Liberty Latin America(LILAK) - 2023 Q4 - Annual Report

Item 1. Business Liberty Latin America is an international telecommunications provider offering converged fixed, mobile, and subsea services across Latin America and the Caribbean, focusing on network expansion, strategic acquisitions, and managing diverse regulatory and competitive landscapes General Development of Business Liberty Latin America Ltd. is a Bermuda-registered international provider of fixed, mobile, and subsea telecommunications services across Latin America and the Caribbean, expanding through network build-outs, upgrades, and strategic acquisitions - Liberty Latin America is an international provider of fixed, mobile, and subsea telecommunications services, operating in over 20 countries across Latin America and the Caribbean, Puerto Rico, USVI, and Costa Rica[25][27] - The company has expanded its network, passing or upgrading approximately 1.6 million additional homes and commercial premises in the past three years[26] - Key strategic transactions include: monetization of ~1,300 mobile tower sites (November 2023), agreement to acquire Dish Network spectrum assets in Puerto Rico and USVI (November 2023, expected to close 2024), formation of Chile JV (October 2022), acquisition of América Móvil's Panama operations (July 2022), and acquisition of Telefónica's Costa Rica wireless operations (August 2021)[28][31] Description of Business Liberty Latin America is a leading communications company offering converged mobile, broadband, video, and fixed-line telephony services to residential and business customers across Puerto Rico, Panama, Costa Rica, and the Caribbean, leveraging an extensive subsea and terrestrial fiber optic cable network - The company is a leading communications provider in Puerto Rico, Panama, Costa Rica, the Caribbean (including Jamaica), and other parts of Latin America[35] - Services offered include video, broadband internet, telephony, and mobile services, often bundled for residential and business customers[35] - Business products include enterprise-grade connectivity, data center, hosting, managed solutions, and IT solutions, supported by a subsea and terrestrial fiber optic cable network connecting approximately 40 markets[36] Operating Data As of December 31, 2023, Liberty Latin America's fixed networks passed over 4.6 million homes and served nearly 4 million revenue-generating units (RGUs) and almost 8 million mobile subscribers, with network penetration varying by region Operating Data as of December 31, 2023 | Metric | Value | | :---------------------- | :---------- | | Homes Passed | 4,620,400 | | Customer Relationships | 1,950,900 | | Total RGUs | 3,933,400 | | Video RGUs | 933,700 | | Internet RGUs | 1,801,400 | | Telephony RGUs | 1,198,300 | | Mobile Subscribers | 7,977,400 | | Prepaid Mobile Subscribers | 5,556,500 | | Postpaid Mobile Subscribers | 2,420,900 | Fixed Network and Product Penetration Data (%) as of December 31, 2023 | Market | Cable Homes Passed (%) | FTTH Homes Passed (%) | Television Penetration (%) | Broadband Internet Penetration (%) | | :---------------- | :--------------------- | :-------------------- | :------------------------- | :------------------------------- | | Panama | 37 | 57 | 15 | 24 | | Jamaica | 42 | 47 | 18 | 45 | | The Bahamas | — | 74 | 6 | 21 | | Trinidad and Tobago | 99 | 1 | 28 | 38 | | Barbados | — | 100 | 28 | 56 | | Other C&W | 58 | 39 | 19 | 52 | | Costa Rica | 80 | 20 | 24 | 35 | | Puerto Rico | 87 | 13 | 20 | 46 | Products and Services Liberty Latin America offers a comprehensive suite of converged mobile, broadband, video, and fixed-line telephony services, expanding high-speed networks and deploying 5G, while relying on diverse third-party suppliers for content and equipment - The company offers mobile, broadband internet, video, and fixed-line telephony services across its operating footprint, with mobile services available on postpaid or prepaid basis[59][60][63] - Network expansion and upgrade programs (Network Extensions) passed or upgraded approximately 349,200 homes in 2023, with over 80% of the network capable of delivering speeds of 1 Gbps or above through FTTH and DOCSIS 3.1[64][82] - Content strategy emphasizes product accessibility (home and mobile screens), diverse propositions (channels, VoD, streaming), strategic partnerships, and variety across entertainment categories[88] Residential Services Residential services include mobile, broadband internet, video, and fixed-line telephony, with mobile spectrum licenses typically 10-15 years, broadband expanding with FTTH/HFC, video offering digital platforms, and fixed-line transitioning to VoIP - Mobile services are offered on postpaid or prepaid basis, with contract terms typically 12-36 months for postpaid and no minimum for prepaid; spectrum licenses generally last 10-15 years, with Puerto Rico/USVI licenses often perpetual[62][63] - Broadband internet services are expanding through FTTH or HFC networks, with a focus on increasing speeds and offering next-generation WiFi products; multiple tiers of internet service are available, with pricing based on speed and market conditions[64][66][67] - Video services, offered in most markets, include digital television platforms with DVR, VoD, and access to streaming services via apps like 'Flow Sports' and 'Liberty Go'; multiple tiers of programming are available, often with discounts for bundled services[68][69] - Fixed-line telephony services are provided over HFC, FTTH, and copper networks, with a strategic shift towards VoIP technology and modern fiber optics to enhance customer experience[71][72] Business Services The company offers B2B services leveraging its extensive fixed and mobile infrastructure, with Liberty Networks providing integrated communication and cloud solutions across Latin America and the Caribbean via its 50,000 km subsea and terrestrial fiber optic cable network - B2B services are offered across operations, with C&W having the most developed business; Liberty Puerto Rico and Liberty Costa Rica segments present future growth opportunities in B2B[73] - Liberty Networks provides integrated communication and cloud services, connectivity, and wholesale solutions to hyper scalers, carriers, and businesses using approximately 50,000 kilometers of fiber optic cable with over 20 Tbps activated capacity[74][78] - Business services include VoIP, data services (VPN, MPLS, SDWAN), wireless services, and value-added managed services (Cloud Infrastructure, Cyber Security, Managed WiFi, IoT, Telehealth)[79][81] Technology The company primarily uses HFC and FTTH networks for broadband, video, and fixed-line telephony, continuously optimizing network capacity and deploying 5G in Puerto