15, I will discuss 2022 P&E additions and adjusted FCF and our 2023 outlook. First, we incurred $225 million of P&E additions in Q4 and $816 million for the full year, with the latter representing 17% of revenue, a little better than our 2022 guidance.

Without VTR, our total full year spend would have dropped to $709 million or 16% of revenue of which over $40 million was related to acquisition integration and Hurricane Fiona. On this basis, we are targeting approximately 16% of revenue for P&E additions at LLA in 2023, including integration spend of more than $30 million.

This overall quantum of spend for 2023 enables us to continue investing on our networks to drive gigabit readiness, progress in the elimination of residual copper and deliver on our integrations. With respect to adjusted free cash flow, we had a great Q4 delivering $210 million in the quarter and bringing our full year result to nearly $190 million.

For 2023, we are targeting to deliver $300 million of adjusted free cash flow before partner distributions, which compares to $190 million for 2022 on the same basis.

We foresee having very attractive capital deployment opportunities in 2023, including with respect to our own equity, hence, we'll look to more aggressively upstream cash out of non-wholly owned entities this year and going forward. We estimate that third-party distributions could total up to $100 million this year. Moving to Slide 16.

At December 31, 2022, and adjusting for the 2023 January Costa Rica financing, we had $8 billion of total debt, approximately $800 million of cash and $1 billion of availability under our revolving credit lines. At LLA, gross leverage was 5.1x and net leverage was 4.6x.

Post quarter end, in January of 2023, we refinanced our 2024 bank debt maturities in Costa Rica, with new $450 million 8-year debt from both the Inter-American Development Bank and institutional investors via a sustainability-linked bond, which is the largest [issuance] of its kind in Central America.

It was the first single B rated issuance from the Lat Am corporate to come to market since March 2022 and a milestone transaction for the Costa Rican corporate market. As a result of this transaction, we have further improved our maturity schedule with only about 5% of our debt due before 2027.

Our key next maturity over the coming 4 years is our $400 million convertible bond, which is due in July 2024. And we currently have ample liquidity to address this debt maturity. Overall, with minimal near-term maturities, we can look to be opportunistic and wait for improving market conditions before addressing debt due in 2027 and beyond.

Further, the long-dated maturity wall provides us with significant financial flexibility in the meantime to allocate capital to higher-yielding activities. In terms of our stock repurchase activity, we bought nearly $170 million in 2022, bringing our total to $243 million since the program's inception.

Our 2022 amount was about 90% of our consolidated 2022 adjusted free cash flow. Under our current authorization, we have $57 million remaining through December 31, 2024. As Balan mentioned, we would expect to use this amount in 2023, and we'll look to our Board for additional authorization during the year.

In summary, we made steady progress with respect to our longer-term strategy in 2022 and completed the inorganic transactions in Panama on Chile. Looking forward, 2023 is geared towards operational execution as we begin to see the benefits from our network, digital platform and product investments as well as centralization efforts.

Additionally, a big part of our story in 2023 will involve the integrations in Puerto Rico, Costa Rica and Panama. Successful implementation will set the stage for significant cash flow acceleration into 2024.

We remain disciplined around our CapEx spend even as we invest in our fixed network, both in terms of fiber-to-the-home expansion and shutting down our residual copper plant, expanding mobile capacity throughout our markets and advancing our integration efforts.

Capital allocation will remain a key focus as we seek to drive shareholder return and given global market conditions likely to see us dedicate more spend to internal investments, including our stock. And finally, we have set the bar high for ourselves in 2023.

We are pursuing mid to high single-digit rebased adjusted OIBDA growth, P&E additions of approximately 16% of revenue and adjusted free cash flow before distributions to partners of approximately $300 million. With that, operator, please open the line for questions..

[Operator Instructions] The first question we have from the phone lines comes from Soomit Datta of New Street Research..

A couple of questions, please. One, just on the free cash flow outlook for 2023. You talked a little bit around where synergies are going.

I just wondered -- do you have a number for full year '23 to what that synergy capture will be within the $300 million? And then secondly, please, just on the minority dividends, which is an interesting one, obviously, very limited payout last year. It looks like a bit of a catch-up payment this year.

What is the best way to think about that number going forward, please?.

Soomit. Okay. Let me take your questions. I'll start with the dividend first and I'll get back to the free cash flow. On the dividends, last year, we did the acquisition in Panama. So we did not -- we spent most of the cash there on that transaction, the Claro acquisition.

And then certainly, in the Bahamas, what we did was -- sometimes we hold the cash in the business, especially when we think with natural disasters, hurricanes, et cetera, we have issued dividends in the Bahamas prior, and I think what Chris was indicating in his comments was that we are working with our partners this year to determine if we need to issue dividends this year, and I suspect we will.

And from where we stand, of course, when we upstream all that cash, the capital allocation needs in our business to be significant. So we feel really good about the cash going towards buybacks as an example. On the free cash flow side, we're not breaking out the synergies, but I can tell you this, most of our synergies are going to kick in, in '24.

So you'll see this year's FCF, of course, have synergies in that, but the bulk of our synergies dropped in '24 and beyond. So clearly, you can see even further expansion next year..

I would add, Soomit, your question around what maybe is more of a normalized bid. I think there is -- we are sitting on some cash balances in both Panama and Bahamas. So I think it's rightfully good to assume that there is a little bit of a catch-up.

I think as you look out until '24 and beyond, it will really be a factor of the free cash flow generation in each of those businesses both of which we think we can continue to grow the cash flow, particularly in Panama with the synergies kicking in, in '23 going into '24..

That's right..

[Operator Instructions].

I think, operator, if we don't have any more further questions, I think our presentation this morning was self-evident. So we give maybe 20 seconds, and then we'll call it a wrap..

[Operator Instructions].

Okay. Well, operator, thank you. And to everybody on the call, I want to thank you all for your support. Clearly, we are quite excited about 2023 with the guidance that Chris just gave.

I think the management team feels really good about our region, feels really good about the businesses that we operate, and feels really good as well on our ability to execute this year. So we do thank you for your support, and we look forward to talking to you again in the next quarter. Thank you, everybody..

Thank you, all. Ladies and gentlemen, this concludes Liberty Latin America's Full Year 2022 Investor Call. As a reminder, a replay of the call will be available to 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..