Q4 2020 Liberty Latin America Ltd Earnings Call
And please standby of good day, everyone, you're holding for the Liberty Latin America's full year 2020 Investor call. Thank you for your patience the investor call will begin shortly.
[music].
And ladies and gentlemen, please standby.
Good morning, ladies and gentlemen, thank you for standing by today's call is being recorded all of that.
I'll turn the call over to Ray Collins, Chief strategy Officer of Liberty Latin America.
Good morning, and welcome to the Liberty Latin America's full year 2020, investor call at the 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 Dot L. L. A.
The dotcom following today's formal presentation instructions will be giving from the question answer session at the really.
During the call is being reported 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.
Additional information on factors of risks that could cause results to differ is available the liberty Latin America's most recently filed form 10-K Liberty.
The Liberty Latin America disclaims any obligation to update any of these forward looking statements to reflect any change in its expectations or the conditions of which any such statement is based in addition of the call. We will refer to start the non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures.
Which can be found in the appendices to this presentation and all of our Investor Relations website I would now like to turn the call over to our CEO Mr balance there.
Thank you Ray and welcome everybody throughout the full year results presentation.
I'll begin by taking you through our group highlights and the operating results for each of our reporting segments before closing with an overview of our strategic focus in 2021.
Chris Noyes CFO Bill debt fall over the review of the company for the actual performance and our outlook.
After that we will get straight to your questions.
All of these I'm joined by Mike and his team from across the region and I'll get them involved as needed during the Q&A.
Following our prepared remarks.
That's the point of housekeeping, we will both be working from slides, which you can find all of our website at www Dot dot.
Uh huh.
Well, let's start on slide four and the highlights.
Highlights for the year.
Operationally, we added 170000, RG use driven by strong performance in the cable and wireless.
The record result in Puerto Rico, net broadband demand drove subscriber growth of more than double of 2019 additions.
A key financial objective to deliver positive free cash flow of 2020.
I am pleased to say that we generated close to 115 billion.
Very challenging yet.
Joseph of momentum.
Even excluding <unk> contribution.
Our results continued to improve the waterfall that's been reported revenue of at a similar level to the pre Covid waterborne.
And adjusted or EBITDA interest in fact higher than in the first quarter of the year.
We also made significant progress with the inorganic strategy. That's been completed the acquisition of At&t's, Puerto Rico and U S budget, either the operations I think over 1 billion, mainly postpaid mobile subscribers to the grid.
Yeah.
The operations of after a good start in the car.
Our integration plans in more detail.
Leave it in the presentation.
Finally, we continue to lean into our investment thesis.
The COVID-19, but the.
Addition of approximately 400000, new or upgraded homes in 'twenty three.
Over 80% of the source pass using fiber to the old technology. It would be of exciting plants increased sales by 50 per se in 'twenty and 'twenty one.
Moving to slide five and seven.
Summary of our quarterly fixed and mobile subscriber adds.
Starting with the fixed odds you evolution of the left of the slide.
So here you can see the read through all of our view basis, each one of truth of year.
In the second quarter of markets adjusted to the impact of the bad debt.
All of these impacts of reduced mobility, which drove higher demand for residential data connectivity as customers increasingly worked and learn from home.
That's a result of broadband adds Cubs beat of over 90% of our net subscriber additions in the year.
We believe the significant opportunity to bring high speed connectivity to all households in the region.
This underpins all of organic growth strategy in the coming years.
All of the right at the slide we show of mobile subscribers of evolution.
Subscriber losses in the first half of primarily the result of mobility restrictions because of it.
The ability of our customers to access services and reduced demand for the top ups generally.
The customer spending creasing, the mother's day, India helps.
In the second half restrictions with the east across most markets and we saw a recovery in subscribers numbers. However, did not offset of first half of subscriber losses.
I'll cover the specific trends in more detail all of the accompanying slides.
Turning to slide six total cable wireless Caribbean net book reporting segment.
Note that this represents the cable and wireless segment of this reported prior was however, excluding the cable and wireless Panama, which we now disclose separately due to a change or.
Instead of organization structure.
The change has no impact on the borrowing groups all of the legal structure.
Starting with the Archie your trends of the left and the similar evolution to the probably the slide we had a good year in fixed.
Adding over 100000 subscribers led by 92000 adds of Jamaica, which was close to three times debt markets 20, Nike performance.
Broadband was once again the main driver contributing over half of Jamaica as ads.
During 'twenty 'twenty over 80% of our Newbuild and upgrade volume of cable and wireless Caribbean of Netlist Watson.
Lots of Jamaica reaches the segment's largest market.
Mobile of steadily recovered in the second half once again led by Jamaica, However be recorded losses for the other two the second audits adverse performance.
Instead of the slide we presented an overview of our revenue mix and the sequential growth rates, we saw in the fourth quarter.