Rico and USVI, covering approximately 95% of the population - Primary network technologies are HFC and FTTH, with VDSL/DSL in a minority of cases; over 80% of the network is capable of 1 Gbps speeds[81][82] - Network optimization efforts include increasing nodes, upgrading HFC bandwidth, converting analog to digital, replacing copper with fiber, and using digital compression[82] - The subsea network has over 10 Tbps capacity to the United States, utilizing approximately 20% of its potential, indicating significant growth opportunities[83] - Wireless networks primarily use LTE, with 5G deployed in Puerto Rico and USVI, serving approximately 95% of the population; the company aims to expand 5G footprint where business cases exist[85][86][87] Supply Sources The company's programming strategy focuses on diverse content through licensing agreements and owned sports networks, while mobile handsets and CPE are sourced from various suppliers with dual-sourcing strategies, and software licenses are obtained under long-term contracts - Programming content is primarily licensed from third-party providers (broadcasters, cable networks, Hollywood studios) through multi-year agreements, with fees often on a per-subscriber basis[88] - The company operates its own content, such as Flow Sports and RUSH sports channels in the Caribbean, and produces original series[88][89] - Mobile handsets and CPE (set-top boxes, modems, WiFi routers) are sourced from a variety of suppliers, with production lead times and dual-sourcing strategies actively managed[91] - Software licenses for internet services, internal IT platforms, and mobile network operations (e.g., voicemail, text messaging) are licensed from various suppliers, typically involving per-subscriber or one-off fees[92] Regulatory Matters The company's operations are subject to diverse and evolving regulatory regimes across its markets, covering video, broadband, telephony, and mobile services, with increasing focus on broadband regulation, network resilience, and third-party access - Telecommunications services are regulated in each market, with scope varying; adverse regulatory developments could limit growth, revenue, and service offerings, and increase operating costs[93] - Regulation often includes price caps, consent requirements for price changes, and determination of interconnect and access charges; there's a trend towards decreasing interconnection rates[98] - Regulators are increasingly focused on broadband internet services, network resilience, affordability, penetration, quality of services, and consumer rights[99] - Mandated third-party access to network infrastructure (dark fiber, landing stations, mobile towers) is a growing concern, potentially strengthening competitors and impacting revenue[100][101] C&W Caribbean C&W Caribbean operates under non-exclusive, renewable government-issued licenses and concessions, subject to competitive, qualitative, and rate regulation, with increasing regulatory focus on broadband and mandated third-party network access - C&W Caribbean operates under non-exclusive, renewable multi-year licenses and concessions, subject to competitive, qualitative, and rate regulation[95] - Rate regulation includes price caps for telephony services and regulator-set interconnect and access charges, with a trend towards decreasing interconnection rates[98] - Increased regulatory focus on broadband, network resilience, and mandated third-party access to infrastructure (e.g., dark fiber, mobile towers) is evident, with Jamaica's new infrastructure sharing rules and ECTEL's Electronic Communications Bill posing potential adverse impacts[99][100][101][102] - The company is subject to universal service obligations and must comply with general legislation on data retention, consumer protection, and e-commerce[106][107] Liberty Networks Liberty Networks' B2B and wholesale operations are subject to less regulation than residential businesses, holding 10-15 year licenses, while its submarine fiber optic cable systems in the U.S., Caribbean, and Latin America are regulated by the FCC and Department of Homeland Security - Liberty Networks faces significantly less regulation than residential businesses, holding 10-15 year licenses for wholesale and enterprise services in all operating countries[109] - Its submarine fiber optic cable systems and landing stations in the U.S. and its territories are regulated by the FCC and Department of Homeland Security, requiring additional reporting and licensing[110] C&W Panama C&W Panama is regulated by ASEP and ACODECO, holding concessions renewed until 2037 for various telecommunication services and 125 MHz of allocated spectrum, with the government aiming to maintain three mobile operators after market consolidation - C&W Panama is regulated by ASEP (public services) and ACODECO (consumer protection/antitrust)[111] - The company holds thirteen concessions, renewed until 2037, for basic local, national, and international telecommunications, public/semipublic terminals, and dedicated voice circuits[115][117] - C&W Panama has 125 MHz of allocated spectrum and is authorized to operate mobile telephone services until 2037[114][118] - Following mobile market consolidation, the Panamanian government is facilitating the acquisition of Digicel Panama's concession to maintain three mobile operators[113] Liberty Puerto Rico Liberty Puerto Rico is extensively regulated by the FCC and TB, receiving significant funding for network deployment and hardening, participating in affordability programs, and facing recent regulatory changes regarding broadband classification and network resiliency - Liberty Puerto Rico is regulated by the FCC and the TB, with comprehensive oversight under the Communications Act for communication, telecommunication, and cable television services[122][123] - The company received preliminary approval for approximately $72 million from the UPR Fund for high-speed broadband access in Puerto Rico and $85 million in Connect USVI funding for wireline networks in USVI, with six-year completion timelines[127][128] - Liberty Puerto Rico participates in the Affordable Connectivity Program (ACP) and Emergency Connectivity Fund (ECF) to provide discounted broadband services to low-income customers, though ACP funding is expected to be exhausted by April 2024[140][141] - Recent FCC proposals include reclassifying broadband as a 'telecommunications service' (2023 Notice), prohibiting 'digital discrimination of access,' and mandating wireless providers to enhance network reliability and resiliency during emergencies[138][139][149] Liberty Costa Rica Liberty Costa Rica operates under Costa Rica's General Telecommunications Law, regulated by MICITT and Sutel, holding