Liberty Latin America(LILA) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted OIBDA of $1.6 billion for the year, with strong year-over-year rebased growth in C&W Caribbean and Costa Rica, and double-digit rebase growth in C&W Panama [10] - Q4 revenue improved by $61 million to $1.15 billion compared to Q3, with each operating segment delivering increases [51] - Year-over-year Q4 revenue was 2% lower on a rebased basis, primarily due to declines in Liberty Puerto Rico and Liberty Networks [52] Business Line Data and Key Metrics Changes - C&W Caribbean reported $371 million in Q4 revenue, reflecting 2% year-over-year rebased growth, driven by residential mobile growth of 7% [53] - C&W Panama generated $209 million in revenue, representing 1% year-over-year rebased growth, with mobile residential revenue up by 20% [55] - Liberty Puerto Rico's Q4 revenue was $317 million, reflecting a 13% rebased decline year-over-year, primarily due to lower ARPU and subscriber losses [58] Market Data and Key Metrics Changes - The company added nearly 100,000 subscribers in total throughout the year, with broadband and postpaid performance particularly robust, adding over 260,000 subscribers in 2024 excluding Puerto Rico [9] - In Costa Rica, the company added 114,000 postpaid subscribers in the year, marking a 31% year-over-year increase [21] - The company reported that 97% of its fixed footprint is now gigabit-ready, exceeding previous targets [11] Company Strategy and Development Direction - The company is focused on rebuilding its operations in Puerto Rico, emphasizing customer care and churn reduction as key strategies [36] - The company plans to drive adjusted OIBDA and free cash flow growth across the company while reducing leverage levels [75] - The company is also targeting significant growth in its B2B business, particularly in the hospitality sector [46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2024 was a challenging year, particularly in Puerto Rico, but expressed optimism about future growth prospects and operational improvements [36][75] - Management highlighted the importance of improving customer experience and operational efficiency to drive future growth [72] - The company is committed to maintaining a long-dated capital structure and has successfully refinanced $3.3 billion of C&W debt [11] Other Important Information - The company has made significant strides in network upgrades, with 400,000 homes passed or upgraded to fiber-to-the-home in 2024 [10] - The company is finalizing contract terms for the construction of a subsea cable system project in collaboration with Sparkle [25] - The company reported a robust Q4 adjusted free cash flow of $196 million, bringing the full year total to $116 million [64] Q&A Session Summary Question: Concerns about bad debt in Puerto Rico and its impact on churn - Management explained that the increase in bad debt was primarily due to catch-up related to equipment installment plans and that they are working to improve collection processes [82][84] Question: Update on EBITDA target for Puerto Rico - Management confirmed that the target is to return to a full handle on EBITDA, although they did not provide specific guidance for the first quarter [90][91] Question: CapEx guidance and rationale for reduction - Management clarified that the goal is to reduce CapEx to 14% of revenue, primarily due to completed upgrades and lower costs for customer premises equipment [98][102] Question: Impact of billing adjustments on B2B revenue - Management indicated that most credits related to billing errors are tapering off and do not expect significant adjustments in the first quarter [104] Question: M&A interest in the region - Management stated that there are no current plans to sell the Puerto Rico business and expressed no interest in acquiring Telefonica's assets due to their financial issues [110][112] Question: Benefits of FTTH and cost of connecting customers - Management discussed that while the cost to connect customers via FTTH is higher initially, the long-term benefits include improved pricing power and network reliability [118][124] Question: Integration of EchoStar distribution network - Management acknowledged potential interoperability issues but expressed confidence in resolving them as they integrate the network [130]