All of fixed operations remain robust and mobile revenue grew as prepaid recharges continued to recover.
<unk> benefited from increased demand supported the bandwidth.
The limit healthy sequential growth of 5%.
Finally <unk>.
<unk> service revenues was 2% with sequential overall. However, this is the tale of two different businesses.
The Latam operations growing Walter incumbent Caribbean market, the slightly down in the quarter.
Taking subsea, including intercompany revenue, which is the eliminated you know consolidated reported EBITDA.
Latam in the aggregate this.
The business with approximately 400 million of mainly U S dollar revenue and the OIBDA margin of 50%.
Finally, I want to highlight that this segment actually grew adjusted OIBDA of the Rebased basis and credit rating.
Despite the impact of COVID-19.
This was a great achievement by the team in the group.
Very tough yet.
Next to slide seven and cable the widest Panama maybe.
Where we experienced the most severe COVID-19 restrictions across our operations.
Created a challenging operating backdrop needing to fixed and mobile subscriber losses in the second quarter as shown on the left of the slide which really cause it to an extent in the second half of the S restrict shifts where east.
Residential fixed business, we delivered 35000 net argue you asked of the year.
Second half of additions more than offsetting second clause losses.
Mobile ads improved in the second half, but were impacted by increased competitive intensity.
Did not recover the losses.
Yeah.
And besides of the slide you can see that revenue from each of our products grew sequentially in the fourth quarter north of that being of fee growth of 20% was driven by some significant contract bids.
As we look to continue growing of fixed operations.
Our focus on expanding our product and the network offerings.
Combination of unusual activity, where we added 100005 of the did the whole passing income.
The 20, you have also launch of hub TV platform, bringing greater differentiation to our product bundle.
Overall, we believe that this business has a lot of potential given the fixed market structure and relatively strong economic environment all of them all.
The laser based on changes get Panama, more senior management focus and should provide a catalyst to drive improved performance.
Turning to slide eight and the BD or couple of it you kind of segment.
Starting with our evolution of the left of slide three.
Obviously discuss the challenges we faced in Chile, all the way.
The initial spike in bed with demand during the second quarter, beating the reliability of service issues.
We moved quickly to stabilize the other books.
Of the proof of customer service.
Drove better operational performance as can be seen even though it's archie of losses being half.
And the Q4 compared to Q3.
It really getting to flat result of January.
We see the recovery.
All the color I'll approach it in more detail on the next slide.
Of Costa Rican business Cup of tea.
The continued to perform well during adding RG use them each quarter.
18000 in aggregate during the year.
The mobile chart in the lower left represent the business in Chile.
We finished the year of 280000 predominantly postpaid subscribers.
Store closures due to COVID-19, and a highly competitive market environment for all of the software performance you had in second half.
Moving to the center of the slight revenue by product.
In contrast, with the cable and wireless business fixed residential services are by far the largest product in the V. T. I'll call. It you gotta reporting segments, contributing 90% of revenue and up 3% sequentially in Q4.
Finally the.
The key segment of our group strategy in 'twenty 'twenty, one east to consolidate all five of the did a whole new Bill program.
Across the Chile of Costa Rica, we are planning to build more than 400000 new homes.
She said significant uplift on the.
Any trading activity.
On slide nine.
You wanted to highlight some of the metrics that we as the management team focused the that'd be look improve operational and financial trends of BTR.
In the upper left we show significant reductions in both the daily number of technical calls to our representatives.
And the truck roll rate of 73% of 49% respectively.
These improvements followed the previously discussed targeted net customer service investments.
The point below the chart.
Summarized the key pillars of the framework, we are using to approach the network and customer experience.
The additional measures of our operational improvements are presented in the Central chart would be the reduction of any of the intent of disconnect.
The increase in retention rates over the past months.
Finally, all of the upper right, but the slide we show of how a newbuild ambitions of 2021 compares to prior years of <unk>.
Significant and exciting step up.
Which we believe low reinforce our platform for sustained growth.
From the return on investment perspective, we have been successful in driving down the cost the past holds true by the making these project very attractive.
Turning to slide 10, and the best performing business in Crazy Crazy.
Liberty Puerto Rico.
Starting with the I'll argue your trends of the leftovers flow.
I mentioned earlier.
20th of rocket youth of the business with 121 of the net Archie you additions.
Broadband net adds contributed two thirds of total <unk> growth and its share.
And the law of chart all brought the base grew by nearly a quarter of India.
To put this into the prospectus.
A lot of Comcast and the old geese USA can we get broadband subscribers by of rose eight 9%, 7% of 4% respectively in 2020.
Instead of the slide.
B what does it provide the view of 'twenty 'twenty four Puerto Rico operations income.
The full year for the agent the business being quiet at the end of October.
We really liked the smoking and she could see.