telecommunications services licenses expiring in 2028 and renewable 15-year mobile concessions, with fixed number portability implementation underway - Liberty Costa Rica is regulated by MICITT and Sutel under the General Telecommunications Law, with licenses for wireline HFC networks expiring in 2028[151] - Mobile concessions grant 100 MHz of spectrum, with 15-year renewable terms, some expiring in 2026 and others in 2033[152][158] - Video service providers can define channels and content, but must carry Costa Rican television channels with 60% national coverage and retransmission consent[153][155] - Fixed number portability implementation has started, but is expected to take at least two years[157] Competition Liberty Latin America operates in competitive telecommunications markets across Latin America and the Caribbean, facing significant competition from converged service providers and mobile/cable/IPTV operators, with a strategy focused on converged services, speed leadership, and attractive content - The company operates in emerging markets with lower telecommunication service penetration, presenting opportunities for growth in data services[159] - Competition is significant from companies offering converged services (video, internet, fixed telephony, mobile) and those specialized in one or more products[160] - Key competitive differentiators include customer service, competitive pricing, quality high-speed connectivity, and the ability to offer converged services[160] Mobile Services The company is a leading mobile provider in its footprint, competing with major players like Digicel, Millicom, T-Mobile US, América Móvil, and ICE, with a strategy to expand bandwidth and high-speed coverage through diverse calling plans and bundled offers - The company is a leading mobile provider, competing with Digicel and ALIV in C&W Caribbean, Millicom (Tigo) in Panama, T-Mobile US and América Móvil (Claro) in Puerto Rico, and Claro and ICE (Kolbi) in Costa Rica[161][166] - Strategy includes offering diverse calling plans (unlimited, minute packages) and using bundled offers with video and high-speed internet to gain mobile subscribers[161] Broadband Internet In broadband internet, the company faces intense competition from incumbent and non-incumbent telecommunications companies, mobile operators, and cable-based ISPs, focusing on speed leadership (up to 1 Gbps) and utilizing DOCSIS 3.0/3.1 and FTTH to compete effectively - Competition comes from incumbent/non-incumbent telcos, mobile operators, and cable-based ISPs offering fixed-line (cable, DSL, FTTH) and wireless (LTE, WiFi) broadband[162] - Speed, bundling, and pricing are key competitive factors; the company aims for speed leadership, offering up to 1 Gbps via HFC and FTTH networks[163] - Key competitors include Cable Bahamas Limited and Digicel in C&W Caribbean, Millicom (Cable Onda) in Panama, Claro and fiber/fixed wireless operators in Puerto Rico, and ICE (Kolbi), Telecable, and Millicom (Tigo) in Costa Rica[167] Video Distribution Video services compete with traditional broadcasters, DTH satellite providers, other fixed-line carriers, and increasingly, OTT aggregators, with piracy also posing challenges, while the company leverages deep-fiber access and innovative video services to enhance customer experience - Video services compete with FTA/DTT broadcasters, DTH satellite providers, IPTV over DSL/FTTH, and OTT services (Max, Amazon Prime Video, Netflix)[165][166] - Piracy and unauthorized content distribution, particularly in regions with less developed copyright laws, present significant challenges[169] - Competitive advantages include deep-fiber access for concurrent services, triple-play bundles, and converged mobile/fixed-line offerings; the company launches innovative video services (e.g., Flow Sports, Liberty Go) to respond to OTT growth[170] - Key competitors include Digicel and DTH in C&W Caribbean, Millicom (Cable Onda) in Panama, DirecTV and Dish Network in Puerto Rico, and Millicom (Tigo) and Telecable in Costa Rica[173][174] Fixed-Line Telephony The mature fixed-line telephony market is driven by price, quality, and bundling, with the company facing competition from other telecommunications operators, VoIP providers, and OTT telephony services, focusing on value leadership and innovative calling options - The fixed-line telephony market is mature, with competition from other telecommunications operators, VoIP providers, and OTT telephony services like WhatsApp[175] - The company's strategy emphasizes value leadership, offering diverse calling plans and bundling telephony with digital video and internet services[176] - Key competitors include Digicel and Cable Bahamas Limited in C&W Caribbean, Millicom (Tigo) in Panama, Claro, Aeronet, Neptuno, and WorldNet in Puerto Rico, and ICE (Kolbi), Millicom (Tigo), and Telecable in Costa Rica[179] Business and Wholesale Services The company provides advanced B2B and wholesale services over its technologically advanced subsea fiber optic cable network, offering operational redundancy and significant unused capacity, making it difficult for competitors to replicate - The company offers advanced B2B and wholesale services over its subsea fiber optic cable network, providing operational redundancy and significant unused capacity (approximately 20% utilized as of December 31, 2022)[177] - The network's advanced technical state and the challenges in securing governmental/environmental licenses make it unlikely to be replicated in the region in the near term[177] - Competition in B2B services comes from residential telecommunications operators and regional/international service providers[178] Human Capital Resources As of December 31, 2023, Liberty Latin America employed approximately 10,600 full-time employees, with a talent strategy focused on acquisition, learning, development, and performance management, fostering a diverse and inclusive workplace through its EDI strategy and CSR initiatives Employee Demographics (as of December 31, 2023) | Metric | Value | | :-------------------------------- | :---------- | | Total Full-time Employees | 10,600 | | Women Employees (Global) | 41% | | Women in Managerial Positions | 39% | | Employees Covered by Union Contracts | ~3,800 | - The total employee attrition rate (voluntary and involuntary) was approximately 11.5% in 2023, with an eNPS of +20, indicating an engaged workforce[181] - Talent strategy focuses on Talent Acquisition, Learning & Development, and Performance Management, with an Agile Performance Development (APD) experience for frequent feedback[183] - The Equality, Diversity & Inclusion (EDI) strategy focuses on gender equity, LGBTQIA+ inclusion, and Race & Ethnicity, informed by employee feedback and celebrated through initiatives like International Women's Day and Pride Month[185][186] - Corporate Social Responsibility (CSR) efforts concentrate on Learning, Environment, Access, and Disaster Relief, with employees actively participating in outreach programs like Mission Week (7,800+ volunteer hours in 2023)[189][190] - The company offers competitive compensation, benefits (retirement, healthcare, parental leave, ESPP), and well-being programs, and enforces a Code of Conduct with mandatory training and an employee hotline[191][192][194] Available Information All SEC filings, including amendments, are available free of charge on Liberty Latin America's investor relations website (www.lla.com) generally within 24 hours of filing - All SEC filings and amendments are available free of charge on the company's website (www.lla.com) within 24 hours of filing[196] Item 1A. Risk Factors The company faces substantial risks from intense competition, rapid technological changes, complex international operations, significant leverage, cybersecurity threats, climate change, and its corporate structure, all of which could materially impact financial performance and shareholder value Risks that Relate to the Competition we Face and the Technology Used in Our Businesses The company operates in highly competitive markets for cable television, broadband internet, telephony, and mobile services, facing challenges from various providers including OTT content, overbuilds, and government involvement, demanding continuous investment and adaptation to rapid technological changes - The markets for cable television, broadband internet, telephony, and mobile services are highly competitive, with competition from FTA/DTT broadcasters, DTH satellite providers, DSL/VDSL/FTTH networks, OTT content providers, and other mobile operators[200] - Overbuilds (multiple cable/fiber systems in the same territory) and potential government involvement in network establishment (e.g., FTTH) can increase competition and adversely affect growth and financial results[201][202] - Failure to anticipate and adapt to rapid technological changes (e.g., 5G, AI, machine learning, cloud computing) or to successfully introduce new products/services could limit competitiveness and demand[203][216][217] - Significant capital expenditures for network upgrades and expansions (Network Extensions) may not generate positive returns, and delays or lack of adequate capital could harm growth and competitive position[205][206] - Dependence on third-party programming providers, broadcasters, and rights owners for content, and suppliers/licensors for equipment and software, exposes the company to risks of unfavorable terms, supply chain disruptions, and intellectual property challenges[207][209][212] - Inability to obtain or maintain necessary roaming services from other carriers on competitive terms could limit the ability to compete effectively for wireless customers[213][214] Risks that Relate to Our Operating in Overseas Markets and Being Subject to Foreign and Domestic Regulation Operating predominantly outside the U.S. exposes the company to significant operational risks, including foreign currency fluctuations, political and economic instability, and diverse regulatory environments, with non-compliance potentially leading to penalties and license renewal challenges - Substantial operations outside the U.S. expose the company to risks like foreign currency fluctuations, political/economic instability, export/import restrictions, and changes in foreign laws and policies[221][222] - Uncertain and rapidly changing political, regulatory, and economic conditions in operating countries, including potential expropriation or nationalization of assets, pose significant operational risks[223][224] - Exposure to foreign currency exchange rate risk from unmatched debt and non-functional currency transactions can lead to unrealized and realized gains/losses, impacting operating results and comprehensive earnings[228][229][231] - Failure to comply with economic and trade sanctions (e.g., OFAC) and anti-corruption laws (e.g., FCPA) could result in legal and reputational consequences, including civil/criminal penalties[232][236][260] - Businesses are subject to unique regulatory regimes, including licensing, rate regulation, interconnection obligations, and potential mandates for third-party access to network infrastructure, which can limit growth and increase costs[237][238] - Acquisitions may be blocked or conditioned by governmental authorities, and integration of acquired businesses can present significant costs and challenges, including compliance with U.S. securities laws and FCPA[241][250][251] - Inability to renew necessary regulatory or spectrum licenses, concessions, or operating agreements upon expiration, or their termination/alteration due to breach or change of control clauses, could materially adversely affect business[252][253] - Strikes, work stoppages, and other industrial actions could disrupt operations and increase costs; exposure to additional tax liabilities due to changing tax laws, treaties, and interpretations, including OECD's BEPS project, could materially increase tax expenses[255][256][257][258] Risks that Relate to Certain Financial Matters The company's substantial leverage (over $8.2 billion in debt) limits its financing and debt service capabilities, with debt instruments imposing significant restrictions on subsidiaries, while exposure to interest rate risks, increasing operating costs, and uncertain economic conditions can adversely affect financial performance - The company is highly leveraged, with $8,248 million in debt and finance lease obligations as of December 31, 2023, which could limit additional financing and ability to meet debt obligations[263] - Ability to service or refinance debt depends on cash flow from operating subsidiaries and returns on property/equipment additions and acquisitions; insufficient cash could lead to delayed capital expenditures or asset sales[265][266] - Subsidiaries are subject to significant financial and operating restrictions in debt instruments, limiting their ability to incur debt, pay dividends, make investments, or dispose of assets[267][268] - Exposure to interest rate risks, primarily from SOFR-indexed variable-rate debt, can increase debt service obligations, despite the use of derivative instruments to manage this exposure[271] - Increasing operating costs and inflation, combined with regulatory and competitive constraints on subscription rates, may adversely affect operating margins[272] - Uncertain global and local economic conditions, including sovereign debt and currency instability, can impact customer demand, pricing, and