The acquisition of provides a significant step up in scale there.
The combined business to one point of billions of revenue.
All of a half a billion of adjusted OIBDA.
What is the primary reasons to be sea of differentiated converge the opportunity in Puerto Rico debt over 80 per cent of our mobile service revenues come from postpaid customers.
Finally, we continue to innovate and invest in the Netflix to maintain our leading position in April at the equal.
We are rolling out of Hep D V type of it.
Continuing to build out of footprint.
The past one 1 million of thought of a total of one 4 million homes in Puerto Rico is that the illustrative of drilling plans to continue to grow.
If this is for the assisted by the Union Doe funding. We have won the improved broadband speeds of 43 municipalities out of 78 across the island.
<unk>, San Juan and other key metro areas.
On slide 11.
Provide an update on the integration of working both are equal.
All key focus areas are.
Firstly, the integrate and grow as the single company.
The process began on day, one of the acquisition and we are making good progress establishing a called the culture.
Secondly, I've talked previously about leveraging the product suite of.
Putting together a great proposition for our customers.
This is already happening, but the welcome off of each had 20 per cent enrollment of the week it continues to grow.
The author of the boss free fixed broadband speed upgrades if of course.
The minutes fixed and mobile services with us.
Certainly it is vital to ensure that service level of not compromise.
As we move to the you know more of I'll call it new operations and business support systems.
Yeah, I thought the comprehensive TSA agreement with AT&T to help us yet.
Part of it we can most of these new platforms the minimal friction.
For the summer.
That is particularly exciting.
<unk> created a converged play in the market, which enables us to differentiate the product offerings, but also adds resilience given the fiber backbone.
The five T mobile net but we never have.
Fifth we have a unique opportunity to see the digital channels and services as we create new platforms for the new business.
Overall.
I'm very excited about the value of you can generate for our customers and other stakeholders through the acquisition.
Finally to slide 12.
D G focus areas that speeds up the training training what that's the.
Well that's longer term shareholder value creation.
But we expect to recover and grow across all buckets that the economic backdrop improves.
Chile, a ton of unless specifically.
This pain better transforming the operational actions, we have taken it pretty clean.
Secondly, with respect to of commercial approach, we remain focused of product innovation and that the.
Distributing of hub TV products asked me rollout of new fiber to the whole debt.
We are also developing of self install capabilities, which should both improve customer experience and drive cost efficiencies in the future.
Thirdly, we will continue to lean into our broadband penetration pieces for the region.
And add or upgrade the approximately 600000, mainly five of the whole host of 'twenty three of it.
Kiwi of Rep and the activity from 2020.
Fourth of cost focus.
Chris will talk to the numbers in more detail in his section however, I nor debt. We've made good progress since becoming a separately listed company.
And this remains it gave you the way, we see significant potential to improve and drive value.
Finally, the ebony.
I'll, let me hit the full because you sort of integrating the assets acquired from AT&T.
And closing the acquisition of Telefonica, Costa Rica of business.
Which we anticipate will happen.
The son of a subtype.
We see inorganic opportunities as a core driver of value creation in the region.
But.
The only at the at the right value.
We're very disciplined in our process to a price assets.
Of the accretive let the free cash flow of bullshit.
A key metric.
With that.
Pass you over to Chris Noyes.
The financial Officer, who will talk you true of financial performance before we take your questions Chris.
Chris.
Thanks, Don I'll start on slide 14, with all of our financial results. Two quick housekeeping items. Our 2020 results include Liberty Mall, the quarterly AT&T, Puerto Rico for the post acquisition period, which is for the last two months of Q4 and as mentioned we are now show on cable wireless Panama as a separate operating segment, reflecting the change in reported months Howie.
I'll keep all while the credit side of that will still include the CW P was the mix results. When the other left we reported Q4 revenue of one point of $1 billion, including $274 million in revenue from Liberty Global This compares to $975 million from Q4 2019.
Our Q4 result reflects a modest one per cent year over year Rebased decline much improved versus the Q2 Q3 rebased levels because of the law.
Large part by our strong quarterly performance of Puerto Rico for the full year, we generated revenue of $3 $8 billion for an Oregon based decline of 3% moving to adjusted EBITDA posted $428 million of 4% Rebased decline for Q4, and $1 $5 billion or of 2% Rebased decline for the full year.
Liberty Global contributed $56 million of adjusted EBITDA in the quarter Weibo's performance in the quarter inclusive of $13 million net talks about the impact from certain non recurring items, primarily related the content accrual on withholding tax adjustments of disclose the earnings release.
The difference from the bottom left of slide well of $188 million from Q4 or 17% of that.
This result brings out of 'twenty 'twenty total to $631 million of 17% of revenue, which was the one.
100 basis kind of slower than our year ago pre COVID-19 2020 target.