tourism-reliant markets, potentially leading to fiscal reforms, tax increases, and reduced revenue[273][274][276][277][278][279][280] - The company is exposed to counterparty credit risk from derivative instruments, undrawn debt facilities, and cash investments, with potential adverse effects if counterparties default[281] - Goodwill and other identifiable intangible assets ($3,483 million, 26% of total assets as of Dec 31, 2023) represent a significant portion of total assets, and future impairment charges could be significant if equity values decline or adverse macroeconomic/competitive factors worsen[283] Risks Relating to Cybersecurity The company's operations rely heavily on sophisticated IT and network systems, making them vulnerable to security attacks and disruptions that could lead to equipment failures, unauthorized data access, service interruptions, and reputational damage, incurring significant costs - The company's success depends on the uninterrupted performance of its IT and network systems, which are vulnerable to damage or security breaches from various sources, including natural disasters, malicious acts, and cyberattacks[284][287] - Cyberattacks can lead to equipment failures, operational disruptions, unauthorized access to confidential customer/employee data, and service degradation, potentially going undetected for extended periods[288][289][291] - Despite preventive measures and cyber liability insurance, there's no guarantee against all cyberattacks or system compromises; the costs of a cyberattack could be significant, including increased security expenditures, litigation, fines, and lost revenue[290][292] - Unauthorized access to the network, resulting in piracy of television, broadband, and telephony services, could lead to revenue loss and concerns under content provider agreements[293] - Expanding data privacy regulations (e.g., customer personal data processing, breach notifications) require significant compliance expenses, and violations could result in substantial fines and damages[294] Risks Related to Climate Change The company faces increased costs and operational limitations due to international climate change regulations, and its operations in the Caribbean and Latin America are vulnerable to physical impacts of climate change, potentially leading to loss of markets, customers, property, and revenue - International climate change treaties/accords or national regulations may increase costs, limit operations, or impact supply chains for components and products[295] - Operations in the Caribbean and Latin America are vulnerable to physical impacts of climate change (sea level rise, altered rainfall, fires, severe weather), potentially causing loss of markets, customers, property, revenue, and supply chain disruptions, which may not be fully covered by insurance[296] Risks Relating to our Corporate History and Structure As a holding company, Liberty Latin America's ability to service financial obligations depends on cash access from its subsidiaries, which can be limited by various restrictions, while overlapping directors with Liberty Global and specific bye-law provisions may lead to conflicts of interest and restrict shareholder legal action - As a holding company, Liberty Latin America's ability to meet financial obligations depends on accessing cash from subsidiaries, which can be limited by various restrictions (tax, legal, noncontrolling interests, foreign currency)[297] - Overlapping directors and executive officers with Liberty Global, and their financial interests in Liberty Global, may create conflicts of interest regarding corporate opportunities and transactions[298] - The company's bye-laws waive fiduciary duty breaches for directors diverting corporate opportunities, unless the opportunity was expressly offered to them solely as a company director and relates to an existing line of business[299] - The bye-laws also generally restrict shareholders from bringing legal action against officers and directors for actions/inactions in their duties, unless fraud or dishonesty is involved[299] Risks Relating to Our Common Shares and the Securities Market The company's capital structure, with different voting rights for Class A, B, and C common shares, along with other bye-law provisions, may deter third-party acquisitions, while the limited trading market for Class B shares and significant voting power of a principal shareholder could impact stock price and shareholder protection - Different classes of common shares have varying voting rights (Class A: 1 vote/share, Class B: 10 votes/share, Class C: no significant voting rights), allowing Class A and B holders to consistently outvote Class C[301][302] - Provisions in bye-laws, such as blank check preferred shares, staggered board terms, and supermajority shareholder approvals, may discourage or delay a change in control[304] - Class B common shares have no meaningful trading market and are subject to volatility; a principal shareholder, John C. Malone, beneficially owns approximately 27% of the aggregate voting power, giving him significant influence[304][305] - As a Bermuda company, shareholders may have less protection than in other jurisdictions, and enforcing judgments against the company or its non-U.S. resident directors/officers may be difficult[306][307] - The Bermuda Economic Substance Act 2018 may require substantial additional costs or re-domiciliation; regulatory limitations exist on the ownership and transfer of common shares[308][310] - Sales of Class C common shares by certain Searchlight parties under a Registration Rights Agreement could cause the market price to decrease and make future equity financing or acquisitions more difficult[312] - The company identified material weaknesses in internal control over financial reporting as of December 31, 2023, which could lead to material misstatements if not remediated[313][314] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments to report[315] Item 1C. Cybersecurity Liberty Latin America has established a comprehensive cybersecurity program, integrated into its risk management framework and operations, with robust governance, management, third-party engagement, and a qualified leadership team, and has not experienced any material cybersecurity threats to date Introduction Liberty Latin America has established a cybersecurity program as a foundational business practice, integrated into its broader risk management framework and all operational objectives, benchmarked against recognized frameworks like NIST and ISO standards - The company has a cybersecurity program integrated into its risk management framework and operations, benchmarked against NIST and ISO standards[316] Governance of Cybersecurity Risks The Audit Committee oversees the cybersecurity program and risk management, receiving quarterly reports on cyber developments, standards, vulnerabilities, and threats, with the Global Information Security Office (GISO) informing the executive team of significant security incidents - The Audit Committee oversees the cybersecurity program and management of cyber risks[317] - Quarterly reports are provided to the Audit Committee by internal and external sources, covering cyber developments, standards, vulnerabilities, and threats[317] - The GISO informs the executive team and Audit Committee of security incidents meeting reporting thresholds[317] Management of Cybersecurity Risks The Global Information Security Office (GISO), led by the Chief Information Security Officer, manages the cybersecurity program, aligning with NIST functions (Identify, Protect, Detect, Respond, Recover), and implementing incident prevention/detection software, encryption, timely patch application, and regular training - The GISO, led by the Chief Information Security Officer, manages the cybersecurity program, aligning with NIST functions (Identify, Protect, Detect, Respond, Recover)[318] - Measures include incident prevention/detection software, industry-standard encryption, timely patch application, an incident response plan, and regular training, audits, and vulnerability testing[319] Engagement of Third-Parties The GISO collaborates with third-party cybersecurity vendors for network protection and engages experts for program assessments, audits, and reviews, with policies requiring third-party service providers to maintain cybersecurity controls and report incidents - The GISO partners with third-party cybersecurity vendors for network protection and engages experts for program assessments and audits[320] - Third-party service providers are contractually required to maintain cybersecurity controls, share information, and report security incidents, but their success is not guaranteed[321] Our Senior Leadership Team's Qualifications The senior leadership team possesses extensive experience in cybersecurity and information technology, with the Chief Information Security Officer having over 15 years of experience, the Chief Technology Officer over 30 years, and the Chief Executive Officer significant security technology responsibility from previous roles - Chief Information Security Officer has over 15 years of information security experience, with degrees in risk management, business administration, and IT, and CISM certification[322] - Chief Technology Officer has over 30 years of IT experience, including leading cybersecurity practices at large U.S. telecommunication companies[323] - Chief Executive Officer has significant security technology and operational responsibility from previous CTO roles at large media and telecommunications companies[324] Material Impact from Cybersecurity Threats As of the filing date, the company has not experienced any cybersecurity threats that have materially affected its business strategy, operations, or financial condition - No cybersecurity threats have materially affected the company's business strategy, operations, or financial condition to date[325] Item 2. Properties Liberty Latin America leases its corporate office in Denver, Colorado, and an operations center in Panama City, Panama, while its Liberty Networks segment owns significant portions of its subsea network, and subsidiaries own or lease other fixed assets deemed suitable and adequate for operations - Corporate offices are leased in Denver, Colorado, and an operations center in Panama City, Panama[327] - Liberty Networks segment owns significant portions of its subsea network in the Caribbean[327] - Subsidiaries own or lease necessary fixed assets, including network infrastructure and customer premises equipment, which are deemed suitable and adequate for future operations[327] Item 3. Legal Proceedings The company's subsidiaries and affiliates are routinely involved in legal disputes and proceedings arising from normal business operations, including claims from regulatory, competition, and tax authorities, with resolutions potentially materially impacting financial results due to their complex and unpredictable nature - Subsidiaries and affiliates are involved in ongoing legal disputes and proceedings from normal business, including regulatory, competition, and tax matters[328] - Resolution of these contingencies may materially impact financial results, but due to complexity, a meaningful range of potential losses cannot be provided[328] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[329] Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities This section provides information on Liberty Latin America's common equity market, shareholder matters, and issuer purchases of equity securities, including trading information for its Class A, B, and C shares, dividend policy, and share repurchase program details General This section provides general information regarding the company's common equity, related shareholder matters, and issuer purchases of equity securities - The section covers market information, shareholder matters, and issuer equity purchases[332] Market Information Liberty Latin America's Class A and Class C common shares trade on the Nasdaq Global Select Market, while Class B common shares are eligible for OTC Markets but lack an established public trading market - Class A and Class C common shares trade on Nasdaq (LILA, LILAK); Class B common shares are eligible for OTC Markets (LILAB) but lack an active trading market[333] Class B Common Shares High and Low Prices | Period | High ($) | Low ($) | | :-------------------------- | :------- | :------ | | Year ended December 31, 2023 | | | | First quarter | 11.00 | 8.01 | | Second quarter | 11.00 | 7.11 | | Third quarter | 11.00 | 6.74 | | Fourth quarter | 8.19 | 7.45 | | Year ended December 31, 2022 | | | | First quarter | 9.00 | 8.06 | | Second quarter | 9.00 | 7.50 | | Third quarter | 9.69 | 6.00 | | Fourth quarter | 9.50 | 6.20 | Holders As of January 31, 2024, Liberty Latin America had 10,748 record holders for Class A common shares, 19 for Class B, and 24,738 for Class C, excluding shares held nominally by institutions Number of Common Stock Holders of Record (as of January 31, 2024) | Class | Number of Holders | | :---- | :---------------- | | Class A | 10,748 | | Class B | 19 | | Class C | 24,738 | Dividends Liberty Latin America has not paid any cash dividends on its shares and has no current intention to do so, with future dividend payments to be determined by the board of directors based on earnings, financial condition, and other relevant factors - The company has not paid cash dividends