The 2021 what are you targeting the modest increase to approximately 18% of revenue for cleaning the dishes.
Alan mentioned, we are planning to build up cost of about 600000, the homes. The 2021 what's the status.
The increase over 2020.
The integration Capex in Puerto Rico, as we embark on out of a three year plan to fully integrate the business moving to the bottom right. We generated $89 million of adjusted free cash flow in Q4 helped in part by the positive contribution from our newly acquired mobile operations in Puerto Rico.
For the full year, we delivered of $148 million from adjusted free cash flow of comfortably achieved an hour of Covid adjusted target of positive free cash flow for 2020 of the 'twenty 'twenty. One we are targeting approximately $200 million of adjusted free cash flow, which is more of a 30% increase of around 2020 of results.
Slide 15 highlights our continued recovery from Q2, excluding the impact of Liberty mobile all of Q4 revenue of $923 million was nearly back to Q1 levels and all of Q4 of adjusted EBITDA of $317 million surpassed Q1, adjusted EBITDA by 2% as we left the 'twenty 'twenty, one we expect to build the bank.
The next we go through the year with Q1, being our toughest comp and as we begin to lap COVID-19 impacts in Q2. Additionally, Q4 to Q1 on an apples to apples basis, typically steps down to the general seasonal factors.
On slide 16, our Q4 financial the adult in quarterly adjusted EBITDA evolution by segment, starting in the left field that'd be the Caribbean of networks, we generated $428 million of revenue and the $182 million of adjusted EBITDA in Q4 year over year of Q4 revenue was 4% lower on the Rebased basis.
The 2% growth in fixed residential revenue was more than offset by the COVID-19 impacts across our global and BW businesses, which were <unk> 14 per cent and 3% lower respectfully.
As highlighted earlier, our Rebased adjusted EBITDA decline for the segment of 10 per cent for Q4 was due large part to roughly $13 million of net nonrecurring items the spike.
These headwinds and the impact of Covid. He had W. Caribbean of networks grew adjusted EBITDA by one per cent for the full year I don't know of any of those spaces and we obtained at 42% adjusted EBITDA margin. The bottom chart highlights our sequential improvement of our Q4. Adjusted EBITDA result was $5 million higher than Q3 and really bad.
The Q1 levels.
Moving to our new segment cable wireless Panama, The cross L. L. A our Panama business of suffered from the bus graduate programs, we've already locked out of Q4 revenue of $131 million in the definitely but the 51 of the doors were 19% ex <unk>.
14% lower on the Rebased basis, respectively, as compared to the prior year period.
The year over year revenue of result was driven primarily by double digit declines appear to be a global sequentially. The Q3. The business has continued to recover as quarterly adjusted EBITDA was $8 million of 19% higher in fact, the at the bottom chart highlights we delivered our strongest adjusted EBITDA quarter of 2020 of in Q4.
Turning to the T. Our children, probably peaking in Costa Rica, we reported Q4 revenue of $244 million, reflecting the year over year of Rebased decline of 3%. The rebased year over year decline was driven in large part of the volume losses in our compressor in D. T R, which more than offset continued rebased revenue growth in public debt.
Thank you I'll, probably keep that posted $89 million of of desperately EBITDA in Q4, which was 15% lower than the prior year period right every day basis. The year over year decline was driven by increased operating expenses at the T. R. As we invested in our networks and customer service initiatives and to a lesser extent of $3 million.
The impact of non functional currency exposure in Chile related to the depreciation of the Chilean peso to the U S. Dollar sequentially. The Q3, adjusted EBITDA was $4 million lower however, it was about the $86 million posted in Q2.
Finally to our strongest performing segment of Liberty, Puerto Rico, as Alan mentioned, our business, Puerto Rico hype of the strong Q4, and 2020 with two months of contribution from Liberty Global in the quarter, we delivered $296 million of revenue and $116 million, but definitely but the plus the double digit rebased growth rates, our cable business continued to.
So the momentum throughout 2020 in fact, our top line growth in Q4, excluding the impact of Liberty mobile was the best of the year, roughly 15% rebates growth year over year. This result was due in large part to all of our 120000 Archie you've added over the last 12 months the.
Many of the acquired business contributed $174 million of revenue and $56 million of adjusted EBITDA in the quarter, achieving double digit rebased growth as well.
The mobile <unk> growth was primarily driven by the combination of revenue increase was driven by strong postpaid ARPA positive alkali revenue as well as equipment sales. The 'twenty 'twenty. One it's important to note that we expect to incur significant integration costs of Puerto Rico as we began to work off the three year of TSA with AT&T and the operate on a standalone of doses.
During 2021, we estimate that we will incur the integration of operating costs of $35 million to $40 million in cap ex integration costs of $25 million to $30 million in terms of the benefits, we anticipate generating $10 million of synergies in 2021 of the ramp towards the full run rate expectation of $70 million by the end of our integration.