and has no present intention to do so[336] - Future dividend decisions will be made by the board based on earnings, financial condition, and other considerations[336] Securities Authorized for Issuance Under Equity Compensation Plans Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference from the definitive proxy statement for the 2024 Annual General Meeting of Shareholders - Information is incorporated by reference from the 2024 Annual General Meeting of Shareholders proxy statement[337] Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities All information under this item has been previously reported in the company's Current Reports on Form 8-K - All information has been previously reported on Current Reports on Form 8-K[338] Issuer Purchase of Equity Securities The company's Directors approved the 2022 Share Repurchase Program, authorizing up to $400 million for Class A and/or Class C common shares through December 2025, with $139 million remaining authorized as of December 31, 2023, and repurchases of 0.1 million Class A and 0.8 million Class C shares in Q4 2023 - The 2022 Share Repurchase Program authorizes repurchases of Class A and/or Class C common shares, with an initial $200 million through December 2024 and an additional $200 million approved in May 2023 through December 2025[339] - As of December 31, 2023, $139 million remained authorized for share repurchases[342] Issuer Purchases of Equity Securities (Q4 2023) | Period | Class | Total Shares Purchased (millions) | Average Price Paid Per Share ($) | | :------------------------------------------ | :---- | :-------------------------------- | :------------------------------- | | October 1, 2023 through October 31, 2023 | Class A | 0.1 | 8.17 | | October 1, 2023 through October 31, 2023 | Class C | 0.8 | 7.63 | | November 1, 2023 through November 30, 2023 | Class A | — | — | | November 1, 2023 through November 30, 2023 | Class C | — | — | | December 1, 2023 through December 31, 2023 | Class A | — | — | | December 1, 2023 through December 31, 2023 | Class C | — | — | | Total Q4 2023 | Class A | 0.1 | 8.17 | | Total Q4 2023 | Class C | 0.8 | 7.63 | Stock Performance Graph The stock performance graph compares the cumulative total shareholder return of Liberty Latin America's Class A and Class C ordinary shares against the MSCI Emerging Markets NTR Index and the Nasdaq Composite TR Index from December 31, 2018, to December 31, 2023 Cumulative Total Shareholder Return (Indexed to $100 on Dec 31, 2018) | Index/Share Class | 2018 ($) | 2019 ($) | 2020 ($) | 2021 ($) | 2022 ($) | 2023 ($) | | :-------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | | Liberty Latin America Shares - Class A | 100.00 | 89.43 | 51.58 | 54.03 | 34.89 | 33.87 | | Liberty Latin America Shares - Class C | 100.00 | 90.98 | 51.85 | 53.30 | 35.53 | 34.32 | | MSCI Emerging Markets NTR Index | 100.00 | 99.48 | 117.73 | 114.70 | 91.66 | 100.67 | | Nasdaq Composite TR Index | 100.00 | 130.84 | 189.61 | 231.66 | 156.29 | 226.06 | Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's discussion and analysis of Liberty Latin America's financial condition and results of operations, covering its business overview, detailed financial performance, liquidity, capital resources, and critical accounting policies - Operating income increased significantly in 2023 compared to 2022, primarily due to decreases in impairment, restructuring, and other operating items, net, and the disposition of Chile JV Entities[363] - Consolidated Adjusted OIBDA remained relatively flat, decreasing by $8.3 million or 0.5% in 2023 compared to 2022[367] - The company continues to report significant net losses, driven by substantial interest expense and volatility from derivative instruments and foreign currency transactions[439][440] Consolidated Financial Highlights (in millions USD) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | Change ($) | Change (%) | | :------------------------------------------ | :---------------------- | :---------------------- | :--------- | :--------- | | Revenue | 4,511.1 | 4,808.6 | (297.5) | (6.2%) | | Operating Income | 517.7 | 86.5 | 431.2 | 498.5% | | Consolidated Adjusted OIBDA | 1,701.6 | 1,709.9 | (8.3) | (0.5%) | | Net Loss | (86.8) | (207.8) | 121.0 | (58.2%) | Overview Liberty Latin America is an international provider of fixed, mobile, and subsea telecommunications services across Latin America and the Caribbean, with a strategy focused on organic growth through bundled services and network expansion, while managing significant competition and macroeconomic factors - Liberty Latin America provides residential and B2B fixed, mobile, and subsea telecommunications services in over 20 countries across Latin America and the Caribbean, Puerto Rico, USVI, and Costa Rica[348][350] - As of December 31, 2023, the company served 4,620,400 homes passed, 3,933,400 RGUs (1,801,400 broadband, 933,700 video, 1,198,300 fixed-line telephony), and 7,977,400 mobile subscribers[348] - Strategic focus is on organic revenue and customer growth through bundled services, network extensions/upgrades, and maximizing ARPU, alongside maintaining attractive debt levels[353][354] - Recent transactions include the monetization of ~1,300 mobile tower sites (Nov 2023, $244 million proceeds), agreement to acquire Dish Network spectrum assets in Puerto Rico/USVI (Nov 2023, $256 million purchase price, expected 2024 close), and the formation of the Chile JV (Oct 2022), which is now an equity method investment[349][351][352] - Operating results are impacted by significant competition, macroeconomic factors, acquisitions (e.g., América Móvil's Panama operations in July 2022), dispositions (e.g., Chile JV Entities in Oct 2022), and foreign currency exchange rates[355][356][357][358] Results of Operations Liberty Latin America's operating income significantly increased in 2023 due to lower impairment and restructuring charges, despite a decrease in total revenue, while consolidated Adjusted OIBDA remained relatively flat, and the company reported a net loss influenced by non-operating expenses Operating Income or Loss Operating income increased by $431.2 million in 2023 compared to 2022, reaching $517.7 million, primarily driven by a significant decrease in impairment, restructuring, and other operating items, net, and the impact of the Chile JV Entities disposition Operating Income/Loss Components (in millions USD) | Component | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | Increase (Decrease) | | :------------------------------------------ | :---------------------- | :---------------------- | :-------------------- | | Revenue | 4,511.1 | 4,808.6 | (297.5) | | Programming and other direct costs of services | 1,020.4 | 1,210.5 | (190.1) | | Other operating costs and expenses | 1,877.8 | 1,981.7 | (103.9) | | Depreciation and amortization | 1,008.3 | 910.7 | 97.6 | | Impairment, restructuring and other operating items, net | 86.9 | 619.2 | (532.3) | | Total Operating Costs and Expenses | 3,993.4 | 4,722.1 | (728.7) | | Operating Income | 517.7 | 86.5 | 431.2 | - The $431.2 million increase in operating income was primarily due to a $532.3 million decrease in impairment, restructuring, and other operating items, net, and the disposition of the Chile JV Entities[363] Consolidated Adjusted OIBDA Consolidated Adjusted OIBDA decreased slightly by $8.3 million to $1,701.6 million in 2023 from $1,709.9 million in 2022, serving as a non-U.S. GAAP measure for evaluating segment operating performance and resource allocation - Consolidated Adjusted OIBDA is a non-U.S. GAAP measure used by management to evaluate segment operating performance and allocate resources, providing a transparent view of recurring operating performance[365] Consolidated Adjusted OIBDA (in millions USD) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :-------------------------- | :---------------------- | :---------------------- | | Operating income | 517.7 | 86.5 | | Share-based compensation expense | 88.7 | 93.5 | | Depreciation and amortization | 1,008.3 | 910.7 | | Impairment, restructuring and other operating items, net | 86.9 | 619.2 | | Consolidated Adjusted OIBDA | 1,701.6 | 1,709.9 | - The slight decrease in Adjusted OIBDA was influenced by organic changes in revenue and operating costs, as well as non-organic impacts from FX and the Chile JV disposition[368] Adjusted OIBDA Margin Adjusted OIBDA margins varied across segments in 2023 compared to 2022, with increases in C&W Caribbean, C&W Panama, and Liberty Costa Rica, and decreases in Liberty Networks and Liberty Puerto Rico, while integration costs of $26 million were incurred in specific segments in both years Adjusted OIBDA Margin by Segment (%) | Segment | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------- | :---------------------- | :---------------------- | | C&W Caribbean | 41.5 | 37.2 | | C&W Panama | 30.7 | 29.4 | | Liberty Networks | 57.7 | 61.3 | | Liberty Puerto Rico | 34.2 | 36.3 | | Liberty Costa Rica | 37.1 | 30.5 | - Adjusted OIBDA margin is affected by organic changes in revenue, programming, and other direct/operating costs; integration costs of $26 million were incurred in Liberty Puerto Rico, Liberty Costa Rica, and C&W Panama in both 2023 and 2022[369] Revenue Total revenue decreased by $297.5 million to $4,511.1 million in 2023, primarily due to the disposition of VTR, partially offset by increases in C&W Panama and Liberty Costa Rica, with revenue driven by changes in RGUs/mobile subscribers and ARPU, impacted by competition, pricing, and bundling Revenue by Reportable Segment (in millions USD) | Segment | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | Increase (Decrease) | | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | C&W Caribbean | 1,437.0 | 1,436.8 | 0.2 | | C&W Panama | 742.6 | 642.7 | 99.9 | | Liberty Networks | 453.3 | 450.8 | 2.5 | | Liberty Puerto Rico | 1,417.7 | 1,463.6 | (45.9) | | Liberty Costa Rica | 547.9 | 441.3 | 106.6 | | VTR | — | 450.6 | (450.6) | | Corporate | 23.5 | 22.2 | 1.3 | | Intersegment eliminations | (110.9) | (99.4) | (11.5) | | Total | 4,511.1 | 4,808.6 | (297.5) | - Revenue is primarily derived from residential fixed services (video, broadband, telephony), mobile services, and B2B enterprise/wholesale services[370] - C&W Panama's revenue increased by $99.9 million, driven by the Claro Panama acquisition ($69.6 million) and organic growth in B2B services and residential fixed RGUs[374][377][378] - Liberty Puerto Rico's revenue decreased by $45.9 million, mainly due to lower residential mobile service revenue (lower ARPU and subscriber count) and a decline in FCC funding, partially offset by higher residential fixed subscription revenue[374][382][383] - Liberty Costa Rica's revenue increased by $106.6 million, significantly impacted by FX ($85.4 million) and organic growth in B2B services (fixed and mobile) and residential mobile subscribers, despite lower residential fixed ARPU[374][384][385] Programming and other direct costs of services Consolidated programming and other direct costs of services decreased by $190.1 million to $1,020.4 million in 2023, primarily due to the disposition of VTR and organic decreases in equipment and interconnect costs, with variations across segments influenced by content renegotiations, lower handset sales, and traffic volumes Consolidated Programming and Other Direct Costs of Services (in millions USD) | Category | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | Increase (Decrease) | | :-------------------------- | :---------------------- | :---------------------- | :-------------------- | | Programming and copyright | 237.2 | 360.3 | (123.1) | | Interconnect | 302.5 | 350.3 | (47.8) | | Equipment | 320.6 | 369.8 | (49.2) | | Other | 160.1 | 130.1 | 30.0 | | Total | 1,020.4 | 1,210.5 | (190.1) | - The consolidated decrease was primarily driven by the disposition of VTR ($138.6 million impact) and organic decreases in equipment and interconnect costs[388] - C&W Caribbean's organic programming and copyright costs decreased due to content renegotiations, and interconnect costs decreased due to discontinuation of a non-core transit service[390] - Liberty Puerto Rico's equipment costs decreased significantly due to lower handset sales and equipment credits received in 2023[397][400] - Liberty Costa Rica's organic programming and interconnect costs decreased due to lower video RGUs and traffic volumes, while equipment costs increased due to higher CPE and handset sales[399][401] Other operating costs and expenses Consolidated other operating costs and expenses decreased by $103.9 million to $1,877.8 million in 2023, mainly due to the disposition of VTR and organic decreases in personnel, network-related, and commercial costs, with segment-specific variations influenced by capitalized labor, integration efforts, and marketing Consolidated Other Operating Costs and Expenses (in millions USD) | Category | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | Increase (Decrease) | | :-------------------------- | :---------------------- | :---------------------- | :-------------------- | | Personnel and contract labor | 557.6 | 597.7 | (40.1) | | Network-related | 259.0 | 311.4 | (52.4) | | Service-related | 227.6 | 210.8 | 16.8 | | Commercial | 181.1 | 226.0 | (44.9) | | Facility, provision, franchise and other | 563.8 | 542.3 | 21.5 | | Share-based compensation expense | 88.7 | 93.5 | (4.8) | | Total | 1,877.8 | 1,981.7 | (103.9) | -