Moving to slide 17, we have leveraged our cost and capex per well throughout the pandemic. Our 2020 efforts allowed us to maintain our adjusted EBITDA EBITDA margin and the 39 net 40 per cent range, while absorbing revenue contraction of across many of our markets. The inclusion of Liberty mobile in Q4 of compressed our food the L. A margin by 40 basis.
It's really about what the margin was 32 per cent for the two months.
The Middle chart highlights our nearly 200 basis point drop in PP&E additions from 2019, even though we continue to invest in new debt capacity expansion of and subscriber growth. The net impact is the outlined at the right hand chart that we progressed, our adjusted EBITDA less to the additions to <unk> 23 per cent of revenue a solid increase from 2019.
The levels this year.
Metric is a key focus of ours as we let the further improve our future efficiency levels.
Slide 18 summarizes our liquidity and credit profile at year end, we reported $8 $5 billion of total debt $900 million of cash of one point of $1 billion of availability under our Rcs. During Q4, we funded the AT&T transaction, we paid our outstanding C. N. W. R. C L.
As previously highlighted our funding from the Telefonica Costa Rica acquisition was all set we would use the local borrowings of nearly $300 million and anticipate the remainder of will come from cash on hand, as well as of pro rata contribution from our local partner in Costa Rica.
Finished Q4 with gross and net rabbits of $4 eight times from four three times respectively.
The ratios on an L T QA basis on adjusted EBITDA and they get full effect of Liberty global for the entire six month period, turning to our debt maturity schedule on the right of the slide we made great progress during 2020 of terming out our debt at attractive rates, we do not have any significant maturities over the next five years is about 85 per cent of our debt.
In 2026 of them beyond our fully swapped borrowing cost is in the low sixes, but most of our debt is trading above par today, implying an even lower market yields in 'twenty and 'twenty, one will be focused on refinancing the trs local turmoil notes that mature over the next two years.
Turning to slide 19, I'll wrap up all of prepared remarks today.
The theme from Q3 was sequentially improved both on an absolute dollar of revenue and adjusted EBITDA of maintained quarterly fixed and mobile subscriber additions.
Definitely a solid improvement from all of Q2 of Covid impacted gross it's about down and I have highlighted today, our collective years that'll continue to take time for markets to fully recover from the impacts of Covid and for Congress to return more broadly.
It's also safe to assume our region, where the reasonably lagged the U S. In terms of recovery of destination. Those we are managing our business for the next couple of years without it Mike.
With the management team are focused on what we can control grow volume and market share in a day for in service of our customers. That's the new building transformation and continue to reset our cost base. So it did benefit from incremental operational leverage is out of the markets recover.
Currently without the ability to generate free cash flow across all of the operating businesses. We are committed to investing for future growth of we're targeting approximately 18 per cent of revenue into any additions in 2021.
Key to our story and one that will become apparent in the coming quarters.
Anticipated beneficial impact of Liberty Global one of that will underpin our free cash flow generation.
There's a lot of integration crazy systems, where it can be done, but the business came in stronger than expected and things are progressing well.
The closing the purchase of weekend transaction, the seller will strengthen our market leading cable business and we remain very excited about fixed mobile convergence of that market.
Finally, not only the only planning for growth of revenue and adjusted EBITDA in 'twenty total line will continue to drive towards higher adjusted free cash flow.
Two of the approximate $200 million of 2021.
We believe this is the right balance for L. A weighted further while other markets out of the cupboard with that operator, we are ready to take questions.
And the question and answer session will be conducted electronically. If you would like to ask a question of regarding the company's operations. Please do so by pressing the star or Astra key.
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Well, it's all of them all to allow everyone an opportunity to signal for questions.
And we will hear first from James Ratcliffe with Evercore ISI.
Thanks for taking the question two if I could first of all on subsea yeah. Thanks for the color on that business and that seems like the kind of infrastructure asset that's really getting great multiples out there right now.
Talk about is that the business to any degree separable from the rest of the business.
And that secondly.
Can you talk about what the rationale for changing the structure to have Panama report directly versus being part of the taking of wireless.
Yeah.
Thank you.
I'll say I think the point is just right on the subsea and from our business.
And I think over the next quarters. The so we'll give you yeah. The everybody more of your line of sight to that business, but if you kind of highlighted already.
Very good well EBITDA business $400 million in revenue all of you.
U S dollars were quite excited about the asset I think the over the next quarters.
You'll get more visibility to it it's part.
As of it on Panama, I think you know Panama, you can clearly see the numbers there.
And we are very focused on it we have the Greek government partner, Dan <unk> B.
Im very excited about that part of the.
The World, We think in Central America of Panama, and Costa Rica the bed.
The market to be in both of them and and you'll see when we put more of I think it's probably a good thing that we're going to put more attention on Panama and and open the next quarters from that do I think nicely.
You got to see.
Some positive outcomes.
Outcomes there.
Great. Thank you.
Yeah.
Well now move to our the color, we'll hear from Michael Rollins with Citi.
Hi, Good morning, I'm curious on two things if I could the first could you give us an update on the framework for the overall strategy you can look out over the next week of five years, how do you think back of the evolution of your assets, both geographically as well as the product mix that you would like the had.
Our country or country on the average.
And then just you know.
Secondly, maybe.
Maybe it could be in the context.
As.
Investors kind of contemplate where you May go next can you highlight where your largest priorities are in terms of.
For the portfolio or wherever it might be just market right you feel like are underpenetrated relative to their natural opportunities. Thanks.
Thanks.
Sure sure Mike Let me start by saying, we are very happy with the.
The geography that we are currently in and I think we're in the best parts of Latin America, and Central America, and the Caribbean and we see quite of bit of growth opportunity.
Robyn penetration with low fixed broadband LTE penetration is low.
B to B, our clean beat of beat is also low. So we see you know if Mike if I look over the next couple of three years the level of growth was sitting he comes from a network of expansion. He comes from getting the new products and B to B, we're quite excited about that and it also comes from the fact that.
We see <unk>.
Lots of opportunities you know existing business on expanding margins in both on the Opex and Capex.
And I see that in the context of especially on the kind of makes its not so much that kind of cut capex. Because we are still very bullish on building out its not the hospital bill keeps getting better and better.
So you know.
So that's the number of growth drivers in front of the on our existing geography, where he would expand you know would really depend on what's available out there we are very opportunistic.
And the.
The number of places that we like but I can clearly tell you, where we probably weren't being you weren't probably be in Argentina.
Definitely won't be in Venezuela.
Highly unlikely to be in Brazil.
But the rest of the from Latin America I think you know it's good it's part of why we are in this region. Our thesis is strong.
Yeah.
Okay.
Thank you.
Well now move to submit the data with the Street research.
Yeah, Hi, good morning, a couple from me. Please the first of all of them Q&A.
You guided up on the number of claims cost that's a pretty big.
The increase I like some of it's in.
And and Costa Rica policy of most of it is in the Chile can you came from just the little bit more color on lot sales I'm kind of interested in the new expansion areas, what kind of areas of we're talking here. These the already existing high speed coverage are you where you can be the first galleries.
In the in the salary, which we've heard of genuine high speed product.
And can you maybe sort of lay of pop out full penetration of these the new harvest cost should we assume a similar rate.
The time I read your existing penetration or is that maybe it'll be lower rule.
A little bit longer if you could give a bit of color there and that would be super helpful. Thank you and then.
Secondly, if I could just on.
At different points of recovery question from Chris really the the EBIT dollars you'd say came on at a slightly higher number. It's the only two months, it's a bit of help to kind of read too much into that maybe Bob if I annualize lots of kind of 336 million. It's it's probably 10% had the wrong is that it looks like on the Friday Heartbeats, we should think about going forward.
Maybe just I run logging of two months of the contribution thank you.
Right.
We'll get through both questions in the last the year MAU of dogs the Iraq.
Jumping that yeah in the bid.
The idea of run rate in Chile to be very promising it's true.
We think there's at least one of my views more bills that we can do that.
The the increased homes passed that we've targeted for 'twenty 'twenty, one it's mostly because we see great opportunity in some of the B C and moving from the D neighborhoods.
And and this is mostly because we've been able to drive our cost per home passed down very low.
And we actually where we've done trials, maybe it's actually gone in and we've seen the grades that you sometimes two months of path, where we were at you know Ian beat neighborhoods. So so it's quite positive.
Let me ask game of if you can just add on here is our view.
You on the on the commercial front of the.
These are new builds.
Yeah.
Yeah. Thank you Paolo and good morning, So Mike as Balan pointed out we see a very exciting opportunity and continue to expand our current $3 8 million footprint.
The two you know further see decent further municipalities in Chile, we already started doing that during 2020 with with the close 280, I Didnt of 90000, New home Saturday.
You can see in the slide deck with very positive we feel just weird building all of our new homes, the fiber to the home and and and and we will continue doing that.
You know providing.
Accessibility and in better quality to neighborhoods that historically had not had such a you know kind of products in the country. So very excited about the very exciting opportunity and also very proud of narrowing the digital got you know of country, which is something that continues to improve over time.
Thank you Raimo, maybe Chris you can give some color on the Puerto Rico EBITDA, Yeah. I think you know obviously the the the two main threat that the tail end of the year.
Typically as we've seen in our other businesses Q4 tends to be of pretty strong.
Strong time for the mobile businesses, so I wouldn't I wouldn't necessarily suggest you know annualize the notes to two months of.
At this point you know we did give in the balance line you know the full year 2020 number so as a as a reference point for folks on the OIBDA of revenue and OIBDA side, you know I would also caveat as we go into <unk> into 'twenty. One you know we do have you know the business getting kind of them with you now.
The back office and Standalone costs do we you know we do and you know we will be incurring knows you know as we operate the business and as I highlighted the you know in 'twenty, one we have a pretty sizable amount of you know of.
Integration op ex.
In the business as well as Capex.
You know that that kind of gets us moving towards you know of being able to reap the synergies as we look out you know in year two year three et cetera.
So hopefully that.
It provides a little bit of color for you Mike.
Okay. That's really helpful kind of just sorry, just quickly check the free cash flow kind of thought is off the all of the integration expenses the politics.
Most certainly it is.
Right.
Thank you.
Thanks, Chris.
And the Matthew Harrigan with benchmark has the next question.
Well, if you read the Drudge reported I guess, the you know where the.
Pope Francis I wanted to go back two of our Argentina all of the records go out to the read International day, something called it's called the school working from Tony Werner.
But anyway of kind of drone and I was just curious when you look at the fiber to the home of you're obviously not moving that out in the and the more out in the in Arizona is doing because those who already picked off or you just see networks.
Long time ago, but you know people, where you have the apples to apples. It really concluded the opex capex structure, it's pretty superior I noticed one operator in Denmark, and clearly all Q2 was a pretty active do you have any comments there and then as you get the convergence of these technologies from the latency.
C between doctors from <unk>.
Why do you need the doctor's weighted.
Oh, no what package do you feel like there's even more utility for your network before you know part of the use of the weight and often the comedies market's been inevitably mirroring it feels like you've got a great opportunity of having all of the Quad play engineering in house versus having to took a bit of a hodgepodge of approach like some of the Russell.
Operator, thank you.
Okay.
Matthew Hockey.
The let me see breaking the back of all your questions debt.
One of.
I'll start with the fact that each of the two prong vibe.
The library and an amazing network.
We are not worried at all competing with our fiber to the home very happy Jesse I'll tell you that.
A couple of reasons one.
The plant that we have for.
For the most of them all being upgraded two one gigahertz and past. So you have tremendous amount of capacity on it.
Secondly, HFC, it's actually one of the more reliable that's wrong.
Very low maintenance like network. Unlike the twisted pair and all of these other net like no other therapies fiber to home obviously is better.
But it doesn't mean that you cannot compete just look of the United States and you look at charter and Comcast going up against Verizon fires of it.
Idiot AT&T fiber to the home of <unk>.
The fiber.
And you you were in every day and and we have been one of the law.
Longest time, it's well no having said that all of our new builds going forward. The all be fiber to the home and that's what we'll do and we're not doing that or any of the reason then one we've got the cost of price point now to where each of it makes sense to do five of them.
Now the second question that you had on five G backhaul.
We have never had plans to use the HFC from fiber backhaul.
Backhaul of it as a matter of fact mud you went from four G backhaul, we actually run fiber directly.
To the sites. So we from it we've always use HFC is the consumer from me I'm.
Not necessarily a backhaul to beat the beat me.
Okay, great. Thanks, Paul.
Yeah.
Now moving to Kevin ROE ROE equity research.
Thank you good morning.
Paul in a couple of questions first on Panama.
Do you think is your crystal ball showing this could be the year for mobile consolidation.
And on M&A in General you clearly reiterated your you're disciplined M&A strategy and the free cash flow accretive benchmark, but has COVID-19 altered your appetite at all or changed your return thresholds.
The acquisition targets has as COVID-19 over the past year bubbled up any new opportunities or close the doors on on some.
Okay.
Hey, Kevin on Panama, Let me say that.
We've always thought that global consolidation that makes sense and revoke the always said to be of bi you have to have a stellar.
And right now everybody says, they're not everybody, but the DS a couple of debt the sellers, but we've not been able to convince them that selling men's actually selling of the price to make sense of everybody.
So as a result, much of moved in Panama, and but I remain optimistic the overtime that you.
You know they'll get rationale and the and something will break loose that.
On the M&A front.
You're right, we're very disciplined and to your question the Covid increase opportunities.
Thank all of the opportunities out there are well known and and of course, we look at everything that becomes available. We are quite opportunistic you know levered free cash flow per share remains a key metric it's not the only metric the disc.
Quite a few metrics that we looked at it but it is one of the key metrics that the there'd be looked at and desk Covid give us more opportunity or makes us more cautious no I think.
Our approach has been the same pre COVID-19 and post COVID-19 if anything on Covid. The makes it maybe a little harder because you know round equity stance and and therefore you know.
Tenants are judged on the capital allocation basis, Yeah, I mean, maybe you know in buying back stock if its more accretive to us than making the acquisition. We do that then and if you look at mass market that right now.
You know you need a pretty high hurdle.
You know to do the justify allocating capital to an acquisition as opposed to you in term of projects and that's how we look at it and and and and it's just straight math wise and.
Hum.
And therefore, it makes it easy you know the the purity of our decision making here that makes it very very very non emotional at all in the in M&A.
The following up on that comment could we see a share repurchases returning at some point in 2021.
Well you know the the board has authorized US a I think 100 million in three years.
In share repurchases over a period of three years and and you know you see what we're doing with new builds youre seeing a lot of things. So if you look at capital allocation from Us of course, the rights of first of all of its going to be you know high weekend dinner projects. Maybe you know maybe put money to work and then you've got you know inorganic Act.
The buybacks paydown debt doing dividends the.
Two is probably very low likelihood of him and the.
This company, but but right now we've got lots of exciting projects the.
And you can see but the guiding to some pretty nice free cash flow from very very tough.
Couple of years.
Yeah Yeah.
That's right Super Thank you both of them.
Becky.
And we'll take our last question today from Neatness of China with the Pirates capital.
Hi, just expanding on James's question can you just talk about the you know the subsea business and just how strategic you can see it long term I mean, if you think about that LTE CUSA multiple on their fiber backbone at your 400 million and 50% EBITDA margin. It's effectively the majority of bureau of market cap.
Just if you could talk about that and do you see this asset of the strategic long term or a source of funding from M&A.
Yeah.
Hello, Nathan Thanks for the question, Yeah, I think the subsea business.
Clearly.
Right now, we're not getting any credit under some of the parts.
And.
Chris and I've been thinking about the.
And you know, how the crystallized and give people more clear.
The view on the value of this asset.
And there are many strategic opportunities in front of US are clearly you can imagine if other things trade all of the usual suspects of knocking on the outdoors. It's about in the you know.
And asking the same question.
That's what the we need to do internally. This is not an easy separation. If you want to separate the business. We're working on at least the first stages of our.
You know, putting the math together and doing some of the legal work and the accounting works. So that people can really see the value of the Standalone asset. It is a very strategic I said, it's one of the best assets in the Caribbean and Central America.
And it's it's great technology, a lot of growth.
The growth potential in it.
We've got great customers on it we are one of the larger customers on it.
I I think I've got them.
In my best interest to say this but I think it's one of the best the subsea network and then when you link it by the way did the B to B deals ticket asked it so on the landing stations, we actually expanded off the landing station. We've put in sales teams. We've got the management team that runs at a it's a pretty significant business.
Very well length of our sales teams can sell both net.
Like an Ethernet product of private line mine product in the country like Colombia, that's wrong and it's tied back onto a backhaul of a landing station. So it makes a very seamless transition as well. So it's a great asset you know it is clear to the management team in the eye that we probably need to do are.
You know bring better view to do that but clearly.
To sum of the parts do not reflect.
The really the valuable.
The thing that we have in the portfolio.
Thanks, Tom.
Thanks Nathan.
And that will conclude today's question and answer session I'd like to hand, the call back to all of them there for any additional or closing remarks.
Thank you operator.
Well you know I'll tell the 'twenty and 'twenty was probably one of the hottest years debt.
My management team in the.
Periods, just because the nature of where we operate.
But we you know.
We started the last year of it or at least not at the the pandemic period with.
Lots of good since we made the moves masked the baby. If you. If you recall, we drew down the credit line to be you would really really worried I'll tell you at the end of the year and sitting where we're at right now we cannot imagine.
Being in the better spot now.
Having said that I'll tell you the 2021 is still tough.
We've guided the free cash flow of number it is not entirely clear that we are out of the woods yet.
In many of the where we operate they're still curfews at the end.
The evenings the steel.
You know of Lockdowns on the on weekends and.
And so you know this is not super clear, yet and I imagine cruise ships will not be hitting the ocean in the Caribbean until perhaps the November after the hurricane season this year.
So oh the management team is focused on of course its focus on cash collection is focused on our revenue at the focus on where we can find growth and being very creative it is.
Focus on getting Panama back in order of its focus on getting the Chile back on track. These are the things the refocus on on the management team and we are convinced in debt the debt.
Can the execute.
Out of the woods, but but that's the light at the end of the 10 of them.
Thank you very much for all of your support and we'll talk to you in 65 70 days.
Ladies and gentlemen, this will conclude the Liberty Latin America's full year 2020, Investor call. As a reminder, a replay of the call will be available of the Investor Relations section of Liberty Latin America's website at Www Dot.
Oh, how all of that.
Tom.
You can find the copy of today's presentation materials you may now disconnect.
Hmm.
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Yes.
Okay.
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Uh huh.
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Okay.
Yeah.
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Yeah.
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